PHILIPPINES Law and Practice Contributed by: Maria Lethel C. Alburo-Mejia, Puno Law
shareholding in the corporation. Foreign nation- als are nevertheless disallowed from occupying management positions. 1.4 Sale of Power Industry Assets The sale of power industry assets or businesses is not restricted per se. Nevertheless, there are change-in-control clauses in some key per- mits where prior approval of the regulator must be secured. As an example, under the DOE Department Circular No DC2024-06-0018 or the “Revised Omnibus Guidelines Governing the Award and Administration of Renewable Energy Contracts and the Registration of Renewable Energy Developers”, any sale or acquisition of shares or other share capital, or a series thereof, that results in a change in control over an RE developer will be subject to the prior written approval of the DOE. The Size of the Party Test and the Size of the Transaction Test In addition, RA No 10667 or the “Philippine Com- petition Act” (PCA) prohibits parties to a merger or acquisition agreement that meets the notifica- tion thresholds from consummating their agree- ment until the Philippine Competition Commis- sion (PCC) has approved the transaction. The PCC applies the following tests to determine the notifiability of a transaction: (i) the size of the party test; and (ii) the size of the transaction test. The threshold for the size of the party test is cur- rently set at PHP7.8 billion, while the threshold for the size of the transaction test is now set at PHP3.2 billion. Both tests should be met in order for a transaction to be notifiable. 1.5 Central Planning Authorities The primary Philippine regulators are: • the Department of Energy (DOE), the agency responsible for preparing, co-ordinating,
supervising and controlling all plans, pro- grammes and activities of the Philippine government relative to energy exploration, development, utilisation, distribution and conservation; • the Energy Regulatory Commission (ERC), the independent, quasi-judicial regulatory body created under the EPIRA, with the function to promote competition, encourage mar- ket development, ensure customer choice, and penalise abuse of market power in the restructured electricity industry; and • the National Electrification Administration, which carries out the Philippines’ electrifica- tion policy and exercises supervision over electrical co-operatives. 1.6 Recent Changes in Law or Regulation DOE Department Circular No DC2022-11- 0034 On 15 November 2022, the DOE issued Depart- ment Circular No DC2022-11-0034 which amends the Implementing Rules and Regulations of Republic Act No 9513 (otherwise known as the RE Act). The amendment removes the national- ity restrictions on the exploration, development and utilisation of renewable energy resources such as solar, wind, biomass, ocean or tidal energy. The amendment follows DOJ Opinion No 21, series of 2022 issued by the Department of Justice which states that exploration, devel- opment and utilisation of solar, wind, hydro and ocean or tidal energy should not be subject to the 40% foreign equity limitation under the 1987 Philippine Constitution. Notably, the 40% foreign equity limitation continues to apply in respect of appropriation of water directly from the source for power generation.
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