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1. NATIONAL
ECONOMY AND
PATRIMONY
ARTICLE XII

2. SECTION 1: The goals of the national are 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 quality of life foe all, especially the
underprivileged.
 Concept of national economy and patrimony. 1. The national economy
refers to the entire structure of economic life in a country. It
encompasses all the activities relating to or concerned with the
production, distribution and consumption of goods and services and
what are called “factors of production”.
 2. The national patrimony refers primarily to the natural resources of the
country which under the Constitution include “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,
fauna,” and “all marine wealth in its archipelagic waters, territorial sea
and exclusive maritime zone,” and “our cultural heritage”.

3. Three-folds goals of the national economy
1. Equity a more equitable distribution of opportunities,
income and wealth. One important aid in promoting
equity is the control of monopoly and the prevention
of unfair competition.
2. Growth sustained increase in the amount of goods
and services produced by the nation for the benefit
of the people. Economic growth is conventionally
measured by the increase of the gross domestic
product(GDP) which is the estimated total value of
all the goods and services produced by the
economy.
3. Productivity an expanding productivity as the key to
raising the quality of life for all especially the
unprivileged. Productivity is the ability, capacity or

4. Strategies to accomplish goals.
In the pursuit of the goals of the national economy, the Constitution mandates
the State in Section 19 of article II and in Section 1 above, aside from other
provisions.
1. To develop a self reliant and independent national economy effectively
controlled by Filipinos.
2. To promote industrialization and full employment.
3. to protect Filipino enterprises against unfair foreign competition and
trade practices.
4. To give all economic sectors and regions of the country optimum
opportunity to develop; and
5. To encourage private enterprises, including corporations, cooperatives
and similar collective organizations to broaden the base of their
ownership.

5. Guidelines in the development of the national economy
 1. Self-reliant economy. In providing for economic
self-reliance, the intent is not to pursue a policy of
economic seclusion from the international economic
community. Self reliance simply means that the
Philippines must have the ability to cope with its
economic problems or to implement its development
programs by the use of its own resources with a
minimum of dependence from foreign governments,
inventors or financing institutions for loans and
investments.
 2. Independent economy. The national economy must
be free from undue foreign control or intervention.
 3. Economy effectively controlled by Filipinos. “The
principal responsibility for development belongs to
Filipino citizens. They must be the principal
determinants as well as the chief

6. Promotion of Industrialization and Full Employment.
1. The importance and urgency in the Philippines. For the
developing country like Philippines, with growth and an a
large population growth and excess labor supply, there is
an inherent advantage in adopting a development
strategy that promotes industrialization and full
employment.
 An important aspect of industrialization is that it
generates a high level of employment.

7. (2) Based on sound agricultural development and agrarian reform.
 agriculture is not the only main source of livelihood.
 agricultural development is important to a low-income country like the Philippines with
a large agricultural base.
 agrarian reform takes on a central position as component of policies for raising
agricultural productivity.
 agriculture as a source of export earnings even assists industry in providing its foreign
exchange needs.
 all the "tiger economies" of East Asia have anchored their industrialization on
agricultural modernization.
(3) Balance between agricultural development and industrialization. The primary shall be
in agriculture and as agricultural growth is being achieved, the emphasis shall
increasingly shift to industrial development.
(4) Adaptation of a flexible economic policy. Agricultural development must be pursued
not at the expense of industrialization but on a complementary basis to insure the
growth of both.

8. Protection of Filipino enterprises against unfair foreign competition and trade practices.
*protection guaranteed is not against foreign competition but unfair foreign trade
practices.
1. Permanent protection not contemplated. But protection is not intended as a
permanent support for "non-infant" enterprises.
a. It perpetuates the "colonial" of Filipinos to prefer foreign goods and not local products.
b. Having attained greater efficiency, the price of its products should fall and, hence,
benefit consumers.
c. It is also prejudicial to some industries that breed imported raw materials for
processing of products for domestic sale or export.
d. Finally, the constitution rejects the principle of absolute protectionism also it would
invite retaliatory measures by other countries.
2. When protection justified. The Philippine government has the exclusive right to define
what shall constitute unfair competition or trade practices justifying protection of
Filipino enterprises.

