Smc-Sec Form 17-A (04.17.2023) Part2-Final

ANNEX “B”
SAN MIGUEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021 and 2020
SAN MIGUEL CORPORATION AND
SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2022, 2021 and 2020
With Independent Auditors’ Report

R.G. Manabat & Co.
The KPMG Center, 6/F
6787 Ayala Avenue, Makati City
Philippines 1209
Telephone +63 (2) 8885 7000
Fax +63 (2) 8894 1985
Internet www.home.kpmg/ph
Email ph-inquiry@kpmg.com
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders

San Miguel Corporation
No. 40 San Miguel Avenue
Mandaluyong City
Opinion
We have audited the consolidated financial statements of San Miguel Corporation and
Subsidiaries (the Group), which comprise the consolidated statements of financial
position as at December 31, 2022 and 2021, and the consolidated statements of
income, consolidated statements of comprehensive income, consolidated statements of
changes in equity and consolidated statements of cash flows for each of the three years
in the period ended December 31, 2022, and notes, comprising significant accounting
policies and other explanatory information.
In our opinion, the accompanying consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Group as at December 31,
2022 and 2021, and its consolidated financial performance and its consolidated cash
flows for each of the three years in the period ended December 31, 2022, in accordance
with Philippine Financial Reporting Standards (PFRS).
Basis for Opinion
We conducted our audits in accordance with Philippine Standards on Auditing (PSA).

Our responsibilities under those standards are further described in the Auditors’
Responsibilities for the Audit of the Consolidated Financial Statements section of our
report. We are independent of the Group in accordance with the Code of Ethics for
Professional Accountants in the Philippines (Code of Ethics) together with the ethical
requirements that are relevant to our audits of the consolidated financial statements in
the Philippines, and we have fulfilled our other ethical responsibilities in accordance with
these requirements and the Code of Ethics. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion.
Firm Regulatory Registration & Accreditation:

PRC-BOA Registration No. 0003, valid until November 21, 2023
SEC Accreditation No. 0003-SEC, Group A, valid for five (5) years covering the audit of 2020 to 2024
financial statements (2019 financial statements are covered by SEC Accreditation No. 0004-FR-5)
IC Accreditation No. 0003-IC, Group A, valid for five (5) years covering the audit of 2020 to 2024
financial statements (2019 financial statements are covered by IC Circular Letter (CL) No. 2019-39, Transition clause)
BSP Accreditation No. 0003-BSP, Group A, valid for five (5) years covering the audit of 2020 to 2024
financial statements (2019 financial statements are covered by BSP Monetary Board Resolution No. 2161, Transition clause)
R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member firms
affiliated with KPMG International Limited, a private English company limited by guarantee
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the consolidated financial statements of the current period.
These matters were addressed in the context of our audit of the consolidated financial
statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Revenue recognition (P1,506,591 million).

Refer to Notes 6, 25 and 33 of the consolidated financial statements.
The risk
Revenue is an important measure used to evaluate the performance of the
Group and is generated from various sources. It is accounted for when control of
the goods or services is transferred to the customer over time or at a point in
time, at an amount that reflects the consideration to which the Group expects to
be entitled in exchange for those goods or services. While revenue recognition
and measurement are not complex for the Group, revenues may be
inappropriately recognized in order to improve business results and achieve
revenue growth in line with the objectives of the Group, thus increasing the risk
of material misstatement.
Our response
We performed the following audit procedures, among others, on revenue
recognition:
▪ We evaluated and assessed the revenue recognition policies in accordance

with PFRS 15, Revenue from Contracts with Customers.
▪ We evaluated and assessed the design and operating effectiveness of the

key controls over the revenue process.
▪ We involved our information technology specialists, as applicable, to assist in

the audit of automated controls, including interface controls among different
information technology applications for the evaluation of the design and
operating effectiveness of controls over the recording of revenue
transactions.
▪ We vouched, on a sampling basis, sales transactions to supporting

documentation such as sales invoices and delivery documents to ascertain
that the revenue recognition criteria is met.
▪ We tested, on a sampling basis, sales transactions for the last month of the
financial year and also the first month of the following financial year to
supporting documentation such as sales invoices and delivery documents to
assess whether these transactions are recorded in the appropriate financial
year.
▪ We tested, on a sampling basis, journal entries posted to revenue accounts

to identify unusual or irregular items.
▪ We tested, on a sampling basis, credit notes issued after the financial year, to
identify and assess any credit notes that relate to sales transactions
recognized during the financial year.
Valuation of Goodwill (P184,100 million).
Refer to Notes 4 and 17 of the consolidated financial statements.
The risk
The Group has embarked on a diversification strategy and has expanded into
new businesses through a number of acquisitions and investments resulting in
the recognition of a significant amount of goodwill. The goodwill of the acquired
businesses are reviewed annually to evaluate whether events or changes in
circumstances affect the recoverability of the Group's investments.
The methods used in the annual impairment test of goodwill are complex and
judgmental in nature, utilizing assumptions on future market and/or economic
conditions. The assumptions used include future cash flow projections, growth
rates, discount rates and sensitivity analyses, with a greater focus on more
recent trends and current market interest rates, and less reliance on historical
trends.
Our response
We performed the following audit procedures, among others, on the valuation of
goodwill:
▪ We assessed management’s determination of the recoverable amounts

based on fair value less costs to sell or a valuation using cash flow
projections (value in use) covering a five-year period based on long range
plans approved by management. Cash flows beyond the five-year period are
extrapolated using a constant growth rate determined for each individual
cash-generating unit.
▪ We tested the reasonableness of the discounted cash flow model by

comparing the Group’s assumptions to externally derived data such as
relevant industry information, projected economic growth, inflation and
discount rates. Our own valuation specialist assisted us in evaluating the
models used and assumptions applied.
▪ We performed our own sensitivity analyses on the key assumptions used in

the models.
Valuation of Other Intangible Assets (P249,321 million).
Refer to Notes 4, 5 and 17 of the consolidated financial statements.
The risk
The methods used in the annual impairment test for other intangible assets with
indefinite useful lives and tests of impairment indicators for other intangible
assets with finite useful lives are complex and judgmental in nature, utilizing
assumptions on future market and/or economic conditions. These assumptions
include future cash flow projections, growth rates, discount rates and sensitivity
analyses, with a greater focus on more recent trends and current market interest
rates, and less reliance on historical trends.
Our response
We performed the following audit procedures, among others, on the valuation of
other intangible assets:
▪ We evaluated and assessed management’s methodology in identifying any

potential indicators of impairment.
▪ We assessed management’s determination of the recoverable amounts

based on a valuation using cash flow projections (value in use) covering a
five-year period based on long range plans approved by management. Cash
flows beyond the five-year period are extrapolated using a constant growth
rate determined for each individual cash-generating unit.
▪ We tested the reasonableness of the discounted cash flow model by

comparing the Group’s assumptions to externally derived data such as
relevant industry information, projected economic growth, inflation and
discount rates. Our own valuation specialist assisted us in evaluating the
models used and assumptions applied.
▪ We performed our own sensitivity analyses on the key assumptions used in

the models.
Other Information
Management is responsible for the other information. The other information comprises
the information included in the SEC Form 20-IS (Definitive Information Statement),
SEC Form 17-A and Annual Report for the year ended December 31, 2022, but does not
include the consolidated financial statements and our auditors’ report thereon. The
SEC Form 20-IS, SEC Form 17-A and Annual Report for the year ended December 31,
2022 are expected to be made available to us after the date of this auditors’ report.
Our opinion on the consolidated financial statements does not cover the other
information and we will not express any form of assurance conclusion thereon.
In connection with our audits of the consolidated financial statements, our responsibility
is to read the other information identified above when it becomes available and, in doing
so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audits or otherwise
appears to be materially misstated.
Responsibilities of Management and Those Charged with Governance for the
Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated
financial statements in accordance with PFRS, and for such internal control as
management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, management is responsible for

assessing the Group’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless
management either intends to liquidate the Group or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial
reporting process.
Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with PSA will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with PSA, we exercise professional judgment and

maintain professional skepticism throughout the audit. We also:
▪ Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate
to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of
internal control.
▪ Obtain an understanding of internal control relevant to the audit in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose
of expressing an opinion on the effectiveness of the Group’s internal control.
▪ Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.
▪ Conclude on the appropriateness of management’s use of the going concern basis

of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Group’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditors’ report to the
related disclosures in the consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditors’ report. However, future events or
conditions may cause the Group to cease to continue as a going concern.
ANNEX “B-1”
Signature Page of KPMG

▪ Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial
statements represent the underlying transactions and events in a manner that
achieves fair presentation.
▪ Obtain sufficient appropriate audit evidence regarding the financial information of the
entities or business activities within the Group to express an opinion on the
consolidated financial statements. We are responsible for the direction, supervision
and performance of the group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with
them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, actions taken to eliminate threats or safeguards
applied.
From the matters communicated with those charged with governance, we determine
those matters that were of most significance in the audit of the consolidated financial
statements of the current period and are therefore the key audit matters. We describe
these matters in our auditors’ report unless law or regulation precludes public disclosure
about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing
so would reasonably be expected to outweigh the public interest benefits of such
communication.
The engagement partner on the audit resulting in this independent auditors’ report is
Darwin P. Virocel.
R.G. MANABAT & CO.
DARWIN P. VIROCEL
Partner
CPA License No. 0094495
SEC Accreditation No. 94495-SEC, Group A, valid for five (5) years
covering the audit of 2019 to 2023 financial statements
Tax Identification No. 912-535-864
BIR Accreditation No. 08-001987-031-2022
Issued June 27, 2022; valid until June 27, 2025
PTR No. MKT 9563853
Issued January 3, 2023 at Makati City
April 15, 2023

Makati City, Metro Manila
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, 2022 AND 2021
(In Millions)
Note 2022 2021

ASSETS
Current Assets
Cash and cash equivalents 4, 5, 7, 39, 40 P318,214 P300,030
Trade and other receivables - net 4, 5, 8, 33, 35, 39, 40 238,782 161,808
Inventories 4, 5, 9 190,193 141,209
Current portion of biological assets - net 4, 16 3,418 3,106
Prepaid expenses and other current
assets 4, 5, 10, 12, 23, 33, 34, 39, 40 133,691 108,689
Total Current Assets 884,298 714,842
Noncurrent Assets
Investments and advances - net 4, 5, 11, 23 32,523 55,002
Investments in equity and debt instruments 4, 12, 33, 39, 40 18,921 41,966
Property, plant and equipment - net 4, 5, 13, 34 708,192 567,609
Right-of-use assets - net 4, 5, 14, 34 112,067 163,364
Investment property - net 4, 15, 34 74,660 69,825
Biological assets - net of current portion 4, 16 2,671 2,244
Goodwill - net 4, 17 184,100 130,081
Other intangible assets - net 4, 5, 17 249,321 190,979
Deferred tax assets 4, 5, 23 22,554 17,141
Other noncurrent assets - net 4, 5, 18, 33, 34, 35, 39, 40 102,518 98,600
Total Noncurrent Assets 1,507,527 1,336,811
P2,391,825 P2,051,653
LIABILITIES AND EQUITY

Current Liabilities
Loans payable 19, 30, 33, 38, 39, 40 P267,704 P190,779
Accounts payable and accrued expenses 4, 5, 20, 33, 34, 35, 39, 40 227,126 194,579
Lease liabilities - current portion 4, 5, 30, 33, 34, 38, 39, 40 21,020 23,423
Income and other taxes payable 5, 23 37,694 23,102
Dividends payable 33, 36, 38 4,037 4,296
Current maturities of long-term
debt - net of debt issue costs 21, 30, 33, 38, 39, 40 170,032 88,857
Total Current Liabilities 727,613 525,036
Noncurrent Liabilities
Long-term debt - net of current
maturities and debt issue costs 21, 30, 33, 38, 39, 40 918,164 725,108
Lease liabilities - net of current portion 4, 5, 30, 33, 34, 38, 39, 40 54,455 71,569
Deferred tax liabilities 23 26,297 28,742
Other noncurrent liabilities 4, 5, 22, 33, 35, 39, 40 26,144 19,959
Total Noncurrent Liabilities 1,025,060 845,378
Forward
Note 2022 2021
Equity 24, 36, 37
Equity Attributable to Equity Holders of the
Parent Company
Capital stock - common P16,443 P16,443
Capital stock - preferred 10,187 10,187
Additional paid-in capital 177,719 177,719
Capital securities 24,211 28,171
Equity reserves 5, 23 12,753 14,136
Retained earnings:
Appropriated 71,004 66,630
Unappropriated 23 129,239 157,707
Treasury stock (156,763) (144,363)
284,793 326,630
Non-controlling Interests 2, 5, 23, 24 354,359 354,609
Total Equity 639,152 681,239
P2,391,825 P2,051,653
See Notes to the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020
(In Millions, Except Per Share Data)
Note 2022 2021 2020

SALES 6, 25, 33 P1,506,591 P941,193 P725,797
COST OF SALES 26, 34 1,288,086 741,303 573,868
GROSS PROFIT 218,505 199,890 151,929
SELLING AND ADMINISTRATIVE
EXPENSES 27, 34 (83,972) (77,991) (77,872)
INTEREST EXPENSE AND
OTHER FINANCING CHARGES 19, 21, 30, 33, 34, 35 (60,795) (49,265) (52,035)
INTEREST INCOME 7, 12, 31, 33, 35 7,108 3,591 6,182
EQUITY IN NET EARNINGS OF
ASSOCIATES AND JOINT VENTURES 11, 23 1,197 1,040 417
GAIN (LOSS) ON SALE OF
INVESTMENTS AND PROPERTY
AND EQUIPMENT 5, 13, 15, 18 733 167 (491)
OTHER INCOME (CHARGES) - Net 4, 5, 32, 34, 39, 40 (42,699) (11,480) 9,280
INCOME BEFORE INCOME TAX 40,077 65,952 37,410
INCOME TAX EXPENSE 23, 42 13,317 17,793 15,531
NET INCOME P26,760 P48,159 P21,879
Attributable to:
Equity holders of the Parent Company (P12,968) P13,925 P2,973
Non-controlling interests 5, 23, 24 39,728 34,234 18,906
P26,760 P48,159 P21,879
Basic/Diluted Earnings (Loss) Per
Common Share Attributable to Equity
Holders of the Parent Company 37 (P8.15) P2.48 (P1.66)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
Note 2022 2021 2020

NET INCOME P26,760 P48,159 P21,879
OTHER COMPREHENSIVE INCOME (LOSS)
Items that will not be reclassified to profit or
loss
Remeasurement gain (loss) on net defined
benefit retirement plan 35 (8,158) 2,143 (357)
Income tax benefit (expense) 23 2,036 (1,084) 126
Net gain (loss) on financial assets at fair value
through other comprehensive income 12 103 1 (172)
Income tax expense (15) (14) (1)
Share in other comprehensive income (loss)
of associates and joint ventures - net 11 80 91 (135)
(5,954) 1,137 (539)
Items that may be reclassified to profit or

loss
Net gain (loss) on exchange differences on
translation of foreign operations 4,326 5,412 (4,448)
Net gain on financial assets at fair value
through other comprehensive income 12 - - 1
Net gain (loss) on cash flow hedges 40 383 268 (23)
Income tax benefit (expense) (106) (100) 5
Share in other comprehensive income (loss)
of associates and joint ventures - net 11 (242) (81) 3
4,361 5,499 (4,462)
OTHER COMPREHENSIVE INCOME (LOSS) -

Net of tax (1,593) 6,636 (5,001)
TOTAL COMPREHENSIVE INCOME -
Net of tax P25,167 P54,795 P16,878
Attributable to:
Equity holders of the Parent Company (P14,189) P19,387 (P816)
Non-controlling interests 5, 24 39,356 35,408 17,694
P25,167 P54,795 P16,878

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Millions)
Equity Attributable to Equity Holders of the Parent Company

Capital Securities
Senior Equity Reserves
Additional Perpetual Redeemable Reserve for Other Retained Earnings Non-
Capital Stock Paid-in Capital Perpetual Retirement Hedging Fair Value Translation Equity Appro- Unappro- Treasury Stock Controlling Total
Note Common Preferred Capital Securities Securities Plan Reserve Reserve Reserve Reserve priated priated Common Preferred Total Interests Equity
As at January 1, 2022 P16,443 P10,187 P177,719 P24,211 P3,960 (P4,137) (P534) P269 P2,265 P16,273 P66,630 P157,707 (P67,093) (P77,270) P326,630 P354,609 P681,239
Gain on exchange differences on

translation of foreign operations - - - - - - - - 3,802 - - - - - 3,802 524 4,326
Share in other comprehensive
income (loss) of associates - net 11 - - - - - 76 - (237) (10) - - - - - (171) 9 (162)
Net gain on cash flow hedges 40 - - - - - - 260 - - - - - - - 260 17 277
Net gain on financial assets at fair
value through other
comprehensive income 12 - - - - - - - 82 - - - - - - 82 6 88
Remeasurement loss on defined
benefit retirement plan 23, 35 - - - - - (5,194) - - - - - - - - (5,194) (928) (6,122)
Other comprehensive income (loss) - - - - - (5,118) 260 (155) 3,792 - - - - - (1,221) (372) (1,593)
Net income (loss) - - - - - - - - - - - (12,968) - - (12,968) 39,728 26,760
Total comprehensive income (loss) - - - - - (5,118) 260 (155) 3,792 - - (12,968) - - (14,189) 39,356 25,167
Redemption of Subseries “2-H”
preferred shares 24 - - - - - - - - - - - - - (12,300) (12,300) - (12,300)
Acquisition of a subsidiary 5 - - - - (3,960) - - - - - - - - (100) (4,060) - (4,060)
Net addition (reduction) to non-
controlling interests and others 5, 11, 24 - - - - - (1) - - (416) 255 - (1,339) - - (1,501) (7,527) (9,028)
Appropriations - net 24 - - - - - - - - - - 4,374 (4,374) - - - - -
Cash dividends and distributions: 36
Common - - - - - - - - - - - (3,337) - - (3,337) (11,097) (14,434)
Preferred - - - - - - - - - - - (4,293) - - (4,293) (1,544) (5,837)
Senior perpetual capital
securities - - - - - - - - - - - (1,957) - - (1,957) (19,438) (21,395)
Redeemable perpetual
securities - - - - - - - - - - - (200) - - (200) - (200)
As at December 31, 2022 24 P16,443 P10,187 P177,719 P24,211 P- (P9,256) (P274) P114 P5,641 P16,528 P71,004 P129,239 (P67,093) (P89,670) P284,793 P354,359 P639,152
Forward
Capital Securities
As at January 1, 2021 P16,443 P10,187 P177,719 P24,211 P3,960 (P5,102) (P654) P383 (P2,218) P17,722 P60,155 P162,204 (P67,093) (P43,053) P354,864 P300,224 P655,088
Gain on exchange differences on

translation of foreign operations - - - - - - - - 4,455 - - - - - 4,455 957 5,412
income (loss) of associates
and joint ventures - net 11 - - - - - 101 - (96) 1 - - - - - 6 4 10
Net gain on cash flow hedges 40 - - - - - - 120 - - - - - - - 120 48 168
Net gain (loss) on financial assets
at fair value through other
comprehensive income 12 - - - - - - - (15) - - - - - - (15) 2 (13)
Remeasurement gain on defined
benefit retirement plan 23, 35 - - - - - 896 - - - - - - - - 896 163 1,059
Other comprehensive income (loss) - - - - - 997 120 (111) 4,456 - - - - - 5,462 1,174 6,636
Net income - - - - - - - - - - - 13,925 - - 13,925 34,234 48,159
Total comprehensive income (loss) - - - - - 997 120 (111) 4,456 - - 13,925 - - 19,387 35,408 54,795
Redemption of Subseries “2-C”,
Subseries “2-E” and Subseries
“2-G” preferred shares 24 - - - - - - - - - - - - - (34,217) (34,217) - (34,217)
controlling interests and others 5, 11, 24 - - - - - (32) - (3) 27 (1,449) - (604) - - (2,061) 47,009 44,948
Common - - - - - - - - - - - (3,337) - - (3,337) (10,170) (13,507)
Preferred - - - - - - - - - - - (6,002) - - (6,002) (2,400) (8,402)
securities - - - - - - - - - - - (1,804) - - (1,804) (14,806) (16,610)
securities - - - - - - - - - - - (200) - - (200) - (200)
Undated subordinated capital
securities - - - - - - - - - - - - - - - (656) (656)
As at December 31, 2021 24 P16,443 P10,187 P177,719 P24,211 P3,960 (P4,137) (P534) P269 P2,265 P16,273 P66,630 P157,707 (P67,093) (P77,270) P326,630 P354,609 P681,239
Forward
Capital Securities
As at January 1, 2020 P16,443 P10,187 P177,938 P - P - (P4,850) (P614) P548 P982 P18,324 P56,689 P173,092 (P67,093) (P49,190) P332,456 P241,939 P574,395
Loss on exchange differences on

translation of foreign operations - - - - - - - - (3,211) - - - - - (3,211) (1,237) (4,448)
income (loss) of associates
and joint ventures - net 11 - - - - - (69) - 7 (53) - - - - - (115) (17) (132)
Net gain (loss) on cash flow
hedges 40 - - - - - - (40) - - - - - - - (40) 22 (18)
Net loss on financial assets at fair
value through other
comprehensive income 12 - - - - - - - (171) - - - - - - (171) (1) (172)
Remeasurement gain (loss) on
defined benefit retirement plan 35 - - - - - (252) - - - - - - - - (252) 21 (231)
Other comprehensive loss - - - - - (321) (40) (164) (3,264) - - - - - (3,789) (1,212) (5,001)
Net income - - - - - - - - - - - 2,973 - - 2,973 18,906 21,879
Total comprehensive income (loss) - - - - - (321) (40) (164) (3,264) - - 2,973 - - (816) 17,694 16,878
Issuance of capital securities 24 - - - 24,211 14,662 - - - - - - - - - 38,873 - 38,873
Purchase and cancellation of
redeemable perpetual
securities 24 - - - - (10,702) - - - - - - (108) - - (10,810) - (10,810)
Reissuance of treasury shares 24 - - (219) - - - - - - - - - - 33,793 33,574 - 33,574
Redemption of Series “1” and
Subseries “2-D” preferred
shares 24 - - - - - - - - - - - - - (27,656) (27,656) - (27,656)
controlling interests and others 5, 11, 24 - - - - - 69 - (1) 64 (602) (2,795) 2,135 - - (1,130) 62,586 61,456
Common - - - - - - - - - - - (3,337) - - (3,337) (9,967) (13,304)
Preferred - - - - - - - - - - - (6,052) - - (6,052) (1,915) (7,967)
securities - - - - - - - - - - - (238) - - (238) - (238)
securities - - - - - - - - - - - - - - - (8,666) (8,666)
Undated subordinated capital
securities - - - - - - - - - - - - - - - (1,447) (1,447)
As at December 31, 2020 24 P16,443 P10,187 P177,719 P24,211 P3,960 (P5,102) (P654) P383 (P2,218) P17,722 P60,155 P162,204 (P67,093) (P43,053) P354,864 P300,224 P655,088

CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
Note 2022 2021 2020

CASH FLOWS FROM OPERATING
ACTIVITIES
Income before income tax P40,077 P65,952 P37,410
Adjustments for:
Depreciation, amortization
and others - net 13, 14, 15, 17, 18, 28, 32 70,102 46,467 27,723
Interest expense and other
financing charges 30 60,795 49,265 52,035
Interest income 31 (7,108) (3,591) (6,182)
Equity in net earnings of associates and
joint ventures 11 (1,197) (1,040) (417)
Loss (gain) on sale of investments
and property and equipment 5, 13, 15, 18 (733) (167) 491
Operating income before working capital
changes 161,936 156,886 111,060
Changes in noncash current assets,
certain current liabilities and others 38 (93,769) (43,608) 12,823
Cash generated from operations 68,167 113,278 123,883
Interest and other financing charges paid (60,910) (48,612) (54,909)
Income taxes paid (19,650) (14,528) (16,042)
Net cash flows provided by (used in)
operating activities (12,393) 50,138 52,932
CASH FLOWS FROM INVESTING

ACTIVITIES
Acquisition of subsidiaries, net of cash
and cash equivalents acquired 5, 38 (97,204) - -
Additions to property, plant and
equipment 13 (75,986) (74,421) (60,629)
Additions to intangible assets 17 (58,162) (26,007) (16,618)
Additions to investments in equity and
debt instruments 12 (12,937) (6,101) (70)
Additions to advances to contractors and
suppliers 18 (11,449) (16,067) (4,855)
Decrease (increase) in other noncurrent
assets and others 18 (6,330) (7,053) 358
Additions to investment property 15 (4,415) (6,546) (8,711)
Additions to investments and advances 11 (2,432) (5,223) (4,001)
Proceeds from the redemption and
disposal of investments in equity and
debt instruments 12 35,454 6,509 108
Collection of advances for investment 11 22,870 - -
Interest received 5,973 3,313 6,402
Dividends received 12 2,452 2,674 1,344
Proceeds from disposal of subsidiaries,
net of cash and cash equivalents
disposed of 5 385 - -
Proceeds from sale of property and
equipment 13, 15, 18 253 1,350 912
Cash and cash equivalents of a
consolidated subsidiary 5 - - 1,053
Net cash flows used in investing activities (201,528) (127,572) (84,707)
Forward
Note 2022 2021 2020
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from:
Short-term borrowings 38 P1,148,669 P760,746 P813,187
Long-term borrowings 38 353,451 140,777 160,437
Payments of:
Short-term borrowings 38 (1,074,087) (711,147) (841,775)
Long-term borrowings 38 (115,948) (113,419) (58,913)
Cash dividends and distributions paid to
non-controlling shareholders 38 (32,443) (27,555) (21,777)
Payments of lease liabilities 38 (26,031) (26,151) (24,825)
Redemption of preferred shares 24 (12,300) (34,217) (27,656)
Cash dividends and distributions paid 36, 38 (9,680) (11,755) (9,731)
Repurchase and redemption of capital
securities and preferred shares of
subsidiaries 24 (4,703) (17,459) (15,000)
Decrease in non-controlling interests’
share in the net assets of subsidiaries
and others 24 (2,630) (623) (1,526)
Net proceeds from issuance of capital
securities and preferred shares of
subsidiaries 24 - 61,899 67,799
Net proceeds from reissuance of treasury
shares 24 - - 33,588
Net proceeds from issuance of capital
securities 24 - - 28,171
Net cash flows provided by financing
activities 224,298 21,096 101,979
EFFECT OF EXCHANGE RATE

CHANGES ON CASH AND CASH
EQUIVALENTS 7,807 9,159 (9,452)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 18,184 (47,179) 60,752
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 7 300,030 347,209 286,457
CASH AND CASH EQUIVALENTS
AT END OF YEAR 7 P318,214 P300,030 P347,209

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in Millions, Except Per Share Data and Number of Shares)
1. Reporting Entity
San Miguel Corporation (SMC or the Parent Company), a subsidiary of Top Frontier
Investment Holdings, Inc. (Top Frontier or the Ultimate Parent Company), was
incorporated on August 21, 1913. On March 16, 2012, the Philippine Securities and
Exchange Commission (SEC) approved the amendment of the Articles of
Incorporation and By-Laws of the Parent Company to extend the corporate term for
another fifty (50) years from August 21, 2013, as approved on the March 14, 2011
and June 7, 2011 meetings of the Parent Company’s Board of Directors (BOD) and
stockholders, respectively.
The Parent Company has a corporate life of 50 years pursuant to its articles of
incorporation. However, under the Revised Corporation Code of the Philippines, the
Parent Company shall have a perpetual corporate life.
The Parent Company is a public company under Section 17.2 of the Securities
Regulation Code. Its common and preferred shares are listed on The Philippine
Stock Exchange, Inc. (PSE).
The accompanying consolidated financial statements comprise the financial

statements of the Parent Company and its Subsidiaries and the Group’s interests in
associates and joint ventures (collectively referred to as the Group).
The Group is engaged in various businesses, including food and beverage,

packaging, energy, fuel and oil, infrastructure, cement and real estate property
management and development.
The registered office address of the Parent Company is No. 40 San Miguel Avenue,
Mandaluyong City, Philippines.
2. Basis of Preparation
Statement of Compliance
The accompanying consolidated financial statements have been prepared in
compliance with Philippine Financial Reporting Standards (PFRS). PFRS are based
on International Financial Reporting Standards (IFRS) issued by the International
Accounting Standards Board (IASB). PFRS consist of PFRS, Philippine Accounting
Standards (PAS) and Philippine Interpretations issued by the Philippine Financial
and Sustainability Reporting Standards Council (FSRSC).
The consolidated financial statements were approved and authorized for issue in
accordance with a resolution by the BOD on March 9, 2023.
Basis of Measurement
The consolidated financial statements of the Group have been prepared on a
historical cost basis except for the following items which are measured on an
alternative basis on each reporting date:
Items Measurement Basis

Derivative financial instruments Fair value
Financial assets at fair value through profit Fair value
or loss (FVPL)
Financial assets at fair value through other Fair value
comprehensive income (FVOCI)
Defined benefit retirement asset (liability) Fair value of the plan assets less
the present value of the defined
benefit retirement obligation
Agricultural produce Fair value less estimated costs to
sell at the point of harvest
Functional and Presentation Currency

The consolidated financial statements are presented in Philippine peso, which is the
functional currency of the Parent Company. All financial information are rounded off
to the nearest million (000,000), except when otherwise indicated.
Basis of Consolidation
The consolidated financial statements include the financial statements of the Parent
Company and its subsidiaries. The major subsidiaries include the following:
Percentage of
Ownership Country of
2022 2021 Incorporation
Food and Beverage Business
San Miguel Food and Beverage, Inc. (SMFB) and subsidiaries 88.76 88.76 Philippines
[including San Miguel Mills, Inc. (SMMI) and subsidiaries,
Magnolia Inc. and subsidiary, San Miguel Foods, Inc. (SMFI)
and subsidiary, PT San Miguel Foods Indonesia (PTSMFI),
San Miguel Super Coffeemix Co., Inc., The Purefoods-Hormel
Company, Inc. (PF-Hormel), and San Miguel Foods
International, Limited and subsidiary, San Miguel Foods
Investment (BVI) Limited and subsidiary and San Miguel Pure
Foods (VN) Co., Ltd.]
San Miguel Brewery Inc. (SMB) and subsidiaries [including
Iconic Beverages, Inc. (IBI), Brewery Properties Inc. (BPI) and
subsidiary, and San Miguel Brewing International Limited
(SMBIL) and subsidiaries, San Miguel Brewery Hong Kong
Limited (SMBHK) and subsidiaries, San Miguel (Baoding)
Brewery Co., Ltd. (SMBB), San Miguel Beer (Thailand)
Limited, San Miguel Marketing (Thailand) Limited, San Miguel
Brewery Vietnam Company Limited(a) and PT. Delta Djakarta
Tbk and subsidiary]
Ginebra San Miguel Inc. (GSMI) and subsidiaries [including
Distileria Bago, Inc., East Pacific Star Bottlers Phils Inc.,
Ginebra San Miguel International Ltd., GSM International
Holdings Limited, Global Beverages Holdings Limited and
Siam Holdings Limited]
Forward
-2-
Percentage of
Packaging Business
San Miguel Yamamura Packaging Corporation (SMYPC) and 65.00 65.00 Philippines
subsidiaries [including SMC Yamamura Fuso Molds
Corporation (SYFMC), Can Asia, Inc. (CAI) and Wine
Brothers Philippines Corporation]
San Miguel Yamamura Packaging International Limited 65.00 65.00 British Virgin
(SMYPIL) and subsidiaries [including San Miguel Yamamura Islands (BVI)
Phu Tho Packaging Company Limited(a), San Miguel
Yamamura Glass (Vietnam) Limited and San Miguel
Yamamura Haiphong Glass Company Limited., Zhaoqing San
Miguel Yamamura Glass Company Limited(a), Foshan San
Miguel Yamamura Packaging Company Limited and
subsidiary(a), San Miguel Yamamura Packaging and Printing
Sdn. Bhd., San Miguel Yamamura Woven Products Sdn. Bhd.
and subsidiary, Packaging Research Centre Sdn. Bhd., San
Miguel Yamamura Plastic Films Sdn. Bhd. and San Miguel
Yamamura Australasia Pty. Ltd. (SMYA) and subsidiaries
{including SMYC Pty Ltd and subsidiary, Foshan Cospak
Packaging Co Ltd., SMYV Pty Ltd, SMYP Pty Ltd, Cospak
Limited, SMYBB Pty Ltd, SMYJ Pty Ltd, Wine Brothers
Australia Pty Ltd and Vinocor Ltd.}]
Mindanao Corrugated Fibreboard, Inc. 100.00 100.00 Philippines
Energy Business
San Miguel Global Power Holdings Corp. (San Miguel Global 100.00 100.00 Philippines
Power)(b) and subsidiaries [including Sual Power Inc. (SPI)(c)
and subsidiary, South Premiere Power Corp. (SPPC), San
Roque Hydropower Inc. (SRHI)(d), San Miguel Electric Corp.
(SMELC), SMC PowerGen Inc., Universal Power Solutions,
Inc. (UPSI), Limay Power Inc. (LPI)(e), Malita Power Inc.
(MPI)(f), Central Luzon Premiere Power Corp., Prime Electric
Generation Corporation and subsidiary, Lumiere Energy
Technologies, Inc. (LETI), PowerOne Ventures Energy Inc.
(PVEI), SMCGP Masinloc Power Company Limited, SMCGP
Masinloc Partners Company Limited, Masinloc Power
Partners Co. Ltd. (MPPCL), Albay Power and Energy Corp.
(APEC), Oceantech Power Generation and subsidiary,
SMCGP Philippines Energy Storage Co. Ltd. (SPESC),
Excellent Energy Resources Inc. (EERI), SMC Power
Generation Corp. and Mariveles Power Generation
Corporation (MPGC)]
Fuel and Oil Business
SEA Refinery Corporation (SRC)(g) 100.00 100.00 Philippines
Petron Corporation (Petron)(g) and subsidiaries [including 68.26 68.26 Philippines
Petron Marketing Corporation, Petron Freeport Corporation,
Overseas Ventures Insurance Corporation Ltd.(a), New
Ventures Realty Corporation (NVRC) and subsidiaries, Mema
Holdings, Inc. (Mema) and subsidiaries(h), Petron Singapore
Trading Pte., Ltd. (PSTPL), Petron Global Limited, Petron Oil
& Gas Mauritius Ltd. and subsidiary, Petron Oil & Gas
International Sdn. Bhd. and subsidiaries, Petron Malaysia
Refining & Marketing Bhd. (PMRMB), Petron Fuel
International Sdn. Bhd. and Petron Oil (M) Sdn. Bhd.
(POMSB) (collectively Petron Malaysia), Petron Finance
(Labuan) Limited and Petrochemical Asia (HK) Limited(a) and
subsidiaries]
Forward
-3-
Percentage of
Infrastructure Business
San Miguel Holdings Corp. doing business under the name and 100.00 100.00 Philippines
style of SMC Infrastructure (SMHC) and subsidiaries(a)
[including SMC TPLEX Holdings Company, Inc. and
subsidiary, SMC TPLEX Corporation (SMCTC), TPLEX
Operations & Maintenance Corp., Trans Aire Development
Holdings Corp. (TADHC), SMC NAIAX Corporation (SMC
NAIAX)(i), Universal LRT Corporation (BVI) Limited (ULC BVI),
SMC Mass Rail Transit 7 Inc. (SMC MRT 7), ULCOM
Company, Inc., SMC Infraventures Inc. and subsidiary, SMC
Skyway Stage 4 Corporation (MMSS4)(j), Luzon Clean Water
Development Corporation (LCWDC), Wiselink Investment
Holdings, Inc. and subsidiary Cypress Tree Capital
Investments, Inc. and subsidiaries {including Star
Infrastructure Development Corporation (SIDC) and Star
Tollway Corporation (collectively the Star Tollways Group)},
Atlantic Aurum Investments B.V. (AAIBV) and subsidiaries
{including SMC Tollways Corporation (SMC Tollways)(k) and
subsidiaries {including Stage 3 Connector Tollways Holding
Corporation (S3HC) and subsidiary, SMC Skyway Stage 3
Corporation (MMSS3)(l) and SMC Skyway Corporation (SMC
Skyway)(m) and subsidiary, Skyway O&M Corporation
(SOMCO), SMC SLEX Holdings Company Inc. (SSHCI) (n) and
subsidiaries, Alloy Manila Toll Expressways, Inc. (AMTEX),
Manila Toll Expressway Systems, Inc. (MATES) and SMC
SLEX Inc. (SMC SLEX) (o)}, Pasig River Expressway
Corporation (PREC), Intelligent E-Processes Technologies
Corp., SMC Northern Access Link Expressway Corp.
(NALEC), SMC Southern Access Link Expressway Corp.
(SALEC) and South Luzon Toll Road-5 Expressway Inc.
(SLEXTR5)]
San Miguel Aerocity Inc. doing business under the name and 100.00 100.00 Philippines
style of “Manila International Airport” (SMAI) (a)
Cement Business
San Miguel Equity Investments Inc. (SMEII) and subsidiaries(a) 100.00 100.00 Philippines
[including Northern Cement Corporation (NCC), Eagle
Cement Corporation (ECC) and subsidiaries(p), and Southern
Concrete Industries, Inc. (SCII)] (q)
Real Estate Business
San Miguel Properties, Inc. (SMPI) and subsidiaries(a) [including 99.97 99.97 Philippines
SMPI Makati Flagship Realty Corp. and Bright Ventures
Realty, Inc.]
Davana Heights Development Corporation (DHDC) and 100.00 100.00 Philippines
subsidiaries
Forward
-4-
Percentage of
Others
San Miguel International Limited and subsidiary, San Miguel 100.00 100.00 Bermuda
Holdings Limited (SMHL) and subsidiaries [including SMYPIL
and San Miguel Insurance Company, Ltd. (SMICL)]
SMC Shipping and Lighterage Corporation (SMCSLC) and 70.00 70.00 Philippines
subsidiaries(a), including SL Harbor Bulk Terminal Corporation
(SLHBTC)
San Miguel Integrated Logistics Services, Inc. (SMILSI) 100.00 100.00 Philippines
SMC Stock Transfer Service Corporation(a) 100.00 100.00 Philippines
ArchEn Technologies Inc.(a) 100.00 100.00 Philippines
SMITS, Inc. and subsidiaries(a) 100.00 100.00 Philippines
Petrogen Insurance Corporation (Petrogen)(r) 92.05 92.05 Philippines
Anchor Insurance Brokerage Corporation (AIBC)(a) 58.33 58.33 Philippines
SMC Asia Car Distributors Corp. (SMCACDC) and 65.00 65.00 Philippines
subsidiaries(a)
SMC Equivest Corporation (SMCEC) 100.00 100.00 Philippines
(a) The financial statements of these subsidiaries were audited by other auditors.
(b) Formerly SMC Global Power Holdings Corp. The change in the corporate name was approved by the
SEC on March 22, 2023.
(c) Formerly San Miguel Energy Corporation. The change in the corporate name was approved by the
SEC on March 9, 2023.
(d) Formerly Strategic Power Devt. Corp. The change in the corporate name was approved by the SEC on
March 31, 2023.
(e) Formerly SMC Consolidated Power Corporation. The change in the corporate name was approved by
the SEC on February 7, 2023.
(f) Formerly San Miguel Consolidated Power Corporation. The change in the corporate name was
approved by the SEC on March 9, 2023.
(g) Petron is 50.10% indirectly owned by SMC through SRC and 18.16% directly owned by SMC.
(h) Consolidated to Petron effective June 30, 2022 (Note 5).
(i) Formerly Vertex Tollways Devt. Inc. The change in the corporate name was approved by the SEC on
March 2, 2021.
(j) Formerly Citra Intercity Tollways, Inc. The change in the corporate name was approved by the SEC on
February 23, 2021.
(k) Formerly Atlantic Aurum Investments Philippines Corporation. The change in the corporate name was
approved by the SEC on April 5, 2021.
(l) Formerly Citra Central Expressway Corp. The change in the corporate name was approved by the SEC
on March 2, 2021.
(m) Formerly Citra Metro Manila Tollways Corporation. The change in the corporate name was approved
by the SEC on February 22, 2021.
(n) Formerly MTD Manila Expressways Inc. The change in the corporate name was approved by the SEC
on May 20, 2021.
(o) Formerly South Luzon Tollway Corporation. The change in the corporate name was approved by the
SEC on February 22, 2021.
(p) Consolidated to SMEII effective December 14, 2022 (Note 5).
(q) Formerly Oro Cemento Industries Corporation. The change in the corporate name was approved by
the SEC on December 10, 2021.
(r) Became a 92.05% owned subsidiary of the Parent Company and deconsolidated from Petron effective
February 4, 2021 (Note 5).
A subsidiary is an entity controlled by the Group. The Group controls an entity when
it is exposed to, or has rights to, variable returns from its involvement with the entity
and has the ability to affect those returns through its power over the entity. The
Group reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
When the Group has less than majority of the voting or similar rights of an investee,
the Group considers all relevant facts and circumstances in assessing whether it has
power over an investee, including the contractual arrangement with the other vote
holders of the investee, rights arising from other contractual arrangements and the
Group’s voting rights and potential voting rights.
-5-
The financial statements of the subsidiaries are included in the consolidated financial
statements from the date when the Group obtains control, and continue to be
consolidated until the date when such control ceases.
The financial statements of the subsidiaries are prepared for the same reporting
period as the Parent Company, using uniform accounting policies for like
transactions and other events in similar circumstances. Intergroup balances and
transactions, including intergroup unrealized profits and losses, are eliminated in
preparing the consolidated financial statements.
Non-controlling interests represent the portion of profit or loss and net assets not
attributable to the Parent Company and are presented in the consolidated
statements of income, consolidated statements of comprehensive income and within
equity in the consolidated statements of financial position, separately from the equity
attributable to equity holders of the Parent Company.
Non-controlling interests include the interests not held by the Parent Company in its
subsidiaries as follows: SMFB, SMYPC, SMYPIL, Petron, SMCTC, TADHC, AMTEX,
AAIBV, SMPI, SMCSLC, Petrogen, AIBC and SMCACDC in 2022 and 2021
(Note 24).
A change in the ownership interest in a subsidiary, without a loss of control, is

accounted for as an equity transaction. If the Group loses control over a subsidiary,
the Group: (i) derecognizes the assets (including goodwill) and liabilities of the
subsidiary, the carrying amount of any non-controlling interests and the cumulative
translation differences recorded in equity; (ii) recognizes the fair value of the
consideration received, the fair value of any investment retained and any surplus or
deficit in the consolidated statements of income; and (iii) reclassify the Parent
Company’s share of components previously recognized in other comprehensive
income to profit or loss or retained earnings, as appropriate, as would be required if
the Group had directly disposed of the related assets or liabilities.
3. Significant Accounting Policies
The accounting policies set out below have been applied consistently to all periods
presented in the consolidated financial statements, except for the changes in
accounting policies as explained below.
The FSRSC approved the adoption of a number of new and amendments to

standards as part of PFRS.
Adoption of Amendments to Standards
The Group has adopted the following amendments to standards effective January 1,
2022 and accordingly, changed its accounting policies in the following areas:
▪ Proceeds before Intended Use (Amendments to PAS 16, Property, Plant and
Equipment). The amendments prohibit an entity from deducting from the cost of
an item of property, plant and equipment the proceeds from selling items
produced before that asset is available for use. The proceeds before intended
use should be recognized in profit or loss, together with the costs of producing
those items which are identified and measured in accordance with PAS 2,
Inventories.
-6-
The amendments also clarify that testing whether an item of property, plant and
equipment is functioning properly means assessing its technical and physical
performance rather than assessing its financial performance.
For the sale of items that are not part of an entity’s ordinary activities, the
amendments require the entity to disclose separately the sales proceeds and
related production cost recognized in profit or loss and specify the line items in
which such proceeds and costs are included in the statement of income. This
disclosure is not required if such proceeds and cost are presented separately in
the statement of income.
▪ Onerous Contracts - Cost of Fulfilling a Contract (Amendments to PAS 37,

Provisions, Contingent Liabilities and Contingent Assets). The amendments
clarify that the cost of fulfilling a contract when assessing whether a contract is
onerous includes all costs that relate directly to a contract, i.e., it comprises both
incremental costs and an allocation of other direct costs.
▪ Annual Improvements to PFRS 2018-2020. This cycle of improvements contains

amendments to four standards, of which the following are applicable to the
Group:
o Fees in the ‘10 percent’ Test for Derecognition of Financial Liabilities

(Amendment to PFRS 9, Financial Instruments). The amendment clarifies
that for the purpose of performing the ‘10 percent’ test for derecognition of
financial liabilities, the fees paid net of fees received include only fees paid or
received between the borrower and the lender, including fees paid or
received by either the borrower or lender on the other’s behalf.
o Lease Incentives (Amendment to Illustrative Examples accompanying

PFRS 16, Leases). The amendment deletes from the Illustrative Example 13
the reimbursement relating to leasehold improvements to remove the
potential for confusion because the example had not explained clearly
enough the conclusion as to whether the reimbursement would meet the
definition of a lease incentive in PFRS 16.
o Taxation in Fair Value Measurements (Amendment to PAS 41, Agriculture).

