Impact on Business re National Economy and Patrimony

Impact on Business Law Ownership Citizenship Requirements Preference for Filipinos

Natural Resources

The Regalian Doctrine Section 2, Art. XII : 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.

Natural Resources

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.

Citizenship requirements Co-production, joint

venture or production sharing agreements (for exploration, development and utilization of natural resources) : Filipino citizens or corporations or asso. At least 60% of whose capital is Filipino owned.

Natural resources

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.

Use and Enjoyment of the nation’s marine wealth in its archipelagic waters, territorial sea and exclusive economic zone exclusively for filipino citizens

But see exploration, development and utilization of natural resources rule

Classifications of lands of the Public Domain

Lands of the public domain are classified into agricultural, forest or timber, mineral lands and national parks

Alienable lands of the public domain shall be limited to agricultural lands

Regalian Doctrine

Alienable lands of the Public Domain

Limited to agricultural lands Citizenship requirements re

Acquisition/Lease Only Filipino Citizens may

acquire not more than 12 hectares by purchase, homestead or grant or lease not more than 500 hectares

Private Corporations –lease (not acquire) not more than 1,000 hectares for 25 years renewable for another 25 years

Cases: The Amari Deal

( Chavez vs PEA, G.R. No. 133250, Nov. 11, 2003

Meralco vs. Castro-Bartolome, 114 SCRA 799

But compare Director of Lands vs IAC and ACME plywood & Veneer Co., 146 SCRA 509 (now controlling)

Private Lands

Rule: Save in case 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 . (Sec. 7, Art. XII)

The primary purpose of the constitutional provision disqualifying ALIENS from acquiring lands of the public domain and private lands is the conservation of the national economy and patrimony

Any sale or transfer in violation of the prohibition is null and void

Neither recovery of money for the purchase is allowed

Private Lands

The primary purpose of the constitutional provision disqualifying ALIENS from acquiring lands of the public domain and private lands is the conservation of the national economy and patrimony

Case: a lease of 99 years with a 50 year option to purchase the property if and when Wong Heng would be naturalized is invalid and unconstitutional (Phil. Banking Vs Lui She, 21 SCRA 52)

Private Lands

The primary purpose of the constitutional provision disqualifying ALIENS from acquiring lands of the public domain and private lands is the conservation of the national economy and patrimony

An action to recover the property sold filed by the former owner is allowed ( see PBC vs Lui She case)

Compare: land sold to an alien which was later transferred to a filipino citizen or where the alien later becomes a Filipino citizen- can no longer be recovered by the vendor (Lee vs Dir. Of Lands, G.R. No. 128195, October 3, 2001)

Religious Corporations? Roman Catholic Church? Religious corporation sole

Exceptions to the Rule

Hereditary Succession (testamentary dispositions not included)

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 ( Sec. 8, Art. XII)

Former natural born Filipino Citizens may be the transferee/acquire private land = 5,000 square meters for urban land and 3 hectares for rural land. (RESIDENCE AND BUSINESS PURPOSE ALLOWED )

See B.P. 185 as amended by RA 8179

Remedies to Recover Private Land from disqualified aliens

Escheat Proceedings Action for reversion under the Public

Land Act See case re an action to recover filed by

the former filipino owner, etc..

Filipino First Policy

Grant of Rights, Privileges and Concessions covering the national eco and patrimony, the State shall give preference to qualified Filipinos ( Manila Prince Hotel vs. GSIS, 267 SCRA 408)

Public Utilities

A public utility is a business or service engaged in regularly supplying the public with some commodity or service of public consequence. Such as electricity, gas, water, transportation, telephone or telegraph service.

The constitution requires a franchise for the operation of public utilities.

Certain areas of investment are reserved for filipinos for Corporations 60% of whose capital is Filipino owned, although congress may prescribe a higher percentage (sec. 10, Art. XII)

Franchise, certificate or any other form of authorization for the operation of public utility: Only to citizens of the Philippines, or corporations at least 60% of whose capital is Filipino-owned (sec. 11, Art XII

Broadcasting (radio/television) is licensed by the Government Internet?

