TOPIC: NATIONAL ECONOMY AND PATRIMONY

Reporter: Romero , Starski Joseph D.

Questions: 

1. How is National Economy related to National Patrimony? (Efondo)

As defined, National Patrimony consists of the National Wealth and
Possessions of a country derived or acquired from the past or from past
generations and in turn, transmitted to the next and so on successively it
likewise includes All lands of public domain, waters, minerals, coal,
petroleum and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna and all marine wealth in its
archipelagic waters, territorial sea and exclusive economic zone. By the
help of these element of National Patrimony our National Economy
improves. Because using the available Natural resources we are able to
utilize them for the improvement of the different factors of production
which in turn yields to the economic benefit of the citizens and of the
country as a whole.
2. Protection of right of indigenous cultural communities
Article 12, Section 5 of the 1987 Philippine Constitution provides that 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”. With the inclusion of this provision in the
fundamental law of the land we are guaranteed of the safety of our
Indigenous Communities whose Cultural contribution to our Nation is so
valuable. In the midst of the fast phase development in the Social and
Business sectors of our Nation, the Supreme Law of the Land provides
protection to the rights and privileges of the members of this groups. To
strengthen the protection above mentioned. The Republic enacted a Law to
their benefit, REPUBLIC ACT 8371 or also known as the “The Indigenous
Peoples’ Rights Act of 1997” (IPRA LAW). In this particular law several
rights were guaranteed such as:  Right of Ownership, to Develop Lands
and Natural Resources, to Stay in the Territories, in Case of Displacement,
to Safe and Clean Air and Water and many others.
3. What is the function of NEDA? Central Bank?
The National and Economic Development Authority  is in charge of the
macroeconomic forecasting, and policy analysis and research. It provides
high-level policy advice to the Executive and Legislative branches of
government. The Central Bank or the Bangko Sentral ng Pilipinas on the
other hand is the to maintain price stability conducive to a balanced and
sustainable growth of the economy and employment. It shall also promote
and maintain monetary stability and the convertibility of the peso. Take
note however that, Under the New Central Bank Act, the BSP performs
functions such as liquidity management, currency issue, lender of last
resort, financial supervision, management of foreign currency reserves,
and determination of exchange rate policy. It also acts as the banker,
financial advisor, and official depository of the government, its political
subdivisions and instrumentalities, and government-owned and -controlled
corporations. The Bangko Sentral ng Pilipinas provides policy directions in
the areas of money, banking, and credit. It supervises operations of banks
and exercises regulatory powers over nonbank financial institutions with
quasi-banking functions.

4. What is the rationale behind the limitation of the Constitution on co-

production and joint venture agreements? (25-year limitation) (Jaira
Gabriel)
It serves as a limit to private enterprises or corporations in the conduct of
joint venture which legally make use of the National Patrimony and
Resources. Somehow this period also grants ample opportunity for them to
be able to benefit from the conduct of the said venture. At the end of the
day the constitution merely safeguards the exploitation of Natural
Resources so that abusive acts may not prosper and that it will be the
Philippine Nation who shall benefit more.

5. May aliens lease land of public domain? How about private land?
(formaran)
6. Are Aliens absolutely prohibited from owning private lands in the
Philippines? (Baylon)

ANSWERS FOR 6 and 7:

