2006 Annual Financial Report Government-Owned and/or ......It is expected that the publication of this Annual Financial Report of Government-Owned and/or Controlled Corporations will

2006

Annual Financial Report

Government-Owned and/or Controlled Corporations

Volume II-A

TABLE OF CONTENTS

Page

I INTRODUCTION 1

II FINANCIAL STATEMENTS Condensed Balance Sheet 3 Condensed Statement of Income and Expenses 4 Consolidated Statement of Changes in Equity 5 Condensed Statement of Cash Flows 7

III NOTES TO FINANCIAL STATEMENTS 8

IV FINANCIAL HIGHLIGHTS AND ANALYSES Executive Summary 14 Balance Sheet Assets 16 Liabilities 31 Deferred Credits 36 Equity 36 Statement of Income and Expenses Income 42 Subsidy Income 46 Expenses 47 Share of the National Government on the Income of GOCCs 53 Statement of Cash Flows Operating Activities 55 Investing Activities 56 Financing Activities 57

V ACRONYMS 60

Introduction

1

INTRODUCTION

The Commission on Audit (COA) is the Philippines' Supreme State Audit Institution, responsible for auditing all government agencies. In addition, the COA prepares an Annual Financial Report (AFR) for Government-Owned and/or Controlled Corporations (GOCCs) and submits the same to the President and the Congress of the Philippines in compliance to Section 4, Article IX-D of the Philippine Constitution.

The AFR shows the financial position, results of operations, sources and applications of cash and the changes in the equity of government corporations as of December 31, 2006. To enhance the information value, the financial statements included in this AFR are accompanied by explanatory notes supported by tabular presentations and textual analyses for asset, liability, equity, income and expense accounts.

The AFR intends to serve as a potent tool for corporate planning, budgeting and policy formulation and as a medium to enlighten the general public on how GOCCs manage their finances and operations.

This is the second year that the AFR is prepared based on the prescribed Chart of Accounts under the New Government Accounting System (NGAS). The NGAS Chart of Accounts aims to: (a) ensure uniformity in the use of accounts for similar transactions, (b) facilitate consolidation of accounts and monitoring of GOCCs’ financial transactions, and (c) ensure efficient implementation by concerned GOCCs of the computerized NGAS, otherwise known as the e-NGAS.

To provide timely and accurate financial reports and other related information useful to government executives, managers and administrators for control and decision making purposes, to enhance uniformity in the application of government accounting rules and to facilitate the consolidation of financial reports, the COA developed the e-NGAS software for use of all government agencies including government corporations.

During the year, the following government corporations successfully installed the e-NGAS:

• Silang Water District • Metropolitan Waterworks and Sewerage System • Metro Lipa Water District • National Dairy Authority • Philippine Fisheries Development Authority • Philippine Institute for Development Studies

This brings to eleven the total number of GOCCs implementing the eNGAS since it was introduced to GOCCs in 2005.

While NGAS was implemented in all GOCCs effective January 1, 2005, except Government Financial Institutions, GSIS and SSS, some corporations were not able to convert their accounts during the year while others used accounts not included in the prescribed NGAS Chart of Accounts, resulting to different treatment and presentation in the consolidated financial statements.

The financial information presented in this report were generated from the Balance Sheet, Statement of Income and Expenses, Statement of Cash Flows and Statement of Changes in Equity submitted by 408 or 67.88 percent of 601GOCCs including water districts to the Government Accountancy and Financial Management Information System (GAFMIS) Sector, thru the Corporate Government Sector (CGS), COA as of July 24, 2007. Of the 408, 90 were audited and 318 were not.

A significant feature of this year’s AFR is the inclusion of Water Districts. As of date, there are 455 active Water Districts nationwide. Out of the total, 274 or 60.22 percent submitted their financial statements/reports. These were incorporated in the AFR by consolidating the individual

financial statements by province and by region as shown in Volume II – B2. The consolidated Financial Statements of 274 Water Districts are presented under Public Utilities Cluster shown in Volume II – B1.

COA Accounting Circular Letter No. 2007-003 dated January 19, 2007, requires GOCCs and their subsidiaries to submit in printed and digital copies year-end financial statements and other reports/schedules for inclusion in the AFR for fiscal year 2006 and onwards on or before February 14 of each year. The PNOC-Energy Development Corporation, Ilagan Water District and Jaro Water District were not able to provide COA-GAFMIS their Statement of Income and Expenses while those that did submit Balance Sheet were Santiago City Water District, Catbalogan Water District, Ipil-Titay Water District and Libmanan Water District. The GOCCs which failed to submit any of the required financial statements are the following:

• AFP Retirement and Separation Benefit System • Resources and Investments Corporate Home, Inc • Matrix Realty Development Corporation • RSBS Enterprises, Inc • RSBS Land, Inc • Southern Utility Management and Services, Inc • Light Rail Transit Authority • Philippine National Railways • First Centennial Clark Corporation • Philippine Mining Development Corporation • Philippine Forest Corporation • RPN 9 • 181 Water Districts ( Details shown in Schedule 6, Volume II-B)

This AFR consists of two volumes, namely: Volume II-A – Condensed Financial Statements of GOCCs, Notes to Financial

Statements, Financial Highlights and Analyses of the Financial Statements Volume II-B1 – Consolidated Detailed Financial Statements by Cluster/GOCCs and

Schedules of Financial Statements Volume II-B2 – Consolidated Detailed Financial Statements by Water Districts, by

Region/Province

It is expected that the publication of this Annual Financial Report of Government-Owned and/or Controlled Corporations will promote transparency, good governance and benefit not only the implementers of government projects, but also the end-users as this report will be published in the COA Website www.coa.gov.ph for the information of all concerned and the general public.

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http://www.coa.gov.ph/

FINANCIAL STATEMENTS

2006 2005 Increase/ (Decrease)

Current Assets 2,764,381,714.35 2,186,312,425.38 578,069,288.97 26.44 International Reserves (Note 2) 555,989,146.00 504,022,119.00 51,967,027.00 10.31 Cash (Note 3) 772,577,037.49 597,493,938.11 175,083,099.38 29.30 Short Term Investments 567,904,315.24 247,992,374.98 319,911,940.26 129.00 Receivables - net (Note 1e and 4) 701,077,400.30 656,597,470.80 44,479,929.50 6.77 Inventories - net (Note 1f) 79,450,960.84 85,059,763.05 (5,608,802.21) (6.59) Prepayments and Deferred Charges 34,965,403.29 43,819,205.18 (8,853,801.89) (20.21) Other Current Assets 52,417,451.19 51,327,554.27 1,089,896.92 2.12

Long - Term Receivables - net 483,516,766.28 466,493,187.69 17,023,578.59 3.65

Investments - net 544,920,516.32 628,874,351.41 (83,953,835.09) (13.35)

Property Plant and Equipment - net (1d) 1,225,722,307.48 1,214,271,713.80 11,450,593.68 0.94 Land and Land Improvements (Note 5) 806,092,895.33 793,774,980.42 12,317,914.91 1.55 Buildings 124,262,444.13 123,815,319.97 447,124.16 0.36 Leasehold Improvements 1,116,913.23 834,101.29 282,811.94 33.91 Office Equipment, Furniture and Fixtures 20,286,403.91 19,393,200.88 893,203.03 4.61 Machineries and Equipment 30,791,907.61 26,267,917.85 4,523,989.76 17.22 Transportation Equipment 6,924,983.91 5,513,019.63 1,411,964.28 25.61 Other Property, Plant and Equipment (Note 6) 830,298,580.04 789,035,829.36 41,262,750.68 5.23 Accumulated Depreciation (668,775,596.20) (610,263,293.61) (58,512,302.59) 9.59 Construction in Progress 74,723,775.53 65,900,638.02 8,823,137.52 13.39

Intangible Assets 7,534,245.86 5,964,628.43 1,569,617.43 26.32

Other Assets (Note 7) 248,433,266.25 216,395,299.36 32,037,966.89 14.81

5,274,508,816.54 4,718,311,606.08 556,197,210.46 11.79

Current Liabilities 1,740,599,703.24 1,434,523,493.74 306,076,209.50 21.34 Deposit Liabilities 859,334,097.25 611,833,442.35 247,500,654.90 40.45 Currency in Circulation 384,491,616.00 336,557,506.00 47,934,110.00 14.24 Payable Accounts (Note 8) 496,773,989.99 486,132,545.39 10,641,444.60 2.19

Long - Term Liabilities 2,213,919,920.98 2,188,101,382.53 25,818,538.45 1.18 Notes Payable 10,088,005.40 83,505.40 10,004,500.00 11,980.66 Bonds Payable 303,496,952.63 268,797,127.23 34,699,825.40 12.91 Loans Payable 1,282,655,491.84 1,249,767,961.18 32,887,530.66 2.63 Other Long - Term Liabilities 617,679,471.11 669,452,788.72 (51,773,317.61) (7.73)

TOTAL LIABILITIES 3,954,519,624.22 3,622,624,876.26 331,894,747.96 9.16

Deferred Credits 56,559,000.51 60,513,944.66 (3,954,944.15) (6.54)

EQUITY 1,263,430,191.81 1,035,172,785.16 228,257,406.66 22.05

5,274,508,816.54 4,718,311,606.08 556,197,210.46 11.79

Difference between totals and sum of components is due to rounding off.

Amount (in thousand pesos)

TOTAL ASSETS

Percent

Republic of the PhilippinesGovernment Owned and/or Controlled Corporations

Condensed Balance SheetDecember 31, 2006

TOTAL LIABILITIES AND EQUITY

LIABILITIES AND EQUITY

ASSETS

Particulars

3

INCOME (Note 1.d) 718,733,824.24 680,146,457.76 38,587,366.48 5.67 Permits and Licenses 726,318.44 575,758.22 150,560.22 26.15 Service Income 21,089,960.22 13,883,887.10 7,206,073.12 51.90 Business Income 537,287,473.52 503,976,967.58 33,310,505.94 6.61 Other Income 58,481,684.87 52,670,395.95 5,811,288.92 11.03 Gain/Premiums 101,148,387.19 109,039,448.91 (7,891,061.72) (7.24)

Less: Share of National Government (Note 10) 12,599,776.72 12,530,636.14 69,140.58 0.55 Income after Share of National Government 706,134,047.52 667,615,821.62 38,518,225.90 5.77

EXPENSES (Note 1.d) 546,733,681.48 517,651,725.48 29,081,956.00 5.62 Personal Services 51,300,583.74 48,177,891.01 3,122,692.73 6.48 Maintenance and Other Operating Expenses 435,230,879.64 407,833,515.97 27,397,363.68 6.72 Financial Expenses 60,202,218.09 61,640,318.50 (1,438,100.41) (2.33)

Net Income(Loss) Before Subsidy 159,400,366.04 149,964,096.14 9,436,269.90 6.29 Add: Subsidy from Other National Government Agency (Note 11) 13,350,350.38 17,827,500.60 (4,477,150.22) (25.11)

Subsidy from GOCCs 135,498.43 104,205.98 31,292.45 30.03 Subsidy from Subsidiaries/Affiliates 31,105.34 5,758.56 25,346.77 440.16

Net Income(Loss) Before Tax 172,917,320.19 167,901,561.28 5,015,758.90 2.99 Less:Provision for (Benefit from) Income Tax 4,321,002.08 2,283,570.22 2,037,431.86 89.22

Final and Creditable Withholding Tax 21,277.48 24,923.66 (3,646.18) (14.63)

NET INCOME(LOSS) AFTER TAX 168,575,040.62 165,593,067.40 2,981,973.22 1.80


PercentIncrease/ (Decrease)


Condensed Statement of Income and ExpensesYear Ended December 31, 2006

2006 2005ACCOUNT TITLE


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Government Equity Balance at beginning of the year 192,406,936.85 166,230,416.76 Reclassification of Capital Accounts - 13,328,963.07 Additions/Deductions 13,912,529.67 10,500,478.28 Balance at end of the year 206,319,466.52 190,059,858.11

Capital Stock Balance at beginning of the year 224,526,857.58 222,583,195.91 Deposit for Future Subcriptions - 1,191,457.33 Additions/Deductions 5,002,545.03 (2,324,206.40) Balance at end of the year 229,705,867.40 221,450,446.84

Subscribed Capital Stock Balance at beginning of the year 6,583,158.12 6,529,564.19 Additions/Deductions (69,587.72) (52,671.79) Balance at end of the year 6,513,570.41 6,476,892.41

Donated Capital Balance at beginning of the year 13,013,353.22 12,765,435.10 Additions/Deductions 3,977.67 192,766.71 Balance at end of the year 13,017,330.89 12,958,201.81

Paid-in Capital in Excess of Par Value Balance at beginning of the year 3,803,809.75 3,651,120.44 Additions/Deductions 6,272,912.65 604.12 Balance at end of the year 10,076,722.40 3,651,724.56

Appraisal Capital Balance at beginning of the year 279,904,808.37 217,671,271.98 Additions/Deductions (7,005,833.29) 63,658,409.24 Balance at end of the year 272,898,975.07 281,329,681.22

Other Equity Instruments Balance at beginning of the year Additions/Deductions 6,373,900.00 - Balance at end of the year 6,373,900.00 -

Treasury Stock Balance at beginning of the year (16,066.72) (15,889.42) Additions/Deductions - - Balance at end of the year (16,066.72) (15,889.42)

Restricted Capital Balance at beginning of the year 806,933,879.08 747,341,982.87 Additions/Deductions 53,547,427.95 59,695,898.03 Balance at end of the year 860,481,307.03 807,037,880.90

Retained Earnings Balance at beginning of the year (494,389,097.29) (579,424,436.66) Transfers to (from) Reserve (44,514,556.68) (65,559,653.42) Prior Years’ Adjustments 247,736.42 (22,866,369.57) Changes during the year 5,537,381.21 682,851.42 Net Income/Loss for the year 174,338,401.99 166,386,424.39 Net Subsidy from NG - - Remittance of Income to NGAs (689,141.03) (920,408.75) Reclassification of Capital and Liability Accounts - 5,730,794.97 Distribution of Income (3,954.25) (7,256.71) Others (503,750.74) (358,689.45)


Consolidated Statement of Changes in Equity

2006 2005

Year Ended December 31, 2006(in thousand pesos)

ParticularsTOTAL

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Consolidated Statement of Changes in Equity

2006 2005

Year Ended December 31, 2006(in thousand pesos)

ParticularsTOTAL

Sinking Fund (857,050.84) (857,084.11) Dividends (26,173,963.69) (12,203,889.93) Net Unrealized Gain/Loss in the Value of Investments 45,067,113.71 21,621,706.56 Balance at end of the year (341,940,881.19) (487,776,011.26)

Total Equity 1,263,430,191.81 1,035,172,785.16

Difference between totals and sum of componenents is due to rounding off.

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Cash Flows From Operating ActivitiesCash Inflows 738,306,781.16 831,580,677.39 (93,273,896.23) (11.22) Cash Outflows 577,063,149.02 655,009,812.86 (77,946,663.84) (11.90)

Cash Provided by (Used in) Operating Activities 161,243,632.14 176,570,864.54 (15,327,232.40) (8.68)

Cash Flows From Investing ActivitiesCash Inflows 519,550,164.73 506,533,067.34 13,017,097.39 2.57 Cash Outflows 405,729,668.20 486,703,732.57 (80,974,064.37) (16.64)

Cash Provided by (Used in) Investing Activities 113,820,496.53 19,829,334.78 93,991,161.76 474.00

Cash Flows From Financing ActivitiesCash Inflows 364,458,320.20 292,878,352.09 71,579,968.11 24.44 Cash Outflows 418,005,590.42 384,153,892.41 33,851,698.00 8.81

Cash Provided by (Used in) Financing Activities (53,547,270.22) (91,275,540.32) 37,728,270.10 (41.33)

Effects of Exchange Rate Changes on Cash and Cash Equivalents (25,098,140.89) (45,730,602.30) 20,632,461.41 (45.12)

Total Cash provided by Operating, Investing andFinancing Activities 196,418,717.57 59,394,056.69 137,024,660.88 230.70

Add:Cash and Cash Equivalents, Beginning as restated 637,184,789.00 576,167,496.90 61,017,292.10 10.59

Cash and Cash Equivalents, Ending December 31, 2006 833,603,506.57 635,561,553.59 198,041,952.98 31.16



Condensed Statement of Cash FlowsYear Ended December 31, 2006

Percent

(in thousand pesos)

2006 2005Particulars


Increase/ (Decrease)

7

Notes to Financial Statements

8

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

a. Basis for Consolidation

The Consolidated Financial Statements reflect the aggregate account balances based on inancial statements submitted within the cut-off date by 408 GOCCs, including Water Districts (WDs), thru the Corporate Government Sector of the Commission on Audit as shown below:

Cluster Total Received Unsubmitted

I Financial A 14 14 II Financial B 38 32 6 III Public Utilities 472 a 289 b 183 c IV Industrial and Area Development and

Regulatory 31

30

1

V Agricultural, Trading and Promotional 28 26 2 VI Social, Cultural and Scientific 18 17 1

Total 601 408 193

a Includes 455 WDs b Includes 274 WDs c Includes 181 WDs

The financial data consolidated in this report includes 91 audited and 317 unaudited financial

statements of GOCCs. Of the unaudited financial statements, 273 were from Water Districts. List of GOCCs with audited and unaudited financial statements is presented in Schedule 6 of Volume II-B1.

The GOCCs with unsubmitted financial statements and reports are:

• Armed Forces of the Philippines’ Retirement and Separation Benefits System • Matrix Realty Development Corporation • RSBS Land, Inc. • RSBS Enterprises, Inc. • Resources and Investment Corporate House, Inc. • Southern Utility Management and Services, Inc. • Philippine National Railways • Light Rail Transit Authority • First Centennial Clark Corporation • Philippine Mining Development Corporation • Philippine Forest Corporation • RPN 9 • Water Districts (by Region):

CAR - 1 Reg. IV - 53 Reg.VIII - 6 Reg. XIII - 19 Reg. I - 16 Reg. V - 16 Reg. IX - 3 ARMM - 4 Reg. II - 11 Reg. VI - 12 Reg. XI - 7 Reg. III - 21 Reg.VII - 4 Reg .XII - 8

b. Adoption of the New Government Accounting System Chart of Accounts

The GOCCs have adopted the New Government Accounting System (NGAS) Chart of Accounts effective January 2005 pursuant to COA Circular No. 2004-002 dated April 29, 2004. However, there are still some GOCCs which have not yet fully converted the balances of their accounts as of December 31, 2006 due to lack of appropriate accounts. For the purpose of consolidation, these accounts were converted to the nearest appropriate NGAS accounts.

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Accounts of GOCCs exempted from NGAS such as GSIS, SSS and other GFIs were also converted to the nearest appropriate NGAS accounts; however, in the absence of appropriate accounts, the GFIs’ existing accounts were used.

c. Cash Advances

In compliance with COA Circular No. 2006-001 dated November 9, 2006, balances of the accounts for cash advances were analyzed and those determined as advances for transactions specified in the said circular were reclassified as follows:

• Cash advances granted for salaries and wages of officers and employees and other personnel benefits were reclassified from Cash –Disbursing Officers to Payroll Fund account.

• Cash advances granted for travel and other special time-bound undertaking were reclassified from Cash-Disbursing Officers or Due from Officers and Employees to Advances to Officers and Employees account.

d. Basis of Accounting for Income and Expenses

Most GOCCs used the accrual method in accounting for income and expenses. Under this method, all expenses shall be recognized when incurred and reported in the financial statements in the period to which they relate. Some corporations applied the cash basis for income such as: installment sale of condominium units, housing units and lots, interests on accounts in default or past due accounts, demurrage revenues, and guarantee and commitments fees.

On contract jobs of NIA Consult, Inc., the income and expenses are recognized using the percentage of completion method. Under this method, the amount of revenue is related to the percentage of total project work performed during the period.

e. Allowance for Doubtful Accounts

Allowance for Doubtful Accounts was provided based on the age of the accounts, collection experience, history of accounts or identified doubtful accounts of corporations, the rates of which were approved by their respective Board of Directors

f. Inventories

Inventories were valued at cost which is determined using the first-in first-out (FIFO), specific identification, moving average or historical cost methods.

The PRA and NHA recorded construction and completed projects for sale and for transfer at cost. Expenditures incurred for further development are added as part of the cost. Reclaimed lands of PRA are recorded at appraised value, while acquired assets of NHA are valued at the total amount due at a given period plus all incidental expenses, such as legal fees and foreclosure expenses.

g. Property, Plant and Equipment (PPE) and Depreciation

Property, plant and equipment are carried at cost less accumulated depreciation and any

impairment in value. Cost includes expenditures that are directly attributable to the acquisition of the items.

Depreciation was computed based on the estimated lives and salvage value of PPE provided in COA Circular Nos. 2003-007 and 2004-005 dated December 11, 2003 and August 9, 2004, respectively and COA Circular Letter No. 2004-003 dated October 4, 2004. However, in view of the nature of a corporation’s business and the specialized equipment used, estimated useful lives other than those prescribed in the COA Circulars were adopted for certain assets.