The amendment removes the requirement to exclude cash flows for taxation
when measuring fair value, thereby aligning the fair value measurement
requirements in PAS 41 with those in PFRS 13, Fair Value Measurement.
▪ Reference to the Conceptual Framework (Amendments to PFRS 3, Business

Combinations). The amendments:
o replaced a reference to the Framework for the Preparation and Presentation

of Financial Statements, issued in 1989, with a reference to the Conceptual
Framework for Financial Reporting issued in March 2018, without
significantly changing its requirements;
o added a requirement that, for transactions and other events within the scope
of PAS 37 or International Financial Reporting Interpretations Committee
(IFRIC) 21, Levies, an acquirer applies PAS 37 or IFRIC 21 instead of the
Conceptual Framework to identify the liabilities it has assumed in a business
combination; and
o added an explicit statement that an acquirer does not recognize contingent

assets acquired in a business combination.
-7-
The adoption of the amendments to standards did not have a material effect on the
consolidated financial statements.
New and Amendments to Standards Not Yet Adopted
A number of new and amendments to standards are effective for annual reporting
periods beginning after January 1, 2022 and have not been applied in preparing the
consolidated financial statements. None of these are expected to have a significant
effect on the consolidated financial statements.
The Group will adopt the following new and amendments to standards on the
respective effective dates:
▪ Definition of Accounting Estimates (Amendments to PAS 8, Accounting Policies,

Changes in Accounting Estimates and Errors). The amendments clarify that
accounting estimates are monetary amounts in the financial statements that are
subject to measurement uncertainty. The amendments also clarify the
relationship between accounting policies and accounting estimates by specifying
that an accounting estimate is developed to achieve the objective set out by an
accounting policy. Developing an accounting estimate includes both selecting a
measurement technique (estimate or valuation technique) and choosing the
inputs to be used when applying the chosen measurement technique. The
effects of changes in the inputs or measurement techniques are changes in
accounting estimates. The definition of accounting policies remains unchanged.
The amendments also provide examples on the application of the new definition.
The amendments are effective for annual reporting periods beginning on or after
January 1, 2023. Earlier application is permitted. The amendments apply
prospectively to changes in accounting estimates and changes in accounting
policies occurring on or after the beginning of the first annual reporting period in
which the amendments are applied.
▪ Disclosure of Accounting Policies (Amendments to PAS 1, Presentation of

Financial Statements, and PFRS Practice Statement 2, Making Materiality
Judgments). The key amendments to PAS 1 include requiring entities to disclose
material accounting policies rather than significant accounting policies; clarifying
that accounting policies related to immaterial transactions, other events or
conditions are immaterial and as such need not be disclosed; and clarifying that
not all accounting policies that relate to material transactions, other events or
conditions are material to the financial statements. The amendments to PFRS
Practice Statement 2 include guidance and additional examples on the
application of materiality to accounting policy disclosures.
January 1, 2023. Earlier application is permitted.
▪ Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction
(Amendments to PAS 12, Income Taxes). The amendments require an entity to
recognize deferred tax on transactions, such as leases for the lessee and
decommissioning obligations, that give rise to equal amounts of taxable and
deductible temporary differences on initial recognition.
January 1, 2023. Earlier application is permitted.
-8-
▪ Lease Liability in a Sale and Leaseback (Amendments to PFRS 16). The
amendments confirm the following:
o On initial recognition, the seller-lessee includes variable lease payments

when it measures a lease liability arising from a sale and leaseback
transaction.
o After initial recognition, the seller-lessee applies the general requirements for
subsequent accounting of the lease liability such that it recognizes no gain or
loss relating to the right-of-use asset it retains.
A seller-lessee may adopt different approaches that satisfy the new requirements
on subsequent measurement.
The amendments are effective for annual reporting periods beginning or after
January 1, 2024, with earlier application permitted. Under PAS 8, the
amendments apply retrospectively to sale and leaseback transactions entered
into or after the date of initial adoption of PFRS 16.
▪ Classification of Liabilities as Current or Noncurrent - 2020 Amendments and

Noncurrent Liabilities with Covenants - 2022 Amendments (Amendments to
PAS 1). To promote consistency in application and clarify the requirements on
determining whether a liability is current or noncurrent, the amendments:
o removed the requirement for a right to defer settlement of a liability for at

least 12 months after the reporting period to be unconditional and instead
require that the right must have substance and exist at the reporting date;
o clarified that only covenants with which the entity must comply on or before
the reporting date affect the classification of a liability as current or
noncurrent and covenants with which the entity must comply after the
reporting date do not affect a liability’s classification at that date;
o provided additional disclosure requirements for noncurrent liabilities subject

to conditions within 12 months after the reporting period to enable the
assessment of the risk that the liability could become repayable within
12 months; and
o clarified that settlement of a liability includes transferring an entity’s own

equity instruments to the counterparty, but conversion options that are
classified as equity do not affect classification of the liability as current or
noncurrent.
The amendments apply retrospectively for annual reporting periods beginning on

or after January 1, 2024, with early application permitted.
-9-
▪ PFRS 17, Insurance Contracts, replaces the interim standard, PFRS 4,
Insurance Contracts, and establishes the principles for the recognition,
measurement, presentation and disclosure of insurance contracts within the
scope of the standard. The new standard reflects the view that an insurance
contract combines features of both a financial instrument and a service contract,
and considers the fact that many insurance contracts generate cash flows with
substantial variability over a long period. PFRS 17 introduces a new approach
that: (a) combines current measurement of the future cash flows with the
recognition of profit over the period services are provided under the contract;
(b) presents insurance service results (including presentation of insurance
revenue) separately from insurance finance income or expenses; and
(c) requires an entity to make an accounting policy choice portfolio-by-portfolio of
whether to recognize all insurance finance income or expenses for the reporting
period in profit or loss or to recognize some of that income or expenses in other
comprehensive income.
Under PFRS 17, groups of insurance contracts are measured based on

fulfillment cash flows, which represent the risk-adjusted present value of the
entity’s rights and obligations to the policyholders, and a contractual service
margin, which represents the unearned profit the entity will recognize as it
provides services over the coverage period. Subsequent to initial recognition, the
liability of a group of insurance contracts represents the liability for remaining
coverage and the liability for incurred claims, with the fulfillment cash flows
remeasured at each reporting date to reflect current estimates.
Simplifications or modifications to the general measurement model apply to

groups of insurance contracts measured using the ‘premium allocation
approach’, investment contracts with discretionary participation features, and
reinsurance contracts held.
PFRS 17 brings greater comparability and transparency about the profitability of

new and in-force business and gives users of financial statements more insight
into an insurer’s financial health. Separate presentation of underwriting and
financial results will give added transparency about the sources of profits and
quality of earnings.
On December 15, 2021, the FSRSC amended the mandatory effective date of
PFRS 17 from January 1, 2023 to January 1, 2025. This is consistent with
Circular Letter No. 2020-62 issued by the Insurance Commission which deferred
the implementation of PFRS 17 by two years after its effective date as decided
by the IASB. Full retrospective application is required, unless it is impracticable,
in which case the entity chooses to apply the modified retrospective approach or
the fair value approach. However, if the entity cannot obtain reasonable and
supportable information necessary to apply the modified retrospective approach,
then it applies the fair value approach. There is also a transition option allowing
presentation of comparative information about financial assets using a
classification overlay approach on a basis that is more consistent with how
PFRS 9 will be applied in future reporting periods. Early application is permitted
for entities that apply PFRS 9 on or before the date of initial application of
PFRS 17.
- 10 -
Deferral of the local implementation of Amendments to PFRS 10, Consolidated
Financial Statements, and PAS 28, Investments in Associates and Joint Ventures:
Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture.
▪ The amendments address an inconsistency in the requirements in PFRS 10 and

PAS 28 in dealing with the sale or contribution of assets between an investor and
its associate or joint venture. The amendments require that a full gain or loss is
recognized when a transaction involves a business (whether it is housed in a
subsidiary or not). A partial gain or loss is recognized when a transaction
involves assets that do not constitute a business, even if these assets are
housed in a subsidiary.
Originally, the amendments apply prospectively for annual reporting periods

beginning on or after January 1, 2016, with early adoption permitted. However,
on January 13, 2016, the FSRSC decided to postpone the effective date of these
amendments until the IASB has completed its broader review of the research
project on equity accounting that may result in the simplification of accounting for
such transactions and of other aspects of accounting for associates and joint
ventures.
Current versus Noncurrent Classification

The Group presents assets and liabilities in the consolidated statements of financial
position based on current and noncurrent classification. An asset is current when it
is: (a) expected to be realized or intended to be sold or consumed in the normal
operating cycle; (b) held primarily for the purpose of trading; (c) expected to be
realized within 12 months after the reporting period; or (d) cash or cash equivalent
unless restricted from being exchanged or used to settle a liability for at least
12 months after the reporting period.
A liability is current when: (a) it is expected to be settled in the normal operating

cycle; (b) it is held primarily for trading; (c) it is due to be settled within 12 months
after the reporting period; or (d) there is no unconditional right to defer the settlement
of the liability for at least 12 months after the reporting period.
The Group classifies all other assets and liabilities as noncurrent. Deferred tax
assets and liabilities are classified as noncurrent.
Financial Instruments
Recognition and Initial Measurement. A financial instrument is any contract that gives
rise to a financial asset of one entity and a financial liability or equity instrument of
another entity.
The Group recognizes a financial asset or a financial liability in the consolidated

statements of financial position when it becomes a party to the contractual provisions
of the instrument.
A financial asset (unless it is a trade receivable without a significant financing

component) or financial liability is initially measured at the fair value of the
consideration given or received. The initial measurement of financial instruments,
except for financial assets and financial liabilities at FVPL, includes transaction costs.
A trade receivable without a significant financing component is initially measured at
the transaction price.
- 11 -
Financial Assets
The Group classifies its financial assets, at initial recognition, as subsequently
measured at amortized cost, FVOCI and FVPL. The classification depends on the
contractual cash flow characteristics of the financial assets and the business model
of the Group for managing the financial assets.
Subsequent to initial recognition, financial assets are not reclassified unless the
Group changes the business model for managing financial assets. All affected
financial assets are reclassified on the first day of the reporting period following the
change in the business model.
The business model refers to how the Group manages the financial assets in order
to generate cash flows. The business model determines whether cash flows will
result from collecting contractual cash flows, selling the financial assets, or both.
The Group considers the following information in assessing the objective of the
business model in which a financial asset is held at a portfolio level, which reflects
the way the business is managed and information is provided to management:
▪ the stated policies and objectives for the portfolio and the operation of those
policies in practice;
▪ how the performance of the portfolio is evaluated and reported to the Group’s
management;
▪ the risks that affect the performance of the business model (and the financial
assets held within that business model) and how those risks are managed;
▪ how employees of the business are compensated; and
▪ the frequency, volume and timing of sales of financial assets in prior periods, the
reasons for such sales and expectations about future sales activity.
The Group considers the contractual terms of the instrument in assessing whether
the contractual cash flows are solely payments of principal and interest. For
purposes of this assessment, “principal” is defined as the fair value of the financial
asset on initial recognition. “Interest” is defined as consideration for the time value of
money and for the credit risk associated with the principal amount outstanding during
a particular period of time for other basic lending risks and costs (e.g., liquidity risk
and administrative costs), as well as profit margin. The assessment includes whether
the financial asset contains a contractual term that could change the timing or
amount of contractual cash flows such that it would not meet this condition. The
Group considers the following in making the assessment:
▪ contingent events that would change the amount or timing of cash flows;
▪ terms that may adjust the contractual coupon rate, including variable rate
features;
▪ prepayment and extension features; and
▪ terms that limit the Group’s claim to cash flows from specified assets.
- 12 -
A prepayment feature is consistent with the solely payments of principal and interest
criterion if the prepayment amount substantially represents unpaid amounts of
principal and interest on the principal amount outstanding, which may include
reasonable compensation for early termination of the contract. Additionally, for a
financial asset acquired at a discount or premium to its contractual par amount, a
feature that permits or requires prepayment at an amount that substantially
represents the contractual par amount plus accrued (but unpaid) contractual interest
(which may also include reasonable compensation for early termination) is treated as
consistent with this criterion if the fair value of the prepayment feature is insignificant
at initial recognition.
For purposes of subsequent measurement, financial assets are classified in the

following categories: financial assets at amortized cost, financial assets at FVOCI
(with or without recycling of cumulative gains and losses) and financial assets at
FVPL.
Financial Assets at Amortized Cost. A financial asset is measured at amortized cost

if it meets both of the following conditions and is not designated as at FVPL:
▪ it is held within a business model with the objective of holding financial assets to
collect contractual cash flows; and
▪ its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
Financial assets at amortized cost are subsequently measured using the effective
interest method and are subject to impairment. Gains and losses are recognized in
the consolidated statements of income when the financial asset is derecognized,
modified or impaired.
The Group’s cash and cash equivalents, trade and other receivables, investment in
debt instruments at amortized cost, noncurrent receivables and deposits, and
restricted cash are included under this category (Notes 7, 8, 10, 12, 18, 39 and 40).
Cash includes cash on hand and in banks. Cash equivalents are short-term, highly
liquid investments that are readily convertible to known amounts of cash and are
subject to an insignificant risk of changes in value.
Financial Assets at FVOCI. Investment in debt instruments is measured at FVOCI if it

meets both of the following conditions and is not designated as at FVPL:
▪ it is held within a business model whose objective is achieved by both collecting

contractual cash flows and selling the financial assets; and
▪ its contractual terms give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
At initial recognition of an investment in equity instrument that is not held for trading,
the Group may irrevocably elect to present subsequent changes in the fair value in
other comprehensive income. This election is made on an instrument-by-instrument
basis.
Financial assets at FVOCI are subsequently measured at fair value. Changes in fair
value are recognized in other comprehensive income.
- 13 -
Interest income calculated using the effective interest method, foreign exchange
gains and losses and impairment on investment in debt instruments are recognized
in the consolidated statements of income. When investment in debt instruments at
FVOCI is derecognized, the related accumulated gains or losses previously reported
in the consolidated statements of changes in equity are transferred to and
recognized in the consolidated statements of income.
Dividends earned on holding an investment in equity instrument are recognized as

dividend income in the consolidated statements of income when the right to receive
the payment has been established, unless the dividend clearly represents a recovery
of the part of the cost of the investment. When investment in equity instruments at
FVOCI is derecognized, the related accumulated gains or losses previously reported
in the consolidated statements of changes in equity are never reclassified to the
consolidated statements of income.
The Group’s investments in equity and debt instruments at FVOCI are classified
under this category (Notes 10, 12, 39 and 40).
Financial Assets at FVPL. All financial assets not classified as measured at

amortized cost or FVOCI are measured at FVPL. This includes derivative financial
assets that are not designated as cash flow hedge. Financial assets that are held for
trading or are managed and whose performance is evaluated on a fair value basis
are measured at FVPL.
At initial recognition, the Group may irrevocably designate a financial asset as at

FVPL if the designation eliminates or significantly reduces an accounting mismatch
that would otherwise arise from measuring assets or liabilities or recognizing the
gains and losses on different bases.
The Group carries financial assets at FVPL using their fair values. Attributable
transaction costs are recognized in the consolidated statements of income as
incurred. Changes in fair value and realized gains or losses are recognized in the
consolidated statements of income. Fair value changes from derivatives accounted
for as part of an effective cash flow hedge are recognized in other comprehensive
income and presented in the statements of changes in equity. Any interest earned
from investment in debt instrument designated as at FVPL is recognized in the
consolidated statements of income. Any dividend income from investment in equity
instrument is recognized in the consolidated statements of income when the right to
receive payment has been established, unless the dividend clearly represents a
recovery of the part of the cost of the investment.
The Group’s derivative assets that are not designated as cash flow hedge and
investments in equity and debt instruments at FVPL are classified under this
category (Notes 10, 18, 33, 39 and 40).
Financial Liabilities
The Group determines the classification of its financial liabilities, at initial recognition,
in the following categories: financial liabilities at FVPL and other financial liabilities.
All financial liabilities are recognized initially at fair value and, in the case of loans
and borrowings, net of directly attributable transaction costs.
Financial Liabilities at FVPL. Financial liabilities are classified under this category
through the fair value option. Derivative instruments (including embedded
derivatives) with negative fair values, except those covered by hedge accounting
relationships, are also classified under this category.
- 14 -
The Group carries financial liabilities at FVPL using their fair values and reports fair
value changes in the consolidated statements of income. Fair value changes from
derivatives accounted for as part of an effective cash flow hedge are recognized in
other comprehensive income and presented in the consolidated statements of
changes in equity. Any interest expense incurred is recognized as part of “Interest
expense and other financing charges” account in the consolidated statements of
income.
The Group’s derivative liabilities that are not designated as cash flow hedge are
classified under this category (Notes 20, 22, 39 and 40).
Other Financial Liabilities. This category pertains to financial liabilities that are not
designated or classified as at FVPL. After initial measurement, other financial
liabilities are carried at amortized cost using the effective interest method. Amortized
cost is calculated by taking into account any premium or discount and any directly
attributable transaction costs that are considered an integral part of the effective
interest rate of the liability. The effective interest rate amortization is included in
“Interest expense and other financing charges” account in the consolidated
statements of income. Gains and losses are recognized in the consolidated
statements of income when the liabilities are derecognized as well as through the
amortization process.
Debt issue costs are considered as an adjustment to the effective yield of the related
debt and are deferred and amortized using the effective interest method. When a
loan is paid, the related unamortized debt issue costs at the date of repayment are
The Group’s liabilities arising from its trade transactions or borrowings such as loans
payable, accounts payable and accrued expenses, long-term debt, lease liabilities
and other noncurrent liabilities are included under this category (Notes 19, 20, 21,
22, 34, 39 and 40).
Derecognition of Financial Assets and Financial Liabilities

Financial Assets. A financial asset (or, where applicable, a part of a financial asset or
part of a group of similar financial assets) is primarily derecognized when:
▪ the rights to receive cash flows from the asset have expired; or
▪ the Group has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay them in full without material delay to a third party
under a “pass-through” arrangement; and either: (a) has transferred substantially
all the risks and rewards of the asset; or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of
the asset.
When the Group has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if and to what extent it has
retained the risks and rewards of ownership. When it has neither transferred nor
retained substantially all the risks and rewards of the asset nor transferred control of
the asset, the Group continues to recognize the transferred asset to the extent of the
Group’s continuing involvement. In that case, the Group also recognizes the
associated liability. The transferred asset and the associated liability are measured
on the basis that reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset
is measured at the lower of the original carrying amount of the asset and the
maximum amount of consideration that the Group is required to repay.
- 15 -
Financial Liabilities. A financial liability is derecognized when the obligation under the
liability is discharged or cancelled, or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability and the recognition of
a new liability. The difference in the respective carrying amounts is recognized in the
Impairment of Financial Assets

The Group recognizes allowance for expected credit loss (ECL) on financial assets
at amortized cost and investments in debt instruments at FVOCI.
ECLs are probability-weighted estimates of credit losses. Credit losses are measured
as the present value of all cash shortfalls (i.e., the difference between the cash flows
due to the Group in accordance with the contract and the cash flows that the Group
expects to receive), discounted at the effective interest rate of the financial asset,
and reflects reasonable and supportable information that is available without undue
cost or effort about past events, current conditions and forecasts of future economic
conditions.
The Group recognizes an allowance for impairment based on either 12-month or

lifetime ECLs, depending on whether there has been a significant increase in credit
risk since initial recognition.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition and when estimating ECLs, the Group considers
reasonable and supportable information that is relevant and available without undue
cost or effort. This includes both quantitative and qualitative information and analysis,
based on the Group’s historical experience and informed credit assessment and
including forward-looking information.
The Group recognizes lifetime ECLs for receivables that do not contain significant
financing component. The Group uses provision matrix that is based on the Group’s
historical credit loss experience, adjusted for forward-looking factors specific to the
borrowers and the economic environment.
At each reporting date, the Group assesses whether these financial assets at
amortized cost and investments in debt instruments at FVOCI are credit-impaired. A
financial asset is credit-impaired when one or more events that have a detrimental
impact on the estimated future cash flows of the financial asset have occurred.
Evidence that a financial asset is credit-impaired include observable data about the
following events:
▪ significant financial difficulty of the issuer or the borrower;
▪ a breach of contract, such as a default or past due event;
▪ the restructuring of a financial asset by the Group on terms that the Group would
not consider otherwise;
▪ it is becoming probable that the borrower will enter bankruptcy or other financial
reorganization; or
▪ the disappearance of an active market for that financial asset because of

financial difficulties.
- 16 -
The Group considers a financial asset to be in default when a counterparty fails to
pay its contractual obligations, or there is a breach of other contractual terms, such
as covenants.
The Group directly reduces the gross carrying amount of a financial asset when
there is no reasonable expectation of recovering the contractual cash flows on a
financial asset, either partially or in full. This is generally the case when the Group
determines that the borrower does not have assets or sources of income that could
generate sufficient cash flows to repay the amounts subject to the write-off. However,
financial assets that are written off could still be subject to enforcement activities in
order to comply with the Group's procedures for recovery of amounts due.
The ECLs on financial assets at amortized cost are recognized as allowance for
impairment losses against the gross carrying amount of the financial asset, with the
resulting impairment losses (or reversals) recognized in the consolidated statements
of income. The ECLs on investments in debt instruments at FVOCI are recognized
as accumulated impairment losses in other comprehensive income, with the resulting
impairment losses (or reversals) recognized in the consolidated statements of
income.
Classification of Financial Instruments between Liability and Equity

Financial instruments are classified as liability or equity in accordance with the
substance of the contractual arrangement. Interest, dividends, gains and losses
relating to a financial instrument or a component that is a financial liability, are
reported as expense or income. Distributions to holders of financial instruments
classified as equity are charged directly to equity, net of any related income tax
benefits.
A financial instrument is classified as liability if it provides for a contractual obligation

to:
▪ deliver cash or another financial asset to another entity;
▪ exchange financial assets or financial liabilities with another entity under

conditions that are potentially unfavorable to the Group; or
▪ satisfy the obligation other than by the exchange of a fixed amount of cash or
another financial asset for a fixed number of own equity shares.
The components of issued financial instruments that contain both liability and equity
elements are accounted for separately, with the equity component being assigned
the residual amount after deducting from the instrument as a whole or in part, the
amount separately determined as the fair value of the liability component on the date
of issue.
Offsetting Financial Instruments

Financial assets and financial liabilities are offset and the net amount is reported in
the consolidated statements of financial position if, and only if, there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to
settle on a net basis, or to realize the assets and settle the liabilities simultaneously.
- 17 -
Derivative Financial Instruments and Hedge Accounting
The Group uses derivative financial instruments, such as forwards, swaps and
options to manage its exposure on foreign currency, interest rate and commodity
price risks. Derivative financial instruments are initially recognized at fair value on the
date the derivative contract is entered into and are subsequently remeasured at fair
value. Derivatives are carried as financial assets when the fair value is positive and
as financial liabilities when the fair value is negative. Changes in the fair value of
derivatives that are not designated as hedging instruments are recognized in the
Freestanding Derivatives
The Group designates certain derivatives as hedging instruments to hedge the
exposure to variability in cash flows associated with recognized liabilities arising from
changes in foreign exchange rates and interest rates.
At the inception of a hedge relationship, the Group formally designates and

documents the hedge relationship to which the Group wishes to apply hedge
accounting and the risk management objective and strategy for undertaking the
hedge. The Group also documents the economic relationship between the hedged
item and the hedging instrument, including whether the changes in cash flows of the
hedging instrument are expected to offset the changes in cash flows of the hedged
item.
Cash Flow Hedge. When a derivative is designated as a cash flow hedging

instrument, the effective portion of changes in the fair value of the derivative is
recognized in other comprehensive income and presented in the “Hedging reserve”
account in the consolidated statements of changes in equity. The effective portion of
changes in the fair value of the derivative that is recognized in other comprehensive
income is limited to the cumulative change in fair value of the hedged item. Any
ineffective portion of changes in the fair value of the derivative is recognized
immediately in the consolidated statements of income.
The Group designates only the intrinsic value of options and the change in fair value
of the spot element of forward contracts as the hedging instrument in cash flow
hedging relationships. The change in fair value of the time value of options, the
forward element of forward contracts and the foreign currency basis spread of
financial instruments are separately accounted for as cost of hedging and recognized
in other comprehensive income. The cost of hedging is removed from other
comprehensive income and recognized in the consolidated statements of income,
either over the period of the hedge if the hedge is time related, or when the hedged
transaction affects the consolidated statements of income if the hedge is transaction
related.
When the hedged transaction subsequently results in the recognition of a non-

financial item, the amount accumulated in equity is transferred and included in the
initial cost of the hedged asset or liability. For all other hedged transactions, the
amount accumulated in equity is reclassified to the consolidated statements of
income as a reclassification adjustment in the same period or periods during which
the hedged cash flows affect the consolidated statements of income.
- 18 -
If the hedge no longer meets the criteria for hedge accounting or the hedging
instrument expires, is sold, is terminated or is exercised, hedge accounting is
discontinued prospectively. The amount that has been accumulated in equity is:
(a) retained until it is included in the cost of non-financial item on initial recognition,
for a hedge of a transaction resulting in the recognition of a non-financial item; or
(b) reclassified to the consolidated statements of income as a reclassification
adjustment in the same period or periods as the hedged cash flows affect the
consolidated statements of income, for other cash flow hedges. If the hedged future
cash flows are no longer expected to occur, the amounts that have been
accumulated in equity are immediately reclassified to the consolidated statements of
income.
The Group has outstanding derivatives accounted for as cash flow hedge as at
December 31, 2022 and 2021 (Note 40).
Embedded Derivatives
The Group assesses whether embedded derivatives are required to be separated
from the host contracts when the Group becomes a party to the contract.
An embedded derivative is separated from the host contract and accounted for as a
derivative if all of the following conditions are met:
(a) the economic characteristics and risks of the embedded derivative are not
closely related to the economic characteristics and risks of the host contract;
(b) a separate instrument with the same terms as the embedded derivative would
meet the definition of a derivative; and
(c) the hybrid or combined instrument is not recognized as at FVPL.
However, an embedded derivative is not separated if the host contract is a financial

asset.
Reassessment only occurs if there is a change in the terms of the contract that
significantly modifies the cash flows that would otherwise be required.
Embedded derivatives that are bifurcated from the host contracts are accounted for
either as financial assets or financial liabilities at FVPL.
The Group has embedded derivatives as at December 31, 2022 and 2021 (Note 40).
Inventories
Finished goods, goods in process, materials and supplies, raw land inventory and
real estate projects are valued at the lower of cost and net realizable value.
- 19 -
Costs incurred in bringing each inventory to its present location and condition are
accounted for as follows:
Finished goods and goods - at cost, which includes direct materials and labor
in process and a proportion of manufacturing overhead
costs based on normal operating capacity but
excluding borrowing costs; finished goods also
include unrealized gain (loss) on fair valuation of
agricultural produce; costs are determined using
the moving-average method.
Petroleum products (except - at cost, which includes duties and taxes related
lubes and greases) and to the acquisition of inventories; costs are
crude oil determined using the first-in, first-out method.
Lubes and greases, - at cost, which includes duties and taxes related
blending components and to the acquisition of inventories; costs are
polypropylene determined using the moving-average method.
Raw land inventory - at cost, which includes acquisition costs of raw
land intended for sale or development and other
costs and expenses incurred to effect the
transfer of title of the property; costs are
determined using the specific identification of
individual costs.
Real estate projects - at cost, which includes acquisition costs of
property and other costs and expenses incurred
to develop the property; costs are determined
using the specific identification of individual
costs.
Materials, supplies and - at cost, using the specific identification method,
others first-in, first-out method or moving-average
method.
Coal - at cost, using the specific identification method
and weighted average method.
Finished Goods. Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs necessary to make the sale.
Goods in Process. Net realizable value is the estimated selling price in the ordinary
course of business, less the estimated costs of completion and the estimated costs
necessary to make the sale.
Petroleum Products, Crude Oil, Lubes and Greases, and Aftermarket Specialties.
Net realizable value is the estimated selling price in the ordinary course of business,
less the estimated costs to complete and/or market and distribute.
Materials and Supplies, including Coal. Net realizable value is the current
replacement cost.
Any write-down of inventories to net realizable value and all losses of inventories are
recognized as expense in the year of write-down or loss occurrence. The amount of
reversals of write-down of inventories arising from an increase in net realizable
value, if any, are recognized as reduction in the amount of inventories recognized as
expense in the year in which the reversal occurs.
- 20 -
Real Estate Projects. Net realizable value is the estimated selling price in the
ordinary course of business, less estimated costs of completion and the estimated
costs necessary to make the sale.
Raw Land Inventory. Net realizable value is the estimated selling price in the
ordinary course of business, less the estimated costs necessary to make the sale.
Prepaid Expenses and Other Current Assets

Prepaid expenses represent expenses not yet incurred but already paid in cash.
These are initially recorded as assets and measured at the amount of cash paid.
Subsequently, these are recognized in the consolidated statements of income as
they are consumed or expire with the passage of time.
Other current assets pertain to assets which are expected to be realized within
12 months after the reporting period. Otherwise, these are classified as noncurrent
assets.
Biological Assets and Agricultural Produce

The Group’s biological assets include breeding stocks, growing hogs, poultry
livestock and goods in process which are grouped according to their physical state,
transformation capacity (breeding, growing or laying), as well as their particular stage
in the production process.
Breeding stocks are carried at accumulated costs net of amortization and any
impairment in value while growing hogs, poultry livestock and goods in process are
carried at accumulated costs. The costs and expenses incurred up to the start of the
productive stage are accumulated and amortized over the estimated productive lives
of the breeding stocks. The Group uses this method of valuation since fair value
cannot be measured reliably.
The Group’s agricultural produce, which consists of grown broilers and marketable
hogs harvested from the Group’s biological assets, are measured at their fair value
less estimated costs to sell at the point of harvest. The fair value of grown broilers is
based on the quoted prices for harvested mature grown broilers in the market at the
time of harvest. For marketable hogs, the fair value is based on the quoted prices in
the market at any given time.
The Group, in general, does not carry any inventory of agricultural produce at any
given time as these are either sold as live broilers and hogs or transferred to the
different poultry or meat processing plants and immediately transformed into
processed or dressed chicken and carcass.
The carrying amounts of the biological assets are reviewed for impairment when
events or changes in circumstances indicate that the carrying amounts may not be
recoverable.
Amortization is computed using the straight-line method over the following estimated
productive lives of breeding stocks:
Amortization Period
Hogs - sow 3 years or 6 births,
whichever is shorter
Hogs - boar 2.5 - 3 years
Poultry breeding stock 38 - 42 weeks
- 21 -
Contract Assets
A contract asset is the right to consideration that is conditioned on something other
than the passage of time, in exchange for goods or services that the Group has
transferred to a customer. The contract asset is transferred to receivable when the
right becomes unconditional.
A receivable represents the Group’s right to an amount of consideration that is

unconditional, only the passage of time is required before payment of the
consideration is due.
Business Combination
Business combinations are accounted for using the acquisition method. The cost of
an acquisition is measured as the aggregate of the consideration transferred,
measured at acquisition date fair value, and the amount of any non-controlling
interests in the acquiree. For each business combination, the Group elects whether
to measure the non-controlling interests in the acquiree at fair value or at
proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs
are expensed as incurred and included as part of “Selling and administrative
expenses” account in the consolidated statements of income.
When the Group acquires a business, it assesses the financial assets and financial
liabilities assumed for appropriate classification and designation in accordance with
the contractual terms, economic circumstances and pertinent conditions as at the
acquisition date.
If the business combination is achieved in stages, the acquisition date fair value of
the acquirer’s previously held equity interest in the acquiree is remeasured at the
acquisition date fair value and any resulting gain or loss is recognized in the
The Group measures goodwill at the acquisition date as: a) the fair value of the
consideration transferred; plus b) the recognized amount of any non-controlling
interests in the acquiree; plus c) if the business combination is achieved in stages,
the fair value of the existing equity interest in the acquiree; less d) the net recognized
amount (generally fair value) of the identifiable assets acquired and liabilities
assumed. When the excess is negative, a bargain purchase gain is recognized
immediately in the consolidated statements of income. Subsequently, goodwill is
measured at cost less any accumulated impairment in value. Goodwill is reviewed for
impairment, annually or more frequently, if events or changes in circumstances
indicate that the carrying amount may be impaired.
The consideration transferred does not include amounts related to the settlement of
pre-existing relationships. Such amounts are generally recognized in the
consolidated statements of income. Costs related to the acquisition, other than those
associated with the issuance of debt or equity securities that the Group incurs in
connection with a business combination, are expensed as incurred. Any contingent
consideration payable is measured at fair value at the acquisition date. If the
contingent consideration is classified as equity, it is not remeasured and settlement
is accounted for within equity. Otherwise, subsequent changes to the fair value of the
contingent consideration are recognized in the consolidated statements of income.
▪ Goodwill in a Business Combination

Goodwill acquired in a business combination is, from the acquisition date,
allocated to each of the cash-generating units, or groups of cash-generating units
that are expected to benefit from the synergies of the combination, irrespective of
whether other assets or liabilities are assigned to those units or groups of units.
- 22 -
Each unit or group of units to which the goodwill is allocated:
o represents the lowest level within the Group at which the goodwill is
monitored for internal management purposes; and
o is not larger than an operating segment determined in accordance with

PFRS 8, Operating Segments.
Impairment is determined by assessing the recoverable amount of the

cash-generating unit or group of cash-generating units, to which the goodwill
relates. Where the recoverable amount of the cash-generating unit or group of
cash-generating units is less than the carrying amount, an impairment loss is
recognized. Where goodwill forms part of a cash-generating unit or group of
cash-generating units and part of the operation within that unit is disposed of, the
goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured based on the
relative values of the operation disposed of and the portion of the cash-
generating unit retained. An impairment loss with respect to goodwill is not
reversed.
▪ Intangible Assets Acquired in a Business Combination

The cost of an intangible asset acquired in a business combination is the fair
value as at the date of acquisition, determined using discounted cash flows as a
result of the asset being owned.
Following initial recognition, intangible asset is carried at cost less any

accumulated amortization and impairment losses, if any. The useful life of an
intangible asset is assessed to be either finite or indefinite.
An intangible asset with finite life is amortized over the useful economic life and
assessed for impairment whenever there is an indication that the intangible asset
may be impaired. The amortization period and the amortization method for an
intangible asset with a finite useful life are reviewed at least at each reporting
date. A change in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset is accounted for as a change
in accounting estimate. The amortization expense on intangible asset with finite
life is recognized in the consolidated statements of income.
Business Combinations under Common Control

The Group accounts for business combinations involving entities that are ultimately
controlled by the same ultimate parent before and after the business combination
and the control is not transitory, using the pooling of interests method.
The assets and liabilities of the combining entities are reflected in the consolidated
statements of financial position at their carrying amounts. No adjustments are made
to reflect fair values, or recognize any new assets or liabilities, at the date of the
combination. The only adjustments are those to align accounting policies between
the combining entities.
No new goodwill is recognized as a result of the business combination. The only

goodwill that is recognized is any existing goodwill relating to either of the combining
entities. Any difference between the consideration paid or transferred and the equity
acquired is recognized in equity.
The consolidated statements of income reflect the results of the combining entities
for the full year, irrespective of when the combination took place.
- 23 -
Comparatives are presented as if the entities had been combined for the period that
the entities were under common control.
Non-controlling Interests
The acquisitions of non-controlling interests are accounted for as transactions with
owners in their capacity as owners and therefore no goodwill is recognized as a
result of such transactions. Any difference between the purchase price and the net
assets of the acquired entity is recognized in equity. The adjustments to non-
controlling interests are based on a proportionate amount of the identifiable net
assets of the subsidiary.
Investments in Shares of Stock of Associates and Joint Ventures

An associate is an entity in which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of
the investee, but is not control or joint control over those policies.
A joint venture is a type of joint arrangement whereby the parties that have joint
control of the arrangement have rights to the net assets of the joint venture. Joint
control is the contractually agreed sharing of control of an arrangement, which exists
only when decisions about the relevant activities require unanimous consent of the
parties sharing control.
The considerations made in determining significant influence or joint control is similar

to those necessary to determine control over subsidiaries.
The Group’s investments in shares of stock of associates and joint ventures are
accounted for using the equity method.
Under the equity method, the investment in shares of stock of an associate or joint
venture is initially recognized at cost. The carrying amount of the investment is
adjusted to recognize the changes in the Group’s share of net assets of the
associate or joint venture since the acquisition date. Goodwill relating to the
associate or joint venture is included in the carrying amount of the investment and is
neither amortized nor individually tested for impairment.
The Group’s share in profit or loss of an associate or joint venture is recognized as

“Equity in net earnings (losses) of associates and joint ventures” account in the
consolidated statements of income. Adjustments to the carrying amount may also be
necessary for changes in the Group’s proportionate interest in the associate or joint
venture arising from changes in the associate or joint venture’s other comprehensive
income. The Group’s share on these changes is recognized as “Share in other
comprehensive income (loss) of associates and joint ventures - net” account in the
consolidated statements of comprehensive income. Unrealized gains and losses
resulting from transactions between the Group and the associate or joint venture are
eliminated to the extent of the interest in the associate or joint venture.
After application of the equity method, the Group determines whether it is necessary
to recognize an impairment loss on its investment in the shares of stock of an
associate or joint venture. At each reporting date, the Group determines whether
there is objective evidence that the investment in shares of stock of an associate or
joint venture is impaired. If there is such evidence, the Group calculates the amount
of impairment as the difference between the recoverable amount and carrying
amount of the investment in shares of stock of an associate or joint venture and then
recognizes the loss as part of “Equity in net earnings (losses) of associates and joint
ventures” account in the consolidated statements of income.
- 24 -
Upon loss of significant influence over the associate or joint control over the joint
venture, the Group measures and recognizes any retained investment at fair value.
Any difference between the carrying amount of the investment in an associate or
joint venture upon loss of significant influence or joint control, and the fair value of
the retained investment and proceeds from disposal is recognized in the
The financial statements of the associate or joint venture are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
Property, Plant and Equipment

Property, plant and equipment, except for land, are stated at cost less accumulated
depreciation and any accumulated impairment in value. Such cost includes the cost
of replacing part of the property, plant and equipment at the time the cost is incurred,
if the recognition criteria are met, and excludes the costs of day-to-day servicing.
Land is stated at cost less impairment in value, if any.
The initial cost of property, plant and equipment comprises its construction cost or
purchase price, including import duties, taxes and any directly attributable costs in
bringing the asset to its working condition and location for its intended use. Cost also
includes related asset retirement obligation (ARO), if any. Expenditures incurred after
the asset has been put into operation, such as repairs, maintenance and overhaul
costs, are normally recognized as expense in the period the costs are incurred.
Major repairs are capitalized as part of property, plant and equipment only when it is
probable that future economic benefits associated with the items will flow to the
Group and the cost of the items can be measured reliably.
Capital projects in progress (CPIP) represents the amount of accumulated

expenditures on unfinished and/or ongoing projects. This includes the costs of
construction and other direct costs. Borrowing costs that are directly attributable to
the construction of plant and equipment are capitalized during the construction
period. CPIP is not depreciated until such time that the relevant assets are ready for
use.
Depreciation, which commence when the assets are available for their intended use,
are computed using the straight-line method over the following estimated useful lives
of the assets:
Number of Years
Land improvements 5 - 50
Buildings and improvements 2 - 50
Power plants 5 - 42
Refinery and plant equipment 4 - 35
Service stations and other equipment 3 - 30
Equipment, furniture and fixtures 2 - 50
Mine properties 55
Leasehold improvements 2 - 50
or term of the lease,
Effective January 1, 2020, the Group adopted the units of production method (UOP)
for the depreciation of refinery and plant equipment and certain power plant assets
used in production of fuel, using expected capacity over the estimated useful lives of
these assets.
- 25 -
The remaining useful lives, residual values, and depreciation methods are reviewed
and adjusted periodically, if appropriate, to ensure that such periods and methods of
depreciation are consistent with the expected pattern of economic benefits from the
items of property, plant and equipment.
The carrying amounts of property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate that the carrying amounts may
not be recoverable.
Fully depreciated assets are retained in the accounts until they are no longer in use.
An item of property, plant and equipment is derecognized when either it has been
disposed of or when it is permanently withdrawn from use and no future economic
benefits are expected from its use or disposal. Any gain or loss arising from the
retirement and disposal of an item of property, plant and equipment (calculated as
the difference between the net disposal proceeds and the carrying amount of the
asset) is recognized in the consolidated statements of income in the period of
retirement and disposal.
Stripping Costs
As part of mining operations, the Group incurs stripping costs both during the
development phase and production phase of its operations. Stripping costs incurred
in the development phase of a mine before the production phase commences
(development stripping) are capitalized as part of the cost of constructing the mine
and subsequently amortized over its useful life using UOP. The capitalization of
development stripping costs ceases when the mine is commissioned and ready for
use as intended by management. After the commencement of production, further
development of the mine may require a phase of unusually high stripping that is
similar in nature to development phase stripping. The cost of such stripping is
accounted for in the same way as development stripping.
Production stripping is generally considered to create two benefits, being either the
production of inventory or improved access to the ore to be mined in the future.
Where the benefits are realized in the form of inventory produced in the period, the
production stripping costs are accounted for as part of the cost of producing those
inventories. Where the benefits are realized in the form of improved access to the
ore to be mined in the future, the costs are recognized as a noncurrent asset,
referred to as a ‘stripping activity asset’, if the following criteria are met:
(a) future economic benefits (improved access to the ore body) are probable;
(b) the component of the ore body for which access will be improved can be
accurately identified; and
(c) the costs associated with the improved access can be reliably measured.
If all of the criteria are not met, the production stripping costs are recognized in profit
or loss as operating costs when incurred.
- 26 -
Leases
At inception of a contract, the Group assesses whether a contract is, or contains, a
lease. A contract is, or contains, a lease if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration. To
assess whether a contract conveys the right to control the use of an identified asset
for a period of time, the Group assesses whether, throughout the period of use:
▪ the Group has the right to obtain substantially all the economic benefits from use
of the identified asset; and
▪ the Group has the right to direct the use of the identified asset.
Group as Lessee
The Group recognizes a right-of-use asset and a lease liability at the lease
commencement date (i.e., the date the underlying asset is available for use). The
right-of-use asset is initially measured at cost, which comprises the initial amount of
the lease liability adjusted for any lease payments made at or before the
commencement date, plus any initial direct costs incurred and an estimate of costs to
dismantle and remove the underlying asset or to restore the underlying asset or the
site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method

from the commencement date to the earlier of the end of the useful life of the
right-of-use asset or the end of the lease term, as follows:
Number of Years
Land 2 - 999
Power plants 29 - 43
Service stations and other equipment 10 - 12
Machinery and equipment 2-7
In addition, the right-of-use asset is periodically reduced by impairment losses, if any,

and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments
that are not paid at the commencement date, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily determined, the Group’s
incremental borrowing rate. Generally, the Group uses its incremental borrowing rate
as the discount rate.
Lease payments included in the measurement of the lease liability comprise the
following:
▪ fixed payments, including in-substance fixed payments, less any lease incentives
receivable;
▪ variable lease payments that depend on an index or a rate, initially measured

using the index or rate as at the commencement date;
▪ amounts expected to be payable under a residual value guarantee; and
▪ the exercise price under a purchase option that the Group is reasonably certain
to exercise, lease payments in an optional renewal period if the Group is
reasonably certain to exercise an extension option, and penalties for early
termination of a lease unless the Group is reasonably certain not to terminate
early.
- 27 -
The lease liability is measured at amortized cost using the effective interest method.
The carrying amount of the lease liability is remeasured when there is a change in
future lease payments arising from a change in an index or rate, a change in the
estimate of the amount expected to be payable under a residual value guarantee, or
a change in the assessment of whether a purchase or extension option is reasonably
certain to be exercised or a termination option is reasonably certain not to be
exercised.
When the lease liability is remeasured, a corresponding adjustment is made to the

carrying amount of the right-of-use asset, or is recognized in profit or loss if the
carrying amount of the right-of-use asset has been reduced to zero.
The Group has elected not to recognize right-of-use assets and lease liabilities for
short-term leases (i.e., lease that have a lease term of 12 months or less from the
commencement date and do not contain a purchase option) and leases of low-value
assets. The Group recognizes the lease payments associated with these leases as
expense on a straight-line basis over the lease term.
The Group applies the practical expedient allowing it not to assess whether eligible
rent concessions that are a direct consequence of the Corona Virus Disease 2019
(COVID-19) pandemic are lease modifications. The practical expedient is applied
consistently to contracts with similar characteristics and in similar circumstances. For
rent concessions in leases to which the Group chooses not to apply the practical
expedient, or that do not qualify for the practical expedient, the Group assesses
whether there is a lease modification.
Group as Lessor
The Group determines at lease inception whether each lease is a finance lease or an
operating lease.
To classify each lease, the Group makes an overall assessment of whether the lease
transfers substantially all of the risks and rewards incidental to ownership of the
underlying asset. If this is the case, the lease is classified as a finance lease; if not, it
is classified as an operating lease. As part of the assessment, the Group considers
certain indicators such as whether the lease is for the major part of the economic life
of the asset.
When the Group is an intermediate lessor, it accounts for the head lease and the
sublease separately. It assesses the lease classification of a sublease with reference
to the right-of-use asset arising from the head lease. If a head lease is a short-term
lease to which the Group applies the recognition exemption, it classifies the sublease
as an operating lease.
If an arrangement contains lease and non-lease components, the Group applies

PFRS 15 to allocate the consideration in the contract.
The Group recognizes lease payments received under operating leases as rent
income on a straight-line basis over the lease term.
- 28 -
Investment Property
Investment property consists of property held to earn rentals and/or for capital
appreciation but not for sale in the ordinary course of business, used in the
production or supply of goods or services or for administrative purposes. Investment
property, except for land, is measured at cost including transaction costs less
accumulated depreciation and any accumulated impairment in value. The carrying
amount includes the cost of replacing part of an existing investment property at the
time the cost is incurred, if the recognition criteria are met, and excludes the costs of
day-to-day servicing of an investment property. Land is stated at cost less any
impairment in value.
Depreciation, which commence when the assets are available for their intended use,
are computed using the straight-line method over the following estimated useful lives
of the assets:
Number of Years
Land and leasehold improvements 5 - 50
or term of the lease,
Machinery and equipment 3 - 40
Right-of-use assets 2 - 50
The useful lives, residual values and depreciation method are reviewed and
adjusted, if appropriate, at each reporting date.
Investment property is derecognized either when it has been disposed of or when it

is permanently withdrawn from use and no future economic benefit is expected from
its disposal. Any gains and losses on the retirement and disposal of investment
property are recognized in the consolidated statements of income in the period of
retirement and disposal.
Transfers are made to investment property when, and only when, there is an actual
change in use, evidenced by ending of owner-occupation or commencement of an
operating lease to another party. Transfers are made from investment property
when, and only when, there is an actual change in use, evidenced by
commencement of the owner-occupation or commencement of development with a
view to sell.
For a transfer from investment property to owner-occupied property or inventories,

the cost of property for subsequent accounting is its carrying amount at the date of
change in use. If the property occupied by the Group as an owner-occupied property
becomes an investment property, the Group accounts for such property in
accordance with the policy stated under property, plant and equipment up to the date
of change in use.
Intangible Assets
Intangible assets acquired separately are measured on initial recognition at cost.
The cost of an intangible asset acquired in a business combination is its fair value at
the date of acquisition. Subsequently, intangible assets are carried at cost less
accumulated amortization and any accumulated impairment losses. Internally
generated intangible assets, excluding capitalized development costs, are not
capitalized and expenditures are recognized in the consolidated statements of
income in the year in which the related expenditures are incurred.
The useful lives of intangible assets are assessed to be either finite or indefinite.
- 29 -
Intangible assets with finite lives are amortized over the useful life and assessed for
impairment whenever there is an indication that the intangible assets may be
impaired. The amortization period and the amortization method used for an
intangible asset with a finite useful life are reviewed at least at each reporting date.
Changes in the expected useful life or the expected pattern of consumption of future
economic benefits embodied in the asset are accounted for by changing the
amortization period or method, as appropriate, and are treated as changes in
accounting estimate. The amortization expense on intangible assets with finite lives
is recognized in the consolidated statements of income consistent with the function
of the intangible asset.
Except for mineral rights and evaluation asset which is amortized using UOP
method, amortization of other intangible assets with finite lives is computed using the
straight-line method over the following estimated useful lives:
Number of Years
Toll road concession rights 28 - 36
Airport concession rights 25 - 50
Power concession right 25
Water concession right 30
Computer software and licenses 2 - 10
Other rights 27
The Group assessed the useful lives of licenses and trademarks and brand names to
be indefinite. Based on an analysis of all the relevant factors, there is no foreseeable
limit to the period over which the assets are expected to generate cash inflows for
the Group.
Licenses and trademarks and brand names with indefinite useful lives are tested for
impairment annually, either individually or at the cash-generating unit level. Such
intangibles are not amortized. The useful life of an intangible asset with an indefinite
life is reviewed annually to determine whether indefinite life assessment continues to
be supportable. If not, the change in the useful life assessment from indefinite to
finite is made on a prospective basis.
Gains or losses arising from the disposal of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset,
and are recognized in the consolidated statements of income when the asset is
derecognized.
Service Concession Arrangements