9. 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, wild life,
flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural
lands, all other natural resource shall not be alienated.
The exploration, development, and utilization of natural
resources shall be under the full controlling and
supervision of the State. The State may directly
undertake such activities, or it may enter into
coproduction, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or
associations at least sixty per centum of whose capital
is owned by the citizen.

10. The constitution declares that all lands of the public
domain and all other natural resources of the Philippines
"are owned by the State." (par.1.) In furtherance the
constitutional policy on natural resources, Section 2
prohibits the transfer or conveyance to aliens of private
lands save in hereditary succession. (Sect. 7, infra.)
1. Our constitution adopts the Regalian Doctrine with
respect to the natural resources of the country. This
doctrine holds that all minerals, coal, etc. found either in
public lands or in private lands belong to the State.
2. Under the doctrine, all lands of the public domain
belong to the State and lands not otherwise appearing
time be clearly within private ownership are presumed
to belong to the State. Unless public land is shown to
have been reclassified as alienable or disposable, and
subsequently alienated by the State, it remains part of
the public domain. Occupation or possession thereof by
a person in the concept of the owner, no matter how
long cannot ripen in ownership.

11. Objectives of policy on natural resources. The adoption of the Regalian
Theory of ownership over the national resources of the country was
deemed
necessary:
1. To ensure their conservation of national defense, helping prevent
the extension into the country of the foreign control through
peaceful economic penetration; and
2. To prevent making the Philippines a source of international
conflicts with the consequent danger to its internal security and
independence.
Alienation of agricultural lands of through public domain.
The State is not authorized to alienate, not even to Filipino citizens,
the natural resources of the country. Only agricultural lands of the
public domain may be alienated (Sects. 2, 3.) and only to Filipino
citizens. Alienation is allowed because other provisions insure their
conservation and development by Filipino citizens (see Secs. 3, 5, 7,
8, 10.) so that such lands may be utilized and developed for the
benefit of Filipinos

12. Exploration development and utilization of natural resources.
1. Former scheme. - before, the exploration, etc. of any of the
natural resources may be granted by the government by
license, concession or lease to citizens of the Philippines or
to corporations or associations at least 60% of the capital of
which is owned by such citizens. The role of the government
was merely to give the permission.
2. More active role by through State. - Section 2 now
requires that the State should take a more active role in the
exploration, development and utilization of natural
resources.
3. Options available to the State. - The State (a) may
undertake such activities directly, or (b) it may enter into co-
production, joint venture or production-sharing agreements
with Filipino citizens or corporations or associations at least
60% of whose capital is owned by such citizens (par. 1.), or
(c) it may enter into agreements with foreign-owned
corporations for large-scale exploration, etc. (par. 4) The old
system whereby the natural resources are explored, etc., by
license or concession without any participation of the State

13. Period of agreement for exploration, etc., of natural
resources.
1. The agreement for the exploration, development, or utilization of any of the
natural resources may be for a period not exceeding twenty-five (25) years,
renewable for not more than twenty-five (25) years. (par. 1). This period is
believed long enough for capital, local and foreign, to realize profit on
investments in natural resources.
2. With respect to water rights for irrigation, water supply, fisheries or industrial
uses, the measure and limit of the grant is their beneficial use. (Ibid.) The period
of twentyfive (25) years is considered not a satisfactory criterion for these
resources as it might be too short in some cases and too long in others.

14. Protection of the marine wealth. The state has the obligation:
1. To protect the nation's marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone (see Art. 1.); and
2. To reserve its use and enjoyment exclusively to Filipino citizens.
Technical or financial assistance agreements with foreign-owned corporations.
*This refers to the third major scheme.
*The Constitution imposes the ff. conditions on such agreements entered into
by the President:
1. Three agreement must involve only either technical or financial
assistance;
2. It must be for a large-scale for exploration, etc. of minerals, petroleum
and other mineral oils;
3. It provisions must break according to the general terms and conditions
provided by Law, based on real contributions to the economic growth and
general welfare of the country;
4. The President shall sequent notify congress of the Congress of the
contract within 30 days from its execution; and
5. In such agreement, the State shall promote the development and use of
local scientific and technical resources.

