A Briefer On

THE POSSIBLE CHARTER CHANGE FOR ECONOMIC PROVISIONS

prepared by the Coalition for a Citizens Constitution (C4CC) , April 2014
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A. Updates/Status on Charter Change for Economic Provisions

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Charter change (Cha-cha) issues are again becoming the talk of the town. The general public has started to discuss
the issue as House Speaker Feliciano Belmonte declared his plans to amend the 1987 Constitution.

Belmontes proposal (Resolution of Both Houses 0001) focuses on the proposed amendments to certain economic
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provisions of the 1987 Constitution, particularly on Art. XII (National Economy & Patrimony), XIV (Education, Science
and Technology, Arts, Culture, & Sports), & XVI (General Provisions).
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During the 4th Regular Meeting and Public Consultation organized by the Committee on Constitutional Amendments
last Feb 19, 2014, C4CC was invited to present their stand on charter change: yes to political reform, no to proposed
amendments to economic provisions; yes to CONCON, no to CON-ASS; yes to Federal and Asset Reform.

RBH0001 was approved at the committee level with 24 legislators in favor, 2 against and 1 abstain during the 6

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Meeting of the Committee on Constitutional Amendments conducted last March 3, 2014.

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This will be subject to Plenary discussion once the session resumes on May 5, 2014.

B. CLOSER LOOK AT RBH0001

I.

Why amend certain economic provisions of the 1987 Constitution of the Philippines?

The Constitution, as a covenant between the State and the people, vests on the government the duty to provide decent
living conditions to its people

The Mandate given to current leaders who advocated for change signifies renewed trust in the government and
immense optimism in its ability and commitment to bring about improvement in the quality of life of Filipinos

The trust reposed by the people upon the countrys leaders has encouraged more investments which have led to
economic growth, earning for the Philippines the reputation as the fastest growing economy in Asia

Growing global interest in Asia provides an opportunity for the Philippines to compete for more investments

Statistics show that despite the economic growth, poverty incidence remained constant for the past 6 years

In order to realize the full benefit of inclusive growth, the restrictive economic provisions in the Philippine Constitution
which hamper the flow of foreign capital investments must be lifted

II.

How will this change be brought about?

Both Senate and the House of Representatives must

o

Reach a vote of all its members

Vote separately

Amend Art. XII (National Economy & Patrimony), XIV (Education, Science and Technology, Arts, Culture, &
Sports), & XVI (General Provisions) of the 1987 Constitution

III. What do they want to change?

* Emphasized portions (BOLD) are those which RBH 0001 seeks to insert to the current sections of the 1987 Constitution
Par. 1, Sec. 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. The exploration, development, and
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C4CC is a nationwide network of non-government organizations (NGOs) and NGO networks that was established in 2004 to oppose the

various moves in Congress to revise the constitution through a Constituent Assembly (Con-Ass). Instead, the group has been batting for a more
democratic and participatory Constitutional Convention (Con-Con) and for changes to further democratization such as a federal form of
government to give way to more decentralized governance.
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RESOLUTION OF BOTH HOUSES PROPOSING AMENDMENTS TO CERTAIN ECONOMIC PROVISIONS OF THE 1987 CONSTITUTION OF

THE REPUBLIC OF THE PHILIPPINES PARTICULARLY ON ARTICLES XII, XIV & XVI; filed by Cong. Feliciano Belmonte Jr. last July 5, 2013 in the
Congress.

