Delivery by Oil Companies and Refineries of Naptha and Liquified Petroleum Gas to Manila Gas Corporation

June 20, 1985

LETTER OF INSTRUCTIONS NO. 1468

WHEREAS, under Act 2278, the Manila Gas Corporation was granted a franchise for the construction, maintenance and operation of gas system for heat, lighting and power in the City of Manila and the Province of Rizal;

WHEREAS, Section 9 of said Act provides that: "The grantee shall annually on the fifth day of January of each year pay to the City of Manila and to the municipalities in the Province of Rizal in which gas is sold, two per centum of the gross receipt within said city and municipalities, respectively, during the preceding year. Said payment shall be in lieu of all taxes, insular, provincial and municipal, except taxes on the real estate, building, plant, machinery, and other personal property to the grantee";

WHEREAS, the franchise tax which Manila Gas is paying is in lieu of all other taxes, such as the specific tax;

WHEREAS, there is a need to effectuate and give meaning to the provisions of Act No. 2278 to preserve and maintain the financial stability of the Manila Gas Corporation;

WHEREAS, the issuance of this Letter of Instructions will directly benefit the public, as it will enable Manila Gas Corporation to reduce its selling price of city gas by about 6%;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the Constitution, do hereby order and direct that:

1. All oil companies and refineries are hereby allowed to deliver Naptha and Liquified Petroleum Gas to the Manila Gas Corporation for use in the latter's City gas operations, free of specific and ad valorem taxes: Provided, That Manila Gas Corporation is already the owner or processor of such products prior to or at the time of their removal from the place of production or bonded warehouses of the local refineries.

2. Ownership of oil products purchased by the Manila Gas Corporation from local oil companies and refineries shall be transferred to the Manila Gas Corporation upon approval of the purchase order by the oil companies and refineries, even before the oil products are actually withdrawn from the place of production or bonded warehouse of the oil companies and refineries.

3. All local oil companies and refineries are hereby allowed to co-mingled the tax-free oil products purchased by the Manila Gas Corporation with tax-paid oil products in their bulk depot or bonded warehouse.

4. This Letter of Instructions shall take effect immediately.

DONE in the City of Manila, this 20th day of June, in the year of Our Lord, Nineteen Hundred and Eighty-Five.