How the 13th FINL (EO No. 113) Changes Foreign Investment in Philippine Renewable Energy: Structuring, Licences & Project‑finance Implications

Executive Order No. 113, signed in April 2026 and commonly known as the 13th Foreign Investment Negative List (FINL), has materially reshaped the rules governing renewable energy foreign investment in the Philippines. For the first time, most renewable generation activities, solar, wind, hydro, ocean and tidal, and biomass, are expressly opened to significantly higher, and in many cases full, foreign equity participation. The changes create immediate structuring, licensing and project‑finance questions for inbound sponsors, private‑equity and infrastructure‑fund investors, project lenders, and in‑house counsel.

This practitioner guide maps the new ownership landscape, walks through every licence and approval required agency by agency, explains the persistent land and anti‑dummy risks, and sets out the security and enforcement issues that lenders must address before committing capital.

Executive Summary: What Readers Must Know Now

Key takeaway: EO No. 113 did not simply open the door to foreign capital in Philippine renewable energy, it redrew the boundary between activities that remain constitutionally restricted and those that are now fully investable by non‑Filipino entities. Every sponsor, lender and counsel team entering the sector must reassess three things simultaneously: ownership structure, permit sequencing and security enforceability.

• Ownership shift. The 13th FINL reclassifies several renewable energy generation activities, removing or relaxing the foreign ownership caps that previously applied under the 12th FINL. Where an activity falls outside both List A (constitutionally or statutorily restricted) and List B (security, defence, health and morals‑related), up to 100 % foreign ownership is now permissible, a change that fundamentally alters hold‑co structuring for inbound sponsors.
• Structuring implications for sponsors and lenders. Full foreign ownership of a project company eliminates the need for a Filipino joint‑venture partner in many cases, simplifies share‑security packages, and reduces (but does not eliminate) anti‑dummy exposure. However, constitutional restrictions on private land ownership remain untouched, and lenders must still navigate leasehold‑security mechanics and step‑in risks.
• Immediate action items. Investors should map their target activity against the updated FINL lists, confirm agency‑level implementing rules (DOE, ERC, DENR), secure site control through compliant lease structures, and engage Philippine counsel experienced in renewable energy foreign investment to pressure‑test the ownership and financing architecture before capital deployment.

EO No. 113 (13th FINL): Quick Legal Snapshot

The Foreign Investment Negative List is the Philippine instrument that enumerates the sectors and activities in which foreign equity participation is limited or prohibited. It is issued by the President every two years pursuant to the Foreign Investments Act of 1991 (Republic Act No. 7042, as amended). EO No. 113 replaced the 12th FINL and took effect upon publication in April 2026.

The FINL is divided into two lists. List A covers activities restricted by the Constitution or specific statutes, these caps cannot be changed by executive order alone. List B covers activities restricted for reasons of security, defence, risk to health and morals, or protection of small‑ and medium‑scale enterprises, where foreign equity is typically capped at 40 % or a higher threshold specified by the President. Any economic activity that does not appear on either list is, by default, open to 100 % foreign equity.

Key Dates and Transitional Rules

EO No. 113 took effect upon its official publication in April 2026. Transitional treatment for projects that received permits or entered into service contracts under the previous FINL depends on the specific terms of the permit, any vesting or grandfathering provisions in the underlying statute, and the position of the issuing agency. Industry observers expect the DOE and ERC to issue implementing circulars clarifying how pre‑existing service contracts and certificates of compliance will be treated. Until those circulars are finalised, sponsors with legacy structures should confirm their grandfathering position directly with the relevant agency.

Ownership Rules for Renewable Energy Foreign Investment in the Philippines

Key takeaway: The practical question for every sponsor is whether the target renewable energy activity still appears on List A of the FINL. If it does not, 100 % foreign ownership is available, but the corporate vehicle must be structured correctly, and certain related activities (land, small‑scale mining for construction materials, mass media for project communications) may still carry restrictions.

Under EO No. 113, the following renewable energy generation activities are generally open to full foreign equity participation: utility‑scale and distributed solar photovoltaic generation, onshore and offshore wind generation, biomass and waste‑to‑energy generation, and ocean and tidal energy generation, provided they do not involve the exploration, development or utilisation of natural resources classified as part of the public domain under the 1987 Constitution.

