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Legal History

Summary Report of the Preparatory Commission on Constitutional Reforms 4. Restrictions on Land Ownership
30 million hectares of land are public and private
I.Preface The bulk of the private lands are a. Agricultural b. Residential
Small portion: a. Commercial b. Industrial
Preparatory Commission on Consitutuonal reform deliberative, non-partisan body for the sole
purpose of evaluating and recommending porposals on the economic provisions of the 5. Plenary Legislative Power
Constitution Advertising industry of education no compelling policy reason to preserve constitutional
restrictions
Threshold questions not specifically addressed COM recomments the responsibility for economic policy in the executive and the Congress
1. appropriations of embodying economic principles Policies are dynamic and therefore cannot be carved in stone and these policies include:
2. WSON these economic principles were to be further detailed in Consti policies a. equity participation
b. management
How the COM conducted its work: c. ownership in economic enterprises
1. collecting data as well as proposals from various sectos d. factors of production are dynamic
2. database was compiled consisting of the three Consti, the Consti of 148 counties, as Give importance to the power given to the Congress and be given flexibility to adopt economic
well as the works of scholars on consti studies and related fields policies that respond to the requirements of the environment
 Consti amendment alone will not solve all the countries economic woes (But maybe some of
Stages for evaluation of specific proposals the woes)
1. COM divided itself into 8 committees for a closer evaluation of spec. Proposals  COM proposal on amendment to adress:
2. COM conducted meeting, gathered statistical and other research data and held 1. prolbem of graft and corruption
consultative hearings 2. government inefficiency
3. Com attempted to reach as many of the different sectors as possible 3. peace and order
4. local government responsiveness
Findings of the COM: But the problem is that all of these are political in character
There is also a transitory problem and Com proposal is to maintain and impose polices that
1. Comparative East Asian Survey should be assumed immediately by the Congress
East Asian Economies approach to foreign investment:
a. mode of regulation is legislative action rather than constitutional mandate II. Antecedents and Overview
b. no provisions prescribing specific citizenship or foreign investment equity ratios similar
to ours 1. Preliminary Work
c. no constitutional restrictions on the development of natural resources, on the top of Nov. 1998 Estrada promulgated EO no. 43 creating Presidential Commission on Constitutional
public utilities and congressional franchises, on investments etc. reforms
d. Economic partners in corporations with the legislative are afforded the flexibility to 2. Mobilization and Operations
modify economic policies Game Plan called for the organization of a Secretariat and the creation of an electronic database
that would store relevant information on constitutional amendment or revision gathered by the
2. The origin and Impact of the Protectionist Tradition Commission and the complete data-gathering before formally scheduling delierations of the Com
The Consti has nationalistic protectionism-3 consti showed this esp. On National resources and on amendments of the Consti.
Patrimony Nation 3. Delimiting the Scope of the Work
History: US colonial policy Estrada requested the PCCt to limit its studies to economic provisions and leave political reform
1. US prohibited large American corporate investments that would compete with US to a ConCon.
2. economic development in Phil would have to be supported by domestic capital 4. The COM process
resorces Identified topics for the Body’s deliberation and of creating COM that would identify and present
consequence: inability to undertake development due to lack of capital the economic provisions and issues regarding these for discussion
1. Exploration, development and utilization of natural resources
3. Capital Resources Requirements 2. land owndership, use and disposition
Infrastructure 3. public utilities and franchises
Includes: 4. trade and competition policy
a. transportation 5. practice of profession and educational institutions
b. communication 6. mass media and advertising
c. power 7. bureaucracy, decentralization and the economy
d. water 8. the amendment process
These infrastructure: Steps they have undergone:
1. enhances economic activity 1. scheduled meeting and identify relevan issues and provisions they would focus on
2. facilitates domestic and foreign trade 2. conduct public hearing and invite resource persons and experts
3. helps our country be globally competitive 3. analyzed and reviewed the available statistical data and deliberated on the different
positions presented to them
4. seek a consensus among its members to cathc up with the economies of our neighbors—increase our growth rates-not possible
5. drating of the COM reports and presentations which was done by the Chairman without increasing investment and acess to capital resources
5. The COM Deliberations and Debates 5. FDI
Re-affirmation of goal and consensus to arrive at a: supplemetary foreign sources
a. considered and well-studied conclusion and recommendations based on the objective a. ODA (Officail Development Assistance)—not enough of this is available for
data us