15. 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 w/c
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 domains except by lease, for a period
exceeding twenty-one years and not 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

16. 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
therefore.
Classifications of lands of the public domain.
Agricultural – land devoted principally to the raising of crops such as rice, sugar, tobacco, coconut,
etc., or for farming
Forest or timber – land producing wood or able to produce wood or if agricultural crops on the same
land will not bring the financial return that timber will or if the same land is needed for protection
purposes;
Mineral – Land in w/c minerals exist in sufficient quantity or quality to justify he necessary
expenditures to be incurred in extracting and utilizing such minerals
National parks – land maintained by the national government as a place of beauty or for public
recreation, like the Rizal Park or forested land reserved from settlement and maintained in its
natural state for public use (as by campers or hunters) or as wildlife refuge. 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 therefore.

17. Basis and rationale of classification
1. The classification of land (1973 Constitution)
a) Agricultural
b) Industrial / commercial
c) Residential
d) Resettlement
e) Mineral
f) Timber of forest
g) Grazing lands
2. The rationale for the change is to limit the lands of
the public domain w/c may be alienated to public
agricultural lands.

18. Determination of size of landholdings and conditions
therefore.
 The constitutions authorizes Congress to determine by
law the size of alienable lands of the public domains w/c
any qualified individual, corporation or association may
develop, hold or acquire or lease and the conditions
therefor.
 According to studies made 42% of the land area of the
Philippines should be forest in order to maintain the
proper ecological balance.
Maximum size of landholdings
• Individual – the maximum area of public agricultural lands
may be acquired by purchase, homestead or grant is 12
hectares (reduced from 24 hectares) and by lease, 500
hectares.
• Corporations and associations – the maximum area that
may be leased 1,000 hectares.
 Lease period shall not exceed 25 years renewable for not
more than 25 years.

19. 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.

20. Grant. Now a mode for acquisition of public lands
Grant alienable and disposable public lands to qualified individual citizens; the
recipient will not pay for the land, although he may be made to shoulder the
cost of titling and surveying.
(1973 constitution; 1984 plebiscite)
REASONS:
1. It is timely step in making vast parcels of idle public lands available to the
less fortunate citizens and in boosting agricultural production in the country.
2. The land grant is designed to benefit only qualified farmers, landless
agricultural workers, and other landless citizens
3. Only individuals w/ considerable resources have been able to acquire public
lands, defeating the constitutional intent to benefit small settlers in the
distributions of public lands to uninformed but deserving citizens w/in a
relatively short period of time.
4. Gives social justice and renders public land distribution more honored in
practice than in theory; it provides safeguard to prevent abuses and ensure
that public lands of suitable areas will go to the really deserving.
5. A simple method of land acquisition has become imperative to legitimize the
tenure of some three million landless agricultural workers and landless
families now occupying or “squatting” on public agricultural production and
economic development.

21. SECTION 5:
The state, subject to the provisions of this Constitutions 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.
Protection of rights of indigenous cultural communities to their
ancestral lands
 Communal ownership of lands
 Applicability of indigenous customary laws.
.-Ancestral domain embraces all lands located within
and generally belong to what is called a “ cultural region”
including lands w/c are not yet strictly occupied.
.- Ancestral land refers to be the occupied portions of
the ancestral domain.

22. SECTION 6:
The use of property bears a social function and all economic
agents shall contribute to the common good. Individual 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.
Right to own, establish and operate economic enterprises
1. Many economic systems
2. Free enterprise system – “free private enterprise”
persons can own and operate business enterprises
risking their own resources and thereby taking the
profits or the losses in consequence.
3. Intervention by the State
4. Regulated capitalism

23. SECTION 7: Save in cases of hereditary successions, 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 of private lands.
Private lands- are lands of private
ownership.
Private lands may be
transferred or conveyed to
the following:
 They include those
owned by private
individuals,
corporations, or
associations and those
owned by the State and
municipal corporations
which are not intended
for public use, or for
some public service, or
for development of the
national wealth.
 1. Filipino Citizens
 2. Corporations and
associations at least 60% of the
capital of which is owned by
Filipino citizens.
 3. Aliens but not only in cases
of hereditary succession.
 4. Natural-born Filipino citizens
who have lost their Philippine
citizenship subject to limitations
provided by law.

