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Republic of the Philippines
r | ' ¥ DEPARTMENT OF ENERGY

(Kagawaran ng Enerhiya)

DEPARTMENT CIRCULAR NO. OC 2021-12- 0042 Q&-

PRESCRIBING AMENDMENTS TO SECTIONS 13(E) AND 18(C) OF
DEPARTMENT CIRCULAR NO. DC2009-05-0008, ENTITLED RULES AND
REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 9513,
OTHERWISE KNOWN AS “THE RENEWABLE ENERGY ACT OF 2008”

WHEREAS, Section 2(b) of Republic Act No. 9513, Renewable Energy Act of 2008
(the “RE Law’) provides the State policy to increase the development and utilization of
renewable energy by promoting its efficient and cost-effective commercial applications
through the provisions of fiscal and nonfiscal incentives;

WHEREAS, pursuant to Section 33 of the RE Law, the Department of Energy (“DOE”)
promulgated DC No. 2009-05-0008, the Rules and Regulations Implementing
Republic Act No. 9513 (the “RE Law IRR”) on 25 May 2009;

WHEREAS, consistent with Section 15(e) of the RE Law, Section 13(E) of the RE Law
IRR provides that the requisite for the entitlement of the ten percent (10%) corporate
income tax is the registration of the RE Developer with the DOE and the issuance of
the DOE Certificate of Registration;

WHEREAS, Section 13(E) of the RE Law IRR provides that an appropriate mechanism
shall be developed by the Energy Regulatory Commission (“ERC”), in coordination
with the DOE, to implement the power rate reduction;

WHEREAS, in implementing Section 26 of the RE Law, Section 18(C) of the RE Law
IRR requires RE Developers and manufacturers, fabricators, and suppliers of locally-
produced RE equipment to secure a “Certificate of Endorsement from the DOE,
through the Renewable Energy Management Bureau (“REMB"), on a per transaction
basis’ to avail of the incentives provided under the RE Law;

WHEREAS, Republic Act No. 11032 or the Ease of Doing Business Act and Republic
Act No. 11234 or the Energy Virtual One Stop Shop or EVOSS Law were passed
mandating the streamlining of government processes and eliminating red tape in
government transactions to promote the ease of doing business; and

WHEREAS, cognizant of the need to address implementation gaps, promote
efficiency in government processes, and ensure that fiscal incentives are properly
availed of, the DOE deemed it necessary to amend Section 13(E), and Section 18(C)
of the RE Law IRR.

NOW THEREFORE, for and in consideration of the foregoing, the DOE hereby issues,
adopts and promulgates the following amendments to the RE Law IRR:

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Section 1. AMENDMENT TO SECTION 13(E) OF THE RE LAW IRR. Section 13(E)
of DC No. DC2009-05-0008 is hereby amended to read as follows:

E. Corporate Tax Rate

After availment of the ITH, all Registered RE Developers shall
pay a corporate tax of ten percent (10%) on their net taxable
income as defined in the National Internal Revenue Code (NIRC)
of 1997, as amended.

All RE Developers that acquire, operate, and/or administer
existing RE facilities that were or have been in commercial
operation for more than seven (7) years, upon the effectivity of
the Act, shall pay a corporate tax rate of 10% on their net taxable
income, upon registration with the DOE.

PRIOR TO THE FIRST YEAR OF THE REGISTERED RE
DEVELOPER'S AVAILMENT OF THE CORPORATE TAX RATE
INCENTIVE, THE DOE SHALL ISSUE A CERTIFICATE OF
ENDORSEMENT; PROVIDED, THAT THE REGISTERED RE
DEVELOPER, AT THE TIME OF THE AVAILMENT, HOLDS A
VALID AND SUBSISTING RENEWABLE ENERGY
SERVICE/OPERATING CONTRACT AND ITS CORRESPONDING
CERTIFICATE OF REGISTRATION, AND HAS NOT BEEN
FOUND IN DEFAULT OR HAS NOT BEEN FOUND TO HAVE
BREACHED OF ITS OBLIGATIONS UNDER SUCH
RENEWABLE ENERGY SERVICE/OPERATING CONTRACT;
PROVIDED, FURTHER, THAT THE REGISTERED RE
DEVELOPER SUBMITS A SWORN UNDERTAKING TO PASS
ON THE SAVINGS DERIVED FROM THIS INCENTIVE TO THE
END-USERS IN THE FORM OF LOWER POWER RATES.

