ARTICLE XII: NATIONAL ECONOMY AND PATRIMONY

Sec. 1
Paragraph 1. Threefold goal of the national economy:
1. More equitable distribution of wealth;
2. Increase of wealth for the benefit of the people; &
3. Increased productivity

● Industrialization as a result of releasing through agrarian reform capital

locked up in land.
● Related to Art. II Sec. 10 of the Constitution on social justice.
● Does not necessarily mean that agricultural development should be
prioritized over industrialization but a flexible and rational relationship
between the 2 as dictated by the common good.
● “Unfair foreign competition and trade practices” does not intend to protect
local inefficiency at the expense of the consuming public.

Section 2. Regalian Doctrine

Public Domain and Regalian Doctrine
Director of Lands v. Kalahi Investments
Mere location does not mean absolute ownership over the affected land or the
located claim. It merely segregates the located land or area from the public domain
by barring other would-be locators from locating the same and appropriating for
themselves the minerals found therein. To rule otherwise would imply that location
is all that is needed to acquire and maintain rights over a located mining claim.
This, we cannot approve or sanction because it is contrary to the intention of the
lawmaker that the locator should faithfully and consistently comply with the
requirements for annual work and improvements in the located mining claims.
Chavez v. PEA
The foreshore and submerged areas of Manila Bay are part of the lands of the
public domain, waters and other natural resources and consequently owned by the
State. As such, foreshore and submerged areas shall not be alienable unless they
are classified as agricultural lands of the public domain. La Bugal-B’laan v. Ramos

Constitution should be read in broad, life-giving strokes. It should not be used to

strangulate economic growth or to serve narrow, parochial interests. Rather, it
should be construed to grant the President and Congress sufficient discretion and
reasonable leeway to enable them to attract foreign investments and expertise, as
well as to secure for our people and our posterity the blessings of prosperity and
peace.
Section 2. Regalian Doctrine
Utilization
Miners v Factoran
The State, in the exercise of its police power in this regard, may not be precluded
by the constitutional restriction on non-impairment of contract from altering,
modifying and amending the mining leases or agreements granted under
Presidential Decree No. 463, as amended, pursuant to Executive Order No. 211.
Police Power, being co-extensive with the necessities of the case and the demands
of public interest; extends to all the vital public needs. The passage of Executive
Order No. 279 which superseded Executive Order No. 211 provided legal basis for
the DENR Secretary to carry into effect the mandate of Article XII, Section 2 of the
1987 Constitution. Alvarez v PICOP
The Presidential Warranty cannot, in any manner, be construed as a contractual
undertaking assuring PICOP of exclusive possession and enjoyment of its
concession areas. Such an interpretation would result in the complete abdication
by the State in favor of PICOP of the sovereign power to control and supervise the
exploration, development and utilization of the natural resources in the area.
Section 2. Lands of the Public Domain
Dir. Of Lands v. IAC
Operation of law not only a right to a grant, but a grant of the Government, for it is
not necessary that a certificate of title should be issued in order that said grant may
be sanctioned by the courts, an application therefore is sufficient.

Sec. 3 LANDS OF THE PUBLIC DOMAIN

Paragraph 1. Public lands are classified as:
1. Agricultural;
2. Forest or timber;
3. Mineral; &
4. National Parks
● By virtue of C.A. 141, the classification and reclassification of public lands is
an exclusive prerogative of the Executive Department and not of the Courts.
In the absence of such classification, the land remains unclassified. (This
concept is in consonance with the Constitutional precepts and the Regalian
Doctrine.)
● Classification of land does not change automatically when the nature of the
land changes. The legal nature may be different from how the land actually
looks like. (Director of Lands v Judge Aquino)
● A land cannot have a mixed classification (e.g. partly mineral, partly
agricultural). (Republic v CA)
● In the application of the Regalian Doctrine, if a person is the owner of an
agricultural land in which minerals are discovered, the State may expropriate
it to enable it to extract the minerals in the exercise of sovereign prerogative.
Said owner is entitled to just compensation. (Republic v CA)
 ● Mangrove swamps or manglares are forest lands as classified by the
Administrative Code. (Director of Forestry v Villareal)
● All lands not appearing to be clearly of private dominion presumably belong
to the State, by incontrovertible evidence, the presumption that the land
subject of an application for registration is alienable and disposable rests
with the applicant. (Republic v TAN Properties, Inc.)
● Rules on the disposition and exploitation of public agricultural lands:
1. Private corporations and associations may not acquire
alienable lands of the public domain.
2. Qualified individuals may acquire a maximum of 12 hectares of
alienable lands of the public domain. (144 hectares under 1935
Constitution and 24 hectares under 1973)
3. Private corporations may hold alienable lands of the public
domain by lease up to 1000 hectares and for 25 years
renewable for another 25 years.
4. Qualified individuals may lease land of the public domain up to
500 hectares.
5. Qualified corporations may acquire private lands only. (applies
to corporation sole)
● Public land owned within the maximum limit of the Constitution in effect at
the time of acquisition may be registered even if it is beyond the new land
limit of the Constitution. (Director of Lands v Intermediate Appellate Court)
● Alienable public land held by a possessor, personally or through his
predecessor in interest, openly, constinuously, and exclusively for 30 years
is converted to private property by prescription, ipso jure. (Director of Lands
v Intermediate Appellate Court) (Ten Forty Realty and Development Corp. v
Cruz)
● Purposes of the constitutional prohibition of private corporations from
acquiring public agricultural lands:
1. To equitably diffuse ownership;
2. To encourage “owner-cultivatorship”; &
3. To prevent recurrence of huge landholdings.(Lausan Ayog v
Judge Cusi)
● The above-mentioned constitutional prohibition has no retroactive
application against corporations with vested right to the land. (Lausan Ayog
v Judge Cuison)
Paragraph 2. Congress shall fix the available lands of the public domain open to
acquisition, exploration, development, and utilization taking into consideration “the
requirements of conservation, ecology, and development subject to the principles
of agrarian reform.”