24. CONSEQUENCE OF VIOLATION OF PROHIBITION.
RESTORATION OF THE STATUS QUO. A SALE OF LAND IN VIOLATION OF
THE CONSTITUTIONAL PROHIBITION AGAINST THE TRANSFER OF
LANDS TO ALIENS IS VOID. IN OTHERS WORDS, THE SELLER CAN
RECOVER THE LAND FROM THE BUYER (ALIEN) WHO HAS RIGHT TO
BE REIMBURSED WITH THE AMOUNT OF THE PURCHASE PRICE.
WHERE VIOLATION IS DISGUISED. THE PUBLIC POLICY TO CONSERVE
LANDS FOR THE FILIPINOS WOULD BE DEFEATED AND ITS
CONTINUED VIOLATION SANCTIONED, IF THE COURTS WOULD NOT
ORDER THE RESTORATION OF THE PROPERTY.

25. SECTION 8:
Notwithstanding the provisions of Section 7 of this Article,
a natural-born citizen of the Philippines who has lost his
Philippines citizenship may be a transferee of private lands,
subject to limitations provided by law.
RIGHT OF NATURAL- BORN CITIZENS WHO HAVE
LOST THEIR CITIZENSHIP TO ACQUIRE PRIVATE
LANDS.
PERMITS NATURAL-BORN FILIPINOS WHO HAVE
LOST THEIR CITIZENSHIP TO BE A TRANSFEREE OF
PRIVATE LANDS (NOT LANDS OF PUBLIC DOMAIN).

26. SECTION 9:
THE CONGRESS MAY ESTABLISH AN
INDEPENDENT ECONOMIC AND PLANNING AGENCY
HEADED BY THE PRESIDENT, WHICH SHALL, AFTER
CONSULTATIONS WITH THE APPROPRIATE PUBLIC
AGENCIES, VARIOUS PRIVATE SECTORS, AND
LOCAL GOVERNMENT UNITS, RECOMMENDED TO
CONGRESS, AND IMPLEMENT CONTINUING
INTEGRATED AND COORDINATED PROGRAMS AND
POLICIES FOR NATIONAL DEVELOPMENT.
UNTIL THE CONGRESS PROVIDES OTHERWISE,
THE NATIONAL ECONOMIC AND DEVELOPMENT
AUTHORITY SHALL FUNCTION AS THE
INDEPENDENT PLANNING AGENCY OF THE
GOVERNMENT.

27. Independent Economic and Planning agency headed by the President to be
established.
(1) NEED FOR A CENTRAL ECONOMIC PLANNING BODY. Economic
planning is an essential part of development policy. It may cover the whole
economy, or only certain sectors of it, or particular region of a country.
(2) FEATURES AND FUNCTIONS. The following are the features and
functions of the economic and planning agency which Congress is
mandated to establish:
(a) It is independent;
(b) It is a central body for economic planning and policy;
(c) It is headed by the President, making it the highest economic policy
planning organ.
(d) It shall prepare programs and policies for national development;
(e) It shall prepare such programs and policies for approval of Congress;
(f) It shall prepare, recommend, and implement “continuing, integrated, and
coordinated programs and policies”:
(a) continuing because it is a continuous process of preparation, review and
implementation, evaluation and follow-up;
(b) Integrated because it has to present a unified set of policies;
(c) coordinated because cooperation and interaction among all is essential to success
any development plan.
(3) National Economic and Development Authority (NEDA). This body shall
function as the independent planning agency of the government.

28. SECTION 10:
The Congress shall, upon recommendation of
the economic and planning agency, when the
national interest dictates, reserve to citizens of the
Philippines or to corporations or associations at least
sixty per centum of whose capital is owned by such
citizens , or such higher percentage as Congress
may prescribe, certain areas of investments. The
congress shall enact measures hat will encourage
the formation and operation of enterprise whose
capital is wholly-owned by Filipino.