b. promote the aspiration of doing what would contribute to raising the standard of living b. Loans—problematic because of hight costs and country limits related to
of the Filipino. borrowing
c. Portfolio investments—unreliable because of their dependence on
III. Relevant Provisions constatnly fluctuating market forces subject to the whim of the portfolio
manager
SCOPE OF INQUIRY: d. Foreign direct investments—preferred method of capital supplementation
1. Citizenship Requirements Regalian doctrine and inherent regulatory and supervisory pwer of the State—effective
a. consideration on ownership of land by individuals, ownership and management of mechanisms to assure full protection of the national interest by govt
mass medua a. long term benefils outweigh the perceived disadvantages deriving from amending the
b. relaxation of citizenship requirement to an investment environment economic provisions of the Consti
2. Equity for Foreign Investments b. Fundamental charges in the legal framework—neede to respond to and take
Instead of 60 % change it to 40% advantage of the development in international trade
3.Ambiguity in Language 6. Indications of Economic Data
 ambiguity in language gave rise to controversial policy decision affecting foreign investments Economy underperforming
4. Flexibility in Policy Formulation Nationalistica protectionism and conservation of national patrimony require reviwe and re-
Consti has removed the prerogative to determine and shape national economic policy in line examination
with the changing economic environment. Liberalization
inflexible rules that prevent responsive government action to address problems in the a. promotes country competitiveens
management of economic affairs b. tap foreign capital as means of accelerating economic growth
5. Amendment Process c. assure that gov’t and Congress would havve flexibility to react to the changing
Constituent Assembly v. ConCon eceonomic environment
-swifter and less costly -non partisan, independent and less susceptible to the OPPOSITION TO LIBERALIZATION:
conflict of interest (support from certain sectors) 1. loss of the Filipino patrimoy over the national welath and natural resources which are
6. Other Factors Affecting FDI limited and exhaustible
objections to any amendment of Consti: FI are more concerned with non-consti issues like 2. there are already in place various schemes and legal devices that allow foreign
graft and corruption, peace and order, good public and private governance and availability of investment and participation in these sector and the additional costs of amending the
adequate infrastructure and utilities Consti do not justify the incremental benefits to be derived
3. incremental benefits would be very little given that more importatnt to encouraging
SOCIO-ECONOMIC INDICATORS: foreign investment that Comsti amendment would be other factors such as:
1. Poverty and Infant Mortality a. market size
 Infant mortality—key indicator of national development b. growth rates
Higher rate=higher poverty=higher malnutrition=higher inadequte public health services c. economic stability
due solely to poverty and underdevelopment d. quality of regulatory framework
cruellest mode of population reduction or control e. transparency
2. Population and GDP f. adequate infrastructure
Higher population level and low per capita GDP=strain on family income and governemtn existing policies must be retained until our industries are capable of standing on their own
budgets for social services
Phil—16th most populous SUMMARY OF DISCUSSIONS ON THE VARIOUS SECTORS AND ISSUES BEFORE THE
3. Bank Assets as Sources of Capital and Credit COMMISSION:
nations capacity to attain development—ability to pay for its “cost” 1. Trade and Competition Policy
Costs include capital and credit resources to: Challenge: restructure the economic policy-making framework of the Const with a view to
a. support enterprises that provide employment achieving reconciliation with pragmatic dilemmas presented by a complex and competitive
b. generate income and saving economic environment
c. produce commodities for consumption and trade Response to this task: ensure a more enduring yet flexible consti policy
Low amount of bank assets—reflection of a nation’s ability to generate capital for local 2 fundamental notions:
incestments thru domestic saving of the population a. minimalism-minimal and simplified statement of the principles in the Consti to avoid ambiguity
4. GDS and GDI in intent
GDP—value of all goods produced and services undertaken locally b. transference-leaves to legislation the matter of economic, trade and investment policy
-refelct the rise of fall in the standard of living investment
-affected by the GDI which is related to GDS 2. Public Utilities Franchises and Infrastructure
Infrastructure-backbone of a country’s economic development program
How to enable the counrty to achiece GNP growth rate: succesful implementation of the a. discrimination or unequal treatment of Filipino professionals
government’s infrastructure b. the standard of pay and working conditions are matters that possibly involve
Reason for liberalizing public utilities: need for additional capital and financial flows into the legislative action of government intervention
sector to achieve higher economic growth targets COM also urges court to take positive stpes for the adoption of rules and other guidleines for
How development of infrastructure is achieved: investment in the utilities and franchise sectors opening-up the practice of law.