Hydroelectric power generation requires careful analysis. Where a hydro project involves the appropriation or utilisation of water resources classified as part of the public domain, it falls within the constitutional reservation under Article XII, Section 2, capping foreign equity at 40 %. Run‑of‑river and pumped‑storage projects that do not involve such appropriation may qualify for higher foreign ownership, but the classification is fact‑specific and should be confirmed with the DOE and the National Water Resources Board (NWRB). Geothermal projects similarly implicate the public‑domain restriction and remain subject to the 40 % cap unless structured as a service or operating contract with the government.

Holding Company Options

Foreign sponsors entering the Philippine RE sector typically use one of three structures:

• Wholly foreign‑owned domestic corporation. Where the activity permits 100 % foreign equity, the sponsor may incorporate a Philippine domestic corporation with a 100 %‑owned parent. The corporation is registered with the SEC and can hold permits, enter offtake agreements and execute financing documents directly.
• Foreign branch or representative office. Less common for operating RE assets because a branch does not constitute a separate juridical entity; however, it may serve as a pre‑development vehicle for feasibility and land lease negotiations before a project company is incorporated.
• Joint venture with Filipino partner. Still required where the activity remains on List A (e.g., hydro projects involving public‑domain resources). The joint venture requirements are well‑established but carry anti‑dummy risk if the Filipino partner is a mere nominee. The 60/40 Filipino‑foreign equity split, or such other ratio as the statute prescribes, must be genuine.

When You Still Need a Filipino Majority

Even after EO No. 113, a Filipino‑majority structure remains mandatory in the following scenarios relevant to renewable energy projects:

• Activities involving public‑domain natural resources. The 1987 Constitution reserves the exploration, development and utilisation of natural resources to the State, or to Filipino citizens, or to corporations at least 60 % owned by Filipino citizens. This covers large hydro, geothermal and any RE project that the DOE classifies as involving natural‑resource extraction from the public domain.
• Private land ownership. Article XII, Section 7 restricts private land ownership to Filipino citizens or to corporations at least 60 % Filipino‑owned. A project company that needs to own (rather than lease) land must therefore maintain a 60/40 structure, but doing so for the sole purpose of holding land while allowing foreign control over operations creates anti‑dummy risk.
• Activities remaining on List B. Certain ancillary services (e.g., private security for project sites) may carry a 40 % foreign‑equity cap under List B.

For a comprehensive review of the foreign ownership requirements in the Philippines, including the updated 13th FINL, practitioners should cross‑reference the EO text with the relevant SEC and DOE circulars.

Energy Licences and Approvals Map: Agency‑by‑Agency Checklist

Practical step: Before committing capital, map every permit required for your specific RE technology, project size and site location. The table below summarises the core energy licences in the Philippines that a foreign‑owned RE project company will typically need. Timeframes are indicative and vary by project complexity, agency workload and completeness of submissions.

Sponsors should treat the DOE registration and ERC licence as the critical‑path permits. Early engagement with the DOE for project endorsement, ideally during the pre‑feasibility stage, allows the agency to confirm the FINL classification of the target activity and flag any conditions that may affect ownership structure. For environmental permits, the DENR’s categorisation of the project (Category A, B or D) determines whether a full Environmental Impact Statement is required; solar and wind farms above certain capacity thresholds typically fall under Category B (IEE) or Category A (full EIS).

Land, Site Control and Anti‑Dummy Risk

Key takeaway: The 13th FINL did not change the constitutional prohibition on foreign ownership of private land. Foreign RE sponsors must control project sites through lease structures, easements or local subsidiaries, and every arrangement must withstand scrutiny under the Anti‑Dummy Law.

Under Article XII, Section 7 of the 1987 Constitution, private lands may be transferred or conveyed only to Filipino citizens or to corporations or associations at least 60 % of whose capital is owned by Filipino citizens. This restriction is absolute and cannot be waived by executive order, legislation or contract. For renewable energy projects that require long‑term site control, solar farms, wind corridors, biomass feedstock areas, the following structures are used in practice:

• Long‑term lease. A foreign‑owned project company may lease private land for up to 50 years, renewable for another 25 years, under the Investor’s Lease Act (Republic Act No. 7652). The lease must be registered with the Registry of Deeds to bind successors and be enforceable against third parties.
• Lease from a Filipino landholding company. Some sponsors establish a separate Filipino‑majority corporation to acquire and hold the project land, which then leases the land to the foreign‑owned project company. This structure is legally permissible but creates anti‑dummy exposure if the Filipino shareholders of the landholding company are nominees of the foreign sponsor.
• Usufruct or easement. A usufruct grants the foreign sponsor the right to use and enjoy the land (and its fruits) for a defined period. Easements for transmission lines, access roads and substations are typically negotiated separately with adjacent landowners.
• Government lease for public land. Where the project site is on public or alienable land, the sponsor may negotiate a lease directly with the DENR or the relevant government agency. Offshore wind and tidal projects require foreshore leases or special permits from the DENR‑BMB.

