Energy Efficiency and Conservation Act

Republic Act No. 11285, otherwise known as the Energy Efficiency and Conservation Act ("EECA"), was signed into law on 12 April 2019, following the approval of the bill at the Bicameral Committee of the Senate, after more than thirty years of being repeatedly filed in Congress. The EECA focuses on the development and use of renewable energy, to provide a more stable option for power supply in the Philippines. The EECA also grants incentives to entities that undertake energy efficient projects, and imposes penalties on entities engaging in prohibited activities or violating the law or its implementing rules and regulations.

The law mandates the formulation of two plans. The National Energy Efficiency and Conservation Plan is a national comprehensive framework that lays out national targets, feasible strategies, and regular monitoring and evaluation of the country's energy efficiency and conservation efforts. On the other hand, the Government Energy Management Program ("GEMP") is aimed at reducing the government's monthly consumption of electricity and petroleum products, among others.

The EECA also created the Inter-Agency Energy Efficiency and Conservation Committee, composed of various Executive Department Secretaries, to evaluate and approve government energy efficiency projects and to provide strategy direction in the implementation of the GEMP.

The commercial, industrial and transport sectors are likely to see changes, as the Minimum Energy Performance ("MEP") will be developed by the Department of Energy ("DOE"). Fuel economy labelling requirements will be imposed by the DOE, by requiring vehicle manufacturers, importers, and dealers to provide technical information on the fuel economy rating of the engines. New and existing buildings will be required to implement measures to ensure that the activities carried on inside the buildings are geared towards energy conservation.

Manufacturers, importers, distributors and retailers of energy-consuming products are also required to comply with the MEP, by subjecting the products to testing and submitting the information to the DOE. As of date, the DOE has yet to issue the MEP. Moreover, the products to be sold, leased or imported must comply with the MEP and the labelling requirements of the EECA.

The IRR of the EECA is yet to be promulgated.

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Executive Order No. 80, rationalizing the rules for the engagement of third-party participants under Petroleum Service Contracts

Executive Order No. ("EO") 80, signed by President Rodrigo Duterte on 28 May 2019, amended EO No. 556 (series of 2006) which previously prohibited the Philippine National Oil Company ("PNOC") from awarding farm-in and farm-out agreements for oil exploration, development and production.

Under EO 80, the rules for government dealings with third-party participants under petroleum service contracts allows more groups to explore possible fuel deposits in the country, subject to the requirement that PNOC Exploration Corporation enter into such agreements only with reputable, technically competent and financially capable entities.

The Department of Energy, in consultation with Government Commission for Government-Owned or -Controlled Corporations, will issue rules and regulations for the selection process to be followed by PNOC Exploration Corporation when selecting third-party partners.

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Tourism Act of 2009

Republic Act No. 11262 has extended the authority of the Tourism Infrastructure and Enterprise Zone Authority ("TIEZA") to grant incentives to tourism enterprises until 31 December 2029.  Under the old law, i.e., Republic Act No. 9593 or the Tourism Act of 2009, TIEZA had only until August 2019 to grant incentives.

The incentives which may be granted to tourism enterprises include six-year income tax holidays, a 5% preferential tax on gross income, exemption on all taxes and duties on imported capital equipment, and exemption of transport equipment and spare parts from tariffs and duties.  The new law also grants equal preference to large investments that have great potential for employment generation and to local small and medium enterprises, and encourages local government units to provide incentives through reductions in.

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Sin Tax Hike Bill

On 4 June 2019, the Philippine Senate approved Bill 2233 seeking to implement a scheduled increase in the excise tax on tobacco products over four years, and a five percent (5%) yearly hike effective on 1 January 2024. President Duterte had recently certified the bill to allow the Senate to approve it on second and third reading within the same day.

The Senate proposed to increase the tax from ₱37.50 to ₱45.00 in January 2020, ₱50.00 in January 2021, ₱55.00 in January 22, and ₱60.00 in January 2023. An amendment included “heated tobacco products” and “vapor tobacco products” in the measure as well.

On 5 June 2019, the House of Representatives adopted the Senate version of the bill, after having approved its own version in December of 2018. The bill is now awaiting the signature of President Duterte.

Part of the proceeds from the tax hike are intended to be used exclusively for the implementation of the Universal Health Care law and health programs endorsed by the Department of Health. An estimated ₱258 billion is needed by the program in its first year of implementation (i.e. 2020). The law, once passed, is expected to generate ₱136 billion in 2021.