Major impediment to FI: need to improve our infra since it plays a crucial role in the economic
prospects 6. Land Ownership, Use and Disposition
Incidental benefits to welcoming foreign investors:  out of the 30 million hectares that comprise the Philippines, 15.88 million hectares are non-
a. introduction of technology and management expertise alienable and non-disposable which are primarily forest land and the remaining 14. 12 million
b. broader employment oppotunities are alienable and disposabile. 8.11 million out of this are judicially and administratively titled.
c. healthy competition beneficial to the consumer Titled lands are divided into government-owned land and private land. Private land are
3. Mass Media and Advertising classified according to their use:
due to digitalization and the revolution in information technology, television, a. agriculutral
telecommunications, computers and the internet are converging in ways previously unforseen. b. industrial
arguments in favor of liberalizing mass media nd advertising stressed that the Consti might be c. commercial
too rigid and unresponsive, thus denying filipinos access to technological innovations. d. residential
Different nationality restrictions on mass media impede the possiblity of realizing convergence The COM strongle recommends the Congress, as a condition sine qua non to allowing
and it is uncertain which ration to apply: foreigners to own commercial or industrial land, it shall enact a Land Use Law and designate the
a. 100% local ownership mandated for mass media agency which will have exclusive jurisdiction over matters of land use and classification.
b. 60-40 arrangement for the telecommunications industry Arguments in favor of liberalizing:
These restrictions give rise to: a. increase in investment opportunities
a. lack of capital b. preference of foreign investors to own the land on which they build their factories
b. inaccesibility of management expertise c. increase in job opportunities
c. inability to forge strategic partnership with international media companies d. strengthens commitment of the investor to the enterprise of project
Ramification: opposition to the liberalization:
-competition from foreign journalists and broadcasters could possibly provide the necessary a. fear that Filipinos might lose control of their land
competition to uplift the standard of reportage b. lack of empirical evidence to show that investors will actually bring in investments after
-objectors-liberalizing would allow public opinion be molder by foreigners who may be morivated the lifting of the consti restrictions
by profit and not national interst c. present legislation allows long-term leases of land to foreigners in eco-zones
-our culture is already under attack from the Western values—loss of national identity 7. Natural Resources
-increase in foreign participation would affect the viability of Filipino advertsising firms and stunt  arguments in favor of liberalizing the energy and mining sectors stressed that liberalization
the development of local talent. would:
-the Phil is the only country that has provisions that include advertising in its consti in the whole a. support and creat jobs through the inflow of capital
world b. technology and expertise
4. Educational Institutions removal of consti limitations will not result in total liberaliztion, but merely transfer the
Vital sector, an end in itself and a means to an end regulation of these sectors to Congress
education is the largest single item in the national budget. Maintining a closed system makes Depletion of the tree farming and fisheries sectors have been exacerbated by the lack pf
the financial cost of it upkeep almost exclusively a responsibility of government. planning and technical know-how.
fears of colonial education are unfounded bec conditions prevailing during the colonial era no oppositionL liberalization would legitimize exploitation by foreigners of natural resources and
longer subsist. repatriation of profits.
Globalization has invented the concept of nationalism. a. Energy Sector
no relationship betwenn patriotism or nationalism and the citizenship of owners and performed reasonably well during Ramos period due to the inflow of foreign capital and
administrators of schools. technology that follwoed that President’s program to address power shortage crisis in 1992 and
Constitutional restrictions on foreign control and administraion of educational insittuions deter 93.
the entry of foreign capital and modern facilities and equipment. Development of energy resources will have to supplied by the private sector and foreign
objection to liberalization: fear that foreign participation might influence the education of our capital and will require hard currency, as the main costs for these projects involve the purchase
youth which is vital to the development of a patriotic citezenry. of foreign technology, equipment and expertise.