For newly acquired PPE, computation of depreciation starts on the following month after the purchase/completion, regardless of the date of purchase/completion within the month pursuant to COA Circular No 2003-007.

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Minor repairs and maintenance pertaining to the properties are normally charged to expense in the period these are incurred. Major repairs and betterments are capitalized as additional cost of the PPE and depreciated over the remaining estimated useful life of the asset.

The PPE of some corporations (PPA, MRHI, FTI, MWSS) were carried in the books at

appraised value except for additions during the year which were recorded at cost. Depreciation of appraised PPE is computed on restated amount using the straight line method.

. The useful lives and depreciation method are reviewed periodically to ensure that the period

and methods of depreciation are consistent with the expected pattern of economic benefits from items of property, plant and equipment.

Property under construction was stated at cost and depreciation was taken-up when the

relevant assets were completed and put into operational use.

Leasehold improvements were amortized over the estimated useful life of the improvements or the term of the related lease, whichever was shorter.

The PNOC-EC’s SC 38 project-related wells, platform and other related facilities include

acquisition costs and capitalized exploration and development costs. Depreciation, depletion and amortization of which, are computed using the unit-of-production method based on the approved estimated reserves.

h. Foreign Currency Conversion

Transactions in foreign currency were converted to Philippine Peso using exchange rates as of the value/settlement date of the transaction. For reporting purposes, foreign currency-denominated accounts (monetary assets and liabilities) were converted into Philippine Peso using the closing exchange rate per BSP at reporting date. Gain or Loss arising from foreign exchange was included in the computation of the annual profits and losses.

i. Financial Statements Presentation

Accounts in the Balance Sheet and related financial statements for CY 2005 are restated for comparative presentation with those accounts in CY 2006. However, for corporations without the restated figure, the bases are the balances of the financial statements as reported in the 2005 Annual Financial Report.

2. International Reserves

This account which is maintained by the BSP pursuant to Section 65 of Republic Act No. 7653, pertains to the available-for-sale financial assets which are in foreign currency, including gold with foreign financial institution and in the BSP vault.

3. Cash

This account includes the following:

Amount Accounts 2006 2005

Cash on Hand 63,957,705,473.26 52,098,896,197.05 Cash in Bank – Local/Foreign Currency 708,619,332,020.33 545,395,041,913.86

Total 772,577,037,493.59 597,493,938,110.91

Cash on Hand consists of collections made by Collecting Officers, amount of cash advances granted to Disbursing Officers for payment of salaries, Payroll Fund and Petty Cash Fund maintained by GOCCs.

Cash in Bank – Local/Foreign Currency represents deposits in BSP and authorized government

depository banks for current and savings accounts including placements in time deposits.

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For purposes of reporting cash flows, the cash and cash equivalents of P833,603,506,570.34 as reflected in the Statement of Cash Flows consist of the following accounts in the Balance Sheet:

Accounts Amount Cash on Hand 63,957,705,473.26 Cash in Bank – Local/Foreign Currency 708,619,332,020.33 Short-Term Investments (cash equivalents) 61,805,097,871.97 Due from NGAs 157,802,301.00

Total per Balance Sheet 834,539,937,666.56 Total per Statement of Cash Flows 833,603,506,570.34

Difference 936,431,096.22

The group of Short-Term Investments accounts as of December 31, 2006 amounted to P567,904,315,238.85, of which P61,805,097,871.90 are cash equivalents such as marketable securities, treasury bills and other highly liquid short-term investments that are readily convertible to cash when the need arises. The amount of P157,802,301.00 pertains to cash deposited by NPC to the BTr. The discrepancy of P936,431,096.22 is due to the unsubmitted cash flow statements of 23 corporations of which 12 were from WDs and 4 unsubmitted Balance Sheet, also of WDs. The details of cash and cash equivalents is presented in Table IV-50 of the Statement of Cash Flows analysis.

4. Due from NGOs and POs

Included among Receivables are Due from NGOs/POs amounting to P212,707,894.93 as of December 31, 2006. This account includes funds that were entrusted by GOCCs to NGOs/POs to implement various programs and projects as follows:

GOCC NGO/PO Amount KKK-PCA 172,500,000.00

Samahan ng mga Magsasaka sa Kapatagan at Kabundukan

22,500,000.00

Society’s Multi-purpose Foundation, Inc. 63,750,000.00 Greenmakers Development Foundation, Inc 11,250,000.00 One Accord Christian Community Endeavor

for Salvation and Success through Poverty Alleviation, Inc.

75,000,000.00 SBMA 23, 470,229.50

Subicwater Suppliers SBDMC SBWater Regulatory Board

22,888,514.00 556.043.31

20,000.00 5,672.19

PITAHC UP-Manila Foundation, Inc. 8,358,905.60

NHA 4,088,097.36

Palawan Electric Cooperative, Inc. 2,295,634.16 Sulu Electric Cooperative, Inc. 813,789.52 Central Pangasinan Electric Cooperative, Inc. 978,673.68 PCA 3,638,574.00

PEACE Foundation 600,000.00 Biotech Coalition of the Philippines 3,038,573.60 SRA 552,463.00

Ormoc-Kananga Mill Districts 102,463.00 Bais-Ursumco MDDC 150,000.00 Iloilo MDDC 300,000.00 PTA Lingap ni Banzai sa Mamamayan Foundation 99,625.47

Total 212,707,894.93

5. Land and Land Improvements

This group of accounts includes the original cost of expressways maintained in the books of PNCC and PNCC Skyway turned over by the government to said corporations, reimbursable through

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the payment of annual concession fee throughout the life of the franchise of 30 years starting 1979. The PNCC was granted the franchise to construct, maintain and operate toll facilities in the North and South Luzon Tollways. The cost of the franchise is amortized for 20 years; depreciation on expressways and facilities is provided on a straight line method over the estimated useful lives of the assets or 30 years lease period whichever is shorter.

As of December 31, 2006, expressways had a net balance of P3,015,429,167.00. The cost of expressways including the appraisal increase, facilities and improvements totaled P8,410,138,531.00, and with accumulated depreciation of P5,394,709,364.00.

6. Other Property, Plant and Equipment

Included in this group are properties used by Water Districts (WDs) in its normal utility operations classified under the Utility Plant in Service account. This account account consists of Wells, Pumping Equipment, Power Production Equipment, Water Treatment Equipment, Transmission and Distribution Mains, Meters, Hydrants, Collecting and Impounding Reservoir, Structure and Improvement, Tools, Shops and Garage Equipment. In the absence of appropriate accounts, these were converted/classified to Other Property, Plant and Equipment (OPPE).

For calendar year 2006, the total amount of OPPE amounted to P830,298,580,042.67, of which P13,772,042,235.84 pertains to WDs. Among the provinces, WDs from Misamis Oriental recorded the biggest amount of P1,275,105,813.23; followed by Bulacan and Davao del Sur in the amount of P1,242,112,370.28 and P1,124,494,455.93, respectively.

7. Other Assets

Included among the Other Assets group are acquired/foreclosed assets amounting to P59,616,400,258.61 as of December 31, 2006. These are real and other properties acquired in settlement of loans through foreclosure or dacion in payment booked initially at the carrying amount of the loan (i.e., outstanding loan balance less allowance for credit losses) plus booked accrued interest less allowance for credit losses, plus transaction costs incurred upon acquisition (such as non-refundable capital gains tax and documentary stamp tax paid in connection with the foreclosure/purchase of the acquired real estate property). Maintenance and other carrying costs subsequent to the foreclosure or acquisition of such property are taken up as expenses. Realized gain on sale thereof is credited to income.

8. Due to National Treasury

This account amounting to P26,804,855,562.93 as of December 31, 2006, consists primarily of advances made by the BTr for the foreign creditors of GOCCs and guarantee fee charged by the Bureau to compensate for the risk of servicing the obligations of the corporations. The GOCCs with significant amount of payables to the National Treasury were as follows:

GOCC Amount NEA 12,565,987,753.00 PRA 5,519,619,944.00 NFA 1,984,692,907.00 PTrA 1,527,086,024.03 BCDA 1,260,029,209.00 MWSS 991,205,652.00 PAGCOR 842,986,604.00 NHMFC 642,842,228.77 PFDA 432,514,830.96

The PTrA’s outstanding balance of P1,527,086,024.03 represents the unremitted amount to the

National Government (NG) pertaining to Authority’s Main Office collection equivalent to 27 percent of travel tax and Duty Free Philippines’ 1.5 percent of net sales amounting to P137,081,654.00 and P1,390,004,370.00, respectively. This remittance is in accordance with Presidential Decree Nos. 1183, 1447, 189, 564 and 1867 and Section 4 of Execuitve Order No. 140 dated November 30, 1993. Likewise, PAGCOR’s balance of P842,986,604.00 consists of unremitted government share.

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BCDA’s Due to the BTr amounting to P1,260,029,209.00 pertains to the 72.5 percent share of beneficiaries on the sale of Camp Bago Bantay, portions of Villamor Air Base and Fort Bonifacio, and disposition of Heritage Park Certificates.

9. Dividend

In compliance with RA 7656 (Dividend Law) approved in 1994, GOCCs are required to remit half of the income earned in each year to the NG. For CY 2006, the GOCCs paid a total dividend amounting to P13,744,698,388.54, of which, P12,677,427,343.54 was remitted or paid to the NG thru the BTr and the balance were paid to other GOCCs, NGAs, and stockholders. The corporations with the biggest remittance of dividend to the BTr were: BSP – P3,603,712,000.00; NPC – P2,600,000,000.00; DBP – P2,296,013,000.00; PPA – P1,638,401,166.00; and LBP – P1,150,000,000.00.

The PNOC with cash dividend amounting to P353,703,806.00, also paid an amount of

P4,568,017,027.00 as share of NG in the proceeds of PNOC – EDC’s Initial Public Offering.

10. Share of the National Government on the Income of GOCCs This account pertains to the share of the National Government on the income of the following corporations:

Particulars Amount

MIAA 623,257,000.00 PAGCOR 11,976,519,718.00

Total 12,599,776,718.00 The MIAA and PAGCOR are required by law to remit to the National Government its share on their income pursuant to EO No. 298 dated July 26, 1987 and PD No. 1869 dated July 11, 1983, respectively. The share of the National Government is 20 percent on MIAA’s operating income based on actual cash collection excluding income from utilities and terminal fee collections and 50 percent on PAGCOR’s gross income after franchise tax amounting to P9,719,074,063.00. Also included in this account are the contributions of PAGCOR to the following:

Particulars Amount President’s Social Fund. 1,027,283,302.00 Philippine Sports Commission’s 5 percent share 485,953,703.00 Host Cities’ share 466,120,000.00 Early Childhood Care and Development Fund 124,960,195.00 Gasoline Station Training and Loan Fund 63,500,000.00 Barangay Micro Business Enterprises 42500,000.00 Board of Claims’ 1 percent share 16,240,539.00 National Endowment Fund for Children’s Television 9,000,000.00 Mandated Contribution to the National Government – Others 21,887,916.00

Total 2,257,445,655.00

11. Subsidy Received from Other National Government Agencies

This component of income pertains to funds released by the National Government to finance the operations, programs and projects, including tax subsidy for custom duties of GOCCs amounting to P13,347,850,383.68. The NFA is the biggest recipient of subsidy amounting to P4,811,011,245.00, of which P3,911,011,245.00 is for tax subsidy and P900,000,000.00 for food security and stabilization programs, followed by the NHA which received P2,333,000,000.00 to finance various resettlement projects. Other GOCCs which received significant amount of subsidy are NEA – P1,585,259,756.00; PPC – P1,333,795,883.00; and NHMFC – P1,000,000,000.00.

FINANCIAL HIGHLIGHTS AND ANALYSES

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E X E C U T I V E S U M M A R Y

1.0 FINANCIAL CONDITION

1.1 Assets – P5,274.51 billion

Consolidated total assets of Government Owned and/or Controlled Corporations (GOCCs) as of December 31, 2006 stood at P5,274.51 billion which is higher by P556.20 billion or 11.79 percent compared to previous year’s P4,718.31 billion. More than half of the aggregate assets pertains to Current Assets of P2,764.38 billion, representing 52.41 percent. The remaining 47.59 percent is composed of Property, Plant and Equipment – P1,225.72 billion or 23.24 percent, Long-Term Investments – P544.92 billion or 10.33 percent, Long- Term Receivables – P483.52 billion or 9.17 percent, Other Assets – P248.43 billion or 4.71 percent and Intangible Assets – P7.53 billion or 0.14 percent.

1.2 Liabilities –P3,954.52 billion

Total liabilities went up to P3,954.52 billion, higher by P331.89 billion or 9.16 percent than last year’s amount of P3,622.62 billion. The liabilities consist of Long-Term Liabilities of P2,213.92 billion or 55.98 percent and Current Liabilities of P1,740.60 billion or 44.02 percent.

1.3 Deferred Credits –P56.56 billion

Deferred Credits totaled P56.56 billion registering a decrease of P3.95 billion or 6.54 percent compared to P60.51 billion in 2005. These consist primarily of Other Deferred Credits aggregating P56.24 billion or 99.43 percent. The remaining balance of P0.32 billion or 0.57 percent pertains to Deferred Tax Liability.

1.4 Equity – P1,263.43 billion

Net Worth of GOCCs as of December 31, 2006 amounted to P1,263.43 billion, an

increase of P228.26 billion or 22.05 percent compared to P1,035.17 billion in 2005. The Equity consists of Restricted Capital – P860.48 billion which is 68.11 percent of the total, Appraisal Capital – P272.90 billion or 21.60 percent, Capital Stock – P229.71 billion or 18.18 percent, Government Equity – P206.32 billion or 16.33 percent, Donated Capital – P13.02 billion or 1.03 percent, Paid-in-Capital in Excess of Par Value – P10.08 billion or 0.80 percent, Subscribed Capital Stock, net of Subscription Receivables – P6.51 billion or 0.52 percent, Other Equity Instruments – P6.37 billion or 0.50 percent, Deficit – P341.94 billion and Reacquired Stocks of P0.02 billion.

2.0 RESULTS OF OPERATIONS

2.1 Income and Receipts – P718.73 billion

The overall operations of GOCCs generated net income of P168.58 billion in 2006, an increase of P2.98 billion or 1.80 percent from P165.59 billion in 2005. Gross Income of P718.73 billion showed an increment of P38.59 billion or 5.67 percent. Business income continued to be a major source of income accounting for P537.29 billion and contributing 74.76 percent to the total. The balance comprises of Gain/Premiums account – P101.15 billion or 14.07 percent, Other Income – P58.48 billion or 8.14 percent, Service Income – P21.09 billion or 2.93 percent and Permits and Licenses – P0.73 billion or 0.10 percent.

The gross income of GOCCs was reduced by P12.60 billion due to remittance to the

National Government of a portion of their gross earnings pursuant to Republic Act No. 7656. PAGCOR and MIAA shared P11.98 billion and P0.62 billion, respectively.

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During the year, subsidies received by GOCCs decreased to P13.52 billion compared to

last year’s P17.94 billion, consisting of Subsidies from the National Government – P13.35 billion, and GOCCs – P0.17 billion. The corporations which received substantial amount of subsidies from the National Government were: NFA – P4.81 billion, NHA – P2.52 billion, NEA – P1.59 billion, PPC – P1.33 billion and NHMFC – P1 billion.

2.2 Expenses and Provisions for Income Taxes – P551.05 billion

Operating expenses in 2006 amounted to P546.73 billion, an increase of P29.08 billion

or 5.62 percent from P517.65 billion in 2005. The expenses consist of Personal Services (PS) – P51.30 billion or 9.38 percent, Maintenance and Other Operating Expenses (MOOE) – P435.23 billion or 79.61 percent and Financial Expenses (FE) – P60.20 billion or 11.01 percent. The biggest component of PS was Salaries and Wages – P27.08 billion or 52.78 percent while under MOOE, the amount of P151.70 billion or 34.85 percent was for account Other Maintenance and Operating Expenses. It is followed by Members’ Benefits of P99.90 billion or 22.95 percent and Cost of Goods Sold of P45.04 billion or 10.35 percent. Among the Financial Expenses, Interest Expenses and Bank Charges got the biggest share at P55.78 billion and P2.23 billion, respectively.

Provision for income tax increased by P2.04 billion or 89.22 percent, from P2.28 billion

in 2005 to P4.32 billion in 2006.

3.0 CASH FLOWS

Consolidated cash inflows from Operating, Investing and Financing Activities in 2006 totaled P1,622.32 billion while total cash outflows amounted to P1,400.80 billion resulting to increase in cash and cash equivalents of P221.52 billion during the year. The net effect of exchange rate changes amounted to negative P25.10 billion.

Net cash provided by Operations in 2006 accounted for 72.79 percent of the consolidated cash

flows.

3.1 Cash Inflows - P1,622.32 billion

Total cash inflows from Operating, Investing and Financing Activities in 2006 amounted to P1,622.32 billion, a decrease of P8.68 billion or 0.53 percent compared to P1,630.99 billion in 2005. Cash inflows from Operating Activities accounted for 45.51 percent of the consolidated cash inflows while Investing and Financing Activities contributed 32.02 percent and 22.47 percent, respectively.

3.2 Cash Outflows – P1,400.80 billion

Cash outflows in 2006 totaled P1,400.80 billion, a decrease of P125.07 billion or 8.20

percent compared to P1,525.87 billion of the previous year. The biggest share of P577.06 billion or 41.20 percent came from the Operating Activities, followed by Financing Activities – P418.01 billion or 29.84 percent and Investing Activities – P405.73 or 28.96 percent.

3.3 Cash and Cash Equivalents, end of year

The 2006 Cash and Cash Equivalents increased by P198.04 billion to P833.60 billion reflecting cash used for Financing Activities partially funded from net cash provided by Operating and Investing Activities. Principal source of consolidated cash and cash equivalents in the fiscal year 2006 was net cash flows from operations amounting to P161.24 billion.

BALANCE SHEET

As of December 31, 2006, the Consolidated Balance Sheet of GOCCs showed total assets of P5,274.51 billion, total liabilities of P3,954.52 billion, total deferred credits of P56.56 billion and total equity of P1,263.43 billion. Assets, liabilities and equity registered growth of P556.20 or 11.79 percent, P331.89 or 9.16 percent and P228.26 or 22.05 percent, respectively, while deferred credits posted a decrease of P3.95 billion or 6.54 percent.

Chart IV-1 Comparative Components of Consolidated Balance Sheet For Fiscal Year 2006 (in billion pesos)

4 ,718 .3 1

3 ,6 2 2 .6 2

6 0 .51

1,0 3 5.17

5,2 74 .51

3 ,9 54 .52

56 .56

1,2 6 3 .4 30

1,0002,0003,0004,0005,0006,000

Assets Liabilities DeferedCredits

Equity

2006 2005

Chart IV-1 shows the comparative components of the Consolidated Balance Sheet for fiscal years

2006 and 2005.

1.0 ASSETS – P5,274.51 billion

Total Assets amounted to P P5,274.51 billion, higher by P556.20 billion or 11.79 percent than 2005 level.

Table IV-1 Comparative Major Components of Assets

(in million pesos) Increase(Decrease)

Particular 2006 2005 Amount

Percent

Current Assets 2,764,381.71 2,186,312.43 578,069.29 26.44Property Plant and Equipment (net) 1,225,722.31 1,214,271.71

11,450.59 0.94

Long-Term Investments (net) 544,920.52 628,874.35

(83,953.84) (13.35)Long-Term Receivables (net) 483,516.77 466,493.19

17,023.58 3.65

Other Assets 248,433.27 216,395.30 32,037.97 14.81

Intangible Assets 7,534.25 5,964.63 1,569.62

Table IV-1 shows the comparative major components of assets. The largest component is

Current Assets amounting to P2,764.38 billion or 52.41 percent of the total assets. Next with the biggest balance is Property, Plant and Equipment (net) in the amount of P1,225.72 billion or 23.24 percent, followed by Long-Term Investments (net) of P544.92 billion or 10.33 percent and Long-Term

26.32

Total 5,274,508.82 4,718,311.61 556,197.21 11.79 Difference between totals and sum of components is due to rounding off.

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Receivables (net) of P483.52 billion or 9.17 percent. Other Assets of P248.43 billion and Intangible Assets of P7.53 billion accounted for 4.71 percent and 0.14 percent respectively.

Table IV-2 GOCCs with Big Amount of Assets

(in million pesos) Increase(Decrease) GOCC 2006 2005

Amount Percent BSP 1,571,362.97 1,292,767.44 278,595.53 21.55 NPC 1,117,552.07 1,078,746.56 38,805.50 3.60 GSIS SIF 375,820.03 332,607.60 43,212.42 12.99 LBP 365,372.56 324,126.04 41,246.53 12.73 DBP 235,308.34 212,952.92 22,355.41 10.50 SSS 228,444.46 199,713.23 28,731.22 14.39 HDMF 191,548.60 178,332.50 13,216.11 7.41 PNOC 139,599.69 138,281.20 1,318.49 0.95 PDIC 137,887.50 126,437.57 11,449.93 9.06 BCDA 84,125.79 79,061.71 5,064.08 6.41

Table IV-2 shows that BSP is the GOCC with the biggest assets amounting to P1,571.36 billion or 29.79 percent, followed by NPC – P1,117.55 billion or 21.19 percent, GSIS SIF – P375.82 billion or 7.13 percent, LBP – P365.37 billion or 6.93 percent, DBP - P235.31 billion or 4.46 percent, SSS – P228.44 billion or 4.33 percent, HDMF – P191.55 billion or 3.63 percent, PNOC – P139.60 billion or 2.65 percent, PDIC – P137.89 billion or 2.61 percent and BCDA – P84.13 billion or 1.59 percent.

