PSE Circular for Brokers No. 2692-99

October 21, 1999 PSE CIRCULAR FOR BROKERS NO. 2692-99 PETRON WILL COOPERATE WITH THE OMBUDSMAN'S INVESTIGATION In connection with the decision of the Ombudsman to undertake a preliminary investigation of Petron's alleged illegal availment of tax credit certificates (TCCs), we wish to assure all concerned that we will fully cooperate in this undertaking. llcd We take our responsibilities as a corporate citizen seriously. We believe that Petron has always complied with tax regulations, paid the proper taxes at the proper time, and acted within the tax guidelines set by the Department of Finance (DOF), including those governing TCCs. In fact, Petron takes pride in being one of the country's biggest taxpayers, contributing around P8.3 billion to the National Treasury in the first half of 1999 alone and a total of more than P63 billion since 1995. Thus the issue regarding the anomalous issuance of TCCs and the assignment thereof to Petron is one that we regard with great concern. For many years, we have accepted TCCs, verified them, and applied them towards a part of our tax duty obligations in a procedure that was prescribed by the DOF. In accepting these TCCs, we perceived that we were serving both our customers and the Government; our customers because we were helping them utilize their TCCs as payment for their fuel needs; and the Government because we were helping it achieve its policy objective of encouraging exports and supporting local producers. Petron therefore believes that all the transactions in question are legitimate. It accepted and used these TCCs in good faith on the bases of two separate government approvals, namely the approval by the DOF and that by the Bureau of Internal Revenue. prcd As a publicly listed corporation, Petron owes it to its stakeholders and the public to conduct itself in the most professional and transparent manner. As such, we welcome the investigation of the Ombudsman. And we are certain that the investigation will show our scrupulous adherence to the rules and regulations governing the use of such financial instruments. At present, Petron is cooperating with the ongoing investigation being conducted by the DOF and by the Office of Senator Juan Ponce Enrile on similar matters. However, we strongly urge all concerned to exercise restraint in implicating certain Petron officials while the investigation is going on.