PREAMBLE
We, the sovereign Filipino people, imploring the aid of Almighty God, in order to build a just and
humane society and establish a Government that shall embody our ideals and aspirations, promote
the common good, conserve and develop our patrimony, and secure to ourselves and our posterity
the blessings of independence and democracy under the rule of law and a regime of truth, justice,
freedom, love, equality, and peace, do ordain and promulgate this Constitution.
Section 20 of Article II, The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.
Private sector can help in boosting the Philippine economy in several ways, the
most prominent of which are creating jobs, helping uplift the lives of Filipinos out of
poverty, expanding livelihood opportunities and improving healthcare systems.
In the Philippines, private businesses and investors are incredibly important for
the country's growth and well-being. These entities, collectively known as the private
sector, play a key role in making the economy stronger. They create jobs for people,
offering opportunities for better lives and reducing unemployment. Private businesses
also bring in new ideas and technologies, making things more efficient and improving
the quality of goods and services. When investors put their money into businesses, it
helps these companies expand and develop. This, in turn, boosts the overall economy.
Additionally, private businesses contribute a significant amount of money through taxes,
supporting the government in providing public services and building essential
infrastructure. The flexibility and innovation of the private sector contribute to the
country's competitiveness on the global stage. In essence, private sectors and investors
are like the engines that drive the country forward, fostering progress and prosperity for
the people of the Philippines.
The private sector refers to the part of the economy that is not controlled or owned
by the government. It consists of privately-owned businesses, organizations, and
individuals engaged in economic activities with the primary goal of making a profit. In
the private sector, businesses are operated and managed by private individuals or entities
rather than the government.
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Corporations: Large companies, often publicly traded on stock exchanges,
that produce goods or services. Examples include multinational
corporations like Apple, Microsoft, and Toyota.
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Small and Medium Enterprises (SMEs): These are smaller businesses that
operate locally or regionally. Examples include family-owned restaurants,
local retailers, and small manufacturing companies.
Partnerships and Sole Proprietorships: Businesses owned and operated by
an individual or a group of individuals. Examples include law firms,
consulting businesses, and freelance professionals.
Non-Profit Organizations: While not primarily profit-driven, many nonprofit organizations operate in the private sector. They aim to achieve
specific social or environmental goals. Examples include charitable
organizations, advocacy groups, and foundations.
Cooperatives: Organizations owned and operated by their members, who
share the profits or benefits. Examples include agricultural cooperatives,
credit unions, and worker cooperatives.
Private Banks: Financial institutions that are privately owned and operate
for profit. Examples include commercial banks, investment banks, and
credit card companies.
Private Healthcare Providers: Hospitals, clinics, and medical practices that
are privately owned and operated.
Technology Start-ups: Small and innovative companies in the technology
sector that are privately funded and managed. Examples include many
early-stage companies in Silicon Valley.
Article VI
SECTION 28. (1) The rule of taxation shall be uniform and equitable. The Congress shall
evolve a progressive system of taxation.
(2) The Congress may, by law, authorize the President to fix within specified limits, and subject
to such limitations and restrictions as it may impose, tariff rates, import and export quotas, tonnage
and wharfage dues, and other duties or imposts within the framework of the national development
program of the Government.
(3) Charitable institutions, churches and parsonages or convents appurtenant thereto, mosques,
non-profit cemeteries, and all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes shall be exempt from taxation.
(4) No law granting any tax exemption shall be passed without the concurrence of a majority of
all the Members of the Congress.
It emphasizes two key points: first, that the rule of taxation should be uniform and
fair, promoting a progressive taxation system. This means that as people earn more, they
should pay a higher percentage of their income in taxes. Second, the Constitution grants
Congress the authority to empower the President to set tariff rates, import and export
quotas, and other duties within specified limits. This is done to align with the national
development program. The section also outlines tax exemptions for charitable
institutions, religious structures, and educational facilities, ensuring that these entities,
which serve public welfare, are not burdened by taxes. Importantly, any law providing
tax exemptions requires the approval of the majority of Congress members, ensuring a
careful and collective decision-making process in granting such privileges.
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.
Economy - the process or system by which goods and services are produced, sold, and
bought in a country or region; careful use of money, resources, etc.
National Economy - refers to the economy of an entire country. The national economy
includes financial resources and management. It encompasses the value of all goods and
services manufactured within a nation.
Emphasizes the importance of economic growth and development that
benefits all citizens of the Philippines, especially those who are underprivileged. The
government aims to achieve this by ensuring that opportunities, income, and wealth are
distributed more equitably, and by increasing the amount of goods and services
produced by the nation. The ultimate goal is to raise the quality of life for all Filipinos.
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.
It aims to make sure that everyone has a fair share of opportunities, income,
and wealth. The document highlights the need for the economy to keep growing steadily
and for people to become more productive, especially those who have less. The
government wants to achieve this by supporting the development of industries and
creating more jobs, with a special focus on improving agriculture. It also wants to protect
Filipino businesses from unfair competition from other countries. The constitution
stresses the importance of giving everyone, no matter where they are in the country, a
good chance to benefit from economic growth. It encourages businesses to have a wider
group of owners, making sure that economic benefits are shared more widely. In simple
terms, it sets the guidelines for a fair, growing, and competitive economy that benefits
everyone and shields local businesses from unfair practices.