IN THE YEARS SUCCEEDING ITS AVAILMENT OF SAID
INCENTIVE, THE REGISTERED RE DEVELOPER SHALL
SUBMIT TO THE DOE, AND THE ERC, A REPORT, PROVING
THAT IT HAS, DURING THE PREVIOUS YEAR, PASSED ON
THE SAVINGS DERIVED FROM THIS INCENTIVE TO THE
END-USERS IN THE FORM OF LOWER POWER RATES. SAID
REPORT SHALL BE MADE UNDER OATH, AND SUPPORTED
BY ANY OF THE FOLLOWING TECHNICAL AND FINANCIAL
DOCUMENTS:

(1) SALES REPORTS FOR THE YEARS THE ITH
WAS AVAILED OF;

(2) COMPARATIVE FINANCIAL STATEMENTS
SHOWING THE REGISTERED RE DEVELOPER'S
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ESTIMATED NET INCOME WITH AND
WITHOUT THE CORPORATE TAX RATE
INCENTIVE;

(3) ANNUAL SALES FORECASTS;

(4) ESTIMATED DEDUCTIONS OF THE TAX
SAVINGS FROM THE GROSS REVENUE;

(5) SAVINGS DERIVED FROM THE AVAILMENT
OF THE REDUCED CORPORATE TAX
PASSED TO END-USERS HAVE BEEN
FACTORED INTO THE OFFERS MADE IN THE
COMPETITIVE SELECTION PROCESS,
WHOLESALE ELECTRICITY SPOT MARKET,
THE COMPETITIVE RETAIL MARKET, AND
OTHER PROGRAMS DEVELOPED BY THE
DOE; AND

(6) OTHER DOCUMENTS THAT PROVES THAT
THE REGISTERED RE DEVELOPER HAS
PASSED ON THE SAVINGS DERIVED FROM
THIS INCENTIVE TO THE END-USERS IN THE
FORM OF LOWER POWER RATES;

IN THE CASE OF THE POWER SUPPLY AGREEMENT
(PSA) WITH A DISTRIBUTION UTILITY OR ANCILLARY
SERVICE PROCUREMENT AGREEMENT (ASPA) WITH
THE SYSTEM OPERATOR, THE SAME SHALL HAVE BEEN
APPROVED (WHETHER FINAL OR PROVISIONAL) BY THE
ERC; PROVIDED THAT, THE ERC SHALL ENSURE THAT
SUCH PSA AND/OR ASPA RATE WAS DETERMINED
THROUGH A COMPETITIVE PROCESS AND THAT THE
ERC HAS ALREADY TAKEN INTO ACCOUNT THE
ENTITLEMENT OF THE CORPORATE TAX RATE
INCENTIVE. THE REPORT OF THE REGISTERED RE
DEVELOPERS MUST INCLUDE A STATEMENT THAT THE
INCENTIVE IS ALREADY INCORPORATED IN THE PSA
AND/OR ASPA.

THE DOE SHALL MONITOR THE REGISTERED RE
DEVELOPERS’ COMPLIANCE THROUGH THE CONDUCT
OF A RANDOM REVIEW OF THE ANNUAL REPORTS. IF,
AT ANY POINT, THE REGISTERED RE DEVELOPER FAILS
TO PROVE THAT IT HAS PASSED ON THE SAVINGS
DERIVED FROM THIS INCENTIVE TO THE END-USERS IN
THE FORM OF LOWER POWER RATES, THIS SHALL BE
A GROUND FOR THE CANCELLATION/WITHDRAWAL BY
THE DOE OF ITS ENDORSEMENT.

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Section 2. AMENDMENT TO SECTION 18(C) OF THE RE LAW IRR. Section
18(C) of DC No. DC2009-05-0008 is hereby amended to read as follows:

“SEC. 18. Conditions for Availment of Incentives and Other Privileges.

XXX

C. DOE ENDORSEMENT FOR AVAILMENT OF INCENTIVES
AND DUTY-FREE IMPORTATIONS OF MACHINERY,
EQUIPMENT, AND MATERIALS

RE Developers and manufacturers, fabricators, and
suppliers of locally-produced RE equipment shall be
AUTOMATICALLY qualified to avail of the incentives
provided for in the Act, OTHER THAN THE INCENTIVE OF
DUTY-FREE IMPORTATION OF QUALIFIED MACHINERY,
EQUIPMENT, MATERIALS, PARTS AND COMPONENTS,
after securing a Certificate of Registration from the DOE.

