Constitutional amendments: Economic development vs social consequence
A survey conducted by Pulse Asia last March 2023 found that 41 percent of adult Filipinos support amending the 1987 Constitution (Source: https://www.pna.gov.ph/articles/1198875). There are three modes to amend the Constitution, all of which must be ratified by the majority of all votes cast in a plebiscite.
These modes are:
1. The Congress, upon a vote of three-fourths of all its Members, may propose amendments and revisions. This is known as the Constitutional Assembly.
2. The formation of a constitutional convention to study and propose the amendments and revisions.
3. Through a People’s Initiative which is a petition made by at least 12 percent of the total number of registered voters in the Philippines and where each legislative district is represented by 3 percent of its registered voters.
(Article XVIII, 1987 Philippine Constitution)
In reality, however, there are only two modes, as a People’s Initiative still needs an implementing law.
The initiative to amend the Constitution, led by Senator Robinhood Padilla, involves the economic provisions of the Constitution. The proposed amendments aim to allow greater foreign investment or capital in various economic activities that would generate jobs for the people, induce higher wages, improve performance of service sectors, and reduce the cost of goods and services through economic competition. While most of the proposed amendments make sense, allowing non-Filipinos to purchase and own land could be dangerous not only economically, but also socially.
In broad strokes, the amendments being proposed are for Congress to be able to pass laws allowing non-Filipinos, corporations or associations which are up to 100 percent foreign owned to:
1. Enter into joint venture, co-production, production-sharing agreements with the State to explore, develop, utilize natural resources
2. Hold alienable lands of the public domain exceeding 1,000 hectares for more than 25 years
3. Own and convey private lands
4. Acquire for the purpose of foreign direct investment, acquire private lands not exceeding 1,000 square meters in area and rural private land not exceeding 5 hectares
5. Hold and be granted a franchise, certificate, or any other form of authorization for the operation of a public utility
6. Participate in the governing body of public utilities beyond their proportionate share in its capital, including acting as the the executive and managing officers of such corporation or association
7. Own, control and administer educational institutions
8. Ownership and management of mass media as well as participation in their governing body beyond their proportionate share in the capital
9. To engage in the advertising industry as well as participate in the governing body of such entities beyond their proportionate share in the capital including acting as execute and managing officer
The present Constitution either prohibits foreign participation or sets limits on foreign ownership, with no provision allowing Congress to pass a law for increasing foreign participation.
The proposed amendment intends to allow higher foreign investment or capital in various economic activities to generate jobs, induce higher wages, improve service sectors’ performance, and reduce the cost of goods and services. This is based on the committee report of the panel on constitutional amendments of the Senate, chaired by Senator Padilla.
Robin Padilla submits proposed amendments to economic provisions of 1987 Constitution
The proposed amendments are commendable, and make sense for the most part. They may be effective in achieving the purpose of increasing economic development and investment, job creation, and improving the efficiency of certain industries.
Things like exploration and development of natural resources and operation of public utilities require a huge amount of capital and investment to develop, launch, maintain and compete in most efficient and profitable manner. Local Philippine capital may find it too risky to go at it alone without foreign capital and support.
Existing limitations on foreign ownership of educational, advertising and mass media seem outdated given that the internet continuously streams to Filipinos a broad range of content on education and news. Arguably, the biggest venue where advertisements are shown is on Facebook and Instagram, where a lot are conceptualized, run and operated by foreign entities.
There is, however, one aspect of the proposed amendments that could be dangerous, not only economically but also socially and, this is the proposal to allow non-Filipinos to purchase and own land. The Philippine real estate market is small compared to its neighbors, and the entry of huge amounts of foreign capital to buy up land may result in a boom-and-bust cycle, making it difficult for Filipinos to afford their own property.
While foreign capital may be welcome, let us not forget that there are many Filipinos who dream of owning their own property yet are already unable to afford buying property. Like in many countries where speculative money buys up real estate, locals may begin to feel that they are being squeezed out of the property market.
The possibility of foreigners from certain countries buying up large tracts of land and creating enclaves where local Filipinos are not welcome, is another concern. It is conceivable that 1 million people out of a population of about 1.5 billion from Mainland China may buy 1,000 square meters of land each in prime areas such as Palawan, Boracay, Quezon City, or Makati. It will take a mere 6,000 people each purchasing 1,000 square meters to purchase the equivalent of San Juan City, which is just 595 hectares or 5,950,000 square meters.
The Philippines is one of the most beautiful countries rich in natural resources, and the Filipinos are some of the most friendly, welcoming, and open people around. So there is no need to even ask the question, the answer is YES, they will come.
Price will likely not even be an issue since for many mainland Chinese, their main motivation is to move their money, and perhaps themselves, out of the reach of the Communist Party of the People’s Republic of China.
Once foreign ownership of land is allowed, it will take a revolution to reverse, as it will involve taking private property and seeking just compensation. It is difficult to say what the proper safeguards and limitations can be put in place to properly deter and balance the dangers of opening up land ownership to foreigners. We may have the proper laws, rules and regulations, but the real question is, who will ensure that these are complied with.
In summary, the proposed amendments to the Constitution may have a positive impact on the economy, but allowing foreign ownership of land could have negative social and economic consequences that need to be carefully considered, as well as addressed with appropriate safeguards and limitations.
(The author, Atty. John Philip C. Siao, is a practicing lawyer and founding Partner of Tiongco Siao Bello & Associates Law Offices, teaches law at the MLQU School of Law, and an Arbitrator of the Construction Industry Arbitration Commission of the Philippines. He may be contacted at [email protected]. The views expressed in this article belong to the author alone.)