As a rule, foreigners cannot own land in the Philippines. There are,
recognized exceptions on when foreigners can own land in the Philippines:
- ACQUISITION THROUGH HEREDITARY SUCCESSION, (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),
Acquisition by hereditary succession, as opposed to testamentary
succession, simply means that a foreigner can acquire land if he or she is a
legal heir of a Filipino who owned it, and who died without a will (intestate
succession). Articles 978 to 1014 of the Philippine Civil Code enumerate the
order of hereditary or intestate succession as follows:
(1) legitimate children or descendants of the deceased;
(2) in default of above, legitimate parents or ascendant;
(3) illegitimate children or descendants;
(4) surviving spouse;
(5) brothers and sisters;
(6) other collateral relatives within the fifth degree; and
(7) the State.
There is no issue if the foreigner is a legal heir and named in the Last
Will and Testament, but if he or she is not a legal heir, he or she cannot
acquire land even if he or he is given a devise (real property) in the Last
Will and Testament. The Constitutional provision that enables aliens to
acquire private lands does not extend to testamentary succession for
otherwise the prohibition will be meaningless since any alien would be
able to circumvent the prohibition by paying money to a Philippine
landowner in exchange for a devise of a piece of land.
- FOREIGNER WAS A NATURAL -BORN FILIPINO,  natural-born citizen of
the Philippines who has lost his Philippine citizenship may be a transferee
of priivate lands, subject to limitations provided by law. Batas Pambansa
Bilang 185, the law that implements this provision of the Constitution
provides that a natural-born Filipino who lost his Philippine
citizenship can own up to a maximum area of 1,000 square meters, in
the case of urban land, or one hectare in the case of rural land, to be
used by him or her as his residence. In the case of married couples,
one or both may own land as long as the total area of the combined
property shall not go beyond the maximum limit. Republic Act No.
8179, or the Liberalized Foreign Investment Act, also gives former
natural-born Filipinos the right to own private land up to a maximum
area of 5,000 square meters in the case of urban land or three
hectares in the case of rural land to be used by them for business.
- FILIPINOS MARRIED TO FOREIGNERS, Unless they renounced their
Philippine citizenship, Filipinos who married foreigners retain their
citizenship even if they become citizens of their spouses’ country of
 origin. It follows that they can still acquire and own land in the
Philippines. Those who renounce their Philippine citizenship may
reacquire it by becoming a dual citizen. Under Republic Act No. 9225,
or the Dual Citizenship Law of 2003, natural born Filipinos who
eventually lost their Philippine citizenship to another country
because of naturalization may regain their Filipino citizenship after
swearing allegiance to the Philippines. After reacquiring their
Philippine citizenship, they are again considered citizens and may
own real property without any constraints. In many cases, foreigners
married to Filipinos purchase land through their Filipino spouse.
Because of the constitutional prohibition, however, the title to the
land can only be registered to their Filipino spouse. Nevertheless,
foreigners who purchase the land are not prohibited from assigning
their rights and interests in the property to a Filipino
- OWNERSHIP THROUGH A PHILIPPINE CORPORATION. Although,
they will not technically own the land, foreigners may indirectly
purchase and own it through a corporation at least 60% of which is
owned by Filipinos, which is considered a Philippine corporation,
and is therefore qualified to acquire and own land. This explains how
foreigners can purchase condominium units or townhouses in
development projects built on parcels of land owned by
condominium corporations. Foreign investors may also consider
entering into a long-term lease of private lands instead. Subject to
certain conditions, a foreign investor may lease a private land for a
period not exceeding 50 years, renewable once for a period of not
more than 25 years. The debate on whether land ownership in the
Philippines should be liberalized continues to this day, with some
arguing that lifting the nationality restriction on land ownership
would result in more foreign investments while others asserting that
it can result in more landless Filipinos. Until the 1987 Constitution is
amended, only the instances above are the ways foreigners can own
land in the Philippines.
- In general, only Filipino citizens and corporations or partnerships
with least 60% of the shares are owned by Filipinos are entitled to
own or acquire land in the Philippines. Foreigners or non-Philippine
nationals may, however, purchase condominiums, buildings, and
enter into a long-term land lease.
- In the Matthews v. Taylor case, the Supreme Court had to determine
the validity of an Agreement of Lease of a parcel of land in Boracay
entered into by a Filipino wife without the consent of her British
husband. The property was previously acquired by the Filipino wife
and was declared for taxation purposes under her name. When the
property was leased by the Filipino wife to another person, the British
 husband sought the nullification of the contract on two grounds: first, that
he was the actual owner of the property since he provided the funds used
in purchasing the same; and second, that the Filipino wife could not enter
into a valid contract involving the subject property without his consent.
The Supreme Court declared that the British husband has no right to
nullify the Agreement of Lease entered into by his Filipino wife. The
British husband is absolutely prohibited from acquiring private and
public lands in the Philippines. Considering that the Filipino wife was
the "vendee" in the Deed of Sale of the subject property, she
acquired its sole ownership. This is true even if the British husband
claims that he provided the funds for such an acquisition. By
allowing the Filipino wife to enter into such a contract knowing that it
was illegal, no implied trust was created in his favor; no
reimbursement for his expenses can be allowed; and no declaration
can be made that the subject property was part of the
conjugal/community property of the spouses (Matthews v. Taylor,
G.R. No. 164584, June 22, 2009).
- DISSENTING OPINION OF JUSTICE LEONEN IN G.R. No. 202050, July 25,
2016, The law is categorical that no private land shall be transferred,
assigned, or conveyed except to Filipino citizens or former natural-born
citizens, as well as to corporations with at least 60% of the capital owned
by Filipino citizens. Although the sale of private land to an alien is
absolutely prohibited, this is not true with the lease of private land. This
Court has upheld the validity of a lease to an. alien for a reasonable period
of time. Rather, what this Court frowns upon is when the circumstances
attendant to a lease contract are used as a scheme to circumvent the
constitutional prohibition.

