ARTICLE XII

OF THE 1987 PHILIPPINE CONSTITUTION

NATIONAL ECONOMY
AND
PATRIMONY
 3-Fold Goal of the National Economy
Sec. 1, Article XII of 1987 Philippine Constitution

More equitable Expanding pro-

distribution of Sustained increase in the amount of ductivity, as the
opportunities, goods and services produced by the key to raising the
income and nation for the benefit of the people quality of life for
wealth. all.

1 2 3
The State shall promote industrialization and full employment

1. It should be based on sound agricultural

development and agrarian reform.

2. It should be through industries that make

full and efficient use of human and natural
resources. Industries should also be
competitive in both domestic and foreign
markets.
Protection of Filipino Enterprises

The State shall protect Filipino enterprises

against unfair foreign competition and
trade practices.
Role of Private Enterprises

Private enterprises, including corporations,

cooperatives, and similar collective
organizations, shall be encouraged to
broaden the base of their ownership.
REGALIAN DOCTRINE
Sec. 2, Article XII of 1987 Philippine Constitution

Imperium
Government authority possessed by the State
which is appropriately embraced in sovereignty.

Dominium
a. The capacity of the State to own and acquire prop-
erty.

b. It refers to lands held by the government in a

proprietary character: can provide for the exploitation
and use of lands and other natural resources.
The following are Owned by the State
Sec. 2, Article XII of 1987 Philippine Constitution

Lands of the public domain:

Waters
Minerals, coals, petroleum, and other mineral oils;
All sources of potential energy;
Fisheries;
Forests or timber;
Wildlife;
Flora and fauna; and
Other natural resources
Alienation of Natural Resources
Sec. 2, Article XII of 1987 Philippine Constitution

General Rule: All natural resources

CANNOT be alienated.

EXCEPTION: Agricultural lands

Exploration, Development and
Utilization of Natural Resources
1. Shall be under the full control and supervision of the State.

2. Means
A. The State may DIRECTLY UNDERTAKE such activities.
B. The State may enter CO-PRODUCTION, JOINT VENTURE or
PRODUCTION SHARING arrangement with
1. Filipino Citizens
2. Corporation or association at least 60% of whose capital is owned
by such citizens

3. Limitations
A. Period: It should not exceed 25 yrs., renewable for not more than 25 yrs.
B. Under terms and conditions as may be provided by law.

4. In case of water rights/water supply/fisheries/industrial uses other than the develop-

ment of water power. The beneficial use may be the measure and limit of the grant.
Small-Scale Utilization of Natural Resources

1. Congress may, by law, authorize small-scale utilization of

natural resources by Filipino citizens

2. Congress may also authorize cooperative fish farming

with priority given to subsistence fishermen and
fishworkers in the rivers, lakes, bays and lagoons.
Large-Scale Exploration, Development and Utiliza-
tion of Minerals/Petroleum/Other Mineral Oils
1. The President may enter into agreements with foreign owned corporations
involving technical or financial assistance for large-scale exploration etc. of
minerals, petroleum, and other mineral oils. These agreements should be in
accordance with the general terms and conditions provided by law.

2. They should be based on the real contributions to economic growth and

general welfare of the country.

3. In the agreements, the State should promote the development and use of local
scientific and technical resources.

4. The President should notify Congress of every contract under this provision
within 30 days from its execution.

5. Management and service contracts are not allowed under this rule.
Protection of Marine Wealth

1. The State shall protect its marine wealth in its

a. Archipelagic waters
b. Territorial sea
c. Exclusive economic zone (EEZ)

2. The State shall reserve its use and enjoyment

exclusively to Filipino citizens.
LANDS OF THE PUBLIC DOMAIN
Sec. 3, Article XII of 1987 Philippine Constitution

Classified into:

Agricultural lands
Forest/timber
Mineral lands
National Parks
Alienable Lands of Public Domain

1. Only agricultural lands are alienable.

2. Agricultural lands may be further classified by

law according to the uses to which they may
be devoted.
Limitations regarding Alienable
Lands of the Public Domain
1. For private corporations or associations
A. They can only hold alienable lands of the public domain BY LEASE
B. Period: Cannot exceed 25 years, renewable for not more than 25 years
C. Area: Lease cannot exceed 1,000 hectares

