National Power Corporation (1)

March 30, 2009 FIRB RESOLUTION NO. 003-09 SUBJECT MATTER : National Power Corporation (1) WHEREAS, the National Power Corporation (NPC) is mandated to undertake the development of hydroelectric generation of power and the production of electricity from nuclear, geothermal and other sources, as well as the transmission of electric power on a nationwide basis under its original charter and to perform the missionary electrification function under the Electric Power Industry Reform Act of 2001; ISTCHE WHEREAS, the conduct of these functions has resulted in the accumulation of value-added tax liabilities for the NPC for the year 2006; WHEREAS, the NPC does not have the financial resources to settle these tax obligations with the Bureau of Internal Revenue; NOW, THEREFORE, BE IT RESOLVED, AS IT IS HEREBY RESOLVED, to grant tax subsidy to the NPC to cover its VAT liabilities for 2006 in the amount of THREE BILLION FIVE HUNDRED SEVENTY THREE MILLION THREE HUNDRED EIGHTY NINE THOUSAND NINE HUNDRED NINETY SIX AND 71/100 PESOS (P3,573,389,996.71) only: Provided, that such availment shall be in accordance with the terms and conditions of Section 13 of the 2009 General Appropriations Act, subject to the availability of funds therefor, pursuant to the terms and conditions of the Rules and Regulations to Implement the Subsidy Provision under Executive Order No. 93. (SGD.) GIL P. MONTALBO Director Department of Budget and Management (SGD.) ELMER C. HERNANDEZ Undersecretary Department of Trade and Industry (SGD.) MARGARITA R. SONGCO Deputy Director-General National Economic and Development Authority (SGD.) JAMES H. ROLDAN Assistant Commissioner Bureau of Internal Revenue (SGD.) REYNALDO V. UMALI Deputy Commissioner Bureau of Customs (SGD.) LINA D. ISORENA Executive Director Head, FIRB Secretariat National Tax Research Center (SGD.) MARGARITO B. TEVES Secretary Chairman, FIRB ANNEX A Matrix of Deficiency Vat, 2006 National Power Corporation OUTPUT TAX ON ADDITIONAL TAXABLE RECEIPTS Unaccounted cash flow from power customers 1,467,273,164.41 Unreported receipts arising from analysis of 1,395,348,749.31 payments of National Transmission Corporation (NTC) for ancillary services Unaccounted collections prior to R-VAT 153,601,644.14 Zero rated sales per VAT returns without approved 167,515,007.60 zero-rating application UNREMITTED OUTPUT TAX Unremitted VAT arising from increase of VAT rate 47,564,351.11 from 10% to 12% Total Output Tax 3,231,302,916.57 DISALLOWED INPUT TAX Discrepancy between input tax per VAT returns vs. 43,412,591.55 Summary List of Purchases (SLP) Disallowed Input Tax claimed per SLP BIR R-VAT Expanded Withholding Tax Government Agency 142,296.58 LBP, BOC, Cebu, Makati 99,541,831.82 National Power Corporation 8,201,709.13 Non-VAT Suppliers Cooperatives 145,921.55 Various Suppliers 3,222,178.08 Not in Data Base of BIR 147,340,203.34 Unaccounted Invalid TIN by NPC 34,808,825.97 Under-remittance of Final VAT on services rendered 5,271,522.12 by non-resident Total Disallowed Input Tax 342,087,080.14 Total Basic VAT 3,573,389,996.71 ==============