7. May a foreigner own assets of a public utility corporation? (Ramos)

- FOREIGN INVESTMENT ACT - Section 7. Foreign investment in
domestic market enterprises: “Non-Philippine nationals may own up
to one hundred percent (100%) of domestic market enterprises
unless foreign ownership therein is prohibited or limited by the
Constitution existing law or the Foreign Investment Negative List
under Section 8 hereof”
- Please also refer to Section 8 of the Foreign Investment Act, List of
Investment Areas Reserved to Philippine Nationals (Foreign
Investment Negative List)

8. What is the nature of the Filipino First Policy? (Candelaria)

- This principle was introduced by the late President Carlos Garcia, he
himself explained it this way:  “This policy is therefore designed to
 regain economic independence. It is a national effort to the end that
Filipinos obtain major and dominant participation in their own
national economy. This we will achieve with malice towards none and
with fairness to all.”. At present this policy is reflected in the
legislation during the different governments that has passed. Our
Domestic Laws reflect the undying commitment of prioritizing
Filipino participation in the development of National Economy, by
maintaining percentage requirements in different aspect of economic
life and corporate participation we are able to ensure that it will the
Filipinos who will benefit in the economic life of the state.
9. Are the provisions under the national economy and patrimony of the
Constitution self-executing provisions? (Candelaria)
- No, there are enabling laws and recent legislation to ensure that the
provisions in the National Economy and Patrimony should operate
and be executed more efficiently. We remain guided by the basic
mandate under the constitution that we should develop a: “self-
reliant”, “independent economy”, “effectively controlled by
Filipinos”. One example was the IPRA LAW as was discussed above.
Since the National Economy develops everyday and as the National
Patrimony daily affects the life of many constituents it is therefore
necessary that legislations shall be made in order to respond to the
needs and sigs of times.
10. This is in relation with the issue of the Lumads: What is your assessment
of the status quo of the indigenous communities in our country? Do you
think  they are properly represented in the government? Are they given
enough safeguards against abuses from different entities, i.e, the military?
(Agapito)
- The provisions for the protection of the Indigenous cultural
communities in the Philippines under the Philippine Constitution
serves as our assurance that they are given the necessary protection
and rights due to them. Different programs of the government are
implemented for their benefit. Furthermore, under Section 3, Article II
of the Constitution: Civilian authority is, at all times, supreme over
the military. The Military therefore remains to be the protector of the
People and the Lumads are citizens if this country as well and they
too enjoys this mandate.
11. Can the public trust doctrine be enforced even against the government
itself? (Toledo)
- Viewed from the perspective of the constituents of the state, the
Public Trust Doctrine can be used to oblige the government to
 ensure that it must do its job of continuing supervision over the
taking and use of appropriated water, and reaffirming the superiority
of public rights over private rights for critical resources. The
government due to its tremendous power in the administration of
laws must ensure that this particular duty is observed for the benefit
of the constituents.
12. Does non-grant of a re-applied franchise or amendment thereto violate the
non-impairment clause of the Constitution? Morales
- No, because the non-impairment clause applies only to contracts
and not to a franchise.

