THE MAGNA CARTA OF SOCIAL JUSTICE AND ECONOMIC FREEDOM: AN

UNAPPLIED POLICY
_________________________________________________________
House Joint Resolution No. 2. (As finally approved by the Sixth Congress at its NINTH
SPECIAL SESSION)
Introduced by the Special Committee on Social and Economic Planning
JOINT RESOLUTION ESTABLISHING BASIC POLICIES TO ACHIEVE ECONOMIC
DEVELOPMENT AND ATTAIN SOCIAL JUSTICE
WHEREAS, despite progress in certain areas of the national economy, there is urgent need to
accelerate boldly and resolutely the social and economic development of the country;
WHEREAS, the effective solution of the countrys economic and social problems requires a
clear understanding between Congress and the Executive, on the one hand, and the people,
on the other hand, on the basic policies that shall govern the national endeavor towards
economic and social development in order to insure effective cooperation in their
implementation; and
WHEREAS, it is imperative to set forth the core of the national philosophy that will achieve
social justice, develop national self-reliance, and increase the productivity of the national
economy;
Now, therefore, be it Resolved by the Senate and the House of Representatives of the
Philippines in Congress assembled:
To promulgate the following policies that shall govern the country in its efforts to bring about
social and economic development.
A. PARAMOUNT OBJECTIVES OF ECONOMIC POLICY
The sound and balanced development of the economy on a self-sustaining basis, with
emphasis on basic and integrated industries that generate maximum benefits to society, the
widespread application and development of science and technology by the people, the
attainment of maximum employment, and the growth of per capita real income shall be the
paramount objectives of economic policy.
The pursuit and attainment of these objectives are the joint responsibility of the State and of
every Filipino, with the State providing direction to, and coordination of economic activities
through national planning and maintaining conditions that create a favorable climate for
investment that will encourage the people to implement the plan, and will not stifle individual
initiative, innovation or free economic choice, subject to such limitations as the national
interest dictates.
Thus, every encouragement shall be given by the Government to Filipino businessmen and
investors to establish and operate basic and integrated industries essential to change the
structure of our economy, substantially minimize our dependence on imports of raw materials,

semi-processed goods and machinery and equipment, alter the quality and increase the value
our exports, provide greater wages, and achieve a higher rate of economic growth. In arriving
at national decisions affecting the establishment, dispersal and location of such industries, the
State shall be guided by what is socially and economically desirable than what is merely
profitable.
Industries in accepted areas of priority shall be accorded liberal credit facilities, and the
proper industrial financing institution shall be provided with sufficient funds and authority to
satisfy their financial and credit needs specifically and exclusively.
However, if the private sector is unwilling or unable to undertake them despite the financial
assistance and encouragement offered by the State, the State shall assume pioneering
functions particularly in the vital areas which have not been adequately developed.
For this purpose, through an appropriate and effective state development institution, the
government shall vigorously push through a program of industrial and agricultural pioneering
and development, dispersed through the different regions of the country; and to this end, the
State shall establish the required infrastructure including security, transportation and
communication facilities, and a supply of power at reasonable cost throughout the country.
Since the role of Government is to supplement not to supplant, private capital, it shall
relinquish ownership of its enterprises, or the management or operation thereof to the private
sector whenever the latter is ready to take over said enterprises under such conditions as
shall ensure equal opportunities to all and shall not impair the national interest.
The Government shall channel its assets and effort to areas of determined priority and to
activities that will contribute to genuine economic and social development, giving priority to
economic development.
Within the context of what is socially desirable, every effort shall be exerted to persuade and
encourage private capital to invest in enterprises that can operate with maximum efficiency in
providing quality goods and services using domestic raw materials at competitive prices to the
national and foreign markets. However, in their infant stages, products of domestic industries
and agricultural enterprises shall be given competitive advantages in the national market
through direct measures, and foreign markets for these products and others that can be
produced at competitive cost shall be fully explored and developed.
In granting these incentives, priority shall be given to industries that have the potential for full
and complete integration, and to enterprises owned by Farmers Associations and
Cooperatives, and the State shall promote the establishment of enterprises, with dispersed
ownership of such magnitude and resources as will enable them to operate efficiently and
compete effectively specially in foreign markets.
Marketing and distribution shall be granted special incentives, and steps shall be taken to
create a fully integrated system of marketing and distribution of agricultural and industrial
products and to promote Philippine shipping.
B. EFFECTIVE PLANNING FOR SOCIAL AND ECONOMIC DEVELOPMENT