Anti‑Dummy Law: Practical Exposure and Defences

Commonwealth Act No. 108, the Anti‑Dummy Law, makes it unlawful for any person to permit or allow a non‑Filipino citizen to use the former’s name or citizenship for the purpose of evading constitutional or statutory restrictions on foreign participation. Violations carry criminal penalties including imprisonment and fines. In the renewable energy context, anti‑dummy risk arises most commonly in the following scenarios:

• Nominee Filipino shareholders. If a Filipino shareholder in a 60/40 joint venture or landholding company holds shares solely as a nominee for the foreign sponsor, without genuine economic interest, decision‑making authority or independent commercial purpose, the arrangement may constitute an anti‑dummy violation.
• Management and operational control by foreigners in restricted activities. The Anti‑Dummy Law also prohibits foreigners from intervening in the management, operation, administration or control of a nationalised or partly nationalised activity beyond what their equity entitles them to exercise.
• Side agreements or undisclosed protocols. Trust agreements, powers of attorney or side letters that give the foreign sponsor de facto control over the Filipino partner’s shares or votes can be treated as evidence of a dummy arrangement.

Practical Lease Drafting Checklist

• Lease term: confirm maximum permissible term under RA 7652 (50 + 25 years) and align with project‑finance tenor and offtake contract duration.
• Registration: register the lease at the Registry of Deeds; annotate on the land title to ensure enforceability against successors.
• Lender consent and assignment provisions: include express lender step‑in rights, lessor consent to mortgage of improvements, and assignment of lease upon enforcement.
• Termination protections: negotiate cure periods, force majeure carve‑outs and limitations on lessor termination rights to protect project continuity.
• Rent escalation and review: agree commercial terms that support bankability (fixed escalation or CPI‑linked).

Philippines Project Finance Implications for Lenders and Sponsors

Key takeaway: The 13th FINL’s liberalisation of foreign ownership in RE simplifies share‑pledge mechanics where project companies are fully foreign‑owned, but land‑related security remains complex. Lenders must build security packages that account for the constitutional land‑ownership bar, anti‑dummy compliance covenants and the enforceability of step‑in rights under Philippine law.

In a typical Philippine RE project finance transaction, the security package consists of three pillars: equity‑level security (share pledges), asset‑level security (chattel mortgages, assignments of receivables and contracts) and real‑property security (mortgage of improvements and assignment of leasehold rights). Each pillar carries distinct perfection requirements and enforcement risks.

Sample Security Package: Additional Elements

Beyond the three core pillars, lenders in Philippine RE transactions typically require the following:

• Assignment of project contracts. Assignment by way of security of the power purchase agreement (PPA) or feed‑in‑tariff certificate, EPC contract, O&M agreement, and interconnection agreement, with consent of each counterparty and a direct agreement giving the lender step‑in rights.
• Assignment of insurance proceeds. Loss payee and additional insured endorsements in favour of the lender, covering property damage, business interruption and third‑party liability.
• Escrow and reserve accounts. Debt service reserve account (typically six months of debt service), maintenance reserve and revenue waterfall accounts held with a Philippine commercial bank, governed by an account control agreement.
• Anti‑dummy compliance covenants. Representations and warranties that the project company’s ownership structure complies with the FINL and the Anti‑Dummy Law; ongoing reporting obligations on changes in beneficial ownership and board composition; events of default triggered by any anti‑dummy investigation or enforcement action.
• Intercreditor arrangements. Where multiple lenders or tranches are involved, an intercreditor agreement governing priority, voting, enforcement standstills and proceeds allocation.

Industry observers expect the post‑EO No. 113 environment to be significantly more attractive for international project‑finance lenders. The ability to take a share pledge over 100 % of the equity in a project company, without the complication of Filipino shareholder consents or ownership‑threshold triggers, materially simplifies enforcement scenarios and reduces the legal risk premium that lenders have historically built into Philippine RE financings.