NOTES ON THE NATIONALIZED/ PARTLY NATIONALIZED INDUSTRIES AND THE

FOREIGN INVESTMENTS ACT.

Republic Act No. 7042 or the Foreign Investments Act (“FIA”) liberalized the entry
of foreign investments to the Philippines.
Nationalized and Partially Nationalized Industries are listed on the Negative List.
The Negative List is divided into two lists: List A lists industries where foreign
ownership is limited by the Constitution and specific law, and List B lists
industries where foreign ownership is limited for reasons of security, defense,
risk to health and morals and protection of small- and medium-scale enterprises.
The Ninth Negative List, promulgated on 29 October 2012, provides as follows:

LIST A: FOREIGN OWNERSHIP IS LIMITED BY MANDATE OF THE CONSTITUTION

AND SPECIFIC LAWS

I. Nationalized Industries (No Foreign Equity)

1. Mass media except recording (Art. XVI, Sec. 11 of the Constitution; Presidential
Memorandum dated 04 May 1994)
2. Practice of all professions (Art. XII, Sec. 14 of the Constitution, Sec. 1 of
Republic Act (RA) 5181) Example: Engineering, Law, Medicine
3. Retail trade enterprises with paid-up capital of less than US$2,500,000, except,
that full foreign participation is allowed for retail trade enterprises: (a) with paid-
up capital of US$2,500,000 or more provided that investments for establishing a
store is not less than US$830,000; or (b) specializing in high end or luxury
products, provided that the paid-up capital per store is not less than US$250,000
(Sec. 5 of RA 8762)
4. Cooperatives (Ch. III, Art. 26 of RA 6938)
5. Private security agencies (Sec. 4 of RA 5487)
6. Small-scale mining (Sec. 3 of RA 7076)
7. Utilization of marine resources in archipelagic waters, territorial sea, and
exclusive economic zone as well as small-scale utilization of natural resources in
rivers, lakes, bays, and lagoons (Art. XII, Sec. 2 of the Constitution)
8. Ownership, operation and management of cockpits (Sec. 5 of PD 449)
9. Manufacture, repair, stockpiling and/or distribution of nuclear weapons (Art. II,
Sec. 8 of the Constitution), or biological, chemical and radiological weapons and
anti-personnel mines (various treaties to which the Philippines is a signatory and
conventions supported by the Philippines)
10. Manufacture of firecrackers and other pyrotechnic devices (Sec. 5 of RA 7183)

II. Partially Nationalized Industries (Limited Foreign Equity)

Up to Twenty Percent (20%) Foreign Equity
11. Private radio communications network (RA 3846)

Up to Twenty-Five Percent (25%) Foreign Equity

12. Private recruitment, whether for local or overseas employment (Art. 27 of PD
442)

13. Contracts for the construction and repair of locally-funded public works (Sec.
1 of Commonwealth Act No. 541, Letter of Instruction No. 630) except:
a. Infrastructure/development projects covered in RA 7718; and
b. Projects which are foreign funded or assisted and required to undergo
international competitive bidding (Sec. 2 (a) of RA 7718).
14. Contracts for the construction of defense-related structures (Sec. 1 of CA 541)