A franchise, certificate or authorization for the operation of public utilities shall not be exclusive nor for a period of more than 50 years, and shall be subject to amendment, alteration or repeal by congress.

A franchisee cannot complain of a seizure or taking of property because of the issuance of another franchise to a competitor ( see PILTEL case)

All executive and managing officers must be filipino citizens (see Pilipino Telephone Corp vs. NTC, G.R. No. 138295, Aug. 28, 2003

MONOPOLIES

The State shall regulate or prohibit monopolies when the public interest so requires. No combinations in restraint of trade or unfair competition shal be allowed ( Sec. 19, Art. XII)

Monopoly is a privilege or peculiar advantage vested in one persons or companies, consisting in the exclusive right (or power) to carry on a particular business or trade, manufacture a particular article or control the sale of a particular commodity..

MONOPOLIES

Per se Prohibition? NO. example stevedorship and arrastre services

However, see Asso. Of Phil. Coconut Dessicators vs. Phil. Coconut authority, (G.R. No. 110526, Feb. 10, 1998: where the S.C. declared that although the Consti enshrines free enterprise as a policy, nevertheless reserves to the government the power to intervene whenever necessary for the promotion of general welfare, as reflected in Secs 6 and 19, Art. XII.

see also case of Tatad vs Sec., Dept of Energy, (G.R. No. 124360, Nov. 5, 1997) re monopoly, oligopoly and unfair competition Because monopolies are

subject to abuses that can inflict severe prejudice to the public they are subjected to a higher level of State regulation…

For further study re monopolies, etc read US anti-Trust Laws

Practice of Profession: Filipinos only The practice of all professions in the

Philippines shall be limited to Filipino Citizens, save in cases prescribed by law ( sec. 14, Art. XII)

Define professionals? Artist, race car drivers, etc.??

Educational Institutions

Ownership Solely by Filipino citizens or corp 60% filipino-owned

except those established by religious groups or mission boards but congress may increase required Filipino equity participation (sec. 4(2), Art. XIV)

Control and Administration Vested in citizens of the Philippines

Tax exemptions- all revenue and assets of non-stock, non-profit educational institutions- as well as all grants, endowments, donations, and contributions – used actually, directly and exclusively for educational purposes shall be exempt from taxes and duties ( sec. 4 (3), Art. XIV)

Alien schools

Alien Schools No educational institutions shall be

established exclusively for aliens and no group of aliens shall comprise more than 1/3 of the enrollment in any school except for schools for foreign diplomatic personnel and their dependents, and for other temporary residents ((sec. 4(2), Art. XIV)

Mass Media and Advertising Industry

Mass Media- ownership shall be limited to citizens of the Philippines or corporations wholly-owned and managed by such states. Congress shall regulate or prohibit monopolies in commercial mass media (Sec. 11(1), Art. XVI)

Advertising Industry. Only filipino citizens or corporations or Associations at least 70% Filipino-owned shall be allowed to engage in the advertising industry. All eecutives and managing officers of such entities must be citizens of the Philippines (Sec 11 (2), Art. XVI)

Local government units

Police power (General Welfare Clause)

Taxation Eminent domain

Territorial Limits Equal protection clause Due process clause Not contrary to the

constitution and the laws

Activities allowed by law cannot be prohibited, only regulated

POWERS LIMITATIONS

Local Government Units

Liability for contracts? Intra vires? Yes; ultra vires? no

Requisites of a valid municipal contract Express, implied or inherent Power to enter into

the particular contract Entered into by the proper official Must comply with the substantive and

procedural requirements Ultra vires contracts

When ratification allowed?

Local Government Units

Municipal Liability, when? Rule: local government units and their

officials are not exempt from liability for the death or injury to persons or damage to property (sec 24, RA 7160)

Local officials may also be held personally liable

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