RPT Reduction for IPPs under BOT Contracts

Executive Order No. 36 is issued under the President’s constitutional and legal powers, including Section 17, Article VII of the 1987 Constitution, which provides that the President shall have control over all executive departments and ensure faithful execution of laws (WHEREAS).
Executive Order No. 36 expressly cites Section 277 of Republic Act No. 7160 (Local Government Code of 1991) as the authority for the President to condone or reduce real property tax (RPT) and interest (WHEREAS).

Executive Order No. 36 addresses LGU positions that Independent Power Producers (IPPs) are not entitled to RPT exemptions and privileges enjoyed by government-owned or -controlled corporations (GOCCs) (WHEREAS).
Executive Order No. 36 responds to LGU threatened enforcement actions, including levy and public auction of affected properties (WHEREAS).
Executive Order No. 36 recognizes that a substantial portion of RPT charged to IPPs is contractually assumed under Build-Operate-Transfer arrangements, carrying the full faith and credit of the National Government (WHEREAS).
Executive Order No. 36 aims to prevent IPP closure or non-operation that would cause losses to government, force reliance on more costly power sources, and lead to rotating power outages (WHEREAS).

The order applies to IPPs operating under a Build-Operate-Transfer scheme and similar contracts with GOCCs (Section 1).
The reduced and condoned liabilities cover RPT for Calendar Year (CY) 2023, including any special levies accruing to the Special Education Fund on the covered properties (Section 1).
The covered property consists of property, machinery and equipment that are actually and directly used by the IPPs for the production of electricity under the covered contracts (Section 1).
The order covers assessed liabilities by LGUs and other entities authorized to impose RPT for all years up to CY 2023 (Section 1).
The contract types covered include arrangements denominated as Power Purchase Agreements, Energy Conversion Agreements, or other contractual agreements (Section 1).

Section 1 reduces “all liabilities for RPT for CY 2023” to a specific computed amount: the tax due if computed based on assessment level of fifteen percent (15%) of the fair market value of the covered property (Section 1).
The computation under Section 1 uses depreciation at the rate of two percent (2%) per annum (Section 1).
The reduced RPT amount is net of payments already made by the IPPs: the reduced figure is less any amount already paid by the IPPs (Section 1).
Section 1 condones all interests and penalties on such deficiency RPT liabilities (Section 1).
Section 1 relieves the concerned IPPs from payment of the condoned interests and penalties (Section 1).

Section 2 directs that all RPT payments made by the IPPs over and above the reduced amount under Section 1 are applied to RPT liabilities for succeeding years (Section 2).

Section 3 directs all concerned departments, agencies and instrumentalities of the government, including concerned GOCCs and LGUs, to strictly comply with Executive Order No. 36 (Section 3).
Section 3 provides that any violation of the order shall be dealt with under civil service laws, rules and regulations (Section 3).

Section 4 establishes separability: if any part or provision is held invalid or unconstitutional, the remaining provisions remain in full force and effect (Section 4).
Section 5 repeals or modifies all inconsistent orders, rules, regulations, and other issuances or parts thereof (Section 5).