Public-to-private service concession arrangements where: (a) the grantor controls or
regulates what services the entities in the Group can provide with the infrastructure,
to whom it can provide them, and at what price; and (b) the grantor controls (through
ownership, beneficial entitlement or otherwise) any significant residual interest in the
infrastructure at the end of the term of the arrangement are accounted for under
Philippine Interpretation IFRIC 12, Service Concession Arrangements.
Infrastructures used in a public-to-private service concession arrangement for its
entire useful life (whole-of-life assets) are within the scope of the Interpretation if the
conditions in (a) are met.
The Interpretation applies to both: (i) infrastructure that the entities in the Group
construct or acquire from a third party for the purpose of the service arrangement;
and (ii) existing infrastructure to which the grantor gives the entities in the Group
access for the purpose of the service arrangement.
- 30 -
Infrastructures within the scope of the Interpretation are not recognized as property,
plant and equipment of the Group. Under the terms of the contractual arrangements
within the scope of the Interpretation, an entity acts as a service provider. An entity
constructs or upgrades infrastructure (construction or upgrade services) used to
provide a public service and operates and maintains that infrastructure (operation
services) for a specified period of time.
An entity recognizes a financial asset to the extent that it has an unconditional

contractual right to receive cash or another financial asset from or at the direction of
the grantor for the construction services. An entity recognizes an intangible asset to
the extent that it receives a right (a license) to charge users of the public service.
When the applicable entity has contractual obligations to fulfill as a condition of its
license: (i) to maintain the infrastructure to a specified level of serviceability; or
(ii) to restore the infrastructure to a specified condition before it is handed over to the
grantor at the end of the service arrangement, it recognizes and measures the
contractual obligations in accordance with PAS 37, i.e., at the best estimate of the
expenditure that would be required to settle the present obligation at the reporting
date.
In accordance with PAS 23, Borrowing Costs, borrowing costs attributable to the
arrangement are recognized as expenses in the period in which they are incurred
unless the applicable entities have a contractual right to receive an intangible asset
(a right to charge users of the public service). In this case, borrowing costs
attributable to the arrangement are capitalized during the construction phase of the
arrangement.
The following are the concession rights covered by the service concession
arrangements entered into by the Group:
▪ Airport Concession Rights

Boracay Airport. The airport concession right pertains to the right granted by the
Republic of the Philippines (ROP) to TADHC: (i) to operate the Caticlan Airport
(the Airport Project or the Boracay Airport); (ii) to design and finance the Airport
Projects; and (iii) to operate and maintain the Airport Projects during the
concession period. This also includes the present value of the annual franchise
fee, as defined in the Concession Agreement, payable to the ROP over the
concession period of 25 years. Except for the portion that relates to the annual
franchise fee, which is recognized immediately as intangible asset, the right is
earned and recognized by the Group as the project progresses (Note 4).
The airport concession right is carried at cost less accumulated amortization and
any impairment in value. Amortization is computed using the straight-line method
over the remaining concession periods and assessed for impairment whenever
there is an indication that the asset may be impaired.
The airport concession right is derecognized on disposal or when no future

economic benefits are expected from its use or disposal. Gain or loss from
derecognition of the airport concession rights are measured as the difference
between the net disposal proceeds and the carrying amount of the asset, and is
Manila International Airport. The airport concession right pertains to the right
granted by the ROP to SMAI: (i) to operate; (ii) to design and finance; and
(iii) to operate and maintain the Manila International Airport during the
concession period.
- 31 -
The airport concession right represents the design and construction costs
incurred to obtain the right during the construction period. It is carried at cost less
accumulated amortization and any impairment in value. Subsequent
expenditures or replacement of parts of it, are normally recognized in profit or
loss as these are incurred to maintain the expected future economic benefits
embodied in the airport concession right unless it can be demonstrated that the
expenditures will contribute to the increase in revenue from airport and toll
operations which meet the definition of an intangible asset (Note 4).
The airport concession right will be amortized on a straight-line basis over the
period stated in the Concession Agreement which is approximately 50 years from
issuance of the Certificate of Substantial Completion for the First Phase of the
Project, and will be assessed for impairment whenever there is an indication that
the intangible asset may be impaired. The amortization period and method are
reviewed at least at each reporting year-end or more frequently when an
indication of impairment arises during the reporting year. Changes in the term of
the contract or the expected pattern of consumption of future economic benefits
embodied in the asset is accounted for by changing the amortization period and
method, as appropriate, and treated as changes in accounting estimates.
The airport concession right will be derecognized upon turnover to the ROP.
There will be no gain or loss upon derecognition as the concession right which is
expected to be fully amortized by then and will be handed over to the ROP with
no consideration.
▪ Toll Road Concession Rights. The Group’s toll road concession rights represent
the costs of construction and development, including borrowing costs, if any,
during the construction period of the following projects:
o South Luzon Expressway (SLEX);

o Ninoy Aquino International Airport (NAIA) Expressway;
o Metro Manila Skyway (Skyway);
o Tarlac-Pangasinan-La Union Toll Expressway (TPLEX);
o Southern Tagalog Arterial Road (STAR);
o North Luzon Expressway (NLEX) - SLEX Link (Skyway Stage 3);
o Pasig River Expressway (PAREX);
o Northern Access Link Expressway (NALEX); and
o Southern Access Link Expressway (SALEX).
In exchange for the fulfillment of the Group’s obligations under the Concession
Agreement, the Group is given the right to operate the toll road facilities over the
concession period. Toll road concession rights are recognized initially at the fair
value of the construction services. Following initial recognition, the toll road
concession rights are carried at cost less accumulated amortization and any
impairment losses. Subsequent expenditures or replacement of parts of it are
normally recognized in the consolidated statements of income as these are
incurred to maintain the expected future economic benefits embodied in the toll
road concession rights. Expenditures that will contribute to the increase in
revenue from toll operations are recognized as an intangible asset.
The toll road concession rights are amortized using the straight-line method over
the term of the Concession Agreement. The toll road concession rights are
assessed for impairment whenever there is an indication that the toll road
concession rights may be impaired.
- 32 -
The toll road concession rights will be derecognized upon turnover to the ROP.
There will be no gain or loss upon derecognition of the toll road concession rights
as these are expected to be fully amortized upon turnover to the ROP.
▪ Water Concession Right. The Group’s water concession right pertains to the right
granted by the Metropolitan Waterworks and Sewerage System (MWSS) to
LCWDC as the concessionaire of the supply of treated bulk water, planning,
financing, development, design, engineering, and construction of facilities
including the management, operation and maintenance in order to alleviate the
chronic water shortage and provide potable water needs of the Province of
Bulacan. The Concession Agreement is for a period of 30 years and may be
extended for up to 50 years. The Group’s water concession right represents the
upfront fee, cost of design, construction and development of the Bulacan Bulk
Water Supply Project. The service concession right is not yet amortized until the
construction is completed.
The carrying amount of the water concession right is reviewed for impairment
annually, or more frequently when an indication of impairment arises during the
reporting year.
The water concession right will be derecognized upon turnover to MWSS. There
will be no gain or loss upon derecognition of the water concession right, as this is
expected to be fully amortized upon turnover to MWSS.
▪ Power Concession Right. The Group’s power concession right pertains to the
right granted by the ROP to San Miguel Global Power, through APEC, to operate
and maintain the franchise of Albay Electric Cooperative, Inc. (ALECO). On
January 24, 2014, San Miguel Global Power and APEC entered into an
Assignment Agreement whereby APEC assumed all the rights, interests and
obligations under the Concession Agreement effective January 2, 2014. The
power concession right is carried at cost less accumulated amortization and any
accumulated impairment losses.
The power concession right is amortized using the straight-line method over the
concession period which is 25 years and assessed for impairment whenever
there is an indication that the asset may be impaired.
The power concession right is derecognized on disposal or when no further

economic benefits are expected from its use or disposal. Gain or loss from
derecognition of the power concession right is measured as the difference
between the net disposal proceeds and the carrying amount of the asset, and is
▪ Metro Rail Transit Line 7 (MRT 7 Project). The Group’s capitalized project costs
incurred for the MRT 7 Project is recognized as a financial asset as it does not
convey to the Group the right to control the use of the public service
infrastructure but only an unconditional contractual right to receive cash or
another financial asset from or at the direction of the grantor for the construction
services.
The Group can finance, design, test, commission, construct and operate and
maintain the MRT 7 Project on behalf of the ROP in accordance with the terms
specified in the Concession Agreement.
As payment, the ROP shall pay fixed amortization payment on a semi-annual

basis in accordance with the scheduled payment described in the Concession
Agreement (Note 34).
- 33 -
The amortization period and method are reviewed at least at each reporting date.
Changes in the terms of the Concession Agreement or the expected useful life or the
expected pattern of consumption of future economic benefits embodied in the asset
are accounted for by changing the amortization period or method, as appropriate,
and are treated as changes in accounting estimates. The amortization expense is
recognized in the consolidated statements of income in the expense category
consistent with the function of the intangible asset.
Mineral Rights and Evaluation Assets

The Group’s mineral rights and evaluation assets have finite lives and are carried at
cost less accumulated amortization and any accumulated impairment losses.
Subsequent expenditures are capitalized only when it increases the future economic
benefits embodied in the specific asset to which it relates. All other expenditures are
recognized in the consolidated statements of income as incurred.
Amortization of mineral rights and evaluation assets is recognized in the

consolidated statements of income based on UOP method utilizing only recoverable
coal, limestone and shale reserves as the depletion base. In applying the UOP
method, amortization is normally calculated using the quantity of material extracted
from the mine in the period as a percentage of the total quantity of material to be
extracted in current and future periods based on proved and probable reserves.
The Group’s mineral rights and evaluation asset is amortized using UOP method
over 25 years.
Gain or loss from derecognition of mineral rights and evaluation assets is measured
as the difference between the net disposal proceeds and the carrying amount of the
asset, and is recognized in the consolidated statements of income.
Deferred Exploration and Development Costs

Deferred exploration and development costs comprise of expenditures which are
directly attributable to:
▪ Researching and analyzing existing exploration data;

▪ Conducting geological studies, exploratory drilling and sampling;
▪ Examining and testing extraction and treatment methods; and
▪ Compiling pre-feasibility and feasibility studies.
Deferred exploration and development costs also include expenditures incurred in

acquiring mineral rights and evaluation assets, entry premiums paid to gain access
to areas of interest and amounts payable to third parties to acquire interests in
existing projects.
Exploration assets are reassessed on a regular basis and tested for impairment
provided that at least one of the following conditions is met:
▪ the period for which the entity has the right to explore in the specific area has
expired during the period or will expire in the near future, and is not expected to
be renewed;
▪ substantive expenditure on further exploration for and evaluation of mineral

resources in the specific area is neither budgeted nor planned;
▪ such costs are expected to be recouped in full through successful development

and exploration of the area of interest or alternatively, by its sale; or
- 34 -
▪ exploration and evaluation activities in the area of interest have not yet reached a
stage which permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant operations in
relation to the area are continuing, or planned for the future.
If the project proceeds to development stage, the amounts included within

deferred exploration and development costs are transferred to property, plant and
equipment.
Deferred Containers
Returnable bottles, shells and pallets are measured at cost less accumulated
depreciation and impairment, if any. These are presented as “Deferred containers -
net” under “Other noncurrent assets - net” account in the consolidated statements of
financial position and are depreciated over the estimated useful lives of two to ten
years. Depreciable amount is equal to cost less estimated residual value, equivalent
to the deposit value. Depreciation of deferred containers is included under “Selling
and administrative expenses” account in the consolidated statements of income.
The remaining useful lives, residual values and depreciation method are reviewed
and adjusted periodically, if appropriate, to ensure that such periods and method of
depreciation are consistent with the expected pattern of economic benefits from
deferred containers.
The carrying amount of deferred containers is reviewed for impairment when events
or changes in circumstances indicate that the carrying amount may not be
recoverable.
Refundable containers deposits are collected from customers based on deposit

value and refunded when the containers are returned to the Group in good condition.
These deposits are presented as “Customers’ deposits” under “Accounts payable
and accrued expenses” account in the consolidated statements of financial position.
Impairment of Non-financial Assets

The carrying amounts of investments and advances, property, plant and equipment,
right-of-use assets, investment property, biological assets - net of current portion,
other intangible assets with finite useful lives, deferred containers, deferred
exploration and development costs and idle assets are reviewed for impairment
when events or changes in circumstances indicate that the carrying amount may not
be recoverable. Goodwill, licenses and trademarks and brand names with indefinite
useful lives are tested for impairment annually either individually or at the cash-
generating unit level. If any such indication exists and if the carrying amount exceeds
the estimated recoverable amount, the assets or cash-generating units are written
down to their recoverable amounts. The recoverable amount of the asset is the
greater of fair value less costs to sell and value in use. The fair value less costs to
sell is the amount obtainable from the sale of an asset in an arm’s length transaction
between knowledgeable, willing parties, less costs of disposal. Value in use is the
present value of estimated future cash flows expected to arise from the continuing
use of an asset and from its disposal at the end of its useful life.
In assessing value in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current market assessments
of the time value of money and the risks specific to the asset. For an asset that does
not generate largely independent cash inflows, the recoverable amount is
determined for the cash-generating unit to which the asset belongs. Impairment
losses are recognized in the consolidated statements of income in those expense
categories consistent with the function of the impaired asset.
- 35 -
An assessment is made at each reporting date as to whether there is any indication
that previously recognized impairment losses may no longer exist or may have
decreased. If such indication exists, the recoverable amount is estimated.
A previously recognized impairment loss is reversed only if there has been a change
in the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognized. If that is the case, the carrying amount of the asset
is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation and
amortization, had no impairment loss been recognized for the asset in prior years.
Such reversal is recognized in the consolidated statements of income. After such a
reversal, the depreciation and amortization charge is adjusted in future periods to
allocate the asset’s revised carrying amount, less any residual value, on a systematic
basis over its remaining useful life. An impairment loss with respect to goodwill is not
reversed.
Cylinder Deposits
The Group purchases liquefied petroleum gas cylinders which are loaned to dealers
upon payment by the latter of an amount equivalent to about 90% of the acquisition
cost of the cylinders.
The Group maintains the balance of cylinder deposits at an amount equivalent to

three days worth of inventory of its biggest dealers, but in no case lower than P200
at any given time, to take care of possible returns by dealers.
At the end of each reporting date, cylinder deposits, shown under “Other noncurrent
liabilities” account in the consolidated statements of financial position, are reduced
for estimated non-returns. The reduction is recognized directly in the consolidated
statements of income.
Contract Liabilities
A deferred income is the Group’s obligation to transfer goods or services to a
customer for which the Group has received consideration (or an amount of
consideration is due) from the customer. If a customer pays consideration before the
Group transfers goods or services to the customer, a deferred income is recognized
when the payment is made or the payment is due (whichever is earlier). Deferred
income is recognized as revenue when the Group performs under the contract.
Fair Value Measurements

Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date. The fair value measurement is based on the presumption that the transaction
to sell the asset or transfer the liability takes place either: (a) in the principal market
for the asset or liability; or (b) in the absence of a principal market, in the most
advantageous market for the asset or liability. The principal or most advantageous
market must be accessible to the Group.
The fair value of an asset or liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their best economic interest.
The Group uses valuation techniques that are appropriate in the circumstances and
for which sufficient data are available to measure fair value, maximizing the use of
relevant observable inputs and minimizing the use of unobservable inputs.
- 36 -
All assets and liabilities for which fair value is measured or disclosed in the
consolidated financial statements are categorized within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
Level 1: quoted prices (unadjusted) in active markets for identical assets or

liabilities;
Level 2: inputs other than quoted prices included within Level 1 that are observable
for the asset or liability, either directly or indirectly; and
Level 3: inputs for the asset or liability that are not based on observable market
data.
For assets and liabilities that are recognized in the consolidated financial statements
on a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing the categorization at the end of each
reporting period.
For the purpose of fair value disclosures, the Group has determined classes of
assets and liabilities on the basis of the nature, characteristics and risks of the asset
or liability and the level of the fair value hierarchy.
Provisions
Provisions are recognized when: (a) the Group has a present obligation (legal or
constructive) as a result of past events; (b) it is probable (i.e., more likely than not)
that an outflow of resources embodying economic benefits will be required to settle
the obligation; and (c) a reliable estimate of the amount of the obligation can be
made. Where some or all of the expenditure required to settle a provision is expected
to be reimbursed by another party, the reimbursement is recognized as a separate
asset only when it is virtually certain that reimbursement will be received. The
amount recognized for the reimbursement shall not exceed the amount of the
provision. Provisions are reviewed at each reporting date and adjusted to reflect the
current best estimate.
If the effect of the time value of money is material, provisions are determined by
discounting the expected future cash flows at a pre-tax rate that reflects current
market assessment of the time value of money and the risks specific to the liability.
Where discounting is used, the increase in the provision due to the passage of time
is recognized as interest expense.
Capital Stock and Additional Paid-in Capital

Common Shares
Common shares are classified as equity. Incremental costs directly attributable to the
issue of common shares and share options are recognized as a deduction from
equity, net of any tax effects.
Preferred Shares
Preferred shares are classified as equity if they are non-redeemable, or redeemable
only at the option of the Parent Company, and any dividends thereon are
discretionary. Dividends thereon are recognized as distributions within equity upon
approval by the BOD of the Parent Company.
Preferred shares are classified as a liability if they are redeemable on a specific date
or at the option of the shareholders, or if dividend payments are not discretionary.
Dividends thereon are recognized as interest expense in the consolidated
statements of income as accrued.
- 37 -
Additional Paid-in Capital
When the shares are sold at premium, the difference between the proceeds and the
par value is credited to the “Additional paid-in capital” account. When shares are
issued for a consideration other than cash, the proceeds are measured by the fair
value of the consideration received. In case the shares are issued to extinguish or
settle the liability of the Parent Company, the shares are measured either at the fair
value of the shares issued or fair value of the liability settled, whichever is more
reliably determinable.
Capital Securities
Redeemable Perpetual Securities (RPS) and Senior Perpetual Capital Securities
(SPCS) are classified as equity when there is no contractual obligation to deliver
cash or other financial assets to another person or entity or to exchange financial
assets or financial liabilities with another person or entity that is potentially
unfavorable to the issuer.
Incremental costs directly attributable to the issuance of RPS and SPCS are
recognized as a deduction from equity, net of tax.
Retained Earnings
Retained earnings represent the accumulated net income or losses, net of any
dividend distributions and other capital adjustments. Appropriated retained earnings
represent that portion which is restricted and therefore not available for any dividend
declaration.
Treasury Shares
Own equity instruments which are reacquired are carried at cost and deducted from
equity. No gain or loss is recognized on the purchase, sale, reissuance or
cancellation of the Parent Company’s own equity instruments. When the shares are
retired, the capital stock account is reduced by its par value and the excess of cost
over par value upon retirement is debited to additional paid-in capital to the extent of
the specific or average additional paid-in capital when the shares were issued and to
retained earnings for the remaining balance.
Revenue
The Group recognizes revenue from contracts with customers when control of the
goods or services are transferred to the customer at an amount that reflects the
consideration to which the Group expects to be entitled in exchange for those goods
or services, excluding amounts collected on behalf of third parties.
The transfer of control can occur over time or at a point in time. Revenue is
recognized at a point in time unless one of the following criteria is met, in which case
it is recognized over time: (a) the customer simultaneously receives and consumes
the benefits as the Group performs its obligations; (b) the Group’s performance
creates or enhances an asset that the customer controls as the asset is created or
enhanced; or (c) the Group’s performance does not create an asset with an
alternative use to the Group and the Group has an enforceable right to payment for
performance completed to date.
The Group assesses its revenue arrangements to determine if it is acting as principal

or agent. The Group has concluded that it acts as a principal as it controls the goods
or services before transferring to the customer.
- 38 -
The following specific recognition criteria must also be met before revenue is
recognized:
Revenue from Sale of Food and Beverage, Packaging, Petroleum Products and
Cement and Aggregates
Revenue is recognized at the point in time when control of the goods is transferred to
the customer, which is normally upon delivery of the goods. Trade discounts and
volume rebate do not result to significant variable consideration and are generally
determined based on concluded sales transactions as at the end of each period.
Payment is generally due within 30 to 60 days from delivery.
Revenue from sale of petroleum products is allocated between the consumer loyalty
program and the other component of the sale. The allocation is based on the relative
stand-alone selling price of the points. The amount allocated to the consumer loyalty
program is deducted from revenue at the time points are awarded to the consumer.
A deferred liability included under “Accounts payable and accrued expenses”
account in the consolidated statements of financial position is set up until the Group
has fulfilled its obligations to supply the discounted products under the terms of the
program or when it is no longer probable that the points under the program will be
redeemed. The deferred liability is based on the best estimate of future redemption
profile. All the estimates are reviewed on an annual basis or more frequently, where
there is an indication of a material change.
Revenue from Power Generation and Trading

Revenue from power generation and trading is recognized over time when actual
power or capacity is generated, transmitted and/or made available to the customers,
net of related discounts and adjustments.
Revenues from retail and other power-related services are recognized over time
upon the supply of electricity to the customers. The Uniform Filing Requirements on
the rate unbundling released by the Energy Regulatory Commission (ERC) on
October 30, 2001 specified the following bill components: (a) generation charge,
(b) transmission charge, (c) system loss charge, (d) distribution charge, (e) supply
charge, (f) metering charge, (g) currency exchange rate adjustments, where
applicable, and (h) interclass and life subsidies. Feed-in tariffs allowance, Value-
added Tax (VAT) and universal charges are billed and collected on behalf of the
national and local government and do not form part of the Group’s revenue.
Generation, transmission and system loss charges, which are part of revenues, are
pass-through charges.
Revenue from Sale of Real Estate

Revenue from sale of real estate projects under pre-completion stage is recognized
over time based on percentage of completion since the Group does not have an
alternative use of the specific real estate property sold as the Group is precluded by
the contract from redirecting the use of the property for a different purpose. Further,
the Group has rights to payment for the development completed to date as the
Group can choose to complete the development and enforce its rights to full payment
under the contract even if the customer defaults on amortization payments. The
Group determines the stage of completion based on surveys done by the Group’s
engineers and total costs to be incurred on a per unit basis. Revenue is recognized
when 10% of the total contract price has already been collected.
Revenue from sale of completed real estate projects, and undeveloped land or raw
land is recognized at a point in time. The Group recognizes in full the revenue and
cost from sale of completed real estate projects and undeveloped land when 10% or
more of the contract price is received.
- 39 -
If the transaction does not qualify for revenue recognition, the deposit method is
applied until all conditions for recording the sale are met. Pending the recognition of
revenue, payments received from customers are presented under “Accounts payable
and accrued expenses” account in the consolidated statements of financial position.
Cancellation of real estate sales is accounted for on the year of forfeiture. The
repossessed real estate projects are recognized at fair value less cost to repossess.
Any gain or loss on cancellation is recognized as part of “Other income (charges) -
net” account in the consolidated statements of income.
Revenue from Service Concession Arrangements

Revenue from toll operations is recognized upon the use by the road users of the toll
road and is paid by way of cash or charge against Radio Frequency Identification
account. Toll fees are set and regulated by the Toll Regulatory Board (TRB).
Landing, take-off and parking fees are recognized as the services are rendered over
time which is the period from landing up to take-off of aircrafts.
Terminal fees are recognized upon receipt of fees charged to passengers for the use
of airport and port terminals.
Revenue from port cargo handling and ancillary services is recognized as the
services are rendered over time based on the quantity of items handled during the
period multiplied by a predetermined rate.
Revenue from construction contracts is recognized over time based on the

percentage of completion, measured by reference to the proportion of costs incurred
to date to estimated total costs for each contract.
Revenue from Sale of Other Services

Revenue from freight services is recognized as the services are rendered over time
based on every voyage contracted with customers during the period multiplied by a
predetermined rate.
Revenue from Other Sources

Revenue from Agricultural Produce. Revenue from initial recognition of agricultural
produce is measured at fair value less estimated costs to sell at the point of harvest.
Fair value is based on the relevant market price at the point of harvest.
Interest Income. Interest income is recognized using the effective interest method. In
calculating interest income, the effective interest rate is applied to the gross carrying
amount of the asset.
Dividend Income. Dividend income is recognized when the Group’s right to receive
the payment is established.
Rent Income. Rent income from operating lease is recognized on a straight-line

basis over the related lease terms. Lease incentives granted are recognized as an
integral part of the total rent income over the term of the lease.
Gain or Loss on Sale of Investments in Shares of Stock. Gain or loss is recognized

when the Group disposes of its investment in shares of stock of a subsidiary,
associate and joint venture and financial assets at FVPL. Gain or loss is computed
as the difference between the proceeds of the disposed investment and its carrying
amount, including the carrying amount of goodwill, if any.
- 40 -
Costs and Expenses
Costs and expenses are decreases in economic benefits during the reporting period
in the form of outflows or decrease of assets or incurrence of liabilities that result in
decreases in equity, other than those relating to distributions to equity participants.
Expenses are recognized when incurred.
Borrowing Costs
Borrowing costs directly attributable to the acquisition or construction of an asset that
necessarily takes a substantial period of time to get ready for its intended use are
capitalized as part of the cost of the respective assets. All other borrowing costs are
expensed in the period they occur. Capitalization of borrowing costs commences
when the activities to prepare the asset are in progress and expenditures and
borrowing costs are being incurred. Borrowing costs are capitalized until the assets
are substantially ready for their intended use.
Investment income earned on the temporary investment of specific borrowings

pending expenditure on qualifying assets is deducted from the borrowing costs
eligible for capitalization.
Research and Development Costs

Research costs are expensed as incurred. Development costs incurred on an
individual project are carried forward when their future recoverability can be
reasonably regarded as assured. Any expenditure carried forward is amortized in line
with the expected future sales from the related project.
The carrying amount of development costs is reviewed for impairment annually when
the related asset is not yet in use. Otherwise, this is reviewed for impairment when
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
Employee Benefits
Short-term Employee Benefits
Short-term employee benefits are expensed as the related service is provided.
A liability is recognized for the amount expected to be paid if the Group has a
present legal or constructive obligation to pay this amount as a result of past service
provided by the employee and the obligation can be estimated reliably.
Retirement Costs
The net defined benefit retirement liability or asset is the aggregate of the present
value of the amount of future benefit that employees have earned in return for their
service in the current and prior periods, reduced by the fair value of plan assets
(if any), adjusted for any effect of limiting a net defined benefit asset to the asset
ceiling. The asset ceiling is the present value of economic benefits available in the
form of reductions in future contributions to the plan.
The cost of providing benefits under the defined benefit retirement plan is actuarially
determined using the projected unit credit method. Projected unit credit method
reflects services rendered by employees to the date of valuation and incorporates
assumptions concerning projected salaries of employees. Actuarial gains and losses
are recognized in full in the period in which they occur in other comprehensive
income. Such actuarial gains and losses are also immediately recognized in equity
and are not reclassified to profit or loss in subsequent period.
- 41 -
Defined benefit costs comprise the following:
▪ Service costs;
▪ Net interest on the defined benefit retirement liability or asset; and
▪ Remeasurements of defined benefit retirement liability or asset.
Service costs which include current service costs, past service costs and gains or
losses on non-routine settlements are recognized as expense in the consolidated
statements of income. Past service costs are recognized when plan amendment or
curtailment occurs. These amounts are calculated periodically by independent
qualified actuary.
Net interest on the net defined benefit retirement liability or asset is the change
during the period as a result of contributions and benefit payments, which is
determined by applying the discount rate based on the government bonds to the net
defined benefit retirement liability or asset. Net interest on the net defined benefit
retirement liability or asset is recognized as expense or income in the consolidated
statements of income.
Remeasurements of net defined benefit retirement liability or asset comprising

actuarial gains and losses, return on plan assets, and any change in the effect of the
asset ceiling (excluding net interest) are recognized immediately in other
comprehensive income in the period in which they arise. Remeasurements are not
reclassified to consolidated statements of income in subsequent periods.
When the benefits of a plan are changed, or when a plan is curtailed, the resulting
change in benefit that relates to past service or the gain or loss on curtailment is
recognized immediately in the consolidated statements of income. The Group
recognizes gains and losses on the settlement of a defined benefit retirement plan
when the settlement occurs.
Foreign Currency
Foreign Currency Translations
Transactions in foreign currencies are initially recorded in the respective functional
currencies of the Group entities at exchange rates at the dates of the transactions.
Monetary assets and monetary liabilities denominated in foreign currencies are

translated to the functional currency at exchange rate at the reporting date.
Non-monetary assets and non-monetary liabilities denominated in foreign currencies

that are measured at fair value are translated to the functional currency at the
exchange rate when the fair value was determined. Non-monetary items
denominated in foreign currencies that are measured based on historical cost are
translated using the exchange rate at the date of the transaction.
Foreign currency differences arising on translation are recognized in the

consolidated statements of income, except for differences arising on the translation
of monetary items that in substance form part of a net investment in a foreign
operation and hedging instruments in a qualifying cash flow hedge or hedge of a net
investment in a foreign operation, which are recognized in other comprehensive
income.
Foreign Operations
The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated to Philippine peso at exchange
rates at the reporting date. The income and expenses of foreign operations are
translated to Philippine peso at average exchange rates for the period.
- 42 -
Foreign currency differences are recognized in other comprehensive income and
presented in the “Translation reserve” account in the consolidated statements of
changes in equity. However, if the operation is not a wholly-owned subsidiary, the
relevant proportionate share of the translation difference is allocated to the non-
controlling interests. When a foreign operation is disposed of such that control,
significant influence or joint control is lost, the cumulative amount in the translation
reserve related to that foreign operation is reclassified to the profit or loss as part of
the gain or loss on disposal.
When the Group disposes of only part of its interest in a subsidiary that includes a
foreign operation while retaining control, the relevant proportion of the cumulative
amount is reattributed to non-controlling interests. When the Group disposes of only
part of its investment in shares of stock of an associate or joint venture that includes
a foreign operation while retaining significant influence or joint control, the relevant
proportion of the cumulative amount is reclassified to profit or loss.
When the settlement of a monetary item receivable from or payable to a foreign

operation is neither planned nor likely to occur in the foreseeable future, foreign
exchange gains and losses arising from such a monetary item are considered to
form part of a net investment in a foreign operation and are recognized in other
comprehensive income and presented in the “Translation reserve” account in the
consolidated statements of changes in equity.
Taxes
Current Tax. Current tax is the expected tax payable or receivable on the taxable
income or loss for the year, using tax rates enacted or substantively enacted at the
reporting date, and any adjustment to tax payable in respect of previous years.
Current tax relating to items recognized directly in equity is recognized in equity and
not in profit or loss. The Group periodically evaluates positions taken in the tax
returns with respect to situations in which applicable tax regulations are subject to
interpretations and establishes provisions where appropriate.
Deferred Tax. Deferred tax is recognized using the liability method in respect of
temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
▪ where the deferred tax liability arises from the initial recognition of goodwill or of
an asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or
loss; and
▪ with respect to taxable temporary differences associated with investments in

shares of stock of subsidiaries, associates and interests in joint ventures, where
the timing of the reversal of the temporary differences can be controlled and it is
probable that the temporary differences will not reverse in the foreseeable future.
- 43 -
Deferred tax assets are recognized for all deductible temporary differences,
carryforward benefits of unused tax credits - Minimum Corporate Income Tax (MCIT)
and unused tax losses - Net Operating Loss Carry Over (NOLCO), to the extent that
it is probable that taxable profit will be available against which the deductible
temporary differences, and the carryforward benefits of MCIT and NOLCO can be
utilized, except:
▪ where the deferred tax asset relating to the deductible temporary difference
arises from the initial recognition of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
▪ with respect to deductible temporary differences associated with investments in

shares of stock of subsidiaries, associates and interests in joint ventures,
deferred tax assets are recognized only to the extent that it is probable that the
temporary differences will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each reporting date and
reduced to the extent that it is no longer probable that sufficient taxable profit will be
available to allow all or part of the deferred tax asset to be utilized. Unrecognized
deferred tax assets are reassessed at each reporting date and are recognized to the
extent that it has become probable that future taxable profit will allow the deferred tax
asset to be recovered.
The measurement of deferred tax reflects the tax consequences that would follow
the manner in which the Group expects, at the end of the reporting period, to recover
or settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply in the year when the asset is realized or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted at the reporting
date.
Current tax and deferred tax are recognized in the consolidated statements of
income, except to the extent that it relates to a business combination, or items
recognized directly in equity or in other comprehensive income.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current tax liabilities and the deferred
taxes relate to the same taxable entity and the same taxation authority.
VAT. Revenues, expenses and assets are recognized net of the amount of VAT,
except:
▪ where the tax incurred on a purchase of assets or services is not recoverable

from the taxation authority, in which case the tax is recognized as part of the cost
of acquisition of the asset or as part of the expense item as applicable; and
▪ receivables and payables that are stated with the amount of tax included.
The net amount of tax recoverable from, or payable to, the taxation authority is
included as part of “Prepaid expenses and other current assets” or “Income and
other taxes payable” accounts in the consolidated statements of financial position.
- 44 -
Non-cash Distribution to Equity Holders of the Parent Company and Assets Held for
Sale
The Group classifies noncurrent assets, or disposal groups comprising assets and
liabilities as held for sale or distribution, if their carrying amounts will be recovered
primarily through sale or distribution rather than through continuing use. The assets
or disposal groups are generally measured at the lower of their carrying amount and
fair value less costs to sell or distribute, except for some assets which are covered
by other standards. Any impairment loss on a disposal group is allocated first to
goodwill, and then to the remaining assets and liabilities on pro rata basis, except
that no loss is allocated to inventories, financial assets, deferred tax assets,
employee benefit assets, investment property or biological assets, which continue to
be measured in accordance with the Group’s accounting policies. Impairment losses
on initial classification as held for sale or distribution and subsequent gains and
losses on remeasurement are recognized in the consolidated statements of income.
Gains are not recognized in excess of any cumulative impairment losses.
The criteria for held for sale or distribution is regarded as met only when the sale or
distribution is highly probable and the asset or disposal group is available for
immediate sale or distribution in its present condition. Actions required to complete
the sale or distribution should indicate that it is unlikely that significant changes to the
sale or distribution will be made or that the decision on distribution or sale will be
withdrawn. Management must be committed to the sale or distribution within one
year from date of classification.
The Group recognizes a liability to make non-cash distributions to equity holders of

the Parent Company when the distribution is authorized and no longer at the
discretion of the Parent Company. Non-cash distributions are measured at the fair
value of the assets to be distributed with fair value remeasurements recognized
directly in equity. Upon distribution of non-cash assets, any difference between the
carrying amount of the liability and the carrying amount of the assets to be distributed
is recognized in the consolidated statements of income.
Intangible assets, property, plant and equipment and investment property once
classified as held for sale or distribution are not amortized or depreciated. In addition,
equity accounting of equity-accounted investees ceases once classified as held for
sale or distribution.
Assets and liabilities classified as held for sale or distribution are presented
separately as current items in the consolidated statements of financial position.
Discontinued Operations
Discontinued operations are excluded from the results of continuing operations and
are presented as a single amount as “Income after income tax from discontinued
operations” in the consolidated statements of income.
Related Parties
Parties are considered to be related if one party has the ability, directly or indirectly,
to control the other party or exercise significant influence over the other party in
making financial and operating decisions. Parties are also considered to be related if
they are subject to common control. Related parties may be individuals or corporate
entities.
- 45 -
Basic and Diluted Earnings Per Common Share (EPS)
Basic EPS is computed by dividing the net income for the period attributable to
equity holders of the Parent Company, net of dividends on preferred shares and
distributions to holders of RPS and SPCS, by the weighted average number of
issued and outstanding common shares during the period, with retroactive
adjustment for any stock dividends declared.
Diluted EPS is computed in the same manner, adjusted for the effect of all potential
dilutive debt or equity instruments.
Operating Segments
The Group’s operating segments are organized and managed separately according
to the nature of the products and services provided, with each segment representing
a strategic business unit that offers different products and serves different markets.
Financial information on operating segments is presented in Note 6 to the
consolidated financial statements. The Chief Executive Officer (the chief operating
decision maker) reviews management reports on a regular basis.
The measurement policies the Group used for segment reporting under PFRS 8 are
the same as those used in the consolidated financial statements. There have been
no changes in the measurement methods used to determine reported segment profit
or loss from prior periods.
Segment revenues, expenses and performance include sales and purchases

between business segments. Such sales and purchases are eliminated in
consolidation.
Contingencies
Contingent liabilities are not recognized in the consolidated financial statements.
They are disclosed in the notes to the consolidated financial statements unless the
possibility of an outflow of resources embodying economic benefits is remote.
Contingent assets are not recognized in the consolidated financial statements but
are disclosed in the notes to the consolidated financial statements when an inflow of
economic benefits is probable.
Events After the Reporting Date

Post year-end events that provide additional information about the Group’s financial
position at the reporting date (adjusting events) are reflected in the consolidated
financial statements. Post year-end events that are not adjusting events are
disclosed in the notes to the consolidated financial statements when material.
4. Use of Judgments, Estimates and Assumptions
The preparation of the consolidated financial statements in accordance with PFRS

requires management to make judgments, estimates and assumptions that affect the
application of accounting policies and the amounts of assets, liabilities, income and
expenses reported in the consolidated financial statements at the reporting date.
However, uncertainty about these judgments, estimates and assumptions could
result in an outcome that could require a material adjustment to the carrying amount
of the affected asset or liability in the future.
Judgments and estimates are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. Revisions are recognized in the
period in which the judgments and estimates are revised and in any future period
affected.
- 46 -
Judgments
In the process of applying the accounting policies, the Group has made the following
judgments, apart from those involving estimations, which have an effect on the
amounts recognized in the consolidated financial statements:
Measurement of Biological Assets. Breeding stocks are carried at accumulated costs

net of amortization and any impairment in value while growing hogs, poultry livestock
and goods in process are carried at accumulated costs. The costs and expenses
incurred up to the start of the productive stage are accumulated and amortized over
the estimated productive lives of the breeding stocks. The Group uses this method of
valuation since fair value cannot be measured reliably. The Group’s biological assets
or any similar assets prior to point of harvest have no active market available in the
Philippine poultry and hog industries. Further, the existing sector benchmarks are
determined to be irrelevant and the estimates (i.e., revenues due to highly volatile
prices, input costs and efficiency values) necessary to compute for the present value
of expected net cash flows comprise a wide range of data which will not result in a
reliable basis for determining the fair value.
Determining whether a Contract Contains a Lease. The Group uses its judgment in
determining whether a contract contains a lease. At inception of a contract, the
Group makes an assessment whether it has the right to obtain substantially all the
economic benefits from the use of the identified asset and the right to direct the use
of the identified asset.
Operating Lease Commitments - Group as Lessor. The Group has entered into
various lease agreements as a lessor. The Group had determined that it retains all
the significant risks and rewards of ownership of the property leased out on operating
leases.
Rent income recognized in the consolidated statements of income amounted to

P1,766, P1,496 and P1,382 in 2022, 2021 and 2020, respectively (Notes 32 and 34).
Determining the Lease Term of Contracts with Renewal Options - Group as Lessee.
The Group determines the lease term as the non-cancellable term of the lease,
together with any periods covered by an option to extend the lease if it is reasonably
certain to be exercised.
The Group has several lease contracts that include extension options. At lease
commencement date, the Group applies judgment in evaluating whether it is
reasonably certain to exercise the option to renew the lease by considering all
relevant factors that create an economic incentive for it to exercise the renewal
option. The Group reassesses whether it is reasonably certain to exercise the
options if there is a significant event or change in circumstances within its control.
Identification of Distinct Performance Obligation. The Group assesses the goods or

services promised in a contract with a customer and identifies as a performance
obligation either: (a) a good or service (or a bundle of goods or services) that is
distinct; or (b) a series of distinct goods or services that are substantially the same
and that have the same pattern of transfer to the customer. The Group has
determined that it has distinct performance obligations other than the sale of
petroleum products such as the provision of technical support and lease of
equipment to its customers and allocates the transaction price into these several
performance obligations.
Applicability of Philippine Interpretation IFRIC 12. In accounting for the Group’s

transactions in connection with its Concession Agreement with the ROP, significant
judgment was applied to determine the most appropriate accounting policy to use.
- 47 -
Management used Philippine Interpretation IFRIC 12 as guide and determined that
the Concession Agreement is within the scope of the interpretation since it
specifically indicated that the ROP will regulate what services the Group must
provide, at what prices these services will be offered, and that at the end of the
concession period, the entire infrastructure, as defined in the Concession
Agreement, will be turned over to the ROP (Note 34).
Management determined that the consideration receivable from the ROP, in

exchange for the fulfillment of the Group’s obligations under the Concession
Agreement, may either be an intangible asset in the form of a right (license) to
charge fees to users or financial asset in the form of an unconditional right to receive
cash or another financial asset. Judgment was further exercised by management in
determining the cost components of acquiring the right. Further reference to the
terms of the Concession Agreement (Note 34) was made to determine such costs.
a. Airport Concession Rights
Boracay Airport. The airport concession right consists of: (i) Airport Project cost;
(ii) present value of infrastructure retirement obligation (IRO); and (iii) present
value of total franchise fees over 25 years and its subsequent amortization.
(i) The Airport Project cost is recognized as part of intangible assets as the
construction progresses. The cost-to-cost method was used as management
believes that the actual cost of construction is most relevant in determining
the amount that should be recognized as cost of the intangible asset at each
reporting date as opposed to cost plus and other methods of percentage-of-
completion.
(ii) The present value of the IRO is recorded under construction in progress
(CIP) - airport concession arrangements and transferred to the related
intangible assets upon completion of the Airport Project and to be amortized
simultaneously with the cost related to the Airport Project because only at
that time will significant maintenance of the Boracay Airport would
commence.
(iii) The present value of the obligation to pay annual franchise fees over
25 years has been immediately recognized as part of intangible assets
because the right related to it has already been granted and is already being
enjoyed by the Group as evidenced by its taking over the operations of the
Boracay Airport during the last quarter of 2010. Consequently, management
has started amortizing the related value of the intangible asset and the
corresponding obligation has likewise been recognized.
Manila International Airport. The airport concession right consists of the pre-
design costs, consultancy fees and other directly attributable costs incurred in
the development of the project.
b. Toll Road Concession Rights. The Group’s toll road concession rights represent
the costs of construction and development, including borrowing costs, if any,
during the construction period of the following projects: (i) SLEX; (ii) NAIA
Expressway; (iii) Skyway; (iv) TPLEX; (v) STAR; (vi) Skyway Stage 3;
(vi) PAREX; (vii) NALEX; and (viii) SALEX.
Pursuant to the Concession Agreements, any stage or phase or ancillary

facilities thereof, of a fixed and permanent nature, shall be owned by the ROP.
- 48 -
c. Water Concession Right. The Group’s water concession right represents the
right to collect charges from water service providers and third party purchasers
availing of a public service, grant control or regulate the price and transfer
significant residual interest of the water treatment facilities at the end of the
Concession Agreement.
d. Power Concession Right. The Group’s power concession right represents the
right to operate and maintain the franchise of ALECO; i.e., the right to collect
electricity fees from the consumers of ALECO. At the end of the concession
period, all assets and improvements shall be returned to ALECO and any
additions and improvements to the system shall be transferred to ALECO.
e. MRT 7 Project. The Concession Agreement related to the MRT 7 Project does
not convey to the Group the right to control the use of the public service
infrastructure but only an unconditional contractual right to receive cash or
another financial asset from or at the direction of the grantor for the construction
services. Management determined that the consideration receivable from the
ROP, in exchange for the fulfillment of the obligation under the Concession
Agreement, is a financial asset in the form of an unconditional right to receive
cash or another financial asset.
Difference in judgment in respect to the accounting treatment of the transactions

would materially affect the assets, liabilities and operating results of the Group.
Recognition of Profit Margin on the Airport and Toll Road Concession Arrangements.
The Group has not recognized any profit margin on the construction of the airport
and toll road projects as it believes that the fair value of the intangible asset
reasonably approximates the cost. The Group also believes that the profit margin of
its contractors on the rehabilitation of the existing airport and its subsequent upgrade
is enough to cover any difference between the fair value and the carrying amount of
the intangible asset.
Recognition of Revenue from Sale of Real Estate and Raw Land. The Group
recognizes its revenue from sale of real estate projects and raw land in full when
10% or more of the total contract price is received and when development of the real
estate property is 100% completed. Management believes that the revenue
recognition criterion on percentage of collection is appropriate based on the Group’s
collection history from customers and number of back-out sales in prior years.
Buyer’s interest in the property is considered to have vested when the payment of at
least 10% of the contract price has been received from the buyer and the Group
ascertained the buyer’s commitment to complete the payment of the total contract
price.
Distinction Between Investment Property and Owner-occupied Property. The Group

determines whether a property qualifies as investment property or owner-occupied
property. In making its judgment, the Group considers whether the property
generates cash flows largely independent of the other assets held by the Group.
Owner-occupied properties generate cash flows that are attributable not only to the
property but also to the other assets used in marketing or administrative functions.
Some properties comprise a portion that is held to earn rentals or for capital
appreciation and another portion that is held for use in marketing or for administrative
purposes. If the portions can be sold separately (or leased out separately under
finance lease), the Group accounts for the portions separately. If the portions cannot
be sold separately, the property is accounted for as investment property only if an
insignificant portion is held for use in the supply of services or for administrative
purposes. Judgment is applied in determining whether ancillary services are so
significant that a property does not qualify as investment property. The Group
considers each property separately in making its judgment.
- 49 -
Classification of Redeemable Preferred Shares. Based on the features of the
preferred shares of TADHC, particularly on mandatory redemption, management
determined that the shares are, in substance, financial liabilities. Accordingly, these
were classified as part of ‘’Accounts payable and accrued expenses” account in the
consolidated statements of financial position as at December 31, 2022 and 2021,
respectively (Note 20).
Evaluating Control over its Investees. Determining whether the Group has control in
an investee requires significant judgment. The Group receives substantially all of the
returns related to BPI’s operations and net assets and has the current ability to direct
BPI’s activities that most significantly affect the returns. The Group controls BPI
since it is exposed, and has rights, to variable returns from its involvement with BPI
and has the ability to affect those returns through such power over BPI.
Classification of Joint Arrangements. The Group has determined that it has rights
only to the net assets of the joint arrangements based on the structure, legal form,
contractual terms and other facts and circumstances of the arrangement. As such,
the Group classified its joint arrangements in Angat Hydropower Corporation
(Angat Hydro) and KWPP Holdings Corporation (KWPP) as at December 31, 2022
and 2021 and Manila North Harbour Port, Inc. (MNHPI) as at December 31, 2021 as
joint ventures (Note 11).
In 2022, SMHC and International Container Terminal Services, Inc. (ICTSI), co-
shareholders in MNHPI, have assessed that ICTSI has the control in MNHPI by
virtue of its exposure and rights to variable returns from its involvement in this
investee and its ability to affect those returns through its power over the investee.
Accordingly, the Group changed its accounting treatment in MNHPI to Investment in
Associate (Note 11).
Adequacy of Tax Liabilities. The Group takes into account the impact of uncertain tax
positions and whether additional taxes and interest may be due. The Group believes
that its accruals for tax liabilities are adequate for all open tax years based on its
assessment of many factors, including interpretation of tax laws and prior
experience. This assessment relies on estimates and assumptions and may involve
a series of judgments about future events. New information may become available
that causes the Group to change its judgment regarding the adequacy of existing tax
liabilities; such changes to tax liabilities will impact tax expense in the period that
such a determination is made.
Classification of Financial Instruments. The Group exercises judgments in classifying

financial instrument, or its component parts, on initial recognition as a financial asset,
a financial liability, or an equity instrument in accordance with the substance of the
contractual arrangement and the definitions of a financial asset, a financial liability or
an equity instrument. The substance of a financial instrument, rather than its legal
form, governs its classification in the consolidated statements of financial position.
The Group uses its judgment in determining the classification of financial assets
based on its business model in which assets are managed and their cash flow
characteristics. The classification and fair values of financial assets and financial
liabilities are presented in Note 40.
- 50 -
Contingencies. The Group is currently involved in various pending claims and
lawsuits which could be decided in favor of or against the Group. The Group’s
estimate of the probable costs for the resolution of these pending claims and lawsuits
has been developed in consultation with in-house as well as outside legal counsel
handling the prosecution and defense of these matters and is based on an analysis
of potential results. The Group currently does not believe that these pending claims
and lawsuits will have a material adverse effect on its financial position and financial
performance. It is possible, however, that future financial performance could be
materially affected by the changes in the estimates or in the effectiveness of
strategies relating to these proceedings (Note 43).
Estimates and Assumptions

