National Economy and Patrimony

Question 1

What are the goals of the state with regards to National Economy and Patrimony?

Answer 1

Goals

1. More equitable distribution of opportunities, income and wealth
2. Sustained increase in amount of goods and services produced by the nation for the benefit of the people
3. Expanding production as the key to raising the quality of life for all, especially the underprivileged.

Question 2

What is the Regalian Doctrine?

Answer 2

Embodied in the Constitution through:

Sec. 2, Art. XII. 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.

Question 3

The classification of public lands are an exclusive prerogative by what department?

Answer 3

The classification of public lands is an exclusive prerogative of the Executive Department through the Office of the President

[Republic v. Register of Deeds of Quezon, G.R. No. 73974 (1995)]

Question 4

What is the Doctrine of Native Title?

Answer 4

Ownership over native land is already vested on natives even if they do not have formal titles

[Cariño v. Insular Government, 212 U.S. 449 (1909)]

Question 5

What endeavors are limited for filipino citizens or 100% Filipino corporations?

Answer 5

1. Use and
   enjoyment of marine wealth, exclusive to Filipino citizens [Art. XII, Sec. 2, par. 2]

2. Rules on
agricultural lands (Art. XII, Sec. 3) (1) Citizens may lease only < 500 ha. (2) Citizens may acquire by purchase, homestead or grant only < 12 ha.

3. Practice of
   professions, save in cases
   provided by law [Art. XII, Sec. 14(2)]
4. Small-scale utilization of natural resources, as may be provided by law [Art. XII, Sec. 2(3)]

Question 6

What endeavors are limited for filipino citizens, or 60-40 Filipino Corporations?

Answer 6

1. Co-production, Joint venture, and Production sharing agreements over natural resources [Art. XII, Sec. 2(1)] Agreements shall not exceed a period of 25 years renewable for another 25 years
2. Educational Institutions [Art. XIV, Sec. 4(2)] Congress may increase Filipino equity participation.
3. Areas of Investment as Congress may prescribe (Congress may prescribe
   a higher percentage) [Art. XII, Sec. 10]
4. Operation of public utilities [Art. XII, Sec. 11] o Cannot be for longer period than 50 years o Executive and managing officers must be Filipino

Question 7

What endeavors are limited to filipino citizens, or 70-30 Filipino corporations?

Answer 7

Engagement in advertising Industry [Art. XVI, Sec. 11]

Question 8

Can private corporations or associations hold alienable land of public domain?

Answer 8

NO.

The Constitution holds that private corporations or associations may not hold alienable lands of the public domain except by lease, for a period not exceeding 25 years, renewable for not more than 25 years, and not to exceed 1000 ha. in area, [Art. XII, Sec. 3] but the Const. does not specify the capital requirements for such corporations.

Question 9

What are the requirements or rules for a private corporation or association to hold alienable lands of public domain?

Answer 9

Sec 3, Art XII, Constitution

“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.”

Question 10

[iden]

A business or service engaged in regularly supplying the public with some commodity or service of public consequence.

Answer 10

A public utility

[JG Summit Holdings v. CA, G.R. No. 124293 (2000)].

Question 11

What capital is covered by the Constitution limitation of 60% filipino owned corporations?

Answer 11

What “capital” is covered – The 60% requirement applies to both the voting control and the beneficial ownership of the public utility. Therefore, it shall apply uniformly, separately, and across the board to all classes of shares, regardless of nomenclature or category, comprising the capital of the corporation (e.g. 60% of common stock, 60% of preferred voting stock, and 60% of preferred non-voting stock)

[Gamboa v. Teves, G.R. No. 176579 (2012)].

Question 12

Filipino First policy in the Constitution

Answer 12

Art. XII, Sec. 10. 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.

Question 13

What does the term “patrimony” mean in Sec 10, Art XII of the Constitution?

Answer 13

The term “patrimony” pertains to heritage, and given the history of the Manila Hotel, it has become a part of our national economy and patrimony. Thus, the Filipino First policy provision of the Constitution is applicable. Such provision is per se enforceable, and requires no further guidelines or implementing rules or laws for its operation [Manila Prince Hotel v. GSIS, G.R. No. 122156 (1997)].

Question 14

Does the Constitution impose a policy of Filipino monopoly of the economic environment?

Answer 14

NO.

The Constitution does not impose a policy of Filipino monopoly of the economic environment. It does not rule out the entry of foreign investments, goods, and services. While it does not encourage their unlimited entry into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair. The key, as in all economies in the world, is to strike a balance between protecting local businesses and allowing the entry of foreign investments and services

[Tañada v. Angara, G.R. No. 118295 (1997)].