Tax, Incentives and Repatriation

Foreign sponsors entering the Philippine renewable energy sector should address tax structuring and incentive registration early in the project development cycle. The key considerations are:

• BOI incentives. Renewable energy projects that are registered with the Board of Investments under the current Strategic Investment Priority Plan may qualify for income tax holidays, duty‑free importation of capital equipment and enhanced deductions for qualifying expenditures. Early registration, ideally during the pre‑feasibility phase, allows sponsors to lock in available incentive terms before project capital expenditure is committed.
• Corporate income tax. The standard corporate income tax rate applies to the project company’s net taxable income. Sponsors should model the interaction between BOI incentives, the CREATE Act’s reduced rates and any applicable minimum corporate income tax.
• VAT and withholding tax on EPC and offtake. EPC contracts with foreign contractors may attract VAT on services and withholding tax on payments to non‑residents. The project company should confirm whether treaty relief is available under the Philippines’ double taxation agreements.
• Profit repatriation. Dividends, branch profits and capital repatriation by foreign investors are generally freely remittable, subject to Bangko Sentral ng Pilipinas (BSP) registration of the investment. BSP registration should be completed at the time of initial capital infusion to ensure smooth repatriation.
• Tax due diligence. Transfer pricing, thin capitalisation and related‑party transaction rules apply to the project company’s dealings with its foreign parent and affiliates. Sponsors should ensure compliance from incorporation to avoid reassessment risk.

Practical Steps: Market Entry Timeline and Checklist

The following 90‑day playbook outlines the key milestones for a foreign sponsor entering the Philippine renewable energy market after EO No. 113:

1. Weeks 1–2: Confirm FINL classification of the target RE activity; engage Philippine counsel to prepare a legal feasibility opinion on ownership structure.
2. Weeks 2–3: Incorporate the project company with the SEC; file beneficial ownership declaration and FINL compliance certification.
3. Weeks 3–4: Register the foreign investment with the BSP; open project bank accounts.
4. Weeks 4–6: Submit DOE pre‑development notification and project endorsement application; initiate BOI incentive pre‑assessment.
5. Weeks 5–8: Negotiate and execute the site lease; register the lease with the Registry of Deeds.
6. Weeks 6–10: Commission the Environmental Impact Assessment (EIA) or Initial Environmental Examination (IEE); engage DENR‑EMB for scoping.
7. Weeks 8–12: File the ERC application for Certificate of Compliance or Authority to Operate; submit grid‑impact study to NGCP.
8. Weeks 8–12: Secure LGU permits, business permit, building permit, zoning clearance, barangay clearance.
9. Weeks 10–12: Finalise project‑finance term sheet and commence lender due diligence; instruct counsel to prepare security documents (share pledge, chattel mortgage, lease assignment, account control agreement).
10. Week 12 onward: BOI registration submission; commence EPC contractor procurement and offtake (PPA) negotiations.

Conclusion: Structuring for Compliance and Bankability

The 13th FINL represents the most significant liberalisation of renewable energy foreign investment in the Philippines in over a decade. For sponsors, it removes the joint‑venture requirement that previously added cost, complexity and anti‑dummy risk to most RE projects. For lenders, it simplifies share‑security mechanics and reduces the legal risk premium on Philippine RE financings. For in‑house counsel, it demands a fresh review of existing ownership structures, legacy permits and security packages against the updated rules.

Yet critical constraints remain. The constitutional bar on foreign land ownership, the Anti‑Dummy Law’s criminal penalties and the multi‑agency permit landscape all require careful navigation. Sponsors and lenders who treat EO No. 113 as a blanket green light, without mapping activity classifications, stress‑testing lease structures and building anti‑dummy compliance into financing covenants, risk costly enforcement actions, permit revocations or unenforceable security.

The likely practical effect of the 13th FINL will be a significant acceleration of foreign capital into Philippine solar, wind and biomass projects over the next 12 to 24 months, particularly from infrastructure funds and development finance institutions seeking bankable, fully foreign‑owned platforms. Early movers who invest in rigorous foreign investor compliance in the Philippines, from SEC incorporation through DOE registration to ERC licensing and lender security perfection, will be best positioned to capture this opportunity.

This article is for informational purposes only and does not constitute legal advice. Readers should engage qualified Philippine counsel to obtain advice tailored to their specific circumstances.

Sources

1. Executive Order No. 113, s. 2026 (13th FINL), Lawphil
2. Department of Energy (DOE) Philippines
3. Energy Regulatory Commission (ERC)
4. Department of Environment & Natural Resources (DENR), Environmental Impact Assessment
5. 1987 Constitution of the Philippines, Lawphil
6. Anti‑Dummy Law (Commonwealth Act No. 108), ADB Law and Policy Resource
7. Board of Investments (BOI) Philippines
8. Securities and Exchange Commission (SEC) Philippines