In partial fulfillment for Constitutional Law 1

A Self-Reliant and Independent Economic Order

Submitted to:

Atty. Adolf Ryan Lantion

Tuesday 5:30-8:30PM

Submitted by:

Midtimbang, Datu Hasanal Bannah

Mutalib, Nailah A.

Dunque, Bernadette Panes

Sambrano, Jim Leo Valen P.

Palec, Jerry Mark

October 13, 2019

 4. A Self-Reliant and Independent Economic Order

LEGAL BASES

Article II, Section 19. The State shall develop a self-reliant and independent national economy
effectively controlled by Filipinos.

Section 19 of Article II states the constitutional guidelines in the development of the economy.
These are:

 Economic self-reliance;
 Independent national economy;
 Effective Filipino control of the economy.

Article II, Section 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments.

Roles of the private sector in the economy:

1. Encouragement of private enterprise – In recognition of the indispensable role of the

private sector as the main engine of economic development, the State is mandated to
encourage private enterprise and to provide incentives to needed investments, whether
local or foreign. The Constitution does not favor an economy where the State directly
competes or involves with private business. Furthermore, the government should see every
private business as an equal entity and must not favor any private entities.

2. Principle of Subsidiarity – Under this principle adopted by the Constitution in the above
provision, the government should not engage in particular business activities which can be
competently and efficiently undertaken by the private sector unless the latter is timid or
does not want to enter into a specific industry or enterprise. (Article XII, Sections 6, 16.)
The government was not established to engage in business. The duty of the State is to make
the economy a system for free and private enterprise with the least government intervention
in business affairs to create and maintain an environment that sustains healthy business
competition.

Article XII, Sec. 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.
 These provisions reveal that the economic policy of the Philippines is one closer to
socialism than capitalism. The State adopts a policy of balancing the private sector's pursuit for
profit and the concern of the State to promote distributive justice.

The use of "distributive justice" is based on the Aristotelian notion of giving each one what
is due him on the basis of personal worth and value, and not merely what he has contracted for.

RELEVANT LAWS

REPUBLIC ACT NO. 7721 - AN ACT LIBERALIZING THE ENTRY AND SCOPE OF
OPERATIONS OF FOREIGN BANKS IN THE PHILIPPINES AND FOR OTHER
PURPOSES

Section 1. Declaration of Policy. – The State shall develop a self-reliant and independent national
economy effectively controlled by Filipinos and encourage, promote, and maintain a stable,
competitive, efficient, and dynamic banking and financial system that will stimulate economic
growth, attract foreign investments, provide a wider variety of financial services to Philippine
enterprises, households and individuals, strengthen linkages with global financial centers, enhance
the country's competitiveness in the international market and serve as a channel for the flow of
funds and investments into the economy to promote industrialization.

Pursuant to this policy, the Philippine banking and financial system is hereby liberalized to create
a more competitive environment and encourage greater foreign participation through increase in
ownership in domestic banks by foreign banks and the entry of new foreign bank branches.
In allowing increased foreign participation in the financial system, it shall be the policy of the State
that the financial system shall remain effectively controlled by Filipinos.

REPUBLIC ACT NO. 7042 (As amended by RA 8179) AN ACT TO PROMOTE FOREIGN
INVESTMENTS, PRESCRIBE THE PROCEDURES FOR REGISTERING
ENTERPRISES DOING BUSINESS IN THE PHILIPPINES, AND FOR OTHER
PURPOSES

Section 1. Title. – This Act shall be known as the “Foreign Investments Act of 1991”.

Section 2. Declaration of Policy. – It is the policy of the State to attract, promote and welcome
productive investments from foreign individuals, partnerships, corporations, and governments,
including their political subdivisions, in activities which significantly contribute to national
industrialization and socio-economic development to the extent that foreign investment is allowed
in such activity by the Constitution and relevant laws. Foreign investments shall be encouraged in
enterprises that significantly expand livelihood and employment opportunities for Filipinos;
enhance economic value of farm products; promote the welfare of Filipino consumers; expand the
scope, quality and volume of exports and their access to foreign markets; and/or transfer relevant
technologies in agriculture, industry and support services. Foreign investments shall be welcome
as a supplement to Filipino capital and technology in those enterprises serving mainly the domestic
market.

