Mondragon International Phils., Inc.

November 16, 1998 PSE CIRCULAR FOR BROKERS NO. 2593-98 SUBJECT : Mondragon International Phils . , Inc . With reference to a news article published in the November 6, 1998 issue of the Philippine Star, which reported that the Philippine Amusement and Gaming Corporation (PAGCOR) rejected Mondragon Leisure and Resorts Corporation's offer for an amicable settlement of their dispute, Mondragon International Phils., Inc. ("MON"), in a letter dated November 12, 1998, informed the Exchange the status of its current differences with PAGCOR, hereunder quoted: ". . . It is common knowledge that PAGCOR and Mondragon have been having for quite some time now major disagreements on the proper interpretation of certain provisions of the July 25, 1995 Agreement between the two entities which constituted for Mondragon its authority from PAGCOR to conduct gaming operations at the Clark Special Economic Zone. Not even the decision dated November 14, 1997 of the Oversight Committee, which was organized by the then President Fidel V. Ramos which decision, in brief, stated that there was an 'an absence of any persuasive evidence that would indicate any willful and culpable violation by Mondragon of the provisions of its Agreement with PAGCOR' was able to lay to rest the contentions issued between the two parties. Early this year, on March 11, 1998, when it became obvious that PAGCOR was going to insist in its interpretations without passing the process of dispute resolution provided for in the Agreement, Mondragon filed a petition before the Regional Trial Court at Angeles City to compel PAGCOR to go to arbitration with Mondragon as provided for in the aforesaid Agreement. The trial court, in a measure to preserve the status quo pending final judgment on the petition, enjoined PAGCOR from closing the casino, and, among others, from otherwise considering any gambling in the casino illegal. That interlocutory order was raised by PAGCOR on May 7, 1998 to the Court of Appeals on a petition for certiorari and prohibition. The petition has been recently dismissed, but is now pending with the Court of Appeals, on motion for reconsideration by the losing PAGCOR. In the meantime, the period of time for PAGCOR to file its Answer to the petition filed by Mondragon expired without PAGCOR having filed its Answer. Hence, the presiding judge, on motion of Mondragon, declared PAGCOR in default. Expectedly, PAGCOR files its motion for reconsideration and that motion is still consideration. . . ." cdt For your information. (SGD.) JOSE LUIS U. YULO, JR. President and CEO