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Amending economic provisions of Constitution (Part II)


by Bernardo Villegas

Among the amendments proposed by the Study Group, I disagreed with their proposal to restructure Section 1 of Article XII on the National Economy and Patrimony by mentioning first among the goals of the economy the “sustained increase in the amount of goods and services produced by the nation for the benefit of the people.”  I would retain as the first to be mentioned “achieving a more equitable distribution of opportunities, income and wealth” because as we are experiencing, the high growth of GDP in the last five or so years has not really trickled down.  We have to give more importance to reducing poverty even if it means sacrificing some percentage points in GDP growth.  I agree, however, that the rest of the Section which talks about the balance between industrialization and agricultural development and the protection of Filipino enterprises against unfair foreign competition should be deleted because these are better left to legislation.  Also to be eliminated is the third paragraph of the section which refers to equal opportunities for all sectors, regions, and the different forms of business organizations, such as corporations, cooperatives and similar collective organizations.

The fourth paragraph of Section 1 may be retained intact.  It reads: “The State shall regulate the development of the nation’s natural resources towards the efficient use of these resources consistent with sound environmental policies.”  It is a constitutional principle that natural resources of a nation belong to the State which should be used for the common good of society.  The manner in which these resources should be developed, i.e. by large or small enterprises, by foreigners or citizens of the country, corporations or cooperatives, etc. should be left to the legislators.  That is why I agree to deleting the various paragraphs which overly specify the forms of organization or ownership.  Changing circumstances would warrant greater flexibility in both ownership and organization.

Section 3 should read:  “Lands of the public domain are classified into agricultural LANDS, RECLAIMED LANDS, forest or timber LANDS, mineral lands and national parks.  Agricultural lands of the public domain may be further classified by law according to the uses to which they may be devoted (capitalized words are added to the original text).  It is also suggested that a general provision should be added to Section 3:  “Congress shall provide for the disposition of reclaimed lands by law.” Section 4 which refers to the disposition of forest lands and national parks, should also be deleted because policies concerning these should also be left to Congress.

Section 5 has to do with rights of indigenous peoples to their ancestral domains (instead of lands) to give full rights to them.  The second paragraph (The Congress may provide for the applicability of customary laws governing property rights or relations in determining the ownership and extent of ancestral domain) can be eliminated because it is already covered by Republic Act No. 8371 or the Indigenous Peoples Rights Act of 1997.

I do not agree with the Study Group in eliminating Section 6, which is a statement of a very important social principle that is true at all times and places and is not a matter for legislation.  It is a declaration of the principle that private property is not absolute but has a social function.  Thus, the following should be retained:  Section 6.   “The use of property bears a social function, and all economic agents shall contribute to the common good.”  This embodies what is known as the principle of solidarity by which every individual of society has a responsibility, not only to pursue his own legitimate objective, but also to contribute to the common good in whatever way he can.  Especially in the Philippines, where loyalty is limited to one’s family and at most to the clan, our Constitution must explicitly state that everyone has the duty to contribute to the good of society in his everyday activity.

I endorse the proposal of the Study Group to remove Sections 7 and 8 which limit the ownership of land to Filipino citizens or corporations owned by a majority of Filipino citizens.  Ownership of land should be left to legislation.  I see no reason why a foreigner should not be allowed to own the land on which  he (she ) builds a residence, factory or commercial building.  It is only just that he is able to benefit from the appreciation of the land that results from his putting up a structure on an empty lot.  He, after all, cannot bring the land with him if and when he leaves the country.  To those who are afraid that the “Chinese will buy all our 7,100 islands if we allow foreign ownership of land,” we can retort by emphasizing that land ownership by foreigners can be limited by legislation precisely to the land on which residences, factories or commercial buildings are put up. Unlimited purchasing of land will not be allowed to prevent undue speculation.  In fact, as some real estate companies are wont to do, there can be a provision in the law which states that if the foreign buyer does not put up a structure within a certain limited amount of time, the land will revert to the seller.

Section 9, which mandates the creation of an “independent economic and planning agency, can be deleted, since the National Economic and Development Authority (NEDA) already exists.  Section 10 can be reduced to a general statement embodied in the last paragraph of the Section:  “The State shall regulate and exercise authority over foreign investments within its national jurisdiction in accordance with its national goals and priorities.”  Section 11, which limits the equity participation of foreigners in  public utilities. should be deleted   Congress should be free to fix a much larger share of foreign equity of public utilities, both to attract more foreign capital to the country and enhance  competition with oligopolistic players.  Section 12 should also be eliminated since it perpetuates the “Filipino First” policy which has proven to be anti-poor and anti-competitive because it merely reinforces the control by the elite of the Philippine economy.  However, Section 13 can be positively restated as follows:  “The State shall pursue a trade policy that ENHANCES FILIPINO COMPETITIVENESS AND serves the PUBLIC INTEREST (capitalized words are new).

Section 14 can be modified to take into account the free movement of people envisioned by the ASEAN Economic Community (AEC) and to allow for gender neutrality: “STATE SHALL PROMOTE the sustained development of a reservoir of national talents consisting of Filipino scientists, inventors, entrepreneurs, professionals, managers, high-level technical HUMAN RESOURCES, and skilled workers and CRAFTSPEOPLE in all fields.  The State shall encourage appropriate technology and regulate its transfer for the national benefit.  INDIVIDUALS SHALL BE FREE TO practice THEIR professions AND OCCUPATIONS in the Philippines, UNLESS OTHERWISE SUBSEQUENTLY PROVIDED by law.  Section 15 can be modified to read as follows:  “The Congress MAY HELP STRENGTHEN the viability of cooperatives as instruments for social justice and economic development.

Section 16, which provides for the formation of government-owned or controlled corporations may be modified as follows:  “The Congress shall not, except by general law, provide for the formation, organization, or regulation of private corporations.  Government-owned or controlled corporation may be created or established  by special charters in the interest of the common good and subject to the test of SOCIAL AND economic viability.  CONGRESS SHALL PERIODICALLY REVIEW THE SOCIAL AND ECONOMIC VIABILITY OF SUCH CORPORATIONS AS OFTEN AS MAY BE DEEMED NECESSARY BUT AT LEAST ONCE EVERY FIVE YEARS. “

There are other minor modifications in some sections of Article 12.   The last major change I would like to cite is the more emphatic statement of Section 19 which has to do with the promotion of competition:  “The State shall ENHANCE ECONOMIC EFFICIENCY AND PROMOTE FREE COMPETITION IN TRADE, INDUSTRY AND COMMERCIAL ACTIVITIES.  NO ANTI-COMPETITIVE AGREEMENT OR ABUSE OF DOMINANT POSITION SHALL BE ALLOWED.”  Section 20 has become redundant because it mandates Congress to establish an independent central monetary authority which has already been accomplished by Republic Act. No. 7653, as amended (The New Central Bank Act).

There are other economic provisions found in Article II (Declaration of Principles and State Policies).  Section 19 had to do with the Filipino First policy and, as indicated above, is counterproductive and should be removed.  Others under other articles have to do with taxation, agrarian reform, labor and educational institutions which are subject to constantly changing circumstances and therefore should be left to legislation.

In sum, Article XII on National Economy and Patrimony (whose committee I chaired) — after all the suggested deletions and modifications — will be reduced from 22 sections to 14 sections or from 1,747 words to only 700 words.  The additional 12 sections deleted from other Articles with economic provisions reduced verbosity further from 1,258 word to only 42 word.  These amendments will transform the Philippine Constitution to a real fundamental law of the land rather than to an overextended piece of legislation.

For comments, my email address is

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