As a general rule, there are no restrictions on extent of foreign ownership of export

enterprises. In domestic market enterprises, foreigners can invest as much as one hundred percent
(100%) equity except in areas included in the negative list. Foreign owned firms catering mainly
to the domestic market shall be encouraged to undertake measures that will gradually increase
Filipino participation in their businesses by taking in Filipino partners, electing Filipinos to the
board of directors, implementing transfer of technology to Filipinos, generating more employment
for the economy and enhancing skills of Filipino workers.

REPUBLIC ACT No. 6957 July 9, 1990

AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND

MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR,
AND FOR THE OTHER

Section 1. Declaration of Policy. – It is the declared policy of the State to recognize the
indispensable role of the private sector as the main engine for national growth and development
and provide the most appropriate favorable incentives to mobilize private resources for the
purpose.

Section 2. Definition of Terms. – The following terms used in this Act shall have the meanings
stated below:

(a) Build-operate-and-transfer scheme. – A contractual arrangement whereby the contractor

undertakes the construction, including financing, of a given infrastructure facility, and the
operation and maintenance thereof. The contractor operates the facility over a fixed term during
which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges sufficient to
enable the contractor to recover its operating and maintenance expenses and its investment in the
project plus a reasonable rate of return thereon. The contractor transfers the facility to the
government agency or local government unit concerned at the end of the fixed term which shall
not exceed fifty (50) years. For the construction stage, the contractor may obtain financing from
foreign and/or domestic sources and/or engage the services of a foreign and/or Filipino constructor:
provided, that the ownership structure of the contractor of an infrastructure facility whose
operation requires a public utility franchise must be in accordance with the Constitution: provided,
however, that, in the case of corporate investors in the build-operate-and-transfer corporation, the
citizenship of each stockholder in the corporate investors shall be the basis for the computation of
Filipino equity in the said corporation: provided, further, that, in the case of foreign constructors,
Filipino labor shall be employed or hired in the different phases of the construction where Filipino
skills are available: provided, furthermore, that the financing of a foreign or foreign-controlled
contractor from Philippine government financing institutions shall not exceed twenty percent
(20%) of the total cost of the infrastructure facility of project: provided, finally, that financing from
foreign sources shall not require a guarantee by the Government or by government-owned or
controlled corporations. The build-operate-and-transfer scheme shall include a supply-and-operate
situation which is a contractual arrangement whereby the supplier of equipment and machinery for
a given infrastructure facility, if the interest of the Government so requires, operates the facility
providing in the process technology transfer and training to Filipino nationals.

(b) Build-and-transfer scheme. – A contractual arrangement whereby the contractor undertakes

the construction, including financing, of a given infrastructure facility, and its turnover after
completion to the government agency or local government unit concerned which shall pay the
contractor its total investment expended on the project, plus a reasonable rate of return thereon.
This arrangement may be employed in the construction of any infrastructure project including
critical facilities which, for security or strategic reasons, must be operated directly by the
Government.

Section 3. Private Initiative in Infrastructure. – All government infrastructure agencies,

including government-owned and controlled corporations and local government units, are hereby
authorized to enter into contract with any duly prequalified private contractor for the financing,
construction, operation and maintenance of any financially viable infrastructure facilities through
the build-operate-and-transfer or build-and-transfer scheme, subject to the terms and conditions
hereinafter set forth.

Section 4. Priority Projects. – All concerned infrastructure agencies, including government-

owned and controlled corporations and local government units, shall include in their infrastructure
programs those priority projects that may be financed, constructed, operated and maintained by
the private sector under the provisions of this Act.t shall be the duty of all concerned infrastructure
agencies to give wide publicity to all projects eligible for financing under this Act, including
publication in national newspapers of general circulation once every six (6) months and official
notification of contractors registered with them. The lists of all such national projects must be part
of the medium-term infrastructure programs of the agencies concerned and must be duly approved
by Congress. Local projects funded and implemented by the local government units concerned
shall be submitted to the local development councils for confirmation or approval.
Section 5. Public Bidding of Projects. – Upon approval of the projects mentioned in Section 4 of
this Act, the concerned head of the infrastructure agency or local government unit shall forthwith
cause to be published, once every week for three (3) consecutive weeks, in at least two (2)
newspapers of general circulation and in at least one (1) local newspaper which is circulated in the
region, province, city or municipality in which the project is to be constructed a notice inviting all
duly prequalified infrastructure contractors to participate in a public bidding for the projects so
approved.n the case of a build-operate-and-transfer arrangement, the contract shall be awarded to
the lowest complying bidder based on the present value of its proposed tolls, fees, rentals, and
charges over a fixed term or the facility to be constructed, operated, and maintained according to
the prescribed minimum design and performance standards, plans, and specifications. For this
purpose, the winning contractor shall be automatically granted by the infrastructure agency or local
government unit the franchise to operate and maintain the facility, including the collection of tools,
fees, rentals, and charges in accordance with Section 6 hereof.