29. 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.
Filipinization of certain areas of investments.
Congress shall reserve citizens of the Philippines or to
corporations or associations at least 60% of whose capital is owned by
such citizens or such higher percentage as Congress may prescribe (up to
100%), certain traditional areas of investments, upon certain conditions:
(1) There is a recommendation by the economic and planning agency ;
and
(2) The national interest so dictates.

30. Existing laws limiting certain activities to Filipino citizens or corporations.
Under the present laws, activities in the following, among others, are limited to
Filipino citizens or corporations wholly- owned by Filipino citizens:
(1) Operation of rural banks:
(2) Engaging in the retail of trade business;
(3) Operations of registered overseas shipping;
(4) Engaging in the rice and corn industry;
(5) Engaging in tax-free cottage industries;
(6) Contracts for the supply of materials, equipment, goods and commodities for
the government; and
(7) Operations of atomics energy facilities.
Regulation of foreign investments
(1) Sources of investment.
(2) Kinds of investment.
(3) Benefits and negative aspects of foreign direct investments.
(4) Need for foreign investment in the Philippines.
(5) Foreign investment policy.
(6) Objective of regulation.

31. SECTION 11:
No franchise, certificate, or any other form of authorization for the
operation of a public utility shall be granted except to citizens of the
Philippines or to corporations or associations organized under the laws of the
Philippines at least sixty per centum of whose capital is owned by such
citizens, nor shall such franchise, certificate, or authorization be exclusive in
character for a longer period than fifty years. Neither shall any such franchise
or right to be granted except under the condition that it shall be subject to
amendment, alteration, or repeal by the Congress when the common good so
requires. The State shall encourage equity participation in public utilities, by
the general public. The participation of foreign investors in the governing
body of any public utility enterprise shall be limited to their proportionate
share in its capital, and all the executive and managing officers of such
corporation or association must be citizens of the Philippines.

32. Meaning of franchise.
FRANCHISE- includes any special privilege or right conferred by the
State on persons or corporations. It may mean either the:
(1)Corporate or primary franchise, which is the right granted to a group
of individuals to exist and act as a corporation;
(2)Secondary or special franchise, which is the right granted to an
individual, or to a corporation after its incorporation, to exercise
certain power and privileges.
Meaning of public Utility.
A public utility has been described as a business organization
which regularly supplies the public with some service, as electricity,
gas, water, transportation, or telephone or telegraph service.
Public utilities are also known as public service companies.
Public market are public services or utilities under the constitutional
provision.

33. Limitations upon grant of franchise, etc.
The limitations upon the grant of any franchise,
certificate or any other form of authorization for the
operation of a public utility are:
(1) The guarantee must be a citizen of the Philippines or a
corporation or association (a) organized under the laws
of the Philippines (b) at least 60% of the capital of which
is owned by citizens of the Philippines. This means that
40% of said capital may be owned by aliens:
(2) Such franchise, certificate, or authorization shall not be
exclusive in character;
(3) Such franchise, etc. shall not be for a longer period of
fifty (50) years;
(4) Such franchise (although it is in the nature of a contract
between the government and the grantee) or right shall
be subject to amendment, alteration, or repeal by
Congress when the common good so requires.
The provision is a recognition of the very strategic
position of public utilities both in our country’s economy

34. Foreign participation in any public utility.
(1) Investment. Foreigners may invest in public
utility enterprises but to the extent of not more
than 40% of the capital of the same. The entry of
foreign capital is allowed because the
establishment and operation of public utilities may
require the investment of a big amount of capital
which Filipino citizens may not afford.
(2)Governing body and management.
Foreigners can even be elected to the
governing body of any public utility enterprises
but their number shall be limited to their
proportionate share in the capital thereof.

35. SECTION 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.
Adoption of “Filipino First” policy. This is also provided in the
above section:
(1) Duty of the State. The State shall:
(a) promote the preferential use of Filipino labor,
domestic materials and locally produced goods; and
(b) adopt measures that help make them competitive.
(1) Aim of Policy. The constitutional policy is to give
preference or dominance to Filipinos in their own country
especially in the grant of rights, privileges and
concessions involving our national economy and
patrimony, and make them competitive as against
foreigners in both domestic and foreign competition.
(2) Duty of buying public. Many Philippine-made products
are at part with the world’s best. It is the duty of every
self-respecting Filipino citizen to buy the products of his
own countrymen.

