PSE Circular for Brokers No. 1227-98

June 3, 1998 PSE CIRCULAR FOR BROKERS NO. 1227-98 June 2, 1998 Philippine Stock Exchange, Inc. Disclosure Department Listings and Disclosure Group 4th Floor, Philippine Stock Exchange Center PSE Center, Exchange Road Ortigas Center, Pasig City Attention: Mr . Reynold P . Ong Vice President Gentlemen : We refer to your letter request for clarification in connection with the news article captioned "Gov't to audit 10 big corporate taxpayers" published in the May 29, 1998 issue of The Philippine Star. Please be advised that we have no knowledge of the reported intention of the Bureau of Internal Revenue (BIR) to audit San Miguel Corporation (SMC) for an alleged "sharp drop in their tax payments in the first quarter of 1998." At the outset, we wish to correct the misimpression that the tax payments referred to in the quoted article correspond to taxes for the first quarter of 1998. Income tax for the first quarter of 1998 fell due, and was paid, only yesterday, 1 June 1998. To clarify, income tax payment made by SMC during the first quarter of 1998 was for the remaining balance due for the year 1997, partial payments having been made at the end of each of the first three quarters. SMC's income tax for the first quarter of 1998, due and paid yesterday, 1 June 1998, amounted to P35.8 million compared to none for the first quarter of 1997. We confirm that SMC's income tax for the taxable year 1997 considerably decreased compared to income tax for the taxable year 1996. The decline in taxable income for 1997 resulted from a confluence of factors such as higher excise taxes, rollback in beer prices and higher cost of funds. However, total taxes paid by SMC for 1997 increased to P13.1 billion from P12.2 billion in 1996 mainly on account of the increase in excise taxes by P1.1 billion. We also take this opportunity to inform you that Atty. Emmanuel G. Javelosa officially retired from the Company effective 30 April 1998. We request that henceforth, all communications be addressed to me as follows: Atty . Francis H . Jardeleza Assistant Corporate Secretary 7/F San Miguel Corporation-Head Office Complex No. 40 San Miguel Avenue Mandaluyong City Fax No. (632) 632-3375 For your information. Thank you and best regards. Very truly yours, SAN MIGUEL CORPORATION By: (SGD.) FRANCIS H. JARDELEZA Senior Vice President, General Counsel and Assistant Corporate Secretary