ARTICLE XII

NATIONAL ECONOMY AND PATRIMONY

Section 2. REGALIAN DOCTRINE

Distinction between Imperium and Dominium.
1. Imperium
Government authority possessed by the State which is appropriately embraced in s
overeignty.
2. Dominium
The capacity of the State to own and acquire property.
It refers to lands held by the government in a proprietary character: can provid
e for the exploitation and use of lands and other natural resources.
Scope:
The following are owned by the State:
1. Lands of the public domain:
Waters
Minerals, coals, petroleum, and other mineral oils;
All sources of potential energy;
Fisheries;
Forests or timber;
Wildlife;
Flora and fauna; and
Other natural resources.
Alienation of Natural Resources
1. General Rule: All natural resources CANNOT be alienated
2. Exception: Agricultural lands
Exploration, Development and Utilization of Natural Resources
1. Shall be under the full control and supervision of the State
2. Means
A. The state may DIRECTLY UNDERTAKE such activities
B. The state may enter into CO-PRODUCTION, JOINT VENTURE OR PRODUCTION-SHARING a
rrangements with
Filipino citizen or
Corporation or association at least 60% of whose capital is owned by such citize
ns
3. Limitations:

A. Period: It should not exceed 25 years, renewable for not more than 25 years
B. Under terms and conditions as may be provided by law.
4. In case of water rights/water supply/fisheries/industrial uses other than the
development of water power
The beneficial use may be the measure and limit of the grant.
Small-scale Utilization of Natural Resources
1. Congress may, by law, authorize small-scale utilization of natural resources
by Filipino citizens
2. Congress may also authorize cooperative fish farming with priority given to s
ubsistence fishermen and fishworkers in the rivers, lakes, bays and lagoons.
Large-Scale Exploration, Development and Utilization of Minerals/Petroleum/Other
Mineral Oils
1. The President may enter into agreements with foreign owned corporations invo
lving technical or financial assistance for large-scale exploration etc. of mine
rals, petroleum, and other mineral oils. These agreements should be in accordan
ce with the general terms and conditions provided by law.
2. They should be based on the real contributions to economic growth and genera
l welfare of the country.
3. In the agreements, the State should promote the development and use of local
scientific and technical resources.
4. The President should notify Congress of every contract under this provision
within 30 days from its execution.
5. Management and service contracts are not allowed under this rule.
Protection of Marine Wealth
1. The State shall protect its marine wealth in its
Archipelagic waters
Territorial sea &
EEZ
2. The State shall reserve its use and enjoyment exclusively to Filipino citize
ns.
Section 3. LANDS OF THE PUBLIC DOMAIN ARE CLASSIFIED INTO
1. Agricultural
2. Forest/timber
3. Mineral lands &
4. National Parks
Note:

1. Classification of public lands is an exclusive prerogative of the Executive

Department through the Office of the President, upon recommendation by the DENR.
2. Classification is descriptive of the legal nature of the land and NOT what i
t looks like. Thus, the fact that forest land is denuded does not mean it is no
longer forest land.
Alienable lands of public domain
1. Only agricultural lands are alienable.
2. Agricultural lands may be further classified by law according to the uses to
which they may be devoted.
Limitations regarding Alienable Lands of the Public Domain
1. For private corporations or associations
A. They can only hold alienable lands of the public domain BY LEASE
B. Period: Cannot exceed 25 years, renewable for not more than 25
years
C. Area: Lease cannot exceed 1,000 hectares
Note: A corporation sole is treated like other private corporations for the pu
rpose of acquiring public lands.
2. For Filipino citizens
A. Can lease up to 500 hectares
B.

Can ACQUIRE not more than 12 hectares by purchase, homestead or grant.

Taking into account the requirements of conservation, ecology and development, a

nd subject to the requirements of agrarian reform, Congress shall determine by l
aw the size of the lands of the public domain which may be acquired, developed,
held or lease and the conditions therefore.
Means by Which Lands of the Public Domain Become Private Land
1. Acquired from government by purchase or grant;
2. Uninterrupted possession by the occupant and his predecessors-in-interest si
nce time immemorial; and
3. Open, exclusive, and undisputed possession of ALIENABLE (agricultural) publi
c land for a period of 30 years.
A. Upon completion of the requisite period, the land becomes private property i
pso jure without need of any judicial or other sanction.
B. Here, in possession since time immemorial, presumption is that the land was
never part of public domain.
C. In computing 30 years, start from when land was converted to alienable land,
not when it was still forest land
D. Presumption is that land belongs to the State.