1.1 Current Assets – P2,764.38 billion

Current Assets reached P2,764.38 billion exhibiting an increase of P578.07 billion or 26.44

percent compared to last year’s P2,186.31 billion. The increment is attributed primarily to the combined growth of P483.13 billion in Short–Term Investments – P319.91 billion and Cash in Bank of P163.22 billion. This was however partly offset by the combined decrease of P14.46 billion in Prepayments and Deferred Charges – P8.85 billion and Inventories – P5.61 billion.

Table IV-3 Comparative Composition of Current Assets

(in million pesos) Increase(Decrease) Particular 2006 2005

Amount Percent Cash in Bank 708,619.33 545,395.04 163,224.29 29.93Receivables (net) 701,077.40 656,597.47 44,479.93 6.77Short – Term Investments 567,904.32 247,992.37 319,911.94 129.00International Reserves 555,989.15 504,022.12 51,967.03 10.31Inventories (net) 79,450.96 85,059.76 (5,608.80) (6.59)Cash on Hand 63,957.71 52,098.90 11,858.81 22.76Other Current Assets 52,417.45 51,327.55 1,089.90 2.12Prepayments and Deferred Charges 34,965.40 43,819.21 (8,853.80) (20.21)

Total 2,764,381.71 2,186,312.43 578,069.29 26.44 Difference between totals and sum of components is due to rounding off.

. Table IV-3 presents the comparative composition of Current Assets. In 2006, total current

assets compared to total current liabilities show a ratio of 1.59 : 1, which means that GOCCs taken as a whole is relatively liquid as every P1.0 current liability can be covered by P1.59 current assets.

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1.1.1 International Reserves – P555.99 billion International Reserves amounting to P555.99 billion or 20.11 percent of the total Current Assets as reported by BSP grew by P51.97 billion or 10.31 percent. These pertain to the available-for-sale financial assets in foreign currency, including gold with foreign financial institutions and in the BSP vault which are maintained by BSP pursuant to Section 65 of Republic Act No. 7653. The financial assets include investments securities in treasury strips pertaining to the 1992 RP Financing Plan reclassified from “FX Receivable” upon release by the Treasurer of the Philippines which amounted to P3.45 billion (market value) as of December 31, 2006.

Table IV-4 Details of International Reserves (in million pesos)

Increase(Decrease) Particulars 2006 2005 Amount Percent

Investment Securities 411,733.04 367,738.68 43,994.36 11.96

Securities Available for Sale Marketable Securities 21,862.63 189,522.84 (167,660.21) (88.46)

Other Investments 389,870.41 178,215.85 211,654.56 118.76 Gold 144,256.11 136,283.44 7,972.67 5.85

In Bullion Vault 44,023.32 43,722.45 300.87 0.69

With Foreign Financial Institutions 100,232.79 92,560.99 7,671.80 8.29 Total 555,989.15 504,022.12 51,967.03 10.31 Difference between totals and sum of components is due to rounding off.

Details of international reserves are shown in Table IV-4.

1.1.2 Cash on Hand – P63.96 billion

Cash on Hand of P63.96 billion was higher by P11.86 billion or 22.76 percent compared to last year’s level of P52.10 billion. The increase was brought about by the net effect of the combined growth of P12.74 billion in Other Cash Accounts, Cash in Vault, Cash – Collecting Officers; Payroll Fund and Petty Cash Fund and aggregate decrease of P0.88 billion in Cash on Hand and Cash – Disbursing Officers. Among the GOCCs, DBP reported a significant increase in Other Cash Accounts amounting to P18.25 billion which consist of cash and other cash items, due from other banks, interbank losses receivables and securities purchased under agreement to resell.

Other Cash Accounts – P53.85 billion accounted for 84.19 percent of the total while Cash in Vault – P7.55 billion shared 11.80 percent. The balance of P2.56 billion or 4.01 percent is composed of Cash – Collecting Officers – P1.56 billion, Cash-Disbursing Officers – P0.74 billion, Cash on Hand – P0.18 billion, Payroll Fund – P0.07 billion and Petty Cash Fund – P0.02 billion.

Table IV-5 Comparative Composition of Cash on Hand

(in million pesos) Increase(Decrease) Particulars 2006 2005 Amount Percent

Other Cash Accounts 53,848.30 49,165.34 4,682.96 9.52 Cash in Vault 7,546.60 18.20 7,528.39 41,354.92 Cash - Collecting Officers 1,555.61 1,098.61 457.00 41.60 Cash - Disbursing Officers 740.84 956.43 (215.59) (22.54) Cash on Hand 175.37 842.30 (666.92) (79.18) Payroll Fund 70.62 1.38 69.24 4,999.31 Petty Cash Fund 20.36 16.63 3.73 22.44

Total 63,957.70 52,098.90 11,858.81 22.76

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Table IV-5 presents the comparative composition of Cash on Hand.

Table IV-6 Other GOCCs with Substantial Cash on Hand Balance


GOCC 2006 2005 Amount Percent

PAGCOR 490.87 497.52 (6.65) (1.34) PHIC 419.59 381.33 38.27 10.04 NDC 386.18 415.69 (29.51) (7.10) BSP 373.78 310.75 63.03 20.28 SSS 279.99 28.67 251.32 876.55 OWWA 266.92 86.03 180.89 210.25 NHA 245.05 616.87 (371.81) (60.27) PNCC 231.40 62.38 169.02 270.96

Of the total Cash on Hand of P63.96 billion, DBP reported the 80.14 percent or P51.26 billion, while LBP accounted for P8.31 billion or 12.99 percent. Other GOCCs with substantial Cash on Hand balance are shown in Table IV-6. These are PAGCOR – P490.87 million or 0.77 percent, PHIC – P419.59 million or 0.66 percent, NDC – P386.18 million or 0.60 percent, BSP – P373.78 million or 0.58 percent, SSS – P279.99 million or 0.44 percent, OWWA – P266.92 million or 0.42 percent, NHA – P245.05 million or 0.38 percent and PNCC – P231.40 million or 0.36 percent. The remaining amount of P1.70 billion or 2.65 percent is shared by 94 GOCCs.

1.1.3 Cash in Bank – P708.62 billion

One fourth of the aggregate Current Assets consists of the Cash in Bank amounting to P708.62 billion, posting an increase of P163.22 billion or 29.93 percent from the 2005 level of P545.40 billion.

Table IV-7 Comparative Composition of Cash in Bank


Particulars 2006 2005 Amount Percent

Cash in Bank - Foreign Currency, Current Account

355,937.72

227,896.26 128,041.46 56.18

Cash - Bangko Sentral ng Pilipinas-Local Currency

252,250.77

256,867.27

(4,616.50) (1.80)

Cash in Bank - Foreign Currency, Savings Account

26,200.52 743.25 25,457.27 3,425.14

Cash in Bank - Local Currency, Time Deposits

22,648.94

12,044.01 10,604.93 88.05

Cash in Bank - Local Currency, Savings Account

19,775.84

16,850.45 2,925.40 17.36

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(Table IV-7, Continued)

Cash in Bank - Local Currency, Current Account 19,325.71

16,357.22 2,968.48 18.15

Cash in Bank – Foreign Currency, Time Deposits

8,768.68

5,595.21

3,173.47 56.72

Other Cash in Bank 3,657.62 8,980.28 (5,322.66) (59.27) Cash-Bangko Sentral ng Pilipinas-

Foreign Currency 53.52 (7.58) 61.10 (12.40)

Total 708,619.33 545,395.04 163,224.29 29.93 Difference between totals and sum of components is due to rounding off.

Table IV-7 shows the comparative composition of Cash in Bank account.

Table IV-8 GOCCs with the Biggest Cash in Bank

(in million pesos) Increase(Decrease) GOCCs 2006 2005 Amount Percent

BSP 558,850.35 466,665.60 92,184.75 19.75 LBP 40,336.18 14,368.35 25,967.83 180.73 GSIS Social Insurance Fund 30,046.69 5,310.76 24,735.93 465.77 PSALM 11,845.66 6,785.36 5,060.30 74.58 DBP 8,659.39 3,266.70 5,392.68 165.08 PHIC 8,124.73 4,206.11 3,918.62 93.16 HDMF 7,262.53 5,956.02 1,306.50 21.94 SSS 5,571.29 6,441.70 (870.41) (13.51) MWSS 3,476.51 4,124.96 (648.45) (15.72) NPC 2,846.79 2,197.32 649.47 29.56

Table IV-8 shows the ten GOCCs with the biggest balance of cash in bank aggregating to P677.02 billion or 95.54 percent. The remaining P31.60 billion or 4.46 percent is shared by 109 GOCCs.

BSP’s cash in bank consists of cash deposits with foreign banks and international monetary fund special drawing rights, while LBP’s cash in bank includes receivables from BSP and accounts on global basis with 23 foreign depository banks totaling 39 accounts in 2006. Deposits with foreign banks as of December 31, 2006 include special deposit account with Citibank-New York amounting to $1.032 million which is restricted for disbursements on special lending projects.

GSIS SIF cash in bank includes special savings deposits and time deposits amounting to P28.3 billion in 2006 while PSALM’s includes cash in bank, short-term placements and restricted cash which pertains to proceeds from the sale of NPC’s six hydroelectric plants and lease rental. DBP’s cash in bank includes cash due from BSP.

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1.1.4 Short-Term Investments – P567.90 billion

Short-Term Investments reached P567.90 billion or 20.54 percent of the total Current Assets that went up by 129 percent or P319.91 billion from 2005 level of P247.99 billion.

Table IV-9 Comparative Composition of Short-Term Investments


Particular 2005 2005 Amount Percent

Investments in Treasury Bills/Notes 242,853.09 53,563.35 189,289.74 353.39

Other Short Term Investments 158,763.78 53,291.16 105,472.62 197.92 Marketable Securities 86,605.23 67,550.89 19,054.34 28.21 Investments in Treasury

Bonds 67,894.54 64,645.37 3,249.16 5.03

Investments in Stocks 11,787.67 8,941.59 2,846.08 31.83

Total 567,904.32 247,992.37

319,911.94 129.00


Table IV-9 shows the comparative composition of Short-Term Investments. The enormous increase in this account was mainly due to additional investments in treasury bills/notes and Other Short-Term Investments amounting to P189.29 billion and P105.47 billion, respectively.

This component of the Current Assets consists of Investments in Treasury Bills/Notes – P242.85 billion or 42.76 percent, Other Short-Term Investments – P158.76 billion or 27.96 percent, Marketable Securities – P86.61 billion or 15.25 percent, Investments in Treasury Bonds – P67.89 billion or 11.96 percent and Investments in Stocks – P11.79 billion or 2.08 percent.

Almost 40 percent of the aggregate short-term investments or P221.91 billion was reported by the BSP, higher by P147.73 billion or 199.16 percent than 2005 level of P74.18 billion. This consists of marketable securities and investments in treasury bills/notes and bonds. LBP’s include government securities acquired under repurchase agreement and reverse repurchase agreement, government and private securities and investment in non-marketable securities.

Table IV-10 Other GOCCs with Substantial

Short-Term Investments (in million pesos)

GOCCs Amount Percent Distribution

LBP 116,725.60 20.55 GSIS SIF 76,492.46 13.47 PHIC 31,809.93 5.60 NPC 30,447.19 5.36 PNOC 19,967.82 3.52 SSS 16,201.23 2.85 HDMF 13,975.21 2.46 GSIS AF 13,609.09 2.40 GSIS FB 10,120.00 1.78

Other corporations which reported substantial short-term investments are shown in Table IV-10. The remaining P16.65 billion or 2.93 percent is shared by 41 GOCCs. Short-term investments of GSIS SIF is composed of held-for-trading foreign currency-denominated Republic of the Philippines (ROP) notes, bonds and bills, held-for-trading stocks and loans to local government units; PHIC’s represents treasury bills and bonds; and NPC’s consists of short-term placements with the DBP, LBP and PNB which are intended for general funding requirements of NPC’s operations.

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1.1.5 Receivables (net) – P701.08 billion

Outstanding receivables of the GOCCs as of yearend totaled P751.62 billion with Allowance for Doubtful Accounts of P50.54 billion. Receivables (net) of P701.08 billion or 25.36 percent is the second highest component of the current assets.

Table IV-11 Comparative Composition of Receivables (net)

(in million pesos) Increase(Decrease) Particular 2006 2005

Amount Percent Loans Receivable - Others 244,354.49 250,112.73 (5,758.24) (2.30) Accounts Receivable 226,378.92 203,167.82 23,211.10 11.42 Other Receivables 72,294.28 74,281.97 (1,987.69) (2.68) Loans Receivable - GOCCs 45,718.27 46,611.26 (892.99) (1.92) Due from GOCCs 34,102.10 21,307.85 12,794.25 60.04 Interests Receivable 33,423.54 29,637.66 3,785.88 12.77 Notes Receivable 20,202.72 1,938.16 18,264.57 942.37 Due from National Treasury 19,503.79 22,664.00 (3,160.21) (13.94) Due from NGAs 17,815.52 6,899.52 10,915.99 158.21 Due from Subsidiaries/Affiliates 14,314.60 20,533.08 (6,218.48) (30.29) Mortgage Receivable 13,653.83 14,520.94 (867.12) (5.97) Premium Receivable 7,206.36 13,113.25 (5,906.89) (45.05) Due from Officers and Employees 1,901.20 1,934.58 (33.37) (1.72) Receivables - Disallowances/Charges 631.36 578.08 53.28 9.22 Due from LGUs 340.36 270.55 69.81 25.80 Due from Central Office/Home Office 319.06 1.19 317.86 26,625.62 Lease Receivable 264.55 222.79 41.77 18.75 Due from Operating Units 213.14 285.22 (72.08) (25.27) Due from NGOs/POs 212.71 216.48 (3.77) (1.74) Dividend Receivable 53.54 55.69 (2.15) (3.86) Advances to Officers and Employees 39.60 8.77 30.83 351.71 Due from Other Funds 36.95 9.66 27.29 282.52 Loans Receivable - LGUs 17.59 15.51 2.08 13.39 Rent Receivables 3.51 1.72 1.79 104.30 Insurance Claims Receivable 2.17 - 2.17 0.00 Due from Regional Offices/Staff Bureaus/Branch Offices (1,384.53) 1,325.83 (2,710.36) (204.43)

Outstanding Receivables 751,619.62 709,714.31 41,905.31 5.90 Allowance for Doubtful Accounts (50,542.22) 2,574.62 (53,116.84) (4.85)

Receivables (net) 701,077.40 656,597.47 44,479.93 6.77


Receivables (net) increased by P44.48 billion or 6.77 percent compared to 2005 figures as shown in Table IV-11. Of the total Receivable accounts, the highest amount at P244.35 billion or 34.85 percent was in the form of Loan Receivable – Others of which 92.51 percent was recorded by LBP – P131.83 billion and DBP – P94.23 billion.

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The bulk of the total Receivables (net) amounting to P151.09 billion or 21.55 percent pertains to NPC consisting mainly of receivables from power customers while LBP’s total receivables (net) of P144.12 billion or 20.56 percent consist of various loans such as agrarian reform and other agricultural credit loans, development incentive loans, microfinance loans and other loans. LBP’s receivables also include bills purchased, customers liability on bills/drafts under letters of credit and/or trust receipts and for acceptances outstanding, credit card receivables, sales contract receivables, due from Agrarian Reform Fund (ARF), unquoted debt securities, lease contract receivables and others. Unquoted debt securities pertains to government and private securities amounting to P0.55 billion and P1.93 billion, respectively, as of December 31, 2006.

Third with the highest Receivable (net) balance is DBP with P133.43 billion or 19.03 percent which represents interbank accounts receivables, loans receivables, loans and discounts underwritten, unquoted debt securities purchased, unquoted debt securities classified as loan, bill purchased and interest receivables. Accounts receivables include accounts receivable from NG foreign exchange differential.

Receivable Accounts of HDMF of P43.49 billion or 6.20 percent represent receivables from employers, borrowers, collecting agents, officers and employees and other government agencies, current portion of Loan/Mortgage Contracts Receivables and Interest Receivables. The BSP’s receivables of P38.64 billion or 5.51 percent consist of due from foreign and local banks/branches, foreign exchange receivables, accounts and notes receivables, due from officers and employees and interest receivables.

1.1.6 Inventories (net) – P79.45 billion

Inventory level as of yearend amounted to P79.45 billion net of Allowance for Obsolescence of P0.75 billion, lower by P5.61 billion or 6.59 percent from 2005 yearend balance.

Table IV-12 Comparative Composition of Inventories (In million pesos)

Increase(Decrease) Particular 2006 2005 Amount Percent

Merchandise Inventory 19,253.48 18,681.04 572.44 3.06 Finished Goods Inventory 16,825.48 20,736.23 (3,910.75) (18.86) Other Supplies Inventory 9,968.61 9,013.88 954.73 10.59 Raw Materials Inventory 8,626.32 11,430.59 (2,804.26) (24.53) Office Supplies Inventory 8,376.67 8,672.58 (295.91) (3.41) Other Inventories 5,579.25 4,609.71 969.54 21.03 Gasoline, Oil and Lubricants Inventory 3,390.45 2,786.06 604.39 21.69

Work-In-Process Inventory 3,310.67 5,471.98 (2,161.31) (39.50) Construction Materials Inventory 1,633.02 983.44 649.58 66.05 Accountable Forms Inventory 818.28 804.50 13.78 1.71 Items for Sale 784.52 891.03 (106.51) (11.95) Land and Other Property Held for Sale 761.87 761.57 0.30 0.04

Spare Parts Inventory 249.26 180.11 69.15 38.39 Drugs and Medicines Inventory 216.49 182.40 34.09 18.69 Medical, Dental and Laboratory Supplies Inventory 213.00 207.23 5.77 2.78

Agricultural Supplies Inventory 111.87 65.07 46.80 71.93 Confiscated/Abandoned/Seized Goods Inventory 26.26 6.33 19.92 314.53

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(Table IV-12, Continued) Crops and Fruits Inventory 24.84 52.57 (27.74) (52.76) Food Supplies Inventory 13.85 17.55 (3.70) (21.08) Textbooks and Instructional Materials Inventory 12.08 11.34 0.74 6.55 Other Agricultural, Fishery and Forestry Products Inventory 0.69 - 0.69 0.00 Livestock Inventory 0.29 12.98 (12.68) (97.73) Military and Police Supplies Inventory 0.08 0.16 (0.08) (47.18)

Animal/Zoological Supplies Inventory -

1.74 (1.74) (100.00)

Gross Inventories 80,197.34 85,580.09 (5,382.75) (6.29) Allowance for Obsolescence (746.38) 43.44 (520.33) (226.05)

Inventories (net) 79,450.96 85,059.76 (5,608.80) (6.59) Difference between totals and sum of components is due to rounding off.

Table IV-12 shows the comparative components of Inventories. The decrease in Inventory Account is mainly due to reduction in the value of PRA’s reclaimed lands, particularly in Central Business Park IA by P3.91 billion and decrease in BSP’s gold for refining, Security Printing Complex inventories, work–in–process and other supplies inventories by P5.95 billion.

Gross Inventories totaled to P80.20 billion, bulk of which represents Merchandise Inventory amounting to P19.25 billion or 24.01 percent and Finished Goods of P16.83 billion or 20.98 percent. Other components of Inventories are as follows: Other Supplies Inventory – P9.97 billion or 12.43 percent, Raw Materials Inventory – P8.63 billion or 10.76 percent, Office Supplies Inventory – P8.38 billion or 10.45 percent, Other Inventories – P5.58 billion or 6.96 percent; Gasoline, Oil and Lubricants – P3.39 billion or 4.23 percent, Work-in-Process – P3.31 billion or 4.13 percent and other inventory accounts of P4.87 billion or 6.07 percent.

Among the GOCCs, NPC recorded the highest inventory balance with P20.20 billion or 25.42 percent pertaining to office supplies, gasoline, oil and lubricants and other supplies, followed by PRA and BSP with balances of P16.78 billion or 21.11 percent and P14.57 billion or 18.33 percent, respectively. PRA’s inventory pertains to reclaimed lands, while those of BSP are composed mostly of gold for sale and refining. NFA and NHA ranked fourth and fifth among the GOCCs with the biggest inventory balance. NFA’s inventory of P10.56 billion or 13.29 percent consists mainly of palay and rice inventory, while NHA’s inventory of P10.36 billion or 13.04 percent pertains to developed lands and housing units intended for sale and still under construction.