Section 4
FORESTS & PARKS

1. Congress to determine specific limits of forest lands and national parks

a) To determine as soon as possible by law the specific limits of forest lands and
national parks, marking clearly their boundaries on the ground
b) To provide, for such period as it may determine measures to prohibit logging in
endangered forests and watershed areas. Forest lands and national parks whose
boundaries have been marked as provided by law are to be conserved

2) Prohibition of

logging Section 5

Protection of indigenous communities to their ancestral domain

1. The State protects the rights of indigenous cultural communities to their

ancestral lands

2. In determining ownership and extent of ancestral domain, Congress may use

customary laws on property rights and relations.

ANCESTRAL LAND -Occupied portions of ancestral domain

ANCESTRAL DOMAIN- All lands within and belonging to a cultural region not
strictly occupied

Ancestral lands and ancestral domains are not part of the lands of the
public domain. They are private lands and belong to the ICCs/IPs by native title,
which
is a concept of private land title that existed irrespective of any royal grant from
the State. However, the right of ownership and possession by the ICCs/IPs of
their ancestral domains is a limited form of ownership and does not include the
right to alienate the same. CRUZ V. SEC. OF DENR, 347 SCRA 128 (2000)

Section 6
ENTERPRISE & COMMON GOOD

Article XII, Section 6 of the Constitution says that cooperatives are subject to the
duty of the state to intervene when the common good demands. (La Union Electric
cooperative v. Judge Yaranin [G.R. No. 87001]

Since a franchise is a mere privilege, the exercise of the privilege may

reasonably be burdened with the performance by the grantee of some form of
public service. Under Sec. 6 of Article XII of the Constitution, such privilege use of
property is
subject to the duty of the State to promote distributive justice and to intervene when
the
common good so demands. It is for the common good to grant free air time for the
candidates but even more of the public, particularly the voters, so that they will be
fully
informed of the issues in an election. TELECOM & GMA NETWORKS, INC. V.
COMELEC [G.R. NO. 132922. APRIL 21,1998.]

Free enterprise system – “free private enterprise” persons can own and operate
business enterprises risking their own resources and thereby taking the profits or
the losses in consequence.

SECTION 7
Acquisition of private lands.
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, or for some public
service, or for development of the national wealth.
Private lands may be transferred or conveyed to the following:
1. Filipino Citizens (can both acquire and hold lands of public domain)
2. Corporations and associations at least 60% of the capital of which is owned by
Filipino citizens. (cannot acquire but can hold by modes other than acquisition,
such as lease)
3. Aliens but only in cases of hereditary succession.
4. Natural-born Filipino citizens who have lost their Philippine citizenship subject to
limitations provided by law.

SECTION 8
RIGHT OF NATURAL- BORN CITIZENS WHO HAVE LOST THEIR CITIZENSHIP
TO ACQUIRE PRIVATE LANDS.
WHO MAY ACQUIRE PRIVATE LANDS?
(Natural born who lost citizenship)
The time to determine whether the person acquiring the land is qualified is the time
the right to own it is required and not the time to register ownership. Thus, a foreign
national who, while still a Filipino citizen, acquired land from a vendor who had
complied with the requirements for registration under the Public Land Act (C.A.
141) prior to the purchase, can validly register his title to the land. Republic v. Court
of Appeals, 235, SCRA 567 (1994).
WHY ALLOW THIS?
Those who migrated maintain filial connections
National interest to encourage their nationalistic
sentiment Many desire to return & contribute

SEC. 17 – In times of national emergency, when the public interest so requires, the
state may, during the emergency and under reasonable terms prescribed by it,
temporarily take over or direct the operation of any privately owned public utility or
business affected with public interest.

Note:
Public interest on the occasion of national emergency is the primary
consideration when the government decides to take over.
The power to take over the operation of public utilities is activated only if
congress grants emergency power under article VI.

SEC 18 – The state may, in the of national welfare or defense, established and
operate vital industries and upon payment of just compensation, transfer to public
ownership utilities and other private enterprises to be operated by the government.

Note:
Sec. 18 deals with state ownership of public utilities and industries.
Business affected with public interest, generally speaking means that an
industry for adequate reason is subject to control for public good.

SEC. 19 – The state shall regulate or prohibit monopolies when the public interest
so requires. No combinations in restraint of trade or unfair competition shall be
allowed. Note:
Monopoly – is the simplest form of monopoly exists when there is only one
seller or producer of a product or service for which there are no substitutes.
The operation of monopoly is not entirely banned by the constitution. However, the
state shall regulate them when public interest so requires.

SEC 20 – The congress shall establish an independent central monetary authority,

members of whose governing board must be natural born citizens.

Qualifications of the governing board:

Natural born citizen,
Of known probity, integrity and patriotism,
 Majority shall come from the private sector,
Subject to such qualifications and disabilities as maybe prescribed by law.

SEC 21 – Foreign loans may only be incurred in accordance with law and
regulation of the money authority. Information on foreign loans obtained or
guaranteed by the government shall be available to the public. Restrictions on
contracting foreign laws:

Must be in accordance with laws

Must be in accordance with regulations of the monetary board.
Must be in prior concurrence with the monetary board.

SEC 22. - Acts which circumvent or negate any of the provisions of this article shall
be considered inimical to the national interest and subject to criminal and civil
sanctions, as may be provided by law.