ARTICLE XII

National Economy and Patrimony

SECTION 1. The goals of the national economy are a more equitable

distribution of opportunities, income, and wealth; a sustained increase in
the amount of goods and services produced by the nation for the benefit of
the people; and an expanding productivity as the key to raising the quality
of life for all, especially the underprivileged.

The State shall promote industrialization and full employment based on

sound agricultural development and agrarian reform, through industries
that make full and efficient use of human and natural resources, and which
are competitive in both domestic and foreign markets. However, the State
shall protect Filipino enterprises against unfair foreign competition and
trade practices.

In the pursuit of these goals, all sectors of the economy and all regions of
the country shall be given optimum opportunity to develop. Private
enterprises, including corporations, cooperatives, and similar collective
organizations, shall be encouraged to broaden the base of their ownership.

SECTION 2. All lands of the public domain, waters, minerals, coal,

petroleum, and other mineral oils, all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna, and other natural resources are
owned by the State. With the exception of agricultural lands, all other
natural resources shall not be alienated. The exploration, development, and
utilization of natural resources shall be under the full control and
supervision of the State. The State may directly undertake such activities,
or it may enter into co-production, joint venture, or production-sharing
agreements with Filipino citizens, or corporations or associations at least
sixty per centum of whose capital is owned by such citizens. Such
agreements may be for a period not exceeding twenty-five years,
renewable for not more than twenty-five years, and under such terms and
conditions as may be provided by law. In cases of water rights for irrigation,
water supply, fisheries, or industrial uses other than the development of
water power, beneficial use may be the measure and limit of the grant.

The State shall protect the nations marine wealth in its archipelagic waters,
territorial sea, and exclusive economic zone, and reserve its use and
enjoyment exclusively to Filipino citizens.
The Congress may, by law, allow small-scale utilization of natural resources
by Filipino citizens, as well as cooperative fish farming, with priority to
subsistence fishermen and fishworkers in rivers, lakes, bays, and lagoons.

The President may enter into agreements with foreign-owned corporations

involving either technical or financial assistance for large-scale exploration,
development, and utilization of minerals, petroleum, and other mineral oils
according to the general terms and conditions provided by law, based on
real contributions to the economic growth and general welfare of the
country. In such agreements, the State shall promote the development and
use of local scientific and technical resources.

The President shall notify the Congress of every contract entered into in
accordance with this provision, within thirty days from its execution.

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 which
they may be devoted. Alienable lands of the public domain shall be limited
to agricultural lands. Private corporations or associations may not hold such
alienable lands of the public domain except by lease, for a period not
exceeding twenty-five years, renewable for not more than twenty-five
years, and not to exceed one thousand hectares in area. Citizens of the
Philippines may lease not more than five hundred hectares, or acquire not
more than twelve hectares thereof by purchase, homestead, or grant.

Taking into account the requirements of conservation, ecology, and

development, and subject to the requirements of agrarian reform, the
Congress shall determine, by law, the size of lands of the public domain
which may be acquired, developed, held, or leased and the conditions
therefor.

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.

SECTION 5. The State, subject to the provisions of this Constitution and

national development policies and programs, shall protect the rights of
indigenous cultural communities to their ancestral lands to ensure their
economic, social, and cultural well-being.
The Congress may provide for the applicability of customary laws governing
property rights or relations in determining the ownership and extent of
ancestral domain.

SECTION 6. The use of property bears a social function, and all economic
agents shall contribute to the common good. Individuals and private
groups, including corporations, cooperatives, and similar collective
organizations, shall have the right to own, establish, and operate economic
enterprises, subject to the duty of the State to promote distributive justice
and to intervene when the common good so demands.

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.

SECTION 8. Notwithstanding the provisions of Section 7 of this Article, 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.

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, recommend 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.

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 that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos.

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.

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 or for a longer period than fifty years. Neither shall any such
franchise or right 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.

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.

SECTION 13. The State shall pursue a trade policy that serves the general
welfare and utilizes all forms and arrangements of exchange on the basis of
equality and reciprocity.

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.

SECTION 15. The Congress shall create an agency to promote the viability
and growth of cooperatives as instruments for social justice and economic
development.

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 good and
subject to the test of economic viability.

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, temporarily take over or direct the operation of any
privately owned public utility or business affected with public interest.

SECTION 18. The State may, in the interest of national welfare or defense,
establish and operate vital industries and, upon payment of just
compensation, transfer to public ownership utilities and other private
enterprises to be operated by the Government.

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.

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 institutions 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.

SECTION 21. Foreign loans may only be incurred in accordance with law
and the regulation of the monetary authority. Information on foreign loans
obtained or guaranteed by the Government shall be made available to the
public.

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.

RA 9184 Sec. 5 (n) Procurement refers to the acquisition of Goods,

Consulting Services, and the contracting for Infrastructure Projects by the
Procuring Entity. Procurement shall also include the lease of goods and real
estate. With respect to real property, its procurement shall be governed by
the provisions of Republic Act No. 8974, entitled An Act to Facilitate the
Acquisition of Right-of-Way Site or Location for National Government
Infrastructure Projects and for Other Purposes, and other applicable laws,
rules and regulations.

RA 7718 Sec. 2 (b) Build-operate-and-transfer - A contractual

arrangement whereby the project proponent undertakes the construction,
including financing, of a given infrastructure facility, and the operation
maintenance thereof. The project proponent operates the facility over a
fixed term during which it is allowed to charge facility users appropriate
tolls, fees, rentals, and charges not exceeding those proposed in its bid or
as negotiated and incorporated in the contract to enable the project
proponent to recover its investment, and operating and maintenance
expenses in the project. The project proponent transfers the facility to the
government agency or local government unit concerned at the end of the
fixed term which shall not exceed fifty (50) years: Provided, That in case of
an infrastructure or development facility whose operation requires a public
utility franchise, the proponent must be Filipino or, if a corporation, must be
duly registered with the Securities and Exchange Commission and owned up
to at least sixty percent (60%) by Filipinos.
The build-operate-and-transfer shall include a supply-and-operate situation
which is a contractual arrangement whereby the supplier of equipment and
machinery for a given infrastructure facility, if the interest of the
Government so requires, operates the facility providing in the process
technology transfer and training to Filipino nationals.