1.1.7 Prepayments and Deferred Charges – P34.97 billion

Prepayments amounting to P34.97 billion registered a huge slump of P8.85 billion or 20.21 percent. The reduction was mainly due to difference in LBP’s recorded deferred charges in 2005 which included revaluation of foreign borrowings from multilateral agencies amounting to P8.53 billion. In 2006, the difference of Group’s revalued borrowings and accrued interest therein from multilateral agencies and its historical cost amounting to P6.09 billion was reclassified and booked as Accounts Receivable. As per signed Memorandum of Agreement with the DOF, said amount shall be shouldered by the National Government.

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Bulk of this account came from Advances to Contractors of P10.03 billion or 28.68 percent, Deferred Charges – P9.74 billion or 27.85, Deferred Tax Assets – P9.42 billion or 26.95 percent and Other Prepaid Expenses – P5.32 billion or 15.21 percent. The balance of P0.46 billion or 1.32 percent consists of Prepaid Rent, Insurance, Interest and Deposit on Letters of Credit.

Table IV-13 Comparative Composition of Prepayments and Deferred Charges

(in million pesos) Increase(Decrease) Particulars 2006 2005

Amount Percent Advances to Contractors 10,027.12 9,344.43 682.69 7.31 Deferred Charges 9,736.96 18,678.57 (8,941.61) (47.87) Deferred Tax Assets 9,423.24 9,917.40 (494.16) (4.98) Other Prepaid Expenses 5,317.80 5,537.20 (219.40) (3.96) Prepaid Rent 337.15 227.98 109.17 47.89 Prepaid Insurance 119.43 105.81 13.63 12.88 Deposit on Letters of Credit 3.33 6.57 (3.24) (49.35) Prepaid Interest 0.32 1.25 (0.92) (74.27) Deferred Exploration and Development Cost 0.05 ____-___ 0.05 __-__ _

Total 34,965.40 43,819.21 (8,853.80) (20.21) Difference between totals and sum of components is due to rounding off.

Presented in Table IV-13 are the components of Prepayments and Deferred Charges. The LBP reported the biggest component of this account group with P9.28 billion or 26.54 percent in deferred charges, deferred tax assets and other prepaid expenses. Other GOCCs with big balance of the account as of yearend are NLRC – P6.93 billion or 19.83 percent, BSP – P6.14 billion or 17.56 percent, PNOC – P4.43 billion or 12.67 percent, NPC – P2.29 billion or 6.56 percent, PPA – P0.91 billion or 2.59 percent, MIAA – P0.71 billion or 2.02 percent, SBMA – P0.66 billion or 1.88 percent, DBP – P0.58 billion or 1.66 percent and MWSS – P0.37 billion or 1.05 percent. The remaining P2.67 billion or 7.65 percent is shared by 81 GOCCs.

Prepayments of NLRC pertain mainly to the 5 percent down payment (net of recoupment) amounting to P1.15 billion and 25 percent advance payment (net of recoupment) amounting to P5.79 billion made to China National Machinery and Equipment Corporation (CNMEG) as provided under the Supply Contract Agreement between Northrail and CNMEG. The 5 percent down payment and 25 percent advance payment rates are the standard requirements under the Procurement Law, which the contracting parties have agreed to follow.

Prepaid accounts of BSP include deferred charges, deferred tax assets and miscellaneous assets while those of NPC’s pertains to prepaid insurance, advances to contractors and other prepaid expenses.

PNOC’s prepaid expenses consist of deposits, prepaid income tax which pertains to the Company’s 10 percent share on the tax component of the unearned revenue on undelivered gas of the “take or pay” deficiency per Gas Sales and Purchase Agreement (GSPA) with customers of the Service Contract (SC) 38 Malampaya Project. Other prepaid expenses comprise of the excess cash call payments to Shell Philippines Exploration (SC 38 Malampaya Project’s Operator) for the Company’s share in the exploration, development and operational expenditures; remaining vat input, and prepaid portion of the Agency Fee on the US$175 million 5-year syndicated loan with Citibank for the period January 1 – July 31, 2007.

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1.1.8 Other Current Assets – P52.42 billion

Other Current Assets of P52.42 billion posted an increase of P1.09 billion or 2.12 percent from restated 2005 balance of P51.33 billion. Of the amount, P51.19 billion or 97.66 percent pertains to Other Current Assets and P1.23 billion consists of Guaranty Deposits. BSP has the highest Other Current Assets balance amounting to P33.80 billion or 64.47 percent. Other GOCCs included in the top ten with the biggest balance are: HGC – P7.00 billion or 13.35 percent, SHFC – P6.16 billion or 11.76 percent, CB-BOL – P3.28 billion or 6.25 percent, NPC – P864.33 million or 1.65 percent, NFA – P359.33 million or 0.69 percent, MIAA – P347.67 million or 0.66 percent, SSS – P121.27 million or 0.23 percent, LWUA – P115.53 million or 0.22 percent and NHA – P79.50 million or 0.15 percent. The remaining P294.57 million or 0.56 percent belong to 65 GOCCs.

The nature of Other Current Assets of GOCCs with huge balance as of yearend are as follows: BSP – receivables from items under litigation, initial fund of P500 billion set up in calendar year 2006 for the BSP insurance scheme, accumulated earning for the year and input tax; HGC – current portion of Sinking Fund; SHFC – balances of Community Mortgage Program (CMP) related general ledger accounts transferred from NHMFC to SHFC pertaining to projects taken-out from 1994 to September 30, 2005 including the Abot-Kaya Pabahay Fund (AKBF) which are administered by the SHFC by virtue of Executive Order No. 272 and total payments made to contractor. Moreover, CB-BOL reported profits realized and losses sustained by the Central Bank from the revaluation of its assets and liabilities in foreign currencies as a result of changes in parities/exchange rates of foreign currencies to the Peso, and those arising from any other transactions of the Bank in gold or foreign exchange; and NPC’s Other Current Assets of guaranty deposits.

1.2 Long-Term Receivables (net) – P483.52 billion

Total long-term receivables reached P487.18 billion gross of Allowance for Doubtful Accounts of P3.66 billion. The net amount of P483.52 billion comprises 9.17 percent of the total assets.

Compared to last year’s P466.49 billion, the current year’s level increased by P17.02 billion or 3.65 percent. The growth was primarily due to the combined increases exhibited in six components totaling P24.19 billion but it was reduced by the decline of P7.17 billion in Accounts Receivable.

Table IV-14 Comparative Composition of Long-Term Receivables (net)

(in million pesos) Increase (Decrease) Particular 2006 2005 Amount Percent

Loans Receivable 395,841.93 385,975.79 9,866.14 2.56 Other Receivables 32,760.05 27,713.69 5,046.36 18.21 Installment Sales Receivable 32,674.28 25,146.83 7,527.44 29.93 Accounts Receivable 23,591.31 30,757.72 (7,166.40) (23.30) Lease Receivable 2,189.63 1,837.27 352.35 19.18 Receivables - Items for Litigation 122.17 96.73 25.44 26.30 Allowance for Doubtful Accounts - Long Term (3,662.60) (5,034.84) 1,372.24 (27.25)

Long Term Receivables (net) 483,516.77 466,493.19 17,023.58 3.65 Difference between totals and sum of components is due to rounding off.

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Table IV-14 shows the increase and decrease of the composition of long-term receivables (net). Of the total long-term receivable accounts, BSP reported almost one-fourth of the aggregate P483.52 billion or P117.57 billion. Other GOCCs with substantial amount of long-term receivables are GSIS SIF – P108.57 billion or 22.46 percent, HDMF – P76.16 billion or 15.75 percent, SSS – P65.42 billion or 13.53 percent, PDIC – P51.60 billion or 10.67 percent, NHMFC – P25.64 billion or 5.30 percent, LWUA – P14.28 billion or 2.95 percent, NHA – P6.63 billion or 1.37 percent, PRA – P5.70 billion or 1.18 percent and IGLF – P3.28 billion or 0.68 percent. The remaining P8.68 billion or 1.79 percent pertains to 17 GOCCs.

BSP’s long-term receivables account consists of foreign and local currency loans and advances. Local currency loans and advances include PDIC loans and advances which were re-lent to banks requiring financial assistance, National Government loans originally granted to the DBP and the PNB, non-interest bearing subscription loans and advances for the payment of increase in quota contribution of the Republic of the Philippines (RP) in the International Monetary Fund (IMF) under the 11th General Review of Quotas and emergency loans in the form of financial assistance, secured by assets, extended to banks and non-bank financial intermediaries.

Details of long-term receivables of top four GOCCs with big balance of this account as of

yearend are as follows:

GSIS SIF – enhanced salary loans, policy loans, real estate loans, government loans, summer one month, private loans and other loans granted to its members.

HDMF – loans granted under various programs, mortgage contract receivable particularly

those for PAG-IBIG members that are backed-up by real estate mortgages under various home lending programs of the Fund, and sales contract receivables with two categories. Category I consists of high yielding receivables purchased from various developers aimed to provide them with a liquidity mechanism through the Fund’s purchase of their receivables with recourse basis, substitution, buy-back features and a cash flow guarantee that ensures full remittance of the monthly interest and principal. Category II consists of receivables from borrowers under a home lending system using the Contract to Sell (CTS) as a primary debt instrument.

SSS – receivables from members, NHMFC, HDMF, housing loans, commercial and

industrial loans, program and other government agencies.

PDIC – loans, receivables from closed banks, net of allowance for probable losses, interest receivables from held to maturity investments and financial assistance and all other receivables including assessment deficiencies of member banks and those subsequently closed.

1.3 Long-Term Investments (net) – P544.92 billion

Long-term investments (net) valued at P544.92 billion net of Allowance for Decline in

Value of Investments of P2.90 billion represent 10.33 percent of the total assets. Compared to 2005 level, a decrease of P83.95 billion or 13.35 percent is noted.

Table IV-15 Comparative Composition of Long-Term Investments (net)

(in million pesos) Increase(Decrease) Particular 2006 2005 Amount Percent

Other Long Term Investments 209,551.18 233,950.83 (24,399.66) (10.43) Investments in Bonds 175,284.08 225,779.17 (50,495.09) (22.36) Investment Property 46,760.60 55,759.41 (8,998.81) (16.14) Investments in Joint Ventures/Subsidiaries/Operating Units 43,911.09 44,041.85 (130.75) (0.30) Investments in Stocks 39,422.50 38,431.74 990.77 2.58 Sinking Fund 19,939.97 14,535.61 5,404.36 37.18

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(Table IV-15, Continued) Investments in Treasury Bills/Notes 11,144.14 15,043.41 (3,899.27) (25.92) Interest Bearing Loans/Advances 1,801.17 2,603.48 (802.31) (30.82) Investments in Subsidiaries and Affiliates 2.08 2.08 - 0.00 Premium Reserve Fund 0.12 0.16 (0.05) (29.04) Investments (2,896.42) (1,273.39) (1,623.02) 127.46

Total 544,920.52 628,874.35 (83,953.84) (13.35) Difference between totals and sum of components is due to rounding off.

Table IV-15 shows the details of long-term investments (net). The decrease in the recorded

long-term investments of the following GOCCs was mainly due to the decline in the balance of this asset component as of yearend: GSIS SIF – P50.91 billion, LBP – P21.91 billion, DBP – P12.09 billion, PHIC – P10.56 billion, GSIS AF – P5.83 billion, HDMF – P4.89 billion, PSALM – P4.44 billion and PNOC – P1.99 billion.

SSS topped the list of GOCCs with the biggest long-term investments amounting to

P123.60 billion or 22.68 percent, followed by GSIS SIF of P97.94 billion or 17.97 percent, PDIC – P71.50 billion or 13.12 percent, DBP – P34.21 billion or 6.28 percent, BCDA – P27.28 billion or 5.01 percent, HDMF – P26.50 billion or 4.86 percent, PNOC – P24.08 billion or 4.42 percent, LBP – P23.65 billion or 4.34 percent, PHIC – P22.75 billion or 4.18 percent and NHMFC – P13.81 billion or 2.53 percent. The remaining P79.61 billion or 14.61 percent was reported by 71 GOCCs.

Long-term investments of SSS and GSIS SIF of P123.60 billion and P97.94 billion,

respectively, constitute investments in bonds and property investments, loan financing and investments in marketable securities and financial instruments. Loans include real estate loans and non-traded stocks in various companies.

PDIC’s balance as of yearend includes special savings and time deposits; investments in

treasury bills, notes, bonds and sinking fund; and BSP managed funds for the payment of PDIC loans and investment property.

DBP’s include government treasury notes, bills, Land Bank bonds, IRA Monetization

Program bonds, investments in subsidiaries, joint ventures and associates, investment in Heritage Park; financial assets available for sale which include government and private debt and equity securities including accrued interest receivable; and government and private financial assets held to maturity.

PNOC’s long-term investments consist of investment in subsidiary/associates, treasury

bonds, stocks, debt securities, investment in NRMDC, payment in condominium project and other investments.

1.4 Property, Plant and Equipment (net) – P1,225.72 billion

Twenty three percent or P1,225.72 billion of the total assets consists of Property, Plant and

Equipment, net of Accumulated Depreciation of P668.78 billion, posting an increment of P11.45 billion or 0.94 percent from 2005 level.

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Table IV-16 GOCCs with Big

Amounts of Property, Plant and Equipment

(in million pesos) GOCCs Amount

NPC 807,807.33 PPA 74,157.14 PNOC 58,761.34 BCDA 49,484.96 MWSS 47,722.78 NIA 28,311.06 SBMA 25,411.34 LBP 20,071.64 MIAA 16,968.40 WATER DISTRICTS 15,124.28

Table IV-16 shows the top ten GOCCs with big amounts of PPE. NPC accounted for 65.90 percent of the overall PPE while PPA and PNOC shared 6.05 percent and 4.79 percent, respectively.

Among the components, Other Property, Plant and Equipment shared the biggest amount of P830.30 billion or 43.83 percent of the total PPE, followed by Land and Land Improvements of P806.09 billion or 42.55 percent, Buildings – P124.26 billion or 6.56 percent, Construction in Progress of P74.72 billion or 3.94 percent and the 3.12 percent is comprised of Machineries and Equipment – P30.79 billion, Office Equipment, Furniture and Fixtures – P20.29 billion, Transportation Equipment – P6.92 billion and Leasehold Improvements – P1.12 billion.

Land and Land Improvements include runways/taxiways; electrification, power and energy structures; roads, highways and bridges; artesian wells, reservoirs, pumping stations and conduits; reforestation-upland and other public infrastructures that are being utilized by GOCCs to generate income.

Table IV-17 GOCCs with Big Amounts

of Construction in Progress (in million pesos)

GOCCs Amount NPC 22,997.78 BCDA 10,484.46 NIA 9,501.90 PPA 7,909.23 MWSS 6,103.28 WATER DISTRICTS 4,030.20 SBMA 3,647.69 PNOC 3,479.84 MIAA 3,378.26 BSP 1,005.27

Construction in Progress of P74.72 billion, net of Allowance for Valuation of P0.03 billion posted an increase of P8.82 billion or 13.39 percent. The increase was mainly due to the additional construction in progress recorded by BCDA and MIAA in 2006 amounting to P4.69 billion and P3.27 billion, respectively and inclusion in 2006 AFR of Water Districts’ financial statements with account Construction in Progress of P4.03 billion. Of the gross construction in progress, P74.58 billion or 99.76 percent pertains to Agency Assets, 0.11 percent or P0.08 billion for Roads, Highways and Bridges, 0.09 percent or P0.07 billion pertains to Other Public Infrastructures and the remaining 0.04 percent or P0.03 billion for Reforestation - Upland – P0.02 billion and Parks, Plazas and Monuments – P0.01 billion.

Table IV-17 shows the top ten GOCCs with big balance of Construction in Progress. The NPC recorded the substantial amount in PPE which include electric plants, construction work in progress, electric plant under capital lease and non-utility property. Electric plant under capital lease represents the total computed capacity fees of Build Operate and Transfer (BOT) Plants for the duration of the cooperation period.

1.5 Intangible Assets – P7.53 billion

Of the total assets of GOCCs, Intangible Assets accounted for a mere 0.14 percent or P7.53

billion. Compared to 2005, it increased by P1.57 billion or 26.32 percent which was mainly due to the PNOC’s additional development and drilling costs in the geothermal projects mostly in Northern Negros, Malitbog and Upper Mahiao in Leyte and Cabalian, Southern Leyte amounting to P0.79 billion and NLRC’s additional project development costs which include capitalized financing charges; costs of clearing and site preparatory works, rolling stock, squatter relocation, consultancy fees and other project development costs that totaled P0.86 billion and pre-operating expenses of P14.98 million. Its components are Organizational Costs – P0.13 billion or 1.77

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percent, Development Cost – P6.92 billion or 91.83 percent and Other Intangible Assets – P0.48 billion or 6.40 percent.

Among the GOCCs with substantial balance of Intangible Assets are: PNOC – P5.52

billion or 73.33 percent, NLRC – P1.51 billion or 20.05 percent, LBP – P0.29 billion or 3.91 percent, DBP – P0.11 billion or 1.48 percent and SSS – P0.07 billion or 0.94 percent.

1.6 Other Assets – P248.43 billion

Other Assets amounting to P248.43 billion constitute 4.71 percent of the total assets of

GOCCs.

Table IV-18 Comparative Composition of Other Assets (in million pesos)

Increase(Decrease) Particulars 2006 2005 Amount Percent

Other Assets 139,189.26 123,609.97 15,579.29 12.60 Acquired Assets 37,287.91 36,140.85 1,147.06 3.17 Other Non-Current Assets 28,866.90 21,702.43 7,164.47 33.01 Garnished/Foreclosed Assets 22,328.49 21,381.15 947.34 4.43 Non-Current Assets Held for Sale 11,947.20 777.68 11,169.52 1,436.26 Restricted Fund/Assets 5,847.82 9,842.37 (3,994.55) (40.59) Assets Held in Trust 2,650.15 2,676.80 (26.65) (1.00)

Arts, Archeological Specimen and Other Exhibits 150.99 149.50 1.49 1.00 Breeding Stocks 82.27 81.28 0.99 1.22 Items in Transit 75.91 25.27 50.64 200.40 Work/Other Animals 6.36 8.00 (1.65) (20.58)


As shown in Table IV-18, among the components of this group, Other Assets and Acquired

Assets registered the highest balance with P139.19 billion and P37.29 billion, respectively. Other Assets grew by P15.58 billion or 12.60 percent, mainly due to NPC’s higher restricted cash and other assets that amounted to P15.81 billion. Another contributory factor was the increase in the GSIS SIF’s non-current assets held for sale – P5.12 billion, contribution/premiums receivable – P3.35 billion and recorded notes receivable in 2006 of P6.53 billion. SSS’ increase in interest receivable, advances for fire/MRI/Foreclosure proceedings net of accumulated impairment loss and non-current assets held for sale aggregating to P6.09 billion also contributed to the increase in Other Assets.

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The top ten GOCCs with the highest value of Other Assets aggregated to P227.05 billion or 91.39 percent as of yearend are presented in Table IV-19. The remaining P21.38 billion is shared by 81 GOCCs.

The NPC has the biggest amount of Other Assets of P101.88 billion or 41.01 percent higher by P15.81 billion or 18.37 percent from 2005 level. GSIS-SIF ranked second with P30.96 billion or 12.46 percent, higher by P12.24 billion or 65.40 percent from P18.72 billion in 2005.

Table IV-19 GOCCs with Huge Amount of Other Assets (in million pesos)

GOCCs Amount NPC 101,882.28 GSIS SIF 30,964.34 HGC 23,345.01 HDMF 22,434.76 BSP 14,128.86 PDIC 11,793.97 SSS 9,865.98 PNOC 4,724.12 PSALM 4,120.59 DBP 3,794.17

2.0 LIABILITIES – P3,954.52 billion

This group of accounts consists of current liabilities – P 1,740.60 billion or 44.02 percent and long-term liabilities – P2,213.92 billion or 55.98 percent.

Table IV-20 GOCCs with Highest Amount of Liabilities (in million pesos)

GOCCs Amount GOCCs Amount BSP 1,304,600.65 HGC 26,610.07 NPC 1,056,550.92 MWSS 24,416.39 CB-BOL 416,126.22 HDMF 22,970.06 LBP 323,009.41 NEA 18,857.99 DBP 202,970.21 NIA 14,977.26 PDIC 88,458.15 GSIS-FB 12,362.48 NFA 70,638.81 LWUA 12,335.90 PNOC 68,728.72 QUEDANCOR 12,196.98 PSALM 60,652.47 BCDA 10,709.82 NHMFC 47,762.16 WATER DISTRICTS 10,433.90

The GOCCs which recorded the highest amount of liabilities are shown in Table IV-20. BSP has

the biggest liabilities amounting to P1,304.60 billion consisting of foreign and local currency financial liabilities of P146.50 billion and P758.59 billion, respectively, currency in circulation of P384.49 billion and other liabilities of P15.02 billion. Liabilities of NPC include accounts payable and accrued expenses and other current liabilities of P159.80 billion, foreign loans and other long-term liabilities of P360.65 billion and lease obligation for build-operate-transfer of P536.11 billion. CB-BOL’s liabilities of P416.13 billion consist mainly of Due to National Government (NG) of P408.46 billion consisting of payment by NG of CB-BOL liabilities amounting to P244.71 billion, retained deposit of the Treasurer of the Philippines (TOP) of P137.01 billion, NG advances on Brady Bond Exchange of P26.48 billion and accrued interest on TOP’s fixed term deposit of P0.25 billion. Compared with the restated figures as of December 31, 2005, there was a net increase of P331.89 billion or 9.16 percent in Total Liabilities.