In the case of build-and-transfer arrangement, the contract shall be awarded to the lowest
complying bidder based on the present value of its proposed schedule of amortization payments
for the facility to be constructed according to the prescribed minimum design and performance
standards, plans and specifications: provided, however, that a Filipino constructor who submits an
equally advantageous bid shall be given preference.

A copy of each build-operate-and-transfer or build-and-transfer contract shall forthwith be

submitted to Congress for its information.

Section 6. Repayment Scheme. – For the financing, construction, operation, and maintenance of
any infrastructure project undertaken pursuant to the provisions of this Act, the contractor shall be
entitled to a reasonable return of its investment and operating and maintenance costs in accordance
with its bid proposal as accepted by the concerned contracting infrastructure agency or local
government unit and incorporated in the contract's terms and conditions.n the case of a build-
operate-and-transfer arrangement, this repayment scheme is to be effected by authorizing the
contractor to charge and collect reasonable tools, fees, rentals, and charges for the use of the project
facility not exceeding those proposed in the bid and incorporated in the contract: provided, that the
government infrastructure agency or local government unit concerned shall approve the fairness
and equity of the tolls, fees, rentals and charges except in case of tolls for national highways, roads,
bridges and public thoroughfares which shall be approved by the Toll Regulatory Board: provided,
further, that the imposition and collection of tolls, fees, rentals and charges shall be for a fixed
term as proposed in the bid and incorporated in the contract but in no case shall this term exceed
fifty (50) years: provided, finally, that during the lifetime of the franchise, the contractor shall
undertake the necessary maintenance and repair of the facility in accordance with standards
prescribed in the bidding documents and in the contract.n the case of a build-and-transfer
arrangement, the repayment scheme is to be effected through amortization payments by the
government infrastructure agency or local government unit concerned to the contractor according
to the scheme proposed in the bid and incorporated in the contract.

In the case of land reclamation or the building of industrial estates, the repayment scheme may
consist of the grant of a portion or percentage of the reclaimed land or industrial estate built, subject
to the constitutional requirements with respect to the ownership of lands.

Section 7. Contract Termination and Adjustment. – In the event that a project is revoked,
cancelled or terminated by the Government through no fault of the contractor or by mutual
agreement, the Government shall compensate the said contractor for its actual expenses incurred
in the project plus a reasonable rate of return thereon not exceeding that stated in the bidding
documents and in the contract as of the date of such revocation, cancellation or termination:
provided, that the interest of the Government in these instances shall be duly insured with the
Government Service Insurance System or any other insurance entity duly accredited by the Office
of the Insurance Commissioner: provided, finally, that the cost of the insurance coverage shall be
included in the terms and conditions of the bidding referred to above. The tolls, fees, rentals and
charges on the facility are subject to adjustment according to a formula related to official
government price indices which shall be defined before the bidding, through the bidding
documents, and incorporated in the contract.

Section 8. Toll Regulatory Board. – The Toll Regulatory Board is hereby attached to the
Department of Public Works and Highways with the Secretary of Public Works and Highways as
Chairman.

Section 9. Project Supervision. – Every infrastructure project undertaken under the provisions of
this Act shall be constructed, operated and maintained by the contractor concerned in accordance
with the plans, specifications, standards, and costs approved by the concerned government
infrastructure agency and under the technical supervision of the said agency.

Section 10. Implementing Rules and Regulations. – A committee composed and representatives
from the Department of Public Works and Highways, the Department of Finance, the Department
of Local Government, the National Economic and Development Authority, and duly accredited
organizations representing the private Philippine construction industry shall formulate and
prescribe, after public hearing and publication as required by law, the implementing rules and
regulations, including, among others, the criteria and guidelines for evaluation of bid proposals,
provisions to subject the facility collections to audit by the Commission on Audit, and conditions
for the cancellation of contracts, in order to carry out the provisions of this Act.
Section 11. Repealing Clause. – All laws or parts of any law inconsistent with the provisions of
this Act are hereby repealed or modified accordingly.

