Article XII

Article XIINational Economy and PatrimonySection 1The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.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.In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership.

National Economy- refers to the entire structure of economic life in a country.National Patrimony - refers primarily to the natural resources of our country which under the Constitution.

Goals of the National Economy:Equity- more equitable distribution of opportunities income and wealth.Growth- sustained increase in the amount of goods and services produced by the nation for the benefit of the people.Productivity- an expanding productivity as the key to raising the quality of life for all, especially the underprivileged.

Strategies to accomplish goals:

To develop self-reliant and independent national economy effectively controlled by Filipino.To promote industrialization and full employment To protect Filipino enterprise against unfair foreign competition and trade practices.To give all economic sectors and regions of the country optimum opportunity to develop To encourage private enterprise, including corporations, cooperative and similar collective organizations to broaden the base of their ownership.Section 2All 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. With the exception of agricultural lands, all other natural resources shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or corporations or associations at least sixtyper centumof 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. In cases of water rights for irrigation, water supply fisheries, or industrial uses other than the development of water power, beneficial use may be the measure and limit of the grant.The State shall protect the nations marine wealth in its archipelagic waters, territorial sea, and exclusive economic zone, and reserve its use and enjoyment exclusively to Filipino citizens.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 fish workers in rivers, lakes, bays, and lagoons.The President may enter into agreements with foreign-owned corporations involving either technical or 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. In such agreements, the State shall promote the development and use of local scientific and technical resources.The President shall notify the Congress of every contract entered into in accordance with this provision, within thirty days from its execution.

the Constitution declares that all lands of the public domain and all other natural resources of the Philippines are owned by the State.

Our Constitution adopts the Regalian doctrine with respect to the natural resources of the country.

Regalian doctrine-A principle in law which means that all natural wealth - agricultural, forest or timber, and mineral lands of the public domain and all other natural resources belong to the state.Objectives of policy on natural resources:

To ensure their conservation for Filipino posterity.To serve as an instrument of national defense, helping prevent extension into the country of foreign control through peaceful economic penetration.To prevent making the Philippines a source of international conflicts with the consequent danger to its internal security and independence.Section 3Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks. Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted. Alienable lands of the public domain shall be limited to agricultural lands. Private corporations or associations may not hold such alienable lands of the public domain except by lease, for a period not exceeding twenty-five years, renewable for not more than twenty-five years, and not to exceed one thousand hectares in area. Citizens of the Philippines may lease not more than five hundred hectares, or acquire not more than twelve hectares thereof, by purchase, homestead, or grant.Taking into account the requirements of conservation, ecology, and development, and subject to the requirements of agrarian reform, the Congress shall determine, by law, the size of lands of the public domain which may be acquired, developed, held, or leased and the conditions therefore.

Classification of lands of the public domain:AgriculturalForest or TimberMineralNational Parks

Basis and rationale of classificationThe classification of lands of the public domain is based on the nature of the land.The rationale for the change is to limit the lands of the public domain which may be alienated to public agricultural lands.Maximum size of landholdings

Individual - the maximum area of public agricultural lands that may be acquired by purchased, homestead or grant is 12 hectares and by lease, 500 hectares

Corporations and associations- the maximum area that may be leased is 1,000 hectares. The lease period shall not exceed 25 years renewable for not more than 25 years.Section 4The 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 nor diminished, except by law. The Congress shall provide for such period as it may determine, measures to prohibit logging in endangered forests and watershed areas.Congress to determine specific limits of forest lands and national parks.

Congress is required:To determine as soon as possible disposition or appropriation of any portion of forest lands and national parks, marking clearly their boundaries on the ground.

To provide, for such period as it may determine, measures to prohibit logging in endangered forests and watershed areas.

Section 5The State, subject to the provisions of this Constitution and national development policies and programs, shall protect the rights of indigenous cultural communities to their ancestral lands to ensure their economic, social, and cultural well-being.The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain.

Protection of rights of indigenous cultural communities to their ancestral lands.

Communal ownership of lands- in protecting the said rights to insure the economic, social and cultural well-being of the indigenous cultural communities.b. Applicability of indigenous customary laws- the Constitution has opened the possible State recognition by means of legislation of the applicability of indigenous customary laws governing property rights or relations, as part of the laws of the land, in determining the ownership and extent of ancestral domain.Section 6The use of property bears a social function, and all economic agents shall contribute to the common good. Individuals and private groups, including corporations, cooperatives, and similar collective organizations, shall have the right to own, establish, and operate economic enterprises, subject to the duty of the State to promote distributive justice and to intervene when the common good so demands.Right to own, established, and operate economic enterprises.

Many economic systems- an organized way in which a state ornationallocatesitsresourcesand apportionsgoods and servicesin the nationalcommunity.b. Free enterprise system- under this system, often called free private enterprise, private individual or associations of persons can own and operate business enterprises risking their own resources and thereby taking the profits or the losses in consequence.Intervention by the State- the struggle for economic advantage by individuals and groups may deviate from pure competition.