The key estimates and assumptions used in the consolidated financial statements
are based upon the Group’s evaluation of relevant facts and circumstances as at the
date of the consolidated financial statements. Actual results could differ from such
estimates.
Assessment of ECL on Trade Receivables. The Group, in applying the simplified

approach in the computation of ECL, initially uses a provision matrix based on
historical default rates for trade receivables for at least two years. The Group also
uses appropriate groupings if its historical credit loss experience shows significantly
different loss patterns for different customers. The Group then adjusts the historical
credit loss experience with forward-looking information on the basis of current
observable data affecting each customer to reflect the effects of current and
forecasted economic conditions.
The Group has assessed that the forward-looking default rate component of its ECL
on trade receivables is not material because substantial amount of trade receivables
are normally collected within one year. Moreover, based on management’s
assessment, current conditions and forward-looking information does not indicate a
significant increase in credit risk exposure of the Group from its trade receivables.
Trade receivables written off amounted to P193 and P186 in 2022 and 2021,
respectively. The allowance for impairment losses on trade receivables amounted to
P3,949 and P4,094 as at December 31, 2022 and 2021, respectively. The carrying
amount of trade receivables amounted to P169,294 and P97,013 as at
December 31, 2022 and 2021, respectively (Note 8).
Assessment of ECL on Other Financial Assets at Amortized Cost. The Group

determines the allowance for ECL using general approach based on the probability-
weighted estimate of the present value of all cash shortfalls over the expected life of
financial assets at amortized cost. ECL is provided for credit losses that result from
possible default events within the next 12 months unless there has been a significant
increase in credit risk since initial recognition in which case ECL is provided based
on lifetime ECL.
When determining if there has been a significant increase in credit risk, the Group
considers reasonable and supportable information that is available without undue
cost or effort and that is relevant for the particular financial instrument being
assessed such as, but not limited to, the following factors:
▪ actual or expected external and internal credit rating downgrade;
▪ existing or forecasted adverse changes in business, financial or economic

conditions; and
- 51 -
▪ actual or expected significant adverse changes in the operating results of the
borrower.
The Group also considers financial assets at day one to be the latest point at which
lifetime ECL should be recognized unless it can demonstrate that this does not
represent a significant risk in credit risk such as when non-payment was an
administrative oversight rather than resulting from financial difficulty of the borrower.
The Group has assessed that the ECL on other financial assets at amortized cost is
not material because the transactions with respect to these financial assets were
entered into by the Group only with reputable banks and companies with good credit
standing and relatively low risk of defaults. Accordingly, no additional provision for
ECL on other financial assets at amortized cost was recognized in 2022 and 2021.
The carrying amounts of other financial assets at amortized cost are as follows:
Note 2022 2021

Other Financial Assets at
Amortized Cost
Cash and cash equivalents
(excluding cash on hand) 7, 39 P315,823 P298,783
Other current receivables - net
(included under “Trade and
other receivables - net” account) 8 69,488 64,795
Financial assets at amortized
cost (included under “Prepaid
expenses and other current
assets” and “Investments in
equity and debt instruments”
accounts) 10, 12, 39, 40 12,134 577
Noncurrent receivables and
deposits - net (included under
“Other noncurrent assets - net”
account) 18, 39, 40 39,700 32,310
Restricted cash (included under
“Prepaid expenses and other
current assets” and “Other
noncurrent assets - net”
accounts) 10, 18, 39, 40 19,050 12,965
The allowance for impairment losses on other current receivables, included as part of
“Trade and other receivables - net” account and noncurrent receivables and deposits
included as part of “Other noncurrent assets - net” account in the consolidated
statements of financial position, amounted to P8,964 and P582, respectively, as at
December 31, 2022, and P9,174 and P572, respectively, as at December 31, 2021
(Notes 8 and 18).
Fair Value Measurements. A number of the Group’s accounting policies and

disclosures require the measurement of fair values for both financial and non-
financial assets and liabilities.
- 52 -
The Group has an established control framework with respect to the measurement of
fair values. This includes a valuation team that has the overall responsibility for
overseeing all significant fair value measurements, including Level 3 fair values. The
valuation team regularly reviews significant unobservable inputs and valuation
adjustments. If third party information is used to measure fair values, then the
valuation team assesses the evidence obtained to support the conclusion that such
valuations meet the requirements of PFRS, including the level in the fair value
hierarchy in which such valuations should be classified.
The Group uses market observable data when measuring the fair value of an asset
or liability. Fair values are categorized into different levels in a fair value hierarchy
based on the inputs used in the valuation techniques (Note 3).
If the inputs used to measure the fair value of an asset or a liability can be
categorized in different levels of the fair value hierarchy, then the fair value
measurement is categorized in its entirety in the same level of the fair value
hierarchy based on the lowest level input that is significant to the entire
measurement.
The Group recognizes transfers between levels of the fair value hierarchy at the end
of the reporting period during which the change has occurred.
The methods and assumptions used to estimate the fair values for both financial and
non-financial assets and liabilities are discussed in Notes 9, 10, 11, 12, 15, 16, 17,
18, 20, 35 and 40.
Write-down of Inventory. The Group writes-down the cost of inventory to net

realizable value whenever net realizable value becomes lower than cost due to
damage, physical deterioration, obsolescence, changes in price levels or other
causes.
Estimates of net realizable value are based on the most reliable evidence available
at the time the estimates are made of the amount the inventories are expected to be
realized. These estimates take into consideration fluctuations of price or cost directly
relating to events occurring after the reporting date to the extent that such events
confirm conditions existing at the reporting date.
The write-down of inventories amounted to P1,542 and P1,505 as at December 31,

2022 and 2020, respectively (Note 9).
The carrying amounts of inventories amounted to P190,193 and P141,209 as at

Estimated Useful Lives of Property, Plant and Equipment, Right-of-Use Assets,

Investment Property and Deferred Containers. The Group estimates the useful lives
of property, plant and equipment, right-of-use assets, investment property and
deferred containers based on the period over which the assets are expected to be
available for use. The estimated useful lives of property, plant and equipment,
right-of-use assets, investment property and deferred containers are reviewed
periodically and are updated if expectations differ from previous estimates due to
physical wear and tear, technical or commercial obsolescence and legal or other
limits on the use of the assets.
- 53 -
In addition, estimation of the useful lives of property, plant and equipment,
right-of-use assets, investment property and deferred containers is based on
collective assessment of industry practice, internal technical evaluation and
experience with similar assets. It is possible, however, that future financial
performance could be materially affected by changes in estimates brought about by
changes in factors mentioned above. The amounts and timing of recorded expenses
for any period would be affected by changes in these factors and circumstances. A
reduction in the estimated useful lives of property, plant and equipment, right-of-use
assets, investment property and deferred containers would increase the recorded
cost of sales and selling and administrative expenses and decrease noncurrent
assets.
Except for refinery and plant equipment and certain power plant assets used in
production of fuel, there is no change in estimated useful lives of property, plant and
equipment, right-of-use assets, investment property and deferred containers based
on management’s review at the reporting date.
Starting January 1, 2020, the Group adopted the UOP method of accounting for
depreciation of refinery and plant equipment and certain power plant assets used in
production of fuel. The UOP method closely reflects the expected pattern of
consumption of the future economic benefits embodied in these assets. Depreciation
of said assets is computed using the expected consumption over the estimated
useful lives of these assets. Previously, depreciation was computed using the
straight-line method over the estimated useful lives of the assets.
Property, plant and equipment, net of accumulated depreciation, amounted to

P723,030 and P582,092 as at December 31, 2022 and 2021, respectively.
Accumulated depreciation of property, plant and equipment amounted to P267,528
and P243,297 as at December 31, 2022 and 2021, respectively (Note 13).
Right-of-use assets, net of accumulated depreciation, amounted to P112,155 and

P163,446 as at December 31, 2022 and 2021, respectively. Accumulated
depreciation of right-of-use assets amounted to P20,268 and P20,308 as at
Investment property, net of accumulated depreciation, amounted to P74,668 and

P69,833 as at December 31, 2022 and 2021, respectively. Accumulated depreciation
of investment property amounted to P21,267 and P19,470 as at December 31, 2022
and 2021, respectively (Note 15).
Deferred containers, net of accumulated depreciation, included as part of “Other

noncurrent assets - net” account in the consolidated statements of financial position
amounted to P18,549 and P19,800 as at December 31, 2022 and 2021, respectively.
Accumulated depreciation of deferred containers amounted to P16,691 and P14,714
as at December 31, 2022 and 2021, respectively (Note 18).
Estimated Useful Lives of Intangible Assets. The useful lives of intangible assets are
assessed at the individual asset level as having either a finite or indefinite life.
Intangible assets are regarded to have an indefinite useful life when, based on
analysis of all of the relevant factors, there is no foreseeable limit to the period over
which the asset is expected to generate net cash inflows for the Group.
- 54 -
Intangible assets with finite useful lives, net of accumulated amortization, included as
part of “Other intangible assets - net” account in the consolidated statements of
financial position amounted to P247,015 and P188,873 as at December 31, 2022
and 2021, respectively. Accumulated amortization of intangible assets with finite
useful lives amounted to P56,782 and P49,717, as at December 31, 2022 and 2021,
Estimated Useful Lives of Intangible Assets - Concession Rights. The Group

estimates the useful lives of airport, toll road, port, power and water concession
rights based on the period over which the assets are expected to be available for
use. The Group has not included any renewal period on the basis of uncertainty of
the probability of securing renewal contract at the end of the original contract term as
at the reporting date.
The amortization period and method are reviewed when there are changes in the
expected term of the contract or the expected pattern of consumption of future
economic benefits embodied in the asset.
The combined carrying amounts of toll road, airport, power and water concession
rights amounted to P229,057 and P178,833 as at December 31, 2022 and 2021,
In 2022, APEC has derecognized its power concession right as a result of the
termination of the concession agreement with ALECO in November 2022 (Note 34).
Impairment of Goodwill, Licenses and Trademarks and Brand Names with Indefinite
Useful Lives. The Group determines whether goodwill, licenses and trademarks and
brand names are impaired at least annually. This requires the estimation of value in
use of the cash-generating units to which the goodwill is allocated and the value in
use of the licenses and trademarks and brand names. Estimating value in use
requires management to make an estimate of the expected future cash flows from
the cash-generating unit and from the licenses and trademarks and brand names
and to choose a suitable discount rate to calculate the present value of those cash
flows.
The carrying amount of goodwill amounted to P184,100 and P130,081 as at

The combined carrying amounts of licenses and trademarks and brand names
amounted to P2,345 and P2,286 as at December 31, 2022 and 2021, respectively
(Note 17).
Acquisition Accounting. At the time of acquisition, the Group considers whether the
acquisition represents an acquisition of a business or a group of assets. The Group
accounts for an acquisition as a business combination if it acquires an integrated set
of business processes in addition to the group of assets acquired.
The Group accounts for acquired businesses using the acquisition method of
accounting which requires that the assets acquired and the liabilities assumed are
recognized at the date of acquisition based on their respective fair values.
- 55 -
The application of the acquisition method requires certain estimates and
assumptions concerning the determination of the fair values of acquired intangible
assets and property, plant and equipment, as well as liabilities assumed at the
acquisition date. Moreover, the useful lives of the acquired intangible assets and
property, plant and equipment have to be determined. Accordingly, for significant
acquisitions, the Group obtains assistance from valuation specialists. The valuations
are based on information available at the acquisition date.
The Group, however, is currently completing the purchase price allocation exercise
on the acquisition of ECC in 2022. The identifiable assets and liabilities at fair value
are based on provisionary amounts as at the acquisition date, which is allowed under
PFRS 3, within 12 months from the acquisition date (Note 5).
The carrying amount of goodwill arising from business combinations amounted to

P54,273 in 2022 (Notes 5, 17 and 38).
Estimating Coal Reserves. Coal reserve estimates are based on measurements and
geological interpretation obtained from natural outcrops, trenches, tunnels and drill
holes. In contrast with “coal resource” estimates, profitability of mining the coal
during a defined operating period or “mine-life” is a necessary attribute of “coal
reserve”.
The Philippine Department of Energy (DOE) is the government agency authorized to

implement coal operating contracts (COC) and regulate the operation of contractors
pursuant to DOE Circular No. 81-11-10: Guidelines for Coal Operations in the
Philippines. For the purpose of the five-year development and production program
required for each COC, the agency classifies coal reserves, according to increasing
degree of uncertainty, into: (i) positive, (ii) probable and (iii) inferred. The DOE also
prescribes the use of “total in-situ reserves” as the sum of positive reserves and
two-thirds of probable reserve; and “mineable reserve” as 60% of total in-situ reserve
for underground, and 85% for surface (including open-pit) coal mines.
Recoverability of Deferred Exploration and Development Costs. A valuation

allowance is provided for estimated unrecoverable deferred exploration and
development costs based on the Group’s assessment of the future prospects of
the mining properties, which are primarily dependent on the presence of
economically recoverable reserves in those properties.
The Group has mining activities that were in the exploratory stages as at
December 31, 2022 and 2021. The related costs and expenses from exploration
were deferred as mine exploration and development costs to be amortized upon
commencement of commercial operations. The Group has not identified any facts
and circumstances which suggest that the carrying amount of the deferred
exploration and development costs exceeded the recoverable amounts as at
December 31, 2022 and 2021.
No impairment loss on deferred exploration and evaluation costs was recognized in

2022, 2021 and 2020.
Deferred exploration and development costs included as part of “Other noncurrent

assets - net” account in the consolidated statement of financial position amounted to
P55 and P719 as at December 31, 2022 and 2021, respectively (Notes 18 and 34).
In December 2022, deferred exploration and development costs related to coal

mining activities amounting to P719 were derecognized upon the sale by SPI of its
subsidiaries (Notes 5).
- 56 -
Realizability of Deferred Tax Assets. The Group reviews its deferred tax assets at
each reporting date and reduces the carrying amount to the extent that it is no longer
probable that sufficient taxable profit will be available to allow all or part of the
deferred tax assets to be utilized. The Group’s assessment on the recognition of
deferred tax assets on deductible temporary differences and carryforward benefits of
MCIT and NOLCO is based on the projected taxable income in the following periods.
Deferred tax assets amounted to P22,554 and P17,141 as at December 31, 2022
and 2021, respectively (Note 23).
Impairment of Non-financial Assets. PFRS requires that an impairment review be

performed on investments and advances, property, plant and equipment, right-of-use
assets, investment property, biological assets - net of current portion, other intangible
assets with finite useful lives, deferred containers, deferred exploration and
development costs and idle assets when events or changes in circumstances
indicate that the carrying amount may not be recoverable. Determining the
recoverable amounts of these assets requires the estimation of cash flows expected
to be generated from the continued use and ultimate disposition of such assets.
While it is believed that the assumptions used in the estimation of fair values
reflected in the consolidated financial statements are appropriate and reasonable,
significant changes in these assumptions may materially affect the assessment of
recoverable amounts and any resulting impairment loss could have a material
adverse impact on the financial performance.
Accumulated impairment losses on property, plant and equipment, right-of-use

assets and investment property, other intangible assets with finite useful lives and
deferred containers amounted to P16,065 and P15,490 as at December 31, 2022
and 2021, respectively (Notes 13, 14, 15, 17 and 18).
The combined carrying amounts of investments and advances, property, plant and
equipment, right-of-use assets, investment property, biological assets - net of current
portion, other intangible assets with finite useful lives, deferred containers, deferred
exploration and development costs and idle assets amounted to P1,197,145 and
P1,068,884 as at December 31, 2022 and 2021, respectively (Notes 11, 13, 14, 15,
16, 17 and 18).
Estimating the Incremental Borrowing Rate. The Group cannot readily determine the
interest rate implicit in the leases. Therefore, it uses its relevant incremental
borrowing rate to measure lease liabilities. The incremental borrowing rate is the rate
of interest that the Group would have to pay to borrow over a similar term, and with a
similar security, the funds necessary to obtain an asset of a similar value to the right-
of-use asset in a similar economic environment. The incremental borrowing rate,
therefore, reflects what the Group would have to pay, which requires estimation
when no observable rates are available and to make adjustments to reflect the terms
and conditions of the lease. The Group estimates the incremental borrowing rate
using observable inputs (such as market interest rates) when available and is
required to consider certain contract and entity-specific estimates.
The Group’s lease liabilities amounted to P75,475 and P94,992 as at December 31,
2022 and 2021 respectively (Notes 34, 38, 39 and 40).
Present Value of Defined Benefit Retirement Obligation. The present value of the
defined benefit retirement obligation depends on a number of factors that are
determined on an actuarial basis using a number of assumptions. These
assumptions are described in Note 35 to the consolidated financial statements and
include discount rate and salary increase rate.
- 57 -
The Group determines the appropriate discount rate at the end of each reporting
period. It is the interest rate that should be used to determine the present value of
estimated future cash outflows expected to be required to settle the retirement
obligations. In determining the appropriate discount rate, the Group considers the
interest rates on government bonds that are denominated in the currency in which
the benefits will be paid. The terms to maturity of these bonds should approximate
the terms of the related retirement obligation.
Other key assumptions for the defined benefit retirement obligation are based in part
on current market conditions.
While it is believed that the assumptions of the Group are reasonable and
appropriate, significant differences in actual experience or significant changes in
assumptions may materially affect the defined benefit retirement obligation of the
Group.
The present value of defined benefit retirement obligation amounted to P31,873 and
P30,539 as at December 31, 2022 and 2021, respectively (Note 35).
Asset Retirement Obligation. The Group has ARO arising from refinery, power
plants, leased service stations, terminals, blending plant and leased properties.
Determining ARO requires estimation of the costs of dismantling, installing and
restoring leased properties to their original condition. The Group determined the
amount of the ARO by obtaining estimates of dismantling costs from the proponent
responsible for the operation of the asset, discounted at the Group’s current credit-
adjusted risk-free rate ranging from 3.25% to 12.64% and 1.85% to 12.64% as at
December 31, 2022 and 2021, respectively, depending on the life of the capitalized
costs. While it is believed that the assumptions used in the estimation of such costs
are reasonable, significant changes in these assumptions may materially affect the
recorded expense or obligation in future periods.
The ARO amounted to P4,296 and P3,668 as at December 31, 2022 and 2021,
respectively (Notes 20 and 22).
Present Value of Annual Franchise Fee and IRO - Airport Concession Arrangement.
Portion of the amount recognized as airport concession right of TADHC as at
December 31, 2022 and 2021 pertains to the present value of the annual franchise
fee payable to the ROP over the concession period. The recognition of the present
value of the IRO is temporarily lodged in CIP - airport concession arrangements until
the completion of the Airport Project.
The present values of the annual franchise fee and IRO were determined based on
the future value of the obligations discounted at the Group’s internal borrowing rate
which is believed to be a reasonable approximation of the applicable
credit-adjusted risk-free market borrowing rate.
A significant change in such internal borrowing rate used in discounting the

estimated cost would result in a significant change in the amount of liabilities
recognized with a corresponding effect in profit or loss.
The present value of the annual franchise fees payable to the ROP over 25 years
discounted using the 8% internal borrowing rate in 2022 and 2021, included as part
of “Airport concession right” under “Other intangible assets - net” account amounted
to P50 and P57 as at December 31, 2022 and 2021, respectively (Note 17).
- 58 -
The cost of infrastructure maintenance and restoration represents the present value
of TADHC’s IRO recognized and is presented as part of IRO under “Accounts
payable and accrued expenses” and “Other noncurrent liabilities” accounts
amounting to P20 and P74 in 2022 and P16 and P74 in 2021, respectively (Notes 20
and 22).
Present Value of Mine Rehabilitation Obligation (MRO) and Decommissioning. The

Group has MRO arising from NCC’s mining operations. Determining MRO requires
estimation of the costs of dismantling and removing structures, rehabilitating mines
and tailings dams, dismantling operating facilities, closing plant and waste sites, and
restoring, reclaiming and revegetating affected areas. The estimated rehabilitation
costs are then discounted using a discount rate that reflects current market
assessments and the risks specific to the liability. Discount rates used by the Group
ranged from 4.60% to 7.04% as at December 31, 2022 and 7.04% as at
December 31, 2021. The ultimate cost of MRO and decommissioning is uncertain,
and cost estimates can vary in response to many factors including estimates of the
extent and costs of rehabilitation activities, changes in the relevant legal
requirements, emergence of new restoration techniques or experience, cost
increases as compared to the inflation rates, and changes in discount rates. The
expected timing of expenditure can also change in response to changes in quarry
reserves or production rates. These uncertainties may result in future actual
expenditure different from the amounts currently provided. As a result, there could be
significant adjustments in provision for MRO and decommissioning, which would
affect future financial results.
Provision for MRO and decommissioning presented as part of “Other noncurrent

liabilities” account amounted to P100 and P47 as at December 31, 2022 and 2021,
Percentage-of-Completion - Airport and Toll Road Concession Arrangements. The

Group determines the percentage-of-completion of the contract by computing the
proportion of actual contract costs incurred to date, to the latest estimated total
airport and toll road project cost. The Group reviews and revises, when necessary,
the estimate of airport and toll road project cost as it progresses, to appropriately
adjust the amount of construction cost and revenue recognized at the end of each
reporting period. Construction revenue and construction costs, reported as part of
“Other income (charges) - net” account in the consolidated statements of income,
amounted to P60,461, P29,769 and P22,747 as at December 31, 2022, 2021 and
2020, respectively (Note 32).
Accrual for Repairs and Maintenance - Toll Road Concession Arrangements. The
Group recognizes accruals for repairs and maintenance based on estimates of
periodic costs, generally estimated to be every 5 to 10 years and 5 to 12 years as at
December 31, 2022 and 2021, respectively, or the expected period to restore the toll
road facilities to a level of serviceability and to maintain its good condition before the
turnover to the ROP. This is based on the best estimate of management to be the
amount expected to be incurred to settle the obligation, discounted using a pre-tax
rate, ranging from 5.21% to 6.99% and 1.66% to 4.88% as at December 31, 2022
and 2021, respectively, that reflects the current market assessment of the time value
of money.
The accrual for repairs and maintenance, included as part of “IRO” under “Other
noncurrent liabilities” account in the consolidated statements of financial position,
amounted to P825 and P698 as at December 31, 2022 and 2021, respectively
(Note 22).
- 59 -
The current portion included as part of “Accounts payable and accrued expenses”
account amounted to P467 and P419 as at December 31, 2022 and 2021,
5. Investments in Subsidiaries
The following are the developments relating to the Parent Company‘s investments:
Infrastructure
▪ SMHC
On November 27, 2020, the BOD and stockholders of SMHC approved the
additional increase in its authorized capital stock from P71,500 divided into
71,500,000 common shares to P91,500 divided into 91,500,000 common shares,
both with a par value of P1,000.00 per common share. On the same date, SMHC
and the Parent Company executed a Subscription Agreement to subscribe to an
additional 10,000,000 common shares out of the proposed increase in authorized
capital stock for a total subscription price of P15,000 or P1,500.00 per common
share. The Parent Company paid P6,606 in 2020 as deposit for future stock
subscription, while the remaining balance of the subscription price amounting to
P8,394 was paid in 2021.
The application for the Amendment of Articles of Incorporation for the increase in
authorized capital stock of SMHC was filed with the SEC on December 18, 2020
and was approved on January 7, 2021.
On June 30, 2021, SMHC and the Parent Company executed a Subscription
Agreement to subscribe to an additional 10,000,000 common shares for a total
subscription price of P15,000 or P1,500.00 per common share, which was fully
paid in 2021.
On December 17, 2021, the BOD and stockholders of SMHC approved the
91,500,000 common shares to P106,500 divided into 106,500,000 common
shares, both with a par value of P1,000.00 per common share. On the same
date, SMHC and the Parent Company executed a Subscription Agreement to
subscribe to an additional 5,000,000 common shares out of the proposed
increase in authorized capital stock for a total subscription price of P7,500 or
P1,500.00 per common share. The Parent Company paid P3,239 and P3,823 in
2022 and 2021, respectively.
authorized capital stock was filed with the SEC on March 9, 2022 and was
approved on April 26, 2022.
▪ SMAI
On December 27, 2021, SMAI and the Parent Company executed a Subscription
Agreement to subscribe to 3,792,881,031 common shares of SMAI for a total
subscription price of P7,586 or P2.00 per common share, which was fully paid in
2021.
- 60 -
On January 21, 2022, the BOD and stockholders of SMAI approved the
15,000,000,000 shares to P45,000 divided into 45,000,000,000 shares, both with
a par value of P1.00 per common share. On the same date, SMAI and the Parent
Company executed a Subscription Agreement to subscribe to an additional
7,500,000,000 common shares out of the proposed increase in authorized capital
stock for a total subscription price of P15,000 or P2.00 per common share.
On February 23, 2022, SMAI and the Parent Company executed a Subscription
Agreement to subscribe to 307,118,969 common shares of SMAI, to be issued
out of the available unissued shares, for a total subscription price of P614 or
P2.00 per common share, which subscription was fully paid in 2022.
authorized capital stock of SMAI was filed with and was approved by the SEC on
June 17, 2022.
On August 22, 2022, SMAI and the Parent Company executed a Subscription
Agreement to subscribe to 10,000,000,000 common shares of SMAI for a total
subscription price of P20,000 or P2.00 per common share, which was fully paid
in 2022.
In 2022, the Parent Company paid P12,800 as deposit for future stock
subscription intended for investment in new class of shares to be issued by
SMAI.
As at December 31, 2021, the Parent Company has 25.81% direct ownership
interest in SMAI, in addition to the 74.19% indirect ownership interest through
SMHC. As a result of the foregoing additional investments during the year, the
Parent Company increased its direct ownership in SMAI to 66.46%, with indirect
ownership interest through SMHC of 33.54%.
▪ Argonbay Construction Company, Inc. (ACCI)
On November 7, 2022, the BOD and Stockholders of ACCI approved: (i) the
increase of its authorized capital stock from P150 divided into 1,500,000
common shares with a par value of P100.00 per share to P16,150 divided into
1,500,000 common shares with a par value of P100.00 per share and
160,000,000 Series “1” preferred shares with a par value of P100.00 per share,
and (ii) the subscription by the Parent Company to 137,000,000 Series “1”
preferred shares at a subscription price P100.00 per Series “1” preferred share,
or a total subscription amount of P13,700. The said increase and creation of
Series “1” preferred shares is subject to approval by the SEC. In 2022, the
Parent Company paid P3,634 as deposit for future stock subscription to the
Series “1” preferred shares of ACCI.
ACCI’s primary purpose is to engage in general construction and other allied

businesses including constructing, enlarging, repairing, removing, developing,
reclaiming, or otherwise engaging in any work upon buildings, roads, highways,
etc. and to make, execute, bid for, and take or receive any contracts or
assignments of contracts or in relation to manufacture and furnish building
materials and supplies connected therewith.
- 61 -
Fuel and Oil
▪ Acquisition of Mema
On February 16, 2022, the Parent Company through Petron acquired 10,000,000
common shares representing 100% of the outstanding capital stock of Mema for
an initial consideration of P104. Mema is a company with a subsidiary that
provides hauling and logistics services to Petron. On June 30, 2022, control over
the investee was transferred to the Group after the resolution of issues were
agreed by Petron and the seller. On December 29, 2022, an adjustment in the
purchase price of P300 was agreed by Petron and the seller, presented as part
of non-trade payables under “Accounts payable and accrued expenses” account
in the 2022 consolidated statement of financial position (Note 20). The amount
was fully paid in February 2023.
The acquisition of Mema was accounted for using the acquisition method of
accounting in accordance with PFRS 3.
The following summarizes the recognized amounts of assets acquired and

liabilities assumed at the acquisition date:
Note 2022
Assets
Cash and cash equivalents P3,406
Trade and other receivables 2,034
Prepaid expense and other current assets 69
Property, plant and equipment - net 13 219
Other noncurrent asset 15
Liabilities
Accounts payable and accrued expenses (5,303)
Other noncurrent liabilities (14)
Total Identifiable Net Assets at Fair Value P426
The Group recognized a gain on acquisition amounting to P22, presented as part

of “Other income (charges) - net” account in the 2022 consolidated statement of
income, representing the excess of total identifiable net assets at fair value of
P426 over the total consideration of P404 (Note 32).
The fair value of trade and other receivables amounted to P2,034. None of the
receivables has been impaired and it is expected that the full amount will be
collected. As at December 31, 2022, receivables amounting to P2,000 was
already collected.
Accounts payable and accrued expenses amounting to P5,165 was already paid
as at December 31, 2022 from existing cash and the receivables collected.
The fair value of the acquired equipment was measured using depreciated
replacement cost by considering the current replacement cost of new assets and
adjusted for obsolescence, including physical, functional and economic
obsolescence.
- 62 -
Mema and its subsidiaries contributed nil and P26 to the Group’s revenue and
net income from the acquisition date to December 31, 2022, respectively. Had
the acquisition occurred on January 1, 2022, the Group’s revenue and net
income in 2022 would have been P1,506,591 and P26,756, respectively. In
determining these amounts, management assumed that the fair value
adjustments that arose on the acquisition date would have been the same if the
acquisition had occurred on January 1, 2022.
On October 27, 2022, Petron and Mema executed a Subscription Agreement to

subscribe to an additional 1,375,000,000 common shares of Mema for a
subscription price of P1,375 or P1.00 per common share, of which P899 was
paid in 2022.
Energy
▪ Acquisition of Multi-Ventures Investment Holdings, Inc. (MVHI) and Bluelight

Industrial Estate, Inc. (Bluelight)
On August 25, 2022, the Parent Company through San Miguel Global Power
acquired 100,000 and 50,000 common shares, equivalent to 100% of the
outstanding capital stock of MVHI and Bluelight, respectively, for a total
consideration of P16 (Note 13).
MVHI and Bluelight own and manage various properties located in the province
of Cavite and Quezon, respectively.
The transaction is accounted for as an asset acquisition since the assets and
activities does not constitute a business as defined in PFRS 3.
▪ Sale of Strategic Energy Development Inc. (SEDI)
On August 26, 2022, San Miguel Global Power sold its 100% shareholdings in
SEDI to a third party for P1,200 with 10% downpayment upon signing of the
contract. The amount of consideration, which will be collected on installment
basis up to 2026 and subject to interest to be agreed by the relevant parties, is
presented as part of non-trade receivables under “Trade and other receivables -
net” and “Noncurrent receivables and deposits - net” accounts in the 2022
consolidated statement of financial position (Notes 8 and 18).
SEDI owns real properties, including land with a 15 MW heavy fuel oil power
plant facility located in Tagum City, Davao del Norte.
The Group recognized a gain on the sale amounting to P555, presented as part
of “Gain (loss) on sale of investments and property and equipment’’ account in
the 2022 consolidated statement of income.
▪ Sale of Daguma Agro-Minerals, Inc. (DAMI), Bonanza Energy Resources, Inc.

(BERI) and Sultan Energy Phils. Corp. (SEPC)
On December 21, 2022, SPI entered into a Share Purchase Agreement with a
third party for the sale of its 100% equity interests in DAMI, BERI and SEPC for a
total consideration of P1,818. The amount of consideration, which will be paid to
SPI on or before September 30, 2023, is presented as part of non-trade
receivables under “Trade and other receivables - net” account in the 2022
consolidated statement of financial position (Note 8).
- 63 -
Also on the same date, SPI entered into an agreement with the third party for the
assignment of its deposit for future stock subscription amounting to P1,552,
payable over a period of five years, subject to interest to be agreed-upon by both
parties. The amount is presented as part of noncurrent receivables and
deposits - net under “Other noncurrent assets - net” account in the 2022
consolidated statement of financial position (Note 18).
DAMI and SEPC have coal mining properties, covered by COCs issued by the
Philippine DOE, located in the provinces of Sarangani, South Cotabato and
Sultan Kudarat (Note 34).
The Group recognized a gain on the sale amounting to P182, presented as part
of “Gain (loss) on sale of investments and property and equipment’’ account in
the 2022 consolidated statement of income.
Packaging
▪ Acquisition of 35% of CAI
On September 30, 2022, SMYPC and Can Pack S.A. (Can Pack), shareholders
of CAI, executed a Deed of Sale of Shares for the acquisition by SMYPC from
Can Pack of the 3,500,000 common shares representing 35% of the outstanding
capital stock of CAI for a total consideration of US$9 (P531).
The acquisition of the 35% of CAI is considered as a transaction with the Group’s
non-controlling interest.
As a result, CAI became a wholly-owned subsidiary of SMYPC. The Group’s

non-controlling interests decreased by P451 equivalent to the carrying amount of
the share in the net assets acquired. The difference between the carrying
amount of the share in the net assets acquired and the consideration transferred
was recognized in other equity reserve.
Real Estate
▪ SMPI
a) Subscription of Common Shares
On various dates in 2020, SMPI and the Parent Company executed

Subscription Agreements to subscribe to a total of 241,393,750 common
shares of SMPI for a total subscription price of P4,828 or P20.00 per
common share. The Parent Company paid P4,092 in 2020, while the
remaining balance of the subscription price amounting to P736 was paid in
2021.

common share. The Parent Company paid P3,018 in 2021.

common share, which was fully paid in 2022.
- 64 -
b) Acquisition of Subsidiaries
On February 2, 2021, the Parent Company through SMPI acquired a total of

95,252 common shares, equivalent to 70% of the outstanding capital stock of
Agricultural Investors, Inc., Unexplored Land Developers, Inc., Ocean-Side
Maritime Enterprises, Inc., Labayug Air Terminals, Incorporated, Pura
Electric Co., Inc., Punong Bayan Housing Development Corporation,
Habagat Realty Development Incorporated and Spade One Resorts
Corporation, for a total consideration of P3,500. The acquisition gave SMPI
70% ownership and control over these entities and consequently were
consolidated to the Group effective February 2, 2021. The related advances
for investments amounting to P2,975 was reclassified from “Investments and
advances” to investment in shares of stock of subsidiaries as part of the total
consideration transferred (Note 11). SMPI fully paid the remaining balance of
P525 in 2021.
The entities are Philippine companies engaged in the purchase, acquisition,

development or use for investment, among others, of real and personal
property, to the extent permitted by law.
The acquisition of the entities is accounted for as an asset acquisition since

the assets and activities does not constitute a business as defined in
PFRS 3.
On December 17, 2021, SMPI acquired a total of 8,165 additional common

shares, equivalent to 6% of the outstanding capital stock of the entities, at a
purchase price of P300 or P36,742.19 per share, of which P150 was paid in
2021 and the balance in 2022.
On various dates in 2022, SMPI acquired a total of 24,495 additional

common shares, equivalent to 18% of the outstanding capital stock of the
entities, at a purchase price of P900 or P36,742.19 per share. The related
advances for investments amounting to P150, which was paid in 2021, were
reclassified from “Investments and advances” to investment in shares of
stock of subsidiaries as part of the consideration transferred (Note 11). In
2022, SMPI fully paid the remaining balance of P750.
c) Acquisition of 31.70% of Integrated Geosolutions, Inc. (IGI)
On December 21, 2022, SMPI and the non-controlling shareholders

executed Deeds of Absolute Sale of Shares for the acquisition by SMPI of
the remaining 208,968,925 common shares representing 31.70% of the
outstanding capital stock of IGI for a total consideration of P1,050. The
consideration is payable on installment basis up to 2025 and bears an annual
interest rate of 5.11%. In 2022, SMPI paid P210. The related current and
noncurrent portions of the outstanding payables are presented under
“Accounts payable and accrued expenses” and “Other noncurrent liabilities”
accounts in the 2022 consolidated statement of financial position (Notes 20
and 22).
The acquisition of the 31.70% of IGI is considered as a transaction with the

Group’s non-controlling interest.
- 65 -
As a result, IGI became a wholly-owned subsidiary of SMPI. The Group’s
non-controlling interests decreased by P173 equivalent to the carrying
amount of the share in the net assets acquired. The difference between the
carrying amount of the share in the net assets acquired and the
consideration transferred was recognized in other equity reserve.
▪ DHDC
On February 3, 2021, DHDC and the Parent Company executed a Subscription

Agreement to subscribe to a total of 30,000,000 common shares of DHDC for a
total subscription price of P60 or P2.00 per common share, which was fully paid
in 2021.
On June 1, 2021, the BOD and stockholders of DHDC approved the additional
increase in its authorized capital stock from P2,100 divided into 2,100,000,000
common shares to P2,400 divided into 2,400,000,000 common shares, both with
a par value of P1.00 per common share. On the same date, the Parent Company
in a Subscription Agreement, subscribed to 75,000,000 common shares out of
the proposed increase in authorized capital stock for a total subscription price of
P150 or P2.00 per common share. The subscription price was fully paid in 2021.
authorized capital stock of DHDC was filed with the SEC on September 10, 2021
and was approved on September 14, 2021.
On December 15, 2021, DHDC and the Parent Company executed a

Subscription Agreement to subscribe to an additional 7,750,000 common shares
of DHDC for a subscription price of P15 or P2.00 per share, which was fully paid
in 2021.
On various dates in 2022, DHDC and the Parent Company executed

Subscription Agreements to subscribe to a total of 32,250,000 common shares of
DHDC for a total subscription price of P65 or P2.00 per share, which was fully
paid in 2022.
Cement
▪ Consolidation of ECC
On October 5, 2022, SMEII signed a share purchase agreement with Far East
Holdings, Inc. (FEHI), the parent company of ECC and three other individual
shareholders (collectively, the Selling Shareholders) for the acquisition by SMEII
of a total of 4,425,123,001 common shares (the Sale Shares) representing
approximately 88.50% of the total outstanding capital stock of ECC for a total
consideration of P97,441 or P22.02 per Sale Share.
ECC and its subsidiaries are engaged in manufacturing, marketing, sale, and
distribution of cement. ECC owns a cement production facility in San Ildefonso,
Bulacan and a grinding and packaging facility in Limay, Bataan.
- 66 -
On October 27, 2022, the Philippine Competition Commission issued a notice
which states that the transaction is not subject to the notification requirement
under the Philippine Competition Act and its implementing rules and regulations.
Consequently, on November 7, 2022, SMEII proceeded to conduct a mandatory
tender offer to acquire a total of 574,877,004 common shares of ECC,
representing approximately 11.46% of the outstanding capital stock of ECC held
by the minority shareholders, as required by the Securities Regulations Code,
which tender offer was likewise considered as the tender offer required for the
voluntary delisting of ECC under the relevant rules of the PSE after the required
written assent of the stockholders of ECC was secured.
The tender offer period ended on December 5, 2022, with a total of 572,780,677
ECC shares representing approximately 11.46% of the total outstanding common
shares of ECC were tendered (Tendered Shares) for a total consideration of
P12,613 or P22.02 share (Tender Offer Price). The Tendered Shares were
crossed through the PSE on December 14, 2022, upon approval of the PSE of a
special block sale of the Tendered Shares. Thereafter, ECC petitioned for a
voluntary delisting and was approved by the PSE effective February 28, 2023.
As at December 31, 2022, SMEII beneficially owns 4,997,903,678 common

shares representing 99.96% of the total outstanding common shares of ECC.
The acquisition of ECC was accounted for using the acquisition method of
accounting in accordance with PFRS 3.
The following summarizes the recognized amount of assets acquired and

liabilities assumed at the acquisition date:
Note 2022
Assets
Trade and other receivables - net 118
Inventories 2,299
Prepaid expenses and other current assets 10, 24 8,613
Investment and advances 24 105
Property, plant and equipment - net 13 33,502
Right-of-use assets - net 14 26
Other intangible assets - net 17 8,305
Deferred tax assets 23 102
Other noncurrent assets - net 966
Liabilities
Income and other taxes payable (200)
Lease liabilities (including current portion) (36)
Long-term debt - net (4,040)
Deferred tax liabilities (13)
Other noncurrent liabilities 22, 35 (168)
Total Identifiable Net Assets at Fair Value P55,804
The fair value of trade and other receivables amounted to P118. None of the
receivables has been impaired and it is expected that the full amount can be
collected (Note 8).
- 67 -
Provisional goodwill was recognized as a result of the acquisition as follows:
Note 2022
Total consideration transferred (cash) 11 P110,054
Non-controlling interest measured at proportionate
interest in identifiable net assets 23
Total identifiable net assets at fair value (55,804)
Provisional goodwill 17, 38 P54,273
SMEII incurred acquisition-related costs of P80 for the year ended December 31,
2022, which were included in the “Selling and administrative expenses” account
in the consolidated statements of income.
Goodwill arising from the acquisition of ECC is attributable to the benefit of

expected synergies with the Group’s cement business, revenue growth, future
development and the assembled workforce. These benefits are not recognized
separately from goodwill because they do not meet the recognition criteria for
identifiable net assets.
SMEII is currently completing the purchase price allocation exercise on the

acquisition. The identifiable assets and liabilities are based on provisionary
amounts as at the acquisition date, which is allowed under PFRS 3 within
12 months from the acquisition date.
If the foregoing acquisitions have occurred on January 1, 2022, management

estimates that it would have increased consolidated revenue and consolidated
net income by P20,378 and P4,470, respectively. In determining these amounts,
management assumed that the fair value adjustments, determined provisionally,
that arose on the acquisition date would have been the same if the acquisition
had occurred on January 1, 2022. The amount of revenue and profit or loss of
ECC since the acquisition date included in the 2022 consolidated statements of
comprehensive income amounted to nil.
▪ Merger of NCC and San Miguel Northern Cement, Inc. (SMNCI)
On March 3, 2021, the BOD and stockholders of NCC and SMNCI approved the
plan of merger of NCC and SMNCI, with NCC as the surviving entity.
On June 14, 2021, the SEC approved the Articles and Plan of Merger executed
by NCC and SMNCI, whereby the entire assets and liabilities of SMNCI will be
transferred to and absorbed by NCC.
On the same date, the SEC approved the increase in the authorized capital stock
of NCC which was filed on April 27, 2021.
On July 1, 2021, the effective date of the merger, NCC issued 131,835,212
common shares in favor of SMEII for a total amount of P9,834 as consideration
for the net assets of SMNCI in accordance with the Plan of Merger. The shares
were issued out of the increase in the authorized capital stock of NCC.
On October 6, 2021, the BIR issued BIR Ruling No. S40M-371-2021 which
confirmed the tax-free exchange of investment relative to the merger of NCC and
SMNCI.
- 68 -
The merger of NCC and SMNCI is considered to be a business combination
under common control. The Group accounts for business combinations involving
entities that are ultimately controlled by the same ultimate parent before and after
the business combination and the control is not transitory, using the pooling of
interest method.
The assets and liabilities of the combining entities are reflected in the
consolidated statement of financial position at their carrying amounts. No
adjustments are made to reflect fair values, or recognize any new assets or
liabilities, at the date of the combination.
▪ SMEII
On various dates in 2021, SMEII and the Parent Company executed Subscription
Agreements to subscribe to a total of 1,956,500,000 common shares of SMEII for
a total subscription price of P2,935 or P1.50 per share, which was fully paid in
2021.
On December 7, 2022, the BOD and stockholders of SMEII approved the

21,425,000,000 shares to P88,371 divided into 88,370,900,000 common shares,
both with a par value of P1.00 per common share.
On December 13, 2022, SMEII and the Parent Company executed a

Subscription Agreement whereby the Parent Company subscribed to
2,157,400,000 common shares out of the entire available unissued shares of
SMEII for a total subscription price of P3,236 or P1.50 per common share, which
was fully paid in 2022.
On December 13, 2022, pursuant to the Subscription Agreement between SMEII

and the Parent Company, the latter subscribed to 44,630,600,000 common
shares out of the aforementioned proposed increase in the authorized capital
stock of SMEII for a total subscription price of P66,946 or P1.50 per common
share, which was fully paid in 2022.
authorized capital stock of SMEII was filed with the SEC on December 19, 2022
and was approved on December 29, 2022.
On December 21, 2022, SMEII and the Parent Company executed another
Subscription Agreement whereby the Parent Company subscribed to an
additional 7,602,900,000 common shares out of the proposed increase in the
authorized capital stock of SMEII for a total subscription price of P11,404 or
P1.50 per common share, which was fully paid in 2022.
Food and Beverage
▪ SMBB
On March 10, 2020, SMBIL and San Miguel (China) Investment Company,
Limited, the shareholders of SMBB, passed a resolution approving the
dissolution and liquidation of SMBB. SMBB is in the process of liquidation as at
December 31, 2022.
- 69 -
▪ GSMI
On December 1, 2020, the BOD of GSMI approved the redemption of the

32,786,885 outstanding preferred shares, all of which are held by SMC
equivalent to 10.27% equity interest in GSMI. The holders of preferred shares
are entitled to vote in the same manner as the holders of common shares. On
January 4, 2021, GSMI paid the redemption price of P1,000 or P30.50 per share
and all accumulated unpaid cash dividends. Consequently, the effective
ownership of SMC in GSMI was reduced from 70.62% to 67.26% with indirect
ownership interest through SMFB.
▪ PTSMFI
On November 10, 2021, the BOD of SMFB approved the closure of the
operations of PTSMFI effective October 31, 2021. SMFB made cash advances to
PTSMFI amounting to US$3 (P167), representing its proportionate share to the
total cash advances necessary to settle PTSMFI’s outstanding obligations.
PTSMFI was in the process of liquidation as at December 31, 2022.
Others
▪ SMCEC
On June 29, 2021, the BOD and stockholders of SMCEC approved the increase
in its authorized capital stock from P1,100 divided into 1,100,000,000 common
shares to P3,520 divided into 3,520,000,000 common shares, both with a par
value of P1.00 per common share. On July 9, 2021, the Parent Company in a
Subscription Agreement, subscribed to 605,000,000 common shares out of the
proposed increase in authorized capital stock for a total subscription price of
P1,210 or P2.00 per common share. The subscription price was paid in 2021.
authorized capital stock of SMCEC was filed with the SEC on July 30, 2021 and
was approved on August 3, 2021.
On August 5, 2021, SMCEC and the Parent Company executed a Subscription

Agreement to subscribe to an additional 350,000,000 common shares of SMCEC
for a total subscription price of P700 or P2.00 per share, which was fully paid in
2021. On the same date, SMCEC and the Parent Company executed a
Subscription Agreement to subscribe to an additional 1,815,000,000 common
shares out of the increase in authorized capital stock of SMCEC for a total
subscription price of P3,630 or P2.00 per common share, which was fully paid in
2021.
On October 19, 2021, the BOD and stockholders of SMCEC approved the
3,520,000,000 common shares to P3,875 divided into 3,875,000,000 common
shares, both with a par value of P1.00 per common share. On October 20, 2021,
the Parent Company in a Subscription Agreement, subscribed to 177,500,000
common shares out of the proposed increase in authorized capital stock for a
total subscription price of P355 or P2.00 per common share. The subscription
price was paid in 2021.
authorized capital stock of SMCEC was filed with and approved by the SEC on
December 31, 2021.
- 70 -
▪ Petrogen
On December 3, 2020, the BOD and stockholders of Petrogen approved the

increase in its authorized capital stock from P750 divided into 750,000 common
shares to P2,250 divided into 2,250,000 common shares, both with a par value of
P1,000.00 per common share. On January 5, 2021, the Parent Company in a
Subscription Agreement, subscribed to 1,494,973 common shares out of the
increase in authorized capital stock for a total subscription price of P3,000 or
P2,006.73 per common share. The subscription price was fully paid in 2021.
authorized capital stock of Petrogen was filed with the SEC on January 27, 2021
and was approved on February 4, 2021.
As a result, Petrogen became 74.94% directly owned by the Parent Company

effective February 4, 2021.
As at December 31, 2022 and 2021, the Parent Company’s effective equity
interest in Petrogen is 92.05%, including the 17.11% indirect equity interest
through Petron.
▪ SMCACDC
On December 18, 2020, the BOD of SMCACDC approved the redemption of the
730,000 preferred shares held by the Parent Company, which was issued in
2019. On March 19, 2021, SMCACDC paid the redemption price of P730 or
P1,000.00 per share.
On March 3, 2022, the BOD of SMCACDC approved the redemption of the