Up to Thirty Percent (30%) Foreign Equity

15. Advertising (Art. XVI, Sec. 11 of the Constitution)

Up to Forty Percent (40%) Foreign Equity

16. Exploration, development and utilization of natural resources, except, that full
foreign participation is allowed through financial or technical assistance
agreement with the President (Art. XII, Sec. 2 of the Constitution) – this includes
mining

17. Ownership of private lands (Art. XII, Sec. 7 of the Constitution; Ch. 5, Sec. 22
of CA 141; Sec. 4 of RA 9182)

18. Operation and management of public utilities (Art. XII, Sec. 11 of the
Constitution; Sec. 16 of CA 146) – such as (but not limited to) the following:

a. Telecommunications
b. domestic public transportation
c. logistics
d. operation of toll roads
e. transmission and distribution of electricity

19. Ownership/establishment and administration of educational institutions (Art.

XIV, Sec. 4 of the Constitution)

20. Culture, production, milling, processing, trading except retailing, of rice and
corn and acquiring, by barter, purchase or otherwise, rice and corn and the by-
products thereof (Sec. 5 of PD 194), except, that full foreign participation is
allowed provided that within the 30-year period from start of operation, the
foreign investor shall divest a minimum of 60 percent of their equity to Filipino
citizens (Sec. 5 of PD 194; NFA Council Resolution No. 193 s. 1998)

21. Contracts for the supply of materials, goods and commodities to government-
owned or controlled corporation, company, agency or municipal corporation (Sec.
1 of RA 5183)

22. Project proponent and facility operator of a Build-Operate-Transfer Project

requiring a public utilities franchise (Art. XII, Sec. 11 of the Constitution; Sec. 2 (a)
of RA 7718)

23. Operation of deep sea commercial fishing vessels (Sec. 27 of RA 8550)

24. Adjustment companies (Sec. 323 of PD 612 as amended by PD 1814)

25. Ownership of condominium units where the common areas in the

condominium project are co-owned by the owners of the separate units or owned
by a corporation (Sec. 5 of RA 4726)

Up to Forty-Nine Percent (49%) Foreign Equity

26. Lending companies (Sec. 6 of RA 9474)

Up to Sixty Percent (60%) Foreign Equity

27. Financing companies regulated by the SEC (Sec. 6 of RA 5980 as amended by

RA 8556), provided that, no foreign national may be allowed to own stock in
lending companies, financing companies or investment houses unless the
country of which he is a national accords the same reciprocal rights to Filipinos
(Sec. 6 of RA 9474; Sec. 6 of RA 5980 as amended by RA 8556)
28. Investment houses regulated by the SEC (Sec. 5 of PD 129 as amended by RA
8366), provided that, no foreign national may be allowed to own stock in lending
companies, financing companies or investment houses unless the country of
which he is a national accords the same reciprocal rights to Filipinos (Sec. 6 of
RA 9474; PD 129 as amended by RA 8366)

LIST B: FOREIGN OWNERSHIP IS LIMITED FOR REASONS OF SECURITY,

DEFENSE, RISK TO HEALTH AND MORALS AND PROTECTION OF SMALL- AND
MEDIUM-SCALE ENTERPRISES

Up to Forty Percent (40%) Foreign Equity

1. Manufacture, repair, storage, and/or distribution of products and/or ingredients

requiring Philippine National Police (PNP) clearance:

a. Firearms (handguns to shotguns), parts of firearms and ammunition therefore,

instruments or implements used or intended to be used in the manufacture of
firearms
b. Gunpowder
c. Dynamite
d. Blasting supplies
e. Ingredients used in making explosives:

i. Chlorates of potassium and sodium

ii. Nitrates of ammonium, potassium, sodium barium, copper (11), lead (11),
calcium and cuprite
iii. Nitric acid
iv. Nitrocellulose
v. Perchlorates of ammonium, potassium and sodium
vi. Dinitrocellulose
vii. Glycerol
viii. Amorphous phosphorus
ix. Hydrogen peroxide
x. Strontium nitrate powder
xi. Toluene

f. Telescopic sights, sniper scope and other similar devices

However, the manufacture or repair of these items may be authorized by the Chief
of the PNP to non-Philippine nationals; Provided that a substantial percentage of
output, as determined by the said agency, is exported. Provided further that the
extent of foreign equity ownership allowed shall be specified in the said
authority/clearance (RA 7042 as amended by RA 8179)