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Draft Circular on the National Payment Systems Act

Republic Act 11127, or The National Payment Systems Act ("NPSA"), mandates the Bangko Sentral ng Pilipinas ("BSP") to exercise supervisory and regulatory powers for the purpose of ensuring the stability and effectiveness of the monetary and financial system in the country.  In keeping with its thrust to promote efficiency and ease of doing business, the BSP thus released a draft circular providing for the implementing rules and regulations of the NPSA - the first comprehensive legal and regulatory framework governing the payment systems in the Philippines.

The draft Circular is part of the first phase of the phased-in implementation of the NPSA, which prioritizes the creation of a baseline inventory of all operators of payment systems ("OPS"), which is required under Section 10 of the law.  The draft contains a simplified registration process and streamlined documentary requirements through which funds are transferred to discharge payment obligations arising from transactions across the entire economy - an essential tool for the effective implementation of monetary policy and the smooth functioning of money and capital markets.

To ensure the smooth transition of the OPS existing at the time of the NPSA's effectivity, the draft Circular provides a transitory provision that allows said OPS to register with the Bangko Sentral within a reasonable period.

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New Guidelines for External Auditors

The external auditing function is often utilized by government regulatory agencies to safeguard the financial industry. The work of external auditors promotes good governance in the financial industry, by upholding fairness, accuracy and transparency in financial reporting. On 29 May 2019, the Monetary Board ("MB") of the Bangko Sentral ng Pilipinas ("BSP") approved the revised guidelines on the selection, appointment and delisting of external auditors of BSP Supervised Financial Institutions ("BSFIs").

The guidelines are intended to streamline the selection process in the financial sector, and promote ease of doing business. They introduce a centralized system for accreditation / selection of external auditors, with the integration of the accreditation requirements of the BSP, the Securities and Exchange Commission ("SEC") and the Insurance Commission ("IC"), introduced by the Financial Sector Forum ("FSF"), which is an inter-agency body composed of the BSP, SEC, IC and the Philippine Deposit Insurance Corporation.

The BSFIs and external auditors are grouped into categories, and external auditors are allowed to extend their services to BSFIs belonging to the same category or to categories lower than the category of the external auditor. Aside from the abovementioned safeguard, the guidelines also impose new audit engagement and reportorial requirements for the BSFIs.

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Security of Tenure and End of Endo Act of 2018

The bill seeking to amend the Labor Code and stop abusive forms of contractualization - the proposed Security of Tenure Act or more popularly known as the "End Endo" Bill - has been approved by the Senate and is now ready for signature by President Rodrigo Duterte.

Endo is a labor practice where a worker is hired for up to five months to skirt a labor law granting permanent tenure on the sixth month of service.  The practice leaves many Filipino workers unprotected and without benefits.

According to Senator Joel Villanueva, the bill clarifies ambiguities in existing laws that have allowed employers to evade the prohibition on labor-only contracting.  Under the newly-approved bill, labor-only contracting exists when any of the following instances occur: (i) the job contractor merely supplies, recruits, and places workers to a contractee; (ii) the workers supplied to a contractee perform tasks / activities that are listed by the industry to be directly related to the core business of the contractee; or (iii) the contractee has direct control and supervision of the workers supplied by the contractor.

The measure also trims down the classification of workers to four types: regular, probationary, project and seasonal.  Under the bill, project and seasonal workers are now given the same rights and privileges granted to regular employees.

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Guidelines on the Establishment of a One Person Corporation

Republic Act No. 11232, or the Revised Corporation Code of the Philippines ("RCC"), introduced the novel One Person Corporation ("OPC"). The Securities and Exchange Commission ("SEC"), in response to the growing interest in OPCs, recently issued guidelines on the establishment of OPCs. Memorandum Circular No. 7, series 2019, providing for the requirements and limitations of OPCs, also provides sample forms and sample letters.

In a press release on 2 May 2019, the SEC announced that it will start accepting applications for registration of an OPC on 6 May 2019. According to SEC Chairperson Emilio B. Aquino, the concept of an OPC is intended to make doing business in the Philippines easier. The OPC offers the "agility and complete dominion of a sole proprietorship, and the limited liability of a corporation," according to Aquino.

The requirements and process, which begins and ends with the Company Registration and Monitoring Department of the SEC, of incorporating an OPC are laid out in the circular.

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