ECONOMIC

PROVISIONS
HERSON S. VALMORES
SMU-LAW
REGALIAN DOCTRINE

 REGALIAN DOCTRINE/THEORY OF JURA REGALIA. “All

lands of the public domain, waters, minerals, coal, petroleum
and other mineral oils, all forces of potential energy,
fisheries, forests or timber, wildlife, flora and fauna, and
other natural resources are OWNED BY THE STATE.”

 Exception: THE CONCEPT OF NATIVE TITLE (as embodied in

the case of Carino v. Insular Government) Lands and domains
held prior to the Spanish conquest under a claim of private
ownership are presumed to have never been public lands and
are private
LANDS OF THE PUBLIC DOMAIN
CLASSIFICATIONS
1. Agricultural lands
2. Forest or timber lands
3. Mineral lands
4. National Parks

Only agricultural lands are alienable which is subject to

the following limitations:
1. Private corporations or associations may not hold such alienable
lands of the public domain except by lease, for a period not
exceeding 25 years, renewable for not more than 25 years, and not
to exceed 1,000 hectares in area.
2. Citizens of the Philippines may lease not more than 500 hectares,
or acquire not more than 12 hectares thereof by purchase,
homestead, or grant.
RULES REGARDING OWNERSHIP OF
LANDS

 LANDS OF THE PUBLIC DOMAIN: Only agricultural lands are ALIENABLE

 Filipino citizens may ACQUIRE not more than 12 hectares by
purchase, homestead or grant
 Filipino citizens may LEASE not more than 500 hectares
 Private corporations or associations may LEASE not exceeding
1,000 hectares

 PRIVATE LANDS: Only Filipino citizens may own private lands in the
Philippines. Exceptions:
 Section 7, Article XII – hereditary succession
 Section 8, Article XII: “A natural-born citizen of the Philippines who
has lost his Philippine citizenship may be a transferee of private
lands, subject to limitations provided by law.” Thus, under Section 5
of the Foreign Investment Act (R.A. 8179), they may be a transferee
of a private land up to a maximum of 5,000 square meters in
URBAN LAND, or three hectares of RURAL LAND for business or
other purposes.”
RULES REGARDING OWNERSHIP OF
LANDS

 LANDS FORMING PART OF THE REPARATION AGREEMENT WITH

JAPAN (ROPONNGI PROPERTY– LANDS OF THE PUBLIC DOMINION
(LAUREL V. GARCIA)

 THE CLASSIFICATION OF PUBLIC LANDS IS AN EXCLUSIVE

PREROGATIVE OF THE EXECUTIVE DEPARTMENT, THROUGH THE
OFFICE OF THE PRESIDENT AND NOT OF THE COURTS. IT IS
THEREFORE ITS CALL TO DETERMINE IF SUCH LANDS OF THE PUBLIC
DOMAIN WILL REMAIN INALIENABLE OR MAY BE DISPOSED OF FOR
PRIVATE OWNERSHIP.
REGALIAN DOCTRINE
OPTIONS AVAILABLE TO THE STATE OF THE EDU OF
NATURAL RESOURCES

1. The State may directly undertake EDU activities

2. It may enter into co-production, joint venture, or
production-sharing agreements with Filipino citizens, or
corporations or associations at least sixty per centum of
whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-
five years, renewable for not more than twenty-five
years, and under such terms and conditions as may be
provided by law.
REGALIAN DOCTRINE

3. The Congress may, by law, allow small-scale utilization of

natural resources by Filipino citizens, as well as
cooperative fish farming, with priority to subsistence
fishermen and fishworkers in rivers, lakes, bays, and
lagoons.

4. The President may enter into agreements with foreign-

owned corporations involving either technical of financial
assistance for large-scale exploration, development, and
utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by
law, based on real contributions to the economic growth
and general welfare of the country.
RULES REGARDING OWNERSHIP OF
LANDS

 “CONTROL” IN THE EDU OF NATURAL RESOURCES. It was ruled in La

Bugal-B’laan Tribal Association v. Ramos that under the FTAA, the foreign
contractor provides capital, technology and technical know-how, and
management expertise while the government, through its agencies (DENR
and Mines and Geosciences Bureau) actively exercises control and
supervision over the entire operation. Moreover, the FTAA is subject to
the following constitutional safeguards:
 It shall be crafted in accordance with the general terms and
conditions set by Congress in a law;
 It is signed by the President who is presumed to have vetted the
contractor and ensured that the terms of the agreement is in
accordance with law; and
 The President shall notify the Congress of any FTAA within 30 days
from its execution.
RULES REGARDING OWNERSHIP OF
LANDS

