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B. Franchises, authorities, and certificates for public utilities


a. Holders of franchise, certificate, or authorization

No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to:

1) Citizens of the Philippines; or

2) Corporations or associations organized under the laws of the Philippines at least sixty per centum (60%) of whose capital is owned by such citizens. (Section 11, Article XII, 1987 Constitution)

b. Limitations

Franchise, certificate, or authorization shall:

1) Not be exclusive in character (Ibid.); or,

2) Not for a longer period than fifty (50) years (Ibid.);

3) Conditioned that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. (Section 11, Article XII, Ibid.)

c. Equity participation

The State shall encourage equity participation in public utilities by the general public. (Section 11, Article XII, Ibid.)

1) Foreign investors

The 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. (Ibid.)


The Congress may establish an independent economic and planning agency headed by the President, which shall, after consultations with the appropriate public agencies, various private sectors, and local government units, recommend to Congress, and implement continuing integrated and coordinated programs and policies for national development. (Section 9, Article XII, Ibid.)

Until the Congress provides otherwise, the National Economic and Development Authority shall function as the independent planning agency of the government. (Paragraph 2, Section 9, Article XII, Ibid.)

1) Protected areas of investment

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 (60%) of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. (Section 10, Article XII, Ibid.)

The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos. (Ibid.)

2) Preferrence to Filipinos

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos. (Paragraph 2, Section 10, Article XII, Ibid.)

3) Foreign investments

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. (Paragraph 3, Section 10, Article XII, Ibid.)

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