Section 12. Separability Clause. – If any provision of this Act is held invalid, the other provisions
not affected thereby shall continue in operation.

Section 13. Effectivity. – This Act shall take effect fifteen (15) days after its publication in at least
two (2) newspapers of general circulation.

Approved: July 9, 1990

RELEVANT JURISPRUDENCE

GARCIA vs BOI (191 SCRA 288)

FACTS: The BOI approved the transfer of the site of the petrochemical plant from Bataan to
Batangas and shift of feedstock for that plant from naphtha only to naphtha and/or LPG. The
petrochemical plant was to be a joint venture between the PNOC and the BPC which is a
Taiwanese group. According to the BOI, it is the investor which has the final say as to the site
and the feedstock to be used.

HELD: Every provision of the Constitution on the national economy and patrimony is infused
with the spirit of national interest. The non-alienation of natural resources, the State's full
control over the development and utilization of scarce resources, agreements with foreigners
being based on real contributions to the economic growth and general welfare of the country and
the regulation of foreign investments in accordance with national goals and priorities are too
explicit not to be noticed and understood.

A petrochemical industry is not an ordinary investment opportunity. The petrochemical industry

is essential to the national interest. The BOI committed a grave abuse of discretion when it
approved the transfer of the petrochemical plant from Bataan to Batangas and authorized the
change of feedstock from naphtha only to naphtha and/or LPG. No cogent advantage to the govt.
has been shown by this transfer. This is a repudiation of the independent policy of the govt.
expressed in numerous laws and the Constitution to run its own affairs the way it deems best for
the national interest.

MANILA PRINCE HOTEL vs GSIS

G.R. NO. 122156. February 3, 1997

FACTS: The controversy arose when respondent Government Service Insurance System (GSIS),
pursuant to the privatization program of the Philippine Government, decided to sell through public
bidding 30% to 51% of the issued and outstanding shares of respondent Manila Hotel Corporation
(MHC). The winning bidder, or the eventual “strategic partner,” will provide management
expertise or an international marketing/reservation system, and financial support to strengthen the
profitability and performance of the Manila Hotel.

In a close bidding held on 18 September 1995 only two (2) bidders participated: petitioner
Manila Prince Hotel Corporation, a Filipino corporation, which offered to buy 51% of the MHC
or 15,300,000 shares at P41.58 per share, and Renong Berhad, a Malaysian firm, with ITT-
Sheraton as its hotel operator, which bid for the same number of shares at P44.00 per share, or
P2.42 more than the bid of petitioner. Prior to the declaration of Renong Berhard as the winning
bidder, petitioner Manila Prince Hotel matched the bid price and sent a manager’s check as bid
security, which GSIS refused to accept.
 Apprehensive that GSIS has disregarded the tender of the matching bid and that the sale
may be consummated with Renong Berhad, petitioner filed a petition before the Court.

ISSUE: Whether or not the Manila Hotel forms part of the national patrimony.

Section 10, second paragraph, Article XII of the 1987 Constitution is a mandatory, positive
command which is complete in itself and which needs no further guidelines or implementing laws
or rules for its enforcement. From its very words the provision does not require any legislation to
put it in operation. It is per se judicially enforceable. When our Constitution mandates that in the
grant of rights, privileges, and concessions covering national economy and patrimony, the State
shall give preference to qualified Filipinos, it means just that – qualified Filipinos shall be
preferred. And when our Constitution declares that a right exists in certain specified circumstances
an action may be maintained to enforce such right notwithstanding the absence of any legislation
on the subject; consequently, if there is no statute especially enacted to enforce such constitutional
right, such right enforces itself by its own inherent potency and puissance, and from which all
legislations must take their bearings. Where there is a right, there is a remedy (Ubi jus ibi
remedium).

The Court agreed.

In its plain and ordinary meaning, the term patrimony pertains to heritage. When the
Constitution speaks of national patrimony, it refers not only to the natural resources of the
Philippines, as the Constitution could have very well used the term natural resources, but also to
the cultural heritage of the Filipinos.

It also refers to Filipino’s intelligence in arts, sciences and letters. In the present case,
Manila Hotel has become a landmark, a living testimonial of Philippine heritage. While it was
restrictively an American hotel when it first opened in 1912, a concourse for the elite, it has since
then become the venue of various significant events which have shaped Philippine history.

