3. Suspensive and Prohibitory Powers of the President

Powers of the President

R.A. No. 11659¹

Powers of the President to Suspend or Prohibit Transaction or Investment. - In the interest of national security, the President, after review, evaluation and recommendation of the relevant government department or Administrative Agency, may, within sixty (60) days from the receipt of such recommendation, suspend or prohibit any proposed merger or acquisition transaction, or any investment in a public service that effectively results in the grant of control, whether direct or indirect, to a foreigner or a foreign corporation.

The Philippine Competition Commission (PCC) may be consulted on all matters relating to mergers and acquisitions.

The NEDA shall promulgate rules and regulations to implement the provisions of this section.

For national-security reasons, and after the required review, evaluation, and recommendation, the President may suspend or prohibit a proposed merger or acquisition transaction, or an investment in a public service, that effectively grants direct or indirect control to a foreigner or foreign corporation. This power is rooted in various laws and regulations designed to protect public interest, ensure national security, and maintain competitive markets.

Legal Basis

• Constitution²: The Philippine Constitution grants the State the power to regulate and exercise authority over public utilities in the interest of public welfare and security. This includes preventing monopolies and promoting competition.
• Public Service Act (Commonwealth Act No. 146³): The Public Service Act empowers the government to regulate public utilities and ensure that mergers and acquisitions do not negatively impact public interest. The President, through regulatory agencies, can intervene in such transactions.
• Philippine Competition Act (Republic Act No. 10667⁴): The Philippine Competition Act aims to enhance economic efficiency and promote free and fair competition. The Philippine Competition Commission (PCC), an independent quasi-judicial body, reviews mergers and acquisitions to prevent anti-competitive practices. The PCC exercises its merger-review authority under the Philippine Competition Act. Separately, the President may suspend or prohibit a covered proposed transaction or investment on national-security grounds, subject to applicable statutory requirements.
• National Security Considerations: The President has the authority to intervene in mergers and acquisitions if they pose a threat to national security. This is particularly relevant for critical infrastructure sectors such as energy, telecommunications, and transportation.