Atty. Marcelo N. Fernando

August 12, 1980 Atty. Marcelo N. Fernando Philippine Petroleum Corporation Lopez Bldg., Ortigas Ave. Pasig, Metro-Manila Dear Atty. Fernando: This has reference to your letter dated August 6, 1980 requesting confirmation on whether the approval by the Commission of the Certificate of Increase of Authorized Capital Stock of the Philippine Petroleum Corporation (PPC) from P120M to P200M retroacts or relates back to the approval of such increase in capital stock by the stockholders on June 26, 1980, thereby giving effect to or validating the approval of the stock dividend declaration by the same stockholders at the same meeting of June 26, 1980. prcd A perusal of records of subject corporation on file with this Commission shows that at a special meeting of its stockholders held on June 26, 1980, the increase in authorized capital stock of the corporation from P120M to P200M by way of 25% stock dividend payable on June 30, 1980 was approved by the required stockholders vote; that on June 17, 1980, a Registration Statement covering the entire P80M increase in authorized capital was filed with the SEC; that on July 9, 1980 the SEC issued the Certificate of Filing of Certificate of Increase in Authorized Capital Stock; and that on July 16, 1980, the SEC, acting on the Registration Statement, issued an Order registering the P80M worth of securities and permitting the sale thereof to the public. It appears from your said letter that the increase in authorized capital by way of stock dividends was made in conjunction with application of PPC filed with the BOI for an expansion of its lubricating oil refinery to increase its registered capacity, as well as for expansion reinvestment incentives covering the earned surplus transferred into capital account by way of the 25% stock dividend declaration. In so doing, PPC would like to avail itself of the tax deductible benefit as of June 30, 1980 which is the record date for payment of the stock dividend and also marks the end of the 1979-80 fiscal year. Based on the foregoing facts, this Commission hereby confirm that the approval of said Certificate of increase of Capital Stock by this Office on June 30, 1980 will relate back to the date of the approval of Increase of Capital Stock by the stockholders, thereby giving effect or validating the approval of the stock dividend declaration by the stockholders on June 26, 1980; and that the transfer in the books of account of PPC of P28,682,250 worth of stock dividends from surplus capital account was validly effected as of dividend payment date. cdll Please be advised accordingly. Very truly yours, For the Chairman: (SGD.) ROSARIO N. LOPEZ Director Corporate and Legal Department