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 nation’s 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.
It states that the State owns all public lands, waters, minerals, energy sources,
fisheries, forests, wildlife, and other natural resources. However, agricultural lands are
an exception and can be privately owned. The exploration, development, and use of these
resources are under the complete control of the government, which may directly handle
these activities or collaborate with Filipino citizens or corporations, as long as the
majority of the capital is owned by Filipino citizens. Agreements for such collaborations
are limited to 25 years, renewable for another 25 years, with terms set by law. Water rights
for various purposes, except water power development, are based on beneficial use. The
State also commits to safeguarding marine wealth in specific waters, reserving its use for
Filipino citizens. Congress can permit small-scale use of resources and cooperative fish
farming, prioritizing subsistence fishermen. The President has the authority to enter
agreements with foreign-owned corporations for large-scale resource development, with
a focus on benefiting the country's economic growth. These agreements must be disclosed
to Congress within 30 days of execution. Overall, this section aims to ensure responsible
and beneficial management of the Philippines' natural resources for the welfare of its
citizens
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.
The Constitution emphasizes that alienable lands of the public domain, those that
can be transferred to private ownership, are limited to agricultural lands. However,
private corporations or associations can only hold such lands through lease, with
restrictions on the duration and size (i.e. 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 have limitations on the amount of land they can lease
or acquire through various means like purchase, homestead, or grant. The Constitution
also mandates that the Congress, considering factors like conservation, ecology, and
development, and in line with agrarian reform requirements, will determine the size of
public domain lands that can be acquired, developed, held, or leased, along with the
conditions for such activities.
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.
It says that the Congress should quickly decide the exact borders of these areas
through laws. Once these borders are set, they shouldn't be changed except through new
laws. The Congress is also responsible for making rules to stop logging in forests and
places where water flows (watershed areas) that are in danger. In simpler terms, this
section aims to make sure that these important natural areas are protected, and any
changes or restrictions are decided by laws to ensure their sustainable use and
preservation.
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.
It is about the protection of the rights of indigenous communities to their ancestral
lands. The government is committed to ensuring the well-being of these communities in
economic, social, and cultural aspects. Customary laws governing property rights within
these communities are considered when determining the ownership and extent of their
ancestral domain. It underscores the government's dedication to respecting and
preserving the heritage and rights of indigenous communities.
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.
It emphasizes that the use of property serves a social function, meaning it should
benefit society as a whole. It states that all economic entities, whether individuals or
private organizations like corporations and cooperatives, have the right to own and run
economic businesses. However, this right is not absolute, as it comes with a
responsibility. The State has a duty to ensure distributive justice, meaning a fair
distribution of economic benefits. If necessary for the common good, the government has
the authority to intervene in economic activities. In simpler terms, this section stresses
the idea that economic activities should contribute to the well-being of society, and the
government can step in if there's a need to ensure fairness and the overall welfare of the
people.
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.
It says that, except in cases of passing down property to family members
(hereditary succession), private lands can only be sold or transferred to individuals,
corporations, or groups that meet specific qualifications to own lands originally
considered part of the public domain. This rule is in place to make sure that the
ownership of private lands follows certain guidelines and is not open to just anyone,
helping to manage and regulate land ownership in the country.
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.
the section allows individuals who were once Filipino citizens but lost their
citizenship to own private lands, but there are certain restrictions and conditions imposed
by law that they must adhere to.
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.
It is all about making sure that economic opportunities mainly benefit Filipino
citizens. It allows Congress, with advice from economic experts, to set aside certain areas
of investment for Filipinos or companies mostly owned by Filipinos. The provision also
encourages laws that support businesses completely owned by Filipinos. When it comes
to granting economic rights and privileges, the State is instructed to favor qualified
Filipinos. The government is also given the power to regulate and supervise foreign
investments within the country, making sure they align with national goals. Simply put,
this section aims to ensure that the benefits of economic activities primarily go to Filipino
individuals and businesses to boost the country's development.
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.
About the rules for allowing companies to operate essential services like
electricity, water, or transportation, known as public utilities. To get permission, these
companies must be owned mostly by Filipinos, either citizens or corporations with at
least 60% Filipino ownership. The granted permission can't be exclusive and must not
last more than fifty years. Congress can change or cancel these permissions if it's for the
common good. The government wants more Filipinos to be involved in these businesses
and limits the influence of foreign investors in decision-making. It insists that the top
executives of these companies must be Filipino citizens.
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.
It means that the government is committed to giving preference to Filipino
workers, using materials produced within the country, and supporting goods made
locally. The goal is to make sure these Filipinos are competitive in the market. In simpler
terms, the provision encourages the use of local resources and supports Filipino workers
and products to boost their competitiveness and contribute to the country's economic
development.
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.
