FUNDAMENTAL POWERS OF THE STATE OUTLINE

Definition

The fundamental powers of the State are:

1. Police Power – the power of the State to regulate liberty and property(definition) for the
promotion of the general welfare(goal).

2. Power of Eminent Domain – the power of the State that enables the State to forcibly
acquire private property, upon payment of just compensation(definition), for some
intended public use(goal).

3. Power of Taxation – the power of the State to demand from the members of the society
their proportionate share or contribution(definition) in the maintenance of the
government(goal).

These powers are inherent and need not be expressly conferred by constitutional provision on the
State. They are supposed to co-exist with the State. The moment the State comes into being, it is deemed
invested with these three powers as its innate attributes.

Elements

1. Inherent in the State, exercised even without need of express Constitutional grant.

2. Necessary and Indispensable; as the State cannot be effective without them.

3. Methods by which State interferes with private property or rights.

4. Presuppose equivalent compensation.

5. Exercised primarily by the Legislature.

Distinction

Subject of Powers

a. Police Power – both liberty and property rights;

b. Eminent Domain – property rights only;

c. Taxation Power – property rights only.

Who can exercise

a. Police Power – government only;

 b. Eminent Domain – primarily by the government; private entities can also exercise;

c. Taxation Power – government only.

Effects of the exercise of the fundamental power of the State

a. Police Power – properties taken, usually noxious or intended for a noxious purpose,
usually must be destroyed;

b. Eminent Domain – properties are wholesome and is intended for public use or lawful
purpose;

c. Taxation power - properties are wholesome and is intended for public use or lawful
purpose.

Limitations

Generally – may not be exercised arbitrarily to prejudice the Bill of Rights;

Exception – the courts may decide that the exercise of the fundamental powers of the State
prevail over specific constitutional guarantees.

A. Police Power

I. Definition

The power of promoting public welfare(goal) by restraining and regulating the use of liberty
and property(definition).

II. Scope/Characteristics

Among all the three fundamental powers, the Police Powers is the:

- Most permissive

- Least limitable

- Most demanding

This is justified by the Latin Maxim: “salus populi est suprema lex, and sic utere tuo ut alienm
non laedas” – calling for the subordination of individual benefit to the interests of the
greater number.
CASES:

a. Inchong v Hernandez, 101 Phil 1155

The petitioner sought to enjoin the enforcement of the Retail Trade Nationalization
Law on the ground, among others, that it was inconsistent with the treaty of amity between the
Philippines and China, the United Nations Charter and the Universal Declaration of Human
Rights.

The SC saw no conflict. “But even supposing that the law infringes upon the said
treaty,XXX, the treaty is always subject to qualification or amendment by a subsequent law
(US v Thompson, 258 Fed 257,260), and the same may never curtail or restrict the scope of
the police power of the State (Palston v Pennsylvania, 58 L ed 539)

b. Tiu v Videogram Regulatory Board, 151 SCRA 508

The taxation power may be used as an implement of the police power.

PD 1987 was promulgated to create the Videogram Regulatory Board, and imposed
taxes accrued to such implements – 30% tax. (not a justiciable question)

Similar to the ruling in Lutz v Araneta, 58 Phil 148, the SC sustained as a legitimate
exercise of police power the imposition of a special tax on sugar producers for the purpose
of creating a special fund to be used for the rehabilitation of the sugar industry.

“The tax levied by the challenged statute is for a regulatory purpose,

namely, to provide ways and means for the rehabilitation and stabilization of the
sugar industry. Sugar production is one of the great industries of the country and
imbued with public interest, and hence, Congress was empowered to find that
the general welfare demanded that the sugar industry be stabilized. The law is
thus primarily an exercise of the police power of the state and taxation was
merely used to implement the state’s power.”

c. Association of Small Landowners v Secretary of Agrarian Reform, 175 SCRA 343

The power of eminent domain may be used to attain the police power objective.

The SC, in sustaining the constitutionality of the Comprehensive Agrarian Reform

Law, held that, like taxation, the power of eminent domain could be used as an implement of
the police power. The express objective of the law was the promotion of the welfare of the
farmers, which came clearly under the police power of the state. To achieve this purpose, the
law provided for the expropriation of agricultural lands (subject to minimum retention limits
for landowners) to be distributed among the landless peasantry.