The attainment of our national objectives requires a planned comprehensive, integrated and
resolute approach by the Government and the people together.
Accordingly, there shall be a national economic development authority with powers to plan
and coordinate the nations economic activities.
C. NATIONAL COMMITMENT TO AUSTERIY AND SELF-RELIANCE
Austerity and self-reliance are among the keystones to progress and national greatness.
Conspicuous consumption and the ostentation of wealth are an assault on the social
conscience and should be avoided by all for they are censured by the whole nation.
The disposition of the nations foreign exchange shall be subjected to a rigorous system of
priorities and the importation of items that are not essential to the nations sound and
balanced development shall be subjected to tariff and to quantitative and/or qualitative
measures.
Hereafter, subsidies shall be granted only when absolutely necessary and only to enterprises
at least 70% of the capital of which is owned by Filipinos. agricultural subsidies shall be
granted primarily to commodities essential to the life of the people.
D. COMMITMENT TO SOCIAL JUSTICE AND ECONOMIC DEMOCRACY
The inequities in the distribution of the nations income constitute serious impediments to the
attainment of social justice as ordained by the Constitution and foment of social unrest and
dissatisfaction.
The State shall take steps to enlarge and develop the middle class, prevent unwarranted
monopolies, and reconcile conflicts between the welfare of consumers, entrepreneurial
incentives and the earnings of labor. It shall vigorously pursue a program of increased labor
productivity, together with measures to assure a fair share of economic rewards to labor.
The State shall accelerate agrarian reform and modernization.
It shall give full and continuing support to cooperatives.
In order to achieve the aforementioned objectives, the following steps shall be undertaken
without delay:
The Government shall intensify its effort to spread the principles of cooperative action among
people, and to train them in its practices.
Incentives shall be given to cooperatives and to small and medium- scale enterprises. A
financial institution shall be created, or existing ones strengthened, to provide adequate credit
and financing facilities exclusively to these enterprises.
Private corporations availing themselves of loan funds, equity investment, or incentives from
the Government shall be required to open their capital structure to public participation.

In granting licenses, concessions, and franchises to exploit, develop or utilize natural

resources or to establish and operate public utilities, preference shall be given to
corporations, associations or entities not only on the basis of the capital and managerial
resources of the applicants but also on the degree of dispersal of their ownership,
cooperatives and other applicants with greater public participation being preferred.
The State shall foster profit sharing between capital and labor in private enterprises.
The State shall take steps to prevent the branching out of large corporate entities into
activities unrelated to their primary purpose in a manner that may have as a consequence the
domination of the economy by a few corporations.
Congress shall, as authorized by the Constitution, determine the size of private agricultural
land which persons may own.
Assistance shall be extended by the State to destitute families deserving of such assistance.
E. FISCAL MONETARY AND CREDIT BASE FOR DEVELOPMENT
Monetary, credit and fiscal policies shall be employed to provide adequate non-inflationary
internal funds for private and public investment, together with enough supplementary foreign
exchange; to channel these funds to their most productive uses; and to maintain relatively
stable prices, avoid inflation, encourage savings and prevent distortion of investment.
Sound fiscal policy shall include an appropriate balance of well administered, incentiveoriented, and equitable taxation, both direct and indirect; the avoidance of waste in essential
government expenditures, and the rational resort to government deficits.
Sound monetary policy shall require the Central Bank to maintain discipline over banks, the
treasury and itself, and to impose adequate restraints on credit expansion, while avoiding the
economic stagnation which excessively restrictive policies might produce allowing realistic
interest rates and maintaining realistic foreign exchange rates.
F. POLICY POPULATION
A high rate of population growth poses grave social and economic chal- lenges. The State
shall meet these challenges both by positive social and economic measures that will increase
the productivity of human work, so as to promote economic growth, and by programs of family
planning which respect the religious beliefs of the individuals involved, so as to increase the
share of each Filipino in the fruits of economic development.
G. RESTRUCTURING AND FINANCING THE EDUCATIONAL SYSTEM
Education shall aim to develop moral character, personal discipline and civic conscience, and
to strengthen moral and ethnical standards. It must also impart the skills, instill the attitudes
and spread the values that are essential to rapid and sustained economic growth and achieve
the goals set forth in this joint resolution.
Steps shall be taken, therefore, to restructure and give adequate and continuing support to

