QuestionsQuestions (EXECUTIVE ORDER NO. 36)
Executive Order No. 36 cites Section 277 of RA 7160, which authorizes the President, when public interest requires, to condone or reduce RPT and related interest for provinces/cities or municipalities within the Metropolitan Manila Area.
It aims to reduce and condone RPT liabilities (and the interest/penalties) assessed by LGUs on property, machinery, and equipment actually and directly used by IPPs for electricity generation and distribution under BOT or similar contracts with government-owned or -controlled corporations (GOCCs).
Independent Power Producers (IPPs) operating under Build-Operate-Transfer (BOT) scheme and similar contracts with GOCCs, where the property/machinery/equipment is actually and directly used for producing electricity (e.g., under Power Purchase Agreements, Energy Conversion Agreements, or other similar contractual agreements).
All liabilities for RPT for Calendar Year (CY) 2023, including special education fund (SEF) special levies accruing to the SEF, and RPT assessed for all years up to CY 2023.
The reduced RPT is equivalent to the tax due if computed based on an assessment level of 15% of the fair market value (FMV) of the property/machinery/equipment, depreciated at 2% per annum, minus any amount already paid by the IPPs.
It applies to RPT liabilities for CY 2023 and includes special levies accruing to the Special Education Fund (SEF) on the covered property, machinery, and equipment.
All interests and penalties on such deficiency RPT liabilities are condoned, and the IPPs are relieved from paying them.
Under Section 2, all RPT payments made by the IPPs over and above the reduced amount under Section 1 shall be applied to their RPT liabilities for succeeding years.
They are directed to strictly comply with the Order. Any violation shall be dealt with in accordance with civil service laws, rules, and regulations.
EO 36 contains a separability clause: if any part is held invalid or unconstitutional, the provisions not affected remain in full force and effect.
It provides a repeal/modification clause: all issuances inconsistent with EO 36 are repealed or modified accordingly.
It takes effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.
EO 36 cites Section 17, Article VII of the 1987 Constitution: the President has control over executive departments/bureaus/offices to ensure faithful execution of laws. It generally supports the President’s authority to direct compliance by executive agencies.
It states that closure/non-operation would entail substantial losses to government, force the public to use more costly electricity sources, and cause rotating power outages.
It argues that a substantial portion of RPT charges is contractually assumed by the National Power Corporation/Power Sector Assets and Liabilities Management Corporation, and thus the arrangement carries the full faith and credit of the National Government—supporting the public interest rationale for the reduction/condonation.
EO 36 does not create a blanket exemption; it reduces and condones assessed liabilities (and condones interests/penalties) by prescribing a specific reduced computation and relief for deficiency liabilities.
LGUs were taking the position that IPPs are not entitled to RPT exemptions/privileges enjoyed by GOCCs, and they threatened enforcement actions such as levy and sale at public auction of affected properties.