“to the extent that the measures under challenge merely prescribe
retention limits for landowners, there is an exercise of the police power for the
 regulation of private property in accordance with the Constitution. But where, to
carry out such regulation, it becomes necessary to deprive such owners of
whatever lands they may own in excess of the maximum area allowed, there is
definitely a taking under the power of eminent domain for which payment of just
compensation is imperative.”

III. Who exercises the power

The power is inherently vested in the Legislative Department. However, the Congress may
validly delegate this power to the President, administrative bodies, and to lawmaking bodies of
LGUs. LGUs exercise the power under the general welfare clause. (Sec. 16, RA 7160, and Sec. 391,
447, 458 of RA 7160)

CASES:

a. MMDA v Bel-Air Village Association, GR No 135962, March 27, 2000

Unlike the legislative bodies of LGUs, there is no provision in RA 7924 that empowers the
MMDA or its council to “enact ordinances, approve resolutions and appropriate funds for the
general welfare” of the inhabitants of Metro Manila. Thus, MMDA may not order the opening of
Neptune St. in the Bel-Air subdivision to public traffic, as it does not possess the
delegated power.

b. Francisco v Fernando, GR No 166501, November 16, 2006

A petition for prohibition and mandamus was filed against the MMDA and its
Chairman, Bayani Fernando, to enjoin the further implementation of the “Wet Flag Scheme”
and to compel respondents to “respect and uphold” the pedestrians’ right to due process
and equal protection of the law. (As implemented, police mobile units bearing wet flags with the
words “Maglakad ang mag-abang sa bangketa” are deployed along major Metro Manila
thoroughfares.)

It was held that the petitioner failed to show the lack of basis or the unreasonableness of
the Wet Flag Scheme. On the alleged legal basis, the Court noted that all the cities and
municipalities within the MMDA’s jurisdiction, except Valenzuela City, have each enacted
anti-jaywalking ordinances or traffic management codes with provisions for pedestrian
regulation.

This serves as sufficient basis for the respondent’s implementation of schemes to enforce
the anti-jaywalking ordinances and similar regulations. The MMDA is an administrative agency
tasked with the implementation of rules and regulations enacted by proper authorities. The
absence of an anti-jaywalking ordinance in Valenzuela City does not detract from this conclusion
absent any proof that respondents implemented the Flag Scheme in that city.

c. MMDA v Viron Transportation, GR No 170656, August 15, 2007

 While concededly, the President has the authority to provide for the establishment of
Greater Manila Mass Transport System, in order to decongest traffic by eliminating bus
terminals along major Metro Manila thoroughfares, EO No 179, which designates the Metro
Manila Development Authority as the implementing agency for the project, is “ultra vires”.

Under the provision of EO 125, as amended, it is the DOTC, not the MMDA, which
is authorized to establish and implement such project. The President must exercise the
authority through the instrumentality of the DOTC which, by law is the primary implementing and
administrative entity in the promotion, development and regulation of networks of transportation.
By designating the MMDA as the implementing agency, the President overstepped the
limits of the authority conferred by law.

IV. Test for Valid Exercise

The question of validity of legislative enactments as determined by the criterion of their conformity
to the Constitution is essentially justiciable and may be validly decided by the courts of justice.

(1) The interest of the public generally, as distinguished from those of a particular class,
require exercise of the police power (lawful subject)

(2) The means employed are reasonably necessary for the accomplishment of the purpose
and not unduly oppressive upon individuals (lawful means)

FIRST: Lawful Subject

The activity or property sought to be regulated affects the general welfare; if it does, then
the enjoyment of the rights flowing therefrom may have to yield to the interests of the greater
number.

CASES:

a. Lim v Pacquing, 240 SCRA 649

It was held that PD 771, which expressly revoked all existing franchises and
permits to operate all forms of gambling facilities (including jai-alai) issued by the LGUs,
was a valid exercise of police power. Gambling is essentially antagonistic to the objectives of
national productivity and self-reliance; it is a vice and a social ill which the government must
minimize (or eradicate) in pursuit of social and economic development.

b. Sangalang v Intermediate Appellate Court, 176 SCRA 719

The act of the Municipal Mayor in opening Jupiter and Orbit streets, Bel-Air
subdivision, to the public was deemed a valid exercise of the police power. A municipal
zoning ordinance, as a police power, prevails over the non-impairment clause. Thus, a zoning
ordinance reclassifying residential into commercial or light industrial area is a valid exercise of the
police power of the State.

c. Ople v Torres, 293 SCRA 141

An administrative order is an ordinance issued by the President which relates to specific

aspects in the administrative operation of the Government. It cannot be argued that AO No 308
(prescribing a National Computerized Identification Reference System) merely implements the
Administrative Code of 1987.