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 60 per centum of whose capital is owned by such citizens,
UNLESS OTHERWISE PROVIDED BY LAW. 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 provided by law. In cases
of water rights for irrigation, water supply, fisheries, or industrial uses other than the development of waterpower,
beneficial use may be the measure and limit of the grant.
Par. 1, Sec. 3, Art XII
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 to 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, UNLESS
OTHERWISE PROVIDED BY LAW. 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.
Sec. 7, Art XII
Save in cases of hereditary succession, UNLESS OTHERWISE PROVIDED BY LAW, no private lands shall be
transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the
public domain.
Par. 1, Sec. 10, Art. XII
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, UNLESS
OTHERWISE PROVIDED BY LAW. The Congress shall enact measures that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos.
Sec. 11, Art XII
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, UNLESS OTHERWISE PROVIDED BY LAW; 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. UNLESS OTHERWISE PROVIDED BY LAW, [t]he 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.
Par. 1 & 2, No. 2, Sec. 4, Art XIV
Educational institutions, other than those established by religious groups and mission boards, shall be owned solely
by citizens of the Philippines or corporations or associations at least sixty per centum of the capital of which is owned
by such citizens, UNLESS OTHERWISE PROVIDED BY LAW. The Congress may, however, require increased Filipino
equity participation in all educational institutions.
The control and administration of educational institutions shall be vested in citizens of the Philippines, UNLESS
OTHERWISE PROVIDED BY LAW.
Par. 1, No. 1, Sec. 11, Art. XVI
The ownership and management of mass media shall be limited to citizens of the Philippines, or to corporations,
cooperatives or associations, wholly-owned and managed by such citizens, UNLESS OTHERWISE PROVIDED BY
LAW.
Par. 2 & 3, No. 2, Sec 11, Art. XVI
Only Filipino citizens or corporations or associations at least seventy per centum of the capital of which is owned by
such citizens shall be allowed to engage in the advertising industry, UNLESS OTHERWISE PROVIDED BY LAW.

UNLESS OTHERWISE PROVIDED BY LAW, [t]he participation of foreign investors in the governing body of entities in
such industry shall be limited to their proportionate share in the capital thereof, and all the executive and managing
officers of such entities must be citizens of the Philippines.
IV. What do other people think? (from Resource persons invited during the Meeting held on February 19, 2014)
In favor of RBH 0001 Amendments

Constitution has reached its limit in terms of its ability to

Against RBH 0001 Amendments

lend itself to the changing times and environment

BY LAW might degrade the fundamental law to the level

We need to open up our economy to attract foreign

of an ordinary piece of legislation

investments, create new jobs, and invigorate our anti-

poverty programs

vary the changes

no more permanency on the provisions

provisions to be amended.

public domain, our natural resources, mass media, and

policies to implement the economic provisions should

education can altogether be owned by foreigners

If there would be future abuse on the part of legislators,

there are remedies within the legal framework. Good
1935 Constitution is superior to all other Constitutions, so

labor sector needs to be globally competitive vis-a-vis its

Philippines being competitive in the ASEAN market is at

An improved healthy competition will result in better

we have to have consensus in reviewing the

Constitution

harassment of foreign investors

we have to consider the interests of our basic sectors

Growth is not inclusive - despite a growing economy, we

It will not be easy to make changes in major pieces of

havent yet resolved the problem of poverty in our

legislation, as this requires the presence of an

country. it is not spread out to benefit the great majority

overwhelming set of facts and evidence.

these proposals will require intensive study on the

As to land ownership, foreign investors need to be

impact of globalization and liberation towards foreign

allowed to use land as collateral, raise capital and

investment in our country on education

develop under-invested and underdeveloped lands in

the country
the 40% equity limits is discouraging the entry of
sizeable risk capital in public utilities
comparing experience in the sector across Asia,
partnerships with transnational education institutions
have improved the quality and relevance of the
programs and products

The prohibition against foreign ownership of land may

be relaxed, but should be restricted by Congress

these restrictions give rise to the corruption and

as agri-business, tourism, real estate, and banking, to

risk

with the restrictions, the Philippines has had difficulty in

investments in sectors where land is a key factor, such

There are now 10 jobs that are being opened to

foreigners and by amending it, the question of the

of the people

cannot handle and might affect the labor sector

society.

attracting foreign investors.

it may open the floodgates of different laws that we

An improved economy will trickle down to all sectors of

products and services to the people in general.