Question 15

[FIB]

Art XII, Sec 12

The State shall promote the preferential use of _____________, _____________ and ____________, and adopt measures that help make them competitive.

Answer 15

Filipino labor;
domestic materials;
locally produced goods

Art. XII, Sec. 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and adopt measures that help make them competitive.

Question 16

[FIB]

Par. 4, Sec. 2Art. XII.

The President may enter into ________ with foreign-owned corporations involving either _________________ for large-scale exploration, development, and utilization of ________________ according to the general terms and conditions provided by law, based on _____________ of the country. In such agreements, the State shall promote the development and use of _____________.

Answer 16

agreements;

technical or financial assistance;

minerals, petroleum, and other mineral oils;

real contributions to the economic growth and general welfare;

local scientific and technical resources

Par. 4, Sec. 2Art. XII.

The President may enter into ________ with foreign-owned corporations involving either _________________ for large-scale exploration, development, and utilization of ________________ according to the general terms and conditions provided by law, based on _____________ of the country. In such agreements, the State shall promote the development and use of _____________.

Question 17

What are the 4 modes with which the State may undertake the exploration, development, and utilization of natural resources?

Answer 17

1. The State may directly undertake such activities;
2. The State may enter into co-production, joint venture or production-sharing agreements with Filipino citizens or qualified corporations;
3. Congress may, by law, allow small-scale utilization of natural resources by Filipino citizens; or
4. For the large-scale exploration, development and utilization of minerals, petroleum and other mineral oils, the President may enter into agreements with foreign-owned corporations involving technical or financial assistance

[La BugalB’Laan v. Ramos, G.R. No. 127882 (Jan. 2004)].

Question 18

What are the requirements of an FTAA (financial and technical assistance agreement) in the 1987 Constitution?

Answer 18

1. Parties: Only the President (in behalf of the State), and only with corporations
2. Size of Activities: Only large-scale exploration, development and utilization
3. Natural Resources Covered: Minerals, petroleum and other mineral oils
4. Scope of Agreements: Involving either
   financial or technical assistance

Question 19

Differentiate an FTAA (financial and technical assistance) in the 1987 Constitution and Service Contract in the 1973 Constitution re parties?

Answer 19

FTAA:
Only the President (in behalf of the State), and only with corporations

Service Contract:
A Filipino citizen, corporation or association with a “foreign person or entity”

Question 20

Differentiate an FTAA (financial and technical assistance) in the 1987 Constitution and Service Contract in the 1973 Constitution re size of parties?

Answer 20

FTAA:
Only exploration, development utilization large-scale

Service Contract:
Contractor provides all necessary services and technology and the requisite financing, performs the exploration work obligations, and assumes all exploration risks

Question 21

Differentiate an FTAA (financial and technical assistance) in the 1987 Constitution and Service Contract in the 1973 Constitution re natural resources covered?

Answer 21

FTAA:
Minerals, petroleum and other mineral oils

Service Contracts:
Virtually the entire range of the country’s natural resources

Question 22

Differentiate an FTAA (financial and technical assistance) in the 1987 Constitution and Service Contract in the 1973 Constitution re scope of agreements?

Answer 22

FTAA:
Involving either financial or technical assistance

Service Contracts:
Contractor provides financial or technical resources, undertakes the exploitation or production of a given resource,or directly manages the productive enterprise, operations of the exploration and exploitation of the resources or the disposition of marketing or resources

Question 23

Are service contracts prohibited?

Answer 23

NO.

A verbalegis interpretation does not support an intended prohibition. The members of the CONCOM used the terms “service contracts” and “financial and technical assistance” interchangeably

[La Bugal-B’laan Tribal Assn. v. Ramos, G.R. No. 127882 (Dec. 2004)].

The following are valid:

1. Financial and Technical Assistance Agreements (FTAA): not a prohibited agreement in the contemplation of the Constitution
2. Philippine Mining Law (RA 7942)
3. Its Implementing Rules and Regulations, insofar as they relate to financial and technical agreements [La Bugal-B’laan Tribal Assn. v. Ramos, supra (Dec. 2004)]

Question 24

What are the limitations in the large scale exploration, development and utilization of minerals, petroleum and other mineral oils?