2. For Filipino citizens

A. Can lease up to 500 hectares
B. Can ACQUIRE not more than 12 hectares by purchase, homestead or
grant
Means by Which Lands of the Public Domain Be-
come Private Land
1. Acquired from government by purchase or grant;

2. Uninterrupted possession by the occupant and his predecessors-in-interest

since
time immemorial; and

3. Open, exclusive, and undisputed possession of ALIENABLE (agricultural) public

Land for a period of 30 years.
A. Upon completion of the requisite period, the land becomes private property
ipso jure without need of any judicial or other sanction.
B. Here, in possession since time immemorial, presumption is that the land was
never part of public domain.
C. In computing 30 years, start from when land was converted to alienable land,
not when it was still forest land
D. Presumption is that land belongs to the State.
Limits of Forest lands and National parks
Sec. 4, Article XII of 1987 Philippine Constitution

Congress shall, as soon as possible, determine by law,

the specific limits of forest lands and national parks,
marking clearly their boundaries on the ground.
Thereafter, such forest lands and national parks shall
be conserved and may not be increased or diminished,
EXCEPT by law. Congress shall provide measures to
prohibit logging in -
A. Endangered forest and
b. Watershed areas
for such period as it may determine.
 ANCESTRAL LANDS
Sec. 5, Article XII of 1987 Philippine Constitution

Protection of Indigenous Cultural Communities

1. The State protects the rights of indigenous cultural communities

to their ancestral lands
A. Subject to Constitutional provisions
B. Subject to national development policies and programs

2. In determining ownership and extent of ancestral domain,

Congress may use customary laws on property rights and relations

3. “ANCESTRAL DOMAIN”
A. It refers to lands which are considered as pertaining to a cultural region
B. This includes lands not yet occupied, such as deep forests.
Ronald, pasok….
 PRIVATE LANDS
Sec. 7, Article XII of 1987 Philippine Constitution

General Rule:

Private lands CAN only be transferred or conveyed to:

A. Filipino citizens
B. Corporations or associations incorporated in the
Philippines, at least 60% of whose capital is owned by
Filipino citizens
 PRIVATE LANDS
Sec. 7, Article XII of 1987 Philippine Constitution

Exceptions:

A. In intestate succession, where an alien heir of a Filipino is

the transferee of private land.

B. A natural born citizen of the Philippines who has lost his

Philippine citizenship may be a transferee of PRIVATE LAND,
subject to limitation provided by law. Hence, land can be used
only for residential purposes. In this case, he only acquires
derivative title.

C. Foreign states may acquire land but only for embassy and
staff residence purposes.
 PRIVATE LANDS
Sec. 7, Article XII of 1987 Philippine Constitution

Filipino citizenship is only required at the time the land is

acquired. Thus, loss of citizenship after acquiring the land
does not deprive ownership.

Restriction against aliens only applies to acquisition of

ownership. Therefore:
A. Aliens may be lessees or usufructuaries' of private lands
B. Aliens may be mortgages of land, as long as they do not
obtain possession thereof and do not bid in the foreclosure sale.

Land tenure is not indispensable to the free exercise of

religious profession and worship. A religious corporation
controlled by non-Filipinos cannot acquire and own land,
even for religious purposes.
Remedies to recover private lands
from disqualified aliens:

1. Escheat proceedings

2. Action for reversion under the Public Land Act

3. An action by the former Filipino owner to recover the land

A. The former pari delicto principle has been abandoned
B. Alien still has the title (didn’t pass it on to one who is qualified)
 Power of Congress
Sec. 10, Article XII of 1987 Philippine Constitution

Congress, upon the recommendation of NEDA, can reserve

to Filipino citizens or to corporations or associations at least
60% of whose capital is owned by such citizens, or such
higher percentage as Congress may prescribe, certain
areas of investment. This may be done when the national
interest dictates.