800,000 preferred shares held by the Parent Company, which were issued in
2019. On July 15, 2022, SMCACDC paid the redemption price of P800 or
P1,000.00 per share.
The preferred shares issued by SMCACDC are non-voting, non-convertible, and

redeemable at the sole option of SMCACDC at a price and at such time that the
BOD of SMCACDC shall determine. The preferred shares are entitled to
dividends as declared by the BOD of SMCACDC. In the event of liquidation,
dissolution, bankruptcy, or winding up of the affairs of SMCACDC, the holders of
preferred stocks that are outstanding at that time shall enjoy preference in the
payment. Furthermore, holders of preferred shares have no pre-emptive right to
any issue of disposition of any stocks of any class of SMCACDC.
▪ SMICL
On July 13, 2021, the BOD of SMICL approved to increase its authorized capital
stock from US$0.12 to US$66 divided into 120,000 common shares with par
value of US$1.00 per share and creation of 6,600,000 preferred shares with par
value of US$10.00 per share. On the same date, the Parent Company
subscribed to 6,600,000 preferred shares out of the proposed increase in
authorized capital stock of SMICL, for a total subscription price of US$66
(P3,170) or US$10.00 per share. The subscription price was fully paid in 2021.
authorized capital stock of SMICL was filed with and approved by the Registrar
of Companies of the Government of Bermuda on August 5, 2021.
- 71 -
The holders of the preferred shares have the right to receive, in priority to any
payments to the holders of common shares, out of the funds of SMICL available
for distribution, a non-cumulative preference dividend at the rate of 4% per
annum on the par value of the preference shares. SMICL has the right to convert
the preferred shares into common shares at a rate of ten common shares for
each preferred share, or to redeem any or all of the preferred shares for a
redemption price equal to the par value of the preferred shares. The holders of
the preferred shares are entitled to vote in same manner as the holders of
common shares.
▪ SMHL
On September 16, 2020, SMHL issued to the Parent Company an additional

2,500,000 preferred shares from the unissued capital stock of SMHL, for a total
subscription price of US$25 (P1,215) or US$10.00 per preferred share. As at
December 31, 2020, the Parent Company paid a total of US$23 (P1,153). The
balance amounting to US$2 (P62) was subsequently paid on March 29, 2021.
The holders of the preferred shares have the right to receive, in priority to any
payments to the holders of common shares, out of the funds of SMHL available
for distribution, a non-cumulative preference dividend at the rate of 4% per
annum on the par value of the preference shares. SMHL has the right to convert
the preferred shares into common shares at a rate of one common share for
each preferred share, or to redeem any or all of the preferred shares for a
redemption price equal to the par value of the preferred shares. The holders of
the preferred shares are entitled to vote in same manner as the holders of
common shares.
On December 12, 2022, the BOD of SMHL approved the redemption of the
30,300,000 preferred shares held by the Parent Company. On December 19,
2022, SMHL paid the redemption price of US$303 (P16,789) or US$10.00 per
share, corresponding to the par value of such preferred shares.
6. Segment Information
Operating Segments
The reporting format of the Group’s operating segments is determined based on the
Group’s risks and rates of return which are affected predominantly by differences in
the products and services produced. The operating businesses are organized and
managed separately according to the nature of the products produced and services
provided, with each segment representing a strategic business unit that offers
different products and serves different markets.
The Group’s reportable segments are food and beverage, packaging, energy, fuel
and oil and infrastructure.
- 72 -
The food and beverage segment is engaged in: (i) the processing and marketing of
branded value-added refrigerated processed meats and canned meat products,
manufacturing and marketing of butter, margarine, cheese, milk, ice cream,
jelly-based snacks and desserts, specialty oils, salad aids, snacks and condiments,
marketing of flour mixes and the importation and marketing of coffee and coffee-
related products (collectively known as “Prepared and Packaged Food”),
(ii) the production and sale of feeds (“Animal Nutrition and Health”), (iii) the poultry
and livestock farming, processing and selling of poultry and fresh meats (“Protein”),
and (iv) the milling, production and marketing of flour and bakery ingredients, grain
terminal handling, food services, franchising and international operations. It is also
engaged in the production, marketing and selling of fermented, malt-based and
non-alcoholic beverages within the Philippines and several foreign markets; and
production of hard liquor in the form of gin, Chinese wine, brandy, rum, vodka and
other liquor variants which are available nationwide, while some are exported to
select countries.
The packaging segment is involved in the production and marketing of packaging

products including, among others, glass containers, glass molds, polyethylene
terephthalate (PET) bottles and preforms, PET recycling, plastic closures, corrugated
cartons, woven polypropylene, kraft sacks and paperboard, pallets, flexible
packaging, plastic crates, plastic floorings, plastic films, plastic trays, plastic pails and
tubs, metal closures and two-piece aluminum cans, woven products, industrial
laminates and radiant barriers. It is also involved in crate and plastic pallet leasing,
PET bottle filling graphics design, packaging research and testing, packaging
development and consultation, contract packaging and trading.
The energy segment sells, retails and distributes power, through power supply
agreements (PSA), retail supply contracts (RSC), concession agreement and other
power-related service agreements, either directly to customers [other generators,
distribution utilities (DU), including Manila Electric Company (Meralco), electric
cooperatives and industrial customers], or through the Philippine Wholesale
Electricity Spot Market (WESM).
The fuel and oil segment is engaged in refining crude oil and marketing and
distribution of refined petroleum products.
The infrastructure segment has investments in companies which hold long-term

concessions in the infrastructure sector in the Philippines. It is engaged in the
management and operation, as well as, construction and development of various
infrastructure projects such as major toll roads, airports, railways and bulk water.
Segment Assets and Liabilities

Segment assets include all operating assets used by a segment and consist primarily
of operating cash, receivables, inventories, biological assets, property, plant and
equipment and concession rights, net of allowances, accumulated depreciation and
amortization and impairment. Segment liabilities include all operating liabilities and
consist primarily of accounts payable and accrued expenses and other noncurrent
liabilities, excluding interest payable. Segment assets and liabilities do not include
deferred taxes.
Inter-segment Transactions
Segment revenues, expenses and performance include sales and purchases
between operating segments. Such transactions are eliminated in consolidation.
Major Customer
The Group does not have a single external customer from which sales revenue
generated amounted to 10% or more of the total revenues of the Group.
- 73 -
Operating Segments
Financial information about reportable segments follows:

Food and Beverage Packaging Energy Fuel and Oil Infrastructure Cement, Real Estate and Others Eliminations Consolidated
2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020
Sales
External sales P358,587 P309,576 P279,122 P26,794 P24,033 P22,832 P212,843 P129,420 P111,798 P841,688 P430,662 P281,667 P29,003 P19,688 P14,564 P37,676 P27,814 P15,814 P - P - P - P1,506,591 P941,193 P725,797
Inter-segment sales 266 202 168 10,245 9,670 8,672 8,546 4,290 3,231 15,950 7,395 4,366 5 2 1 35,723 31,483 21,985 (70,735) (53,042) (38,423) - - -
Total sales P358,853 P309,778 P279,290 P37,039 P33,703 P31,504 P221,389 P133,710 P115,029 P857,638 P438,057 P286,033 P29,008 P19,690 P14,565 P73,399 P59,297 P37,799 (P70,735) (P53,042) (P38,423) P1,506,591 P941,193 P725,797
Result
Segment result P48,711 P43,695 P33,412 P1,648 P1,162 P961 P17,278 P36,633 P39,504 P45,734 P26,927 (P4,674) P14,244 P6,788 P2,571 P6,034 P4,086 P2,166 P884 P2,608 P117 P134,533 P121,899 P74,057
Interest expense and
other financing
charges (60,795) (49,265) (52,035)
Interest income 7,108 3,591 6,182
Equity in net earnings
of associates and
joint ventures 1,197 1,040 417
Gain (loss) on sale
of investments
and property and
equipment 733 167 (491)
Other income
(charges) - net (42,699) (11,480) 9,280
Income tax expense (13,317) (17,793) (15,531)
Net Income P26,760 P48,159 P21,879
Attributable to:
Equity holders of
the Parent
Company (P12,968) P13,925 P2,973
Non-controlling
interests 39,728 34,234 18,906
Net Income P26,760 P48,159 P21,879
Other Information
Segment assets P281,652 P252,307 P230,208 P54,672 P66,337 P68,053 P637,243 P553,573 P528,587 P448,562 P396,054 P339,241 P355,140 P279,269 P239,407 P564,044 P395,834 P383,871 (P208,682) (P136,417) (P121,035) P2,132,631 P1,806,957 P1,668,332
Investments and
advances - - 4 - - - 7,855 10,837 9,956 11 9 6 5,229 5,330 4,465 19,428 38,826 36,064 - - - 32,523 55,002 50,495
Goodwill and
trademarks and
brand names 184,320 130,357 130,434
Other assets 19,797 42,196 42,000
Deferred tax assets 22,554 17,141 20,946
Consolidated
Total Assets P2,391,825 P2,051,653 P1,912,207
Forward
- 74 -
Food and Beverage Packaging Energy Fuel and Oil Infrastructure Cement, Real Estate and Others Eliminations Consolidated
2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020
Segment liabilities P69,749 P62,807 P55,255 P9,802 P10,265 P10,213 P73,768 P52,019 P35,245 P72,756 P58,909 P42,110 P66,382 P47,960 P45,696 P145,612 P89,333 P80,571 (P189,869) (P110,173) (P92,569) P248,200 P211,120 P176,521
Loans payable 267,704 190,779 140,645
Long-term debt 1,088,196 813,965 766,909
Lease liabilities 75,475 94,992 117,037
Income and other
taxes payable 37,694 23,102 20,998
Dividends payable
and others 9,107 7,714 7,260
Deferred tax
liabilities 26,297 28,742 27,749
Consolidated
Total Liabilities P1,752,673 P1,370,414 P1,257,119
Capital expenditures
(Note 13) P11,873 P10,802 P13,888 P1,276 P2,605 P3,149 P44,580 P39,597 P23,931 P5,397 P9,158 P8,167 P1,191 P906 P452 P11,669 P11,353 P11,042 P - P - P - P75,986 P74,421 P60,629
Depreciation of
property, plant
and equipment
(Notes 13 and 28) 5,294 5,062 4,392 2,107 2,086 2,164 7,336 5,960 5,215 8,942 7,047 6,525 363 369 377 3,136 3,382 3,027 - - - 27,178 23,906 21,700
Noncash items other
than depreciation
of property, plant
and equipment 8,474 6,588 6,274 577 590 347 14,230 5,924 2,438 6,360 3,912 (889) 5,211 5,113 5,349 6,961 (15) (7,304) - - - 41,813 22,112 6,215
Loss on (reversal of)
impairment of
trade and other
receivables,
goodwill, property,
plant and
equipment,
trademark and
brand names and
other noncurrent
assets (Notes 8,
13, 17, 18 and 32) (31) 455 (3) 910 - (99) 12 12 (103) (1) 1 - (1) - - 222 (19) 13 - - - 1,111 449 (192)
Disaggregation of Revenue
The following table shows the disaggregation of revenue by timing of revenue recognition and the reconciliation of the disaggregated revenue with the Group’s
reportable segments:
Food and Beverage Packaging Energy Fuel and Oil Infrastructure Cement, Real Estate and Others Consolidated
2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020 2022 2021 2020
Timing of Revenue
Recognition
Sales recognized at point
in time P358,573 P309,565 P279,110 P25,894 P23,408 P21,897 P - P - P - P841,688 P430,662 P281,667 P - P - P - P33,806 P24,832 P13,361 P1,259,961 P788,467 P596,035
Sales recognized over time 14 11 12 900 625 935 212,843 129,420 111,798 - - - 29,003 19,688 14,564 3,870 2,982 2,453 246,630 152,726 129,762
Total External Sales P358,587 P309,576 P279,122 P26,794 P24,033 P22,832 P212,843 P129,420 P111,798 P841,688 P430,662 P281,667 P29,003 P19,688 P14,564 P37,676 P27,814 P15,814 P1,506,591 P941,193 P725,797
- 75 -
7. Cash and Cash Equivalents
Cash and cash equivalents consist of:
Note 2022 2021

Cash in banks and on hand P78,560 P70,124
Short-term investments 239,654 229,906
4, 39, 40 P318,214 P300,030
Cash in banks earn interest at bank deposit rates. Short-term investments include
demand deposits which can be withdrawn at any time depending on the immediate
cash requirements of the Group and earn interest at short-term investment rates
(Note 31).
8. Trade and Other Receivables
Trade and other receivables consist of:
Note 2022 2021

Trade P172,373 P99,056
Non-trade 5, 34 69,672 60,457
Amounts owed by related parties 33, 35 9,650 15,563
251,695 175,076
Less allowance for impairment losses 4, 5 12,913 13,268
4, 39, 40 P238,782 P161,808
Trade receivables are non-interest bearing and are generally on a 30 to 60-day term.
Non-trade receivables include claims from the Government, interest receivable,

claims receivable, contracts receivable and others.
a. Claims from the Government consist of duty drawback, VAT and specific tax
claims, subsidy receivables from the Government of Malaysia under the
Automatic Pricing Mechanism and due from Power Sector Assets and Liabilities
Management Corporation (PSALM). Due from PSALM amounting to US$60
(P3,345) pertains to SPPC’s performance bond pursuant to the Ilijan
Independent Power Producer (IPP) Administration (IPPA) Agreements that was
drawn by PSALM in September 2015. The validity of PSALM's action is the
subject of an ongoing case filed by SPPC with the Regional Trial Court (RTC) of
Mandaluyong City (Note 43).
b. Receivables recognized by SPI for WESM transactions as well as the cost of

fuel, market fees and other charges related to the dispatch of the excess
capacity of the Sual Power Plant.
On March 5, 2022, SPI entered into a Settlement Agreement with Team

(Philippines) Energy Corporation (TPEC) and TeaM Sual Corporation (TSC) that
aims to resolve all pending disputes on the dispatch of the excess capacity of the
Sual Power Plant, including the claims of TPEC and SPI on historic imbalances
arising from WESM transactions, cost of fuel, market fees and other charges.
Pursuant to said agreement, SPI, TPEC and TSC have agreed to cause the
dismissal of all ongoing cases and settle the historic imbalances and the
corresponding amounts claimed relative to the excess capacity of the Sual
Power Plant.
- 76 -
As at December 31, 2022, SPI has collected and recognized a receivable from
TPEC amounting to P574 and P2,055, respectively, in accordance with the
Settlement Agreement. In addition, SPI recognized cost of its full dispatch rights
on the capacity of the Sual Power Plant amounting to P1,629 as “Other
intangible assets - net” account (Note 17). The noncurrent portion of the
receivable amounting to P1,576 is included under “Other noncurrent assets - net”
account in the 2022 consolidated statement of financial position (Note 18).
c. Receivables recognized by APEC from ALECO following the termination of the

concession agreement on November 21, 2022 amounted to P1,641 (Note 34).
Amounts owed by related parties include trade receivables amounting to P870 and
P2,051 as at December 31, 2022 and 2021, respectively.
The movements in the allowance for impairment losses are as follows:
Note 2022 2021

Balance at beginning of year P13,268 P13,741
Reversal of allowance for impairment
losses - net 27, 32 (6) (225)
Amounts written off 4 (366) (281)
Translation adjustments and others 17 33
Balance at end of year P12,913 P13,268
9. Inventories
Inventories consist of:
Note 2022 2021

At net realizable value:
Finished goods and goods in process
(including petroleum products) P108,586 P84,093
Materials and supplies (including coal) 75,650 52,589
At cost:
Raw land inventory and real estate
projects 5,957 4,527
4 P190,193 P141,209
The cost of finished goods and goods in process amounted to P109,119 and
P84,514 as at December 31, 2022 and 2021, respectively.
If the Group used the moving-average method (instead of the first-in, first-out
method, which is the Group’s policy), the cost of petroleum, crude oil and other
petroleum products would have increased by P1,487 and P994 as at
December 31, 2022 and 2021, respectively.
The cost of materials and supplies amounted to P76,659 and P53,673 as at

Inventories (including distribution or transshipment costs) charged to cost of sales

amounted to P995,346, P514,638 and P367,125 in 2022, 2021 and 2020,
- 77 -
The movements in allowance for write-down of inventories to net realizable value
and inventory obsolescence at the beginning and end of 2022 and 2021 follow:
Note 2022 2021

Provisions - net 26, 27 277 227
Write-off and others (240) (346)
Provisions for inventory losses amounted to P330 and P277 in 2022 and 2021,
respectively. Reversals of provision for inventory losses pertain to inventories sold
amounting to P53 and P50 in 2022 and 2021, respectively. Provisions for inventory
losses, net of reversals, are included as part of “Cost of sales” and “Selling and
administrative expenses” accounts in the consolidated statements of income
(Notes 26 and 27).
The fair value of agricultural produce less costs to sell, which formed part of the cost
of finished goods inventory, amounted to P127 and P112 as at December 31, 2022
and 2021, respectively, with corresponding costs at point of harvest amounting to
P110 and P86, respectively. Net unrealized gain on fair valuation of agricultural
produce amounted to P17, P26 and P70 in 2022, 2021 and 2020, respectively
(Note 16).
The fair values of marketable hogs and grown broilers, which comprised the Group’s
agricultural produce, are categorized as Level 1 and Level 3, respectively, in the fair
value hierarchy based on the inputs used in the valuation techniques.
The valuation model used is based on the following: (a) quoted prices for harvested
mature grown broilers at the time of harvest; and (b) quoted prices in the market at
any given time for marketable hogs; provided that there has been no significant
change in economic circumstances between the date of the transactions and the
reporting date. Costs to sell are estimated based on the most recent transaction and
is deducted from the fair value in order to measure the fair value of agricultural
produce at point of harvest. The estimated fair value would increase (decrease) if
weight and quality premiums increase (decrease) (Note 4).
The net realizable value of raw land inventory and real estate projects is higher than
the carrying amount as at December 31, 2022 and 2021, based on management’s
assessment.
The fair value of raw land inventory amounted to P24,952 and P11,613 as at
December 31, 2022 and 2021, respectively. The fair value has been categorized as
Level 3 in the fair value hierarchy based on the inputs used in the valuation
techniques (Note 4).
In estimating the fair value of the raw land inventory, management takes into account
the market participant’s ability to generate economic benefits by using the assets in
their highest and best use. Based on management assessment, the best use of the
Group’s raw land inventory are their current use.
The Level 3 fair value of raw land inventory was derived using the observable recent
transaction prices for similar raw land inventory in nearby locations adjusted for
differences in key attributes such as property size, zoning and accessibility. The
most significant input into this valuation approach is the price per square meter,
hence, the higher the price per square meter, the higher the fair value (Note 4).
- 78 -
10. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consist of:
Note 2022 2021

Prepaid taxes and licenses 23 P100,339 P87,358
Restricted cash - current 4, 18, 39, 40 17,411 10,872
Advances to contractors and
suppliers 2,931 2,619
Assets held for sale 2,840 -
Derivative assets 3, 39, 40 2,486 870
Financial assets at FVPL 5, 33, 39, 40 1,349 298
PSALM monthly fee outage credits 850 1,397
Prepaid insurance 657 940
Financial assets at amortized cost -
current portion 4, 12, 39, 40 531 547
Prepaid rent 280 290
Catalyst 197 178
Financial assets at FVOCI -
current portion 4, 12, 39, 40 1 46
Others 34 3,819 3,274
P133,691 P108,689
Restricted cash - current represents: (i) cash in banks maintained by SMC NAIAX,
SMCTC, SIDC, MMSS3, SMC Tollways and LCWDC in accordance with the specific
purposes and terms as required under certain loan and concession agreements.
Certain loan agreements provide that the Security Trustee shall have control over
and the exclusive right of withdrawal from the restricted bank accounts; and (ii) funds
maintained in various financial institutions, as (a) cash flow waterfall accounts
required under the respective credit facilities of LPI, MPI and MPPCL,
(b) debt service reserve account required under the Term Loan Facility and Security
Agreement (TLFSA) of ECC, and (c) environmental guarantee fund for remittance to
the Department of Environment and Natural Resources (DENR) and financial
benefits to host communities, as required by law, of LPI and MPI.
Assets held for sale consist of:
a. KB Space Holdings, Inc. (KSHI)
Included in the balance of assets consolidated to the Group upon acquisition of

ECC are the assets of KSHI amounting to P2,668, classified as held for sale as
at December 14, 2022 (Note 5). KSHI is a wholly-owned subsidiary of ECC
which owns several properties within a prime commercial area in Wack-Wack,
Mandaluyong.
As at March 9, 2023, the sale transaction has not yet been executed. Based on
management’s assessment, the negotiated price of the transaction is higher than
the carrying value of KSHI.
- 79 -
b. La Pacita Biscuit Assets
On October 17, 2021, in an effort to streamline its businesses, Magnolia ceased

the operation of La Pacita biscuit which was acquired in February 2015 and
accounted for as an asset acquisition. Accordingly, SMFB assessed the
recoverable value of the trademarks, formulations, recipes and other intangible
properties relating to La Pacita biscuit and flour-based snack business. It was
determined that the carrying amount of the asset was higher than the
recoverable amount. Impairment loss was recognized amounting to P386 to
reduce the carrying amount of trademark to recoverable amount
(Notes 17 and 32).
On March 11, 2022, the BOD of Magnolia approved the plan to take steps to
liquidate the properties related to the operation of La Pacita biscuit. On
February 2, 2023, the BOD of SMFB approved the sale of La Pacita trademarks,
together with its product formulations and process specifications. Accordingly,
the related trademark amounting to P60 and property and equipment amounting
to P112 were presented as held for sale (Notes 13 and 17).
PSALM monthly fee outage credits pertain to the approved reduction in SPI’s future
monthly fees payable to PSALM resulting from the outages of the Sual Power Plant
in 2022 and 2021.
Financial assets at FVPL include investment in debt securities under investment

agreement with Bank of Commerce (BOC) amounting to P50 as at
December 31, 2022 (Note 33).
“Others” consist mainly of prepayments for various operating expenses and contract
assets pertaining to the Group’s right to consideration for work completed but not
billed at the reporting date on the sale of real estate projects.
The methods and assumptions used to estimate the fair values of restricted cash,
derivative assets, financial assets at FVPL, and financial assets at FVOCI are
discussed in Note 40.
- 80 -
11. Investments and Advances
Investments and advances consist of:
Note 2022 2021

Investments in Shares of Stock of
Associates and Joint Ventures -
at Equity
Acquisition Cost
Additions 503 357
Balance at end of year 21,290 20,787
Accumulated Equity in Net Earnings
Balance at beginning of year 1,886 836
Equity in net earnings 1,197 1,040
Share in other comprehensive income
(loss) (162) 10
Dividends (1,100) -
23,111 22,673
Advances for Investments 5 9,412 32,329
4 P32,523 P55,002
Investments in Shares of Stock of Associates
a. BOC
▪ Acquisition of Additional Common Shares
On October 20, 2021, SMC through SMCEC acquired 1,571,600 common

shares of BOC at P226.48 per share or P357, including transaction cost,
representing additional 1.4% ownership interest.
The Bangko Sentral ng Pilipinas (BSP) and SEC approved the Amendment
of Articles of Incorporation of BOC on October 4 and November 2, 2021,
respectively, for the change in the par value of BOC’s common and preferred
shares from P100.00 per share to P10.00 per share, which was approved by
the BOD and stockholders of BOC on May 25 and July 8, 2021, respectively.
As a result, SMPI and SMCEC’s investment in BOC’s common shares
increased from 44,771,180 shares to 447,711,800 shares and from
6,830,556 shares to 68,305,560 shares, respectively. SMCEC’s investment
in BOC’s preferred shares also increased from 41,666,667 shares to
416,666,670 shares and presented as part of “Equity securities” under
“Investments in equity and debt instruments” account in the 2022
consolidated statement of financial position (Notes 12 and 35).
As at December 31, 2021, SMC through SMPI and SMCEC, respectively,

had 39.93% and 6.09% equity ownership interest in BOC.
- 81 -
▪ Approval of the Upgrade of Banking License
On December 23, 2021, the Monetary Board of the BSP, in its Resolution
No. 1798, approved the upgrade of the banking license of BOC from
commercial bank to universal bank, subject to the public offering of its shares
and listing the same with the PSE within one year from the date of the grant
of the universal banking license.
On February 22, 2022, the BOD of BOC approved the amendments to the
Articles of Incorporation to change its purpose from commercial bank to
universal bank pursuant to BSP Monetary Board Resolution No. 1798 dated
December 23, 2021.
▪ Initial Public Offering of Common Shares
On February 15, 2022, the SEC issued its pre-effective letter relating to the
registration of securities of up to 1,403,013,920 common shares of BOC to
be listed and traded in the Main Board of the PSE in relation to its initial
public offering. On February 16, 2022, the PSE approved the application for
the listing of up to 1,403,013,920 common shares of BOC, which includes the
280,602,800 common shares subject of the initial public offering. On
March 31, 2022, BOC listed its common shares with the PSE.
After completion of initial public offering and as at December 31, 2022, the
Group through SMPI and SMCEC has 31.94% and 4.87% equity interest in
BOC, respectively.
As at December 31, 2022, the fair value of investment in common shares of

stock of BOC amounted to P4,029.
b. MNHPI
The Parent Company through SMHC owns 50% of the outstanding capital stock
of MNHPI as at December 31, 2022 and 2021. MNHPI is the terminal operator of
Manila North Harbor, a 63.5-hectare port facility situated in Tondo, City of Manila.
The port has a total quay length of 5,758 meters and 41 berths which can
accommodate all types of vessels such as containerized and non-container type
vessels.
On September 8, 2022, SMHC and ICTSI signed a Shareholders Agreement

wherein SMHC recognizes that ICTSI is the shareholder who has the ability to
direct the relevant operational activities in view of its technical and port
management expertise to affect increased returns to the shareholders. SMHC,
directly or through its affiliates, shall provide financial management expertise and
support to the operations of MNHPI. Consequently, the Group reclassified its
investment in MNHPI from “Investments in shares of stock of joint ventures” to
“Investments in shares of stock of associates” in accordance with PAS 28
(Note 4).
- 82 -
Investments in Shares of Stock of Joint Ventures
Angat Hydro and KWPP

PVEI, a subsidiary of San Miguel Global Power has an existing joint venture
agreement with Korea Water Resources Corporation (K-Water), covering the
acquisition, rehabilitation, operation and maintenance of the 218 MW Angat
Hydroelectric Power Plant (Angat Power Plant) which was previously awarded by
PSALM to K-Water.
PVEI holds 30,541,470 shares or 60% of the outstanding capital stock of Angat
Hydro and 75 shares representing 60% of KWPP outstanding capital stock. PVEI
and K-Water are jointly in control of the management and operation of Angat Hydro
and KWPP.
In January 2017, PVEI granted shareholder advances amounting to US$32 (P1,579)

to Angat Hydro. The advances bear annual interest rate of 4.5% and were due on
April 30, 2017. The due date of the advances was extended as agreed amongst the
parties. As at December 31, 2022 and 2021, the remaining balance of the
shareholder advances amounted to US$2 (P127 and P116, respectively) and the
due date was extended to December 31, 2023. Interest income earned from the
advances amounted to P6 and P5 in 2022 and 2021, respectively (Notes 31 and 33).
In June and October 2021, PVEI granted shareholder advances to Angat Hydro
amounting to P600 and P408, respectively. The advances bear interest rates of 4.6%
and 6.125%, respectively, and are due on January 5, 2032. As at December 31,
2022 and 2021, the outstanding balance of the advances amounted to a total of
P1,008. Interest income earned from the advances amounted to P53 and P19 in
2022 and 2021, respectively (Notes 31 and 33).
Advances for Investments
a. SMPI made advances to future investees amounting to P640 and P1,034 as at

December 31, 2022 and 2021, respectively. These advances will be applied
against future subscriptions of SMPI to the shares of stock of the future investee
companies.
In 2021, advances for investments amounting to P2,975 were reclassified to

investment in shares of stock of subsidiaries as part of the consideration
transferred for the acquisition of various entities (Notes 5 and 15).
In 2022, advances for investments amounting to P150 were reclassified to

investment in shares of stock of subsidiaries for the additional shares purchased
from non-controlling shareholders of various entities (Note 5).
Impairment loss recognized on the advances for investments amounted to P241

in 2022 (Note 32). No impairment loss was recognized in 2021 and 2020.
b. San Miguel Global Power and SPI made deposits to certain landholding
companies amounting to P2,502 and P5,587 as at December 31, 2022 and
2021, respectively. These deposits will be applied against future stock
subscriptions.
In 2022, San Miguel Global Power bought ownership interests in certain

landholding companies. As a result, these landholding companies were
consolidated and deposits amounting to P2,987 were eliminated (Note 5).
- 83 -
c. On June 29, 2016, SMHL entered into an Investment Agreement
(the Agreement) with Bryce Canyon Investments Limited (BCIL), for the sale and
purchase of assets, as defined in the Agreement, upon the satisfaction of certain
conditions set out in the Agreement.
As at December 31, 2021, the outstanding balance of advances for investment

amounted to US$409.
On December 16, 2022, the Agreement was terminated as agreed by both

parties, and accordingly, BCIL paid the outstanding balance of advances for
investment amounting to US$409.
d. Other advances pertain to deposits made to certain companies which will be

applied against future stock subscriptions.
- 84 -
The details of the Group’s material investments in shares of stock of associates and joint ventures which are accounted for using the equity method
are as follows:
December 31, 2022 December 31, 2021

Angat Hydro Angat Hydro
and KWPP BOC MNHPI Others Total and KWPP BOC MNHPI Others Total
Country of incorporation Philippines Philippines Philippines Philippines Philippines Philippines
Percentage of ownership 60.00% 36.81% 50.00% 60.00% 46.02% 50.00%
Share in net income (loss) (P414) P661 P951 (P1) P1,197 (P134) P582 P550 P42 P1,040
income (loss) - (172) 9 1 (162) - - 14 (4) 10
Share in total comprehensive
income (loss) (P414) P489 P960 P - P1,035 (P134) P582 P564 P38 P1,050
Dividends received P - P - P1,100 P - P1,100 P - P - P - P - P -
Carrying amounts of investments in

shares of stock of associates and joint
ventures P4,606 P12,358 P4,714 P1,433 P23,111 P5,020 P11,869 P4,854 P930 P22,673
The following are the audited condensed financial information of the Group’s material investments in shares of stock of associates and joint ventures:

Angat Hydro Angat Hydro
and KWPP BOC MNHPI Others and KWPP BOC MNHPI Others
Current assets P1,985 P96,658 P1,236 P5,578 P2,513 P100,520 P1,901 P5,281
Noncurrent assets 16,794 120,859 9,497 2,924 17,180 99,193 9,999 2,640
Current liabilities (1,428) (181,197) (920) (4,715) (1,025) (169,937) (2,580) (4,250)
Noncurrent liabilities (11,848) (8,289) (2,610) (470) (12,483) (6,413) (2,679) (514)
Net assets P5,503 P28,031 P7,203 P3,317 P6,185 P23,363 P6,641 P3,157
Sales P1,572 P7,966 P5,185 P3,948 P1,927 P6,095 P4,341 P4,049
Net income (loss) (P677) P1,800 P1,742 (P401) (P237) P1,207 P1,283 (P33)
Other comprehensive income (loss) (5) (391) 20 3 - (11) 28 31
Total comprehensive income (loss) (P682) P1,409 P1,762 (P398) (P237) P1,196 P1,311 (P2)
- 85 -
12. Investments in Equity and Debt Instruments
Investments in equity and debt instruments consist of:
Note 2022 2021

Government and other debt securities P12,874 P623
Equity securities 5,984 41,477
Proprietary membership shares and others 595 459
4, 39, 40 19,453 42,559
Less current portion 10 532 593
P18,921 P41,966
Government and Other Debt Securities

Government and other debt securities include:
a. Petrogen’s government securities deposited with the Bureau of Treasury in

accordance with the provisions of the Insurance Code, for the benefit and
security of its policyholders and creditors amounting to P634 and P577 as at
December 31, 2022 and 2021, respectively. These investments bear fixed
annual interest rates ranging from 1.37% to 5.015% in 2022 and 1.23% to 7.02%
in 2021 (Note 31).
b. Investment in debt securities under investment agreement with BOC entered in

December 2022 by SMB, GSMI and Petrogen amounting to a total of P12,200,
which bear an annual average interest rate of 6.9% and maturities up to seven
years (Note 33).
Equity Securities
Equity securities include:
a. Parent Company’s investment in the shares of stock of Top Frontier consisted of

2,561,031 common shares amounting to P243 and P313 as at December 31,
2022 and 2021, respectively and 1,904,540 preferred shares amounting to
P35,424 as at December 31, 2021.
On December 20, 2022, the BOD of Top Frontier approved the redemption of the
remaining 1,904,540 preferred shares held by the Parent Company. On
December 21, 2022, Top Frontier redeemed the preferred shares at the
redemption price of P35,424, corresponding to the original issue price, plus
unpaid cash dividends amounting to P267.
Total dividend income from the investment in preferred shares of stock of Top
Frontier amounted to P1,328 and P1,063 in 2022 and 2021, respectively
presented as part of “Dividend income” under “Other income (charges) - net”
account in the consolidated statements of income (Note 32).
b. On December 28, 2021, the Parent Company’s investment in redeemable

preferred shares of stock of Carmen Red Ltd. (CRL) was redeemed by CRL at
the redemption price of US$123 (P6,181). The Parent Company also received
dividends of US$32 (P1,594) presented as part of “Dividend income” under
“Other income (charges) - net” account in the 2021 consolidated statement of
income (Note 32).
- 86 -
c. Parent Company through SMCEC’s investment in 41,666,667 Series 1 Preferred
Shares of BOC at P132.00 per share or P5,500 on August 5, 2021.
The preferred shares are non-voting, except as provided by law, perpetual or

non-redeemable, cumulative, convertible to common shares at the option of the
holders, subject to requirements under laws, rules and regulations, have
preference over common shares in case of liquidation, dissolution, or winding up
of the affairs of BOC and subject to the other terms and conditions as may be
fixed by the BOD of BOC, required under regulations, and to the extent permitted
by applicable law.
As discussed in Note 11, the investment in preferred shares increased from

41,666,667 shares to 416,666,670 shares following the approval of the
Amendment of Articles of Incorporation of BOC for the change in the par value
from P100.00 per share to P10.00 per share.
The movements in investments in equity and debt instruments are as follows:
Note 2022 2021

Additions 12,937 6,101
Redemption/disposals (35,454) (5,467)
Fair value gain 103 1
Amortization of premium 4 1
Currency translation adjustments
and others (696) (28)
Balance at end of year 4, 10, 39, 40 P19,453 P42,559
The investments in equity and debt instruments are classified as follows:
Note 2022 2021

Noncurrent
Financial assets at FVOCI P7,318 P41,936
Financial assets at amortized cost 11,603 30
18,921 41,966
Current
Financial assets at FVOCI 10 1 46
Financial assets at amortized cost 10 531 547
532 593
P19,453 P42,559
The methods and assumptions used to estimate the fair value of investments in
equity and debt instruments are discussed in Notes 3, 4 and 40.
- 87 -
13. Property, Plant and Equipment
Property, plant and equipment consist of:

Land Refinery Service Stations Equipment,
and Land Buildings and Power and Plant and Other Furniture and Leasehold Capital Projects
Note Improvements Improvements Plants Equipment Equipment Fixtures Improvements in Progress Total
Cost
January 1, 2021 P41,964 P61,683 P146,692 P175,957 P19,786 P190,957 P7,587 P99,655 P744,281
Additions 1,524 173 527 1,903 149 3,858 180 66,107 74,421
Acquisition of subsidiaries 5 867 120 - - - 43 - - 1,030
Disposals/retirement (2) (262) - (5) (24) (2,823) (110) (15) (3,241)
Reclassifications and others 15 (490) 2,564 2,620 9,923 (65) 6,523 917 (21,211) 781
Currency translation adjustments 32 758 4,287 754 246 2,109 6 (75) 8,117
December 31, 2021 43,895 65,036 154,126 188,532 20,092 200,667 8,580 144,461 825,389
Additions 14 950 1,036 48,873 2,119 265 3,956 224 66,921 124,344
Acquisition of subsidiaries 5, 11 11,708 6,603 - - - 18,059 4 595 36,969
Disposals/retirement (38) (118) (465) - (524) (2,160) (8) (59) (3,372)
Reclassifications and others 5, 10, 15 (2,781) 7,837 932 2,971 319 11,531 1,161 (17,954) 4,016
Currency translation adjustments 129 403 - 822 330 1,460 10 58 3,212
December 31, 2022 53,863 80,797 203,466 194,444 20,482 233,513 9,971 194,022 990,558
Accumulated Depreciation
January 1, 2021 3,477 19,393 16,292 60,607 13,689 103,819 1,969 - 219,246
Depreciation 6, 28 465 1,852 6,265 3,665 941 10,294 424 - 23,906
Acquisition of subsidiaries 5 88 119 - - - 42 - - 249
Disposals/retirement (2) (215) - (1) (15) (1,781) (104) - (2,118)
Reclassifications (83) (131) - - 2 (997) 53 - (1,156)
Currency translation adjustments 3 244 1,562 245 134 976 6 - 3,170
December 31, 2021 3,948 21,262 24,119 64,516 14,751 112,353 2,348 - 243,297
Depreciation 6, 28 484 1,897 7,575 5,543 1,108 10,140 431 - 27,178
Disposals/retirement (13) (70) (133) - (518) (1,437) (2) - (2,173)
Reclassifications 10 (3) (302) - - - (2,151) 37 - (2,419)
Currency translation adjustments 2 207 - 346 209 878 3 - 1,645
December 31, 2022 4,418 22,994 31,561 70,405 15,550 119,783 2,817 - 267,528
Accumulated Impairment Losses

January 1, 2021 - 3,129 - - - 10,255 27 - 13,411
Impairment 32 38 2 - - 1 45 - - 86
Disposals/retirement - - - - - (24) (1) - (25)
Currency translation adjustments - 264 - - - 747 - 1,011
December 31, 2021 38 3,395 - - 1 11,023 26 - 14,483
Impairment 32 - - - - - 105 - - 105
Disposals/retirement - (4) - - - (4) - - (8)
Reclassifications (38) (1) - - (1) - - - (40)
Currency translation adjustments - 27 - - - 271 - - 298
December 31, 2022 - 3,417 - - - 11,395 26 - 14,838
Carrying Amount
December 31, 2021 P39,909 P40,379 P130,007 P124,016 P5,340 P77,291 P6,206 P144,461 P567,609
December 31, 2022 P49,445 P54,386 P171,905 P124,039 P4,932 P102,335 P7,128 P194,022 P708,192
- 88 -
“Equipment, furniture and fixtures” includes machinery, transportation equipment, office equipment and tools and small equipment.
Total depreciation and impairment losses recognized in the consolidated statements of income amounted to P27,283, P23,992 and P21,735 in
2022, 2021 and 2020, respectively (Notes 28 and 32). These amounts include annual amortization of capitalized interest amounting to P767,
P942 and P997 in 2022, 2021 and 2020, respectively.
Reclassifications and others include transfers to investment property due to change in usage as evidenced by ending of owner-occupation or
commencement of operating lease to another party (Note 15) and reclassifications from capital projects in progress account to specific
property, plant and equipment accounts. In 2022, property and equipment related to La Pacita biscuit operations amounting to P112 were
reclassified to “Assets held for sale” account (Note 10).
In June 2022, the IPPA Agreement between SPPC and PSALM has ended. Accordingly, pursuant to the terms and conditions in the IPPA
Agreement, the Ilijan Power Plant was reclassified from “Right-of-use assets” to “Property, plant and equipment” account presented as part of
“Additions” (Notes 14 and 34).
The Group has capitalized borrowing costs amounting to P4,111 and P2,035 in 2022 and 2021, respectively. The capitalization rates used to
determine the amount of interest eligible for capitalization ranged from 2.27% to 8.22% and 1.34% to 8.21% in 2022 and 2021, respectively.
The unamortized capitalized borrowing costs amounted to P23,342 and P19,119 as at December 31, 2022 and 2021, respectively.
Certain fully depreciated property, plant and equipment with aggregate costs of P96,558 and P76,855 as at December 31, 2022 and 2021
respectively, are still being used in the Group’s operations.
As at December 31, 2022 and 2021, certain property, plant and equipment amounting to P126,261 and P127,673 respectively, are pledged as
security for syndicated project finance loans (Note 21).
- 89 -
14. Right-of-Use Assets
The movements in right-of-use assets are as follows:
Buildings and Service Stations and Machinery and

Note Land Improvements Power Plants Other Equipment Equipment Total
Cost
January 1, 2021 P14,410 P1,016 P167,387 P24 P676 P183,513
Additions 654 548 - - 70 1,272
Disposals/retirement (284) (441) - - (75) (800)
Remeasurement and others (295) (75) - - - (370)
Currency translation adjustments 127 10 - - 2 139
December 31, 2021 14,612 1,058 167,387 24 673 183,754
Additions 2,373 252 - - 34 2,659
Acquisition of a subsidiary 5 - 26 - - - 26
Remeasurement, reclassifications and others 13 70 56 (53,988) 46 - (53,816)
Currency translation adjustments 147 7 - 1 5 160
December 31, 2022 17,026 1,242 113,399 71 685 132,423
January 1, 2021 2,813 634 10,373 6 402 14,228
Depreciation 28 835 336 5,186 3 164 6,524
Remeasurement and others 49 4 - - - 53
December 31, 2021 3,656 589 15,559 9 495 20,308
Depreciation 28 915 356 4,244 4 95 5,614
Remeasurement, reclassifications and others 13 (40) 9 (5,520) 2 7 (5,542)
December 31, 2022 4,561 837 14,283 15 572 20,268

January 1, 2021 77 - - - - 77
Currency translation adjustments 5 - - - - 5
December 31, 2021 82 - - - - 82
Currency translation adjustments 6 - - - - 6
December 31, 2022 88 - - - - 88
Carrying Amount
December 31, 2021 P10,874 P469 P151,828 P15 P178 P163,364
December 31, 2022 P12,377 P405 P99,116 P56 P113 P112,067
- 90 -
The Group recognized right-of-use assets for leases of office space, warehouse, factory facilities and parcels of land. The leases typically run
for a period of one to 50 years. Some leases contain an option to renew the lease at the end of the lease term and are being subjected to
reviews to reflect current market rentals. The renewal option provides operational flexibility in managing the leased asset portfolio and aligns
the business needs of the Group.
Total depreciation recognized in the consolidated statements of income amounted to P5,614, P6,524 and P6,694 in 2022, 2021 and 2020,
The remeasurements pertain mainly to the change in the estimated dismantling costs of ARO during the year (Note 4).
The reclassifications in 2022 mainly relates to the Ilijan Power Plant that was reclassified to “Property, plant and equipment" account following
the expiration of the IPPA Agreement between SPPC and PSALM and its turnover to SPPC in June 2022 (Notes 13 and 34).
No impairment loss was recognized in 2022, 2021 and 2020.
The Group recognized interest expense related to these leases amounting to P4,785, P6,057 and 7,465 in 2022, 2021 and 2020, respectively
(Note 30).
The Group also has certain leases of property and equipment with lease terms of 12 months or less and leases of equipment with low value.
The Group has elected not to recognize right-of-use assets and lease liabilities for these leases. The expenses relating to short-term leases,
leases of low-value assets and variable lease payments that do not depend on an index or a rate amounted to P82, P6 and P3,415,
respectively, in 2022, P288, P6 and P2,766, respectively, in 2021, and P877, P10 and P2,565, respectively, in 2020.
The Group had total cash outflows for leases of P34,237, P35,164 and P35,556 in 2022, 2021 and 2020, respectively.
- 91 -
15. Investment Property
The movements in investment property are as follows:
Land, Land and

Leasehold Buildings and Machinery and Construction Right-of-Use
Note Improvements Improvements Equipment in Progress Asset Total
Cost
January 1, 2021 P46,923 P19,492 P438 P442 P10,229 P77,524
Additions 5,512 274 - 285 475 6,546
Acquisition of subsidiaries 5, 11 3,682 - - - - 3,682
Reclassifications 13 712 588 - (201) 6 1,105
Disposals/retirement (6) (17) - (19) (136) (178)
Currency translation adjustments 299 293 - (3) 35 624
December 31, 2021 57,122 20,630 438 504 10,609 89,303
Additions 3,264 98 - 415 638 4,415
Reclassifications 13 (7,017) (234) (420) 310 8,946 1,585
Currency translation adjustments 404 419 - 4 62 889
December 31, 2022 53,752 20,895 18 1,233 20,037 95,935
January 1, 2021 4,229 10,040 427 - 2,142 16,838
Depreciation 28 331 756 2 - 936 2,025
Reclassifications (4) 55 - - (25) 26
Disposals/retirement - (16) - - (130) (146)
December 31, 2021 4,825 11,279 429 - 2,937 19,470
Depreciation 28 29 733 2 - 1,318 2,082
Reclassifications (4,078) 94 (421) - 4,000 (405)
Disposals/retirement - (17) - - (203) (220)
December 31, 2022 886 12,294 10 - 8,077 21,267
December 31, 2021 and 2022 8 - - - - 8
Carrying Amount
December 31, 2021 P52,289 P9,351 P9 P504 P7,672 P69,825
December 31, 2022 P52,858 P8,601 P8 P1,233 P11,960 P74,660
- 92 -
Total depreciation recognized in the consolidated statements of income amounted to
P2,082, P2,025 and P2,056 in 2022, 2021 and 2020, respectively (Note 28).
In 2022 and 2021, property, plant and equipment were reclassified to investment
property due to change in usage as evidenced by ending of owner-occupation or
commencement of operating lease to another party (Note 13).
No impairment loss was recognized in 2022, 2021 and 2020.
There are no other direct selling and administrative expenses other than depreciation
and real property taxes arising from investment property that generated income in
2022, 2021 and 2020.
The fair value of investment property amounting to P122,861 and P94,390 as at

December 31, 2022 and 2021, respectively, has been categorized as Level 3 in the
fair value hierarchy based on the inputs used in the valuation techniques (Note 4).
The fair value of investment property was determined by external, independent

property appraisers having appropriate recognized professional qualifications and
recent experience in the location and category of the property being valued. The
independent appraisers provide the fair value of the Group’s investment property on
a regular basis.
Valuation Technique and Significant Unobservable Inputs

The valuation of investment property applied the following approaches:
Cost Approach. This approach is based on the principle of substitution, which holds
that an informed buyer would not pay more for a given property than the cost of an
equally desirable alternative. The methodology of this approach is a set of
procedures that estimate the current reproduction cost of the improvements, deducts
accrued depreciation from all sources, and adds the value of investment property.
Sales Comparison Approach. The market value was determined using the Sales
Comparison Approach. The comparative approach considers the sale of similar or
substitute property, registered within the vicinity, and the related market data. The
estimated value is established by process involving comparison. The property being
valued is then compared with sales of similar property that have been transacted in
the market. Listings and offerings may also be considered. The observable inputs to
determine the market value of the property are the following: location characteristics,
size, time element, quality and prospective use, bargaining allowance and
marketability.
Income Approach. The rental value of the subject property was determined using the
Income Approach. Under the Income Approach, the market value of the property is
determined first, and then proper capitalization rate is applied to arrive at its rental
value. The rental value of the property is determined on the basis of what a prudent
lessor or a prospective lessee are willing to pay for its use and occupancy
considering the prevailing rental rates of similar property and/or rate of return a
prudent lessor generally expects on the return on its investment. A study of current
market conditions indicates that the return on capital for similar real estate
investment range from 3.00% to 6.45%.
- 93 -
16. Biological Assets
Biological assets consist of:
Note 2022 2021