Answer 24

a) As to Parties. Only the President, in behalf of the State, may enter into these agreements, and only with corporations.
b) As to Size of the Activities. Only large scale exploration, development and utilization is allowed, i.e., very capital-intensive activities.
c) The natural resources subject of the activities is restricted to minerals, petroleum and other mineral oils, the intent being to limit service contracts to those areas where Filipino capital may not be sufficient.
d) Consistency with the Provisions of Statute. The FTAA must be in accordance with the terms and conditions provided by law.
e) The FTAA must be based on real contributions to economic growth and general welfare of the country.
f) The FTAA must contain rudimentary stipulations for the promotions of the development and use of local scientific and technical resources.
g) Notification Requirement. The President shall notify Congress of every FTAA entered into within 30 days from its execution.
h) Scope of the FTAA. Only for agreements involving either financial or technical assistance and does not include “service contracts” and “management or other forms of assistance.”

(La Bugal-B’laan Tribal Association, Inc., GR No. 127882, January 27, 2004)

Question 25

What are the requisites for a valid service contract under the Constitution?

Answer 25

1. A general law that will set standards or uniform terms, conditions, and requirements
2. The president shall be the signatory for the government
3. Within thirty (30) days of the executed agreement, the President shall report it to Congress

[La Bugal-B’laan Tribal Assn. v. Ramos, supra (Dec. 2004)].

Question 26

Who can own Franchise, certificate or any other form of authorization for the operation of public utilities ?

Answer 26

ONLY to citizens of the Philippines, or corporations at least 60% of whose capital is Filipino-owned

[Art. VII, Sec. 11]

Question 27

What is the characteristic (nature) of a franchise?

Answer 27

Nature of a Franchise:

1. It is a privilege not a right
2. Shall NOT be exclusive;
3. Shall NOT be for a period of more than 50 years;
4. Shall be subject to amendment, alteration or repeal by Congress

Question 28

Does Congress have exclusive power to issue franchises?

Answer 28

NO.

Congress does not have the exclusive power to issue franchises. Administrative bodies (i.e. LTFRB, Energy Regulatory Board) may be empowered by law to do so.

[Albano v. Reyes, G.R. No. 83551 (1989)]

Question 29

What constitutes a public utility?

Answer 29

What constitutes a public utility is not the ownership but the use to the public. The Constitution requires a franchise for the operation of public utilities. However, it does not require a franchise before one can own the facilities needed to operate a public utility so long as it does not operate them to serve the public

[Tatad v. Garcia, G.R. No. 114222]

e.g. X Company may own an airline without the need of a franchise. But in operating an air transport business, franchise is required.

Question 30

What are the 4 classification of Lands of the Public Domain?

Answer 30

Lands of the Public Domain are classified into:

1. Agricultural Lands
2. Forest or Timber Lands
3. Mineral Lands
4. National Park

[Art. XII, Sec. 3]

Question 31

Alienable lands of the public domain are limited to what?

Answer 31

Alienable lands of the public domain shall be limited to agricultural lands [Sec. 3, Art. XII].

Question 32

What is foreshore land?

Answer 32

Foreshore land is that part of the land which is between the high and low water, and left dry by the flux and reflux of the tides. It is part of the alienable land of the public domain and may be disposed of only by lease and not otherwise

[Republic v. Imperial, supra].

Question 33

What are the limitations for private corporations or associations re holding alienable lands of public domains?

Answer 33

Private corporations or associations may not hold such alienable lands of public domain except by lease, for a period not exceeding 25 years, and not to exceed 1000 hectares in area.
[Sec. 3, Art. XII]

Question 34

What are the limitations for citizens of the Philippines re holding alienable lands of public domains?

Answer 34

Citizens of the Philippines may lease not more than 500 ha., or acquire not more than 12 hectares thereof by purchase, homestead, or grant

[Sec. 3, Art. XII].

Question 35

What is the general rule re. private lands?

Answer 35

General Rule:

No private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain

[Sec. 7, Art. XII]

Question 36

What are the exceptions to the general rule re private lands?

Answer 36

Exceptions:

1. Hereditary succession [Art. XII, Sec. 7]
2. 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.

[Art. XII, Sec. 8]

Question 37

What is the primary purpose of the constitutional prohibition disqualifying aliens from acquiring lands of the public domain and private lands?

Answer 37

the conservation of the national economy and patrimony

Muller vs. Muller, GR 149615, August 29,2006

Question 38

What is the consequence of sale of private lands to non-citizens?

Answer 38

Any sale or transfer in violation of the prohibition is null and void
[Ong Ching Po v. CA, G.R. No. 113472-73 (1994)]

When a disqualified foreigner later sells it to a qualified owner (e.g. Filipino citizen), the defect is cured. The qualified buyer owns the land

[SeeHalili v. CA, G.R. No. 113538 (1998)]

Question 39

Are foreigners allowed to own condominium units and shares in condominium corporations?

