RMC No. 124-2024 — Circularizing ERC Resolution No. 10, Series of 2023, titled "A Resolution Suspending the Inclusion of the National Franchise Tax of the National Grid Corporation of the Philippines in the Total Monthly Transmission Cost Billing of Distribution Utilities"

BUREAU OF INTERNAL REVENUE REPUBLIC OF THE PHILIPPINES DEPARTMENT OF FINANCE

Bringing in Revenues for Nation-Building PILIPINAS BAGONG

NOV 1 5 2024 REVENUE MEMORANDUM CIRCULAR NO.1 2 4 - 2 0 2 4

SUBJECT: Circularizing ERC Resolution No. 10, Series of 2023, Entitled "A RESOLUTION SUSPENDING THE INCLUSION OF THE NATIONAL

TRANSMISSION COST BILLING OF DISTRIBUTION UTILITIES: FRANCHISE TAX OF THE NATIONAL GRID CORPORATION OF THEPHILIPPINES (NGCP)INTHETOTALMONTHLY

TO : All Internal Revenue Officers and Others Concerned

entitled "A RESOLUTION SUSPENDING THE INCLUSION OF THE NATIONAL concerned, attached as Annex "A" hereof is the copy of ERC Resolution No. 10, Series of 2023 FRANCHISE TAX OF THE NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP) IN THE TOTAL MONTHLY TRANSMISSION COST BILLING OF DISTRIBUTION For the information and guidance of all internal revenue officials, employees and others

UTILITIES.

wide a publicity as possible. All internal revenue officials and employees are hereby enjoined to give this Circular as

Rey UMAGI, JR.

Smissioner of Internal Revenue

K-1 BUREAU OF INTERNAL REVENUE Internal CoMmuniCations DIvIsiOn TLOEAFT NOV 1 51 2824 @RUBEADS RFANTER L} 4as DIVISION 21

EUWI L NOV 1 5 2024

BY Admin unit"- 1 HME

BiR National Office Bldg., Senator Miriam Defensor-Santiago Avenue, Diliman, Quezon City Trunktine: 8981-7000 : 8929-7676 Website: www.bir.gov.ph

Ai0 E

ANNEX"A ENERGY REGULATORY COMMISSION Republic of the Philippines Pasig City APPROVED FOR www.erc.gov.ph POSTING

M

RESOLUTION NO. O Series of 2023

PHILIPPINES (NGCP) IN THE TOTAL MONTHLY TRANSMISSION COST FRANCHISE TAX OF THE NATIONAL GRID CORPORATION OF THE A RESOLUTION SUSPENDING THE INCLUSION OF THE NATIONAL BILLING OF DISTRIBUTION UTILITIES

"Electric Power Industry Reform Act of 20o1" (EPIRA), recognizes the policy of the State to protect the public interest affected by rales and services of electric utilities; WHEREAS, Section 2 (f) of Republic Act No. 9136, otherwise known as the

powers of the ERC; power shall bc a regulated common electricity carrier business, subject to the fatemaking WHEREAS, Section 7 of the EPIRA provides that the transmission of electric

supply electricity in the least cost manner to its captive market, subject to the collection of retail rate approved by the ERC; WHEREAS, Section 23 of the EPIRA obligates distribution utilities (DUs) to

policies enshrined therein and in the Iaws of the land, the ERC recognizes the need to constantly uphold and duly enforce such policies, particularly in the light of its mandate "to prolect the public interest as it is affected by the rates ard services of electric utilitics and other providers of electric power: WHEREAS, pursuant to its authority under the EPIRA and in light of state

known as An Act Granting the National Grid Corporation of the Philippines a Franchise to Engage in the Business of Conveying or Transmitting Electricity Through High Corporation of the Philippines (NGCP), Section 9 of Republic Act No. 9511 otherwise Voltage Back-Bone System of Interconnected Transmission Lines, Substations and Related Facilities, and for Other Purposes, mandated NGCP to "pay a franchise tax duties, fees and charges of any kind, naturc or description levied, established or collected by any authority whatsoever, local or national, on its franchise x x x;" equivalent to three percent (3%) of all gross receipts derived by the Grantee from its operation under this franchise. Said tax shall be in lieu of income tax and any and all taxes, WHEREAS, in consideration of the nchise granted to the National Grid

Franchise Tax Billing was adopted by the then Commission, providing for "the inclusion monthly transmission cost in the Transmission Rate Adjustment Mechanism (TRAM) Monthly Transmission Cost the National Grid Corporation of the Philippines' National of the threc percent (3%) national franchise tax billed by NGCP as part of the DUs' total formula; otherwise known as A Resolution Allowing the Distribution Utilities to Include in their WHEREAS, ERC Resolution No. 07, Series of 2011, dated o7 March 2011,

Voperating expenscs to the consuming public. The Supreme Court declared that such taxes State and that the same cangot be unduly passed on to consumers, by way of tariff, since must be shouldered by the income earner who receives the benefit or protection of the said tax was paid not for the consumers benefit but for benefit of the business entity Company (MERALCO): and Maynilad Water Services, Inc-v. National Water and Resources Board, et al.,a disallowed public utilities from passing-on certain taxes as earning the income; WHEREAS, the Supreme Court, in the cases of Republic . Manila Electric

the Supreme Court in ihe decisions aforementioned, the Commission dcems it consistent with established jurisprudence, and in the best interest of the public, to suspend the implementation of Resolution No. 07, Series of 201i and the passing-on of the three percent (3%) national franchise tax of NGCP to its customers; WHEREAS, upon careful deliberation and in consideration of the declarations of

G:R Nos. 181764, 187380, 20744, 208207. 210147.2132 7, 219362, and 239938, December 72021./j G.R. No. 141314, November 15, 2002 ARS BUREAU OF InTERNALREVeNUE /RECORDS MANAGEMENT DIVISION I

NOV 15 2024

BY AdMin unit - 1 Tt

THE TOTAL MONTHLY TRANSMISSION COST BILLING OF DISTRIBUTION A RESOLUIION SUSPENDING THE INCLUSION OF THE NATIONAL FRANCHISE TAX OF THE NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP) IN ERC Resolution No. _10_, Series of 2023 Page 2 of 2 UTILITIES

Commission SUSPENDS the passing-on of the 3% national franchise tax by NGCP to its customers. In relation thereto, the effectivity of Resolution No. 07, Series of 2011 is likewise SUSPEND ED. NOW, THEREFORE, BE IT RESOLVED, as it is hereby resolved, that the

newspaper of general circulation in the country. This Resolution shall take effect IMMEDIATELY following its publication in a

the Philippines Law Center - Office of the National Administrative Register (UPLc- ONAR)} Let this Resolution be posted on the ERC website and filed with the University of

Pasig City,08 August 2023. Office of ths Chairperson and CEO ERC

21: medinaluatn IEC 3F11:5 MONALISA C. DIMALANTA Chairperson and CEO MCD2023-007665

ALEXIS M. LUMBATAN Commissioner CATHERINE P. MACEDA Commissioner

FLOR -INDA G. B LDO-DIGAL AA Commissioner MARKO ROMEO L. FUENTES Commfissioner

NBIREAUOFN JROS MANAGEMENT DIVSION F.Ti NTERNAL REVENUE

NOV 1 5 2024

ADMIN UNIT - 1 1 TMe