Current:
Growing stocks P2,418 P2,509
Goods in process 1,000 597
3,418 3,106
Noncurrent:
Breeding stocks - net 2,671 2,244
4 P6,089 P5,350
The amortization of breeding stocks recognized in the consolidated statements of

income amounted to P3,303, P2,896 and P3,565 in 2022, 2021 and 2020,
Growing stocks pertain to growing broilers and hogs, while goods in process pertain
to hatching eggs.
The movements in biological assets are as follows:
Note 2022 2021

Cost
Increase (decrease) due to:
Production 54,657 47,234
Purchases 841 306
Mortality (363) (405)
Harvest (51,084) (44,551)
Retirement (3,836) (3,021)
Accumulated Amortization
Balance at beginning of year 551 585
Amortization 28 3,303 2,896
Retirement (3,827) (2,930)
Balance at end of year 27 551
Carrying Amount P6,089 P5,350
The Group harvested approximately 560.4 million and 599.9 million kilograms of
grown broilers in 2022 and 2021, respectively, and 0.12 million and 0.29 million
heads of marketable hogs and cattle in 2022 and 2021, respectively.
The aggregate fair value less estimated costs to sell of agricultural produce
harvested during the year, determined at the point of harvest, amounted to P67,232
and P63,349 in 2022 and 2021, respectively.
- 94 -
17. Goodwill and Other Intangible Assets
Goodwill and other intangible assets consist of:
2022 2021
Goodwill P184,100 P130,081
Other intangible assets 249,321 190,979
P433,421 P321,060
The movements in goodwill are as follows:
Note 2022 2021

Gross Carrying Amount
Additions 5, 38 54,273 -
Cumulative translation adjustments 538 348
Impairment 32 789 -
Cumulative translation adjustments 3 -
Balance at end of year 1,671 879
4 P184,100 P130,081
The movements in other intangible assets with indefinite useful lives are as follows:
Trademarks
and Brand
Note Licenses Names Total
Cost
January 1, 2021 P2,105 P934 P3,039
Disposals - (45) (45)
Currency translation adjustments (95) 21 (74)
December 31, 2021 2,010 910 2,920
Reclassifications 10 (493) (493)
Currency translation adjustments 115 28 143
December 31, 2022 2,125 445 2,570
Accumulated Impairment
Losses
January 1, 2021 - 233 233
Impairment 10, 32 - 386 386
Currency translation adjustments - 15 15
December 31, 2021 - 634 634
Reclassifications 10 - (433) (433)
Currency translation adjustments - 24 24
December 31, 2022 - 225 225
Carrying Amount
December 31, 2021 P2,010 P276 P2,286
December 31, 2022 P2,125 P220 P2,345
- 95 -
The movements in other intangible assets with finite useful lives are as follows:
Mineral Computer
Rights and Software and
Concession Rights Evaluation Licenses
Note Toll Road Airport Power Water Assets and Others Total
Cost
January 1, 2021 P180,224 P10,980 P1,434 P6,894 P6,384 P4,634 P210,550
Additions 8,570 14,831 127 4 - 2,475 26,007
Reclassifications and others 2,022 122 (4) - - (135) 2,005
Currency translation adjustments - - - - - 28 28
December 31, 2021 190,816 25,933 1,557 6,898 6,384 7,002 238,590
Additions 8 6,879 48,723 136 54 16 2,354 58,162
Acquisition of subsidiaries 5, 38 - - - - 8,121 185 8,306
Reclassifications and others 2,358 175 (1,693) (1) (1,721) (410) (1,292)
December 31, 2022 200,053 74,831 - 6,951 12,800 9,162 303,797
Accumulated Amortization
January 1, 2021 38,385 1,388 236 463 85 3,086 43,643
Amortization 28 5,090 351 60 257 180 225 6,163
Reclassifications and others - - - - - (120) (120)
December 31, 2021 43,475 1,739 296 720 265 3,222 49,717
Amortization 28 6,235 352 67 257 242 312 7,465
Reclassifications and others - - (363) - - (67) (430)
Currency translation adjustments - - - - 30 30
December 31, 2022 49,710 2,091 - 977 507 3,497 56,782
January 1, 2021 - - 141 - - 40 181
Disposals - - - - - (1) (1)
December 31, 2021 - - 141 - - 39 180
Disposals - - (141) - - - (141)
December 31, 2022 - - - - - 39 39
Carrying Amount
December 31, 2021 P147,341 P24,194 P1,120 P6,178 P6,119 P3,741 P188,693
December 31, 2022 P150,343 P72,740 P - P5,974 P12,293 P5,626 P246,976
The Group has capitalized borrowing costs amounting to P63 and P1,407 in 2022
and 2021, respectively. The capitalization rates used to determine the amount of
interest eligible for capitalization ranged from 5.06% to 5.87% and 5.87% to 10% in
2022 and 2021, respectively. The unamortized capitalized borrowing costs amounted
to P8,964 and P9,211 as at December 31, 2022 and 2021, respectively.
Goodwill, licenses and trademarks and brand names with indefinite lives acquired
through business combinations, have been allocated to individual cash-generating
units, for impairment testing as follows:
2022 2021
Licenses, Licenses,
Trademarks Trademarks
and Brand and Brand
Goodwill Names Goodwill Names
Energy P69,944 P - P69,944 P -
Cement 54,273 - - -
Fuel and oil 30,534 - 30,260 -
Infrastructure 21,950 - 21,950 -
Packaging 3,686 - 4,214 -
Food and beverage 3,639 2,345 3,639 2,286
Others 74 - 74 -
Total P184,100 P2,345 P130,081 P2,286
- 96 -
The recoverable amount of goodwill has been determined based on fair value less
costs to sell or a valuation using cash flow projections (value in use) covering a five-
year period based on long range plans approved by management. The values
assigned to the key assumptions represent management’s assessment of future
trends in the relevant industries and were based on historical data from both external
and internal sources. Cash flows beyond the five-year period are extrapolated using
a constant growth rate determined per individual cash-generating unit to arrive at its
terminal value. The growth rates used which range from less than 1% to 15.22% and
2% to 10.50% in 2022 and 2021, respectively, are based on strategies developed for
each business and include the Group’s expectations of market developments and
past historical performance. The discount rates applied to after tax cash flow
projections ranged from 6% to 11% in 2022 and 2021. The discount rate also
imputes the risk of the cash-generating units compared to the respective risk of the
overall market and equity risk premium. The recoverable amount of goodwill has
been categorized as Level 3 in the fair value hierarchy based on the inputs used in
the valuation technique (Note 4).
Impairment loss recognized in 2022 amounted to P789 (Note 32). No impairment

loss was recognized for goodwill in 2021 and 2020.
The recoverable amount of licenses, trademarks and brand names has been
determined based on a valuation using cash flow projections (value in use) covering
a five-year period based on long range plans approved by management. The values
assigned to the key assumptions represent management’s assessment of future
trends in the relevant industries and were based on historical data from both external
and internal sources. Cash flows beyond the five-year period are extrapolated using
a determined constant growth rate to arrive at its terminal value. The growth rates
used which range from 2% to 5% in 2022 and 2021, are based on strategies
developed for each business and include the Group’s expectations of market
developments and past historical performance. The discount rates applied to after
tax cash flow projections ranged from 6.5% to 12% and 5.9% to 12% in 2022 and
2021, respectively. The recoverable amount of trademarks and brand names has
been categorized as Level 3 in the fair value hierarchy based on the inputs used in
the valuation technique (Note 4).
Management’s calculations are updated to reflect the most recent developments as

at reporting date. Management’s expectations reflect performance to date and are
based on its experience in times of recession and consistent with the assumptions
that a market participant would make. Management also considered the expected
improvement of the economy in 2021, the lifting of liquor bans, consumer spending
and expected increase in revenues through its promotional strategies.
Impairment loss recognized in 2021 for La Pacita trademark amounted to P386 with
a recoverable amount of P60 (Note 32). As at December 31, 2022, the recoverable
amount was presented as held for sale following the approval of the sale of La Pacita
trademark on February 2, 2023 (Note 10).
No impairment loss was recognized for licenses in 2022, 2021 and 2020 and for
trademarks and brand names in 2022 and 2020.
- 97 -
Other than the items on which impairment losses were already recognized,
management believes that any reasonably possible change in the key assumptions
on which the recoverable amount is based would not cause its carrying amount to
exceed its recoverable amount.
▪ Gross Margins. Gross margins are based on average values achieved in the
period immediately before the budget period. These are increases over the
budget period for anticipated efficiency improvements. Values assigned to key
assumptions reflect past experience, except for efficiency improvement.
▪ Discount Rates. The Group uses the weighted-average cost of capital as the
discount rate, which reflects management’s estimate of the risk specific to each
unit. This is the benchmark used by management to assess operating
performance and to evaluate future investment proposals.
▪ Raw Material Price Inflation. Consumer price forecast is obtained from indices
during the budget period from which raw materials are purchased. Values
assigned to key assumptions are consistent with external sources of information.
As at December 31, 2022 and 2021, certain other intangible assets amounting to
P100,641 and P101,769, respectively, were pledged as security for syndicated
project finance loans (Note 21).
18. Other Noncurrent Assets
Other noncurrent assets consist of:
Note 2022 2021

Noncurrent receivables
and deposits - net 4, 5, 8, 33, 34, 39, 40 P39,700 P32,310
Advances to contractors
and suppliers 31,966 29,016
Deferred containers - net 4 17,457 19,063
Deposits on land for future
development 3,946 4,049
Idle assets 4 2,544 2,365
Restricted cash 4, 39, 40 1,639 2,093
Derivative assets - noncurrent 3, 39, 40 1,138 659
Noncurrent prepaid input tax 877 1,506
Catalyst 422 489
Noncurrent prepaid rent 179 316
Deferred exploration and
development costs 4, 34 55 719
Retirement assets 35 31 4,175
Others 2,564 1,840
P102,518 P98,600
- 98 -
The movements in deferred containers - net are as follows:
Note 2022 2021

Gross Carrying Amount
Disposals/retirement/reclassifications (5,683) (1,543)
Currency translation adjustments 1 105
Balance at beginning of year 14,714 13,178
Depreciation 28 59 2,323
Disposals/retirement/reclassifications 1,906 (833)
Impairment 27, 32 1,187 738
Disposals/reclassifications (833) (736)
Balance at end of year 1,092 737
P17,457 P19,063
Noncurrent receivables and deposits include amounts owed by related parties

amounting to P4,115 and P4,147 as at December 31, 2022 and 2021, respectively
(Note 33) and the costs related to the development of the MRT 7 Project amounting
to P30,816 and P27,299 as at December 31, 2022 and 2021, respectively (Note 34).
Noncurrent receivables and deposits are net of allowance for impairment losses
amounting to P582 and P572 as at December 31, 2022 and 2021, respectively
(Note 4).
Restricted cash represents:
i. LPI’s cash flow waterfall accounts amounting to P1,160 and P1,145 as at

December 31, 2022 and 2021, respectively;
ii. The amount received from Independent Electricity Market Operator of the
Philippines (IEMOP), amounting to P491 as at December 31, 2021, representing
the proceeds from sale on WESM for a specific period in 2016, for the electricity
generated from the excess capacity of the Sual Power Plant, which SPI
consigned with the RTC of Pasig City;
iii. APEC’s reinvestment fund for sustainable capital expenditures and contributions
collected from customers for bill deposits which were refundable amounting to
P187 as at December 31, 2021;
iv. MPPCL’s cash flow waterfall accounts and environmental guarantee fund
amounting to P130 and P56 as at December 31, 2022 and 2021, respectively;
v. Cash in bank maintained by TADHC, NCC and SCII in accordance with the
specific purpose and term as required under its loan agreement, amounting to
P179 and P170 as at December 31, 2022 and 2021, respectively;
- 99 -
vi. Rehabilitation funds established by NCC and ECC which are deposited with a
local bank in compliance with DENR Administrative Order No. 2005-07 for
environmental protection and enhancement amounting to P120 and P44 as at
December 31, 2022 and 2021, respectively; and
vii. Deposit in escrow by ECC pertaining to cash in escrow account related to a

pending legal case amounting to P50 as at December 31, 2022.
The methods and assumptions used to estimate the fair values of noncurrent
receivables and deposits and restricted cash are discussed in Note 40.
“Others” include marketing assistance to dealers and other noncurrent prepaid

expenses.
19. Loans Payable
Loans payable consist of:
Note 2022 2021

Parent Company
Peso-denominated P22,457 P51,450
Foreign currency-denominated 33,168 -
Subsidiaries
Peso-denominated 195,919 122,445
Foreign currency-denominated 16,160 16,884
38, 39, 40 P267,704 P190,779
Loans payable mainly represent unsecured peso and foreign currency-denominated

amounts obtained from local and foreign banks. Interest rates per annum for Peso-
denominated loans ranged from 1.97% to 7.75% and 1.97% to 3.00% in 2022 and
2021, respectively. Interest rates per annum for foreign currency-denominated loans
ranged from 1.28% to 5.14% and 1.18% to 4.64% in 2022 and 2021, respectively
(Note 30).
Loans payable include interest-bearing amounts payable to BOC amounting to

P8,172 and P6,994 as at December 31, 2022 and 2021, respectively (Note 33).
- 100 -
20. Accounts Payable and Accrued Expenses
Accounts payable and accrued expenses consist of:
Note 2022 2021

Trade 34 P107,990 P88,970
Non-trade 5 90,755 81,053
Customers’ deposits 3 8,603 8,445
Accrued payroll 6,400 6,565
Accrued interest payable 5,047 3,394
Amounts owed to related parties 33 2,755 2,666
Derivative liabilities 39, 40 2,832 1,247
Deferred liability on consumer loyalty
program 813 814
Current portion of IRO 4 487 435
Retention payable 210 482
Retirement liabilities 35 122 187
Deferred rent income 60 57
Redeemable preferred shares 4 19 19
Others 1,033 245
39, 40 P227,126 P194,579
Trade payables are non-interest bearing and are generally on a 30 to 60-day term.
Non-trade payables include contract growers/breeders’ fees, guarantee deposits,

utilities, rent and other expenses payable to third parties.
Redeemable Preferred Shares. These represent the preferred shares of TADHC

issued in 2010. The preferred shares are cumulative, non-voting, redeemable and
with liquidation preference. The shares are preferred as to dividends, which are
given in the form of coupons, at the rate of 90% of the applicable base rate (i.e., one
year Bloomberg Valuation or BVAL). The dividends are cumulative from and after the
date of issue of the preferred shares, whether or not in any period the amount is
covered by available unrestricted retained earnings.
The preferred shares are required to be redeemed at the end of the 10-year period
from and after the issuance of the preferred shares by paying the principal amount,
plus all unpaid coupons (at the sole option of TADHC, the preferred shares may be
redeemed earlier in whole or in part).
In the event of liquidation, dissolution, bankruptcy or winding up of the affairs of

TADHC, the holders of the preferred shares are entitled to be paid in full, an amount
equivalent to the issue price of such preferred shares plus all accumulated and
unpaid dividends up to the current dividend period or proportionately to the extent of
the remaining assets of TADHC, before any assets of TADHC will be paid or
distributed to the holders of the common shares.
As at December 31, 2022 and 2021, the preferred shares remain outstanding as
other requirements prior to redemption are pending from the shareholders.
“Others” include ARO, accruals for materials, repairs and maintenance, advertising,
handling, contracted labor, supplies and various other payables.
The methods and assumptions used to estimate the fair value of derivative liabilities
are discussed in Note 40.
- 101 -
21. Long-term Debt
Long-term debt consists of:
2022 2021
Parent Company
Peso-denominated Bonds:
Fixed interest rate of 6.25%, 5.284% and
5.55%, 6.625%, 5.7613%, and 7.125%
maturing in 2023, 2024, 2025, 2027 and
2028, respectively (a) P43,167 P59,748
Fixed interest rate of 3.3832% maturing in
2027 (b) 29,700 29,640
Fixed interest rate of 5.2704% and 5.8434%
maturing in 2027 and 2029, respectively (c) 29,644 -
Fixed interest rate of 7.4458%, 7.8467%
and 8.4890% maturing in 2028, 2029 and
2032, respectively (d) 59,165 -
Peso-denominated Term Notes:
Fixed interest rate of 6.9375% with
maturities up to 2026 (e) 15,373 15,517
Foreign currency-denominated Term Notes:
Floating interest rate based on London
Interbank Offered Rate (LIBOR) plus
margin, maturing in 2024 (f) 110,492 100,417
Floating interest rate based on LIBOR plus
margin, maturing in 2026 (g) 49,172 21,887
Floating interest rate based on Secured
Overnight Financing Rate (SOFR) plus
margin, maturing in 2035 (h) 47,534 -
Floating interest rate based on SOFR plus
margin, maturing in 2027 (i) 38,201 -
margin, maturing in 2023 (j) 22,282 20,278
margin, maturing in 2023 (k) 16,697 15,211
margin, maturing in 2023 (l) 16,682 15,194
margin, maturing in 2023 (m) 11,116 10,127
Floating interest rate based on SOFR plus
margin, maturing in 2027 (n) 5,512 -
margin, maturing in 2026 (o) 5,510 5,020
margin, maturing in 2024 (p) 4,999 4,561
505,246 297,600
Forward
- 102 -
2022 2021
Subsidiaries
Peso-denominated Bonds:
2032, respectively (q) P39,476 P -
2025, respectively (r) 26,896 26,846
2027, respectively (s) 25,012 34,845
maturing in 2025 and 2027, respectively (t) 17,823 17,779
maturing in 2024 and 2026, respectively (u) 16,070 29,857
maturing in 2025 and 2027, respectively (v) 14,892 14,860
maturing in 2023 and 2026, respectively
(w) 8,821 8,808
2024 (x) 2,534 2,531
2025 (y) 2,491 4,885
Fixed interest rate of 6.60% (z) - 6,998
Peso-denominated Term Notes:
5.997% with maturities up to 2029 (aa) 36,137 38,407
and 7.3889% with maturities up to 2029
(ab) 35,178 37,626
maturities up to 2027 (ac) 26,686 29,049
with maturities up to 2030 (ad) 15,894 17,154
maturities up to 2024 (ae) 14,216 14,341
Fixed interest rate of 3.80%, 3.875%, 3.95%
and 4.15% with maturities up to 2028 (af) 11,907 11,906
maturities up to 2029 (ag) 10,416 11,116
2024 (ah) 9,967 9,953
2029 (ai) 9,945 9,938
maturities up to 2031 (aj) 8,557 6,853
2026 (ak) 6,960 6,950
with maturities up to 2027 (al) 6,958 -
maturities up to 2027 (am) 4,969 -
Forward
- 103 -
2022 2021
maturities up to 2027 (an) P4,968 P -
maturities up to 2027 (ao) 4,967 -
maturities up to 2027 (ap) 4,963 -
Fixed interest rate of 5.00% with maturities
up to 2025 (aq) 4,889 4,925
maturities up to 2028 (ar) 4,770 4,762
6.36% with maturities up to 2026 (as) 4,040 -
maturities up to 2024 (at) 3,744 5,878
Fixed interest rate of 8.1711%, 8.4490%,
9.0280% and 9.6350% with maturities up
to 2030 (au) 3,674 3,921
Fixed interest rate of 4.59% with maturities
up to 2025 (av) 3,116 4,356
maturities up to 2025 (aw) 2,963 3,692
2025 (ax) 2,359 -
Fixed interest rate of 3.2837%, with
maturities up to 2026 (ay) 1,992 1,989
2026 (az) 1,989 1,986
2025 (ba) 621 -
maturities up to 2023 (bb) 373 860
maturities up to 2023 (bc) 165 331
Fixed interest rate of 6.7495%, 6.7701%,
7.165%, 7.5933% and 7.6567% (bd) - 4,070
Fixed interest rate of 5.7584% (be) - 2,497
Fixed interest rate of 5.4583% (bf) - 1,000
Floating interest rate based on BVAL plus
margin maturing in 2025 (bg) 15,628 -
margin, or BSP Term Deposit Auction
Facility (BSP TDF) plus margin,
whichever is higher, maturing in 2029 (ai) 7,956 7,950
or BSP Overnight Lending Facility Rate
plus margin, whichever is higher,
maturing in 2030 (bh) 3,087 -
margin, with maturities up to 2024 (bi) 1,170 1,753
margin, with maturities up to 2023 (bj) 879 2,049
margin (bk) - 1,378
Forward
- 104 -
Note 2022 2021
Foreign currency-denominated Term
Notes:
Fixed interest rate of 4.7776% and
5.5959%, with maturities up to 2023
and 2030, respectively (bl/br) P24,654 P24,488
Floating interest rate based on LIBOR
plus margin, maturing in 2023 (bm) 27,858 25,337
Floating interest rate based on SOFR
plus a spread, maturing in 2027 (bn) 26,794 -
plus margin, maturing in 2026 (bo) 16,455 14,949
plus margin, maturing in 2027 (bp) 16,282 -
plus margin, maturing in 2024 (bq) 10,955 -
plus margin, with maturities up to
2023 and 2030 (bl/br) 8,140 8,087
2024 (bs) 6,276 22,992
plus margin, maturing in 2025 (bt) 5,485 -
Floating interest rate based on Tokyo
Overnight Average Rate (TONA)
2025 (bu) 4,528 6,556
plus margin, maturing in 2023 (bv) 2,767 2,504
Floating interest rate based on Bank
Bill Swap Rate (BBSY) plus margin,
with maturities up to 2024 (bw) 2,151 2,470
Floating interest rate based on BBSY
2027 (bx) 377 -
Floating interest rate based on BBSY
2026 (by) 110 142
plus margin (bz) - 7,522
plus margin (ca) - 7,219
582,950 516,365
38, 39, 40 1,088,196 813,965
Less current maturities 170,032 88,857
P918,164 P725,108
- 105 -
a. The amount represents the first, second, third and fourth tranche of the P60,000
shelf registered fixed rate bonds issued by the Parent Company amounting to
P20,000, P10,000, P20,000 and P10,000, respectively. The Bonds were listed in
the Philippine Dealing & Exchange Corp. (PDEx).
▪ The first tranche of the fixed rate bonds listed on March 1, 2017 amounting to
P20,000 consists of: (i) five-year Series A Bonds, due in 2022 with an
interest rate of 4.8243% per annum; (ii) seven-year Series B Bonds, due in
2024 with an interest rate of 5.284% per annum; and (iii) 10-year Series C
Bonds, due in 2027 with an interest rate of 5.7613% per annum. Interest is
payable every 1st of March, June, September and December of each year.
▪ The second tranche of the fixed rate bonds listed on April 7, 2017 amounting
to P10,000 comprises five-year Series D Bonds, due in 2022 with an interest
rate of 5.1923% per annum. Interest is payable every 7th of January, April,
July and October of each year.
▪ The third tranche of the fixed rate bonds listed on March 19, 2018 amounting
to P20,000 consists of: (i) five-year Series E Bonds, due in 2023 with an
interest rate of 6.25% per annum; (ii) seven-year Series F Bonds, due in
2025 with an interest rate of 6.625% per annum; and (iii) 10-year Series G
payable every 19th of March, June, September and December of each year.
▪ The fourth tranche of the fixed rate bonds listed on October 4, 2019
amounting to P10,000 comprises five-year Series H Bonds, due in 2024 with
an interest rate of 5.55% per annum. Interest is payable every 4th of
January, April, July and October of each year.
Proceeds from the issuance of the bonds were used to partially refinance various
loans.
The Series A Bonds and Series D Bonds matured on March 1, 2022 and April 7,
2022, respectively, and were accordingly paid by the Parent Company on the
same day.
Unamortized debt issue costs amounted to P150 and P252 as at

b. The amount represents the first tranche of the P50,000 shelf registered fixed rate
bonds issued by the Parent Company amounting to P30,000. The Bonds were
listed in the PDEx.
The first tranche of the fixed rate bonds listed on July 8, 2021 comprises Series I
Bonds, due in 2027 with an interest rate of 3.3832% per annum and with a put
option on the part of the bondholder on the third anniversary of its issue date.
Interest is payable every 8th of January, April, July and October of each year.
Proceeds from the issuance of the bonds were used to repay existing
obligations.
Unamortized debt issue costs amounted to P300 and P360 as at December 31,
- 106 -
c. The amount represents the first tranche of the P60,000 shelf registered fixed rate
bonds issued by the Parent Company amounting to P30,000. The Bonds were
listed in the PDEx.
The first tranche of the fixed rate bonds listed on March 4, 2022, consists of:
(i) five-year Series J Bonds, due in 2027 with an interest rate of 5.2704% per
annum; and (ii) seven-year Series K Bonds, due in 2029 with an interest rate of
5.8434% per annum. Interest is payable every 4th of March, June, September
and December of each year.
Proceeds from the issuance of the bonds were used for refinancing the Parent
Company’s short-term loan facilities and other general corporate purposes.
Unamortized debt issue costs amounted to P356 as at December 31, 2022.
d. The amount represents the P60,000 fixed rate bonds issued by the Parent
Company consisting of: (i) Series L Bonds, due in 2028 with an interest rate of
7.4458% per annum; (ii) Series M Bonds, due in 2029 with an interest rate of
7.8467% per annum; and (iii) Series N Bonds, due in 2032 with an interest rate
of 8.4890% per annum. The Bonds were listed in the PDEx. Interest is payable
every 14th of March, June, September and December of each year.
Proceeds from the issuance of the bonds were used for the optional redemption
of Series “2” Preferred Shares - Subseries “2-H” and repayment of Peso-
denominated short-term loan facilities that were used to redeem the Series A and
Series D Bonds and will be used for the final redemption and payment of
Series E Bonds due in 2023, and refinancing of certain US Dollar-denominated
obligations.
e. The amount represents the drawdown by the Parent Company on June 24, 2019
from its term loan facility amounting to P16,000. The loan is amortized over
seven years and is subject to a fixed interest rate of 6.9375% per annum payable
quarterly. The proceeds were used for general corporate purposes.
The Parent Company paid the scheduled amortizations amounting to P560 and
P400 as at December 31, 2022 and 2021, respectively.
f. The amount represents the drawdown by the Parent Company of US$50

(P2,532) and US$1,950 (P99,645) on December 27, 2019 and March 19, 2020,
respectively, from its term loan facility amounting to US$2,000. The term of the
loan is for five years and is subject to a floating interest rate. The proceeds of the
loans were used for general corporate purposes.
Unamortized debt issue costs amounted to P1,018 and P1,581 as at

- 107 -
g. The amount represents the drawdown by the Parent Company on various dates
in 2022 and 2021 from its term loan facility amounting to US$900 (P46,080). The
term of the loan is for five years and is subject to a floating interest rate. The
proceeds were used for general corporate purposes.
Unamortized debt issue costs amounted to P1,008 and P1,062 as at

h. The amount represents the drawdown by the Parent Company of US$871

(P49,453) on various dates in 2022 from its US$2,165 term loan facility. The term
of the loan is for 13 years and is subject to a floating interest rate. The proceeds
were used to fund the land development works of the Manila International Airport
Project in Bulacan.
Unamortized debt issue costs amounted to P1,043 as at December 31, 2022.
i. The amount represents the drawdown by the Parent Company on various dates
in 2022 from its term loan facility amounting to US$700 (P39,953). The term of
the loan is for five years and is subject to a floating interest rate. The proceeds
were used for general corporate purposes.
j. The amount represents the drawdown by the Parent Company on March 16,
2018 from its term loan facility amounting to US$400 (P20,772). The term of the
loan is for five years and is subject to a floating interest rate. The proceeds were
used to fund the subscription of RPS in San Miguel Global Power to partially
finance the acquisition of Masinloc Group of Companies.
k. The amount represents the drawdown by the Parent Company on June 26, 2018
from its term loan facility amounting to US$300 (P16,041). The term of the loan is
for five years and is subject to a floating interest rate. The proceeds were used to
fund general corporate requirements and/or additional investments to its
subsidiaries.

l. The amount represents the drawdown by the Parent Company of US$120

(P6,517) and US$180 (P9,684) on September 25, 2018 and October 25, 2018,
respectively, from its term loan facility amounting to US$300. The term of the
loans is for five years and is subject to a floating interest rate. The proceeds were
used to refinance existing US dollar-denominated obligations and/or for general
corporate purposes.

- 108 -
m. The amount represents the drawdown by the Parent Company on
November 21, 2018 from its term loan facility amounting to US$200 (P10,470).
The term of the loan is for five years and is subject to a floating interest rate. The
proceeds were used to repay existing US dollar-denominated obligations.

n. The amount represents the drawdown by the Parent Company on August 2,

loan is for five years and is subject to a floating interest rate. The proceeds were
used for general corporate purposes.
o. The amount represents the drawdown by the Parent Company on December 23,
loan is for five years and is subject to a floating interest rate. The proceeds of the
loan were used for general corporate purposes.
p. The amount represents the drawdown by the Parent Company on

October 24, 2017 from its term loan facilities amounting to US$300 (P15,462)
entered into with various banks. The loans have various maturities and is subject
to floating interest rate. The proceeds were used to fund general corporate
requirements and/or partially repay existing loans.
Payments made amounted to $210 (P10,536) as at December 31, 2022.

q. The amount represents the first tranche of the P60,000 shelf registered fixed rate
bonds issued by San Miguel Global Power amounting to P40,000 on July 26,
2022. The Bonds were listed in the PDEX.
The Bonds consists of: (i) three-year Series K Bonds due in 2025 with an interest
rate of 5.9077% per annum; (i) five-year Series L Bonds due in 2028 with an
interest rate of 7.1051% per annum; and, (iii) ten-year Series M Bonds due in
2032 with an interest rate of 8.0288% per annum. Interest is payable every 26th
of January, April, July and October of each year.
The proceeds from the issuance of the bonds were used: (i) to partially finance
San Miguel Global Power’s investments in power-related assets, particularly the
Liquefied Natural Gas (LNG) projects and related assets, coal power plant
projects, Battery Energy Storage Systems (BESS) and solar power plant
projects; (ii) for general corporate purposes; and (iii) for payment of transaction-
related fees, costs and expenses.
- 109 -
r. The amount represents the first and second tranche of the P40,000 shelf
registered fixed rate bonds issued by Petron amounting to P20,000 and P20,000
on October 27, 2016 and October 19, 2018, respectively. The Bonds were listed
in the PDEx.
▪ The first tranche of the fixed rate bonds listed on October 27, 2016
amounting to P20,000, consists of: (i) five-year Series A Bonds, due in 2021
with an interest rate of 4.0032% per annum; and, (ii) Series B Bonds, due in
2023 with an interest rate of 4.5219% per annum. Interest is payable every
27th of January, April, July and October of each year.
▪ The second tranche of the fixed rate bonds listed on October 19, 2018
amounting to P20,000, consists of: (i) 5.5-year Series C Bonds, due in 2024
with an interest rate of 7.8183% per annum; and, (ii) seven-year Series D
payable every 19th of January, April, July and October of each year.
The proceeds from the first tranche were used to partially settle the US$475 and
US$550 Term Loan, repay short-term loans and for general corporate purposes.
The proceeds from the second tranche were used for the payment of short-term
loans, redemption of a portion of Petron’s Undated Subordinated Capital
Securities (USCS) and for general corporate purposes.
On October 27, 2021, Petron paid the Series A Bonds, amounting to P13,000.

s. The amount represents the first and second tranche of the P35,000 shelf
registered fixed rate bonds issued by San Miguel Global Power amounting to
P20,000 on December 22, 2017 and P15,000 on August 17, 2018, respectively.
The Bonds were listed in the PDEx.
▪ The first tranche of the fixed rate bonds listed on December 22, 2017
amounting to P20,000, consists of: (i) five-year Series D Bonds, due in 2022
with an interest rate of 5.3750% per annum; (ii) seven-year Series E Bonds,
due in 2024 with an interest rate of 6.2500% per annum; and, (iii) 10-year
Series F Bonds, due in 2027 with an interest rate of 6.6250% per annum.
Interest is payable every 22nd of March, June, September and December of
each year.
▪ The second tranche of the fixed rate bonds listed on August 17, 2018
amounting to P15,000 pertains to the five-year Series G Bonds, due in 2023
with an interest rate of 6.7500% per annum. Interest is payable every 17th of
February, May, August and November of each year.
Proceeds from the first tranche were used to refinance Peso-denominated short-
term loans.
Proceeds from the second tranche were used to refinance the outstanding
shareholder advances and partially refinance existing US dollar-denominated
loan obligations and payment of transaction-related expenses.
On December 22, 2022, San Miguel Global Power paid the Series D Bonds,
amounting to P9,913.
- 110 -
t. The amount represents the first tranche of the P50,000 shelf registered fixed rate
bonds issued by Petron amounting to P18,000 on October 12, 2021. The Bonds
were listed in the PDEx.
The first tranche of the fixed rate bonds amounting to P18,000, consist of
four-year Series E Bonds, due in 2025 with an interest rate of 3.4408% per
annum and six-year Series F Bonds, due in 2027 with an interest rate of
4.3368% per annum. Interest is payable every 12th of January, April, July and
October of each year.
The proceeds were used primarily for the redemption of its outstanding Series A
Bonds, partial financing of the power plant project and payment of existing
indebtedness.
u. The amount represents the first tranche of the P60,000 shelf registered fixed rate
bonds issued by San Miguel Global Power amounting to P30,000 on April 24,
2019. The Bonds were listed in the PDEx.
The Bonds consist of: (i) three-year Series H Bonds, due in 2022 with an interest
rate of 6.8350% per annum; (ii) five-year Series I Bonds, due in 2024 with an
interest rate of 7.1783% per annum; and, (iii) seven-year Series J Bonds, due in
2026 with an interest rate of 7.6000% per annum. Interest is payable every 24th
of January, April, July and October of each year.
The net proceeds were used for refinancing of maturing long-term and short-term
loans, investments in power-related assets and payment of transaction-related
expenses.
On April 25, 2022, San Miguel Global Power paid the Series H Bonds, amounting
to P13,845.
v. The amount represents the P15,000 fixed rate bonds issued by SMFB on
March 10, 2020, divided into Series A Bonds, due in 2025 with an interest rate of
5.05% per annum, and Series B Bonds, due in 2027 with an interest rate of
5.25% per annum. Interest is payable every 10th of March, June, September and
December of each year. The Bonds were listed in the PDEx.
Proceeds from the issuance were used to redeem the outstanding Series “2”
Perpetual Preferred Shares of SMFB and payment of transaction-related fees,
costs and expenses.
- 111 -
w. The amount represents the P15,000 fixed rate bonds issued by San Miguel
Global Power on July 11, 2016, divided into: (i) Series A Bonds, due in 2021 with
an interest rate of 4.3458% per annum; (ii) Series B Bonds, due in 2023 with an
interest rate of 4.7575% per annum; and, (iii) Series C Bonds, due in 2026 with
an interest rate of 5.1792% per annum. Interest is payable every 11th of January,
April, July and October of each year. The Bonds were listed in the PDEx.
Proceeds from the issuance were used to refinance the US$300 short-term loan
that matured on July 25, 2016, which were used for the redemption of the
US$300 bond in January 2016.
On July 12, 2021, San Miguel Global Power paid the Series A Bonds amounting
to P6,153.

x. The amount represents the P15,000 fixed rate bonds issued by SMB on April 2,
2014, divided into: (i) Series G Bonds, due in 2021 with an interest rate of 5.50%
per annum; and (ii) Series H Bonds, due in 2024 with an interest rate of 6.00%
per annum. Interest is payable every 2nd of April and October of each year. The
Bonds were listed in the PDEx.
Proceeds from the Series G Bonds and Series H Bonds issuance were used to
partially refinance the redemption of Series B Bonds.
The Series G Bonds with an aggregate principal amount of P12,462 matured on

April 5, 2021 (April 2 being a non-business day) and were accordingly paid by
SMB on the same date.

y. The amount represents the P7,300 fixed rate bonds issued by SMC SLEX on
May 22, 2015, divided into: (i) Series A Bonds, due in 2020 with an interest rate
of 4.9925% per annum; (ii) Series B Bonds, due in 2022 with an interest rate of
5.5796% per annum; and, (iii) Series C Bonds, due in 2025 with an interest rate
of 6.4872% per annum. Interest is payable every 22nd of February, May, August
and November of each year. The Bonds were listed in the PDEx.
The proceeds from the issuance were used to prepay the Peso-denominated
Corporate Notes drawn in 2012.
The Series B Bonds with a principal of P2,400 and Series A Bonds with a
principal of P2,400 were paid by SMC SLEX on May 22, 2022 and August 24,
2020, respectively.

z. The amount represents the P17,000 fixed rate bonds issued by SMB on April 2,
2012, divided into: (i) seven-year Series E Bonds, due in 2019 with an interest
rate of 5.93% per annum; and, (ii) ten-year Series F Bonds, due in 2022 with an
interest rate of 6.60% per annum. The Series E and F Bonds were part of the
P20,000 fixed rate bonds of SMB. Interest is payable every 2nd of April and
October of each year. The Bonds were listed in the PDEx.
- 112 -
The proceeds from the issuance were used to refinance existing financial
indebtedness and for general working capital purposes.
The Series F Bonds with an aggregate principal amount of P7,000 and Series E
Bonds with an aggregate principal amount of P10,000 matured on April 2, 2022
and April 2, 2019, respectively, and were accordingly paid by SMB on the same
day.
aa. The amount represents the loan drawn by SMC Tollways from its P41,200
Corporate Notes Facility Agreement dated December 9, 2019 with various local
banks amounting to P41,200 as at December 31, 2022 and 2021, respectively.
Proceeds of the loan were mainly used to refinance existing debt obligations,
invest and/or advance for infrastructure projects, for general corporate purposes
and to finance transaction related fees, taxes and expenses. The loan is payable
in 40 quarterly installments commencing on the third month from initial issue
date. Final repayment date is 10 years from initial issue date.
The Notes are subject to repricing on the fifth year from initial issue date.
Payments made amounted to P4,682 and P2,327 as at December 31, 2022 and
2021, respectively.

ab. The amount represents the drawdown by LPI from its P44,000 Omnibus Loan
and Security Agreement (OLSA) dated June 22, 2017 with various banks,
consisting of Tranche A and Tranche B amounting to P42,000 and the remaining
balance of Tranche B amounting to P2,000 on June 28, 2017 and January 31,
2018, respectively.
Proceeds from the loan were used for the settlement of the US$360 short-term
loan, acquisition of the Phase II Limay Greenfield Power Plant in Limay, Bataan
from LETI, repayment of shareholder advances and financing of transaction
costs relating to the OLSA. The loan is payable in 46 unequal quarterly
installments commencing on the 9th month from initial advance for Tranche A, 36
unequal quarterly installments commencing on the 39th month from initial
advance for Tranche B. Final repayment date is 12 years from initial advance.
The loan is subject to repricing on the seventh year from the date of initial
advance.
2021, respectively.

ac. The amount represents loan drawn by MMSS3 from its P31,000 OLSA dated
December 15, 2014 with various banks.
- 113 -
Proceeds of the loan were used to partially finance the design, construction and
the operation and maintenance of the Skyway Stage 3 Project. The loan is
payable in 35 unequal consecutive quarterly installments starting on the earlier of
March 30, 2020 or one quarter after issuance of toll operation certificate by TRB.
Final repayment date is 12 years after initial drawdown date.
2021, respectively.
The drawdown includes payable to BOC amounting to P3,205 and P3,493 as at


ad. The amount represents loan drawn by MPI from its P21,300 12-year OLSA dated
August 9, 2018 with various banks.
The proceeds were used by MPI for the repayment of the short-term loan used to
fund the design, construction and operation of the Davao Greenfield Power Plant
and payment of transaction-related fees and expenses.
2021, respectively.


ae. The amount represents the drawdown by San Miguel Global Power on April 26,
2017 from its term loan facility amounting to P15,000. The loan is amortized over
seven years and is subject to a fixed interest rate of 6.9265% per annum,
payable quarterly. The proceeds were used for debt refinancing.
Payments made amounted to P750 and P600 pursuant to the loan agreement as
at December 31, 2022 and 2021, respectively.

af. The amount represents the loan drawn by SMB on March 30, 2021 from its loan
facilities amounting to P12,000 with various banks. The loans are subject to fixed
interest rates, where P10,000 will mature on March 30, 2026 and P2,000 will
mature on March 30, 2028. The proceeds of the loan were used to refinance the
redemption of Series G Bonds.
Payments made amounted to P31 and P16 as at December 31, 2022 and 2021,
respectively.
- 114 -
ag. The amount represents the drawdown by SMCTC on December 19, 2019
amounting to P12,000 from its P42,000 Second Amendment to the OLSA dated
December 16, 2019 with various local banks.
Proceeds of the loan were used for consolidation of project loans, releveraging
the project, repayment of certain shareholder advance and partial financing of
operation and maintenance of the project. The loan is payable in 39 quarterly
installments commencing on the third month from initial drawdown. Final
repayment date is 11 years and 9 months from initial drawdown.
The loan is subject to repricing on the fifth year from date of initial drawdown.
Payments made amounted to P1,500 and P780 as at December 31, 2022 and
2021, respectively.

ah. The amount represents the drawdown by SMB on December 19, 2019 from its
term loan facility amounting to P10,000. The loan will mature on December 26,
2024 and is subject to a fixed interest rate of 4.63% per annum. The proceeds
were used for general corporate purposes.

ai. The amount represents the loan drawn by SMFI amounting to P8,000 and
P10,000 in 2020 and 2019, respectively, from its term loan facility amounting to
P18,000. The loan is amortized for 10 years and is subject to a floating interest
rate based on BVAL plus margin or BSP TDF overnight rate plus margin,
whichever is higher with a one-time option to convert to a fixed interest rate. The
proceeds were used to refinance its existing short-term obligations, fund capital
expansion projects and for other general corporate purposes.
On December 14, 2020, SMFI exercised its one-time option to convert to fixed
interest rate for its P10,000 loan.
Unamortized debt issue costs for the fixed interest loan amounted to P55 and
Unamortized debt issue costs for the floating interest loan amounted to P44 and
aj. The amount represents the loan drawn by NCC and SMNCI amounting to P1,674
and P7,075 in 2022 and 2021, respectively, from the P12,500 OLSA dated
June 22, 2021 with various banks.
The loan is subject to a fixed interest rate of 4.8356% per annum and is payable
in 34 unequal quarterly installments commencing on the seventh quarter from
initial advance. Final repayment date is ten years from initial advance.
Proceeds of the loan were used to partially finance the development, design,
construction, completion and operation of the cement plant in Sison, Pangasinan,
repay the reimbursable sponsor advances and finance the transaction costs,
other taxes, costs and operation expenses and other financing costs incurred in
availing the loan.
- 115 -
On July 1, 2021, the balance of the loan drawn by SMNCI was transferred to
NCC following the merger of SMNCI to NCC (Note 5).

ak. The amount represents the drawdown by PF-Hormel on September 29, 2021
from its loan facilities amounting to P7,000 with various banks. The loans will
mature on September 29, 2026 and is subject to a fixed interest rate of 3.846%
per annum. The proceeds of the loan were used for refinancing of existing
indebtedness and general corporate purposes.
al. The amount represents the loan drawn by SMB on April 1, 2022 amounting to
P7,000 from a local bank. The terms of the loans are three and five years, and
are subject to fixed interest rates of 4.633% and 5.7513% per annum payable
quarterly. The proceeds of the loan were used to redeem the Series F bonds
which matured on April 2, 2022 and/or general corporate purposes.
am. The amount represents the drawdown by Petron on June 15, 2022 from its term
loan facility amounting to P5,000 which was signed and executed on June 10,
2022. The facility is subject to a fixed interest rate of 7.4206% per annum and
amortized over five years with a 15-month grace period, after which the total
principal will be amortized in 16 equal quarterly payments beginning
September 15, 2023. The proceeds were used to partially pay its US dollar term
loan.
an. The amount represents the drawdown by Petron on June 16, 2022 from its term
loan facility amounting to P5,000 which was signed and executed on June 7,
amortized over five years with a 15-month grace period, after which the total
principal will be amortized in 16 equal quarterly payments beginning
September 16, 2023. The proceeds were used to pay its US dollar term loan and
various loan facilities.
ao. The amount represents the drawdown by Petron on May 19, 2022 from its term
loan facility amounting to P5,000 which was signed and executed on May 17,
amortized over five years with a two-year grace period, after which the total
principal will be amortized in seven semi-annual payments beginning May 19,
2024. The proceeds were used for partial financing of the power plant project.
- 116 -
ap. The amount represents the loan drawn by SMB on December 20, 2022
amounting to P5,000 from its P10,000 term loan facility from a local bank. The
term of the loan is five years and is subject to a fixed interest rate of 6.8412% per
annum payable quarterly. The proceeds of the loan were used to partially finance
capital expenditures.
aq. The amount represents the drawdown by San Miguel Global Power on May 28,
2021 from its term loan facility amounting to P5,000. The loan will mature on May
28, 2025 and is subject to a fixed interest rate of 5.00% per annum payable
quarterly. The proceeds were used for general corporate purposes.
Payments made amounted to P75 and P25 as at December 31, 2022 and 2021,
respectively.
ar. The amount represents loan drawn by SCII on December 29, 2021 from its
P4,800 OLSA dated December 22, 2021 with various local banks.
The loan is subject to a fixed interest rate of 6.37239% and is payable in 23

unequal quarterly installments commencing on the 6th quarter from initial
advance. Final repayment date is seven years from initial advance.
Proceeds of the loan were used to partially finance the development, design,
construction, completion and operation of the cement grinding facility with
cement packing and pier facilities of SCII in Davao.
The drawdown includes payable to BOC amounting to P2,000 as at

December 31, 2022 and 2021 (Note 33).
as. The amount represents the outstanding loan drawn by ECC from its TLFSA
dated February 3, 2016 with various local banks, to refinance the previous loan
and partially finance the line 3 expansion project of its cement plant. The loan is
subject to a fixed interest rate payable in 32 quarterly installments commencing
on the 9th quarter from loan availment and will be fully paid on March 2, 2026.
The drawdown includes payable to BOC amounting to P810 as at December 31,

2022 (Note 33).
at. The amount represents the drawdown by Petron on July 25, 2017 from its term
loan facility amounting to P15,000. The loan is amortized over seven years and
is subject to a fixed interest rate of 5.5276% per annum payable quarterly. The
proceeds were used to refinance the short-term loan availed on
December 23, 2016 for the acquisition of the Refinery Solid Fuel-fired Power
Plant.
2021, respectively.
- 117 -
au. The amount represents the drawdown by LCWDC in 2018 amounting to P4,200
from its P5,400 OLSA dated September 16, 2016 with various local banks.
Proceeds of the loan were used for the Bulacan Bulk Water Supply Project.
The loan is subject to repricing on the seventh year from the initial drawdown
date.
Payments made amounted to P504 and P252 as at December 31, 2022 and
2021, respectively.

av. The amount represents the drawdown by Petron on April 27, 2020 from its term
loan facility amounting to P5,000. The loan is amortized over five years and is
subject to a fixed interest rate of 4.59% per annum payable quarterly. The
Payments made amounted to P1,875 and P625 as at December 31, 2022 and
2021, respectively.

aw. The amount represents the drawdown by SMYPC from its term loan facility
amounting to P5,000. The loan will mature on January 30, 2025 and is subject to
a fixed interest rate of 5.1657% per annum payable quarterly. The proceeds
were used to refinance existing short-term loans.
2021, respectively.
ax. The amount represents the drawdown by Petron on September 8, 2022 from its
term loan facility amounting to P2,375 which was signed and executed on
September 6, 2022. The loan is subject to a fixed interest rate of 6.4920% per
annum and will be fully paid on September 8, 2025. The proceeds were partially
used to pay existing indebtedness.
ay. The amount represents the P2,000 seven-year term loan availed by SMMI on
December 19, 2019. The loan is amortized for seven years and is subject to a
floating interest rate based on BVAL plus margin with a one-time option to
convert to a fixed interest rate within two years. The proceeds of the loan were
used to refinance existing short-term loans, fund its capital expenditure
requirements for the upgrade or expansion of its production facilities and/or
finance other general corporate requirements.
- 118 -
On December 19, 2020, SMMI exercised its option to convert the interest rate
from floating to fixed. As a result, the interest rate was fixed at 3.2837% per
annum.

az. The amount represents the drawdown by SMCSLC on July 14, 2021 from its
term loan facilities with various banks amounting to P2,000. The loan will mature
on July 14, 2026 and is subject to a fixed interest rate of 4.20% per annum
payable quarterly. The proceeds were used to refinance existing indebtedness
and for general corporate purposes.
ba. The amount represents the drawdown by Petron on September 30, 2022 from its
term loan facility amounting to P625 which was signed and executed on
September 6, 2022. The loan is subject to a fixed interest rate of 6.8672% per
annum and will be fully paid on September 8, 2025. The proceeds will be used to
pay existing indebtedness.
bb. The amount represents the P3,500 loan facility with local banks, entered into by
SIDC in 2013. The proceeds of the loan were used to refinance its existing debt
and to finance the construction and development of Stage II, Phase II of the
STAR Project. Repayment period is within 32 unequal consecutive quarterly
installments on each repayment date in accordance with the agreement
beginning on the earlier of the 27th month from initial drawdown date or the third
month from the date of receipt by SIDC of the financial completion certificate for
the Project.
2021, respectively.
bc. The amount represents drawdown by GSMI on December 28, 2020 from its
term-loan facility amounting to P500. The loan is amortized over three years and
is subject to a fixed interest rate of 4.2105% per annum payable quarterly. The
2021, respectively.
Unamortized debt issue costs amounted to P1 and P2 as at December 31, 2022

and 2021, respectively.
- 119 -
bd. The amount represents the drawdown by SMC NAIAX amounting to P1,100 and
P6,400 in 2016 and 2015, respectively, from its P7,500 OLSA dated July 8,
2014. Proceeds of the loan were used to finance the construction of the NAIA
Expressway. The loan is payable in 32 unequal consecutive quarterly
installments commencing on the period ending the earlier of 24 months from
initial drawdown date or the date of the issuance by the TRB of the Toll
Operations Certificate. Final repayment date is 10 years after initial drawdown
date.
The drawdown includes payable to BOC amounting to P1,090 as at

December 31, 2021 (Note 33).
Payments made amounted to P3,412 as at December 31, 2021.
The loan was fully paid on December 28, 2022.
be. The amount represents the drawdown by Petron on December 29, 2017 from its
term loan facility amounting to P10,000. The loan is amortized over five years
and is subject to a fixed interest rate of 5.7584% per annum payable quarterly.
The proceeds were used to finance working capital requirements.
The loan was fully paid on December 29, 2022.
bf. The amount represents the drawdown by Petron on October 13, 2015 amounting
to P5,000 from its term loan facility. The loan is amortized over seven years with
a two-year grace period and is subject to a fixed interest rate of 5.4583% per
annum payable quarterly. The proceeds were used to repay maturing obligations
and for general corporate purposes.
The loan was fully paid on October 13, 2022.
bg. The amount represents the drawdown by SSHCI on various dates in 2022
amounting to P15,800 from its P20,000 term loan facility. The term of the loan is
for three years and is subject to a floating interest rate based on BVAL plus
margin payable quarterly. The proceeds were used to partially finance
investments, expansion and capital expenditure programs in toll roads and other
infrastructure and infrastructure-related projects and other related and/or allied
businesses which provide service to the toll roads and other infrastructure-
related projects.

