Natural Resources
Notes and Digests
ARTICLE XII
NATIONAL ECONOMY AND PATRIMONY
Section 1. The 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.
DISCUSSION:
The term “industrialization and full employment based on
sound agricultural development and agrarian reform” gives the
impression that industrialization cannot take off until
agricultural and agrarian development has been achieved.
However, the intent of the Constitutional Commission was
clear. What is envisioned by the provision is not necessarily
agriculturally-related industrialization but rather
industrialization that is the result of releasing locked up capital
through agrarian reform.
This therefore, is necessarily related to the subject of social
justice. Moreover, the policy does not mean a hard-bound rule
that agricultural development must have priority over
industrialization. What is envisioned is a flexible and rational
relationship between the two as dictated by the common good.
Section 2. All 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 sixty
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per centum of 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 nation’s 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
fishworkers 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.
DISCUSSION:
In public law, a distinction is made between Imperium and
dominium. Imperium is the government authority possessed by
the State expressed in the concept of Sovereignty. Dominium
is the capacity of the State to own or acquire property. This term
was the foundation for the early Spanish decrees embracing the
feudal theory of Jura Regalia.
Q: What is Jura Regalia?
A: It is the view that all lands belong to the Crown. It is also the
foundation of the first sentence of Section 2.
As adopted in a republican system, the concept of Jura Regalia
has been stripped of its royal overtones and now it is the view
that all lands are now owned by the State.
It is important to note however, that when the regalian doctrine
was introduced into the Philippines by colonizers, the
colonizers did not intend to strip the natives of their ownership
of the lands already belonging to them.
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As provided for in the case of Cariño v. Insular Government,
it was held that dating back as testimony or memory goes, the
lands held by individuals under a claim of private ownership
will be presumed to have been held in the same way before the
Spanish Conquest and was never converted to public land.
Q: What are the limitations on Dominium?
A: While dominium necessarily includes the power to alienate
what is owned, Section 2, following the lead of earlier
constitutions, limits the power of the State to alienate the natural
resourced of the public domain. Only agricultural lands of the
public domain may be alienated. All other natural resources
may not be.
Q: What are lands of the public domain?
A: Lands 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.
Q: What is the reason why natural resources are prohibited
from being alienated?
A: Natural resources, particularly the mineral resources which
constituted a great source of wealth, belonged not only to the
generation then but also to the succeeding generations and
consequently should be conserved for them.
There is the fear that, if the freeholds system was adopted, some
of the mineral lands after they had become private property
through the grant of a patent might eventually get into the
ownership or control of foreigners to the prejudice of Filipino
posterity. For there was no prohibition in the draft against the
transfer or assignment to aliens and foreigners of private
mineral lands.
Q: With regard to natural resources other than agricultural
land, who may participate in their exploration, development
and utilization?
A: Only Filipinos and Filipino corporations may engage in the
development and utilization of these natural resources.
The reason for the limitation is that if our natural resources, our
sources of power and energy, our public lands, and our public
utilities, the material basis of the nation's existence, would be in
the hands of aliens over whom the Philippine Government does
not have complete control, the Filipinos may soon find
themselves deprived of their patrimony and living as it were, in
a house that no longer belongs to them.
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Q: If natural resources, except agricultural land, cannot be
alienated, how may they be explored, developed, or utilized?
A: It would be through direct undertaking of activities by the
State or co-production, joint venture, or production-sharing
agreements with the State.
Note:
There are two levels of control that must be considered:
(a) The first level is the control over the corporation
which may engage with the State in “co-production,
joint venture, or production-sharing agreements.”
If individuals, they must be Filipino Citizens; if
corporations, the ownership must be 60% Filipino.
(b) The second level is control of the “co-production,
joint venture, or production-sharing” operation.
This must be under the full control and supervision of
the State.
The state must always have some control of the exploration,
development and utilization even if the individual or
corporation engaged in the operation is Filipino.
Q: Suppose a juridical entity is given the power to exploit
natural resources and, of course, there are decisions made
by the governing board of that juridical entity, can the State
change the decisions of the governing board of that entity
based on the words "full control.”?
A: If the decision is within the context of the contract, the State
cannot violate the laws of the land.
Note:
Another limitation is that agreements for the exploitation of the
natural resources can have a life of only 25 years. This period
is considered to be a reasonable time to attract capital, local and
foreign and to enable them to recover their investment and make
a profit.
Other limitations:
1. A strict rile is imposed regarding the use and
enjoyment of the nation’s marine wealth in its
archipelagic waters, territorial sea, and exclusive
economic zone.
