RENEWABLE ENERGY RESOURCES: FILIPINO NATIONALITY REQUIREMENT FOR THE DEVELOPMENT OF SOLAR ENERGY & WIND ENERGYBy: Nastasha Dominique G. Ortiz LuisLeslie Glenne C. Abad

I. Regalian DoctrineUnder the concept of Jura Regalia, the State has the capacity to own or acquire property as part of the state's power ofdominium.[footnoteRef:1] The Regalian doctrine was enshrined in the1935 Constitution.[footnoteRef:2]One of the fixed and dominating objectives of the 1935 Constitutional Convention was the nationalization and conservation of the natural resources of the country.[footnoteRef:3] The1973 Constitutionalso reiterated the Regalian doctrine in Section 8, Article XIV on the National Economy and the Patrimony of the Nation. The1987 Constitutionreaffirmed the Regalian doctrine in Section 2 of Article XII on "National Economy and Patrimony," to wit: [1: Cruz v Sec. of Environment and Natural Resources, G.R. No. 135385. Dec 6, 2000, Justice Puno, Separate Opinion.] [2: Id.] [3: Id.]

Sec. 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 sixty per centum of whose capital is owned by such citizens.Such agreements may be for a period not exceeding twenty-five 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 water power, beneficial use may be the measure and limit of the grant. xxx. (Emphasis supplied.)[footnoteRef:4] [4: Phil. Const. Art. XII 2.]

Simply stated, alllandsof the public domain as well as allnatural resourcesenumerated therein, whether on public or private land, belong to the State.[footnoteRef:5] The provision reads that the exploration, development and utilization of all forces of potential energy, which are considered natural resources shall be under the full control and supervision of the State. To conserve the Philippines natural resources and to prevent its exploitation, the State has effectively restricted the use of these natural resources by imposing a limit to the allowed foreign equity. In the case of Republic v. Judge Villanueva and Iglesia ni Kristo, Justice Teehankee opined that the Constitutions provision stating that no private corporation or association may hold alienable lands of the public domain except by lease not to exceed one thousand hectares in area - was adopted to guard against the undue large scale control and exploitation of our public lands and natural resources by corporations, Filipino or multinational.[footnoteRef:6] [5: Id.] [6: G.R. No. L-56025 November 25, 1982.]

II. Solar Energy and Wind Energy as Renewable EnergySolar and wind energy are natural resources of the State. They are sources of renewable energy as defined in the Renewable Energy Act.[footnoteRef:7] Section 4 of the Renewable Energy Act defines Renewable Energy Resources as: [7: An Act Promoting The Development, Utilization And Commercialization Of Renewable Energy Resources And For Other Purposes, [Renewable Energy Act of 2008], Republic Act No. 9513 2 (2008)]

Renewable Energy Resources (RE Resources) refer to energy resources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis, and whose renewal rate is relatively rapid to consider availability over an indefinite period of time. These include, among others, biomass, solar, wind, geothermal, ocean energy, and hydropower conforming with internationally accepted norms and standards on dams, and other emerging renewable energy technologies. (Emphasis supplied.)[footnoteRef:8] [8: Renewable Energy Act of 2008 4]

The exploration, development and utilization of Solar Energy and Wind Energy are mandated to by under the full control of the state. Even though there are no provisions in the Renewable Energy Act stating that the ownership requirement of 60% Filipino equity and 40% foreign ownership, it appears likely that such requirement is applicable to the Solar Energy and Wind Energy industries. Section 8 of the Amended Foreign Investments Act (FIA) enumerates the investment areas reserved for Filipino nationals. The Foreign Investments Negative Lists (FINL) are classified as either falling on List A or List B. Under List A as updated by Executive Order No. 98, exploration, development and utilization of natural resources are limited up to 40% foreign equity. Based on the foregoing discussion, it is established that the exploration, development and utilization of Solar Energy and Wind Energy is limited by the 60-40 equity requirements imposed by the Constitution and by the Foreign Investments Act. However, it is interesting to note that in the declaration of policies under Section 2 of Renewable Energy Act, it states that it is the policy of the State to accelerate the exploration and development of renewable energy resources.[footnoteRef:9] Moreover, the State aims to achieve energy self-reliance, through the adoption of sustainable energy development strategies to reduce the country's dependence on fossil fuels.[footnoteRef:10] Furthermore, as part of the acts declaration of policies, the State aims to increase the utilization of renewable energy by institutionalizing the development of national and local capabilities in the use of renewable energy systems, and promoting its efficient and cost-effective commercial application by providing fiscal and non-fiscal incentives.[footnoteRef:11] Even further, the State aims to encourage the development and utilization of renewable energy resources as tools to effectively prevent or reduce harmful emissions and thereby balance the goals of economic growth and development with the protection of health and the environment and to establish the necessary infrastructure and mechanism to carry out the mandates specified in the Renewable Energy Act and other existing laws. [footnoteRef:12] [9: Renewable Energy Act of 2008 2] [10: Id.] [11: Id.] [12: Id.]

