HHIC-Phil, Inc.

December 22, 2009 BIR RULING [DA-(C-324) 791-A-09] HHIC-Phil, Inc. Greenbeach 1, Redondo Peninsula Sitio Agusuhin, Brgy. Cawag, Subic, Zambales Attention: Mr. Kwon Myung Goo Vice-President/Director Gentlemen : This refers to your letter dated December 23, 2009 in which you informed this Office that in reference to BIR Ruling No. DA(C-324)791-2009 dated December 17, 2009, the same may have inadvertently created the impression that National Transmission Corporation (TransCo) is one and the same with the National Grid Corporation of the Philippines (NGCP). You informed that TransCo was created under Republic Act (RA) No. 9136 (EPIRA Law) in order to assume the electrical transmission function of the National Power Corporation (NPC); that TransCo assumed the authority and responsibility of NPC for the planning, construction and centralized interconnections and ancillary services; that however, under the same law, TransCo was mandated to award, in open competitive bidding, a concession contract to a qualified party for the operation, maintenance, improvement and expansion of its transmission assets and the operation of any related business for a period of twenty-five (25) years, subject to review and renewal for a maximum period of another 25 years and that pursuant to said provision, NGCP was awarded the concession contract; that the award to NGCP was purely concession to operate and that there is no transfer of ownership by TransCo to NGCP; that hence, the transfer of Connection Assets by HHIC-Phil would be in favor of TransCo and not to NGCP; that upon the consummation of the transfer of the Connection Assets to TransCo, the ownership and title of HHIC-Phil connection assets shall remain with TransCo albeit the turn-over of the said Connection Assets to NGCP. In reply, please be advised that we have duly noted the representations stated above with the conclusion that the ownership and title to the Connection Assets transferred by HHIC-Phil shall remain with TransCo in spite of the turn-over of the same assets to NGCP. This letter will therefore supplement BIR Ruling No. DA(C-324)791-2009 dated December 17, 2009 insofar as the correct legal status of the transferee, i.e., TransCo in relation to NGCP, is concerned. However, this notwithstanding, the tax treatments laid down in the said ruling remain the same considering that the conclusions therein were arrived at purely on the basis of the application of the law on the attendant facts, circumstances and legal standing of the transferor HHIC-Phil. cSEaTH Very truly yours, Commissioner of Internal Revenue By: (SGD.) JAMES H. ROLDAN Assistant Commissioner Legal Service