2. A special provision was made in favor of subsistence
fishermen and fish workers, which allow small-scale
utilization of natural resources by Filipino Citizens, as
well as cooperative fish farming.
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3. A limitation on service contracts is imposed. Service
contracts under the 1973 Constitution and the
implementing decree were generally regarded in the
Constitutional Commission as means of
circumventing the prohibitions of the Constitution.
For this reason, the new provision avoids the use of the
phrase “service contracts.” It has also put in stronger
safeguards against circumvention.
Section 3. Lands 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 therefor.
DISCUSSION:
Land is the single biggest major resource of the nation. This
section deals with the classification of lands.
Under the 1935 Constitution the classification was:
1. Agricultural lands;
2. Timber lands; and
3. Mineral lands.
Under the 1973 Constitution the classification increased to 7
separate categories:
1. Agricultural;
2. Industrial or commercial;
3. Residential;
4. Resettlement;
5. Mineral;
6. Timber or forest; and
7. Grazing
Under the 1987 Constitution, the classification returned to what
was provided under the 1935 Constitution however, with the
addition of national parks:
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1. Agricultural
2. Forest or timber
3. Mineral
4. National Parks
The prerogative of classifying public lands pertains to
administrative agencies which have been specially tasked by
statutes to do so and the courts will not interfere on matters
which are addressed to the sound discretion of government
and/or quasi-judicial agencies entrusted with the regulation of
activities coming under their special technical knowledge and
training.
Q: Who classifies the lands?
A: In the case of Director of Lands v. Court of Appeals, the
court said that the classification of public lands is an exclusive
prerogative of the Executive Department of the Government
and not of the Courts.
In the absence of such classification, the land remains as
unclassified land until it is released therefrom and rendered
open to disposition. This is also in consonance with the regalian
doctrine that all lands of the public domain belong to the State,
and that the State is the source of any asserted right to
ownership in the land and charged with the conservation of such
patrimony.
Note:
The classification of the land, moreover, is descriptive of the
legal nature of the land and not of what it looks like. Hence, for
instance, the fact that a forest land has been denuded does not
by that fact mean that I has ceased to be forest land.
Furthermore, the classification of the lands are indivisible. It
cannot be half agricultural and half mineral. The classification
must be categorical such that it must be either completely
mineral or completely agricultural.
Q: How are lands of the public domain disposed?
A: The first rule established by Section 3 is that only
agricultural lands of the public domain may be alienated. All
others are inalienable and may be developed and utilized only
according to the rules established in Section 2. Until public
land is classified into alienable land, it remains inalienable.
The second rule is that only public corporations and qualified
individuals may acquire alienable lands of the public domain.
Corporations can hold alienable lands of the public domain only
by lease.
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The third rule establishes the size of the land which may be
acquired by individuals or leased by individuals or
corporations.
The fourth rule limits the discretion of Congress to open public
lands for lease or acquisition.
Note:
It should be noted that the ban on acquisition of alienable public
lands applies to private corporations. It does not apply to public
corporations. The acquisition of alienable public lands therefore
is now open only to public corporations and qualified natural
persons.
Section 4. The 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.
DISCUSSION:
This section delas with two classes of public land. Forests and
Parks. It reflects a concern about forests and the preservation of
national parks. Discretion, however, is given to Congress about
what should be done in terms of delimiting areas and time limits
for exploitation.
Note that these two classifications although dealt together is not
to be understood that logging may also allowed in parks. Once
forest lands are converted into parks, logging may no longer be
permitted in the area,
Reclaimed land is still public land. Before it can be registered
as private property, it must be classified as alienable.
Section 5. The 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.
DISCUSSION:
There are two concepts used in Section 5:
1. Ancestral Lands and
2. Ancestral Domain
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These two concepts are distinct from one another and they are
defined by Section 3(a) and (b) of R.A. 8371 or the Indigenous
People’s Rights Act.
Ancestral Domains — Subject to Section 56 hereof, refer to
all areas generally belonging to ICCs/IPs comprising lands,
inland waters, coastal areas, and natural resources therein,
held under a claim of ownership, occupied or possessed by
ICCs/IPs, by themselves or through their ancestors,
communally or individually since time immemorial,
continuously to the present except when interrupted by war,
force majeure or displacement by force, deceit, stealth or as
a consequence of government projects or any other voluntary
dealings entered into by government and private
individuals/corporations, and which are necessary to ensure
their economic, social and cultural welfare. It shall include
ancestral lands, forests, pasture, residential, agricultural, and
other lands individually owned whether alienable and
disposable or otherwise, hunting grounds, burial grounds,
worship areas, bodies of water, mineral and other natural
resources, and lands which may no longer be exclusively
occupied by ICCs/IPs but from which they traditionally had
access to for their subsistence and traditional activities,
particularly the home ranges of ICCs/IPs who are still
nomadic and/or shifting cultivators;
Ancestral Lands — Subject to Section 56 hereof, refers to
land occupied, possessed and utilized by individuals,
families and clans who are members of the ICCs/IPs since
time immemorial, by themselves or through their
predecessors-in-interest, under claims of individual or
traditional group ownership, continuously, to the present
except when interrupted by war, force majeure or
displacement by force, deceit, stealth, or as a consequence of
government projects and other voluntary dealings entered
into by government and private individuals/corporations,
including, but not limited to, residential lots, rice terraces or
paddies, private forests, swidden farms and tree lots;
Note:
The phrase “ancestral domain” is thus a broader concept than
ancestral lands.