Section 4. Congress shall, as soon as possible, determine by law, the specific

limits of forest lands and national parks, marking clearly their boundaries on t
he ground. Thereafter, such forest lands and national parks shall be conserved
and may not be increased or diminished, EXCEPT by law. Congress shall provide m
easures to prohibit logging in
a.
Endangered forest and
b.
Watershed areas for such period as it may determine.
Section 5. ANCESTRAL LANDS
Protection of Indigenous Cultural Communities
1. The State protects the rights of indigenous cultural communities to their an
cestral lands
A. Subject to Constitutional provisions
B. Subject to national development policies and programs
2. In determining ownership and extent of ancestral domain, Congress may use cu
stomary laws on property rights and relations.
3.

ANCESTRAL DOMAIN

A. It refers to lands which are considered as pertaining to a cultural region

B. This includes lands not yet occupied, such as deep forests.
Section 7. PRIVATE LANDS
General rule
1. Private lands CAN only be transferred or conveyed to:
A. Filipino citizens
B. Corporations or associations incorporated in the Philippines, at least 60% of
whose capital is owned by Filipino citizens
2. Exceptions
A. In intestate succession, where an alien heir of a Filipino is the transferee
of private land.
B. A natural born citizen of the Philippines who has lost his Philippine citize
nship may be a transferee of PRIVATE ALND, subject to limitation provided by law
. Hence, land can be used only for residential purposes. In this case, he only
acquires derivative title.
C. Foreign states may acquire land but only for embassy and staff residence pur
poses.
3. Filipino citizenship is only required at the time the land is acquired. Thu
s, loss of citizenship after acquiring the land does not deprive ownership.
4. Restriction against aliens only applies to acquisition of ownership. Theref
ore:
A. Aliens may be lessees or usufructuaries of private lands
B. Aliens may be mortgages of land, as long as they do not obtain possession th
ereof and do not bid in the foreclosure sale.
5. Land tenure is not indispensable to the free exercise of religious professio

n and worship. A religious corporation controlled by non-Filipinos cannot acqui

re and own land, even for religious purposes.
Remedies to recover private lands from disqualified aliens:
1. Escheat proceedings
2. Action for reversion under the Public Land Act
3. An action by the former Filipino owner to recover the land
A. The former pari delicto principle has been abandoned
B. Alien still has the title (didn t pass it on to one who is qualified)
Section 10. NATIONAL ECONOMY AND PATRIMONY/INVESTMENTS
Power of Congress
1. Congress, upon the recommendation of NEDA, can reserve to Filipino citizens
or to corporations or associations at least 60% of whose capital is owned by suc
h citizens, or such higher percentage as Congress may prescribe, certain areas o
f investment. This may be done when the national interest dictates.
2. Congress shall also enact measures to encourage the formation and operation
of enterprises whose capital is wholly owned by Filipinos.
National Economy and Patrimony
In the grant of rights, privileges and concessions covering the national economy
and patrimony, the State shall give preference to QUALIFIED Filipinos.
Section 11. FRANCHISES FOR PUBLIC UTILITIES
Power to grant:
1. Congress may directly grant a legislative franchise; or
2. Power to grant franchises may be delegated to appropriate regulatory agencies
and/or LGU s
Public utility
1. In order to be considered as a public utility, and thus subject to this prov
ision, the undertaking must involve dealing directly with the public.
2. Thus, a Build-Operate-Transfer grantee is NOT a public utility. The BOT gra
ntee merely constructs the utility, and it leases the same to the government. I
t is the government which operates the public utility (operation separate from o
wnership).
To whom granted:
1. Filipino citizens or
2. Corporations or associations incorporated in the Philippines and at least 60
% of the capital is owned by Filipino citizens.
Terms and conditions:
1. Duration: Not more than 50 years
2. Franchise is NOT exclusive in character
3. Franchise is granted under the condition that it is subject to amendment, al

teration, or repeal by Congress when the common good so requires.

Participation of Foreign Investors
1. The participation of foreign investors in the governing body of any public ut
ility enterprise shall be limited to their proportionate share in its capital.
2. Foreigners cannot be appointed as the executive and managing officers becaus
e these positions are reserved for Filipino citizens.