As defined by law, renewable energy resources refer to energy resources that do not have an upper limit on the total quantity to be used. [footnoteRef:13] This means, solar and wind energy are basically infinite resources of energy. Solar Energy refers to the energy derived from solar radiation that can be converted into useful thermal or electrical energy. [footnoteRef:14] Whereas, Solar Energy Systems refer to energy systems which convert solar energy into thermal or electrical energy. [footnoteRef:15] On the other hand, Wind Energy refers to the energy that can be derived from wind that is converted into useful electrical or mechanical energy. [footnoteRef:16] And Wind Energy Systems refer to the machines or other related equipment that convert wind energy into useful electrical or mechanical energy. [footnoteRef:17] [13: Renewable Energy Act of 2008 4] [14: Id.] [15: Id.] [16: Id.] [17: Id.]

The electricity converted by Solar Energy Systems and Wind Energy Systems which are to be transmitted and distributed to end users are governed by the Electric Power Industry Reform Act of 2001 or EPIRA. However, the generation of electricity is from solar or wind energy systems are not regulated by the EPIRA. The government should review the question of whether the generation of electricity through the use of Solar and Wind Energy Systems should be limited by the Constitutions equity requirement. If the purpose of the Constitution is to prevent the exploitation of our natural resources, should this restriction include renewable energy resources?

III. Technology and the Future of Solar EnergyIt is interesting to note that the Philippines is a signatory of the 1967 Outer Space Treaty.[footnoteRef:18] Under Article II of the treaty it states that Outer space, including the moon and other celestial bodies, is not subject to national appropriation by claim of sovereignty, by means of use or occupation, or by any other means. Of course it is safe to infer that outer space is outside the jurisdiction of the Philippines. Therefore our laws or our Constitution cannot regulate the exploration, development and utilization of natural resources that may be found in outer space. However, our government should also ask the question: does the prohibition under Article II of the treaty extend to the appropriation of cosmic rays, gases or the sun's energy, or to the collecting of mineral samples or precious metals on the moon or other celestial bodies?[footnoteRef:19] If and when our country develops the technology to harness energy from the sun in outer space, the answer to the question will be vital rather than trivial. [18: Treaty on Principles Governing the Activities of States in the Exploration and Use of Outer Space, Including the Moon and Other Celestial Bodies, Jan. 27, 1967, 18 U.S.T. 2410, T.I.A.S. No. 6347, 610 U.N.T.S. 205 [hereinafter Outer Space Treaty].] [19: Stephen Gorove, Interpreting Article II of the Outer Space Treaty, 37 Fordham L. Rev. 349 (1969). Available at: http://ir.lawnet.fordham.edu/flr/vol37/iss3/2]

IV. Summary

The concept of the regalian doctrine extends not only to the States right to the ownership of lands but also to other natural resources such as solar energy and wind energy. The constitution mandates that the exploration, development, utilization be bound by the 60-40 equity requirement. Thus, effectively limiting foreign participation and investment in the solar and wind energy industry to on 40%. The authors of this paper would like to challenge such ownership equity limitations on the ground that although the State has the right to limit the right to enjoy these natural resources based on the regalia doctrine, practicality dictates that in order to develop such industries it would be wiser to lift the limits. Instead of imposing the equity restrictions, the State should promote foreign investments on those industries to help renewable energy industries to prosper and progress faster. Solar and wind energy are considered renewable energy resources. This means these resources are infinite. The States duty to conserve and preserve the use of natural resources for Filipinos should not be applied so strictly with regard to renewable energy resources.