It emphasizes the country's commitment to a trade policy that prioritizes the wellbeing of its citizens. In simple terms, the government aims to create trade policies that
benefit everyone and ensure fairness. This involves engaging in exchanges with other
nations on the principles of equality and reciprocity. In other words, the Philippines seeks
to establish trade relationships where both parties are treated fairly and enjoy mutual
benefits. This constitutional provision reflects the nation's dedication to fostering a trade
environment that contributes to the overall welfare and prosperity of its people.
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.
It focuses on fostering the continuous growth of a skilled and knowledgeable
workforce in the country. The State is committed to promoting the development of a pool
of national talents, including scientists, entrepreneurs, professionals, managers, highlevel technical manpower and skilled workers and craftsmen in all fields. This is aimed
at ensuring that the Philippines has a capable and diverse workforce in various fields.
Additionally, the State is tasked with encouraging the use of suitable technology and
overseeing its transfer for the overall benefit of the nation. It emphasizes that the practice
of all professions within the Philippines should generally be reserved for Filipino citizens,
with exceptions specified by law. In simpler terms, this section highlights the
government's dedication to nurturing local talents, regulating the transfer of technology
for national advantage, and ensuring that professional opportunities primarily benefit
Filipino citizens.
SECTION 15. The Congress shall create an agency to promote the viability and growth of
cooperatives as instruments for social justice and economic development.
It says that the government, through Congress, will set up an agency with the
specific job of helping cooperatives thrive. Cooperatives are groups where people team
up for mutual benefits. The government believes that these cooperatives are vital for
making society fairer and boosting economic development. So, by creating an agency
dedicated to supporting and growing these cooperative efforts, the government aims to
use them as a way to empower communities and contribute to the country's overall
progress.
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.
It states that the Congress should not create specific laws for individual private
corporations. Instead, the regulation of private corporations should be done through
general laws that apply to all. However, government-owned or controlled corporations
may be formed through special charters, but only if it serves the common good and
proves to be economically viable. This provision ensures that the establishment and
oversight of private corporations are guided by laws that apply uniformly, promoting
fairness and transparency in the corporate sector.
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.
In times of a crisis, when the well-being of the public demands it, the State has the
power to temporarily take control or oversee the operations of privately-owned
businesses that are essential to the public, such as public utilities. This means that, under
specific and fair conditions set by the government, private businesses that play a crucial
role in serving the public interest can be temporarily directed or operated by the State to
ensure the country's stability and the welfare of its citizens during an emergency.
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.
It allows the government to take control of important industries and, if necessary
for the country's well-being or defense, operate them itself. It also permits the transfer of
utilities and private businesses into public ownership, but this must be done by fairly
compensating the original owners. Essentially, this provision grants the government the
authority to step in and manage industries or take over private enterprises for the benefit
of national welfare or defense, ensuring that these crucial sectors are aligned with the
interests of the country as a whole.
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.
It grants the State the authority to regulate or even prohibit monopolies if it is
deemed necessary for the well-being of the public. Monopolies, which are situations
where one entity has exclusive control over a particular market, can be restricted if they
are detrimental to the broader public interest. Additionally, the provision prohibits any
agreements or collaborations among businesses that restrict trade or involve unfair
competition. In simpler terms, this section aims to prevent unfair business practices and
monopolies, promoting a competitive and fair economic environment for the benefit of
the public.
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.
It is about establishing an independent central monetary authority. This authority
is tasked with overseeing important aspects of the country's finances. The members of its
governing board must be natural-born Filipino citizens known for their honesty,
integrity, and patriotism, with a majority coming from the private sector. They must meet
certain qualifications and be subject to specific rules outlined by law. The primary
responsibilities of this authority include setting policies related to money, banking, and
credit. It also has the power to supervise the operations of banks and regulate activities
of finance companies and similar institutions. Until the Congress makes other
arrangements, the Central Bank of the Philippines, operating under existing laws, will
serve 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.
It is about transparency and accountability in dealing with foreign loans. It states
that the government can only take on foreign loans in compliance with existing laws and
regulations set by the monetary authority. Importantly, it mandates that information
about any foreign loans acquired or guaranteed by the government must be disclosed to
the public. This provision underscores the need for openness and public awareness
regarding the country's financial commitments to foreign entities, ensuring that citizens
have access to relevant information about the government's financial activities with
international lenders. Essentially, the section promotes responsible and transparent
management of foreign loans, safeguarding the interests and right to information of the
Filipino 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.
It states that any actions or activities that go against the rules outlined in this
Article VXII are considered harmful to the country's national interest. If someone tries to
bypass or undermine these provisions, they can face legal consequences, both in terms of
criminal charges and civil penalties, as specified by the law. In simpler terms, this section
serves as a warning that breaking the rules laid out in Article 12, which deals with the
country's economy and natural resources, can result in legal repercussions to protect the
nation's well-being.
DICTIONARY
Alienable – transferrable to another owner
Patrimony - heritage
National Patrimony - basically comprises two components, namely, natural resources
and cultural heritage.
Conserve – to keep in a safe or sound condition, or to preserve from destruction.
Conservation - entails sustained maintenance and upkeep.
Development - may involve any alteration, transformation, or change in the character of
the property in order to allow its growth and increase in value and productivity, or to
enhance the significance of the thing to the community.