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ARTICLE XII NATIONAL ECONOMY AND PATRIMONY

SEC. 1. GOALS OF THE NATIONAL ECONOMY


Three-fold goal:
1. More equitable distribution of opportunities, income and wealth;
2. Sustained increase in the amount of goods and services produced by the nation
forthe benefit of the people; and
3. Expanding productivity, as the key to raising the quality of life for all.
The State shall promote industrialization and full employment
1. It should be based on sound agricultural development and agrarian reform
2. 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 an
d 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 collectiv
eorganizations, shall be encouraged to broaden the base of their ownership.
SEC. 2. REGALIAN DOCTRINE
Distinction between Imperium and Dominium
1. Imperium
Government authority possessed by the State which is appropriately embraced inso
vereignty.
2. Dominium
a. The capacity of the State to own and acquire property.b.It refers to lands he
ld by the government in a proprietary character: can provide for the exploitatio
n and use of lands and other natural resources.
Scope:
The following are owned by the State:
1. 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

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 into CO-PRODUCTION, JOINT VENTURE ORPRODUCTION-SHARING ar
rangements with

1.Filipino citizen or

2.Corporation or association at least 60% of whose capital isowned by
such citizens

3. Limitations:
A. Period: It should not exceed 25 years, renewable for not more than 25 years
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
development 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 tosu
bsistence fishermen and fishworkers in the rivers, lakes, bays and lagoons.
Large-Scale Exploration, Development and Utilization of Minerals/Petroleum/OtherM
ineral Oils
1. The President may enter into agreements with foreign owned corporations invol
ving technical or financial assistance for large-scale exploration etc. of miner
als,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 locals
cientific and technical resources.
4. The President should notify Congress of every contract under this provision w
ithin 30days 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
Archipelagic waters
Territorial sea
EEZ
2. The State shall reserve its use and enjoyment exclusively to Filipino citizen
s.
Section 3. LANDS OF THE PUBLIC DOMAIN ARE CLASSIFIED INTO
1. Agricultural
2. Forest/timber
3. Mineral lands
4. National Parks
Note:
1. Classification of public lands is an exclusive prerogative of the Executive D
epartment through the Office of the President, upon recommendation by the DENR.
2. Classification is descriptive of the legal nature of the land and NOT what it
looks like. Thus, the fact that forest land is denuded does not mean it is no l
onger forest land.
Alienable lands of public domain
1. Only agricultural lands are alienable.
2. 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
Note:
A corporation sole is treated like other private corporations for the purpose ofa
cquiring public lands.
2. For Filipino citizens
A. Can lease up to 500 hectares
B. Can ACQUIRE not more than 12 hectares by purchase, homestead or grant
Taking into account the requirements of conservation, ecology and development, a
nd subject to the requirements of agrarian reform, Congress shall determine by l
aw the size of the lands of the public domain which may be acquired, developed,
held or lease and the conditions therefore.
Means by Which Lands of the Public Domain Become Private Land
1. Acquired from government by purchase or grant;
2. Uninterrupted possession by the occupant and his predecessors-in-interest sin
ce 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 ip
so jure without need of any judicial or other sanction.
B. Here, in possession since time immemorial, presumption is that the land was n
ever 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.
Section 4. Congress shall, as soon as possible, determine by law, the specificli
mits of forest lands and national parks, marking clearly their boundaries on the
ground. Thereafter, such forest lands and national parks shall be conserved andm
ay not be increased or diminished, EXCEPT by law. Congress shall providemeasures
to prohibit logging in
a.Endangered forest and
b.Watershed areas
for such period as it may determine.
Section 5. ANCESTRAL LANDS
Protection of Indigenous Cultural Communities
1. The State protects the rights of indigenous cultural communities to their anc
estrallands
A. Subject to Constitutional provisions
B. Subject to national development policies and programs
2. In determining ownership and extent of ancestral domain, Congress may usecust
omary laws on property rights and relations.
3. ANCESTRAL DOMAIN
A. It refers to lands which are considered as pertaining to a cultural reg
ion
B. This includes lands not yet occupied, such as deep forests.
Section 7. PRIVATE LANDS
General rule
1. Private lands CAN only be transferred or conveyed to:
A. Filipino citizens
B. Corporations or associations incorporated in the Philippines, at least 60% ofw
hose capital is owned by Filipino citizens
2. Exceptions
A. In intestate succession, where an alien heir of a Filipino is the transferee
ofprivate land.
B. A natural born citizen of the Philippines who has lost his Philippine citizen
shipmay be a transferee of PRIVATE ALND, subject to limitation provided by law.
Hence, land can be used only for residential purposes. In this case, he only acq
uires derivative title.
C. Foreign states may acquire land but only for embassy and staff residencepurpo
ses.
3. Filipino citizenship is only required at the time the land is acquired. Thus,
loss ofcitizenship after acquiring the land does not deprive ownership.
4. Restriction against aliens only applies to acquisition of ownership. Therefor
e:
A. Aliens may be lessees or usufructuaries of private lands
B. Aliens may be mortgages of land, as long as they do not obtain possessionther
eof and do not bid in the foreclosure sale.
5. Land tenure is not indispensable to the free exercise of religious profession
andworship. A religious corporation controlled by non-Filipinos cannot acquire
and ownland, 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

C. Alien still has the title (didnt pass it on to one who is qualified)
Section 10. NATIONAL ECONOMY AND PATRIMONY/INVESTMENTS
Power of Congress
1. Congress, upon the recommendation of NEDA, can reserve to Filipino citizens o
r tocorporations or associations at least 60% of whose capital is owned by such
citizens,or such higher percentage as Congress may prescribe, certain areas of i
nvestment.This may be done when the national interest dictates.
2. Congress shall also enact measures to encourage the formation and operation o
fenterprises whose capital is wholly owned by Filipinos.
National Economy and Patrimony
In the grant of rights, privileges and concessions covering the national economy
andpatrimony, the State shall give preference to QUALIFIED Filipinos.
Section 11. FRANCHISES FOR PUBLIC UTILITIES
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/orLGUs
Public utility
1. In order to be considered as a public utility, and thus subject to this provi
sion, theundertaking must involve dealing directly with the public.
2. Thus, a Build-Operate-Transfer grantee is NOT a public utility. The BOT grant
eemerely constructs the utility, and it leases the same to the government. It is
thegovernment which operates the public utility (operation separate from owners
hip).
To whom granted:
1. Filipino citizens or
2. Corporations or associations incorporated in the Philippines and at least 60%
of thecapital 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, alte
ration, orrepeal by Congress when the common good so requires.
Participation of Foreign Investors
1. The participation of foreign investors in the governing body of any public ut
ilityenterprise shall be limited to their proportionate share in its capital.
2. Foreigners cannot be appointed as the executive and managing officers because
these positions are reserved for Filipino citizens.
Section 16. FORMATION/ORGANIZATION/REGULATION OF CORPORATIONS
1. Private corporations
Congress can only provide for the formation, etc. of private corporations
through a general law.
2. GOCCs
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.
Sections 18-19. SPECIAL ECONOMIC POWERS OF THE GOVERNMENT
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 affectedwi
th 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.
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 utili
ties and other private enterprises to be operated by thegovernment.
Section 19. MONOPOLIES
1. The Constitution does NOT prohibit the existence of monopolies.
2.The State may either regulate or prohibit monopolies, when public interest sor
equires.3. Combinations in restraint of trade or unfair competition are prohibit
ed.