RPT relief for IPPs under BOT contracts

Executive Order No. 117 is anchored on Sections 218(d) and 234 of Republic Act No. 7160 (the Local Government Code of 1991), which relate to real property tax (RPT) treatment of certain GOCCs.
Executive Order No. 117 also cites Section 277 of Republic Act No. 7160, which authorizes the President to condone or reduce RPT and interest for any year in a province or city or a municipality within the Metropolitan Manila Area when public interest so requires.
Executive Order No. 117 cites Section 17, Article VII of the 1987 Constitution, providing that the President has control over executive departments, bureaus, and offices.

Executive Order No. 117 directs reduction and condonation to address LGU enforcement actions that threatened IPP operations and financial stability.
Executive Order No. 117 aims to prevent collection of RPT from triggering massive liabilities on the part of involved GOCCs and to support national fiscal and energy-price stability.
Executive Order No. 117 is intended to avoid closures or non-operation of affected IPPs that would cause substantial losses and force reliance on more costly power alternatives, including possible rotating power outages.
Executive Order No. 117 recognizes that affected IPP operations contribute to national and local tax revenues and provide grid capacity.

Executive Order No. 117 covers independent power producers (IPPs) operating power generation facilities under a Build-Operate-Transfer scheme and similar contracts with government-owned or -controlled corporations (GOCCs).
Executive Order No. 117 covers facilities actually and directly used by the IPPs for the production of electricity.
Executive Order No. 117 covers contracts that are whether denominated Power Purchase Agreements, Energy Conversion Agreements or other contractual agreements, as long as they are with GOCCs.
Executive Order No. 117 covers RPT liabilities for calendar year (CY) 2019, including any special levies accruing to the Special Education Fund.
Executive Order No. 117 covers RPT liabilities assessed by LGUs and other entities authorized to impose RPT for all years up to CY 2019.

Section 1 reduces all liabilities for RPT, including Special Education Fund special levies, assessed for calendar year (CY) 2019 on covered IPP property, machinery, and equipment.
Section 1 applies the reduction by computing the RPT as if assessed using an assessment level of fifteen percent (15%) of the fair market value of the covered property, machinery, and equipment.
Section 1 requires that covered property, machinery, and equipment be depreciated at the rate of two percent (2%) per annum for purposes of the reduced computation.
Section 1 mandates that the reduced amount is less any amounts already paid by the IPPs.
Section 1 condones all interests and penalties on any deficiency RPT liabilities arising from the above reduction.
Section 1 relieves the concerned IPPs from payment of such interests and penalties.

Section 2 provides that all RPT payments made by the IPPs over and above the reduced amount under Section 1 must be applied to the IPPs’ RPT liabilities for the succeeding years.

Section 3 directs all concerned departments, agencies, and instrumentalities of the government, including relevant GOCCs and LGUs, to strictly comply with Executive Order No. 117.
Section 3 provides that any violation of Executive Order No. 117 shall be dealt with under civil service laws and regulations.

Section 4 revokes, amends, or modifies all rules and regulations, or parts thereof, that are inconsistent with Executive Order No. 117.
Section 5 provides separability: if any provision is declared invalid or unconstitutional, the remaining provisions that are unaffected remain valid and subsisting.
Section 6 sets effectivity: immediately upon publication in a newspaper of general circulation.