Answer 39

YES.

Foreigners are allowed to own condominium units and shares in condominium corporations up to not more than 40% of the total and outstanding capital stock of a Filipino-owned or controlled corporation.

Under this set up, the ownership of the land is legally separated from the unit itself. The land is owned by a Condominium Corporation and the unit owner is simply a member in this Condominium Corporation. As long as 60% of the members of this Condominium Corporation are Filipinos, the remaining members can be foreigners [Hulst v. PR Builders, G.R. No. 156364(2008)].

Question 40

Is an Agreement of Lease of a parcel of land entered into by a Filipino wife without the consent of the British husband valid?

Answer 40

YES.

Being an alien, the husband is absolutely prohibited from acquiring private and public lands in the Philippines even if he claims that he provided funds for such acquisition. He had and has no capacity or personality to question the subsequent lease of the Boracay property by his wife on the theory that in so doing, he was merely exercising the prerogative of a husband in respect of conjugal property. If the property were to be declared conjugal, this would accord the alien husband a substantial interest and right over the land, as he would then have a decisive vote as to its transfer or disposition. This is a right that the Constitution does not permit him to have.

Matthews vs. Taylor, GR No. 164584, June 22, 2009

Question 41

What is the general rule and exception re the practice of profession in the Philippines?

Answer 41

Sec. 14, Art. XII.

General Rule: The practice of all profession in the Philippines shall be limited to Filipino citizens,

Exception: save in the case prescribed by law.

Question 42

Sec. 6, Art. XII. The use of property bears a ___________, and all economic agents shall contribute to the ________. 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 _____________ and to intervene when ___________.

Answer 42

social function;

common good;

duty of the State to promote distributive justice;

the common good so demands

Sec. 6, Art. XII. 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.

Question 43

[FIB]

Sec. 6, Art. XIII. The State shall apply the principles of ______________, whenever applicable in accordance with law, in the disposition or utilization of other natural resources, including lands of the public domain under lease or concession suitable to agriculture, subject to __________________.

Answer 43

agrarian reform or stewardship;

prior rights, homestead rights of small settlers, and the rights of indigenous communities to their ancestral lands.

Sec. 6, Art. XIII. The State shall apply the principles of agrarian reform or stewardship, whenever applicable in accordance with law, in the disposition or utilization of other natural resources, including lands of the public domain under lease or concession suitable to agriculture, subject to prior rights, homestead rights of small settlers, and the rights of indigenous communities to their ancestral lands.

Question 44

Does the Constitution totally prohibit monopolies?

Answer 44

NO.

The Constitution does not totally prohibit the operation of monopolies. It mandates the State to regulate them when public interest so requires. (EASCO vs. LTFRB, 413 SCRA 75)

Question 45

[FIB]

Sec. 19, Art. XII.

The State shall regulate or prohibit monopolies when the _____________. No combinations in ______________ or ______________ shall be allowed.

Answer 45

public interest so requires;

restraint of trade;

unfair competition

Sec. 19, Art. XII. 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.

Question 46

Is an “exclusivity clause” allowed?

Answer 46

YES.

An “exclusivity clause” in contracts is allowed. An “exclusivity clause” is defined as agreements which prohibit the obligor from engaging in “business” in competition with the obligee.
Contracts requiring exclusivity are not per se void. Each contract must be viewed vis-à-vis all the circumstances surrounding such agreement in deciding whether a restrictive practice should be prohibited as imposing an unreasonable restraint on competition. Restrictions upon trade may be upheld when not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to the party in whose favor it is imposed

[Avon v. Luna, G.R. No. 153674 (2006)]

Question 47

What are the functions of the Central Monetary Authority?

Answer 47

Functions:

1. Provide policy directions in the areas of money, banking, and credit;
2. Supervise the operations of banks;
3. Exercise such regulatory powers as may be provided by law over the operations of finance companies and other institutions performing similar functions

[Sec. 20, Art. XII]

Question 48

What are the qualifications of the governors of the Centarl Monetary Authority?

Answer 48

[Sec. 20, Art. XII]

Qualifications of the Governors:

1. Natural-born Filipino;
2. Known probity, integrity and patriotism;
3. Majority shall come from the private sector Subject to such other qualifications and disabilities as may be provided by law

Question 49

What is the central monetary authority in the Philippines?

Answer 49

Bangko Sentral ng Pilipinas

Until the Congress otherwise provides, the Central Bank of the Philippines operating under existing laws, shall function as the central monetary authority. Currently, the central monetary authority is the Bangko Sentral ng Pilipinas.