no assurance as to the integrity and patriotism of the

next Speaker and future members of the House

neighbors, in time for the 2015 ASEAN Free Trade

Agreement

Education and mass media can be controlled by

foreigners and soon Filipinos will lose their culture

it may be best to adopt its economic provisions

It is possible that a law can be passed which will not

recognize the Filipinization of our natural resources

faith on the part of Congress must be assumed

It might introduce instability as future Congresses may

resolution is very clear in its desired procedure and the

not be constitutional but statutory in effect

Inserting the clause UNLESS OTHERWISE PROVIDED

Easing restrictions on ownership of educational

institutions would help improve the quality of graduates

who may be tapped for higher value services like IT

services and BPO

Mining, despite numerous challenges, has grown only at

around 11% per annum from 2000 to 2010

There are situations now that may be useful, effective,

and relevant, but many years from now, they might
change. Thus, the flexibility of allowing Congress to
make those changes would be more practical than
having it embedded in our constitution

the requirement of 60 50% in a corporation have ways

of getting around. Knowing how corporations operate,
the 40% can get the proxy of the 60%
In favor of convening a Constituent Assembly

less costly

easier to control, minimizing the risk of people meddling

In favor of convening a Constitutional Convention

interests, and will push us into genuine inclusive growth

into the other parts of the Constitution

more participative, will accommodate the basic sectors

avoid the possible dilatory legal process should
challenges be introduced

C. CURRENT C4CC STAND ON CHARTER CHANGE

Yes to Political Reform, No to Amendment of the Economic Provisions
Yes to Con-Con, No to Con-Ass
(February 2014; forwarded to the Committee)
The Coalition for a Citizens Constitution (C4CC) welcomes the consensus of the Charter change advocates that it is the
right time to review and change the 1987 Constitution.
However, we believe that we need to reform the political system of our country, and not the national economy and
patrimony provisions. Also, we disagree with the proposal to amend the constitution through a Constituent Assembly (CONASS). We believe that CON-ASS is an elitist manner of constitutional reform. The appropriate mode to revise the Constitution
is through a more participatory, objective, and more deliberative Constitutional Convention (CON-CON) whose members are
elected for no other purpose than to review and propose changes to the Constitution.
The proposed constitutional changes for economic provisions are based on the argument that these supposedly
restrictive provisions of the constitution impede the entry of foreign direct investments into the country resulting to the inability of
our economy to generate much needed jobs. These provisions, it is argued, limit the flexibility of the government in responding
to the changes in the global economic environment, adversely affecting the capacity of the country to achieve faster economic
growth.
We in C4CC, believe that our economy should still be founded on the basic principle articulated in Article II Section 19 of
the 1987 constitution which provides that the State shall develop a self-reliant and independent national economy effectively
controlled by Filipinos. With this, it is necessary that the state must protect Filipino enterprises against unfair foreign
competition and trade practices. Who should we expect to protect Filipino enterprises from the intense competition of global
economy especially when we know that the global playing field is uneven?
Land has often been the flashpoint for conflict in the Philippines, and the proposition that foreigners will be allowed to
own land when millions of Filipinos cannot, given the still incomplete land reform and the increasing settlement problems in
urban centers, makes this issue potentially the most contentious of all the proposed constitutional revisions.
We oppose opening our lands to foreign ownership. The proposed amendments apparently allow foreign ownership
only of residential, commercial and industrial lands. However, this would certainly open the gates wider to indiscriminate
conversion of agricultural lands by landowners who would want to cash in on these amendments. Foreign ownership of

residential lands would also further jack up prices of land in the cities and town centers, adversely affecting the urban poors
campaign for safe, decent and affordable human settlements
We also highly doubt whether foreign investments will come into the country as a result of the changes in the economic
provisions of the constitution. The Philippines is already one of the most open economies in the world. Compared to many of
our trade and investment-restrictive neighbors, movement in liberalizing foreign investment in the Philippines has been marked,
consistent, and applauded by the international business press. Yet this approval has not translated into significantly higher levels
of foreign investments.
In fact, for the nationalists, it is not anymore just a question of preventing the removal of nationalist constitutional
provisions. It is what should be done in a situation where these provisions are being rendered inutile through a mix of legislative
measures, executive issuance and judicial interpretations of the provisions of the constitution.
We believe that the root cause of the low inflow of foreign investment into the country is not mainly the constitutional
restrictions; but rather the entire architecture of the political system in the country which promotes and nurtures patronage-based,
elitist, manipulative and corrupt politics.
We reiterate that the fundamental issue on Constitutional Reform is political reform, not economic reform. We believe
that veering away from an over-centralized system of decision-making and giving more shared powers and responsibility to the
local governments and the regions through a federal form of government will unleash enormous economic and civic energies
untapped by the present system.