Fundamental Powers of the State

In Philippine Constitutional Law and Public International Law, the fundamental powers of the state refer to three inherent powers essential for its survival and to fulfill its functions. These powers are:

Police Power
Eminent Domain (Power of Expropriation)
Power of Taxation

These powers are inherent in sovereignty and are necessary for the maintenance of public order, the regulation of property, and the provision of public services. Let’s go into detail on each of these powers.

1. Police Power

Definition:

Police power is the most pervasive and least limitable of the fundamental powers of the State. It is the power of the State to enact laws, ordinances, and regulations to promote the general welfare, public morals, public health, and safety.

Scope:

Police power covers the regulation of liberty and property in the interest of the general welfare. It allows the State to regulate actions that may be harmful to the community.

Limitations:

The exercise of police power is subject to two essential tests:

Lawful Subject Test: The interest of the public generally, as distinguished from those of a particular class, must require the exercise of the power.
Lawful Means Test: The means employed must be reasonably necessary for the accomplishment of the purpose and not unduly oppressive on individuals.

Who Exercises It:

Police power is vested primarily in the Legislative Department, but it can also be exercised by local government units (LGUs) and delegated to administrative agencies, such as the MMDA, by virtue of Republic Act No. 7160 (Local Government Code).

Examples of Police Power:

Regulation of businesses (e.g., requiring licenses, setting conditions for operation)
Sanitary regulations (e.g., ordinances on waste disposal)
Zoning ordinances
Anti-drug and anti-crime laws
Environmental laws (e.g., banning certain harmful activities)

Limitations on Police Power:

While vast in scope, police power must still respect the fundamental rights guaranteed under the Constitution, including due process and equal protection of the law.

2. Eminent Domain (Power of Expropriation)

Definition:

Eminent domain is the power of the State to forcibly acquire private property for public use or purpose upon payment of just compensation.

Essential Requirements:

Public Use: The property must be taken for public purposes (e.g., roads, public buildings, infrastructure). Public use has been interpreted broadly and includes public welfare and public convenience.
Just Compensation: The owner of the property must be paid a fair equivalent of the loss sustained by them.
Due Process: There must be compliance with both substantive and procedural due process in the exercise of eminent domain.

Who Exercises It:

Eminent domain is primarily exercised by the Legislature, but it may be delegated to local government units, quasi-public corporations, and government agencies (e.g., the National Power Corporation, MWSS).

Limitations:

The exercise of eminent domain is limited by:

Necessity: The taking must be necessary for public use.
Proportionality: There must be no excessive or arbitrary taking of property.
Compensation: The compensation must be prompt and fair.

Public Use Expanded:

The concept of public use has evolved to include not just direct use by the public, but also indirect benefits. For instance, expropriating land for a public utility company that provides services to the general public constitutes a public use.

Examples of Eminent Domain:

Expropriation of land for highways, airports, schools, or government offices
Expropriation for socialized housing under the Urban Development and Housing Act (RA 7279)

3. Power of Taxation

Definition:

The power of taxation is the State’s authority to impose and collect revenues from individuals and property to fund its operations and provide services to the public.

Characteristics of Taxation:

Inherent: The power of taxation is inherent in every sovereign state.
Comprehensive: Taxation reaches all persons, property, and businesses within the jurisdiction of the State.
Plenary: The power is broad, but not absolute, as it must conform to constitutional limitations.
Subject to Constitutional and Statutory Limitations: The exercise of taxation must adhere to the constitutional guarantee of due process, equal protection, and non-impairment of contracts.

Basic Principles of Taxation:

Taxes must be for a public purpose.
Uniformity of Taxation: Taxes must be uniform and equitable; that is, all subjects of a class must be taxed at the same rate.
Non-delegation: The power to tax is primarily vested in Congress and cannot be delegated unless expressly authorized by law (e.g., LGUs' authority to impose local taxes under the Local Government Code).
Exemption from Taxation: Only the government, charitable institutions, and certain industries (e.g., religious institutions) are exempt from taxation.
Progressive Taxation: The State is encouraged to adopt a progressive taxation system where wealthier individuals or entities bear a heavier tax burden.

Types of Taxes:

Direct Taxes: Imposed directly on individuals (e.g., income tax, estate tax).
Indirect Taxes: Passed on to the consumer (e.g., value-added tax, customs duties).

Taxation and Due Process:

Taxation must follow due process, meaning that it must be authorized by law and the taxpayer must be notified and given a fair chance to comply.

Limitations on the Power of Taxation:

Constitutional Restrictions: Taxation cannot violate the provisions on due process, equal protection, and religious freedom.
Double Taxation: This refers to taxing the same entity or transaction twice, which is generally frowned upon but may be allowed in certain circumstances (e.g., taxing the income of corporations and then dividends distributed to shareholders).
International Agreements: The Philippines is bound by international treaties, such as tax treaties, which provide relief from double taxation and ensure fair taxation across borders.

Examples of Taxation Power in Practice:

Imposition of income taxes on individuals and corporations (e.g., National Internal Revenue Code)
VAT on goods and services
Real property taxes imposed by local government units

Common Limitations to the Fundamental Powers

Despite the inherent nature of these powers, they are subject to the following limitations:

The Bill of Rights: Any exercise of these powers must respect constitutional guarantees, particularly due process, equal protection, and protection from the undue deprivation of property.
Public Welfare: These powers are justified only if they serve the general public interest and promote the common good.
International Law: The powers of the state must also respect treaties and international agreements to which the Philippines is a party, particularly in the context of human rights and the protection of foreign investments.

Conclusion:

The three fundamental powers of the State—police power, eminent domain, and taxation—are indispensable tools for governance. These powers must be exercised with prudence, in line with constitutional principles, and always for the public good. These powers, while vast, are not without their limitations, ensuring that individuals' rights are protected against arbitrary or excessive state action.