CONCEPT, APPLICATION AND LIMITS

A.1 POLICE POWER Definition

It is the inherent and plenary power of the state which enables it to prohibit all that is hurtful to the comfort, safety and welfare of society. [Ermita-Malate Hotel and Motel Operators Association, Inc. v. Mayor of Manila (1967)]

Scope and Limitations General Coverage

“The state, in order to promote the general welfare, may interfere with personal liberty, with property, and with business and occupations. Persons may be subjected to all kinds of restraints and burdens, in order to secure the general comfort, health and prosperity of the state and to this fundamental aim of our Government, the rights of the individual are subordinated.” [Ortigas and Co., Limited Partnership v. Feati Bank and Trust Co.

(1979)]

“Police power, while incapable of an exact definition, has been purposely veiled in general terms to underscore its comprehensiveness to meet all exigencies and provide enough room for an efficient and flexible response as the conditions warrant.”

[White Light Corporation v. City of Manila (2009)]

Police Power cannot be bargained away through treaty or contract. [Ichong v.

Hernandez (1957)]

Despite the impairment clause, a contract valid at the time of its execution may be legally modified or even completely invalidated by a subsequent law. If the law is a proper exercise of the police power, it will prevail over the contract. [PNB v. Office of the President (1996)]

Taxation, Eminent Domain as Implements of Police Power

Taxation may be used as an implement of police power. [Lutz v. Araneta (1955)]

Eminent domain may be used as an implement to attain the police objective.

[Association of Small Landowners v. Secretary of Agrarian Reform (1989)]

Specific Coverage (1) Public Health (2) Public Morals (3) Public Safety (4) Public Welfare

Test of Reasonability (Means-Purpose Test) (1) Lawful means: The means employed are

reasonably necessary for the accomplishment of the purpose and not unduly oppressive upon individuals.

[Planters Products v. Fertiphil Corp. (2008)]

(2) Lawful purpose: The interests of the public, generally, as distinguished from those of a particular class, require such interference;

The limit to police power is reasonability. The Court looks at the test of reasonability to decide whether it encroaches on the right of an individual. So long as legitimate means can reasonably lead to create that end, it is reasonable. [Morfe v. Mutuc (1968)]

Legislature’s determination “as to what is a proper exercise of its police powers is not final or conclusive, but is subject to the supervision of the court.” [US v. Toribio (1910)]

However, courts cannot delimit beforehand the extent or scope of the police power, since they cannot foresee the needs and demands of public interest and welfare. “So it is that Constitutions do not define the scope or extent of the police power of the State; what they do is to set forth the limitations thereof. The most important of these are the due process clause and the equal protection clause.” [Ichong v.

Hernandez (1957)]

The SC upheld the validity of Administrative Orders (issued by the DENR Sec.) which converted existing mine leases and other

mining agreements into production-sharing agreements within one year from effectivity.

The subject sought to be governed by the AOs are germane to the object and purpose of E.O.

279 (passed under the Freedom Constitution) and that mining leases or agreements granted by the State are subject to alterations through a reasonable exercise of police power of the State. [Miners Association of the Philippines v.

Factoran (1995)]

Illustrations on the Exercise of Police Power General Welfare v Property rights – RA 9257, the Expanded Senior Citizens Act of 2003, is a legitimate exercise of police power.

Administrative Order No. 177 issued by the Department of Health, providing that the 20%

discount privilege of senior citizens shall not be limited to the purchase of unbranded generic medicine but shall extend to both prescription and non-prescription medicine, whether branded or generic, is valid. [Carlos Superdrug Corporation v. DSWC et al. (2007)]

National Security v Property Rights – SC upheld the constitutionality of RA 1180 (An Act to Regulate the Retail Business) which sought to nationalize the retail trade business by prohibiting aliens in general from engaging directly or indirectly in the retail trade. The law was to “remedy a real actual threat and danger to national economy posed by alien dominance and control of the retail business;

the enactment clearly falls within the scope of the police power of the State, thru which and by which it protects its own personality and insures its security and future.” [Ichong v.

Hernandez (1957)]

Public Safety – Police power is a dynamic agency, suitably vague and far from being precisely defined; the principle is the Constitution did not intend to enable an individual citizen or a group of citizens to unreasonably obstruct the enactment of measures calculated to communal peace, safety, good order, and welfare. A heavy burden lies in the hands of a petitioner who questions the state’s police power if it was clearly intended to promote public safety.

[Agustin v. Edu, (1979), on an LOI requiring early warning devices for all motor vehicle owners]

Police Power, Property Rights v Fundamental Rights - Hotel and motel operators’

association assailed the constitutionality of Ordinance No. 4760 (regulating motels through fees, restrictions on minors, open inspection, logbooks, etc.). Court held: The mantle of protection associated with the due process guaranty does not cover petitioners.

This particular manifestation of a police power measure being specifically aimed to safeguard public morals is immune from such imputation of nullity resting purely on conjecture and unsupported by anything of substance.

Where the liberty curtailed affects at the most rights of property, the permissible scope of regulatory measure is wider. [Ermita-Malate Motel and Motel Operators Assn. v. City Mayor of Manila (1967)]

However, when legitimate sexual behavior, which is constitutionally protected [by the right to privacy], and other legitimate activities, most of which are grounded on the convenience of having a place to stay during the short intervals between travels [in motels], will be unduly curtailed by the ordinance, the same ordinance is invalid. [See White Light Corp. v. City of Manila (2009)]

Limitations when police power is delegated:

(1) Express grant by law [e.g. Secs. 16, 391, 447, 458 and 468, R.A. 7160, for LGUs]

(2) Limited within its territorial jurisdiction [for local government units]

(3) Must not be contrary to law.

