Explanation to Newspaper Article

September 25, 1998 PSE CIRCULAR FOR BROKERS NO. 2227-98 22 September 1998 PHILIPPINE STOCK EXCHANGE, INC . PSE Center, Exchange Road Ortigas Center, Pasig City RE : Explanation to Newspaper Article Gentlemen : We write in behalf of the VMC MANAGEMENT COMMITTEE (the "VMC Mancom") in relation to your fax message dated 18 September 1998 addressed to Ruben Agpalo of Victorias Milling Co., Inc. but received by the undersigned only on even date, requiring clarification/verification of the following news article captioned " Victorias Management Committee wants SEC to junk Dao Heng Bid " which was published in the 17 September 1998 issue of the Business World. dctai In compliance with the SEC Order dated 04 August 1998 directing Dao Heng Bank to file its Complaint-in-Intervention in SEC Case No. 07-97-5693, " In the Matter of the Petition for the Declaration of a State of Suspension of Payments, for the Approval of a Rehabilitation Plan, and the Appointment of a Management Committee by Victorias Milling Company, Inc ." (the "VMC Case") regarding Dao Heng Bank's claim under the Refined Sugar Order Delivery Receipts which were offered as collateral by North Negros Marketing Company, Inc., Dao Heng Bank then filed its Complaint-in-Intervention with the SEC on 17 August 1998. Consequently, the VMC Mancom filed a Motion to Dismiss with the SEC on 11 September 1998 basically interposing the following grounds: (a) Dao Heng Bank's Complaint-in-Intervention does not comply with Section 5, Rule 7 of the 1997 Rules of Civil Procedure; (b) Litis Pendentia; (c) The complaint fails to state a cause of action; (d) lack of jurisdiction over the case; (e) forum-shopping; and (f) condition precedent for filing the claim has not been complied with. We can only confirm the foregoing position taken by the VMC Mancom in its Motion to Dismiss but we are not in a position to confirm or deny the matters contained in the news article which appeared in the aforesaid issue of the Business World. Anent the items in the news article discussing alleged provisions in the Rehabilitation Plan, we can only confirm those which are consistent with VMC's Rehabilitation Plan dated 23 March 1998 and formally submitted with the SEC, a copy of which had already been furnished the Philippine Stock Exchange. We trust you find our foregoing explanation in compliance with your requirements. Very truly yours, (SGD.)SANTIAGO T. GABIONZA, JR. (SGD.)SENEN AGUSTIN S. DE SANTOS (SGD.)MARILOU S. DUMADAG