36. SECTION 13:
The State shall pursue a trade policy that serves the general
welfare and utilizes all forms and arrangement of exchange on the
basis of equality and reciprocity.
Promotion of trade policy that serves the general welfare.
(1) Trade policy as an implement to achieve specific goals. A trade policy
is a policy affecting exports and imports and domestic commerce
formulated to achieve specific goals. Thus:
(a) High tariffs or duties, import quotas or even total import ban of certain
commodities may be imposed to protect local industries producing
similar articles;
(b) Tariffs are made relatively low so as not to discourage imports and
thus raise more revenues;
(c) Import controls are relaxed when they tend to encourage production
of goods that are high-priced and low quality;
(d) A trade policy may be designed to promote export industries to earn
more foreign exchange or the domestic-oriented industries to replace
imports: and
(e) The government may impose dumping duty on imported articles sold
in the Philippines at less than their fair market value or countervailing
duty on such articles.

37. SECTION 14:
The sustained development of a reservoir of national talents consisting of
Filipino scientists, entrepreneurs, professionals, managers, high-level technical
manpower and skilled workers and craftsmen in all fields shall be promoted by
the State. The State shall encourage appropriate technology and regulate its
transfer for the national benefit. The practice of all professions in the
Philippines shall be limited to Filipino citizens, save in cases prescribed by law.
Promotion of national talent pool of Filipinos.
(1) Human resources- people- are the most critical
sources of economic growth. They are the active factors
of development that utilize through their labor the passive
factors (land and capital) to produce goods and services
needed by a growing economy. They determine the pace
and quality of economic, social and political development.
A country is only as good as its human resources.

38. (2) Paramount objective of trade policy. The Constitution
makes it clear that the trade policy which it requires the
State to promote must be one that serves the general
welfare.
(3) Benefits from international trade. International trade
benefits a country by allowing it to buy from other
countries, goods it lacks, or cannot produce better, or can
produce only at higher cost, and sell surplus goods, or
those it can produce better and cheaper.
(4) Exchange rates of different currencies. However, since
countries used different currencies, international trade
necessarily involves exchanging one into the other at the
prevailing rate of exchange.
(5) Special problems arsing from international trade.
Special problems usually arise from international
economic relations.

39. Regulation of Technology transfer.
1). Benefits from technology transfer. – It is safe to say that underdeveloped
economies are so because they continue to depend on traditional technology
particularly in agriculture. The growth gap between developed and
underdeveloped countries is generally wide as the technological gap.
2). Safeguard against import of inappropriate foreign technology. – The transfer
or appropriation of technology, however, is not necessarily the solution. There
must be safeguards against import of obsolete foreign technologies particularly
where they involve the payment of high charges such as royalties and license
fees.
Practice of all professions limited to Filipinos Profession - has been
defined as a calling which requires the passing of an appropriate government
or bar examination, such as the practice law, medicine, public accountancy,
engineering, etc.
• Nature of right to practice – The practice of profession involves public interest
and is open only to persons who have undergone the necessary academic
preparation and passed the appropriate government examination and who
possesses such other special qualification prescribed by law.
• Exercise of privilege by aliens. – The Constitution limits the practice of all
professions in the Philippines to Filipino citizens. However, Congress may
provide otherwise in certain cases, pursuant to the treaty, or on grounds of
reciprocity.

40. SECTION 15:
The Congress shall create an energy to promote the viability and growth
of cooperatives as instrument for social justice and economic
development.
Agency to promote viability and growth of cooperatives
to be created.
Cooperative is a type of business unit through which
individual members cooperate in providing specific types of
services of mutual benefit to the membership. Cooperatives
operate under certain basic principles. They may be
classified as consumers, producers, marketing, credit, or
service cooperatives.
With the mandate to create an agency to promote
their viability and growth, the new Constitution now gives
proper recognition to the important role cooperatives can
play, “instrument for social justice and economic
development”. Cooperative can serve as a vehicle for
attaining a more equitable distribution of wealth by increasing
the income and purchasing power of the low- income sector
of the population and providing needed services not only for
their members, but also for the community in general.