A.2 EMINENT DOMAIN Definition and Scope

The power of eminent domain is the inherent right of the State to condemn private property to public use upon payment of just compensation.

It is well settled that eminent domain is an inherent power of the State that need not be granted even by the fundamental law. Sec. 9, Art. III merely imposes a limit on the government’s exercise of this power. [Republic v.Tagle (1998)]

The repository of eminent domain powers is legislature, i.e. exercised through the enactment of laws. But power may be delegated to LGUs and other government entities (via charter); still, the delegation must be by law. [Manapat v. CA (2007)]

Who may exercise the power?

(1) Congress;

(2) By delegation, the President and administrative bodies [through the Admin.

Code], local government units [through the Loc. Gov. Code], and even private enterprises performing public services [See Tenorio v. Manila Railroad (1912)]

Application

When is there taking in the constitutional case?

(1) Diminution in value;

(2) Prevention of ordinary use; and (3) Deprivation of beneficial use.

(4) Regulatory takings

In Didipio Earth Savers Multipurpose Association (DESAMA) v. Gozun (2006), examples were (a) trespass without actual eviction; (b) material impairment of the value;

(c) prevention of the ordinary uses (e.g.

easement).

But anything taken by virtue of police power is not compensable (e.g. abatement of a nuisance), as usually property condemned under police power is noxious [DESAMA v.

Gozun (2006)]

Examples from Jurisprudence:

(1) The imposition of an aerial easement of right-of-way was held to be taking. The exercise of the power of eminent domain does not always result in the taking or appropriation of title to the expropriated property; it may also result in the imposition of a burden upon the owner of the condemned property, without loss of title or possession. [NPC v. Gutierrez (1991)]

(2) A municipal ordinance prohibiting a building which would impair the view of the plaza from the highway was likewise considered taking. [People v. Fajardo (1958)]

(3) A regulatory taking occurs where a regulation places limitations on land that fall short of eliminating all economically beneficial use, a taking nonetheless may have occurred, depending on a complex of factors including the regulation's economic effect on the landowner, the extent to which the regulation interferes with reasonable investment-backed expectations, and the character of the government action. [Armstrong v. United States, 364 U.S. 40 (1960)]

When the State exercises the power of eminent domain in the implementation of its agrarian reform program, the constitutional provision which governs is Section 4, Article XIII of the Constitution. Notably, this provision also imposes upon the State the obligation of paying the landowner compensation for the land taken, even if it is for the government’s agrarian reform purposes. [Land Bank of the Philippines v. Honeycomb Farms Corporation (2012)]

A.3 TAXATION Definition and Scope

It is the power by which the State raises revenue to defray the necessary expenses of the Government. It is the enforced proportional contributions from persons and property, levied by the State by virtue of its sovereignty, for the support of the government and for all public needs.

It is as broad as the purpose for which it is given.

Purpose:

(1) To raise revenue (2) Tool for regulation

(3) Protection/power to keep alive

Tax for special purpose

Treated as a special fund and paid out for such purpose only; when purpose is fulfilled, the balance, if any shall be transferred to the general funds of the Government. [Sec. 29 (3), Art. VI]

Scope and Limitation General Limitations

(1) Power to tax exists for the general welfare;

should be exercised only for a public purpose

(2) Might be justified as for public purpose even if the immediate beneficiaries are private individuals

(3) Tax should not be confiscatory: If a tax measure is so unconscionable as to amount to confiscation of property, the Court will invalidate it. But invalidating a tax measure must be exercised with utmost caution, otherwise, the State’s power to legislate for the public welfare might be seriously curtailed

(4) Taxes should be uniform and equitable [Sec. 28(1), Art. VI]

Judicial review for unconscionable and unjust tax amounting to confiscation of property

The legislature has discretion to determine the nature, object, extent, coverage, and situs of taxation. But where a tax measure becomes so unconscionable and unjust as to amount to confiscation of property, courts will not hesitate to strike it down; the power to tax cannot override constitutional prescriptions.

[Tan v. del Rosario, (1994)]

Specific Limitations (1) Uniformity of taxation

General Rule: Simply geographical uniformity, meaning it operates with the same force and effect in every place where the subject of it is found

Exception: Rule does not prohibit classification for purposes of taxation, provided the requisites for valid classification are met. [Ormoc Sugar v.

Treasurer of Ormoc (1968)]

(2) Tax Exemptions

No law granting any tax exemption shall be passed without the concurrence of a majority of all the Members of Congress [Sec. 28 (4), Art. VI]

There is no vested right in a tax exemption.

Being a mere statutory privilege, a tax exemption may be modified or withdrawn at will by the granting authority. [Republic v. Caguioa (2009)]

Exemptions may either be constitutional or statutory.

(1) If statutory, it has to have been passed by majority of all the members of Congress [Sec. 28 (4), Art. VI]

(2) Constitutional exemptions [Sec. 28(3), Art.

VI]

Requisite: Exclusive Use

(a) Educational institutions (both profit and non-profit used actually, directly and exclusively for educational purposes): Benefits redound to students, but only applied to property taxes and not excise taxes

(b) Charitable institutions: Religious and charitable institutions give

considerable assistance to the State in the improvement of the morality of the people and the care of the indigent and the handicapped

(c) Religious property: Charitable Institutions, churches, and parsonages or convents appurtenant thereto, mosques, non-profit cemeteries, and all lands, buildings and improvements, actually, directly and exclusively used for religious, charitable or educational purposes