Congress shall also enact measures to encourage the

formation and operation of enterprises whose capital is
wholly owned by Filipinos.
 National Economy and Patrimony

In the grant of rights, privileges and concessions covering the national

economy and patrimony, the State shall give preference to QUALIFIED Fil-
ipinos.
FRANCHISES FOR PUBLIC UTILITIES
Sec. 11, Article XII of 1987 Philippine Constitution

Power to grant:
1. Congress may directly grant a legislative franchise; or

2. Power to grant franchises may be delegated to appropriate

regulatory agencies and/or LGU’s
 Public Utility

1. In order to be considered as a public utility, and thus

subject to this provision, the undertaking must involve
dealing directly with the public.

2. Thus, a Build-Operate-Transfer grantee is NOT a public

utility. The BOT grantee merely constructs the utility, and it
leases the same to the government. It is the government
which operates the public utility (operation separate from
ownership).
 To whom granted:

1. Filipino Citizens

2. Corporations or associations incorporated in the

Philippines and at least 60% of the capital is owned
by Filipino citizens.
Terms and Conditions:

1. Duration: Not more than 50 years

2. Franchise is NOT exclusive in character

3. Franchise is granted under the condition that it is

subject to amendment, alteration, or repeal by Congress
when the common good so requires.
Margie, pasok…
Participation of Foreign Investors

1. The participation of foreign investors in the govern-

ingbody of any public utility enterprise shall be limited
totheir proportionate share in its capital.

2. Foreigners cannot be appointed as the executive and

managing officers because these positions are
reserved for Filipino citizens.
FORMATION/ORGANIZATION/REGULATION
OF CORPORATIONS
Sec. 16, Article XII of 1987 Philippine Constitution

1. Private Corporations
Congress can only provide for the formation, etc. of
private corporations through a general law.

2. GOCC’s
They may be created by:
a. Special charters in the interest of the common good
and subject to the test of economic viability.

b. By incorporation under the general corporation law.

SPECIAL ECONOMIC POWERS
OF THE GOVERNMENT
Sec. 18, Article XII of 1987 Philippine Constitution

1. Temporary takeover or direction of operations:

A. Conditions
i. National emergency and
ii. When the public interest requires
B. May be used against privately owned public utilities or
businesses affected with public interest.
C. Duration of the takeover: period of emergency
D. Takeover is subject to reasonable terms and conditions
E. No need for just compensation because it is only temporary.
SPECIAL ECONOMIC POWERS
OF THE GOVERNMENT
Sec. 18, Article XII of 1987 Philippine Constitution

2. Nationalization of vital industries:

A. Exercised in the interest of national welfare or defense

B. Involves either:

i. Establishment and operation of vital industries; or

ii. Transfer to public ownership, upon payment of just
compensation, public utilities and other private enterprises to
be operated by the government.
 MONOPOLIES
Sec. 19, Article XII of 1987 Philippine Constitution

1. The Constitution does NOT prohibit the existence of

monopolies.

2. The State may either regulate or prohibit monopolies,

when public interest so requires.

3. Combinations in restraint of trade or unfair competition

are prohibited.
 Filipino Citizenship/Equity Requirements:
1. Exploitation of natural resources
2. Operation of Public Utilities
 Filipino citizens; or
 Corporations incorporated in RP, with 60% Filipino ownership

3. Acquisition of alienable lands of the public domain

 Filipino citizens;
 Corporations incorporated in RP, with 60% Filipino ownership;
 Former natural-born citizens of RP, as transferees, with certain
legal restrictions; and
 Alien heirs as transferees in case of intestate succession.

4. Practice of ALL Professions

 Filipino citizens only (natural persons)
*Congress may, by law, otherwise prescribe
 Filipino Citizenship/Equity Requirements:
5. Mass Media
 Filipino citizens; or
 Corporations incorporated in RP, with 100% Filipino owned
6. Advertising
 Filipino citizens; or
 Corporations incorporated in RP, with 70% Filipino owned
7. Educational institution
 Filipino citizens; or
 Corporations incorporated in RP, with 70% Filipino ownership
 EXCEPT: Schools established by religious groups and mission
boards.
*Congress may, by law, increase Filipino equity requirements for
ALL educational institutions.
8. Other economic activities
Congress may, by law, reserve to Filipino citizens or to corporations 60%
Filipino owned (or even higher) certain investment areas.
Thank you