2. Manufacture, repair, storage and/or distribution of products requiring

Department of National Defense (DND) clearance:

a. Guns and ammunition for warfare

b. Military ordinance and parts thereof (e.g., torpedoes, depth charges, bombs,
grenades, missiles)
c. Gunnery, bombing and fire control systems and components
d. Guided missiles/missile systems and components
e. Tactical aircraft (fixed and rotary-winged), parts and components thereof
f. Space vehicles and component systems
g. Combat vessels (air, land and naval) and auxiliaries
h. Weapons repair and maintenance equipment
i. Military communications equipment
j. Night vision equipment
k. Stimulated coherent radiation devices, components and accessories
l. Armament training devices
m. Others as may be determined by the Secretary of the DND
However, the manufacture or repair of these items may be authorized by the
Secretary of National Defense to non-Philippine nationals; Provided that a
substantial percentage of output, as determined by the said agency, is exported.
Provided further that the extent of foreign equity ownership allowed shall be
specified in the said authority/clearance (RA 7042 as amended by RA 8179).

3. Manufacture and distribution of dangerous drugs (RA 7042 as amended by RA

8179)

4. Sauna and steam bathhouses, massage clinics and other like activities
regulated by law because of risks posed to public health and morals (RA 7042 as
amended by RA 8179)

5. All forms of gambling (including casinos), except those covered by investment

agreements with PAGCOR pursuant to RA 9487 (RA 7042 as amended by RA 8179)

6. Domestic market enterprises with paid-in equity capital of less than the
equivalent of US$200,000 (RA 7042 as amended by RA 8179)

7. Domestic market enterprises which involve advanced technology or employ at

least fifty (50) direct employees with paid-in equity capital of less than the
equivalent of US$100,000 (RA 7042 as amended by RA 8179)

OTHER INDUSTRIES WITH LIMITED FOREIGN OWNERSHIP ALLOWED

Up to Forty Percent (40%) Foreign Equity

1. Exploration, development and utilization of renewable energy resources and

actual operation of renewable energy systems or facilities (Section 19, B. of Rule
6, Part IV of Department of Energy Circular No. DC2009-05-0008)

2. Foreign individuals and non-bank corporations can only own up to 40% of the
voting stock of a domestic bank (Section 11, GBL) while foreign banks can own
up to 60% of the voting stock of only one domestic bank (Section 2, Republic Act
No. 7721 or An Act Liberalizing the Entry and Scope of Operations of Foreign
Banks in the Philippines and for Other Purposes)

In connection with the Negative List, the distinction must be made between an
Export Enterprise and a Domestic Market Enterprise.

An Export Enterprise is (i) a manufacturer, processor or service enterprise that

exports 60% or more of its output, or (b) a trader that purchases products
domestically and exports 60% or more of such purchases. On the other hand, a
Domestic Market Enterprise is (i) an enterprise that produces goods for sale, or
renders service or otherwise engages in any business in the Philippines, or (ii) an
enterprise that exports less than 60% of its output.

As a general rule, there are no restrictions on extent of foreign ownership of

Export Enterprises. In Domestic Market Enterprises, foreigners can invest as
much as 100% equity except in areas included in the Negative List. Note that a
foreign entity may own more than 40% of a Domestic Market Enterprise only if the
paid-in capital of the enterprise is at least US$200,000.00. This minimum is
reduced to US$100,000.00 if the Domestic Market enterprise involves advanced
technology or employs at least 50 employees.