Ancestral Domain is an all-embracing concept. They include
lands which my no longer be exclusively occupied by
indigenous cultural communities but to which they have
traditionally had access for their subsistence and traditional
activities.
Ancestral land is a narrower concept. It refers to those held
under the same conditions as ancestral domain but limited to
lands that are not merely occupied and possessed but are also
utilized by cultural communities under the claim of individual
or traditional group ownership.
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Notes and Digests
R.A. No. 8371, was assailed as unconstitutional on the ground
that it deprived the State of its ownership over lands of the
public domain and the natural resources in them. The vote of
the Supreme Court on the subject, in Cruz v. Secretary? was
equally divided, 7-7 and therefore meant that validity was
upheld.
Section 6. The 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.
DISCUSSION:
Section 6 embodies guidelines which are applicable not only to
the utilization of land but to everything which, in an agrarian
economy, has special relevance to land. The Section in general
is a rejection of laissez faire (Let alone policy) and adopts the
principle of solidarity. Thus, where needed for the common
good, the state may intervene in the operation, e.g., of
cooperatives.
Section 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.
DISCUSSION:
Q: What is the meaning of Private Lands?
A: Private land means any land of private ownership. This
includes both lands owned by private individuals and lands
which are patrimonial property of the State or of municipal
corporations.
Q: Who may acquire private land?
A: The capacity to acquire private land is made dependent upon
the capacity to acquire or hold lands of the public domain.
Private land may be transferred or conveyed only to individuals
or entities "qualified to acquire or hold lands of the public
domain.
Aliens were disqualified from acquiring or in any way holding
lands of the public domain (since the 1935 Constitution
reserved the right to participate in the "disposition, exploitation,
development, or utilization" of all "lands of the public domain"
and "other natural resources of the Philippines" for Filipino
citizens or corporations at least sixty per centum of the capital
of which was owned by Filipinos)
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Note:
The prohibition applies even to a regime of conjugal partnership
in a marriage. Thus, when husband and wife decide to buy land
and the husband is an alien, he does not have the right of a
conjugal partner to consent or not to consent to the disposition
of the land.
Even if it were a fact that said wife had used conjugal funds to
make the acquisition, the considerations just set out militate, on
high constitutional grounds, against recovering and holding the
property so acquired, or any part thereof.
However, 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 .
No. 141) prior to the purchase, can validly register his title to
the land.
There is an exception to be noted. Aliens may acquire private
land in cases of hereditary succession. However, whenever an
alien acquires land by hereditary succession, such alien cannot
renounce the right to inherit in favor of one who is not qualified.
To add, "if land is invalidly transferred to an alien who
subsequently becomes a citizen or transfers it to a citizen, the
flaw in the original transaction is considered cured and the title
of the transferee is rendered valid."
Take further note that the prohibition in the Constitution on
aliens and alien corporations applies only to ownership of
land. It does not extend to all immovable or real property as
defined under Article 415 of the Civil Code, that is, those which
are considered immovable for being attached to land, including
buildings and construction of all kind attached to the soil. Thus,
a foreigner may own a unit in a condominium because the
prohibition on aliens is only from acquiring land. The land on
which the condominium stands is owned by the condominium
corporation.
Q: Can Filipino Corporations own private land?
A: Yes. Provided that corporation must be a Filipino
corporation. In the absence of capital stock, the controlling
membership should be composed of Filipinos.
Q: What is the consequence of conveyances made in
violation of Section 7?
A: The sale of private land made in violation of Section 7 is null
and void. Of this there is no doubt. Thus, an alien who buys a
lot but, knowing that he could not acquire land in the
Philippines, registers it in the name of his wife, may not, upon
the dissolution of the community of property, claim ownership
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Notes and Digests
of the land and reimbursement in equity on the theory that the
wife merely held the property in trust. To claim equity the must
come with clean hands. (Muller v. Muller)

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