problem with educational institutions is over-regulation by government that limits the freedom b. Fisheries and Marine Resources
of school adminstrators in pursuing management objectives. Categories of fisheries:
5. Practice of Professions a. Commercial b. Municipal c. Aquaculture
the consti permits foreigners to practice their professions here in the Philippines on the notion Problems of fisheries result from the :
of reciprocity for purposes of evaluating conditions for the transnational practice of professions a. population growth in coastal areas
which is inadequate. b. degradation due to industrial pollution and siltation from deforestation
The 31 laws relating to license professions allow foreign professionals to practice here c. use of habitat-and-fishery-destructive practices that damage coral reef habitats and kill
provided that it is proven that their countries also allow Filipinos to practice our profession in small fish essential for reproduction
their country on terms of absoulute and strict equality. d. absence of a viable master investment plan
Issues related to this:
e. failure to promoto inoovative, ecologically sound projects which will help sustain an while numerous restrictions and regulations pertaining to foreign investment do exist in
rehabilitate marine resources and the environment (local and national levels) various Asian countries, Only in the Phil are these contained in the Consti. This deprives the
 In order to achieve this basic increase, the industry will have to develop: legislature and policy makers of flexibility in altering or modifying these restrictions in
a. increased capacity for its distant water fleets accordance with the economic needs of the country
b. exploit new fishing grounds
c. strenthen policing and surveillance of fishing grounds VII. Other Factors Affecting Economic Growth
d. establush new infrastructure facilities
These requre capital investments that could be supplement or complemented by foreign tech Economic reforms must be accompanied by non-economic reforms such as prevention of
c. Mining Sector graft and corruption, streamlined government service must be examined and strengthened.
 The Philippines ranks among the highest around the world as a nation endowed with rich the key role of bureaucracy and decentralization in development
natural resources however have suffered from stagnation and negative growth for the last years. 5 provisions in the Consti were recommended to be amended:
d. Timber and Forestry resources 1. regarding appointments to the civil service to be based on merits and fitness
Declining and non-secure wood supplied have brought investments in forest industries to a 2. freedom of information
standstill; many industrial plants based on wood closed down, resulting in loss of employment 3. governing public spaces as well as conferring tax raising powers to local government units for
and foreign exchange earnings. purposes of balancing their budgets
Use of addtional foreign technology, expertise and capital should prove beneficial 4. provide for the creation of municipal and provincial police forces
more progressive policy in the management planning of forestry and timber resources 5. mandating the performance of pre-audits on government transactions by the Com. On Audit
development is essential for the sustainable use and rehabilitation of these resources.
8. Amendatory Process VIII. Planning and Policy-Making
EO 43 requires COM not only to study and recommend proposed amendments and/or
revisions to the 1987 Consti but also the manner of implementing the same. proposal of Com. Paderanga nad Virata was to delete “independent” from Article XII sec. 9
COM limited itself to a comparative analysis of advantages and disadvantages between a which referred to NEDA. They argued that an independent economic and panning agency was
ConCon and Constituent assembly. intractable and indeed undesirable due to the reality that economic policy is effective drawn up
Public concerns were considered: only thru close cooperation and implementation i.e. executive and legislative branches
a. transparency proposed the replacement of NEDA with a body similar to the former National Economic
b. degree of public participation Council, as well as the private sector
c. peso-cost Same Commissioners moved to delete or revise Sec. 20 of Article XII which refers to the
d. speed central monetay authority.
9. The Transitory Provision
COM acknowledges that acceptance of its proposed amendments would signal a shift in the IX. Restoring Constitutional Intent
policy framework embodied in the Consti.
to merely amend the Conssti without managing the period of transition would leave intact there have been countries which reduced the number of their investments here because of the
numerous laws implementing restrictions found in the 1987 Consti. Filipino first policy.
One view favored the inclusion in the transitory provision of a grave period to allow for
legislative and regulatory reforms. But this would impose upon Congress the laborious task of X. Conclusion and Recommendations
reviewing the entire legal code for amendments should adoption of the Com’s proposals come to
pass. (see page 429 until last page for this)
 preferred optionL provide a general repealing clause to address these statutory restrictions.

VI. Survey of Asian Constitutions and Regulations

1. Constitutional restrictions
a. No provision in the consti of the developing or neighboring counties contaided specific
restrictions or limitations on foreign investment
b. No provision affecting foreign investment in the areas of advertising, education and the
practice of professions were discovered. Thai-specific provision restricting foreign ownership of
media
c. none of the Asian countries surveyed contained constitutional restrictions of land ownership
by foreigners
2. Legislative and Regulatory Restrictions
COM notes that what are significant are the legal approaches and formulations of policy that
have been adopted with respect to foreign investment in the countries surveyed.
Consistent rule that governments and their legislatures are allowed some degree of flexibility
in regulating economic matters and issues relating to FI
Achieved by placing these mattes at the legislative or policy level rather than constitutional
level.