Hogan Lovell OffshoreBook 2023 230809 OnlinePDF - Flipbook - Page 225
Offshore Wind Worldwide 2023
from water, marine current and wind; thermal energy from solar, ocean, geothermal,
and biomass.
However, on 29 September 2022, the
Department of Justice (DOJ) rendered DOJ
Opinion No. 21, Series of 2022 stating that
the exploration, development, and utilization of certain sources of renewable energy, including solar and wind, should not be
covered by the foreign equity restrictions
under the Philippine Constitution.
Section 2 of Article XII of the Philippines Constitution provides that all lands
of the public domain, waters, minerals,
coal, petroleum, and other mineral oils,
all forces of potential energy, fisheries,
forests or timber, wildlife, flora and fauna,
and other natural resources are owned by
the State. The exploration, development,
production, and utilization of natural resources shall be under the full control and
supervision of the state. It further states
that the state may directly undertake such
activities, or it may enter into co-production, joint venture or coproduction sharing
agreements with Filipino citizens or corporations or associations at 60% of whose
capital is owned by Filipinos. Notably, the
225
Philippine Constitution does not define
natural resources as including wind energy.
The DOJ opined that the term "natural
resources" contemplates only those that
are susceptible of appropriation and those
that are exhaustible in nature. The DOJ
further explained the term "all forces of
potential energy" should not include kinetic energy sources such as wind energy.13
The issuance of the DOJ Opinion provided
basis for the DOE to amend Section 19(B)
of the RE Act IRR. Thus, on 15 November
2022, the DOE amended RE Act IRR14 (DOE
Amendment) and provided that the State
may directly undertake the exploration,
development, production, and utilization
of RE resources, or it may enter into RE
Contracts with Filipino and/or foreign
citizens or Filipino and/or foreign-owned
corporations and associations.15 This DOE
Amendment took effect on 8 December
2022.
Following the effectivity of the DOE
Amendment, insofar as the DOE is concerned, RE Contracts for the exploration,
development, production, and utilization
of wind energy may be awarded to 100%
foreign-owned corporations.
13 Section 2. All lands of the public domain, waters, minerals, coal, petroleum, and other mineral oils, all forces of potential energy, fisheries, forests or
timber, wildlife, flora and fauna, and other natural resources are owned by the State. With the exception of agricultural lands, all other natural resources
shall not be alienated. The exploration, development, and utilization of natural resources shall be under the full control and supervision of the State. The
State may directly undertake such activities, or it may enter into co-production, joint venture, or production-sharing agreements with Filipino citizens, or
corporations or associations at least 60 per centum of whose capital is owned by such citizens. Such agreements may be for a period not exceeding twentyfive years, renewable for not more than twenty-five years, and under such terms and conditions as may be provided by law. In cases of water rights for
irrigation, water supply, fisheries, or industrial uses other than the development of waterpower, beneficial use may be the measure and limit of the grant.
14 DOE Department Circular No. 2022-11-0034.
15 However, under the DOE Amendment, the following activities shall still be reserved to Filipino citizens or corporations at least 60% of whose capital is
owned by Filipinos:
1. The appropriation of water direct from a natural source (Presidential Decree No. 1067; IDEALS v. PSALM, G.R. No. 192088, 09 October 2012);
2. The exploration, development and utilization of geothermal resources, except for financial or technical assistance agreements covering the large-scale
exploration, development and utilization of geothermal resources (Article XII, Section 2 of the Philippine Constitution); or
3. The utilization of timber and non-timber forest products originating from lands of the public domain and private lands where the collection, harvesting
and processing of timber or wood are permitted or the utilization of naturally-occurring flora on lands of the public domain (Article XII, Section 2 of the
Philippine Constitution; Presidential Decree No. 705 as amended).