Verily, Manila Hotel has become part of our national economy and patrimony. For sure,
51% of the equity of the MHC comes within the purview of the constitutional shelter for it
comprises the majority and controlling stock, so that anyone who acquires or owns the 51% will
have actual control and management of the hotel. In this instance, 51% of the MHC cannot be
disassociated from the hotel and the land on which the hotel edifice stands.

In the instant case, where a foreign firm submits the highest bid in a public bidding
concerning the grant of rights, privileges and concessions covering the national economy and
patrimony, thereby exceeding the bid of a Filipino, there is no question that the Filipino will have
to be allowed to match the bid of the foreign entity. And if the Filipino matches the bid of a foreign
firm the award should go to the Filipino. It must be so if the Court is to give life and meaning to
the Filipino First Policy provision of the 1987 Constitution. For, while this may neither be
expressly stated nor contemplated in the bidding rules, the constitutional fiat is omnipresent to be
simply disregarded. To ignore it would be to sanction a perilous skirting of the basic law.

The Court does not discount the apprehension that this policy may discourage foreign
investors. But the Constitution and laws of the Philippines are understood to be always open to
public scrutiny. These are given factors which investors must consider when venturing into
business in a foreign jurisdiction. Any person therefore desiring to do business in the Philippines
or with any of its agencies or instrumentalities is presumed to know his rights and obligations
under the Constitution and the laws of the forum.

To insist on selling the Manila Hotel to foreigners when there is a Filipino group willing
to match the bid of the foreign group is to insist that government be treated as any other ordinary
market player, and bound by its mistakes or gross errors of judgement, regardless of the
consequences to the Filipino people. The miscomprehension of the Constitution is regrettable.
Thus, the Court would rather remedy the indiscretion while there is still an opportunity to do so
than let the government develop the habit of forgetting that the Constitution lays down the basic
conditions and parameters for its actions.

Since petitioner has already matched the bid price tendered by Renong Berhad pursuant
to the bidding rules, respondent GSIS is left with no alternative but to award to petitioner the
block of shares of MHC and to execute the necessary agreements and documents to effect the
sale in accordance not only with the bidding guidelines and procedures but with the Constitution
as well. The refusal of respondent GSIS to execute the corresponding documents with petitioner
as provided in the bidding rules after the latter has matched the bid of the Malaysian firm clearly
constitutes grave abuse of discretion.

Hence, respondents GOVERNMENT SERVICE INSURANCE SYSTEM, MANILA

HOTEL CORPORATION, COMMITTEE ON PRIVATIZATION and OFFICE OF THE
GOVERNMENT CORPORATE COUNSEL are directed to CEASE and DESIST from selling
51% of the shares of the Manila Hotel Corporation to RENONG BERHAD, and to ACCEPT the
matching bid of petitioner MANILA PRINCE HOTEL CORPORATION to purchase the subject
51% of the shares of the Manila Hotel Corporation at P44.00 per share and thereafter to execute
the necessary agreements and documents to effect the sale, to issue the necessary clearances and
to do such other acts and deeds as may be necessary for the purpose.

TANADA vs ANGARA

G. R. No. 118295. May 2, 1997

FACTS: This is a case petition by Sen. Wigberto Tanada, together with other lawmakers,
taxpayers, and various NGO’s to nullify the Philippine ratification of the World Trade
Organization (WTO) Agreement.

Petitioners believe that this will be detrimental to the growth of our National Economy and
against to the “Filipino First” policy. The WTO opens access to foreign markets, especially its
major trading partners, through the reduction of tariffs on its exports, particularly agricultural and
industrial products. Thus, provides new opportunities for the service sector cost and uncertainty
associated with exporting and more investment in the country. These are the predicted benefits as
reflected in the agreement and as viewed by the signatory Senators, a “free market” espoused by
WTO.

Petitioners also contends that it is in conflict with the provisions of our constitution, since
the said Agreement is an assault on the sovereign powers of the Philippines because it meant that
Congress could not pass legislation that would be good for national interest and general welfare if
such legislation would not conform to the WTO Agreement.

ISSUE: Whether or not the provisions of the ‘Agreement Establishing the World Trade
Organization and the Agreements and Associated Legal Instruments, cited by petitioners directly
contravene or undermine the letter, spirit and intent of Section 19, Article II and Sections 10 and
12, Article XII of the 1987 Constitution.

