President Rodrigo Duterte has ordered the reduction and condonation of real property taxes and interest or penalties assessed on power generation facilities of independent power producers under build-operate-transfer contracts with government-owned or -controlled corporations.

This was contained in Executive Order No. 117, which Duterte signed on July 24.

Section 277 of Republic Act No. 7160, otherwise known as the Local Government Code, provides that the President may, when public interest so requires, condone or reduce the real property tax and interest for any year in any province or city or a municipality within the Metropolitan Manila Area.

"All liabilities for RPT (real property tax), including any special levies accruing to the Special Education Fund, for calendar year 2019, on property, machinery, and equipment actually and directly used by IPPs for the production of electricity under a Build-Operate-Transfer scheme and similar contracts, whether denominated Power Purchase Agreements, Energy Conversion Agreements or other contractual agreements, with GOCCs, assessed by LGUs and other entities authorized to impose RPT for all years up to CY 2019, are hereby reduced to an amount equivalent to the tax due if computed based on an assessment level of 15 percent of the fair market value of said property, machinery and equipment depreciated at the rate of two percent per annum, less any amounts already paid by the IPPs," the EO read.

"All interests and penalties on such deficiency RPT liabilities are hereby condoned and the concerned IPPs are relieved from payment thereof," it added.

Duterte made the order as closure or non-operation of IPPs will "entail substantial losses to the government and force resort to more costly electric power source alternatives or the implementation of rotating power outages," the EO said.

All concerned departments, agencies and instrumentalities of the government, including relevant GOCCs and LGUs, are ordered to strictly comply with the Order.

The EO said any violation of the Order shall be dealt with in accordance with civil service laws and regulations.

The Order shall take effect immediately upon its publication in a newspaper of general circulation. Celerina Monte/DMS