Philippine Postal Corp.

April 19, 2016 FIRB RESOLUTION NO. 002-16 SUBJECT MATTER : Philippine Postal Corporation WHEREAS, the Philippine Postal Corporation (PHLPost) was created under Republic Act (RA) 7354 to operate a nationwide postal system with a network that extends or makes available provisions of mail services at affordable prices; WHEREAS, in view of this mandate, the PHLPost only partially imposed the value-added tax (VAT) on its domestic postal services in 2015, thus resulting in a VAT liability of PhP332,156,371.00 thereon; WHEREAS, the imposition of VAT on its domestic postal services will increase the postage rates and make it hard for the PHLPost to survive the competition from private, multi-national and local couriers in the ever changing postal courier and logistics market; WHEREAS, despite recognizing income from operation in 2011 to 2014, the PHLPost's retained earnings still registered a negative balance of PhP893.47 million, resulting in its failure to pay past due obligations on due dates; WHEREAS, the grant of VAT subsidy will help improve the PHLPost's financial liquidity, solvency and capacity to meet its financial obligations; WHEREAS, the PHLPost has already approved the imposition of the 12% VAT on all PHLPost products and services in 2016 per Board Resolution No. 2015-144 (Annex A) ; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to approve the application for tax subsidy corresponding to its VAT liability on its domestic postal services for the year 2015, broken down as follows: 2015 VAT Liability Amount (in PhP) 1st Quarter 76,401,720.42 2nd Quarter 77,852,179.63 3rd Quarter 73,495,379.58 4th Quarter 104,407,091.37 Total 332,156,371.00 ============= Provided, however , that such tax subsidy to cover VAT on postal services shall be the last grant to the PHLPost. Provided, further , that such availment shall form part of the 2016 tax expenditure program, in accordance with the terms and conditions of Section 16 of RA 10717 or the 2016 General Appropriations Act, subject to the availability of funds therefor and pursuant to the terms and conditions of the Rules and Regulations to Implement the Subsidy Provision under Executive Order No. 93. AScHCD (SGD.) LAURA B. PASCUA Undersecretary Department of Budget and Management (SGD.) CEFERINO S. RODOLFO Undersecretary Department of Trade and Industry ROSEMARIE G. EDILLON Assistant Director-General National Economic and Development Authority (SGD.) ESTELA V. SALES Deputy Commissioner Bureau of Internal Revenue (SGD.) VICTOR PABLO C. TRINIDAD Chief of Staff, Assessment and Operations Coordination Group Bureau of Customs (SGD.) TRINIDAD A. RODRIGUEZ Acting Executive Director National Tax Research Center Head, FIRB Secretariat (SGD.) SOLEDAD EMILIA J. CRUZ Assistant Secretary of Finance Presiding Officer-FIRB ANNEX A Republic of the Philippines Philippine Postal Corporation SECRETARY'S CERTIFICATE This is to certify that during the 12th Regular Board Meeting of the Philippine Postal Corporation held on December 10, 2015, the Board of Directors adopted the following resolution, to wit: Board Resolution No. 2015-144 "APPROVING THE IMPOSITION OF 12% VALUE ADDED TAX IN ALL PRODUCTS AND SERVICES OF PHILIPPINE POSTAL CORPORATION IN CALENDAR YEAR 2016." RESOLVED, as it hereby resolves, to approve the imposition of 12% Value Added Tax in all products and services of Philippine Postal Corporation in Calendar Year 2016. Issued this 16th day of December 2015 at Manila, Philippines. (SGD.) FLORANTE C. CRUZ Corporate Secretary