the national educational system to increase the economic skills of our people through such
means, among others, as changes in the curricula of public and private schools that will
emphasize scientific and technological professions, managerial and vocational skills, the
dignity of labor, and the highest standard of excellence through the development of an
indigenous school system adapted to the social conditions and needs of the nation and to
the goals set forth in this resolution, and through appropriate incentives such as by granting
loans and credits designed to achieve a level of growth in human capability that will effectively
employ and multiply the physical capital of the nation.
H. AGRICULTURAL AND LAND DEVELOPMENT
The Government shall actively plan and promote the development of the agricultural sector, in
harmony with the industrial sector, in order to achieve increased agricultural productivity and
national self-sufficiency in the basic staples.
To attain these objectives:
Emphasis shall be placed on irrigation, water resource development, the application of
suitable scientific farming methods, power utilization, and extension of liberal credit facilities.
The government shall encourage and support agricultural cooperatives and shall establish a
carefully planned, well-organized national marketing network.
The total electrification of the Philippines on an area coverage basis with reference to rural
areas shall be among the prime objectives of the economic program and shall be given
adequate financing, subsidy or such other incentives as may be needed. In realizing these
objectives, the primary instruments shall be electric cooperatives.
The Government shall immediately implement a thorough-going program of land survey,
classification, and titling in order to hasten the national utilization of the land resources of the
nation.
I. RESOURCES CONSERVATION
The State shall vigorously implement the constitutional policy of resource conservation, by
adopting the following measures, among others.
1. The State shall require those engaged in large-scale exploitation of agricultural, timber,
mineral and other natural resources to establish the industries that will process these
resources into finished products, and shall furnish such assistance as may be necessary to
enable the licenses or concessionaires to comply with this requirement.
2. Forest conservation and reforestation, as well as river and flood control shall be expanded
and efficiently programmed.
3. The minimum and maximum areas of forest concessions and their minimum and maximum
duration shall be established by statute to prevent the exploitation of uneconomic-size units,
avoid short-term leases and encourage the planned development and rational utilization of
forest resources.

4. Areas suitable for grazing shall be systematically conserved and developed to enable the
nation to attain self-sufficiency in meat and dairy products.
5. Marine, fresh water and wild-life resources shall be conserved.
6. Comprehensive studies for the rapid development of water resources throughout the nation
for industrial, agricultural and individual use and as sources of industrial power shall be
undertaken immediately.
7. Tourist attractions shall be preserved and developed in order that both Filipinos and
foreigners may have a better understanding of our historic, cultural and natural heritage. The
state shall pursue the promotion and development of both international and domestic tourism
with equal vigor and constancy.
J. CONSERVATION OF CULTURAL HERITAGE
The cultural and historical heritage of the people shall be conserved and enriched; and the
elements of our culture and traditions that will help attain the goals set forth in this resolution
shall be emphasized, cultivated and disseminated among all sectors of our society.
K. COMMITMENT TO ECONOMIC INDEPENDENCE
Foreign investment is welcome to assist in the economic development of the nation. It shall
not, however, be allowed to dominate the economy or any of strategic areas.
Foreign borrowing by both the public and private sectors shall be preferred to foreign
investment and shall be availed of and utilized exclusively for truly productive purposes.
To increase the participation of Filipinos in the economy, the following principles shall be
observed:
National treatment shall be accorded to foreigners only by law, not by treaty.
Efforts shall be undertaken to place all aspects of the distributive trade in the hands of
Filipinos.
All new institutions performing financial functions shall be owned and controlled by Filipinos.
Foreign financial institutions already operating shall be required to incorporate under
Philippine law and bring in actual capital for their operations; or to take such other steps as
will provide adequate protection for their depositors and creditors and eliminate undue
competitive advantages over Filipino banks.
Government financial and credit institutions shall grant loans and extend credit only to, and
guarantee the obligations only of, Filipinos or domestic corporations at least 70% of the
capital of which is owned and controlled by Filipinos. The State shall determine, by statute,
the minimum portion of loanable funds of private financial and credit institutions, derived or
generated from Philippine sources that shall be used exclusively in granting loans and
extending credit to Filipinos, and shall require that a portion thereof be made available to
small businessmen now shut off from normal sources of credit. Industries vital to national

security shall be regulated as businesses affected with public interest. Steps shall be taken to
place them under the control of Filipinos.
L. COMMITMENT TO FOREIGN POLICY BEFITTING A SOVEREIGN REPUBLIC
1. Foreign policy shall be the fundamental instrument of economic development consistent
with the principles of the Charter of the United Nations.
2. Regional cooperation compatible with the National interest shall be promoted to ensure
understanding and collaboration with our neighboring countries.
3. Efforts shall be exerted to establish trade relations with as many countries as possible and
to maintain balanced trade with each of them.
4. Foreign economic policy shall strive toward diversification of the countrys sources of
imports and of markets for its export products.
Approved.
Signed into law by:
President Ferdinand E. Marcos On August 4, 1969.