Such a national computerized identification reference system requires a delicate

adjustment of various contending State policies, the primacy of national security, the extent of
privacy against dossier-gathering by the Government, and the choice of policies. It deals with a
subject which should be covered by a law, not just an administrative order.

SECOND: Lawful Means

In Constitutional Law, the end does not justify the means. The lawful objective, in other
words, must be pursued through a lawful method; that is, both the end and the means must be
legitimate. Lacking such concurrence, the police measure shall be struck down as an arbitrary intrusion
into private rights.

a. Lorenzo v Director of Health, 50 Phil 595

To contain the spread of leprosy in the interest of public health, the leper may be
confined in a leprosarium where he will not contaminate the other members of the community.
The restriction of his liberty is reasonably related to the purpose sought to be
accomplished and cannot be considered unduly oppressive upon him.

But if in lieu of such remedy the legislature were to provide for his summary execution,
the remedy, being arbitrary, would be illegal although the purpose of the law would be achieved.

b. Ynot v Intermediate Appellate Court, 148 SCRA 659

An Executive Order prohibited the transport of carabaos or carabao meat across

provincial boundaries without government clearance, for the purpose of preventing indiscriminate
slaughter of these animals.

While conceding the validity of the purpose, the SC had the following to say about the method:

“We do not see how the prohibition of the interprovincial transport of

carabaos can prevent their indiscriminate slaughter, considering that they can be
killed anywhere, with no less difficulty in one province than another. Obviously,
retaining the carabaos in one province will not prevent their slaughter there; any
more than moving them to another province will make it easier to kill them there.
 As for the carabeef, the prohibition is made to apply to it as otherwise, so says
the executive order, it could be easily circumvented by simply killing the animal.
Perhaps so. However, if the movement of the live animals for the purpose of
preventing their slaughter cannot be prohibited, it should follow that there is no
reason either to prohibit their transfer as not to be flippant, dead meat.

* * *

In the instant case, the carabaos were arbitrarily confiscated by the

police station commander and were returned to the petitioner only after he had
filed a complaint for recovery and given a supersedeas bond of P12,000.00,
which was ordered confiscated upon his failure to produce the carabaos when
ordered by the trial court. The executive order defined the prohibition, convicted
the petitioner and immediately imposed punishment, which was carried out
forthright. The measure struck at once and pounced upon the petitioner without
giving him a chance to be heard, thus denying him the centuries-old guaranty of
elementary fair-play.”

c. City of Manila v Judge Laguio, GR No 118127, April 12, 2015

The SC declared as an invalid exercise of the police power City of Manila Ordinance No
7783, which prohibited “the establishment or operation of businesses providing certain forms of
amusement, entertainment, services and facilities in the Ermita-Malate area.”

Concedely, the ordinance was enacted with the best of motives and shares the concern
of public for the cleansing of the Ermiate-Malate area of its social sins. Despite its virtuous aims,
however, the enactment of the ordinance has no statutory or constitutional authority to stand on.
Local legislative bodies cannot prohibit the operation of sauna and massage parlors, karaoke
bars, beehouses, night clubs, day clubs, supper clubs, discotheques, cabarets, dance halls,
motels and inns, or order their transfer or conversion without infringing the constitutional
guarantees of due process and equal protection of the laws, not even in the guise of police
power.

B. Power of Eminent Domain

I. Definition/Scope

Also called the power of expropriation, the eminent domain is described as “the highest and
most exact idea of property remaining in the government” that they may be acquired for some public
purpose through a method “in the nature of a compulsory sale to the State”.

Sec. 9, Art. III – “Private property shall not be taken for public use without just compensation.”

Implies that this provision does not grant but indeed limits the power of eminent domain as
its negative and restrictive language clearly suggests.
Sec. 18, Art. XII - “The State may, in the interest of national welfare or defence, establish and operate
vital industries and, upon payment of just compensation, transfer to public ownership utilities and other
private enterprises to be operated by the Government.”

