QuestionsQuestions (EXECUTIVE ORDER NO. 117)
Executive Order (EO) No. 117 cites Section 277 of RA No. 7160 (Local Government Code), which authorizes the President to condone or reduce RPT and interest for any year in provinces/cities or municipalities within the Metropolitan Manila Area when public interest requires.
EO No. 117 covers liabilities for calendar year (CY) 2019 for RPT (including special levies such as the Special Education Fund) assessed by LGUs and other authorized entities.
Liabilities on property, machinery, and equipment actually and directly used by IPPs for the production of electricity under Build-Operate-Transfer (BOT) and similar schemes.
It covers BOT schemes and similar contracts, including those denominated as Power Purchase Agreements (PPAs), Energy Conversion Agreements (ECAs), or other contractual agreements.
Yes. EO No. 117 applies to IPPs under BOT and similar contracts with GOCCs, and the reduction/condonation is tied to such contracting arrangements.
The RPT is reduced to the amount computed using an assessment level of 15% of the fair market value of the covered property/machinery/equipment depreciated at 2% per annum, minus amounts already paid by the IPPs.
All interests and penalties on such deficiency RPT liabilities are condoned, and the concerned IPPs are relieved from payment thereof.
Any RPT payments made above the reduced amount under Section 1 shall be applied to the IPP’s RPT liabilities for succeeding years.
It establishes a tax accounting/crediting rule: excess payments for CY 2019 are not forfeited; they are carried over and applied to RPT due for subsequent years.
All concerned government departments, agencies, instrumentalities (including relevant GOCCs and LGUs) must strictly comply. Any violation is to be dealt with in accordance with civil service laws and regulations.
Section 4 provides repeal/revocation: all rules and regulations or parts thereof inconsistent with EO No. 117 are revoked, amended, or modified accordingly.
It includes a separability clause: if any provision is declared invalid or unconstitutional, the remaining unaffected provisions remain valid and subsisting.
It takes effect immediately upon its publication in a newspaper of general circulation.
It discusses that under Sections 218(d) and 234 of the Local Government Code, GOCCs engaged in generation/transmission enjoy RPT privileges such as a 10% assessment level and exemptions for certain machinery/equipment actually, directly, and exclusively used in generation/transmission, and for pollution control/equipment.
LGUs argued that IPPs are not GOCCs and therefore are not entitled to the GOCCs’ RPT exemptions/privileges for their property and equipment used in generation/distribution of electricity.
It stressed that collection of RPT from IPPs (whose RPT may be contractually assumed by National Power Corporation/PSALM and backed by the National Government’s credit) could trigger massive liabilities, threaten fiscal consolidation, destabilize energy prices, cause cross-defaults, and lead to economic losses and potential non-operation of IPPs.