Political Law (Constitutional Law) – Article XII

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 for the 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.  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

Section 2. REGALIAN DOCTRINE

Distinction between Imperium and Dominium.

1.  Imperium

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

2.  Dominium

  1. The capacity of the State to own and acquire property.
  2. 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.

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

1.  General Rule:  All natural resources CANNOT be alienated

2.  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 OR PRODUCTION-SHARING arrangements with

  1. Filipino citizen or
  2. Corporation or association at least 60% of whose capital is owned 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 to subsistence fishermen and fishworkers in the rivers, lakes, bays and lagoons.

Large-Scale Exploration, Development and Utilization 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

Archipelagic waters

Territorial sea &

EEZ

2.  The State shall reserve its use and enjoyment exclusively to Filipino citizens.

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 Department 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 longer forest land.

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

Note:  A  corporation sole is treated like other private corporations for the purpose of acquiring 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, and subject to the requirements of agrarian reform, Congress shall determine by law 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 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.

Section 4.  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

  1. a.      Endangered forest and
  2. 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 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.

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% of whose capital is owned by Filipino citizens

2.  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 ALND, 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.

3.  Filipino citizenship is only required at the time the land is acquired.  Thus, loss of citizenship after acquiring the land does not deprive ownership.

4.  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.

5.  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)

Section 10.  NATIONAL ECONOMY AND PATRIMONY/INVESTMENTS

Power of Congress

1.  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.

2.  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 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/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 or

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.

Participation of Foreign Investors

1. The participation of foreign investors in the governing body of any public utility enterprise 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.  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.

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 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.

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.

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 so requires.

3.  Combinations in restraint of trade or unfair competition are prohibited.

Filipino citizenship or equity requirements:

 

ACTIVITY REQUIREMENTS                                             CITIZENSHIP AND/OR EQUITY

Exploitation of natural resources                     1.  Filipino citizens; or

2. Corporations incorporated in RP, with 60% Filipino ownership

 

Operation of Public Utilities                              1.  Filipino citizens; or

2. Corporations incorporated in RP, with 60% Filipino ownership

 

Acquisition of alienable lands of the public domain

1.  Filipino citizens;

2. Corporations incorporated in RP, with 60% Filipino ownership;

3.  Former natural-born citizens of RP, as transferees, with certain legal restrictions; and

4.  Alien heirs as transferees in case of intestate succession.

 

Practice of ALL Professions                            Filipino citizens only (natural persons)

*Congress may, by law, otherwise prescribe

 

Mass Media                                                             1.  Filipino citizens; or

2. Corporations incorporated in RP, and 100% Filipino owned

 

Advertising                                                            1.  Filipino citizens; or

2. Corporations incorporated in RP, and 70% Filipino owned.

 

Educational institution                                     1.  Filipino citizens; or

2. Corporations incorporated in RP, with 60% Filipino ownership

EXCEPTSchools established by religious groups and mission boards.

*Congress may, by law, increase Filipino equity requirements for ALL educational institutions.

 

Other economic activities                                Congress may, by law, reserve to Filipino citizens or to corporations 60% Filipino owned (or even higher) certain investment areas.

 

Reference:

Political Law (Constitutional Law) Reviewer & Memory Aid

Ateneo Central Bar Operations 2001

Louie, Carrie, Evelyn, Thel, Gem, Ronald

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About Magz

First of all, I am not a lawyer. I'm a graduate of AB Political Science and went to the College of Law but stopped going to law school for some reasons. I'm a passionate teacher who has been teaching English to speakers of other languages and a person who likes writing and blogging. I lost some important files and software when my computer broke down so the reason I created this website is to preserve the notes, reviewers and digests I collected when I was at the law school and at the same time, I want to help out law students who do not have enough time to go and read books in the library.

Posted on December 20, 2011, in Constitutional Law, Political Law and tagged . Bookmark the permalink. 1 Comment.

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