Chart IV-2 Comparative Liabilities by Major Components

(in billion pesos)

3,954.523,622.62

1,740.601,434.52

2,213.92 2,188.10

0.00

1,000.00

2,000.00

3,000.00

4,000.00

5,000.00

T o tal C urrent Lo ng T erm

2006 2005

31

Comparative details of total liabilities for fiscal years 2006 and 2005 by major components are shown in Chart No. IV-2.

2.1 Current Liabilities - P1,740.60 billion

The major components of current liabilities include Deposit Liabilities – P859.33

billion or 49.37 percent, Payables Accounts – P496.77 billion or 28.54 percent and Currency in Circulation – P384.49 billion or 22.09 percent.

2.1.1 Deposit Liabilities – P859.33 billion

Deposit Liabilities of P859.33 billion accounted for 49.37 percent of the total current liabilities. This account pertains to deposits made by bank depositors with the five government banks namely: BSP – P516.61 billion, LBP – P267.55 billion, DBP – P71.09 billion, PPSB – P3.45 billion and AIIB – P0.63 billion. Compared to 2005 restated amount of P611.83 billion, the account registered an increase of P247.50 billion.

BSP Deposit Liabilities include short-term foreign currency deposits of P41.30

billion, short-term and long-term government deposits of P79.18 billion, demand deposits of banks/non-banks with quasi-banking licenses of P341.06 billion and deposits of International Monetary Fund and other financial institutions amounting to P55.07 billion.

2.1.2 Payables – P496.77 billion

This group of accounts represents 28.54 percent of the total current liabilities. As of December 31, 2006, Payable accounts reached P496.77 billion, higher by P10.64 billion or 2.19 percent than last year’s amount of P486.13 billion.

Table IV-21 Comparative Components of Payables (in million pesos)

Increase(Decrease) Particulars

2006

2005 Amount Percent

Other Payables 124,282.12 181,793.59 (57,511.37) (31.64) Accounts Payable 112,594.92 81,545.23 31,049.70 38.08 Notes Payable 47,900.83 30,712.48 17,188.35 55.97 Loans Payable-Foreign 35,619.20 42,867.66 (7,248.46) (16.91) Loans Payable-Domestic 31,245.88 18,661.68 12,584.20 29.36 Due to National Treasury 26,804.86 26,423.09 381.77 1.44 Interest Payable 23,149.43 19,231.81 3,917.62 20.37 Due to Other GOCCs 17,079.99 10,827.14 6,252.86 57.75 Due to Other NGAs 14,603.29 14,360.78 242.51 1.69 Due to BIR 10,165.11 5,429.89 4,735.23 87.21 Guaranty Deposits Payable 9,946.70 9,091.47 855.23 9.41 Bonds Payable 8,961.74 1,200.00 7,761.74 646.81 Accrued Expenses Payable 7,385.11 7,555.88 (170.76) (2.26) Due to Officers and Employees 7,055.49 5,020.99 2,034.51 40.52 Due to Subsidiaries/Affiliates 5,714.05 10,056.29 (4,342.24) (43.18) Dividend Payable 4,639.19 4,376.58 262.61 6.00 Claims and Benefits Payable 3,423.72 6,037.67 (2,613.95) (43.18) BOT Obligations 2,766.40 5,058.28 (2,291.88) (45.31) Due to Other Funds 2,357.96 3,127.24 (769.27) (24.60) Others Accounts 1,077.98 2,754.91 (1,676.93 (60.87)


Comparative components of Payables are shown in Table IV-21.

32

Other Payables account has the biggest balance at P124.28 billion for 2006,

constituting 7.13 percent of aggregate payables. NPC reported P55.80 billion or 44.90 percent of the total Other Payables. Other GOCCs with substantial amount are the following: BSP – P19.36 billion, HGC – P13.65 billion, DBP – P7.25 billion, LBP – P7.02 billion.

Accounts Payable of P112.59 billion comprises 22.67 percent of the aggregate

current liabilities.

Table IV-22 GOCCs with Huge Accounts Payable (in million pesos)

GOCCs Amount Percent Distribution

NPC 63.212.25 56.29 PSALM 13,445.93 11.97 HDMF 4,231.20 3.77 PHIC 4,118.93 3.67 PNOC 3,807.52 3.39 PPC 2,440.14 2.17 PTA 1,945.48 1.73 QUEDANCOR 1,695.86 1.51 SSS 1,490.00 1.33 LBP 1,457.83 1.30 NFA 1,445.13 1.29 GSIS-FB 1,333.37 1.19 NDC 1,280.83 1.14 PPA 1,086.93 0.97 PAGCOR 1,007.01 0.90

Sub-total 103,998.39 92.62 Other GOCCs (133) 8,289.58 7.38

Total 112,287.97 100.00


Table IV-22 shows the GOCCs with substantial balance of Accounts Payable,

accounting for 92.62 percent and the remaining 7.38 percent is shared by 133 other corporations. Notes Payable pertains to NFA’s temporary availments of credit lines from different banks amounting to P47.90 billion to finance its procurement activities.

DBP’s current portion of Loans Payable – Foreign represents borrowings from

foreign financial institutions of P28.02 billion in 2006. The top four corporations which constitute 89.01 percent of the total Loans

Payable – Domestic are GSIS-FB – P10.99 billion, DBP – P8.86 billion, PNCC – P5.89 billion and PCFC – P2.03 billion.

Details of Loans Payable-Foreign and Domestic are shown in Schedules 1 and 2

of Volume II-B.

2.1.3 Currency in Circulation – P 384.49 billion

This account consists of notes and coins in different denominations issued by BSP amounting to P371.81 billion and P12.68 billion, respectively.

33

BSP recorded an increase of P47.90 billion or 14.20 percent compared to P336.56 billion in 2005.

Table IV-23 Comparative Currency in Circulation

Quantity Amount (in million pesos) Denomination

2006 2005 2006 2005 Notes 371,806.66 325,042.05

100,000 118 118 11.80 11.80 2,000 14,030 9,964 28.06 19.93 1,000 132,367,131 110,734,593 132,367.13 110,734.59 500 337,072,806 296,212,179 168,536.40 148,106.09 200 33,728,702 19,744,360 6,745.74 3,948.87 100 395,450,117 373,158,111 39,545.01 37,315.81 50 307,818,730 263,320,427 15,390.94 13,166.02 20 413,072,478 538,123,864 8,261.45 10,762.48 10 76,518,316 81,992,779 765.18 819.93 5 30,988,918 31,306,345 154.95 156.53 Coins 12,684.96 11,515.45

10 peso 254,835,520 194,290,797 2,548.36 1,942.91 5 peso 1,059,768,067 1,011,398,412 5,298.84 5,056.99 1 peso 3,324,900,825 3,143,795,626 3,324.90 3,143.80 25 cent 4,392,521,069 3,897,513,626 1,098.13 974.38 10 cent 1,799,055,484 1,691,889,330 179.91 169.19 5 cent 1,182,170,789 1,109,115,270 59.11 55.46 1 cent 13,154,712 12,029,642 .13 .12 Commemorative Coins 2,859,897 2,793,092 175.58 172.62

Total 384,491.62 336,557.51


Details of comparative Currency in Circulation are shown in Table IV-23.

2.1 Long-Term Liabilities – P2,213.92 billion

To sustain operations and meet the demand for additional production of goods and services for the general public, GOCCs secured loans from foreign and domestic creditors. As of December 31, 2006, total long-term liabilities of P2,213.92 billion is higher by P25.82 billion from P2,188.10 billion in 2005.

Chart No. IV-3 Comparative Long-Term Liabilities by Major Accounts

(in billion pesos) CY 2006 CY 2005

667.90, 30.52%

108.45, 4.96%160.35,

7 .33%124.92, 5 .71%

441.21, 20.16%

683.64, 31.24%

1.64, 0 .07%616.11 ,

27.83%

119.84, 5.41%183.65,

8.30%282.38, 12.75%

359.04, 16.22%

11.66, 0.53%641.23,

28.96%

Loans Payable-Domestic Bonds Payable-Foreign Other Long-Term Payable Bonds Payable-Domestic Loans and Advances Payable Various Payable Accounts Loans Payable-Foreign

34

The comparative figures of six major accounts under long-term liabilities which represent

99 percent of the total long-term liabilities in two consecutive years 2005 and 2006 are presented in Chart No. IV-3. It shows that out of the total long-term liabilities, Loans Payable-Domestic shared 28.96 percent or P641.23 billion in 2006. Four GOCCs belonging to banking and financing sector with the biggest outstanding loan balances are the following: CB-BOL – P408.46 billion, PDIC – P81.99 billion, BSP – P51.69 billion, NHMFC – P43.36 billion. Details of Loans Payable Domestic are shown in Schedule 2 of Volume II-B.

Other Long-Term Payables recorded by NPC amounting to P572.04 billion for 2006

correspond to 90.94 percent of the total amount. Other GOCCs with large amount of Other Long-Term Payables include PNOC – P16.49 billion, PSALM – P9.95 billion, BSP – P8.60 billion and PDIC – P5.36 billion.

Loans and Advances Payable of BSP amounting to P280.45 billion in 2006 pertain to

government securities purchased under agreement to re-sell. The remaining amount was shared by GOCCs under public utilities and industrial sectors.

Table IV-24 Corporations with Substantial Amount of Foreign Loans (in million pesos)

GOCCs Amount Nature/Purpose NPC 127,871.99 Used to finance projects on electric power production from various

sources such as hydro-electric, nuclear, geothermal field development

PNOC 32,526.34 Financed exploration, discovery and development of all forms of energy resources including geothermal services, heat and power

LBP 31,272.58 Bills payable to multilateral and bilateral funding agencies such as World Bank, ADB, Japan Bank for International Cooperation and Kreditanstalt for Wiederaufbau

MWSS 18,061.26 Financed water supply rehabilitation, Pasig River environmental management, water districts development projects and water supply improvement projects

LWUA 9,689.19 Loans received, through subsidiary loan agreement with the National Government, from foreign creditors mainly to finance on a long term basis, the development of various water systems in different cities, municipalities and rural areas in the country

Table IV-24 shows that GOCCs under financial and public utilities clusters obtained

loans from foreign financial institutions to finance development projects.

Another source of long-term liabilities is the flotation of bonds. Total Bonds Payable-Foreign increased by 14.53 percent from P160.35 billion in 2005 to P183.65 billion in 2006. The GOCCs with substantial balance of this account are NPC – P158.23 billion or 86.16 percent and PSALM – P25.42 billion or 13.84 percent of the aggregate long term liabilities.

Total Bonds Payable-Domestic of P119.84 billion in 2006 registered a net increment of

10.51 percent or P11.40 billion as shown in Table IV-25.

Table IV-25 Comparative Amount of Bonds Payable - Domestic (in million pesos)

Amount Increase(Decrease) GOCCs 2006 2005 Amount Percent BSP 39,400.49 46,019.12 (6,618.63) (14.38) NPC 38,613.00 28,613.00 10,000.00 34.95 NFA 16,500.00 16,500.00 - - HGC 11,631.52 3,648.90 7,982.62 218.77 HDMF 7,000.00 9,000.00 (2,000.00) (22.22)

35

(Table IV-25, Continued) NDC 4,000.00 2,000.00 2,000.00 100.00 PSC 2,638.51 2,638.51 - - PTA 46.27 26.62 19.65 73.81 PNOC 5.81 6.28 (0.48) (7.58)

Total 119,835.60 108,452.42 11,383.17 10.50


Outstanding Bonds Payable – Domestic of BSP which dropped to P39.40 billion constitutes 32.88 percent of the total P119.84 billion. Table IV-25 shows thecomparative amount of Bonds Payable-Domestic of GOCCs.

3.0 DEFERRED CREDITS - P56.56 billion

Deferred Credits of P56.56 billion consisting of Other Deferred Credits – P56.24 billion or 99.44 percent, and Deferred Tax Liability – P319.55 million or 0.56 percent exhibited 6.54 percent or P3.95 billion growth from the previous year.

Table IV-26 GOCCs with Biggest

Deferred Credits (in million pesos)

GOCC Amount HDMF 12,406.14 NIA 11,522.36 PNOC 6,326.82 NPC 5,353.42 BCDA 3,628.18 LBP 3,418.61 NHA 2,380.16 MWSS 2,343.43 DBP 1,747.44 SBMA 1,379.49

The top ten GOCCs with huge amount of Deferred Credits are presented in Table IV-26. HDMF accounted for 21.93 percent or P12.41 billion of the total Deferred Credits. It consists of unearned interest on multi-purpose loans that are amortized monthly over the term of the loan, capitalized interest and penalties on restructured loans, capitalized origination fees on loans processed prior to issuance of Circular 187, and collections for restructured accounts undergoing foreclosure proceedings pending the expiration of one year seasoning period. NIA’s accumulated collection of advances for irrigation fees and unearned income on installment sales, equipment rentals and Communal Irrigation System amortization reached P11.52 billion.

Other GOCCs with substantial balance and nature of the account are as follows:

PNOC – deferred interest income, price adjustment on the sale of 40 percent share of Petron to Saudi Aramco, principal and interest payment on long-term loans, accumulated amount out of the estimated P1.10 billion Company share in the future abandonment costs of SC 38 Malampaya Project, reserve for development cost, interest on delayed payments, unearned income from lease of property, locator deposits and other related fees, unrealized gross profit on installment sales, deferred output value added tax, reservation fees, deferred interests, deferred income on disposed properties and other deferred credits.

NPC – net advances of the Bureau of the Treasury to NPC for the debt servicing of

foreign loans and various payments to Independent Power Producers.

BCDA – deferred income from leased properties, tax subsidy and deferred tax liability.

4.0 EQUITY – P1,263.43 billion

The consolidated equity reported by all GOCCs as of yearend amounted to P1,263.43 billion, higher by P228.26 billion or 22.05 percent than last year’s P1,035.17 billion. It is composed of Government Equity – P206.32 billion, Capital Stock – P229.71 billion, Paid in Capital in Excess of Par

36

Value – P10.08 billion, Subscribed Capital Stock – P6.51 billion, Restricted Capital – P860.48 billion, Appraisal Capital – P272.90 billion, Donated Capital – P13.02 billion, Treasury Stock – (P16.07 million), Other Equity Instruments – P6.37 billion and Retained Earnings/(Deficit) – (P341.94) billion.

Chart IV-4 Components of Equity

(in billion pesos)

Government Equity Appraisal Capital Capital Stock Donated Capital Paid in Capital in Excess of Par Value Treasury Stock Subscribed Capital Stock Retained Earnings Restricted Capital Other Equity Instruments

8 6 0 .4 8

2 72 .9 02 2 9 .71

2 0 6 .3 2

13 .0 210 .0 8 6 .51

( 0 .0 2 )

6 .3 7

( 3 4 1.9 4 )

- 4 0 0

- 2 0 0

0

2 0 0

4 0 0

6 0 0

8 0 0

1 0 0 0

2006

8 0 7.0 4

2 8 1.3 32 2 1.4 5

19 0 .0 612 .9 6 3 .6 6 6 .4 8

( 0 .0 2 )

( 4 8 7.78 )

- 6 0 0

- 4 0 0

- 2 0 0

0

2 0 0

4 0 0

6 0 0

8 0 0

1 0 0 0

2005

Government Equity Appraisal Capital Capital Stock Donated Capital Paid in Capital in Excess of Par Value Treasury Stock Subscribed Capital Stock Retained Earnings Restricted Capital Other Equity Instruments

Chart IV - 4 shows the components of GOCCs’ Equity.

4.1 Government Equity – P206.32 billion

Government Equity pertains to cumulative equity contributions of the National Government

to non-stock GOCCs and to their accumulated earnings, among others. At yearend, Government Equity amounted to P206.32 billion, up by 8.56 percent or P16.26 billion from last year’s restated amount of P190.06 billion. The GOCCs that contributed to the increase are the HDMF for the P13.60 billion collections of members’ contributions, OWWA for the P1.15 income collections and Water Districts for the P2.59 billion which were included for the first time in the AFR. Negative adjustments in the beginning balances of PPC, NTA, CCP and NIA slightly reduced the reported increase.

Table IV – 27 GOCCs with Substantial Amount of Government Equity

(in million pesos) GOCCs Amount Nature

HDMF 138,589.50 Members’ contributions and accrued dividends NIA 13,327.33 Capital expenditures out of funds directly released to NIA from 1983

– 1989 and out funds released thru the DA and DPWH from 1990 to 1996

BSP 10,000.00 Capital fully paid for by the Government of the Republic of the Philippines upon effectivity of R.A. No. 7653 in 1993

OWWA 9,761.00 Accumulated net income MIAA 7,472.00 Capital assets transferred by ATO and DOTC, P605 million

unremitted share of the National Government on the income of MIAA from 1983 – 1986 converted to NG equity in accordance with Executive Order No. 298 and P280.06 million grants and donations from various sources.

NEA 5,148.02 Equity contribution of the National Government and P176.79 million donations from various government agencies in support of the rural electrification project

NFA 3,890.59 Equity contribution of the National Government PPC 3,165.79 Equity contribution of the National Government

37

(Table IV-27, Continued) PDIC 3,000.00 Total capital provided by the National Government in accordance with

R.A. No. 3591 WATER DISTRICTS 2,591.83 Equity contribution of the Local Government Units HSDC 1,970.12 Equity contribution of the National Government NPC 1,883.06 Contra account for disallowances in audit, claims for unrelieved losses of NPC properties and established inventory

shortages of Property Custodians CCP 1,536.66 Vast parcels of reclaimed land where CCP Complex is situated,

initial capitalization of the Center, donated properties, construction cost of Folk Arts Theater including furniture and equipment

PRRI 1,000.71 Capital and equity contribution of the National Government and capital assets

Table IV-27 shows the GOCCs with substantial amount of Government Equity at

yearend. Apart from equity contributions of the NG to non-stock corporations, Government Equity of GOCCs also includes capital assets either transferred from other government agencies pursuant to certain executive issuances or purchased out of funds released through certain departments of the NG.

4.2 Paid-in Capital – P239.77 billion

At yearend, the consolidated Paid-in Capital of GOCCs, net of Treasury Stocks, totaled

P246.28 billion. It is composed of Capital Stock – P229.71 billion, Paid-in Capital in Excess of Par Value – P10.08 billion less Treasury Stock of P16.07 million. Compared to last year’s P225.08 billion, this year’s Paid-in Capital is higher by P14.69 billion or 6.53 percent. Of the total increase, P11.28 billion or 76.63 percent pertains to the P5 billion increase in the capital stock of PNOC-EDC and to the net additional Paid-in Capital of P6.28 billion it realized from the sale of 3 billion shares of stocks with P1.00 par value per share sold at P3.20 per share.

revaluation should be made with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair value at the balance sheet date.

Other GOCCs that reported substantial increase in Paid-in Capital representing stock dividends issued and additional subscriptions of capital stocks are HGC – P3.30 billion and LBP – P0.50 billion.

Table IV-28 shows the GOCCs with Huge amount of Paid-in Capital. Except for BCDA, PNOC-EDC, LBP, HGC and PPA, Paid-in Capital account balances of as of December 31, 2005 of nine listed GOCCs remained the same at yearend.

4.3 Appraisal Capital – P272.90 billion

Appraisal Capital represents increases in the value of assets due to appraisal or revaluation. IAS No.16 allows as an alternative treatment, the carrying of PPE at revalued amount. As provided,

Table IV -28 GOCCs with Huge Amount of Paid-in Capital


BCDA 66,965.92 PNOC-EDC 29,507.40 NPC 27,048.87 SBMA 19,942.81 LBP 12,072.10 HGC 10,000.00 NDC 8,971.95 MWSS 6,095.49 NIA 5,559.19 TIDCORP 4,391.90 PPA 4,308.51 CPA 4,159.93 NHMFC 3,370.51 PRA 3,248.28

At yearend, consolidated Appraisal Capital of GOCCs amounted to P272.90 billion, lower by P8.43 billion or 3 percent than last year’s restated figure of P281.33 billion. The PRA and NPC reported substantial reductions of P3.89 billion and P3.08 billion, respectively.

38

The decrease in PRA’s Appraisal Capital was due to the reduction in the assigned value of its share in various reclamation projects which it entered with private parties without cost. On the other hand, adjustments to correct overstatement of transmission assets revalued in prior years reduced NPC’s Appraisal Capital account balance in 2006 by P3.08 billion.

Other GOCCs which reported significant reductions in this account are PCSO – P0.88 billion, SBMA – P0.34 billion and GSIS SIF – P0.19 billion.

4.4 Donated Capital – P13.02 billion

Donated Capital represents the accumulated balance of grants and donations in cash and in

kind received by GOCCs from various foreign and domestic sources. The aggregate Donated Capital of GOCCs of P13.02 billion posted an increment over last year’s restated balance of P12.96 billion.