41. SECTION 16:
The Congress shall not, except by general law, provide for the formation,
organization, or regulation of private corporations. Government-owned or
controlled corporations may be created or established by special charters
in the interest of the common and subject to the test of economic viability.
Formation, organization, and regulation of
corporations.
Under this provision, Congress is
prohibited from passing a special law or charter for the
formation, organization, or regulation of specific private
corporations. These matters are to be provided for by
general law that is a law equally applicable to all private
corporations. The purpose then is to prevent
discriminatory practices wherein special privileges are
granted to a few without giving others the right to obtain
those privileges or the same conditions. The exception
relates to private corporations that are owned or
controlled by the government.

42. Creation of government-owned or controlled
corporations. These corporations may be created or
established by a special charter or law but only “in the
interests of the common good and subject to the test
of economic viability”.
“Economic viability” means that the government
corporation will have the capability to make profits and
will not have to depend on budgetary appropriations or
special assistance from the government.
The limitation that the creation must be in the interest
of the common good is recognition that the private
sector should be the ”engine” of national economic
progress while the government should engage in
business only when it is absolutely necessary.

43. SECTION 17: In times of national emergency, when the public
interest so requires, the State may, during the emergency and
under reasonable terms prescribed by it, the temporarily take over
or direct the operation of any privately utility or business affected
with public interest.
Temporary take-over or direction of private business by the
government.
Under this provision, the State( Government) in times of
national emergency when the public interest so requires, may
either temporarily take over the operation of any privately-owned
public utility or business affected with public interest, or merely
direct the operation of said public utility or business. In the first
case, the government virtually becomes owner of the utility or
business. In either case, the temporary take over or direction by the
government must not last beyond the period of the public
emergency and it must be under reasonable terms prescribed by it.
The President may declare a state of national emergency and
exercise the powers granted by Section 17 without need of an
emergency powers law enacted by Congress as provided under
Section 23(2) of Article VI.

44. SECTION 18:
The State may, in the interest of national welfare or defence,
establish and operate vitas industries and, upon payment of just
compensation, transfer to public ownership utilities and other
private enterprises to be operated by the Government.
Government ownership of business.
Under this provisions the state may do two(2) things.
1) Establish and operate vital industries(means of
transportation and communication); and
2) Transfer to public ownership, utilities and other private
enterprises, upon payment of just compensation, to be
operated by the government.
The government is allowed to take action in this respect
not only when national defence requires it but in all cases where
the national welfare makes it imperative as when there is
economic monopoly or subjugation by aliens prejudicial to public
interest in the ownership and operation of certain vital industries.

45. SECTION 19:
The State shall regulate or prohibit monopolies when the public interest so requires.
No combinations in restraint of trade or unfair competition shall be allowed.
Meaning of Monopoly
There is monopoly where a single seller or group of sellers acting
in concert actually controls or posses the power to control market
prices. The bigness of a company is not by itself indicative of a
monopoly.
Regulation or prohibition of private monopolies
Even without the above prohibitions, the State may still
regulate or prohibit private monopolies when the public interest do
requires in the exercise of its police power. With these provisions,
however, a law prohibiting private monopolies cannot be attacked
as unconstitutional for being an unreasonable interference with the
right to liberty or property that operate in restraint of trade (infra.) do
away with free and open competition and, therefore, are inimical to
the interest of consuming public.
The use of the word “regulate” in the Constitution indicates
that some monopolies, properly regulated, are in public interest.

46. Meaning of Restraint of Trade
The phrase restraint of trade is used:
(1) in reference to combinations acts, or practices which interfere with
the normal production and supply of commodities by the
suppression of competition there in or by other means and
(2) also with reference to contractual restriction upon the right of a
person to engage in trade, business or profession.
Meaning of Competition
Competition implies a struggle for advantage between two or
more forces each possessing, in substantially similar, if not identical,
degree, certain characteristics essential to the business sought. It
means an independent endeavour of two or more persons to obtain the
business patronage.
Meaning of Unfair Competition
The simulation by one person of the name, symbols, or devices
employed by a business rival so as to induce the purchase of his goods
under a false impression as to their origin, or ownership. Our Civil Code
provides that “unfair competition in agricultural, commercial or industrial
enterprises or in labor, through the use of force, intimidation, deceit,
machination or any other unjust, oppressive or high handed method
shall give rise to the right of action by the person who thereby suffers
the damage”.