THE CASE OF CHAVEZ V. AMARI

What is at issue? The Amended Joint Venture Agreement between PEA &
AMARI

1. The payment by Amari to PEA of more than 1.8 billion pesos as

reimbursement of the cost for the reclamation of the 157.84-hectare
Freedom Islands in the Manila Bay, and as a result, ownership of
77.34 hectares thereof will be transferred to Amari;
2. The grant by PEA to Amari of the authority to further reclaim 250
hectares of the Manila Bay with the option to subsequently reclaim
another 350 hectares;
3. The entitlement of Amari to 70% of the reclaimed area, minus 30%
thereof which was earmarked for the common areas.
RULES REGARDING OWNERSHIP OF
LANDS

 LESSON FROM THE CASE OF CHAVEZ V. AMARI

1. Foreshore and submerged areas form part of the public domain. In
that state it is beyond the commerce of man;
2. Lands reclaimed from foreshore and submerged areas form part of
the public domain and are inalienable;
3. Reclaimed lands retain their inherent potential as areas for public
use or public service until there is a formal declaration from the
government to the contrary;
4. Reclaimed lands can only be alienated if it is converted, pursuant to
law, into alienable and disposable land of the public domain and is
declared no longer needed for public service; and
5. Only Filipino citizens could be a transferee of a reclaimed land which
was declared alienable and is released from public use or public
service. Private corporations are barred from being a transferee of a
reclaimed land which meets the foregoing requirements. They may
only be allowed to lease pursuant to Section 3, Article XII of the
Constitution.
 RULES REGARDING OWNERSHIP OF
LANDS

THE CASE OF CHAVEZ V. AMARI

 The 157.84 hectares of reclaimed lands comprising the Freedom Islands,

now covered by certificates of title in the name of PEA, are alienable lands of
the public domain. PEA may lease these lands to private corporations but
may not sell or transfer ownership of these lands to private corporations.
PEA may only sell these lands to Philippine citizens, subject to the
ownership limitations in the 1987 Constitution and existing laws;

 The 592.15 hectares of submerged areas of Manila Bay remain inalienable

natural resources of the public domain until classified as alienable or
disposable lands open to disposition and declared no longer needed for
public service. The government can make such classification and declaration
only after PEA has reclaimed these submerged areas. Only then can these
lands qualify as agricultural lands of the public domain, which are the only
natural resources the government can alienate. In their present state, the
592.15 hectares of submerged areas are inalienable and outside the
commerce of man;
 RULES REGARDING OWNERSHIP OF
LANDS

THE CASE OF CHAVEZ V. AMARI

 Since the Amended JVA seeks to transfer to AMARI, a private corporation,

ownership of 77.34 hectares of the Freedom Islands, such transfer is void for
being contrary to Section 3, Article XII of the 1987 Constitution which prohibits
private corporations from acquiring any kind of alienable land of the public
domain; and

 Since the Amended JVA also seeks to transfer to AMARI ownership of 290.156
hectares of still submerged areas of Manila Bay, such transfer is void for being
contrary to Section 2, Article XII of the 1987 Constitution which prohibits the
alienation of natural resources other than agricultural lands of the public
domain. PEA may reclaim these submerged areas. Thereafter, the government
can classify the reclaimed lands as alienable or disposable, and further declare
them no longer needed for public service. Still, the transfer of such reclaimed
alienable lands of the public domain to AMARI will be void in view of Section 3,
Article XII of the 1987 Constitution which prohibits private corporations from
acquiring any kind of alienable land of the public domain.
OWNERSHIP OF LANDS BY FOREIGNERS:
EXCEPTIONS

 RAMIREZ V. RAMIREZ – G.R. No. L-27952, 15 February 1982

 APPLICATION OF IN PARI DELICTO

 Rellosa v. Gaw Chee Hun, G.R. No. L-1411, 29 September 1953
 Frenzel v. Catito, G.R. No. 143958, 11 July 2003.
 Muller v. Muller, G.R. No. 149615, August 29, 2006
 Cheesman v. Intermediate Appellate Court, G.R. No. 74833, 21 January
1991.
 Mathews v. Taylor G.R. No. 164584, June 22, 2009

 EXCEPTIONS TO THE APPLICATION OF IN PARI DELICTO

 Philipine Banking Corporation v. Lui She, G.R. No. L-17587, 12
September 1967

 MAY A FOREIGNER OWN A CONDOMINIUM UNIT IN THE PHILIPPINES?

 Hulst v. PR Builders, G.R. No. 156364, 25 September 2008
“FILIPINO FIRST” POLICY

 MANILA PRINCE HOTEL – APPLICATION OF SECTION 10, ARTICLE XII

(“In the grant of rights, privileges and concessions covering the national
economy and patrimony, the State shall give preference to qualified
Filipinos.”)