Table IV-29 GOCCs with Substantial Amount of

Donated Capital (in million pesos)

GOCC Amount NPC 4,022.00 LCP 2,895.05 LWUA 2,647.35 MWSS 1,046.97 PPA 586.64 QUEDANCOR 480.29 PHC 272.99 OSHC 248.92 BFI 205.92 NKTI 114.35 NDC 112.74

Table IV-29 shows the GOCCs with substantial amount of Donated Capital. Donated Capital of NPC pertains to grants received from foreign governments and lending institutions which were used to finance the implementation of various projects. Donated Capital of LCP represents the cost of 12 hectares lot donated by NHA LWUA’s Donated Capital represents the cost of completed water supply projects funded by grants from NG. Waterworks Facilities turned over by private subdivisions and grants from JICA for the rehabilitation of Balara Water Treatment Plant composed of Donated Capital of MWSS.

4.5 Other Equity Instruments – P6.37 billion

Other Equity Instruments valued at P6.37 billion consist of Hybrid Tier 1 (HT1) Capital Securities issued by the DBP with the approval of the BSP. The basic features of the HT1 Capital Securities are as follows:

• Interest at 8.375 percent per annum payable semi-annually • Interest payable on March 15 and September 15 of each year commencing on

March 15, 2007 • Redemption at the option of the Parent Company • Rights and claims of the holders subordinated to the claims of senior creditors

At yearend, Other Equity Instruments showed a balance of P6.37 billion, the aggregate

amount of HT1 Capital Securities sold by DBP from September to December 2006.

4.6 Restricted Capital – P860.48 billion

The consolidated Restricted Capital reported by GOCCs reached P860.48 billion, higher by P53.44 billion or 6.62 percent than last year’s P807.04 billion.

Table IV-30 GOCCs with Substantial Increase in Restricted Capital

(in million pesos) GOCC Amount Nature

GSIS- SIF 38,376.34 Current year revenue appropriated for the actual reserve requirement for various Funds such as Social Insurance, Optional Insurance, Employee Compensation Insurance, Pre-Need Insurance, General Insurance and Property Replacement

39

(Table IV-30, Continued) BSP 5,019.23 Additional set up of reserve for price fluctuation of gold holdings and

gold insurance fund of P11.22 billion reduced by the partial closing of P6.82 billion reserve for contingencies pertaining to BSP advances to the NG for IMF quota increase in 1992 which the NG settled in 2006

SSS 6,051.13 Current year revenue set up as additional reserve for social insurance and property valuation

PDIC 2,200.15 Additional reserve for estimated insurance losses DBP 611.15 Additional reserve for losses and contingencies PAGCOR 577.00 Current year appropriation for acquisition of Slot Machines Demo Units

and for other capital expenditure LBP 411.60 Additional reserve for contingencies and prior period adjustment CDC 160.00 Appropriation for capital expenditure and loan amortization CITEM 154.22 Roll over of interests on Building Fund

Table IV- 30 shows the GOCCs with substantial increases in Restricted Capital. All of the

above GOCCs had the increase in the Restricted Capital taken from their respective current year revenues and income.

4.7 Retained Earnings (Deficit) – (P341.94) billion

At yearend, GOCCs had a Net Deficit of P341.94 billion representing the difference

between the total Retained Earnings of P290.03 billion reported by 64 GOCCs and 273 Water Districts and the total Deficits of P631.97 billion reported by 69 GOCCs. The Deficit is lower by P145.84 billion than last year’s P487.78 billion due to higher net income realized by various GOCCs during the year and the inclusion of Water Districts in the AFR. The latter reported an overall retained earnings of P0.83 billion.

Table IV-31 GOCCs with Substantial Increase in Retained Earnings (in million pesos)

GOCC Amount SSS 22,657.47 BSP 13,603.24 LBP 10,312.70 PNOC 9,576.89 PHIC 9,175.15 GSIS – SIF 8,612.92 MWSS 2,372.27 HDMF 1,677.51 GSIS – MFI 1,596.71 PPA 1,401.25 GSIS – AF 1,273.60 BCDA 1,236.25 PAGCOR 1,091.87 NHA 1,031.85

Table IV-31 shows the GOCCs which reported substantial increases in Retained Earnings. SSS had the highest increase of P22.66 billion which pertains to the fair value gains from its available-for-sale financial assets. BSP followed with P13.60 billion consisting of current year’s income – P3.78 billion, marked to market of government securities – P6.49 billion and closure of reserve for contingencies – P6.82 billion less dividends for the year – P3.60 billion. The increase in Retained Earning of the above listed GOCCs resulted from their substantial net income for the period ended December 31, 2006 and adjustments of prior year’s income and expenses.

40

Table IV 32 GOCCs with Substantial Deficits


CB-BOL 411,895.10 NPC 118,020.24 NFA 46,585.43 PNCC 14,731.85 NDC 7,125.14 NHMFC 6,658.23 NEA 5,297.89 TIDCORP 3,098.61 SBMA 2,365.51 GSIS FAMILY BANK 1,877.94 NABCOR 1,667.33 HGC 1,657.48 HSDC 1,171.68 PPC 1,012.02

Table IV-32 shows the GOCCs with substantial amount of Deficits as of December 31, 2006. The CB – BOL continued to incur deficits which at yearend amounted to P411.89 billion, of which P15.91 billion pertains to current year net loss from operations. Deficit of CB-BOL for 2006 was primarily due to loss on foreign exchange fluctuation of P14.47 billion and interest expense on foreign borrowing of P1.44 billion. Other corporations that reported additional deficits during the year are NFA – P10.89 billion, PNCC – P1.09 billion, HGC – P0.77 billion, NABCOR – P0.36 billion and PPC – P0.17 billion.

At P118.02 billion, the NPC’s deficit is lower by P80.13 billion or 40.44 percent than its last year’s level of P198.15 billion. The substantial decrease pertains to its net income of P90 billion less correction of prior year’s error of P7.26 billion and cash dividends of P2.60 billion. Other GOCCs which reported reductions in their deficit balances are NHMF – P1.45 billion, SBMA – P0.59 billion, NEA – P0.33 billion and NDC – P0.33 billion.

41

STATEMENT OF INCOME AND EXPENSES

The GOCCs registered a total income of P718.73 billion, posting an increase of P38.59 billion or 5.67 percent from P680.15 billion in 2005. The rise in this year’s income was reflected in Business Income, Service Income and Other Income which grew by P33.31 billion, P7.21 billion and P5.81 billion, respectively. This was, however, brought down by a decrease in Gains/Premiums of P7.89 billion.

The aggregate income consists of Business Income – P537.29 billion, Gains/Premiums – P101.15 billion, Other Income – P58.48 billion, Service Income – P21.09 billion and Permits and Licenses – P0.73 billion. The NG share from the gross income of PAGCOR – P11.98 billion and MIAA – P0.62 billion or P12.60 billion rose insignificantly from P12.53 billion in 2005.

Total expenses of P546.73 billion increased by P29.08 billion or 5.62 percent, from P517.65 billion in 2005 resulting from increases in Maintenance and Other Operating Expenses and Personal Services of P27.40 billion and P3.12 billion, respectively. This was however partly reduced by a decline in Financial Expenses of P1.44 billion. Net Income after Tax rose to P168.58 billion or an increase of P2.98 billion or 1.80 percent, from P165.59 billion in 2005.

Chart IV-5 Components of Statement of Income and Expenses (in billion pesos)

680.15

718.73

(12.53)(12.60)

667.62706.13

(546.73) (517.65)

17.94 13.52

165.59 168.58

0

100

200

300

400

500

600

700

800

2006 2005INCOME Share of NG Income after Share of NG EXPENSES SUBSIDIES NET INCOME

Chart IV-5 shows the combined results of operation of GOCCs for fiscal years 2006 and 2005.

1.0 Income - P718.73 billion

The largest source of the Corporate Government Sector’s income in 2006 was Business Income, accounting for almost three fourths or P537.29 billion. The second largest was Gains/Premiums at P101.15 billion or 14.07 percent while Other Income and Service Income contributed P58.48 billion and P21.09 billion, respectively.

42

Chart IV-6 Major Sources of Income (in billion pesos)

537.29

101.1558.48

21.09 0.73

503.98

109.0452.67

13.88 0.580

100

200

300

400

500

600

2006 2005

Business Income

Gains/Premiums

Other Income

Service Income

Permits andLicenses

Chart IV-6 shows the comparative major sources of income earned.

1.1 Business Income – P537.29 billion

Business Income amounted to P537.29 billion, 6.61 percent or P33.31 billion higher in 2005. Major

components of this group of income are as follows: Sales Revenue – P209.23 billion or 38.94 percent, Other Business Income - P185.02 billion or 34.44 percent, Members’ Contribution – P91.14 billion or 16.96 percent, Insurance Premiums - P29.39 billion or 5.47 percent and Income from Waterworks Systems – P11.10 billion or 2.07 percent.

Table IV-34 Comparative Components of Business Income


Particulars

2006

2005 Amount Percent

Sales Revenue 209,234.06 204,391.85 4,842.21 2.37 Other Business Income 185,017.75 171,311.42 13,706.33 8.00 Members Contribution 91,136.78 89,765.42 1,371.36 1.53 Insurance Premiums 29,388.98 24,805.98 4,583.01 18.48 Income from Waterworks Systems 11,097.27 3,173.02 7,924.25 249.74 Rent Income 5,601.48 5,512.01 89.47 1.62 Hospital Fees 3,274.63 2,848.92 425.72 14.94 Landing and Parking Fees 1,415.17 1,457.86 (42.69) (2.93) Income from Joint Ventures 673.51 525.76 147.76 28.10 Fines and Penalties - Business Income 328.88 115.94 212.94 183.66 Income from Canteen/Restaurants

Operations

51.88

43.62

8.26

18.93 Income from Markets 41.13 41.13 Income from Dormitory/Guest

Houses/Cottages Operations

22.83

21.96

0.87

3.98 Income from Communication Facilities 1.95 1.56 0.39 25.01 Printing and Publication Income 1.17 1.66 (0.49) (29.52) TOTAL 537,287.47 503,976.97 33,310.51 6.61 Difference between totals and sum of components is due to rounding off.

Tables IV-34 and IV-35 show the comparative components of Business Income and top earners for

the year, respectively. The overall increase of P33.31 billion resulted from higher Business Income in almost all components. The inclusion of Water Districts’ Business Income of P 8.21 billion contributed

43

Table IV-35 Top Business Income Earners for the Year

GOCC Amount

(in million pesos) NPC 175,128.41 SSS 64,651.50 GSIS - SIF 54,355.28 BSP 52,410.34 NFA 52,410.34 PHIC 22,598.60 PAGCOR 22,491.31 LBP 20,940.83 DBP 14,633.64 PDIC 12,772.58 HDMF 12,223.45

to said increment.

As in the previous year, NPC continued to account the biggest share of the Business Income at P175.13 billion largely from Sales Revenue of P175.12 billion. NPC’s sales revenue grew by P9.67 billion from P165.44 billion in 2005. This should have been higher if not for the three super typhoons – Milenyo, Senyang and Reming – which hit the country in 2006, impeding more sales due to toppled towers and power transmission lines.

The SSS which ranked second, earned business

income from Members’ Contributions and Other Business Income amounting to P52.54 billion and P12.11 billion, respectively. Other Business Income of the SSS consists of income from loans and receivable – P4.23 billion, financial assets held to maturity – P3.85 billion, available for sale financial assets – P1.72 billion, current investments – P1.3 billion and others – P1.01 billion.

The Social Insurance Fund (SIF) administered by the GSIS generated business income from

Members’ Contributions and Other Business Income totaling P54.36 billion. Other Business Income includes interests on loans granted to members – P15.28 billion and interest on premium arrearages – P0.48 billion.

The BSP ranked fourth with Other Business Income of P52.41 billion in 2006 which increased by

P9.45 billion over P 42.96 billion in 2005. Income from Waterworks System more than tripled with P11.10 billion or an increase of P7.92

billion from P3.17 billion in 2005 due to the inclusion of 272 Water Districts’ income this year which was not incorporated in the previous year’s report because of low submission rate. For fiscal year 2006, Water Districts generated P7.80 billion of income under this category.

1.2 Gains/Premiums – P101.15 billion

Gains/Premiums reached P101.15 billion, showing a decline of P7.89 billion or 7.24 percent, based on P109.04 billion in 2005. Gain on Foreign Exchange accounted for three fourths or P75.43 billion while Gain on Sale of Securities/Investments totaled P12.38 billion.

Table IV-36 Major Components of Gains/Premiums (in million pesos)

Increase(Decrease) Particulars

2006

2005 Amount Percent

Gain/Loss on Foreign Exchange 75,434.43 102,126.85 (26,692.42) (26.14) Gain/Loss on Sale of

Securities/Investments

12,375.15

4,379.78

7,995.37

182.55 Gain/Loss on Sale of Disposed Assets 7,002.99 480.89 6,522.11 1,356.26 Unrealized Gain (Loss) 5,782.83 806.42 4,976.40 617.10 Gain/Loss on Revaluation 427.66 1,169.59 (741.93) (63.44) Realized Gain (Loss) 125.32 75.91 49.41 65.09 Total 101,148.39 109,039.45 (7,891.06) (7.24) Difference between totals and sum of components is due to rounding off.

Table IV-36 summarizes the major components of Gains/Premiums account.

44

Of the total Gain/Loss on Foreign Exchange, the NPC generated P68.74 billion or 91.13 percent resulting from the appreciation of peso upon revaluation of outstanding loans used for operating plants and working capital loans.

Majority of Gain/Loss on Sale of Securities/Investments or 90.14 percent was reported by the

following: PNOC with P6.14 billion, GSIS-SIF – P3.15 billion and DBP – P1.87 billion. PNOC realized gain when its investments in PNOC-EDC (three billion shares of stock with par value of P1) were included in the six billion shares sold to the public at P3.20 per share. The gain of P6.14 billion was net of cost and other selling expenses.

Substantial amount of Gain/Loss on Sale of Disposed Assets or P6.37 billion was reported by

NPC brought about by the gain on sale of Pantabangan HEPP. Unrealized gain of P4.83 billion reported by the GSIS-SIF was the difference between the cost

and the fair value of the stock investments held for trading initially recorded at cost and revalued at fair value at balance sheet date.

1.3 Other Income – P58.48 billion

Other Income consists mainly of Interest Income, Miscellaneous Income, Dividend Income and Insurance Income. Interest Income accounted for P30.54 billion and Miscellaneous Income with P22.48 billion while Dividend Income and Insurance Income contributed P3.58 billion and P1.28 billion, respectively.

Table IV-37 GOCCs with Substantial Amount of Other Income

(in million pesos) GOCC Amount GOCC Amount

GSIS-SIF 14,906.89 OWWA 2,062.61 NPC 6,669.58 LBP 1,818.96 PHIC 5,624.30 LWUA 1,773.83 HDMF 4,450.62 NHMFC 1,558.92 BSP 3,381.50 GSIS - AF 1,356.76 PNOC 2,977.01 DBP 1,225.28 PAGCOR 2,908.19 NFA 1,131.53

The GOCCs that reported substantial amount of Other Income are shown in Table IV-37. Of the total Other Income, P14.91 billion earned by the GSIS-SIF was composed of Interest

Income – P10.43 billion, Miscellaneous Income – P3.91 billion and Dividend Income – P0.56 billion. Interest Income was generated mainly from investments on ROP notes, bonds and bills amounting to P10.36 billion.

1.4 Service Income – P21.09 billion

Service Income rose to P21.09 billion, up by P7.21 billion or 51.90 percent from the previous

year’s P13.88 billion. Service Income consists principally of earnings from Other Service Income of P16.33 billion,

Toll and Terminal Fees – P3.79 billion and Processing Fees – P0.73 billion. Other Service Income went up by P5.95 billion or 57.40 percent in 2006 compared to last year’s P10.37 billion. On the other hand, Toll and Terminal Fees increased slightly by P0.59 billion.

Of the total Other Service Income, P12.03 billion or 73.68 percent was generated by the

following: PEZA with P6.36 billion, PPC – P3.50 billion, QUEDANCOR – P1.11 billion and NIA – P1.06 billion. The remaining 26.32 percent was shared by various GOCCs with less than P1 billion each.

45

The income of MIAA from Toll and Terminal Fees amounted to P1.97 billion representing 52.13 percent of the total, up by P0.51 billion or 34.92 percent.

1.5 Permits and Licenses – P726.32 million

Permits and Licenses issued by GOCCs went up by P150.56 million or 26.15 percent from last year’s amount of P575.76 million.

Table IV-38 Composition of Permits and Licenses


Particulars

2006

2005 Amount Percent Permit Fees 288.55 213.86 74.69 34.92 Other Permits and Licenses 186.56 186.28 0.28 0.15 Registration Fees 105.75 97.57 8.17 8.38 Franchising and Licensing Fees 97.36 28.58 68.78 240.62 Fishery Rental Fees 36.04 37.49 (1.45) (3.87) Fines and Penalties – Permits and Licenses

12.06 11.97 0.09 0.78

Total 726.32 575.76 150.56 26.15 Difference between totals and sum of components is due to rounding off.

Composition of Permits and Licenses is shown in Table IV-38.

Of the total Permits and Licenses, the PCA recorded the highest earnings from this type of

income amounting to P157.03 million followed by SRA with P122.14 million, NFA – P98.29 million, LLDA – P81.16 million, CEZA – P79.04 million and PEZA – P76.63 million.

2.0 Subsidy Income – P13. 52 billion

Some GOCCs received subsidy from the NG, other GOCCs and subsidiaries/affiliates to sustain their operations and/or finance the implementation of programs and projects pertaining to food security and stabilization, housing, electrification, transportation, etc.

Table IV-39 GOCCs that Received Substantial Amount

of Subsidy from the NG (in million pesos)

GOCC Amount Purpose NFA 3,911.01 Tax subsidy for customs duties

900.00 Food security and stabilization programs

4,811.01 Total NHA 1,523.00 Various resettlement projects 500.00 Northrail/Southrail Linkage Project 500.00 Northrail Resettlement Project 2,523.00 Total NEA 549.00 Calamity Grant for release to electric cooperatives 500.00 Conversion of interest on NG advances 500.00 Regular subsidy 36.26 Priority development program 1,585.26 Total PPC 1,333.80 Tax subsidy to cover payment of Value Added Tax on domestic

postal services for the years 1999 to 2005 NHMFC 1,000.00 Implementation of the Community Mortgage Program

46

Table IV-39 shows GOCCs that received substantial amount of subsidy. For complete list of GOCCs that received subsidy from NG, refer to Schedule 3, Volume II-B.

3.0 Expenses – P546.73 billion Chart IV-7 Expenses by Class (in million pesos)

The aggregate expenses reported by government corporations reached P546.73 billion, up by P29.08 billion or 5.62 percent from last year’s P517.65 billion. This year’s expenses are for Personal Services – P51.30 billion or 9.38 percent, Maintenance and Other Operating Expenses – P435.23 billion or 79.61 percent and Financial Expenses – P60.20 billion or 11.01 percent. Chart IV-7 presents expenses by class.

60.2051.30

435.23

PS MOOE FE

3.1 Personal Services – P51.30 billion Personal Services (PS) for the year aggregated to P51.30 billion, exhibiting an increase of

P3.12 billion or 6.48 percent than last year’s P48.18 billion. Among the components, the biggest outlay was for Salaries and Wages – P27.08 billion or 52.78 percent of the total; followed by Other Compensation – P11.36 billion or 22.15 percent, Other Personnel Benefits – P9.31 billion or 18.14 percent and Personnel Benefits Contribution – P3.55 billion or 6.93 percent.

Table IV-39 Top Ten GOCCs With Huge

Expenses for Personal Services (in million pesos)

Increase (Decrease) Rank GOCC 2006 2005

Amount Percent

1 PAGCOR 5,556.92 5,224.53 332.39 6.36

2 BSP 5,310.79 6,151.21 (840.42) (13.66)

3 LBP 5,186.82 5,144.23 42.59 0.83

4 SSS 4,152.77 3,964.58 188.19 4.75

5 GSIS-SIF 3,639.57 3,388.23 251.35 7.42

6 NPC 3,486.27 3,613.85 (127.58) (3.53)

7 DBP 2,977.26 3,000.07 (22.80) (0.76)

8 PPC 2,553.07 2,547.59 5.47 0.21

9 WDs 2,514.63 - - -

10 HDMF 1,474.75 1,217.44 257.31 21.14

Table IV-39 shows the top ten GOCCs that incurred huge expenses for Personal Services aggregating to P36.85 billion which is equivalent to 71.84 percent of the total. The remaining P14.45 billion or 28.16 percent was shared by the remaining GOCCs. Except for the ranking, the same corporations are on the top ten in this category last year. BSP’s PS dropped by 13.66 percent brought about by the decrease of 211 personnel this year, from 5,047 to 4,836.