47. Combinations in restraint of trade and unfair
competition prohibited.
 The Constitution altogether prohibits combinations in
restraint of trade and unfair competition. (Sec.19).
Democracy becomes a veritable mockery if any
person or group of persons by any unjust or high-
handed method may deprive others of a fair chance to
engage in business or earn a living. The provision
seeks to preserve competition in a wholesome and
free atmosphere.
 Note that what the Constitution prohibits is unfair
competition. So long as fair or legitimate means are
used, competition is proper.

48. SECTION 20:
The Congress Shall establish an independent
central monetary authority, the members of whose
governing board must be natural born Filipino citizens, of
known probity, integrity, and patriotism, the majority of
whom shall come from the private sector. They shall also
be subject to such other qualifications and disabilities as
may be prescribed by law. The authority shall provide
policy direction in the areas of money, banking, and credit.
It shall have supervision over the operations of banks and
exercise such regulatory powers as may be provided by
law over the operations of finance companies and other
institution performing similar functions.
Until the Congress otherwise provides, the Central
Bank of the Philippines, operating under existing laws, shall
function as the central monetary authority.

49. Central monetary authority established.
This Provisions direct Congress to establish an independent central
monetary authority with the powers and functions mentioned therein. The
Central bank of the Philippines created by R.A No. 265 ha been constituted as
the central monetary authority pursuant to the 1973 Constitution.
1).Responsibilities and objectives – The importance of a central monetary
authority may be seen by looking at the responsibilities and objectives of
Bangko Sentral ng Pilipinas (Central bank of the Philippines) as provided by the
new Central Bank Act:
• To provide policy directions in the areas of money, banking, and credit;
• To supervise ad regulate the operation of banks, finance companies, and non-
bank financial institutions;
• To maintain price conducive to a balanced and sustainable growth of the
economy; and
• To promote and maintain stability and convertibility of peso in other
currencies.
2). Qualification of members of governing board. – The members of the
governing
board of the central monetary authority must be natural born Filipinos because
of the nature of their functions. The requirement that the members must be a
persons of known probity, integrity and patriotism and that the majority of the
members shall come from the private sector is designed to promote the

50. SECTION 21:
Foreign loans may only be incurred in accordance with law and regulation of the
monetary authority. Information foreign loans obtained or guaranteed by the
Government shall be made available to the public.
Section 21 seeks to prevent, once and for all,
the injudicious contracting of foreign loans in the
past on the sole initiative of the President even
against the advice of the Monetary Board of the
Central Bank. Furthermore, more, the contract or
guarantee must be with the prior concurrence of the
Monetary Board. Bu the congressional approval is
not required.
As it is the people who will ultimately
shoulder the payment of the country’s
indebtedness, the Constitution also requires that
the information on foreign loans obtained or
guaranteed by the government shall be available to

51. SECTION 22:
Acts which circumvent or negate any of the Provisions of this article shall
be considered inimical to the national interest and subject to criminal and
civil sanctions, as may be provided by law.
Acts which circumvent or negate Article XII.
Section 22 declares that:
1) Acts which circumvent or negate any of the provisions of
article XII are inimical to the national interest: and
2) 2) They shall be subject to civil and criminal sanctions as
may be provided by law.
• This provisions basically prohibits foreign use of Filipino
dummies and seeks to prevent the enjoyment of a right,
franchise, privilege, or property reserved for Filipinos by those
who are not qualified. It is in response to the revelations of
abundant violations of constitutional provisions reserving to
Filipinos and Filipino Controlled corporations certain areas of
investment should be severe enough as to discourage
employment of dummies by aliens
• The criminal penalties should be severe as to discourage
employment of dummies by aliens.