2022 (Note 33).
- 120 -
bh. The amount represents the drawdown by SMC NAIAX amounting to P3,124 from
the P5,656 OLSA with various banks dated December 21, 2022. Proceeds of the
loan were used to prepay the balance of the 2014 OLSA and will be used to
partially finance the construction and development of the NAIAX Tramo
Extension Project. The loan is payable in 30 equal quarterly installments
commencing on the third month from initial drawdown date. Final repayment date
is seven years and six months from the signing date of the OLSA.
The loan is subject to annual repricing from the date of initial drawdown.

2022 (Note 33).
bi. The amount represents drawdowns by SMYPC of P1,449 and P551 in 2020 and
2019, respectively from its term loan facility amounting to P2,000. The loan is
amortized for five years and is subject to a floating interest rate payable
quarterly. The proceeds were used to finance the capital expenditure in relation
to Line 3 of the glass manufacturing plant project.
2021, respectively.

bj. The amount represents drawdown of SMYPC from its term loan facility amounting
to P4,000. The term of the loan is for five years and is subject to a floating
interest rate payable quarterly. The proceeds were used to finance the capital
expenditure in relation to Line 3 of the glass manufacturing plant project.
2021, respectively.
Unamortized debt issue costs amounted to P1 and P4 as at December 31, 2022

bk. The amount represents series of drawdowns in 2014 and 2013, from a loan
agreement entered into by TADHC with BOC amounting to P3,300, used for
financing the Airport Project. The loan is payable in 28 quarterly installments
commencing on the 12th quarter.
TADHC paid P1,921 as at December 31, 2021, as partial settlement of the loan
principal (Note 33).
The loan was fully paid on July 15, 2022.
- 121 -
bl. The amount represents the total outstanding loan drawn in various tranches by
MPPCL from its Omnibus Refinancing Agreement (ORA) with various local
banks dated December 28, 2012. The proceeds of the loan were used to
refinance its debt obligations previously obtained to partially finance the
acquisition, operation, maintenance and repair of the power plant facilities
purchased from PSALM by MPPCL. The loan is divided into fixed interest
tranche amounting to US$111 (P6,212) and US$129 (P6,583) as at
December 31, 2022 and 2021, respectively, and floating interest tranche based
on LIBOR plus margin amounting to US$37 (P2,071) and US$43 (P2,194) and
as at December 31, 2022 and 2021, respectively. The loan will mature on
January 23, 2023.
On January 17, 2023, MPPCL executed an amendment to the ORA with various
local banks to convert its outstanding obligation amounting to $148 into a P8,155
Peso-denominated loan having a term of seven years from additional ORA Loan
Availment Date subject to floating interest rate based on BVAL plus margin with
MPPCL having a one-time right to convert into a fixed interest rate on the second
anniversary from the additional ORA Loan Availment Date, pursuant to the terms
of the agreement.
Unamortized debt issue costs amounted to P2 as at December 31, 2021, for the
fixed interest tranche.
Unamortized debt issue costs amounted to P1 as at December 31, 2021, for the
floating interest tranche.
bm. The amount represents the balance of the US$700 (P36,351) term loan facility
availed by San Miguel Global Power on March 16, 2018. The US$700 term loan
facility is divided into Facility A Loan amounting to US$200 maturing on
March 12, 2021 and Facility B Loan amounting to US$500 maturing on
March 13, 2023. The proceeds were used to partially finance the acquisition of
the Masinloc Group.
San Miguel Global Power fully paid the Facility A Loan using the proceeds from
its US$200 (P9,691) term loan availed on March 12, 2021.

bn. In November and December 2022, Petron availed of US$267 (P15,225) and
US$228 (P27,909) loans, respectively, from its US$550 term loan facility. The
loan is amortized over five years with a two-year grace period, after which the
total principal will be amortized in seven equal semi-annual installments
beginning November 8, 2024. The facility is subject to a floating interest rate
based on SOFR plus a spread, repriced every 1, 3 or 6 months. The proceeds
were used to partially prepay the US$800 term loan facility availed in 2019 and
the US$150 term loan availed in 2020.
- 122 -
bo. The amount represents the US$200 (P9,691) five-year term loan drawn by San
Miguel Global Power on March 12, 2021 from a US$200 Facility Agreement with
a syndicate of foreign banks executed on March 9, 2021. The loan is subject to a
floating interest rate based on LIBOR plus margin and will mature in March 2026.
The proceeds were used as repayment of Facility A Loan of US$700 term loan
facility.
On June 7, 2021, San Miguel Global Power availed an additional US$100

(P4,766) term loan from its Syndication Agreement executed on May 21, 2021.
The Syndication Agreement amended the Facility Agreement dated March 9,
2021, increasing the loan facility from US$200 to US$300. The proceeds were
used mainly for the redemption of Series A Bonds in July 2021.
bp. The amount represents the drawdown of San Miguel Global Power on August 26,
loan is for five years and is subject to a floating interest rate based on SOFR plus
margin payable 1/3/6 months as selected by the borrower. The proceeds were
used for general corporate purposes, including capital expenditures and
refinancing of short-term loans, and payment of other transaction related fees,
costs and expenses of the facility.
bq. The amount represents the drawdown of San Miguel Global Power on
January 21, 2022 from its term loan facility amounting to US$200 (P10,274). The
term of the loan is for three years and is subject to a floating interest rate based
on LIBOR plus margin payable 1/3/6 months as selected by the borrower. The
proceeds were used for capital expenditures relating to expansion projects and
payment of other transaction related fees, costs and expenses of the facility.
The initial loan amount under the facility agreement was increased from US$100
to US$200 on December 16, 2021.
br. The amount represents total outstanding loan drawn in various tranches by
MPPCL from its Omnibus Expansion Financing Agreement dated December 1,
2015, with various local banks, to finance the construction of the additional
335 MW coal-fired plant within MPPCL existing facilities. The loan is divided into
fixed interest tranche amounting to US$335 (P18,651) and US$356 (P18,154) as
at December 31, 2022 and 2021, respectively, and floating interest tranche
based on LIBOR plus margin amounting to US$110 (P6,138) and US$117
(P5,975) as at December 31, 2022 and 2021, respectively. The loan will mature
on December 16, 2030.
2022 and 2021, respectively, for the fixed interest tranche.
2022 and 2021, respectively, for the floating interest tranche.
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bs. In May and July 2019, Petron availed of US$536 (P28,031) and US$264
(P13,572) loans, respectively, from its US$800 term loan facility. The loan is
amortized for five years with a two-year grace period and subject to a floating
interest rate. The proceeds were used to refinance Dollar-denominated and
Peso-denominated bilateral short-term loans, to partially prepay its existing
US$1,000 term loan and for general corporate purposes.
Payments made amounted to US$686 (P35,681) and US$343 (P17,837) as at

bt. The amount represents drawdown by San Miguel Global Power on May 24, 2022
from its term loan facility amounting to US$100 (P5,232). The term of the loan is
three years and is subject to a floating interest rate based on SOFR plus margin
payable 3/6 months as selected by the borrower. The proceeds were used for
working capital requirements of San Miguel Global Power’s BESS and LNG
projects, for general corporate purposes, and payment of other transaction
related fees, costs and expenses of the facility.
bu. The amount represents the drawdown by Petron on April 22, 2020 from its term
loan facility amounting to JPY15,000 (P7,079) with various banks. The loan is
amortized over five years and is subject to a floating interest rate based on JPY
LIBOR plus a spread payable every 1, 3 or 6 months as selected by the
borrower. Due to the global discontinuation of JPY LIBOR by December 31,
2021, an amendment was made to the JPY Facility adopting the TONA as the
new benchmark rate. Beginning December 29, 2021, the floating interest rate on
the JPY15,000 facility is based on TONA plus a spread, repriced every 1, 3, or
6 months. The proceeds of the loan were used to partially prepay its US$1,000
term loan facility.
Payments made amounted to JPY4,286 (P2,022) as at December 31, 2022.
bv. The amount represents the drawdown by San Miguel Global Power on April 12,
loan is for three years and is subject to a floating interest rate based on LIBOR
plus margin payable 1/3/6 months as selected by the borrower.
The proceeds were used to finance the capital expenditures of the Batangas
Combined Cycle Power Plant (including expansion projects related thereto); the
liquid natural gas import, storage and distribution facilities; pre-operating and
operating working capital requirements for BESS projects, and transaction-
related fees, costs and expenses of the facility.
- 124 -
bw. The amount represents the drawdown by SMYA on July 31, 2019 amounting to
AU$80 (P2,803) from AU$100 syndicated facility agreement entered into by
SMYA on July 23, 2019. The loan is amortized over five years and is subject to
interest based on BBSY rate plus margin. Proceeds of the loan were used to
refinance maturing short-term obligations and general corporate purposes.
Payments made amounted to AU$23 (P830) and AU$13 (458) as at

bx. The amount represents the drawdown by SMYA on November 11, 2022
amounting to AU$10 (P377). The loan is amortized over five years and is subject
to interest based on BBSY rate plus margin. Proceeds of the loan were used to
finance short-term obligations and general corporate purposes.
by. The amount represents the loan drawn by SMYA on February 25, 2021
amounting to AU$5 (P172). The loan is amortized over five years and is subject
to interest based on BBSY rate plus margin. Proceeds of the loan were used to
refinance maturing short-term obligations and general corporate purposes.
Payments made amounted to AU$2 (P58) and AU$1 (P25) as at December 31,
bz. The amount represents the drawdown by Petron on August 26, 2020 from its
term loan facility amounting to US$150 (P7,280) with various banks. The loan is
amortized for three years and is subject to a floating interest rate based on
LIBOR plus margin payable (1, 3, or 6) months as selected by the borrower. The
proceeds were used to prepay part of the existing US$1,000 term loan facility
and US$800 loan.
The loan was fully paid on November 29, 2022.
ca. The amount represents the drawdown of US$600 (P30,262) and US$400
(P20,523) by Petron on June 28, 2017 and October 10, 2017, respectively, from
its US$1,000 term loan facility, which was signed and executed on
June 16, 2017. The loan is subject to a floating interest rate plus spread and is
amortized over five years with a two-year grace period. The proceeds were used
to fully pay the outstanding loan balances.
Payments made amounted to US$858 (P43,559) as at December 31, 2021,

respectively.
The loan was fully paid on June 28, 2022.
The gross amount of long-term debt payable to BOC amounted to P11,703 and
- 125 -
The debt agreements contain, among others, covenants relating to merger and
consolidation, negative pledge, maintenance of certain financial ratios, working
capital requirements, restrictions on loans and guarantees, disposal of a substantial
portion of assets, significant changes in the ownership or control of subsidiaries,
payments of dividends and redemption of capital stock.
The Group is required to comply with the following financial ratios:
Parent Company Consolidated EBITDA to Not less than

consolidated total interest 2.00:1.00
expense
Consolidated net debt to Does not exceed
consolidated total equity ratio 2.10:1.00
Major subsidiaries:
Petron Net leverage ratio Not to exceed 6.50
Consolidated gross debt to Not to exceed 2.75
consolidated net worth
San Miguel Global Net debt to equity ratio Not more than 3.25x
Power Interest coverage ratio Not less than 2.25x
SMFB Consolidated debt to Not more than 3.50x
consolidated equity
Consolidated total EBITDA to Not less than 2.00x
consolidated interest expense
The Group is in compliance with the covenants of the debt agreements or obtained
the necessary waivers as at December 31, 2022 and 2021.
Long-term debt includes syndicated project finance loans amounting to P146,526

and P148,811 as at December 31, 2022 and 2021, respectively, which were secured
by certain property, plant and equipment and other intangible assets (Notes 13
and 17).
The movements in debt issue costs are as follows:
Note 2022 2021

Amortization 30 (2,824) (2,630)
Reclassification, capitalized and others (267) 146
Repayment Schedule
The annual maturities of long-term debt are as follows:
Year Gross Amount Debt Issue Costs Net

2023 P170,751 P719 P170,032
2024 241,146 2,702 238,444
2025 104,334 918 103,416
2026 154,897 1,974 152,923
2027 and thereafter 428,575 5,194 423,381
Total P1,099,703 P11,507 P1,088,196
Contractual terms of the Group’s interest-bearing loans and borrowings and

exposure to interest rate, foreign currency and liquidity risks are discussed in
Note 39.
- 126 -
22. Other Noncurrent Liabilities
Other noncurrent liabilities consist of:
Note 2022 2021

Retirement liabilities - noncurrent 5, 35 P9,539 P6,843
Retention payable - noncurrent 8,210 5,510
ARO 4 4,264 3,648
IRO 4 899 772
Cylinder deposits 736 687
Cash bonds 419 450
Customers’ deposits 39, 40 343 603
MRO and decommissioning 4, 5 100 47
Obligation to ROP - service
concession agreement 4, 34 43 58
Amounts owed to related parties 33 1 53
Derivative liabilities - noncurrent 4, 39, 40 - 745
Concession liabilities - 88
Others 5 1,590 455
39, 40 P26,144 P19,959
“Others” include deferred rent income and liability to contractor and supplier.
23. Income Taxes
The components of income tax expense are shown below:
2022 2021 2020

Current P19,442 P14,258 P15,540
Deferred (6,125) 3,535 (9)
P13,317 P17,793 P15,531
The movements of deferred tax assets and liabilities are accounted for as follows:
Recognized
Recognized in Other
Balance at in Profit Comprehensive Balance at
2022 January 1 or Loss Income Others December 31
Allowance for impairment losses on
trade and other receivables and
inventory P2,752 (P742) P9 (P2) P2,017
MCIT 1,045 (237) - - 808
NOLCO 8,374 6,442 - - 14,816
Undistributed net earnings of foreign
subsidiaries (846) - - - (846)
Leases (19,044) (3,344) - (16) (22,404)
Unrealized intercompany charges
and others (3,882) 4,006 1,906 (164) 1,866
(P11,601) P6,125 P1,915 (P182) (P3,743)
Recognized
Recognized in Other
Balance at in Profit Comprehensive Balance at
2021 January 1 or Loss Income Others December 31
Allowance for impairment losses on
trade and other receivables and
inventory P4,742 (P1,992) P - P2 P2,752
MCIT 1,137 (92) - - 1,045
NOLCO 10,852 (2,478) - - 8,374
Undistributed net earnings of foreign
subsidiaries (962) 116 - - (846)
Leases (17,104) (2,278) - 338 (19,044)
Unrealized intercompany charges
and others (5,468) 3,189 (1,198) (405) (3,882)
(P6,803) (P3,535) (P1,198) (P65) (P11,601)
- 127 -
The above amounts are reported in the consolidated statements of financial position
as follows:
Note 2022 2021

Deferred tax assets 4 P22,554 P17,141
Deferred tax liabilities (26,297) (28,742)
(P3,743) (P11,601)
As at December 31, 2022, the NOLCO of the Group, which are presented as part of
“Deferred tax assets” account in the consolidated statements of financial position,
that can be claimed as deduction from future taxable income are as follows:
Year
Incurred/Paid Carryforward Benefits Up To NOLCO
2020 December 31, 2025 P25,416
2021 December 31, 2026 6,624
2022 December 31, 2025 27,224
P59,264
As at December 31, 2022, the MCIT of the Group, which are presented as part of
“Deferred tax assets” account in the consolidated statements of financial position,
that can be claimed as deduction from corporate income tax due are as follows:
Year
Incurred/Paid Carryforward Benefits Up To MCIT
2020 December 31, 2023 P171
2021 December 31, 2024 105
2022 December 31, 2025 532
P808
As at December 31, 2022 and 2021, deferred tax assets in respect of NOLCO and
others amounting to P9,580 and P9,009, respectively, has not been recognized
because it is not probable that future taxable profit will be available against which the
Group can utilize the benefits therefrom.
On September 30, 2020, the Bureau of Internal Revenue issued Revenue Regulation
(RR) No. 25-2020 to implement Section 4 (bbbb) of Republic Act (RA) No. 11494,
otherwise known as the Bayanihan to Recover as One Act, relative to NOLCO which
provides that the net operating loss of a business or enterprise for taxable years
2020 and 2021 shall be carried over as a deduction from gross income for the next
five consecutive taxable years immediately following the year of such loss.
The net operating loss for the said taxable years may be carried over as a deduction
even after the expiration of RA No. 11494, provided that the same is claimed within
the next five consecutive taxable years following the year such loss was incurred.
- 128 -
The reconciliation between the statutory income tax rate on income before income
tax and the Group’s effective income tax rate is as follows:
2022 2021 2020

Statutory income tax rate 25.00% 25.00% 30.00%
Increase (decrease) in income
tax rate resulting from:
Impact of change in tax rate - (5.47%) -
Interest income subject to
final tax (4.43%) (1.36%) (4.96%)
Equity in net earnings of
associates and joint ventures (0.75%) (0.39%) (0.33%)
Loss (gain) on sale of
investments subject to final
or capital gains tax (0.46%) (0.06%) 0.39%
Others, mainly income subject
to different tax rates - net 13.87% 9.26% 16.42%
Effective income tax rate 33.23% 26.98% 41.52%
RA No. 11534 or the Corporate Recovery and Tax Incentives for Enterprises
(CREATE) Act
The CREATE Act, which seeks to reduce the corporate income tax rates and to
rationalize the current fiscal incentives by making it time-bound, targeted and
performance-based, was passed into law on March 26, 2021 and took effect 15 days
after its complete publication in the Official Gazette or in a newspaper of general
circulation on April 11, 2021.
Key provisions of the CREATE Act which have an impact on the Group are:
(i) reduction of Regular Corporate Income Tax (RCIT) rate from 30% to 25% for
domestic and resident foreign corporations effective July 1, 2020; (ii) reduction of
MCIT rate from 2% to 1% of gross income effective July 1, 2020 to June 30, 2023;
and (iii) repeal of the imposition of improperly accumulated earnings tax. Accordingly,
current and deferred taxes as at and for the year ended December 31, 2022 and
2021 were computed and measured using the applicable income tax rates.
The impact on the consolidated financial statements of the Group based on balances
as at and for the year ended December 31, 2020, which was taken up upon the
effectivity of the CREATE Law are as follows:
Increase
(Decrease)
ASSETS
Prepaid expenses and other current assets P407
Investments and advances - net 9
Deferred tax assets (2,075)
(P1,659)
LIABILITIES
Income and other taxes payable (P881)
Deferred tax liabilities (3,877)
(4,758)
Forward
- 129 -
Increase
(Decrease)
EQUITY
Equity reserves (P329)
Retained earnings 3,342
Non-controlling interests 86
3,099
TOTAL LIABILITIES AND EQUITY (P1,659)
INCOME BEFORE INCOME TAX
Equity in net earnings of associates and joint ventures P9
INCOME TAX EXPENSE
Current (1,288)
Deferred (2,319)
(3,607)
NET INCOME P3,616
Attributable to:
Equity holders of the Parent Company P3,342
Non-controlling interests 274
P3,616
24. Equity
a. Amendments to the Articles of Incorporation
On July 23, 2009, during the annual stockholders’ meeting of the Parent
Company, the stockholders approved the amendments to the Articles of
Incorporation for the declassification of the common shares of the Parent
Company. The authorized capital stock of the Parent Company amounting to
P22,500 was divided into 2,034,000,000 Class “A” common shares,
1,356,000,000 Class “B” common shares with a par value of P5.00 per share and
1,110,000,000 Series “1” preferred shares with a par value of P5.00 per share,
and defined the terms and features of the Series “1” preferred shares. The SEC
approved the amendments to the Amended Articles of Incorporation of the
Parent Company on August 20, 2009.
During the April 18, 2012 and June 14, 2012 meetings of the BOD and
stockholders of the Parent Company, respectively, the BOD and stockholders
approved the amendments to the Articles of Incorporation of the Parent
Company, to increase the authorized capital stock of the Parent Company from
P22,500 to P30,000 as follows: (a) the increase in the number of the common
shares from 3,390,000,000 common shares to 3,790,000,000, or an increase of
400,000,000 common shares; and (b) the creation and issuance of
1,100,000,000 Series “2” preferred shares with a par value of P5.00 per share.
On September 21, 2012, the SEC approved the amendment to the Articles of
Incorporation of the Parent Company to increase the authorized capital stock,
and consequently creating the Series “2” preferred shares.
- 130 -
On June 9, 2015, during the annual stockholders meeting of the Parent
Company, the stockholders approved the amendment to Article VII of the
Amended Articles of Incorporation of the Parent Company to reclassify
810,000,000 Series “1” preferred shares to Series “2” preferred shares,
consisting of 691,099,686 Series “1” preferred treasury shares to Series “2”
preferred treasury shares and 118,900,314 Series “1” preferred unissued shares
to Series “2” preferred unissued shares. With the approved reclassification, the
resulting distribution of the preferred shares of the Parent Company was
300,000,000 for Series “1” preferred shares and 1,910,000,000 for Series “2”
preferred shares. The stockholders also approved the issuance of the Series “2”
preferred shares subject to the passage of Enabling Resolutions containing the
details of the terms and conditions of the issuance.
The amendment to Article VII of the Amended Articles of Incorporation of the

Parent Company to reclassify 810,000,000 Series “1” preferred shares to
Series “2” preferred shares was approved by the SEC on July 14, 2015.
b. Capital Stock
Common Shares
On July 27, 2010, the BOD of the Parent Company approved the offer to issue
approximately 1,000,000,000 common shares (from the unissued capital stock
and treasury shares) at a price of not less than P75.00 per share.
Effective August 26, 2010, all Class “A” common shares and Class “B” common
shares of the Parent Company were declassified and are considered as common
shares without distinction, as approved by the SEC. Both are available to foreign
investors, subject to the foreign ownership limit.
The Parent Company has a total of 33,653 and 33,828 common shareholders as
at December 31, 2022 and 2021 respectively.
The number of issued and outstanding shares of common stock are as follows:
2022 2021 2020

Issued shares 3,288,649,125 3,288,649,125 3,288,649,125
Less treasury shares 904,752,537 904,752,537 904,752,537
Issued and outstanding shares 2,383,896,588 2,383,896,588 2,383,896,588
Preferred Shares
i. Series “1” Preferred Shares
Series “1” preferred shares have a par value of P5.00 per share and are
entitled to receive cash dividends upon declaration by and at the sole option
of the BOD of the Parent Company at a fixed rate of 8% per annum
calculated in respect of each Series “1” preferred share by reference to the
Issue Price thereof in respect of each dividend period.
Series “1” preferred shares are non-voting except as provided for under the
Corporation Code. The Series “1” preferred shares are redeemable in whole
or in part, at the sole option of the Parent Company, at the end of three years
from the issue date at P75.00 plus any accumulated and unpaid cash
dividends.
- 131 -
All shares rank equally with regard to the residual assets of the Parent
Company, except that holders of preferred shares participate only to the
extent of the issue price of the shares plus any accumulated and unpaid cash
dividends.
On July 23, 2009, the stockholders of the Parent Company approved the
Offer by the Parent Company to exchange existing common shares of up to
approximately 35% of the issued and outstanding capital stock of the Parent
Company with Series “1” preferred shares. The exchange ratio was one
common share for one Series “1” preferred share and the qualified
shareholders of record as at July 2, 2009, were vested with the right to
participate on the exchange.
On October 5, 2009, the Parent Company completed the exchange of

476,296,752 Class “A” common shares and 396,876,601 Class “B” common
shares for Series “1” preferred shares.
On October 15, 2009, the BOD of the Parent Company approved the
issuance, through private placement, of up to 226,800,000 Series “1”
preferred shares.
On December 22, 2009, the Parent Company issued 97,333,000 Series “1”
preferred shares to qualified buyers and by way of private placement to not
more than 19 non-qualified buyers at the issue price of P75.00 per Series “1”
preferred share.
On December 8, 2010 and October 3, 2011, the Parent Company listed

873,173,353 and 97,333,000 Series “1” preferred shares worth P65,488 and
P7,300, respectively.
On August 13, 2012, the BOD of the Parent Company approved the
redemption of Series “1” preferred shares at a redemption price of P75.00
per share.
On October 5, 2012, 970,506,353 Series “1” preferred shares were reverted

to treasury.
On April 14, 2015, the Parent Company reissued 279,406,667 Series “1”
preferred shares held in treasury in the name of certain subscribers at
P75.00 per share. The Series “1” preferred shares became tradable at the
PSE beginning June 10, 2015.
On March 12, 2020, the BOD of the Parent Company approved the
redemption of Series “1” preferred shares at a redemption price of P75.00
per share.
On April 14, 2020, 279,406,667 Series “1” preferred shares were reverted to
treasury.
The Parent Company has 279,406,667 Series “1” preferred shares held in
treasury as at December 31, 2022 and 2021.
The Parent Company has no outstanding Series “1” preferred shares as at

- 132 -
ii. Series “2” Preferred Shares
Subseries 2-A, Subseries 2-B and Subseries 2-C

In September 2012, the Parent Company issued 1,067,000,000 Series “2”
preferred shares at the issue price of P75.00 per share. The said Series “2”
preferred shares worth P80,025 were listed at the PSE on September 28,
2012. The SEC approved the registration and issued a permit to sell on
August 10, 2012.
The Series “2” preferred shares were issued in three subseries

(Subseries “2-A”, Subseries “2-B” and Subseries “2-C”) and are Peso-
denominated, perpetual, cumulative, non-participating and non-voting.
The Parent Company has the redemption option starting on the third, fifth
and seventh year and every dividend payment thereafter, with a “step-up”
rate effective on the 5th, 7th and 10th year, respectively, if the shares are not
redeemed. Dividend rates are 7.500%, 7.625%, and 8.000% per annum for
Subseries “2-A”, Subseries “2-B” and Subseries “2-C” preferred shares,
respectively.
On September 21, 2015, the Parent Company redeemed its 721,012,400

Series “2” preferred shares - Subseries “2-A” at a redemption price of P75.00
per share plus any unpaid cash dividends. The Parent Company paid
P54,076 to the holders of Subseries “2-A” preferred shares. The redemption
was approved by the BOD of the Parent Company on August 20, 2015.

Series “2” preferred shares - Subseries “2-B” at a redemption price of P75.00
per share. The Parent Company paid P6,782 to the holders of Subseries
“2-B” preferred shares. The redemption was approved by the BOD of the
Parent Company on September 12, 2019.
On September 21, 2021, the Parent Company redeemed its outstanding

255,559,400 Series “2” preferred shares - Subseries “2-C” at a redemption
price of P75.00 per share. The Parent Company paid P19,167 to the holders
of Subseries “2-C” preferred shares. The redemption was approved by the
BOD of the Parent Company on August 5, 2021.
As at September 21, 2021, there are no more outstanding Series “2”

preferred shares out of the 1,067,000,000 Series “2” preferred shares subject
of the SEC’s permit to sell on August 10, 2012 and listed with the PSE on
September 28, 2012.
Subseries 2-D, Subseries 2-E and Subseries 2-F

On September 21, 2015, the Parent Company issued and listed at the PSE
446,667,000 Series “2” preferred shares held in treasury in three subseries
(Subseries “2-D”, Subseries “2-E” and Subseries “2-F”) and are Peso-
denominated, perpetual, cumulative, non-participating and non-voting.
Dividend rates are 5.9431%, 6.3255% and 6.8072% per annum for
Subseries “2-D”, Subseries “2-E” and Subseries “2-F” preferred shares,
respectively. The SEC approved the registration and issued a permit to sell
on August 6, 2015.
- 133 -
Series “2” preferred shares - Subseries “2-D” at a redemption price of P75.00
per share plus any unpaid cash dividends. The Parent Company paid P6,700
to the holders of Subseries “2-D” preferred shares. The redemption was
approved by the BOD of the Parent Company on August 6, 2020.

Series “2” preferred shares - Subseries “2-E” at a redemption price of P75.00
P10,050 to the holders of Subseries “2-E” preferred shares. The redemption
was approved by the BOD of the Parent Company on August 5, 2021.
As at September 21, 2021, only the Subseries “2-F” preferred shares remain
outstanding out of the 446,667,000 Series “2” preferred shares subject of the
SEC’s permit to sell on August 6, 2015 and listed with the PSE on
September 21, 2015.
The Subseries “2-F” Preferred Shares include 1,333,500 shares amounting

to P100 held by a subsidiary, which were reclassified to Treasury shares
upon consolidation of the subsidiary on December 14, 2022 (Note 5).
Subseries 2-G, Subseries 2-H and Subseries 2-I

On February 24, 2016, the BOD of PSE approved the listing application of
the Parent Company of up to 975,571,800 shares of Series “2” preferred
shares under shelf registration (the Shelf Registered Shares) and the offering
of up to 400,000,000 shares of Series “2” preferred shares (the First
Tranche) with a par value of P5.00 per share and an offer price of P75.00 per
share. The SEC approved the Shelf Registered Shares and issued a permit
to sell on March 8, 2016.
The Parent Company offered the “First Tranche” of up to: (i) 280,000,000
shares of Series “2” preferred shares consisting of Subseries “2-G”,
Subseries “2-H” and Subseries “2-I” and (ii) 120,000,000 shares of Series “2”
preferred shares to cover the oversubscription option. The First Tranche was
re-issued and offered from the Series “2” preferred shares Subseries held in
treasury. The First Tranche was issued on March 30, 2016 which was also
the listing date of the Shelf Registered Shares.
Dividend rates are 6.5793%, 6.3222% and 6.3355% per annum for
Subseries “2-G”, Subseries “2-H” and Subseries “2-I” preferred shares,
respectively.
Following the completion of the Parent Company’s follow-on offering of

280,000,000 Series “2” preferred shares, with an oversubscription option of
120,000,000 Series “2” preferred shares, the Parent Company re-issued the
Series “2” preferred shares held in treasury, as follows: (i) 244,432,686
Series “2” preferred shares; and (ii) 155,567,314 Subseries “2-A” preferred
shares (collectively, the “Offer Shares”). The Series “2” preferred shares
were Series “1” preferred shares held in treasury that were reclassified to
Series “2” preferred shares on June 9, 2015.
The remaining 575,571,800 Shelf Registered Shares will no longer be issued

due to the expiration of the shelf registration, which is a period of three years
from the date of approval.
- 134 -
On March 30, 2021, the Parent Company redeemed its 66,666,600
Series “2” preferred shares - Subseries “2-G” at a redemption price of P75.00
per share plus any unpaid cash dividends. The Parent Company paid P5,000
to the holders of Subseries “2-G” preferred shares. The redemption was
approved by the BOD of the Parent Company on March 11, 2021.
On December 21, 2022, the Parent Company redeemed its 164,000,000

Series “2” preferred shares - Subseries “2-H” at a redemption price of P75.00
P12,300 to the holders of Subseries “2-H” preferred shares. The redemption
was approved by the BOD of the Parent Company on September 22, 2022.
As at December 21, 2022, only the Subseries “2-I” preferred shares remain
outstanding out of the 400,000,000 shelf-registered Series “2” preferred
shares subject of the SEC’s permit to sell on March 8, 2016 and listed with
the PSE on March 30, 2016.
Subseries 2-J and Subseries 2-K

On September 30, 2020, the BOD of PSE approved the listing application of
the Parent Company of up to 533,333,334 Series “2” preferred shares under
shelf registration (the Shelf Registered Shares) and the offering of up to
266,666,667 Series “2” preferred shares (the First Tranche) with a par value
of P5.00 per share and an offer price of P75.00 per share. The SEC
approved and rendered effective the shelf registration of the Shelf Registered
Shares on October 9, 2020 and issued a permit to sell the First Tranche on
the same date.
The Parent Company offered the First Tranche consisting of: (i) 133,333,400
Subseries “2-J” preferred shares; and (ii) an Oversubscription Option of up to
133,333,267 Subseries “2-J” preferred shares at an offer price of P75.00 per
share. The First Tranche consisting of 266,666,667 Subseries “2-J” Preferred
Shares was issued on October 29, 2020, which was also the date when the
First Tranche was listed on the PSE.
The Parent Company offered a Second Tranche of the Shelf Registered

Shares, consisting of (i) 133,333,400 Subseries “2-K” preferred shares; and
(ii) an Oversubscription Option of up to 133,333,267 Subseries “2-K”
preferred shares at an offer price of P75.00 per share. The Second Tranche
consisting of 183,904,900 Subseries “2-K” was issued and listed at the PSE
on December 10, 2020.
The First and Second Tranche were re-issued and offered from the
Subseries “2-A” preferred shares held in treasury.
Dividend rates are 4.75% and 4.50% per annum for Subseries “2-J” and
Subseries “2-K” preferred shares, respectively.
The Parent Company has 916,194,719, including the 1,333,500 preferred

shares held by a subsidiary (Note 5), and 750,861,219 Series “2” preferred
shares held in treasury as at December 31, 2022 and 2021, respectively.
The Parent Company has 843,238,467 and 1,007,238,467 outstanding

Series “2” preferred shares as at December 31, 2022 and 2021, respectively.
The Parent Company has a total of 251 and 366 preferred shareholders as at
- 135 -
c. Treasury Shares
Treasury shares consist of:
2022 2021 2020

Common P67,093 P67,093 P67,093
Preferred 89,670 77,270 43,053
P156,763 P144,363 P110,146
Common Shares
The Parent Company has 904,752,537 common shares held in treasury as at
December 31, 2022, 2021 and 2020.
1. In the Entry of Judgment received on January 27, 2015, the Supreme Court
entered in the Book of Entries of Judgments the Resolution of
September 4, 2012 in G.R. Nos. 177857-58 and 178193 wherein the
Supreme Court clarified that the 753,848,312 SMC Series “1” preferred
shares of the Coconut Industry Investment Fund (CIIF) companies converted
from the CIIF block of SMC shares, with all the dividend earnings as well as
all increments arising therefrom shall now be the subject matter of the
January 29, 2012 Decision and declared owned by the Government and
used only for the benefit of all coconut farmers and for the development of
the coconut industry. Thus, the fallo of the Decision dated January 24, 2012
was accordingly modified.
On October 5, 2016, the Supreme Court of the Philippines in G.R.

Nos. 177857-58 and 178193 issued a Judgment denying the “Manifestation
and Omnibus Motion” filed by the Presidential Commission on Good
Government to amend the Resolution Promulgated on September 4, 2012 to
Include the “Treasury Shares” Which are Part and Parcel of the 33,133,266
CIIF Block of SMC Shares of 1983 Decreed by the Sandiganbayan, and
Sustained by the Honorable Court, as Owned by the Government. The denial
of the motion is without prejudice to the right of the ROP to file the
appropriate action or proceeding to determine the legal right of the Parent
Company to the 25,450,000 treasury shares of the Parent Company. On
November 29, 2016, the Supreme Court denied with finality the motion for
reconsideration of the ROP. To date, no such further action or proceeding
has been filed by the ROP relating to the 25,450,000 Treasury Shares of the
Parent Company.
2. In 2009, 873,173,353 common shares reverted to treasury were acquired

through the exchange of common shares to preferred shares, on a one-for-
one basis, at P75.00 per share amounting to P65,488.
3. On May 5, 2011, the Parent Company completed the secondary offering of

its common shares. The offer consists of 110,320,000 shares of stock of the
Parent Company consisting of 27,580,000 common shares from the treasury
shares of the Parent Company and 82,740,000 SMC common shares held by
Top Frontier, priced at P110.00 per share.
- 136 -
4. Also on May 5, 2011, US$600 worth of exchangeable bonds of the Parent
Company sold to overseas investors were simultaneously listed at the
Singapore Exchange Securities Trading Limited (SGX-ST). The
exchangeable bonds have a maturity of three years, a coupon of 2% per
annum and a conversion premium of 25% of the offer price. The
exchangeable bonds are exchangeable for common shares to be re-issued
from the treasury shares of the Parent Company. The initial exchange price
for the exchange of the exchangeable bonds into common shares is P137.50
per share.
On December 5, 2011, 765,451 common shares were delivered to the

bondholders of the Parent Company’s exchangeable bonds who exercised
their exchange rights under the terms and conditions of the bonds at an
exchange price of P113.24 per share. Subsequently on December 8, 2011
and February 10 and 16, 2012, the delivered common shares of stock of the
Parent Company were transacted and crossed at the PSE via a special block
sale in relation to the issuance of common shares pursuant to the US$600
exchangeable bonds of the Parent Company.
In 2014, 2013 and 2012, additional 1,077,573, 6,540,959 and 1,410,604

common shares, respectively, were delivered to the bondholders of the
Parent Company’s exchangeable bonds who exercised their exchange rights
under the terms and conditions of the bonds at exchange prices ranging from
P80.44 to P113.24 per share. The additional common shares of stock of the
Parent Company were transacted and crossed at the PSE on various dates
via special block sales.
A total of 9,794,587 common shares were issued to the bondholders of the

Parent Company’s exchangeable bonds as at December 31, 2014.
5. In 2014 and 2013, 68,150 common shares and 3,410,250 common shares,
respectively, under the Parent Company’s Employee Stock Purchase Plan
(ESPP) were cancelled and held in treasury shares.
In 2016, the Parent Company discontinued the ESPP.
d. Capital Securities
Senior Perpetual Capital Securities

On December 5, 2019, the BOD approved the establishment of a medium term
note programme amounting to US$3,000 (the “Programme”), and the issuance of
US$500 perpetual securities out of the Programme. The Programme and the
initial issuance of perpetual securities were both registered at the SGX-ST.
The Programme will be available for a medium term and will allow the Parent
Company to tap the financial market for funding through the issuance of
securities, including but not limited to corporate notes, bonds, and perpetual
securities and other similar instruments at different currencies (other than
Philippine peso). The establishment of the Programme will give the Parent
Company ready access to funding and will give the Parent Company the
flexibility to fund its contemplated investments and projects such as the MRT 7
construction, the Manila International Airport, as well as the refinancing of its
existing obligations and for other general corporate purposes. All instruments
and securities that will be issued out of the Programme shall be exempt
securities and shall not be required to be registered with the PSE.
- 137 -
On July 29, 2020, the Parent Company issued US$500 (P24,595) SPCS at an
issue price of 100%, with a rate of distribution of 5.5% per annum, payable every
January 29 and July 29 of each year. The securities were issued under the
Programme. The net proceeds were used to finance investments and various
projects, to refinance existing obligations and for general corporate purposes.
Redeemable Perpetual Securities

On various dates in June and July 2020, the Parent Company issued a total of
P14,810 RPS (including P4,000 RPS issued to a related party) at an issue price
of 100%, with a rate of distribution of 5% per annum.
On September 29 and October 19, 2020, the Parent Company purchased and
cancelled a total of P10,810 RPS, pursuant to the agreement with the holders of
the said RPS who accepted the offer by the Parent Company to purchase the
RPS. As a result of the purchase, the RPS were cancelled in accordance with
the terms and conditions of the purchase agreement between the parties.
The outstanding P4,000 RPS issued to a related party, with a distribution rate of
5% per annum, is payable every January 1, April 1, July 1 and October 1 of each
year.
On August 4, 2020, the Parent Company issued US$100 (P4,909) RPS to a

related party at an issue price of 100%, with a rate of distribution of 2.5% per
annum, payable every February 5, May 5, August 5 and November 5 of each
year.
The RPS are capital securities with no fixed redemption date. The security
holders have the right to receive distribution payable quarterly in arrears. The
Parent Company has the right to defer this distribution under certain conditions.
The net proceeds of RPS were used by the Parent Company for general
corporate purposes.
The amount of RPS presented in the consolidated financial statements was net
of the RPS issued to related parties amounting to US$100 (P4,909) in 2022 and
2021 and P4,000 in 2022 (Note 5).
e. Unappropriated Retained Earnings
The unappropriated retained earnings of the Parent Company is restricted in the

amount of P67,093 in 2022, 2021 and 2020, representing the cost of common
shares held in treasury.
The unappropriated retained earnings of the Group includes the accumulated

earnings in subsidiaries and equity in net earnings of associates and joint
ventures not available for declaration as dividends until declared by the
respective investees.
f. Appropriated Retained Earnings
The BOD of certain subsidiaries approved additional appropriations amounting to

P23,602, P29,112, and P16,620 in 2022, 2021 and 2020, respectively, to finance
future capital expenditure projects. Reversal of appropriations amounted to
P19,228, P22,637, and P10,359 in 2022, 2021 and 2020, respectively.
- 138 -
g. Non-controlling Interests
Non-controlling interests consist of:
2022 2021
Capital securities of subsidiaries P214,365 P220,464
Share in the net assets of subsidiaries 110,383 104,534
Preferred shares of subsidiaries 29,611 29,611
P354,359 P354,609
The following are the developments relating to the capital securities and
preferred shares of subsidiaries:
Energy
▪ San Miguel Global Power
a) Issuance of SPCS
San Miguel Global Power has the following US-dollar SPCS issued and
listed at the SGX-ST as at December 31, 2022:
Initial
Rate of
Distribution Balance as at
Date of Issuance Per Annum Issued Amount December 31, 2022
April 25 and July 3,
2019 6.50% US$800 P41,050 US$783 P40,187
November 5, 2019 5.95% 500 24,837 492 24,445
January 21, 2020
October 21 and 5.70% 600 30,171 593 29,836
December 15, 2020 7.00% 750 36,141 724 34,884
June 9 and
September 15, 2021 5.45% 750 35,568 684 32,416
US$3,400 P167,767 US$3,276 P161,768
The holders of the SPCS have conferred a right to receive distributions

on a semi-annual basis from their issuance dates at the initial rate of
distribution, subject to the step-up rate. San Miguel Global Power has a
right to defer this distribution under certain conditions.
The SPCS constitute direct, unconditional, unsecured and

unsubordinated obligations of San Miguel Global Power with no fixed
redemption date. The SPCS are redeemable in whole, but not in part, at
the option of San Miguel Global Power, on step-up date or any
distribution payment date thereafter or upon the occurrence of certain
other events at the principal amounts of the SPCS plus any accrued,
unpaid or deferred distribution.
The net proceeds from the issuance of SPCS in 2019 were used for the
redemption of the US$300 USCS in November 2019, repayment of
indebtedness, capital expenditures and investments in power-related
assets, the development of the BESS projects and general corporate
purposes.
- 139 -
The net proceeds in 2020 were used for the funding requirements of the
development and completion of the BESS projects, capital expenditures
and investments in liquefied natural gas facilities and related assets,
refinancing or redemption of existing or expiring commitments whether
debt or perpetual securities and general corporate purposes.
The net proceeds in 2021 were used primarily for investments in the
1,313.1 MW Batangas Combined Cycle Power Plant (BCCPP) and
related assets or for general corporate purposes.
b) Repurchase of SPCS
On October 26, 2022, the BOD of San Miguel Global Power authorized
the conduct of tender offer to the holders of its US-dollar denominated
SPCS listed with the SGX-ST to purchase for cash said SPCS up to a
total aggregate principal amount of US$400. The conduct of the tender
offer commenced on October 26, 2022, and expired on November 4,
2022 (the “Expiration Deadline”). All valid tender offers from security
holders, representing an aggregate of US$124 in principal amount of
SPCS were accepted by San Miguel Global Power. Security holders that
validly tendered their securities at or prior to the Expiration Deadline and
which San Miguel Global Power accepted for purchase from such
security holders were paid the applicable purchase price amounting to
US$81 (P4,703, inclusive of transaction costs of P25) and the relevant
accrued distribution amounting to US$2 (P102) on November 9, 2022.
The difference between the price paid and the net carrying value of the
SPCS repurchased amounting to P1,297, net of transaction costs, was
recognized as part of “Equity reserves” account in the 2022 consolidated
statement of financial position.
The payment for the repurchased SPCS was funded by San Miguel
Global Power’s issuance of RPS to SMC.
c) Redemption of USCS
On February 26, 2021, San Miguel Global Power completed the

redemption of its US$300 (P14,582) USCS issued on August 26, 2015
pursuant to the terms and conditions of the securities. The redemption
price includes the principal amount and any accrued but unpaid
distributions up to (but excluding) the step-up date.
The difference between the settlement amount and the carrying amount
of the USCS amounting to P758 was recognized as part of the “Equity
reserves” account in the consolidated statement of financial position as at
December 31, 2021.
The US$300 USCS were redeemed using in part the proceeds of the
US$350 SPCS issued on December 15, 2020.
- 140 -
Fuel and Oil
▪ Petron
a) Issuance of SPCS
On April 19, 2021, Petron issued US$550 (P26,231) SPCS at an issue

price of 100%, with an initial rate of distribution of 5.95% per annum. The
securities were listed at the SGX-ST on April 20, 2021. The net proceeds
were used for the repayment of its indebtedness and for general
corporate purposes.
b) Redemption of Series 2B Preferred Shares
On November 3, 2021, Petron redeemed its 2,877,680 Series 2B