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3.2 Maintenance and Other Operating Expenses – P435.23 billion

The total Maintenance and Other Operating Expenses (MOOE) for the year went up to P435.23 billion, higher by P27.40 billion or 6.72 percent than last year’s P407.83 billion. Other Maintenance and Operating Expenses was the highest among the components with P151.70 billion.

Table IV-40 Maintenance and Other Operating Expenses

by Group of Expenses Amount (in million pesos)

Account 2006 2005 Increase (Decrease)

Other Maintenance and Operating Expenses

151,696.05 149,650.04 2,046.01

Member's Benefits 99,896.62 94,891.60 5,005.02 Cost of Goods Sold 45,038.85 48,164.60 (3,125.75) Interest Expenses 31,302.52 22,045.02 9,257.50 Depreciation 28,671.90 25,268.55 3,403.36 Bad Debts 11,675.33 10,543.31 1,132.03 Taxes, Insurance Premiums and Other Fees 9,994.86 9,371.67 623.20 Utility Expenses 9,651.57 7,737.33 1,914.23 Interest on Conventional Deposits 8,837.48 7,878.36 959.12 Confidential, Intelligence, Extraordinary and

Miscellaneous Expenses

7,089.92 7,021.13 68.79 Professional Services 5,903.67 4,664.81 1,238.87 Supplies and Materials Expenses 4,532.92 3,403.25 1,129.67 Rent Expenses 4,014.52 3,976.36 38.16 Repairs and Maintenance 3,331.77 2,036.02 1,295.75 Subsidies and Donations 2,424.57 1,263.20 1,161.37 Claims and Losses Paid 2,098.25 1,988.55 109.70 Advertising Expenses 1,267.26 1,068.33 198.93 Transportation and Delivery Expenses 1,261.69 1,374.24 (112.55) Amortization Expenses 1,125.27 810.36 314.91 Traveling Expenses 1,097.05 894.98 202.07 Rewards and Other Claims 1,021.44 1,021.48 (0.04) Communication Expenses 993.02 922.36 70.66 Training and Scholarship Expenses 441.60 349.11 92.50 Depletion 437.29 125.60 311.68 Representation Expenses 348.57 258.75 89.82 Foreclosure and Litigation Expenses 316.16 448.51 (132.35) Printing and Binding Expenses 315.52 256.97 58.55 Storage Expenses 189.39 141.90 47.49 Insurance Benefits 90.39 76.86 13.53 Discounts 88.71 128.08 (39.37) Membership Dues and Contributions to

Organizations

36.47 24.58 11.89 Subscription Expenses 16.47 19.33 (2.85) Survey Expenses 9.05 2.45 6.59 Awards and Indemnities 8.61 5.84 2.77 Sales Discounts 6.11 0.00 6.11 Sales Returns and Allowances 0.01 0.00 0.01 Total 435,230.88 407,833.52 27,397.37

48

The major expense accounts under MOOE are shown in Table IV-40.

3.2.1 Other Maintenance and Operating Expenses - P151.70 billion

At P151.70 billion, Other Maintenance and Operating Expenses was 34.85 percent of the total MOOE. This account includes expenses which are not classified in specific accounts such as cost for printing and minting of peso bills and coins, losses on investments and on foreign exchange, provision for impairment of investments, impairment losses on loans and advances, equity share in net loss of subsidiary and others.

Table IV-41 Top Ten GOCCs with Significant Amount of Other Maintenance and Operating Expenses

(in million pesos) Increase/ (Decrease) GOCC 2006 2005 Amount Percent

NPC 117,229.86 120,878.24 (3,648.39) (3.02) CB-BOL 14,474.73 3,365.80 11,108.93 330.05 BSP 2,706.43 3,715.15 (1,008.73) (27.15) DBP 2,703.32 2,566.89 136.43 5.32 GSIS-SIF 2,626.65 671.88 1,954.76 290.94 GSIS-AF 2,298.37 1,972.02 326.36 16.55 PAGCOR 1,946.88 1,384.86 562.02 40.58 PNCC 1,345.69 2,433.72 (1,088.03) (44.71) HDMF 1,161.83 958.20 203.63 21.25 SSS 353.65 266.18 87.48 32.86

Table IV-41 shows the top ten GOCCs with significant Other MOOE. Topping the list of GOCCs which incurred huge Other MOOE are NPC – P117.23 billion or 77.28 percent, which includes expenses for decommissioned plants, CB-BOL – P14.47 billion or 9.54 percent, for losses on foreign exchange fluctuations, BSP - P2.71 billion for currency and gold operation expenses and currency printing and minting costs, DBP – P2.70 billion for management and other operating expenses, GSIS-SIF – P2.63 billion for losses on foreign exchange, GSIS-AF – P2.30 billion for losses on foreign exchange and on investments and for payment to GSIS-SIF for administration and marketing commissions, PAGCOR – P1.95 billion, PNCC – P1.34 billion, HDMF – P1.16 billion for expenses directly attributable to its lending operations and SSS – P0.35 billion. The combined total for these GOCCs is P146.85 billion constituting 97.14 percent of the total Other Maintenance and Operating Expenses.

3.2.2 Members’ Benefits – P99.90 billion

The second highest MOOE incurred by GOCCs are for Members’ Benefits which reached P99.90 billion or 22.95 percent of MOOE. This expense item pertains to social security benefits which include retirement, disability, maternity, sickness, other medical benefits, and death and funeral grants. SSS reported the biggest amount with P52.12 billion or 52.18 percent of the total, registering an increase of P5.85 billion or 12.65 percent over last year’s P46.27 billion. GSIS-SIF followed with P30.57 billion or 30.60 percent, recording a decrease of P0.54 billion or 1.72 percent from last year’s P31.11 billion. PHIC reported P17.20 billion or 17.22 percent, also showing a decrease of P0.31 billion or 1.77 percent compared to P17.51 billion of the previous year.

3.2.3 Cost of Goods Sold – P45.04 billion

Cost of Goods Sold at P45.04 billion account for 10.35 percent of the total MOOE, showing a decline of P3.11 billion or 6.46 percent.

49

Table IV-42 GOCCs that Incurred Significant Amount of Cost of Goods Sold

(in million pesos) Increase (Decrease)

GOCC

2006

2005 Amount Percent NFA 36,239.54 39,607.55 (3,368.01) (8.50) PTA 6,686.49 6,469.11 217.38 3.36 PNOC 1,489.84 1,625.38 (135.54) (8.34) PITC 253.73 200.67 53.06 26..44 FSC 181.56 99.46 82.10 82.55 NFC 87.17 78.92 8.25 10.46 PNCC-TCPC 44.30 31.45 12.85 40.85 PITC-PHARMA 21.18 - 21.18 - PITAHC 12.72 13.14 (0.42) (3.17) ZNAC 11.32 22.29 (10.97 (49.22)

The GOCCs listed in Table IV-42 incurred significant amounts for this group of account which aggregated to P45.03 billion or 99.98 percent of the total Cost of Goods Sold. NFA topped the list with P36.24 billion or 80.46 percent of the total P45.04 billion, particularly for the purchase of local and imported grains, sugar and other non-grains commodities. PTA ranked second with P6.69 billion or 14.85 percent, for operating and managing ten entities and fourteen field offices consisting of duty free shops, hotels, restaurants, golf courses and other tourist facilities. PNOC with P1.49 billion or 3.31 percent spent for power generation.

3.2.4 Interest Expense – P31.30 billion

Interest Expense classified as MOOE pertains to payments of interests by government banks related to their regular function as banking institutions, while those associated with borrowings are classified as Financial Expenses in accordance with the NGAS Chart of Accounts. Government banks, GSIS and SSS are exempted from the use of such Chart of Accounts pursuant to COA Circular No. 2004-002 dated April 29, 2004. For fiscal year 2006 GOCCs’ Interest Expense totaled P31.30 billion or 7.19 percent of the aggregate MOOE. This was incurred by BSP alone as part of its mandated function concerning money, banking and credit and the responsibility of exercising supervision over banking institutions. Interest expense was incurred for foreign and local currency financial liabilities which include deposits of government, banks and other financial institutions, on short term deposits, for the allocation of IMF special drawing rights and for securities sold under agreements to repurchase.

3.2.5 Depreciation – P28.67 billion

Depreciation for fiscal year 2006 amounted to P28.67 billion constituting 6.59 percent of the total MOOE. This year’s level was higher by P3.40 billion or 13.47 percent compared to last year’s P25.27 billion. Among the GOCCs that recorded substantial depreciation expenses for the year, almost 60 percent or P16.95 billion was reported by NPC. Substantial amount was also recorded by the following: HDMF – P1.91 billion, MWSS – P1.62 billion, LBP – P1.49 billion and MIAA – P0.92 billion.

50

3.2.6 Bad Debts Expenses – P11.68 billion

Bad Debts Expenses recorded by GOCCs during the year amounted to P11.68 billion. There was an increase of P1.13 billion or 10.74 percent compared to last year’s P10.54 billion. Of this amount, P11.20 billion or 95.93 percent was reported by the GOCCs shown in Table IV-43.

Table IV-43 GOCCs that Recorded Significant Amount of Bad Debts Expenses


GOCC 2006 2005 Amount Percent PDIC 9,520.82 8,795.93 724.89 8.24 NPC 799.85 702.53 97.33 13.85 GSIS-AF 175.04 100.91 74.14 73.47 TLRC 150.48 144.15 6.32 4.39 QUEDANCOR 119.99 70.08 49.91 71.21 NIA 108.69 9.35 99.34 1062.29 LWUA 105.61 115.73 (10.12) (8.74) NDC 94.72 - 94.72 - PPA 73.94 14.62 59.32 405.71 PCIC 51.02 22.92 28.10 122.62

PDIC continued to be the number one GOCC with the biggest Bad Debts Expenses due

to the provision of insurance and financial assistance losses. NPC’s Bad Debts Expense which increased by 13.85 percent are specifically identified uncollectible accounts for the year.

3.2.7 Taxes, Insurance Premiums and Other Fees – P9.99 billion

Expenses for Taxes, Insurance Premiums and Other Fees reached P9.99 billion, an increase of P0.62 billion or 6.65 percent over last year’s P9.37 billion. This expense item is 2.30 percent of the total MOOE and ranked seventh among the highest expense this fiscal year.

GSIS-AF incurred the highest expense for this category at P2.91 billion or 29.10 percent,

mostly for insurance expenses. LBP came second with P1.52 billion or 15.24 percent incurred for percentage and income taxes and documentary stamp taxes. Income taxes include the corporate income tax and final withholding tax on gross interest income from government securities, deposits and other deposit substitutes.

The other GOCCs which incurred substantial amounts of taxes, insurance and other fees

are: BSP – P1.25 billion or 12.49 percent, NPC – P1.12 billion or 11.23 percent and PAGCOR – P1.03 billion or 10.27 percent.

3.2.8 Interest on Conventional Deposits – P8.84 billion

Expenses for interest on conventional deposits increased by P0.96 billion or 12.17 percent compared to last year’s P7.88 billion.

Interest on Conventional Deposits was incurred by the three government banks

associated with their banking operations. LBP incurred the biggest amount with P6.54 billion or 73.93 percent of the total, while DBP incurred P2.28 billion accounting for 25.84 percent and AIIBP’s was P0.02 billion or 0.23 percent

51

3.2.9 Utility Expenses – P9.65 billion

Utility Expenses increased this fiscal year by P1.91 billion or 24.74 percent from last year’s P7.74 billion

PEZA incurred P5.62 billion or 58.22 percent of the total utility expenses, for its

operations and managing four public economic zones, special economic zones and four PEZA-Customs Documentation Units.

The other GOCCs with substantial utility expenses with the corresponding percentages

to the total are the following: WDs – P0.93 billion or 9.67 percent, PAGCOR – P0.44 billion or 4.51 percent, MIAA – P0.39 billion or 4.03 percent, BSP – P0.21 billion or 2.22 percent, SSS – P0.15 billion or 1.51 percent, PTA – P0.14 billion or 1.47 percent, PPA and GSIS-SIF, each with – P0.14 billion or 1.44 percent and PFDA with P0.10 billion or 1.03 percent.. Total utility expenses of these agencies including PEZA amounted to P8.26 billion or 85.54 percent. The remaining 14.46 percent was reported by the remaining GOCCs.

3.2.10 Confidential, Intelligence, Extraordinary and Miscellaneous Expenses – P7.09 billion

This group of expenses registered an increase of P0.07 billion or 0.98 percent from P7.02 billion last year to P7.09 billion this year. The components are as follows: Miscellaneous Expenses – P6.63 billion or 93.46 percent, Extraordinary Expenses – P0.42 billion or 5.96 percent, Confidential Expenses – P0.04 billion or 0.56 percent and a negligible amount of P1.6 million as Intelligence Expenses representing 0.02 percent

Table IV-44 GOCCs with Significant Confidential,

Intelligence, Extraordinary and Miscellaneous Expenses (in million pesos)

Increase (Decrease) GOCCs 2006 2005 Amount Percent LBP 4,153.38 3,459.94 693.44 20.04 NPC 896.75 291.05 605.70 208.11 MIAA 351.34 782.58 (431.24) (55.10) PAGCOR 322.73 297.78 24.95 8.38 HDMF 281.71 232.26 49.44 21.29 PCSO 215.31 86.85 128.45 147.90 PPA 198.46 138.93 59.54 42.85 BSP 171.59 898.43 (726.84) (80.90) WDs 100.28 - 100.28 - GSIS-SIF 91.53 52.86 38.66 73.14

As shown in Table IV-44, LBP reported P4.15 billion or 58.58 percent of the total P7.09 billion. NPC followed with P0.90 billion posting a huge increase of P0.61 billion or 208.11 percent. This consists mainly of expenses for their decommissioned plants. The BSP reported a substantial decrease in the amount of P0.73 billion or 80.90 percent, from P0.90 billion in the previous year, which were incurred as other foreign currency expenses.

3.3 Financial Expenses – P60.20 billion

A big portion of the financial expenses was for Interests on Borrowings comprising P55.78 billion or 92.66 percent. The components include: Bank Charges – P2.23 billion or 3.71 percent, Other Financial Charges – P1.97 billion or 3.27 percent and Documentary Stamps Expense – P0.21 billion or 0.35 percent, the remaining 0.01 percent pertains to Commitment Fees and Debt Service Subsidy to GOCCs with a combined amount of P4.32 million.

52

Table IV-45 Top Ten GOCCs that Incurred Significant Financial Expenses


GOCC 2006 2005 Amount Percent NPC 22,576.53 22,340.87 235.66 1.05 BSP 9,551.72 12,415.06 (2,863.35) (23.06) DBP 5,896.88 5,734.78 162.10 2.83 NFA 4,688.81 3,779.52 909.29 24.06 PDIC 2,710.79 2,912.79 (202.00) (6.93) HDMF 1,796.69 1,946.89 (150.20) (7.72) LBP 1,337.08 1,310.93 26.16 2.00 CB-BOL 1,444.14 2,409.29 (965.15) (40.06) HGC 939.61 863.78 75.82 8.78 WDs 838.61 - 838.61 -

The top ten GOCCs with substantial financial expenses are shown in Table IV-45. The total of the ten GOCCs listed above is P51.78 billion representing 86.01 percent of the total financial expenses. NPC’s expense of P22.58 billion is equivalent to 37.50 percent of the total.

4.0 Share of the National Government on the Income of GOCCs - P12.60 billion For fiscal year 2006, the share of the National Government on the income of GOCCs amounted to

P12.60 billion showing a very minimal growth of P0.07 billion over last year’s P12.53 billion. This was contributed by PAGCOR – P11.98 billion and MIAA – P0.62 billion. PAGCOR’s remittance to the NG is consonant with the provision of Presidential Decree No. 1869 dated July 11, 1983 which requires the corporation to remit 50 percent of its aggregate earnings; while MIAA is required to remit 20 percent of its operating income based on actual cash collection net of income from utilities and terminal collections, pursuant to Section 3 of Executive Order No. 298 dated July 26, 1987.

53

STATEMENT OF CASH FLOWS

The Consolidated Statement of Cash Flows of GOCCs was prepared using the Direct Method approach. It provides information on the cash receipts and payments made on their Operating, Investing and Financing activities during the year.

Total cash inflows for the year totaled P1,622.32 billion, P8.68 billion lesser than last year’s

P1,630.99 billion, broken down as follows: Operating – P738.31 billion or 45.51 percent, Investing – P519.55 billion or 32.02 percent, and Financing – P364.46 billion or 22.47 percent. On the other hand, total cash outflows reached P1,400.80 billion, composed of Operating – P577.06 billion, Investing – P405.73 billion and Financing – P418.01 billion. Compared to previous year’s P1,525.87 billion, a decrease of P125.07 billion or 8.20 percent was registered.

Table IV-46 Summary of Statement of Cash Flows of the GOCCs

(in million pesos) Increase (Decrease) Particulars 2006 2005 Amount Percent

Cash Inflows Operating Investing Financing Less: Cash Outflows Operating Investing Financing Net Cash Provided by (Used In) Operating Investing Financing Effects of Exchange Rate Changes On Cash and Cash Equivalents Add: Cash and Cash Equivalents, Beginning of Year Cash and Cash Equivalents, End of Year

1,622,315.27 738,306.78 519,550.16 364,458.32

1,400,798.41 577,063.15 405,729.67 418,005.59

221,516.86 161,243.63 113,820.50 (53,547.27)

(25,098.14)

637,184.79

833,603.51

1,630,992.10 831,580.68 506,533.07 292,878.35

1,525,867.44 655,009.81 486,703.73 384,153.89 105,124.66 176,570.86 19,829.33

(91,275.54)

(45,730.60)

576,167.50

635,561.55

(8,676.83) (93,273.90)

13,017.10 71,579.97

(125,069.03) (77,946.66) (80,974.06)

33,851.70 116,392.20 (15,327.23)

93,991.16 37,728.27

20,632.46

61,017.29

198,041.95

(0.53) (11.22)

2.57 24.44 (8.20)

(11.90) (16.64)

8.81 110.72

(8.68) 474.00 (41.33)

(45.12)

10.59

31.16


Table IV-46 summarizes the Statement of Cash Flows of GOCCs. For fiscal year under review, the Consolidated Statement of Cash Flows showed P221.52 billion net

cash provided by the three activities, higher by P116.39 billion than in 2005. Chart IV-8 Net Cash Provided by Operating, Investing and

Financing Activities (in billion pesos)

161.24

113.82

(53.55)

-100.00

-50.00

0.00

50.00

100.00

150.00

200.00

176.57

19.83

(91.27)

2006 2005Investing FinancingOperating

54

Chart IV-8 shows the comparative consolidated net cash provided by Operating, Investing and

Financing Activities of GOCCs. Operating Activities provided net cash of P161.24 billion, 8.68 percent lesser than last year’s

P176.57 billion. On the other hand, net cash provided by Investing Activities increased by P93.99 billion or 474 percent which is mainly due to net increase in local currency liabilities of BSP. 1.0 Cash Flows from Operating Activities

Total cash inflows from Operating Activities registered P93.27 billion reduction as compared to last year’s P831.58 billion. Total cash outflows also went down by P77.95 billion, from P655.01 billion in 2005 to P577.06 billion.

1.1 Cash Inflows – P 738.31 billion

Cash inflows from Operating Activities were derived mostly from collections of operating

and other income, receivables, proceeds of loans, refunds of deposits and entrusted funds.

Table IV-47 Top Ten GOCCs with Substantial Cash Inflows Under Operating Activities

(in million pesos)

GOCC

Amount Percentage

Distribution NPC GSIS-SIF SSS LBP BSP DBP PNOC NFA PAGCOR PHIC

186,567.90 70,295.83 64,989.23 59,678.60

56,072.06 52,967.60 34,233.04

28,642.89 25,405.47

22,592.97

25.27 9.52

8.80 8.08 7.59 7.17 4.64 3.88 3.44 3.06

Table IV-47 shows the top GOCCs with substantial Cash Inflows under Operating

Activities.

NPC contributed the biggest inflows of P186.57 billion representing collections of income from power consumers – P184.18 billion, interest and dividend received – P1.15 billion and collections from receivables – P1.16 billion and refund of deposits – P0.08 billion.

GSIS-SIF, SSS and PHIC accounted for P70.30 billion, P64.99 billion and P22.59 billion,

respectively, which were derived from collections of members’ insurance premiums and/or contributions. LBP’s and DBP’s major sources of inflows were deposits from clients and interest income from loans granted to various borrowers.

1.2 Cash Outflows – P577.06 billion

Cash outflows from Operating Activities include, among others, cash payments of operating expenses, general and administrative expenses, increase in financial assets or securities held for trading and payments to members and beneficiaries of insurance/hospitalization claims. The total outflows registered an amount of P577.06 billion or 41.20 percent of the total cash outflows for the year.

55

Table IV-48 Top Ten GOCCs with Huge Cash Outflows

under Operating Activities (in million pesos)

GOCC

Amount

Percentage Distribution

NPC SSS LBP BSP DBP NFA GSIS-SIF PAGCOR PNOC PHIC

110,186.95 57,826.02 47,718.79 44,713.50 41,400.83 41,273.35 40,011.40 23,674.01 20,474.88 17,482.08

19.09 10.02 8.27 7.75 7.17 7.15 6.93 4.10 3.55 3.03

The top 10 corporations with huge cash outflows under Operating Activities are shown in

Table IV-48.