 TANADA V. ANGARA – APPLICATION OF SECTIONS 1 AND 13, ARTICLE

XII (The second paragraph thereof provides:

 “The State shall promote industrialization and full employment based

on sound agricultural development and agrarian reform, through
industries that make full and efficient use of human and natural
resources, and which are competitive in both domestic and foreign
markets. However, the State shall protect Filipino enterprises against
unfair foreign competition and trade practices.”

 “The State shall pursue a trade policy that serves the general welfare
and utilizes all forms and arrangements of exchange on the basis of
equality and reciprocity.”
FILIPINIZED
INDUSTRIES/BUSINESS
 Franchise, certificate or authorization to operate public utilities shall be granted
only to (1) Filipino citizens, or (2) corporations or associations at least 60% of which
capital is owned by Filipino citizens (Section 11, Article XII)
 Such franchise, certificate or authorization shall not be exclusive in character
nor for a longer period than 50 years;
 The grant of such franchise, certificate or authorization shall be subject to
amendment, alteration, or repeal by Congress when the public good so requires;
and
 The State shall encourage equity participation in public utilities by the general
public. The participation of foreign investors in the governing body of any public
utility enterprise shall be limited to their proportionate share in its capital. All
the executive and managing officers of such corporation or association must be
citizens of the Philippines

 A "public utility" is "a business or service engaged in regularly supplying the public
with some commodity or service of public consequence such as electricity, gas,
water, transportation, telephone or telegraph service." As its name indicates, the
term "public utility" implies public use and service to the public. Public use connote
that it is not confined to privileged individuals, but is open to the indefinite public.
The real test by which to judge the character of the use is whether the public may
enjoy it by right or only by permission. If the use is merely optional with the owners,
or the public benefit is merely incidental, it is not a public use. Also, public use is
not synonymous with public interest. The mere fact that a business is regulated for
being imbued with public interest does not automatically classify it as a public
utility (J.G. Summit Holding v. Court of Appeals, G.R. No. 124293, 24 September
2003)
FILIPINIZED
INDUSTRIES/BUSINESS

 House Bill No. 78 was approved on 10 March 2020 by the House of

Representatives on third and final reading which seeks to limit the term
“public utility” to the distribution and transmission of electricity, water
pipeline distribution and sewerage pipelines

 Is the bill in accord with the Constitution?

FILIPINIZED
INDUSTRIES/BUSINESS
 In Wilson P. Gamboa v. Finance Secretary Margarito Teves, et al.,
G.R. No. 176579, 28 June 2011, the Supreme Court ruled that

 Mere legal title is insufficient to meet the 60 percent Filipino-owned

“capital” required in the Constitution. Full beneficial ownership of 60
percent of the outstanding capital stock, coupled with 60 percent of
the voting rights, is required. The legal and beneficial ownership of 60
percent of the outstanding capital stock must rest in the hands of Filipino
nationals in accordance with the constitutional mandate. Otherwise, the
corporation is “considered as non-Philippine nationals.”

 The “Grandfather Rule” was likewise upheld in the same case

 “Compliance with the constitutional limitation(s) on engaging in
nationalized activities must be determined by ascertaining if 60% of the
investing corporation’s outstanding capital stock is owned by “Filipino
citizens”, or as interpreted, by natural or individual Filipino citizens. If
such investing corporation is in turn owned to some extent by another
investing corporation, the same process must be observed. One must not
stop until the citizenships of the individual or natural stockholders of
layer after layer of investing corporations have been established, the very
essence of the Grandfather Rule.”
FILIPINIZED
INDUSTRIES/BUSINESS
 The practice of all professions in the Philippines shall be limited to Filipino
citizens, save in cases prescribed by law (Section 14, Article XII
 “The Congress shall, upon recommendation of the economic and planning
agency, when the national interest dictates, reserve certain areas of
investment to (1) Filipino citizens, or (2) corporations or associations at
least 60% of which capital is owned by Filipino citizens, or such higher
percentage as may be prescribed by Congress (Section 10, Article XII)
 The ownership and management of mass media shall be limited to Filipino
citizens, or to entities wholly-owned and managed by such citizens (Section
11 [1], Article XVI)
 Only Filipino citizens and entities at least 70% of which capital is owned by
Filipino citizens may engage in the advertising industry (Section 11 [2],
Article XVI)
 Other than those established by religious groups and mission boards,
educational institutions shall be owned solely by Filipino citizens or entities
at least 60% of which capital is owned by Filipino citizens. The Congress
may, however, increase Filipino equity participation in all educational
institutions. The control and administration of educational institutions
shall be vested in Filipino citizens (Section 4[2], Article XIV)
 No educational institutions shall be established exclusively for aliens
and no group of aliens shall comprise more than one-third of the
enrolment in any school. This restriction, however, does not apply to
schools established for foreign diplomatic personnel and their
dependents and, unless otherwise provided by law, for other foreign