HELD: Although the Constitution mandates to develop a self-reliant and independent national
economy controlled by Filipinos, does not necessarily rule out the entry of foreign investments,
goods and services. It contemplates neither “economic seclusion” nor “mendicancy in the
international community.” The WTO itself has some built-in advantages to protect weak and
developing economies, which comprise the vast majority of its members. Unlike in the UN where
major states have permanent seats and veto powers in the Security Council, in the WTO, decisions
are made on the basis of sovereign equality, with each member’s vote equal in weight to that of
any other. Hence, poor countries can protect their common interests more effectively through the
WTO than through one-on-one negotiations with developed countries. Within the WTO,
developing countries can form powerful blocs to push their economic agenda more decisively than
outside the Organization. Such is not merely a matter of practical alliances but a negotiating
strategy rooted in law. Thus, the basic principles underlying the WTO Agreement recognize the
need of developing countries like the Philippines to “share in the growth in international trade
commensurate with the needs of their economic development.”

In its Declaration of Principles and State Policies, the Constitution “adopts the generally
accepted principles of international law as part of the law of the land, and adheres to the policy of
peace, equality, justice, freedom, cooperation and amity, with all nations. By the doctrine of
incorporation, the country is bound by generally accepted principles of international law, which
are considered to be automatically part of our own laws. A state which has contracted valid
international obligations is bound to make in its legislations such modifications as may be
necessary to ensure the fulfillment of the obligations undertaken. Paragraph 1, Article 34 of the
General Provisions and Basic Principles of the Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) may intrude on the power of the Supreme Court to
promulgate rules concerning pleading, practice and procedures. With regard to Infringement of a
design patent, WTO members shall be free to determine the appropriate method of implementing
the provision

While the Constitution indeed mandates a bias in favor of Filipino goods, services, labor
and enterprises, at the same time, it recognizes the need for business exchange with the rest of the
world on the bases of equality and reciprocity and limits protection of Filipino enterprises only
against foreign competition and trade practices that are unfair. In other words, the Constitution did
not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and
services in the development of the Philippine economy. While the Constitution does not encourage
the unlimited entry of foreign goods, services and investments into the country, it does not prohibit
them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only
on foreign competition that is unfair.

By their inherent nature, treaties really limit or restrict the absoluteness of sovereignty. By
their voluntary act, nations may surrender some aspects of their state power in exchange for greater
benefits granted by or derived from a convention or pact. After all, states, like individuals, live
with coequals, and in pursuit of mutually covenanted objectives and benefits, they also commonly
agree to limit the exercise of their otherwise absolute rights. As shown by the foregoing treaties
Philippines has entered, a portion of sovereignty may be waived without violating the Constitution,
based on the rationale that the Philippines “adopts the generally accepted principles of international
law as part of the law of the land and adheres to the policy of cooperation and amity with all
nations.”

Association of Philippine Coconut Desiccators v. PCA

G.R. No. 110526 February 10, 1998
Facts:

PCA was created by PD 232 as independent public corporation to promote the rapid
integrated development and growth of the coconut and other palm oil industry in all its aspects and
to ensure that coconut farmers become direct participants in, and beneficiaries of, such
development and growth through a regulatory scheme set up by law. PCA is also in charge of the
issuing of licenses to would-be coconut plant operators. On 24 March 1993, however, PCA issued
Board Resolution No. 018-93 which no longer require those wishing to engage in coconut
processing to apply for licenses as a condition for engaging in such business. The purpose of which
is to promote free enterprise unhampered by protective regulations and unnecessary bureaucratic
red tapes. But this caused cut-throat competition among operators specifically in congested areas,
underselling, smuggling, and the decline of coconut-based commodities. The APCD then filed a
petition for mandamus to compel PCA to revoke BR No. 018-93.

Issue:

whether or not PCA ran in conflict against the very nature of its creation

Held:

Yes. Our Constitutions, beginning with the 1935 document, have repudiated laissez-faire
as an economic principle. Although the present Constitution enshrines free enterprise as a policy,
it nonetheless reserves to the government the power to intervene whenever necessary to promote
the general welfare. As such, free enterprise does not call for the removal of “protective
regulations” for the benefit of the general public. This is so because under Art 12, Sec 6 and 9, it
is very clear that the government reserves the power to intervene whenever necessary to promote
the general welfare and when the public interest so requires