The NPC, ranked as number one, reported a significant cash outflows amounting to P110.19 billion for operating expenses and cost of purchased power while SSS, GSIS-SIF and PHIC registered a combined amount of P115.32 billion for payment of insurance and hospitalization claims and benefits of members and beneficiaries. LBP, BSP and DBP reported a total of P133.83 billion which was used for investments in financial assets and payment of interests.

2.0 Cash Flows from Investing Activities

During the year, the reported cash inflows from Investing Activities amounted to P519.55 billion, recording an increase of P13.02 billion or 2.57 percent compared to previous year while the total cash outflows reached P405.73 billion, 16.64 percent lesser from last year’s figure of P486.70 billion. These resulted to net cash used in these activities of P113.82 billion registering a significant increment of P93.99 billion. 2.1 Cash Inflows - P519.55 billion

Cash inflows from Investing Activities were sourced from proceeds from sale of

securities, maturing investments in financial securities and other transactions which affect investments in non-current assets. Cash inflows from these activities reached P519.55 billion or 32.03 percent of the total inflows.

Table IV-49 Top GOCCs with Substantial Cash Inflows

(in million pesos)

GOCC

Amount Percentage

Distribution BSP GSIS-SIF HDMF PDIC LBP GSIS - AF PHIC PNOC

171,969.76 110,838.95 104,634.67 38,283.32 23,860.28 17,816.05 15,995.58

11,120.39

33.10 21.33 20.14 7.37 4.59 3.43 3.08 2.14

56

Table IV-49 shows the top GOCCs with substantial cash inflows under Investing Activities.

Out of the total cash inflows, BSP recorded 33.10 percent or P171.97 billion, derived mainly from the collection of the required reserves from banks and non-banks with quasi-banking functions – P105.86 billion, sale of marketable securities – P40.73 billion, short-term deposits – P21.48 billion and sale of other foreign currency assets – P3.89 billion.

GSIS-SIF reported P110.84 billion inflows pertaining mostly to receipt on loan repayments – P39.46 billion and proceeds from sale/redemption/maturity of investments – P71.35 billion.

HDMF’s inflows of P104.63 billion represents receipt on loan repayments – P40.69

billion and proceeds from investment maturities – P63.94 billion while PDIC’s P38.28 billion was the proceeds from matured investments. LBP’s inflows of P23.86 billion came from proceeds from matured investments – P21.76 billion, disposal of property and equipment and investment property – P1.15 billion and cash dividends received and gain from investment securities – P0.95 billion. The sources of inflows of GSIS-AF totaling P17.82 billion were proceeds from sale/redemption/maturity of investments – P16.91 billion and receipt on policy loan repayments – P0.91 billion. PHIC received P16.00 billion from matured bonds and interest on investments..

2.2 Cash Outflows - P405.73 billion

Cash outflows from Investing Activities registered a decrease of P80.97 billion or 16.64 percent, from P486.70 billion in 2005 to P405.73 billion. The biggest component of cash outflow from these activities were acquisition/purchase of investments – P260.10 billion or 64.26 percent of the total and release of loans and advances – P87.82 billion or 21.65 percent. As to corporations, the top five corporations with substantial outflows were the following: GSIS-SIF – P116.93 billion, HDMF – P98.84 billion, PDIC – P49.38 billion, GSIS AF – P22.80 billion and BSP – P21.77 billion.

3.0 Cash Flows from Financing Activities

For fiscal year 2006, Financing Activities accounted for total cash inflows of P364.46 billion and outflows of P418.01 billion resulting to net cash balance of negative P53.55 billion.

The PDIC registered the biggest positive net cash of P14.64 billion having inflows of P16.15

billion from proceeds of borrowings and assessment collection and outflows of P1.51 billion for payments of loans and dividend to BSP and NG, respectively.

3.1 Cash Inflows - P364.46 billion

Cash Inflows from Financing Activities reached P364.46 billion sourced from the issuance of

circulating currency, proceeds from borrowings, issuance of stocks and flotation of bonds.

Table IV-50 GOCCs with Huge Cash Inflows (in million pesos)

GOCC

Amount

Percentage Distribution

BSP NPC NFA PDIC LBP HDMF PNOC

213,333.71 35,729.06

17,246.74 16,150.74 16,030.52

13,745.29 13,288.88

58.53 9.80 4.73 4.43

4.40 3.77 3.65

57

Table IV-50 shows the GOCCs with huge Cash Inflows under Financing Activities. BSP topped the list of GOCCs with significant inflows of P213.33 billion or 58.53 percent

of the total which came from the issuance of circulating currency – P206.51 billion and recoveries from prior period expenses/items written-off – P6.82 billion. Following in the second slot is the NPC with P35.73 billion or 9.80 percent of which P34.91 billion was proceeds from bond floatation. NFA’s collections of P17.25 billion were proceeds from borrowings while LBP’s P16.03 billion were receipts from other charges to capital P8.68 billion and unsecured subordinated debt – P7.35 billion.

3.2 Cash Outflows – P418.01 billion

Cash outflows of P418.01 billion consist mainly of withdrawal of circulating currency – P158.58 billion, payment of loans and bonds payable – P146.30 billion, payment of interest, commitment fees and other financial charges – P20.72 billion and payments of dividends to NG - P12.77 billion. BSP registered the biggest financing outflow of P258.31 billion or 61.80 percent for withdrawal of circulating currency and payment for loans and bonds payable. Other GOCCs with substantial outflows are as follows: NPC – P92.36 billion, PNOC – P19.80 billion, HGC – P8.96 billion, HDMF – P8.03 billion, LBP – P5.24 billion and NFA – P4.45 billion.

4.0 Effects of Foreign Exchange Rate Fluctuations – ( P25.10 billion)

The Effects of Foreign Exchange Rate fluctuations on cash balances are included in the cash flows of GOCCs with foreign currency transactions amounting to a negative balance of P25.10 billion. The BSP contributed 96.97 percent or negative P24.34 billion.

5.0 Reconciliation of Cash and Cash Equivalents

For fiscal year 2006, the Consolidated Statement of Cash Flows showed total cash and cash equivalents of P833.60 billion while the Balance Sheet reflected P834.54 billion registering a difference of P0.94 billion

Table IV-51 Reconciliation of Cash and Cash Equivalents

(in million pesos) Particulars Amount

Per Consolidated Balance Sheet Cash 772,577.04 Cash Equivalents Investment in Treasury Bills 14,613.44 Other Short-Term Investments 15,333.02 Other Investments 30,447.19 Marketable Securities 1,328.87 Due from NGAs 157.80 Investment in Securities 82.58 61,962.90

Total 834,539.94 Per Consolidated Statement of Cash

Flows

833,603.51

Difference 936.43

Table IV-51 shows the Reconciliation of Cash and Cash Equivalents between the Consolidated Balance Sheet and the Consolidated Statement of Cash Flows.

The difference of P0.94 billion was due to the non submission of the Statement of Cash Flows of some GOCCs.

58

Table IV- 52 GOCCs Which Did Not Submit Statement of Cash Flows

(in million pesos)

GOCC Cash Balance Per Balance Sheet

MGC 393.36 PNCC 231.40 GSIS-FB 59.86 FCIE 8.51 PCEC 0.82 NSLC 0.16 NTFC 0.15 NSC 0.12 TABASCO 0.12 LISI 0.09 NPCTI Water Districts (12 without Statement Flow and 4 without Balance Sheet)

0.04

241.80

Total 936.43 Difference between totals and sum of components is due to rounding off.

Table IV-52 shows the list of GOCCs which did not submit Statement of Cash Flows.

59

List of Acronyms

Government-Owned and/or Controlled Corporations

Al-Amanah Islamic Investment Bank of the Philippines AAIIBPAlabang-Sto. Tomas Development, Inc. ASTDIAFP Retirement and Separation Benefits System AFP-RSBSBangko Sentral ng Pilipinas BSPBases Conversion Development Authority BCDABataan Technology Park, Incorporated BTPIBatangas Land Company, Incorporated BLCIBCDA Management and Holdings, Incorporated BCDAMHIBukidnon Forests, Incorporated BFICagayan Economic Zone Authority CEZACentral Bank - Board of Liquidators CB-BOLCebu Port Authority CPACenter for International Trade Expositions and Missions CITEMClark Development Corporation CDCCottage Industry Technology Center CITCCultural Center of the Philippines CCPDBP Data Center, Incorporated DDCIDBP Management Corporation DBP-MCDevelopment Academy of the Philippines DAPDevelopment Bank of the Philippines DBPEmployees' Compensation Commission ECCFirst Cavite Industrial Estate, Incorporated FCIEIFirst Centennial Clark Corporation FCCCFood Terminal, Incorporated FTIFreeport Service Corporation FSCGarments and Textile Export Board GTEBGovernment Service Insurance System GSISGSIS Administered Fund GSIS-AFGSIS Family Bank GSIS-FBGSIS Mutual Fund, Incorporated GSIS-MFIGSIS Social Insurance Fund GSIS-SIFGY Real Estate, Incorporated GYREIHome Development Mutual Fund HDMFHome Guaranty Corporation HGCHuman Settlements Development Corporation HSDCIndustrial Guarantee and Loan Fund IGLFJohn Hay Management Corporation JHMCKamayan Realty Corporation KRCKKK-PCA (Livelihood Corporation) KKK-PCALaguna Lake Development Authority LLDALand Bank Countryside Development Foundation, Incorporated LBCDFILand Bank of the Philippines LBPLand Bank Realty Development Corporation LBRDCLBP Insurance Brokerage, Incorporated LIBILBP Leasing Corporation LBPLCLight Rail Transit Authority LRTALocal Water Utilities Administration LWUALung Center of the Philippines LCPLuzon Integrated Services, Incorporated LINSIMactan-Cebu International Airport Authority MCIAA

Acronym

LIST OF ACRONYMS

60

Government-Owned and/or Controlled Corporations Acronym

LIST OF ACRONYMS

Manila Gas Corporation MGCManila International Airport Authority MIAAMarawi Resort Hotel, Incorporated MRHIMasaganang Sakahan, Incorporated MSIMatrix Realty Development Corporation MRDCMeat Packing Corporation of the Philippines MPCPMetropolitan Waterworks and Sewerage System MWSSNational Agri-Business Corporation NABCORNational Dairy Authority NDANational Development Company NDCNDC Public Infrastructure Corporation NDC-PICNDC Maritime Equity Corporation NDC-MECNational Electrification Administration NEANational Food Authority NFANational Home Mortgage Finance Corporation NHMFCNational Housing Authority NHANational Irrigation Administration NIANational Kidney and Transplant Institute NKTINational Power Corporation NPCNational Precision Cutting Tools, Incorporated NPCTINational Slipways Corporation NSCNational Stevedoring and Lighterage Corporation NSLCNational Tobacco Administration NTANational Trucking and Forwarding Corporation NTFCNatural Resources Development Corporation NRDCNayong Pilipino Foundation, Incorporated NPFINIA Consult, Incorporated NIAConNorth Luzon Railways Corporation NLRCNorthern Foods Corporation NFCOccupational Safety and Health Center OSHCOverseas Workers Welfare Administration OWWAPartido Development Administration PDAPEA Tollway Corporation PEATCPeople's Credit and Finance Corporation PCFCPeople's Television Network, Incorporated PTNIPhilippine Aerospace Development Corporation PADCPhilippine Agricultural Development and Commercial Corporation PADCCPhilippine Amusement and Gaming Corporation PAGCORPhilippine Centennial Expo '98 Corporation PCECPhilippine Center for Economic Development PCEDPhilippine Charity Sweepstakes Office PCSOPhilippine Children's Medical Center PCMCPhilippine Coconut Authority PCAPhilippine Commission on the Promotion and Development of Sports Scuba Diving PCPDSSDPhilippine Convention and Visitors Corporation PCVCPhilippine Crop Insurance Corporation PCICPhilippine Deposit Insurance Corporation PDICPhilippine Economic Zone Authority PEZAPhilippine Fisheries Development Authority PFDAPhilippine Forest Corporation PFCPhilippine Genetics, Incorporated PGI

61

Government-Owned and/or Controlled Corporations Acronym

LIST OF ACRONYMS

Philippine Health Insurance Corporation PHICPhilippine Heart Center PHCPhilippine Institute for Development Studies PIDSPhilippine Institute of Traditional and Alternative Health Care PITAHCPhilippine International Trading Corporation PITCPITC-Pharma, Incorporated PPIPhilippine Mining Development Corporation (formerly NRMDC) PMDCPhilippine National Oil Company PNOCPNOC Coal Corporation PNOC-CCPNOC Development and Management Corporation PNOC-DMCPNOC Energy Development Corporation PNOC-EDCPNOC Exploration Corporation PNOC-ECPNOC Malampaya Production Corporation PNOC-MPCPNOC Petrochecmical Development Corporation PNOC-PDCPNOC Shipping and Transport Corporation PNOC-STCPhilippine National Construction Corporation PNCCPNCC Skyway Corporation PNCC-SCPNCC Traffic Control Products Corporation PNCC-TCPCPhilippine National Railways PNRPhilippine Ports Authority PPAPhilippine Postal Corporation PPCPhilippine Postal Savings Bank PPSBPhilippine Reclamation Authority (formerly PEA) PRAPhilippine Retirement Authority PRAPhilippine Rice Research Institute PRRIPhilippine Sugar Corporation PHILSUCORPhilippine Tourism Authority PTAPHIVIDEC Industrial Authority PIASocial Housing Finance Corporation SHFCPinagkaisa Realty Corporation PRCPoro Point Management Corporation PPMCPower Sector Assets and Liabilities Management Corporation PSALM CorpQuedan and Rural Credit Guarantee Corporation QUEDANCORResources and Investments Corporate House, Incorporated RICHIRetirement and Separation Benefits System Enterprise, Incorporated RSBSEIRetirement and Separation Benefits System Land, Incorporated RSBSLIRPN - 9 RPN - 9Small Business Guarantee and Finance Corporation SBGFCSocial Security System SSSSouthern Utility Management and Services, Incorporated SUMSISubic Bay Metropolitan Authority SBMASugar Regulatory Administration SRATacoma Bay Shipping Company, Incorporated TBSCITechnology and Livelihood Resource Center TLRCTrade and Investment Development Corporation of the Philippines TIDCORPWater District WDZamboanga City Special Economic Zone Authority ZCSEZAZNAC Rubber Estate Corporation ZREC

62

COMMISSION ON AUDIT KEY OFFICIALS

and

GOVERNMENT ACCOUNTANCY and FINANCIAL MANAGEMENT

INFORMATION SYSTEM (GAFMIS) SECTOR

OFFICIALS and STAFF

* As of submission date

COMMISSION ON AUDIT

KEY OFFICIALS

COMMISSION PROPER

GUILLERMO N. CARAGUE Chairman

JUANITO G. ESPINO, JR.

Commissioner

REYNALDO A. VILLAR

Commissioner

Assistant Commissioners

LOURDES M. CASTILLO

GLORIA S. CORNEJO

ARCADIO B. CUENCO, JR.

LOURDES B. DIMAPILIS

EMMA M. ESPINA

JAIME P. NARANJO

CARMELA S. PEREZ, DBA

ROGELIO V. URBANOZO

ELIZABETH S. ZOSA

KEY OFFICIALS CORPORATE GOVERNMENT SECTOR

JAIME P. NARANJO Assistant Commissioner

RODULFO J. ARIESGA

Director IV Cluster I – Financial A

JOSE R. ROCHA, Jr.

Director IV Cluster II – Financial B

ROLAND A. REY Director IV

Cluster III – Public Utilities

MA. CRISTINA D. DIMAGIBA Director IV

Cluster IV – Industrial and Area Development and Regulatory

TITO S. NABUA Director IV

Cluster V – Agricultural, Trading and Promotional

ROSEMARIE L. LERIO Director IV

Cluster VI – Social, Cultural and Scientific

KEY OFFICIALS CORPORATE GOVERNMENT SECTOR

ANGELINA B. VILLANUEVA Director III

Cluster I – Financial A

TERESITA B. MENDOZA Director III

Cluster II – Financial B

LITA E. DIEZ Director III

Cluster III – Public Utilities

AIDA MARIA A. TALAVERA Director III

Cluster V – Agricultural, Trading and Promotional

DIVINIA M. ALAGON

Director III Cluster VI – Social, Cultural and Scientific

Elizabeth D. Ducay - State Auditor I Lolita N. Silva - Utility Worker II

Lualhati F. Azuero - State Auditor IVDinah B. Pagao - Admin. Off. III

Teresita P. Reyes - State Auditor IEditha C. Ramirez - Secretary II

Maria C. Lainez - Process ServerRufa L. Gunabe - Process Server

Roberto L. Palita, Jr. - MessengerSalvador Dayna, Sr. - Chauffer I

Estela C. dela Paz - State Auditor V Juanita B. Abe - State Auditor V Salome L. Llaguno - State Auditor IV Thelma F. Panganiban - State Auditor IV

Susana M. de Guzman - State Auditor II Annabella P. Gabiran - State Auditor IIIAngelita C. Lomentigar - State Auditor II Aurea J. Elmido - State Auditor II

Joven L. Recto - State Auditing Examiner I Guillermo S. Malabanan - State Auditor II

Corazon A. Saldivar - State Auditor V Emelita V. Cayetano - State Auditor IVFidela S. Gonzaga - State Auditor IV (Officer-in-Charge)Agustina Q. Baseo - State Auditor IV Marilyn C. Bibat - State Auditor IV

Amelia F. Guevarra - State Auditor III Rosa Maria V. Santiago - State Auditor IIIMa. Lourdes D. Marayan - State Auditor II Mercedes D. Empleo - State Auditor II Zenaida P. Balmes - State Auditor II Josefino O. Lainez - State Auditor II

Hazel M. Sarmiento - State Auditor I Ma. Belen L. Estuaria - State Auditor II Cristina C. Gungon - State Auditor I

OFFICE OF THE ASSISTANT COMMISSIONER

OFFICE OF THE DIRECTOR

GOVERNMENT ACCOUNTANCY

Director IV

Director III

NATIONAL I NATIONAL II

MARIETTA M. LORENZO

CECILIA B. CAMON

GOVERNMENT ACCOUNTANCY and FINANCIAL MANAGEMENT INFORMATION SYSTEM SECTOR

CARMELA S. PEREZ, DBAAssistant Commissioner

CORPORATE I CORPORATE II

Elena B. Monteza - State Auditor V Editha M. Ramirez - State Auditor V Esperanza V. Oreas - State Auditor IV Anicia H. Guillermo - State Auditor IV

Lydia L. Asiado - State Auditor III Susan C. Vega - State Auditor IIImelda G. Celso - State Auditor III Avelina G. Marquez - State Auditor II

Elmer M. Grande - State Auditor III Maribel G. Cablayan - State Auditor I Lorelei L. Datu - State Auditor II Narcisa S. dela Rosa - State Auditor I

Aida A. Donasco - State Auditor II

Annabelle A. Puserio - State Auditor IV (Officer-in-Charge)

Rudy M. Villareña - State Auditor IVCarmen Z. Zafe - State Auditor IVRomeo C. Cruz - State Auditor IV

Ma. Francisca C. Medialdea - State Auditor IIJorgen Z. Fulleros - State Auditor II

Ma. Corazon D. Eguia - State Auditor IMary Beverly C. Flores - Clerk III

Marlon M. Lim - Executive Assistant IVLolita D. Layugan - State Auditor III

Vilma M. Sarino - State Auditor IIIDionelita R. E. Cabeltis - Executive Assistant III

Rodrigo L. Aro - Information Tech Off IMa. Fe B. Lim - Computer Programmer III

Cherry M. Doromal - Private Secretary IIOhnie Ezra E. Palencia - Private Secretary II

- SA II, Region I- SA V, Region II

Hector L Cortes - SA IV, CARRowena C. Pedroche - SA IV, Region III

Carlos R. Garcia - SA II, Region IVAlexander R. Adoremos - SA IV, Region V

Rey P. Cababasay - AO V, Region VIVictoria C. Quejada - SA V, Region VII

Anna Marie J. Bag-ao - ITS IV, Region VIIIArmi T.C. Kiap - SA III, Region IX

Luzminda N. Canios - RA, Region XFides Edeliza M. Doles - SA III, Region XI

Reynaldo T. Agan - Chief TAS, Region XIIMatthew Rey M. Magno - SA III, Region XIII

*All Acting Heads Navel U. Rangiris - SA II, ARMM

FINANCIAL MANAGEMENT INFORMATION SYSTEM

ACCOUNTING RESEARCH

REGIONAL GOVERNMENT ACCOUNTANCY and FMIS *

LOCAL I LOCAL II

Carmencita D. Tong-MallillinMa. Leonora G. Dacumos

Director III

ROSICAR E. ESCOBER

MARLON R. MARQUINA

Director IV

Documents

2006 Annual Financial Report Government-Owned and/or ......It is expected that the publication of this Annual Financial Report of Government-Owned and/or Controlled Corporations will