RE DEVELOPERS THAT IMPORT RE EQUIPMENT,
EQUIPMENT, MATERIALS, PARTS AND COMPONENTS
SHALL SECURE A CERTIFICATE OF ENDORSEMENT
FROM THE DOE, THROUGH THE REMB, ON A PER
IMPORTATION BASIS.

CONSISTENT WITH THE MANDATE UNDER THE
REPUBLIC ACT NO. 11032 AND REPUBLIC ACT NO.
11234, the DOE MAY issue guidelines to further
STREAMLINE the procedures and requirements for the
availment of incentives FOR RE DEVELOPERS OR
MANUFACTURERS, FABRICATORS, AND SUPPLIERS
OF LOCALLY-PRODUCED RE EQUIPMENT IN GOOD
STANDING, AS DETERMINED based on specific criteria,
such as, but not limited to:

(1) Compliance with Obligations — The RE
Developers or manufacturers, fabricators, and
suppliers of locally-produced RE equipment shall
observe and abide by the provisions of the Act,
this IRR, the applicable provisions of existing
Philippine laws, and take adequate measures to
ensure that its obligations thereunder as well as

those of its officers are faithfully discharged;

(2) Compliance with Directives — The RE
Developer or manufacturers, fabricators, and
suppliers of locally- produced RE equipment shall
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comply with the directives and circulars which the
DOE may issue from time to time in pursuance of

its powers under the Act;

(3) | Compliance with Pre-Registration/Registration
Conditions — The RE Developers or
manufacturers, fabricators, and suppliers of
locally-produced RE equipment shall comply with
all the pre-registration and registration conditions
as required by the DOE;

(4) | Compliance with Reportorial Requirements —
An RE Developer shall maintain distinct and
separate books of accounts for its operations
inside the RE facilities and shall submit technical,
financial and other operational reports/documents
to DOE on or before their respective due dates;
and

(5) Remittance of Government Shares and
Payment of Applicable Financial Obligations —
An RE Developer shall observe timely remittance
of Government Share, and payment of applicable
fees and other financial obligations to the DOE.

RE Developers or manufacturers, fabricators, and suppliers of
locally-produced RE equipment who comply with the above
requirements shall be deemed in good standing and shall
therefore be qualified to avail of the incentives as provided for
in the Act and this IRR.

FAILURE BY THE RE DEVELOPER, MANUFACTURER,
FABRICATOR, OR SUPPLIER OF LOCALLY-PRODUCED RE
EQUIPMENT TO COMPLY WITH THE ABOVEMENTIONED
CRITERIA SHALL BE SUFFICIENT GROUND FOR THE
TERMINATION/CANCELLATION OF ITS RE CONTRACT
AND CERTIFICATE OF REGISTRATION. TO THIS END,
REMB SHALL CLOSELY MONITOR THE COMPLIANCE BY
RE DEVELOPERS OF THE ABOVE CRITERIA AND MAY
CAUSE THE CANCELLATION OF CERTIFICATES FOR NON-
COMPLIANCE THEREWITH.

Section 3. AUTOMATIC REVIEW. THIS CIRCULAR MAY BE REVIEWED
AND REVISED ACCORDINGLY TO ENSURE THAT THE OBJECTIVE TO
ATTAIN LOWER PRICES IS ACHIEVED.

Section 4. SEPARABILITY CLAUSE. If any provision of this Circular is
declared invalid or unconstitutional, the other provisions not affected thereby
shall remain valid and existing.

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Section 5. REPEALING CLAUSE. All issuances inconsistent with the provisions
of this Circular are hereby repealed or amended accordingly.

Section 6. EFFECTIVITY. This Circular shall take effect fifteen (15) days following
its publication in two (2) newspapers of general circulation and submission to the
University of the Philippines Law Center — Office of National Administrative
Register (UPLC-ONAR).

onse’ecus!

Secretary

Issued OE { 2 4 202 bt Energy Center, Bonifacio Global City, Taguig

City.

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DOE-AGC-21007173
WOM UNUM