Section 7Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain.Private lands- are lands of private ownership. They include those owned by private individuals, corporations, or associations and those owned by the State and municipal corporations which are not intended for public use.Under the Constitution, private lands may be transferred or conveyed to the following:Filipino citizensCorporations and associations at least 60% of the capital of which is owned by Filipino citizens.Aliens but not only in cases of hereditary succession.Natural-born Filipino citizens who have lost their Philippines citizenship subject to limitations provide by the law.

The phrase hereditary succession in Section 7 which enables aliens to acquire private lands should be interpreted to mean intestate succession and not testamentary succession.Otherwise, the prohibition will be for naught and meaningless.

Consequences of violation of prohibition:Restoration of the status quo.Where violation disguised.

Section 8Section 8. Notwithstanding the provisions of Section 7 of this Article, 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.Right of natural-born citizens who have lost their citizenship to acquire private lands.

Whereas, many natural born citizens of the Philippines have migrated to foreign countries, particularly to Hawaii and other states of the United State of America, where they eventually acquired the citizenship of the countries to which they migrated and as a consequence, lost their Philippine citizenship.Whereas, in spite of their new citizenship these former Filipino citizens continue to maintain their filial link with their relatives in the Philippines and feel a close affinity to the Philippines as an identity with our people.

Whereas, thousand s of these former Filipino natural-born citizens expressed a desire to return to the Philippines and reside here permanently so as to be able to spend the remaining years of their lives in the land of their birth and contribute, in whatever way they can towards the development of our country and the well-being of our people.

Whereas, it is in the national interest to give encouragement to this beautiful sentiment of our blood-brothers and to make it possible for them to bring to fruition their expressed desire.

Whereas, it would be necessary to amend the Constitution so as to enable these natural-born citizens of the Philippines to own the land on which they would reside.Section 9Section 9. The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development.Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government.Independent economic and planning agency headed by the President to be established.

Need for a central economic planning body.Features and functions.National Economic and Development Authority (NEDA)

Section 10The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixtyper centumof whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities.

Certain conditions:There is a recommendation by the economic and planning agency (NEDA).The national interest dictates.

Existing laws limiting certain activities to Filipino citizens or corporations:Operation of rural banks,Engaging in the retail trade business,Operation of registered overseas shipping,Engaging in the rice and corn industry,Engaging in tax-free cottage industries,Contracts for the supply of materials, equipment, goods and commodities for the government, andOperation of atomic energy facilities.Regulation of Foreign Investments:Sources of investment.Kinds of investment.Benefits and negative aspects of foreign direct investments.Need for foreign investments in the Philippines.Foreign investments policy.Objective of regulations.

Section 11No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines, at least sixtyper centumof whose capital is owned by such citizens; nor shall such franchise, certificate, or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. 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, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.Franchise -includes any special privilege or right conferred by the State on persons or corporations. It may mean either the:Corporate or primary franchiseSecondary or special franchise

Public Utility- has been described as a business organization which regularly supplies the public with some commodity or service.Public utilities are also known as public service companies.Foreign participation in any utility:InvestmentGoverning body and management

Section 12The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.Adoption of Filipino first policy.Duty of the StateAim of policyDuty of buying public

Filipino first policy-that the Filipinos come before anyone else.

Section 13The 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.Trade Policy- is a policy affecting exports and imports and domestic commerce formulated to achieve specific goals.Promotion of trade policy that serves the general welfare:Trade policy as an implement to achieve specific goals.Paramount objective of trade policy.Benefits from the international trade.Exchange rates of different currencies.Special problems arising form international trade.Section 14The sustained development of a reservoir of national talents consisting of Filipino scientists, entrepreneurs, professionals, managers, high-level technical manpower and skilled workers and craftsmen in all fields shall be promoted by the State. The State shall encourage appropriate technology and regulate its transfer for the national benefit.The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law

Promotion of national talent pool of Filipinos Human resources (people)- are the most critical sources of economic growth. -They are the active factors to produce goods and services needed by the growing economy.Practice of all profession limited to Filipinos.Profession- a calling which requires the passing of an appripriate gowernment board or bar examination.

Appropriate technologyAnother important source of economic growth is technological innovation. The application of new knowledge to the productive process.A growing economy has to accommodate itself to successive changes in technology that raise productivity.

Section 15The Congress shall create an agency to promote the viability and growth of cooperatives as instruments for social justice and economic development.Cooperative- is a type of business unit through which individual members cooperate in providing specific types of services mutual benefit to membership.Cooperatives can serve as a vehicle for attaining a more equitable distribution of wealth by increasing the income purchasing power of the low-income sector of the population and for providing needed services not only for their members, but also for the community in general.They encourage self-management and participation in decision making at the grassroots, as well as a broader based ownership of private enterprise.As a direst expression of the bayanihan spirit of the Filipinos, and with strong government support, the cooperative movement ca contribute substantially to the national development and progress of the country.

Section 16The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations. Government-owned or controlled corporations may be created or established by special charters in the interest of the common good and subject to the test of economic viability.