The power of eminent domain is the inherent right of the State to condemn private property to
public use upon payment of just compensation. Although both police power and eminent domain have the
general welfare for their object, and recent trends show a mingling of the two with the latter being used as
an implement of the former, there are still traditional distinctions between the two.

Where a property interest is merely restricted because the continued use thereof would be
injurious to public interest, there is no compensable taking.

However, when a property interest is appropriated and applied to some public purpose, there is a
need to pay just compensation.

Sec. 4, Art. XIII – “The State shall, by law, undertake an agrarian reform program founded on the right of
farmers and regular farmworkers who are landless, to own directly or collectively the lands they till or, in
the case of other farmworkers, to receive a just share of the fruits thereof. To this end, the State shall
encourage and undertake the just discretion of all agricultural lands, subject to such priorities and
reasonable retention limits as the Congress may prescribe, taking into account ecological, developmental,
or equity considerations. In determining the retention limits, the State shall respect the rights of small
landowners. The State shall further provide incentives for voluntary land-sharing.

Sec. 9, Art. XIII – “The State shall, by law, and for the common good, undertake, in cooperation with the
private sector, a continuing program of urban land reform and housing which will make available at
affordable cost decent housing and basic services to underprivileged and homeless citizens in urban
centers and resettlement areas. It shall also promote adequate employment opportunities to such
citizens. In the implementation of such program, the State shall respect the rights of small property
owners.

CASE:

a. Camarines Norte Electric Cooperative v Court of Appeals, GR No 109338, November 20, 2000

The acquisition of an easement of a right of way falls within the purview of the power of
eminent domain.

II. Who may exercise the power

 The power of eminent domain is lodged primarily in the National Legislature, but its exercise
may be validly delegated to other governmental entities and, in fact, even to private corporations,
like the so called quasi-public corporations serving essential public needs or operating public utilities

Under the existing laws, the following may exercise the power of expropriation:

(1) Congress of the Philippines;

(2) The President;

(3) Authorized Local Legislative Bodies;

(4) Certain public corporations – e.g. Land Authority, National Housing Authority;

(5) Quasi-public corporations – e.g. Philippine national Railways, Philippine Long Distance
Telephone Co., Meralco.

CASES:

a. Masikip v. City of Pasig, GR No 136349, January 23, 2006

LGUs have no inherent power of eminent domain; they can exercise the power only when
expressly authorized by the legislature.

Sec. 19 of the Local Government Code confers such power to local governments, but the
power is not absolute; it is subject to statutory requirement.

III. Requisite for exercise

FIRST: Necessity

When exercised by the Legislature, the question of necessity is generally a Political

Question. (Municipality of Meycauayan, Bulacan v Intermediate Appellate Court, 157 SCRA 540)

When exercised by a delegate, the determination of whether there is genuine necessity for the
exercise is a justiciable question. (Republic v La Orden de Po Benedictinos, 1 SCRA 649)

The issue of necessity of the expropriation is a matter properly addressed to the RTC in the
course of the expropriation proceedings. RTC has the power to inquire into the legality of the
exercise of the right of eminent domain and to determine whether there is a genuine necessity for it.
(Bardillon v Barangay Masili of Calamba, Laguna, GR No 146886, April 30, 2003)

CASES:

a. Lagcao v Judge Labra, GR No 155746, October 13, 2004

 The foundation of the right to exercise eminent domain is genuine necessity and that
necessity must be of public character. Government may not capriciously or arbitrarily choose which
private property should be expropriated.

In this case, there was no showing at all why petitioners’ property was singled out for
expropriation by the city ordinance or what necessity impelled the particular choice or selection.

Ordinance No 1843 stated no reason for the choice of petitioners’ property as the site of a
socialized housing project.

SECOND: Private Property

Anything that can come under the dominion of man is subject to expropriation. This will include
real and personal, tangible, and intangible properties.

The only exceptions to this rule are money and choses in action.

Expropriation of money would be a futile act because of the requirement for the payment of just
compensation, usually also in money.

A chose in action is “a personal right not reduced into possession but recoverable by a
suit at law, a right to receive, demand or recover a debt, demand or damages on a cause of action
ex contractu or for a tort or omission of duty.”

CASES:

a. Republic v PLDT, 26 SCRA 620

b. City of Manila v Chinese Community, 40 Phil 349

THIRD: Taking in the constitutional sense

IV. Public Use

V. Just Compensation

C. Power of Taxation