EXECUTIVE ORDER NO. 106 REDUCING AND CONDONING REAL PROPERTY TAXES, INCLUDING INTERESTS AND/OR PENALTIES, ASSESSED ON POWER GENERATION FACILITIES OF INDEPENDENT POWER PRODUCERS UNDER BUILD-OPERATE-TRANSFER CONTRACTS WITH GOVERNMENT-OWNED OR -CONTROLLED CORPORATIONS November 28, 2025

WHEREAS, Sections 218(d) and 234 of Republic Act (RA) No. 7160 or the "Local Government Code of 1991," as amended, provides that government-owned or -controlled corporations (GOCCs) engaged in the generation and transmission of electricity enjoy a number of exemptions and privileges with respect to real property taxes (RPTs), including an assessment level of ten percent (10%) on all its lands, buildings, machineries and other improvements, as well as an exemption for all machinery and equipment that are actually, directly and exclusively used in the generation and transmission of electric power, and machinery and equipment used for pollution control and environmental protection;

WHEREAS,various local government units (LGUs) have taken the position that Independent Power Producers (IPPs) operating within their territories are not entitled to exemptions and privileges enjoyed by GOCCs with respect to RPTs on their properties, machineries and equipment used in the generation and distribution of electric power, and have threatened enforcement action against IPPs, including the levy and sale at public auction of affected properties;

WHEREAS,while IPPs are the taxable entities liable to pay said RPTs, a substantial portion of the RPTs being charged has been contractually assumed by the National Power Corporation (NAPOCOR)/Power Sector Assets and Liabilities Management Corporation (PSALM) under a Build-Operate-Transfer (BOT) scheme and similar contracts, and therefore carry the full faith and credit of the National Government;

WHEREAS,according to the Department of Finance (DOF), the collection of the subject RPTs for Calendar Year (CY)2025, which were assessed at the maximum assessment level of 80% by concerned LGUs pursuant to Section 218 of RA No. 7160, will trigger massive direct liabilities on the part of NAPOCOR/PSALM, thereby threatening their financial stability, the government's fiscal consolidation efforts, the stability of energy prices, and may even trigger further cross-defaults and significant economic losses across all sectors;

WHEREAS,as the operations of affected IPPs provide an estimated grid capacity of 1,085 megawatts, their closure or non-operation will entail substantial losses to the government and force the public to resort to more costly electric power source alternatives or rotating power outrages;

WHEREAS,Section 277 of RA No. 7160 provides that the President may, when public interest so requires, condone or reduce the RPT and interest for any province or city, or a municipality within the Metropolitan Manila Area; and

WHEREAS,Section 17, Article VII of the Constitution provides that the President shall have control over all Executive departments, bureaus and offices, and ensure the faithful execution of laws:

NOW, THEREFORE, I, FERDINAND R. MARCOS, JR.,President of the Philippines, by virtue of the powers vested in me by the Constitution and existing laws, do hereby order:

Section 1. Reduction and Condonation.All liabilities for RPT for CY 2025, including any special levies accruing to the Special Education Fund on property, machinery, and equipment actually and directly used by IPPs for the production of electricity under BOT scheme and similar contracts, whether denominated as 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 2025, are hereby reduced to an amount equivalent to the tax due if computed based on an assessment level of 15% of the fair market value of said property, machinery and equipment, depreciated at the rate of 2% per annum, less any amount already paid by the IPPs. All interest and penalties on such deficiency RPT liabilities are also hereby condoned and the concerned IPPs are relieved from payment thereof.

Section 2. Application of Excess RPT Payments to RPT Liabilities for the Succeeding Years.All RPT payments made by the IPPs over and above the reduced amount under Section 1 of this Order shall be applied to their RPT liabilities for succeeding years.

Section 3. Compliance by all Government Entities.All concerned departments, agencies, instrumentalities, including relevant GOCCs, and LGUs are hereby directed to strictly comply with this Order. Any violation of this Order shall be dealt with in accordance with civil service laws, rules and regulations.

For this purpose, the Department of the Interior and Local Government (DILG), in coordination with the DOF, is hereby directed to monitor the compliance of all concerned LGUs, Further, within six (6) months from the effectivity of this Order, the DOF shall submit to the President, through the Office of the Executive Secretary, a progress report on the status of the implementation of this Order.

Section 4.Separability.If any part or provision of this Order shall be held invalid or unconstitutional, the provisions not affected thereby shall remain in full force and effect.

Section 5.Repeal.All orders, rules and regulations, and other issuances or parts thereof which are inconsistent with the provisions of this Order, are hereby repealed or modified accordingly.

Section 6. Effectivity.This Order shall take effect immediately upon publication in the Official Gazette or in a newspaper of general circulation.

DONE,in the City of Manila, this 28^thday of November, in the year of Our Lord, Two Thousand and Twenty-Five.