Preferred Shares issued on November 3, 2014 at a redemption price of
P1,000.00 per share. The redemption was approved by the BOD of
Petron on March 9, 2021.
- 141 -
The details of material share in the net assets of subsidiaries are as follows:

Petron SMFB Petron SMFB
Percentage of non-controlling interests 31.74% 11.24% 31.74% 11.24%
Carrying amount of non-controlling interests P15,964 P65,539 P14,247 P60,725
Net income attributable to non-controlling interests P1,157 P14,868 P1,037 P13,848
Other comprehensive income attributable to non-controlling
interests P741 P206 P185 P899
Dividends paid to non-controlling interests P177 P10,260 P42 P9,498
The following are the audited condensed financial information of subsidiaries with material non-controlling interests:

Petron SMFB Petron SMFB
Current assets P243,287 P132,957 P188,035 P118,330
Noncurrent assets 216,784 206,521 219,385 179,294
Current liabilities (227,555) (90,070) (190,052) (79,262)
Noncurrent liabilities (118,966) (90,335) (106,455) (72,900)
Net Assets P113,550 P159,073 P110,913 P145,462
Sales P857,638 P358,853 P438,057 P309,778
Net income P6,697 P34,665 P6,136 P31,417
Other comprehensive income 1,721 326 207 1,630
Total Comprehensive Income P8,418 P34,991 P6,343 P33,047
Cash flows provided by (used in) operating activities (P22,674) P36,225 (P10,668) P40,769
Cash flows used in investing activities (2,382) (36,155) (9,759) (17,135)
Cash flows provided by (used in) financing activities 22,807 (1,382) 28,098 (19,518)
Effect of exchange rate changes on cash and cash equivalents 3,026 830 1,682 452
Net increase (decrease) in cash and cash equivalents P777 (P482) P9,353 P4,568
- 142 -
25. Sales
Sales consist of:
Note 2022 2021 2020

Goods P1,472,886 P918,118 P708,144
Services 33,705 23,075 17,653
6, 33 P1,506,591 P941,193 P725,797
26. Cost of Sales
Cost of sales consist of:
Note 2022 2021 2020

Inventories 9 P995,346 P514,638 P367,125
Taxes and licenses 106,351 90,305 82,647
Power purchases 34 57,089 20,557 10,337
Depreciation and amortization 28 37,846 33,548 30,857
Fuel and oil 23,212 12,671 8,367
Contracted services 12,794 15,144 15,119
Personnel 29 12,791 10,049 9,453
Freight, trucking and handling 12,367 7,096 9,260
Energy fees 34 10,452 17,762 20,365
Tolling fees 34 6,692 6,816 7,493
Repairs and maintenance 5,328 5,017 5,101
Communications, light and water 4,406 6,257 5,182
Rent 879 596 419
Others 9, 34 2,533 847 2,143
P1,288,086 P741,303 P573,868
27. Selling and Administrative Expenses
Selling and administrative expenses consist of:
2022 2021 2020

Selling P43,469 P37,177 P36,539
Administrative 40,503 40,814 41,333
P83,972 P77,991 P77,872
- 143 -
Selling expenses consist of:
Note 2022 2021 2020

Personnel 29 P12,454 P8,218 P8,727
Freight, trucking and handling 9,204 9,387 8,931
Advertising and promotions 5,885 5,586 5,375
Rent 2,017 1,633 1,878
Taxes and licenses 949 836 838
Supplies 916 740 557
Communications, light and water 717 485 420
Travel, entertainment and
representation 685 440 398
Professional fees 561 540 518
Others 1,497 2,080 1,909
P43,469 P37,177 P36,539
Administrative expenses consist of:
Note 2022 2021 2020

Personnel 29 P19,845 P23,660 P21,094
Taxes and licenses 3,845 3,488 3,569
Travel, entertainment and
representation 3,119 2,605 3,669
Professional fees 2,605 2,451 2,331
Communications, light and water 948 957 802
Supplies 916 934 903
Rent 408 534 1,133
Impairment loss (reversal of
impairment loss) 8, 9, 18 115 (455) 1,103
Research and development 45 38 50
Others 34 2,207 224 216
P40,503 P40,814 P41,333
- 144 -
28. Depreciation and Amortization
Depreciation and amortization are distributed as follows:
Note 2022 2021 2020

Cost of sales:
Property, plant and equipment 13 P22,435 P18,800 P16,512
Other intangible assets 17 7,178 5,963 4,778
Right-of-use assets 14 4,532 5,571 5,596
Biological assets
and others 15, 16, 18 3,701 3,214 3,971
26 37,846 33,548 30,857
Selling and administrative
expenses:
Property, plant and equipment 13 4,743 5,106 5,188
Right-of-use assets 14 1,082 953 1,098
Investment property,
deferred containers
and others 15, 17, 18 5,571 4,441 4,201
27 11,396 10,500 10,487
P49,242 P44,048 P41,344
“Others” include depreciation of investment property and amortization of catalyst in

cost of sales, and depreciation of idle assets and amortization of computer software
and licenses in selling and administrative expenses.
29. Personnel Expenses
Personnel expenses consist of:
Note 2022 2021 2020

Salaries and wages P26,543 P23,026 P22,334
Retirement costs 35 2,028 3,443 1,830
Other employee benefits 16,519 15,458 15,110
P45,090 P41,927 P39,274
Personnel expenses are distributed as follows:
Note 2022 2021 2020

Cost of sales 26 P12,791 P10,049 P9,453
Selling expenses 27 12,454 8,218 8,727
Administrative expenses 27 19,845 23,660 21,094
P45,090 P41,927 P39,274
- 145 -
30. Interest Expense and Other Financing Charges
Interest expense and other financing charges consist of:
Note 2022 2021 2020

Interest expense P54,269 P42,891 P46,730
Other financing charges 21, 35 6,526 6,374 5,305
P60,795 P49,265 P52,035
Amortization of debt issue costs included in “Other financing charges” amounted to

P2,824, P2,630 and P2,282 in 2022, 2021 and 2020, respectively (Note 21).
Interest expense on loans payable, long-term debt and lease liabilities is as follows:
Note 2022 2021 2020

Loans payable 19 P7,718 P3,737 P7,144
Long-term debt 21 41,766 33,097 32,121
Lease liabilities 14, 34 4,785 6,057 7,465
P54,269 P42,891 P46,730
31. Interest Income
Interest income consists of:
Note 2022 2021 2020

Interest from short-term
investments, cash in
banks and others 7, 12, 35 P6,761 P3,291 P5,861
Interest on amounts
owed by related parties 12, 33, 35 347 300 321
P7,108 P3,591 P6,182
32. Other Income (Charges)
Other income (charges) consists of:
Note 2022 2021 2020

Construction revenue (a) 4, 17, 34 P60,461 P29,769 P22,747
Dividend income 12 1,352 2,674 1,344
Miscellaneous gain (b) 5, 43 22 170 7,971
Reversal of
(additional
provision on)
impairment (c) 8, 11, 13, 17, 18 (1,111) (449) 192
Gain (loss) on foreign
exchange - net 39 (21,518) (4,846) 5,444
Loss on derivatives - net 40 (23,601) (9,427) (5,007)
Construction costs (a) 4, 17, 34 (60,461) (29,769) (22,747)
Gain on fair valuation
of investment 5, 11 - - 894
Others - net (d) 4 ,34 2,157 398 (1,558)
(P42,699) (P11,480) P9,280
- 146 -
a. The construction revenue recognized in profit or loss approximates the
construction costs recognized. When it is probable that the total contract costs
will exceed total contract revenue, the expected loss is recognized as an
expense immediately.
Construction costs are recognized by reference to the stage of completion of the

construction activity of toll road, airport, port, water and power concession rights
as at reporting date.
b. Miscellaneous gain consists of settlement received by the Group from third party
contractors on account of damages arising from the latter’s non-fulfillment of
obligations under procurement-related contracts in 2020 (P3,826), income
recognized by the Group from the Tax Credit Certificates (TCC) issued by the
BIR in relation to the claims for refund filed for overpayment of excise taxes with
the BIR for San Mig Light (Note 43) amounting to P162 and P3,382 in 2021 and
2020, respectively, and the gain recognized from the consolidation of Mema and
NCC in 2022 and 2020 amounting to P22 and P763, respectively.
c. Australian Packaging Operations. The Group’s packaging operations in Australia

particularly the wine filling and bottling operations is being challenged by the
ongoing restrictions imposed by China on importations from Australia, including
wines. In 2021, China imposed a punitive tariff on Australian wines which
severely impacted the Australian wine industry. The ongoing trade restriction and
the lingering effect of COVID-19 led to the decline in demand for products of
SMYA compared to forecasted revenues. In 2022, management performed
impairment testing of SMYA’s goodwill. It was determined that the carrying
amount of the cash generating unit is higher than the recoverable value.
Accordingly, an impairment loss of P789 was recognized by SMYA.
Advances for Investments. As discussed in Note 12, SMPI made advances to

future investees that will be applied against future stock subscriptions. In 2022,
management assessed that the carrying amount of advances for investments
may not be recoverable in full. Accordingly, an additional impairment loss
amounting to P241 was recognized in 2022.
La Pacita Biscuit Operations. As discussed in Notes 10 and 17, Magnolia ceased

the operation of La Pacita biscuit on October 17, 2021. Impairment loss was
recognized amounting to P386 in 2021 to reduce the carrying amount of
trademark to recoverable amount.
d. “Others” consist of rent income, commission income, changes in fair value of

financial assets at FVPL, gain on settlement of ARO, insurance claims, casualty
loss, loss on retirement of breeding stocks and expenses of closed facilities.
This also includes SMYPC’s inventory loss from the fire incident at its plastic
plant located in Pandacan, Manila in February 2020 (P312) and the portion of the
Skyway Stage 3 Project of MMSS3 that was also damaged by the fire (P280),
net of proceeds from insurance claims.
- 147 -
33. Related Party Disclosures
The Parent Company, certain subsidiaries and their shareholders, associates and
joint ventures purchase products and services from one another in the normal course
of business. The Parent Company requires approval of the BOD for related party
transactions amounting to at least ten percent (10%) of the total consolidated assets
based on its latest audited financial statements.
Amounts owed by/owed to related parties are collectible/will be settled in cash. An

assessment is undertaken at each financial year by examining the financial position
of the related party and the market in which the related party operates.
The following are the transactions with related parties and the outstanding balances
as at December 31:
Revenue Purchases Amounts Amounts
from from Owed by Owed to
Related Related Related Related
Note Year Parties Parties Parties Parties Terms Conditions
Ultimate Parent 8, 36 2022 P11 P - P - P515 On demand; Unsecured
Company 2021 8 - 3,652 551 non-interest bearing
18 2022 - - 3,037 - To be settled on the first Unsecured;
2021 - - 3,037 - anniversary of commercial no impairment
operations of the Nonoc
Project; interest bearing
Retirement 8, 35 2022 23 - 3,480 - On demand; Unsecured;
Plans 2021 23 - 4,433 - non-interest bearing no impairment
8, 31, 35 2022 246 - 4,127 - On demand; Unsecured;
2021 266 - 4,371 - interest bearing no impairment
Associates 8, 18, 20, 22 2022 1,970 11 888 74 On demand; Unsecured;
2021 2,045 46 1,245 30 non-interest bearing no impairment
8, 10, 12, 18, 19, 21, 31 2022 6 - 12,346 19,875 Less than 1 to 12 years; Unsecured;
2021 9 - 140 18,817 interest bearing secured; no
impairment
Joint Ventures 8,18, 20, 22 2022 63 471 117 17 On demand; Unsecured;
2021 321 1,681 81 177 non-interest bearing no impairment
8 2022 - - 621 - On demand; Unsecured;
2021 - - 621 - interest bearing with impairment
8, 18, 31 2022 59 - 1,135 - Less than 1 to 10.5 years; Unsecured;
2021 24 - 1,170 - interest bearing no impairment
Shareholders 8, 20 2022 184 890 91 2,658 On demand; Unsecured;
in Subsidiaries 2021 79 1,757 123 2,454 non-interest bearing no impairment
Others 8, 20, 22 2022 6,157 4,284 173 13 On demand; Unsecured;
2021 3,178 2,649 837 61 non-interest bearing no impairment
Total 2022 P8,719 P5,656 P26,015 P23,152
Total 2021 P5,953 P6,133 P19,710 P22,090
1. Revenue consists of sale of power, fuel and other products and services to
related parties.
2. Purchases consist of purchase of inventories, power and other products and

services from related parties.
3. Amounts owed by related parties consist of current and noncurrent receivable,

advances to suppliers and deposits and share in expenses.
a) Amounts owed by related parties include interest bearing receivable from the
Ultimate Parent Company related to the remaining balance of the
consideration for the sale of Clariden Holdings, Inc. (Clariden) amounting to
P2,312 and the assignment of certain receivables of the Ultimate Parent
Company amounting to P725.
(i) Amounts owed by the Ultimate Parent Company amounting to P2,312:

On September 27, 2019, SMC and Top Frontier agreed in writing that
the second payment amounting to P1,099, plus 5.75% interest rate per
annum of any portion thereof unpaid, and the final payment amounting to
P1,213, plus 6.00% interest rate per annum of any portion thereof
unpaid, shall be payable and the interest shall be accrued, on the first
anniversary of commercial operations of the Nonoc Project or such
extended date as may be mutually agreed by the parties in writing. As a
result, no accrual of interest was made as at December 31, 2022 and
- 148 -
2021. The Nonoc Project is primarily focused in extracting nickel deposits
in Nonoc Island, Surigao City, Surigao del Norte undertaken by Pacific
Nickel Philippines, Inc., an indirect subsidiary of Clariden. These
amounts are included as part of noncurrent receivables and deposits
under “Other noncurrent assets - net” account in the consolidated
statement of financial position as at December 31, 2022 and 2021
(Note 18).
(ii) Amounts owed by the Ultimate Parent Company amounting to P725:

These amounts are subject to 5.75% interest rate per annum and will
accrue upon commencement of commercial operations of the Nonoc
Project. As a result, no accrual of interest was made as at December 31,
2022 and 2021. These amounts are included as part of noncurrent
receivables and deposit under “Other noncurrent assets - net” account in
the consolidated statements of financial position as at December 31,
2022 and 2021 (Note 18).
b) Amounts owed by related parties include investments in debt securities

under investment agreement with BOC for a total amount of P12,250 as at
December 31, 2022, presented as part of “Prepaid expenses and other
current assets” and “Investments in equity and debt instruments” accounts in
the consolidated statements of financial position (Notes 10 and 12).
c) Amounts owed by related parties include non-interest bearing receivable

from joint ventures included as part of “Trade and other receivables - net”
account in the consolidated statements of financial position. Allowance for
impairment losses pertaining to these receivables amounted to P621 as at
4. Amounts owed to related parties consist of trade payables, professional fees and
leases. Amounts owed to a related party for the lease of office space presented
as part of “Lease liabilities - current portion” amounted to P6 as at December 31,
2022, and as part of “Lease liabilities - current portion” and “Lease liabilities - net
of current portion” amounted to P2 and P1, respectively, as at December 31,
2021. The amount owed to the Ultimate Parent Company pertains to dividends
payable (Note 36).
5. The amounts owed to associates include interest bearing loans payable to BOC
presented as part of “Loans payable” account amounting to P8,172 and P6,994
and “Long-term debt” account amounting to P11,703 and P11,823 in the
consolidated statements of financial position as at December 31, 2022 and 2021,
respectively (Notes 19 and 21).
The amounts owed to associates include syndicated project finance loans

amounting to P10,913 and P10,444 as at December 31, 2022 and 2021,
respectively, which were secured by certain property, plant and equipment and
other intangible assets (Notes 13 and 17).
6. The compensation of key management personnel of the Group, by benefit type,

follows:
Note 2022 2021 2020

Short-term employee
benefits P631 P436 P477
Retirement cost 35 17 45 31
P648 P481 P508
- 149 -
There were no known transactions with parties that fall outside the definition "related
parties" under PAS 24, Related Party Disclosures, but with whom SMC or its related
parties have a relationship that enables the parties to negotiate terms of material
transactions that may not be available from other, more clearly independent parties
on an arm's length basis.
34. Significant Agreements and Lease Commitments
Significant Agreements
▪ Energy
o IPPA Agreements
As a result of the biddings conducted by PSALM for the Appointment of the

IPP Administrator for the capacity of the following power plants, the Group
was declared the winning bidder and act as IPP Administrator through the
following appointed subsidiaries:
Subsidiary Power Plant Location

SPI Sual Coal - Fired Power Station Sual, Pangasinan
(Sual Power Plant) Province
SRHI San Roque Hydroelectric Multi- San Roque,
purpose Power Plant (San Roque Pangasinan
Power Plant) Province
SPPC also became the IPPA for the Ilijan Power Plant, a natural gas-fired
combined cycle power plant located in Ilijan, Batangas, in June 2010 until the
Ilijan Power Plant was turned over to SPPC in June 2022.
The IPPA Agreements are with the conformity of National Power Corporation
(NPC), a government-owned and controlled corporation created by virtue of
RA No. 6395, as amended, whereby NPC confirms, acknowledges, approves
and agrees to the terms of the IPPA Agreements and further confirms that for
so long as it remains the counterparty of the IPP, it will comply with its
obligations and exercise its rights and remedies under the original agreement
with the IPP at the request and instruction of PSALM.
The IPPA Agreements include, among others, the following common salient
rights and obligations:
i. the right and obligation to manage and control the capacity of the power
plant for its own account and at its own cost and risks;
ii. the right to trade, sell or otherwise deal with the capacity (whether
pursuant to the spot market, bilateral contracts with third parties or
otherwise) and contract for or offer related ancillary services, in all cases
for its own account and at its own cost and risks. Such rights shall carry
the rights to receive revenues arising from such activities without
obligation to account therefore to PSALM or any third party;
iii. the right to receive a transfer of the power plant upon termination of the
IPPA Agreement at the end of the cooperation period or in case of buy-
out;
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iv. for SPI and SPPC, the right to receive an assignment of NPC’s interest in
existing short-term bilateral power supply contracts;
v. the obligation to supply and deliver, at its own cost, fuel required by the
IPP and necessary for the Sual Power Plant to generate the electricity
required to be produced by the IPP;
vi. maintain the performance bond in full force and effect with a qualified
bank; and
vii. the obligation to pay PSALM the monthly payments and energy fees in
respect of all electricity generated from the capacity, net of outages.
Relative to the IPPA Agreements, SPI and SRHI have to pay PSALM
monthly payments for 15 years until October 1, 2024 and 18 years until
April 26, 2028, respectively, while SPPC had to pay for 12 years until
June 26, 2022. Energy fees amounted to P10,452, P17,762 and P20,365 in
2022, 2021 and 2020, respectively (Note 26). SPI and SRHI renewed their
performance bonds amounting to US$58 and US$20, which will expire on
November 3, 2023 and January 25, 2024, respectively.
On June 16, 2015, SPPC renewed its performance bond amounting to

US$60 with a validity period of one year. This performance bond was
subsequently drawn by PSALM on September 4, 2015 which is subject to an
ongoing case (Note 43).
The lease liabilities are carried at amortized cost using the US dollar and
Philippine peso discount rates as follows:
US Dollar Philippine Peso

SPI 3.89% 8.16%
SPPC 3.85% 8.05%
SRHI 3.30% 7.90%
The discount determined at the inception of the agreement is amortized over

the period of the IPPA Agreements and recognized as part of “Interest
expense and other financing charges” account in the consolidated
statements of income. Interest expense amounted to P3,462, P4,706 and
P6,045 in 2022, 2021 and 2020, respectively (Note 30).
On April 4, 2022, SPPC entered into a long-term lease agreement with

PSALM for parcels of land with an aggregate area of 242,445.50 square
meters. The leased premises shall be used for the operation, management,
expansion and maintenance of the Ilijan Power Plant. The lease agreement
shall expire after 25 years, commencing on the expiration of the IPPA
Agreement between SPPC and PSALM in June 2022, and is subject to
renewal upon mutual agreement of both parties.
Subsequently, upon the request of SPPC, PSALM issued an Additional

Leased Premises Certification for the parcels of land with an aggregate area
of 24,116 square meters where the Ilijan switchyard is located.
In 2022, SPPC paid in advance the total lease charges amounting to P1,823
covering the entire leased premises and duration of the lease term. This is
presented under “Right-of-use assets” account in the consolidated statement
of financial position as at December 31, 2022 (Note 14).
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In June 2022, the IPPA Agreement between SPPC and PSALM has ended.
Accordingly, the Ilijan Power Plant was reclassified from "Right-of-use
assets" to “Property, plant and equipment” account pursuant to the terms and
conditions of the IPPA Agreement (Notes 13 and 14).
The power plants under the remaining IPPA lease arrangements with
PSALM, presented under “Right-of-use assets - net” account in the
consolidated statements of financial position, amounted to P99,116 and
o Land Lease Agreement with PSALM
MPPCL has an existing lease agreement with PSALM for the lease of the
199,600 square meters land located in Barangay Bani, Masinloc, Zambales.
The lease agreement will expire on April 11, 2028.
The lease liability is amortized using the discount rate over the period of the
agreement. Amortization is recognized as part of “Interest expense and other
financing charges” account in the consolidated statements of income which
amounted to P3 in 2022, 2021 and 2020 (Note 30).
MPPCL’s land under lease arrangement, presented under “Right-of-use

assets - net” account in the consolidated statements of financial position
amounted to P89 as at December 31, 2022 and 2021, (Notes 4 and 14).
o Market Participation Agreements (MPA)
SPI, SRHI, SPPC, LPI, SMELC, MPI, MPPCL, SPESC and UPSI each
entered into separate MPAs with the Philippine Electricity Market Corporation
(PEMC) to satisfy the conditions contained in the Philippine WESM Rules on
WESM membership and to set forth the rights and obligations of a WESM
member.
The relevant parties in each of the MPAs acknowledged that PEMC was
entering into the agreement in its capacity as both governing arm and
autonomous group market operator of the WESM, and that in due time the
market operator functions shall be transferred to an independent market
operator (IMO) pursuant to RA No. 9136, otherwise known as the “Electric
Power Industry Reform Act of 2001” (EPIRA). The parties further agreed that
upon such transfer, all rights, obligations and authority of PEMC under the
MPA shall also pertain to the IMO and that all references to PEMC shall also
refer to such IMO.
Upon the initiative of the DOE and PEMC, IEMOP was incorporated and
assumed the functions and obligations as the market operator of the WESM
commencing on September 26, 2018. Consequently, SPI, SRHI, SPPC, LPI,
SMELC, MPI and MPPCL each entered into separate Supplemental MPAs
with PEMC and IEMOP for the transfer of rights of the market operator to
IEMOP.
Under the WESM Rules, the cost of administering and operating the WESM
shall be recovered through a charge imposed on all WESM members or
transactions, as approved by the ERC. Market fees charged by IEMOP to
SPI, SRHI, SPPC, LPI and MPPCL amounted to P201, P126 and P185 in
2022, 2021 and 2020, respectively (Note 26).
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SMELC, LPI and MPPCL each has a standby letter of credit, to secure the
full and prompt performance of obligations for its transactions as a Direct
Member and trading participant in the WESM which expired in 2021.
Subsequently, LPI and MPPCL has extended its validity until October 25,
2023 and February 16, 2024, respectively.
o PSAs and RSCs
SPI, SPPC, SRHI, MPI, LPI, SMELC, SEDI and MPPCL have offtake
contracts such as PSAs and RSCs with various counterparties to sell
electricity produced by the power plants. Counterparties for PSAs include
DUs, electric cooperatives, third party Retail Electricity Suppliers (RES) and
other entities.
Counterparties for RSCs are contestable customers, or large industrial users

which have been certified contestable by the ERC.
Majority of the consolidated sales of the Group are through long-term offtake
contracts, which may have provisions for take-or-pay, passing on fuel costs,
foreign exchange differentials or certain other fixed costs and minimum
offtake level. Most of the agreements provide for renewals or extensions
subject to mutually agreed terms and conditions by the parties and applicable
rules and regulations. Tariff structures vary depending on the customer and
their needs, with some having structures based on energy-based pricing or
capacity-based pricing.
For capacity-based contracts, the customers are charged with the capacity
fees based on the contracted capacity plus the energy fees for the
associated energy taken during the month. As stipulated in the contracts,
energy-based contracts on the other hand are based on the actual energy
consumption of customers using the basic energy charge and/or
adjustments.
SPI, SPPC, SRHI, MPI, LPI and MPPCL can also purchase power from
WESM or other power generation companies during periods when power
generated from the power plants is not sufficient to meet the customers’
power requirements. Power purchases amounted to P57,089, P20,557 and
P10,337 in 2022, 2021 and 2020, respectively (Note 26).
On March 2, 2021, EERI and MPPCL have executed long-term PSAs with
Meralco for the supply and delivery of 1,200 MW and 600 MW contract
capacity starting in November 2024 and April 2025, respectively. These
PSAs have been filed and are pending approval by the ERC as at
December 31, 2022.
o Ancillary Service Procurement Agreement (ASPA)
On September 8, 2017, MPPCL entered into an ASPA with the National Grid
Corporation of the Philippines (NGCP) for a period of five years commencing
on May 26, 2018 to allocate the entire capacity of its 10 MW Masinloc BESS
as frequency regulating reserve for the NGCP to maintain power quality,
reliability and security of the grid.
On May 6, 2021, SPESC entered into an ASPA with NGCP for a period of
five years commencing on January 26, 2022, allocating its 20 MW
Kabankalan 1 BESS to provide ancillary services to the Visayas grid based
on the Provisional Authority granted by the ERC.
- 153 -
o Coal Supply Agreements
SPI, MPI, LPI and MPPCL have supply agreements with various coal
suppliers for the coal requirements of the power plants.
o Distribution Wheeling Service (DWS) Agreements
As RES, SMELC, LPI and MPPCL each entered into DWS Agreements with
certain DUs for the conveyance of electricity through its distribution systems
in order to supply the power requirements of their respective contestable
customers. The agreements are valid and binding upon execution unless
terminated by either party.
The DWS charges from the DUs are passed on to the contestable customers
who have opted for a single billing arrangement as provided in the ERC
Supplemental Switching Rules.
SMELC’s DWS Agreements were no longer renewed relative to the

expiration of its RES license in September 2021.
o Concession Agreement
San Miguel Global Power entered into a 25-year Concession Agreement with
ALECO on October 29, 2013. It became effective upon confirmation of the
National Electrification Administration on November 7, 2013.
On January 28, 2014, San Miguel Global Power and APEC, entered into an
Assignment Agreement whereby APEC assumed all the rights, interests and
obligations of San Miguel Global Power under the Concession Agreement
effective January 2, 2014.
The Concession Agreement include, among others, the following rights and
obligations:
i) as Concession Fee, APEC shall pay to ALECO: (a) separation pay of

ALECO employees in accordance with the Concession Agreement, and
(b) the amount of P2 every quarter for the upkeep of residual ALECO
(fixed concession fee);
ii) if the net cash flow of APEC is positive within five years or earlier from
the date of signing of the Concession Agreement, 50% of the Net Cash
Flow each month shall be deposited in an escrow account until the
cumulative nominal sum reaches P4,049;
iii) on the 20th anniversary of the Concession Agreement, the concession

period may be extended by mutual agreement between ALECO and
APEC; and
iv) at the end of the concession period, all assets and system, as defined in
the Concession Agreement, shall be returned by APEC to ALECO in
good and usable condition. Additions and improvements to the system
shall likewise be transferred to ALECO.
- 154 -
In this regard, APEC shall provide services within the franchise area and
shall be allowed to collect fees and charges, as approved by the ERC. APEC
formally assumed operations as concessionaire on February 26, 2014.
On September 27, 2022, APEC received from ALECO its notification to

terminate the Concession Agreement. APEC refuted the claims made by
ALECO in a letter dated November 4, 2022.
On November 18, 2022, APEC served its Notice of Termination to ALECO

based on ALECO’s default of its obligations under the Concession
Agreement.
Effective November 21, 2022, the Concession Agreement was terminated.

Notwithstanding the pending dispute, APEC agreed to turn-over the
operations of the distribution business to ALECO and agreed to provide
assistance and cooperation to ALECO during the transition period beginning
on November 21, 2022 and ending on December 21, 2022, without prejudice
to APEC’s remedies against ALECO under the terms of the Concession
Agreement.
o COC
DAMI’s coal property covered by COC No. 126, issued by the DOE, is
located in South Cotabato consisting of two coal blocks with a total area of
2,000 hectares, more or less, and has an In-situ coal resources (measured
plus indicated coal resources) of about 68 million metric tons as at
December 31, 2022.
SEPC has a coal mining property and right over an aggregate area of 7,000
hectares, more or less, composed of seven coal blocks located in South
Cotabato and Sultan Kudarat. As at December 31, 2022, COC No. 134 has
an In-situ coal resources (measured plus indicated coal resources) of about
35 million metric tons.
BERI’s COC No. 138, issued by the DOE, is located in Sarangani and South
Cotabato consisting of eight coal blocks with a total area of 8,000 hectares,
more or less, and has an In-situ coal resources (measured plus indicated
coal resources) of about 23 million metric tons as at December 31, 2022.
Status of Operations
The DOE approved the conversion of the COC for Exploration to COC for
Development and Production of DAMI, SEPC and BERI effective on the
following dates:
Subsidiary COC No. Effective Date Term*

DAMI 126 November 19, 2008 20 years
SEPC 134 February 23, 2009 10 years
BERI 138 May 26, 2009 10 years
*The term is followed by another ten-year extension, and thereafter, renewable for a series of three-
year periods not exceeding 12 years under such terms and conditions as may be agreed upon with
the DOE.
- 155 -
On April 27, 2012 and January 26, 2015, the DOE granted the requests of
DAMI, SEPC and BERI, for a moratorium on suspension of the
implementation of the production timetable as specified under their
respective COC. The request is in connection with a resolution passed by
South Cotabato in 2010 prohibiting open-pit mining activities in the area. The
moratorium was retrospectively effective from the dates of their respective
COC, when these were converted to Development and Production Phase,
and remained valid as approved by the DOE or until the ban on open-pit
mining pursuant to the Environment Code of South Cotabato has been lifted,
whichever comes first.
On December 11, 2019, the DOE approved the ten-year extension and the
initial five-year WPB for COC No. 134 of SEPC.
On January 10, 2020, DAMI and BERI met with the Energy Resources
Development Bureau representatives to discuss the proposed consolidated
five-year WPB and the documentary requirements to effect consolidation of
the two COCs.
On December 6, 2021, the Sangguniang Panlalawigan of South Cotabato

endorsed the implementation of the respective COCs of DAMI, BERI and
SEPC, thereby removing the biggest impediment for implementation of the
three COCs and the implementation of the five-year WPB of SEPC that was
approved by the DOE on December 11, 2019. On May 20, 2022, the DOE
granted the requests for approval of the transfer/assignment of COC No. 138
in favor of DAMI, consolidation of COC No. 126 and 138 into one contract
and its corresponding proposed 5-year consolidated Work Program and
Budget. The consolidation of COC Nos. 126 and 138 took effect upon the
execution of the Amendment to Coal Operating Contract No. 126 and
approval thereof by the DOE on July 22, 2022.
In December 2022, SPI sold its investments in DAMI, BERI and SEPC and
consequently derecognized the deferred exploration and development costs
of these entities effective December 21, 2022 (Notes 4, 5 and 18).
▪ Fuel and Oil
o Supply Agreements
Petron has assigned all its rights and obligations to PSTPL (as Assignee) to
have a term contract to purchase Petron’s crude oil requirements from Saudi
Arabian Oil Company (Saudi Aramco), based on the latter’s standard Far
East selling prices and Kuwait Petroleum Corporation (KPC) to purchase
Kuwait Export Crude Oil (KEC) and/or Khafji Crude Oil (Khafji) at pricing
based on latter’s standard KEC/Khafji prices. The contract with Saudi
Aramco is from November 1, 2013 to December 31, 2014 with automatic
annual extension thereafter unless terminated at the option of either party
upon at least 60 days written notice, while the contract with KPC is from
July 1, 2022 to June 30, 2023.
PMRMB currently has a long-term supply contract of Tapis crude oil and
Terengganu condensate for its Port Dickson Refinery from ExxonMobil
Exploration and Production Malaysia Inc. (EMEPMI) and Low Sulphur Waxy
Residue Sale/Purchase Agreement with Exxon Trading Asia Pacific, a
division of ExxonMobil Asia Pacific Pte. Ltd. On the average, around 52% of
crude and condensate volume processed in 2022 are from EMEPMI with
balance of around 48% from spot purchases.
- 156 -
Outstanding liabilities of the Group for such purchases are shown as part of
“Accounts payable and accrued expenses” account in the consolidated
statements of financial position as at December 31, 2022 and 2021
(Note 20).
o Lease Agreement with Philippine National Oil Company (PNOC)
On September 30, 2009, Petron through NVRC entered into a 30-year lease
with PNOC without rent-free period, covering a property which it shall use as
site for its refinery, commencing on January 1, 2010 and ending on
December 31, 2039. Based on the latest re-appraisal made, the annual
rental shall be P191, starting 2017, payable on the 15th day of January each
year without the necessity of demand. This non-cancellable lease is subject
to renewal options and annual escalation clauses of 3% per annum to be
applied starting 2018 until the next re-appraisal is conducted. The leased
premises shall be reappraised every fifth year in which the new rental rate
shall be determined equivalent to 5% of the reappraised value, and still
subject to annual escalation clause of 3% for the four years following the
re-appraisal. Prior to this agreement, Petron had an outstanding lease
agreement on the same property from PNOC. Also, as at
December 31, 2022 and 2021, Petron leases other parcels of land from
PNOC for its bulk plants and service stations (Note 43).
▪ Infrastructure
o Airport Concession Agreement
i. Boracay Airport
The ROP awarded TADHC the Airport Project through a Notice of Award
(NOA) issued on May 15, 2009. The Airport Project is proposed to be
implemented through a Contract-Add-Operate and Transfer
Arrangement, a variant of the Build-Operate-Transfer (BOT) contractual
arrangement under RA No. 6957, as amended by RA No. 7718,
otherwise known as the BOT Law, and its Revised Implementing Rules
and Regulations.
On June 22, 2009, TADHC entered into a Concession Agreement with

the ROP, through the Department of Transportation (DOTr) and Civil
Aviation Authority of the Philippines. Based on the Concession
Agreement, TADHC has been granted with the concession of the Airport
Project which includes the development and upgrade of the Caticlan
Airport (marketed and promoted as Boracay Airport) as an international
airport. Subject to existing law, the Concession Agreement also grants to
TADHC the franchise to operate and maintain the Boracay Airport up to
the end of the concession period, which is for a period of 25 years (as
may be renewed or extended for another 25 years upon written
agreement of the parties), and to collect the fees, rentals and other
charges as may be determined in accordance with the Concession
Agreement.
- 157 -
The salient features of the Concession Agreement are presented below:
1. The operations and management of the Boracay Airport shall be

transferred to TADHC, provided that the ROP shall retain the
operations and control of air traffic services, national security matters,
immigration, customs and other governmental functions and the
regulatory powers insofar as aviation security, standards and
regulations are concerned at the Boracay Airport.
2. As concessionaire, TADHC shall have full responsibility in all aspect

of the operation and maintenance of the Boracay Airport and shall
collect the regulated and other fees generated from it and from the
end users. To guarantee faithful performance of its obligation in
respect to the operation and maintenance of the Boracay Airport,
TADHC shall post in favor of the ROP, an Operations and
Maintenance Performance Security (OMPS) amounting to P25, which
must be valid for the entire concession period of 25 years. As at
December 31, 2021, TADHC has yet to pay the OMPS as the Airport
Project has not yet entered the In-Service Date.
3. Immediately upon receiving the Notice to Commence Implementation

(NCI) and provided all conditions precedent in the Concession
Agreement are fulfilled or waived, TADHC shall start all the activities
necessary to upgrade and rehabilitate the Boracay Airport into a
larger and more technologically advanced aviation facility to allow
international airport operations.
4. TADHC shall finance the cost of the Airport Project, while maintaining
a debt-to-equity ratio of 70:30, with debt pertaining to a loan with
BOC. TADHC’s estimated capital commitment to develop the Airport
Project amounts to P2,500, including possible advances to the ROP
for the right of way up to the amount of P466. Such ratio is complied
with as TADHC fully issued its authorized capital stock as a leverage
to the loan obtained (Notes 21 and 33).
5. TADHC shall also post a P250 Work Performance Security in favor of

the ROP as guarantee for faithful performance by TADHC of the
works required to be carried out in connection with the construction
and completion of civil, structural, sanitary, mechanical, electrical and
architectural infrastructure. This performance security shall be
partially released by the ROP from time to time to the extent of the
percentage-of-completion of the Airport Project. TADHC has paid P1
and P2 premiums in 2022 and 2021, respectively, for the Work
Performance Security and is included as part of “Airport concession
rights” under “Other intangible assets” account in the consolidated
statements of financial position (Note 17). The unamortized portion is
included as part of “Prepaid expenses and other current assets”
account in the consolidated statements of financial position
(Note 10).
- 158 -
6. In consideration for allowing TADHC to operate and manage the
Boracay Airport, TADHC shall pay the ROP P8 annually. The first
payment shall be made immediately upon the turnover by the ROP of
the operations and management of the Boracay Airport to TADHC,
and every year thereafter until the end of the concession period. The
operations and management of the Boracay Airport was turned over
to TADHC on October 16, 2010.
After fulfillment of all contractual and legal requirements, the Concession

Agreement became effective on December 7, 2009. The NCI issued to
TADHC by the DOTr was accepted by TADHC on December 18, 2009.
In accordance with the license granted by the ROP, as expressly

indicated in the Concession Agreement, TADHC presently operates the
Boracay Airport. TADHC completed the rehabilitation of the existing
airport terminal building and facilities on June 25, 2011. Construction
work for the extension of runway has been completed in 2016. The
construction of the new terminal building is ongoing and expected to be
completed in 2023.
ii. Manila International Airport
On August 14, 2019, the ROP, through the DOTr, issued a NOA to
SMHC, awarding the Manila International Airport Project. In accordance
with the NOA, SMAI was registered by SMHC as the concessionaire.
The Manila International Airport Project shall create a gateway for

international and domestic travel, with the necessary ancillary facilities to
support the creation of a new airport city outside Metro Manila to
decongest the existing road networks and provide an alternative higher
capacity airport facility.
A. Concession Agreement
On September 18, 2019, SMAI entered into a Concession Agreement

with the ROP, through the DOTr, for the right to finance, design,
construct, supply, complete, test, commission and eventually operate
and maintain the Manila International Project for a period of 50 years
from the issuance of the Certificate of Substantial Completion for the
first phase.
The salient features of the Concession Agreement are presented

below:
1. The Manila International Airport shall consist of airfield facilities,

passenger and cargo terminal buildings, airport support facilities
and an airport toll road facility which will connect the Manila
International Airport to the North Luzon Expressway and will be
implemented in three phases, with increasing capacity for each
phase completed.
2. The implementation of the first phase shall be completed within a

period of five years from the date of commencement of
construction, with the remaining phases subject to the timely
submission and approval of the required documentation for each
phase.
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3. SMAI shall turnover 100 hectares of land to the ROP as
government center land area and execute the necessary
documents to transfer full ownership in favor of the ROP.
4. SMAI shall be responsible for the acquisition of right-of-way and

possession of sufficient title to the facilities of the site of the
Manila International Airport and the removal or abatement of all
liens, encumbrances and hazardous substances within the
Manila International Airport’s vicinities as the case may be.
5. SMAI shall provide proper maintenance of the Manila

International Airport’s facilities and ensure that all airport facilities
and airport toll road are in the condition required upon turnover to
the ROP at the end of the concession period.
6. All revenues derived from the operations, maintenance and

management of the Manila International Airport shall accrue to
SMAI, including the lease or sublease of all business or
commercial ventures and activities consistent with the Manila
International Airport’s operations.
B. Legislative Franchise
On December 20, 2020, RA No. 11506 lapsed into law, granting

SMAI a franchise to construct, develop, establish, operate and
maintain a domestic and international airport in the municipality of
Bulakan and to construct, develop, establish, operate and maintain
an adjacent Airport City (the Manila International Airport Project). The
franchise is for a period of 50 years. RA No. 11506 became effective
on January 15, 2021 and enhances the earlier Concession
Agreement.
The salient features of RA No. 11506 are as follows:
1. SMAI shall be exempt from any and all direct and indirect taxes of
any kind, nature and description, including but not limited to
income taxes, value-added taxes, excise taxes, customs duties
and tariffs, business taxes, among others during a ten-year
construction period beginning from the effectivity of RA
No.11506. After the construction period, SMAI shall be exempt
from income and real estate taxes until SMAI has fully recovered
the costs incurred in the construction of the Manila International
Airport Project.
2. After SMAI has fully recovered the costs, SMAI shall be entitled
to generate income from its operations equivalent to an internal
rate of return of 12% per annum. Any amount in excess shall be
remitted to the national government.
3. SMAI is also required to offer at least 20% of its outstanding

capital stock to any securities exchange in the Philippines for
public participation within 5 years upon full recovery of costs
incurred in the construction of the Manila International Airport
Project.
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o MRT 7 Concession Agreement
The ROP awarded ULC BVI the financing, design, construction, supply,
completion, testing, commissioning and operation and maintenance of the
MRT 7 Project through a NOA issued on January 31, 2008. The MRT 7
Project is an integrated transportation system, under a Build-Gradual
Transfer-Operate, Maintain and Manage scheme, which is a modified Build-
Transfer-Operate arrangement under RA No. 6957, as amended by
RA No. 7718, otherwise known as the BOT Law, and its Revised
Implementing Rules and Regulations, to address the transportation needs of
passengers and to alleviate traffic in Metro Manila, particularly traffic going to
and coming from North Luzon.
On June 18, 2008, ULC BVI entered into the MRT 7 Agreement or
Concession Agreement with the ROP through the DOTr, for a 25-year
concession period, subject to extensions as may be provided for under the
Concession Agreement and by law. Based on the Concession Agreement,
ULC BVI has been granted the right to finance, design, test, commission,
construct and operate and maintain the MRT 7 Project, which consists of a
highway, Intermodal Transport Terminal and Metro Rail Transit System
including the depot and rolling stock.
The ROP through the DOTr granted ULC BVI the following rights under the
Concession Agreement:
▪ To finance, design, construct, supply, complete and commission the

MRT 7 Project;
▪ To designate a Facility Operator and/or a Maintenance Provider to

Operate and Maintain the MRT 7 Project;
▪ To receive the Amortization Payments and the Revenue Share as

specified in the Concession Agreement;
▪ To charge and collect the Agreed Fares or the Actual Fares and/or to
receive the Fare Differential, if any;
▪ Development Rights as specified in the Concession Agreement; and
▪ To do any and all acts which are proper, necessary or incidental to the
exercise of any of the above rights and the performance of its obligations
under the Concession Agreement.
The salient features of the Concession Agreement are presented below:
1. The MRT 7 Project cost shall be financed by ULC BVI through debt and
equity at a ratio of approximately 75:25 and in accordance with existing
BSP regulations on foreign financing components, if any. Based on the
Concession Agreement, ULC BVI’s estimated capital commitment to
develop the MRT 7 Project amounts to US$1,236, adjusted to 2008
prices at US$1,540 per National Economic and Development Authority
Investment Coordination Committee approval on July 14, 2014.
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2. ULC BVI shall post a Performance Security for Construction and
Operations and Maintenance in favor of the ROP as guarantee for faithful
performance by ULC BVI to develop the MRT 7 Project. This
performance security for operations and maintenance shall be reduced
every year of the concession period to the amounts as specified in the
3. All rail-based revenues above 11.90% internal rate of return of ULC BVI
for the MRT 7 Project over the cooperation period, which means the
period covering the construction and concession period, shall be shared
equally by ULC BVI and the ROP at the end of the concession period.
All rail-based revenues above 14% internal rate of return shall wholly
accrue to the ROP.
4. As payment for the gradual transfer of the ownership of the assets of the
MRT 7 Project, the ROP shall pay ULC BVI a fixed amortization payment
on a semi-annual basis in accordance with the schedule of payment
described in the Concession Agreement. The ROP’s amortization
payment to ULC BVI shall start when the MRT 7 Project is substantially
completed.
5. For every semi-annual full payment made by the ROP through the DOTr,
and actually received by ULC BVI, the latter shall issue a Certificate of
Transfer of Ownership, in favor of the former representing a pro-indiviso
interest in the assets of the MRT 7 Project in proportion to the
amortization payment made over the total amortization payment to be
made during the concession period. After the end of the concession
period but provided that all the amortization payment and other amounts
due to ULC BVI under the Concession Agreement shall have been fully
paid, settled and otherwise received by ULC BVI, full ownership of the
assets of the MRT 7 Project shall be transferred to it, free from all liens
and encumbrances.
6. The amortization payments shall be adjusted pursuant to the escalation

formula based on parametric formula for price adjustment reflecting
changes in the prices of labor, materials and equipment necessary in the
implementation/completion of the MRT 7 Project both local and at the
country where the equipment/components shall be sourced.
7. Net passenger revenue shall be shared by the ROP and ULC BVI on a
30:70 basis.
8. The ROP grants ULC BVI the exclusive and irrevocable commercial
Development Rights (including the right to lease or sublease or assign
interests in, and to collect and receive any and all income from, but not
limited to, advertising, installation of cables, telephone lines, fiber optics
or water mains, water lines and other business or commercial ventures or
activities over all areas and aspects of the MRT 7 Project with
commercial development potentials) from the effectivity date of the
Concession Agreement until the end of the concession period, which can
be extended for another 25 years, subject to the ROP’s approval. In
consideration of the Development Rights granted, ULC BVI or its
assignee shall pay the ROP 20% of the net income before tax actually
realized from the exercise of the Development Rights.
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9. Upon the expiration of the concession period and payment in full of the
amortization payments and the other obligations of the ROP through the
DOTr, the Concession Agreement shall be deemed terminated, and all
the rights and obligations thereunder shall correspondingly cease to
exist, other than all rights and obligations accrued prior to the date of
such expiration including, without limitation, the obligations of ROP
through the DOTr to make termination payments in accordance with the
Concession Agreement and following expiration of the concession
period, the Development Rights of ULC BVI pursuant to the Concession
Agreement shall survive.
10. If ULC BVI and ROP through the DOTr are not able to agree on the
solution to be adopted in an appropriate Variation Order within the period
specified in the Concession Agreement, then ULC BVI may proceed to
terminate the Concession Agreement. Also, if either of ULC BVI and
ROP through the DOTr intends to terminate the Concession Agreement,
by mutual agreement under the Concession Agreement, it shall give a
notice of intention to terminate to the other. Following receipt of the Intent
Notice, the parties shall meet for a period of up to eight weeks and
endeavor to agree on the terms, conditions arrangements, and the
necessary payments for such termination. If at the expiration of the said
period, ULC BVI and ROP through the DOTr are unable to agree on and
execute an agreement for the mutual termination of the Concession
Agreement, the same shall remain valid and in effect.
On July 23, 2014, the ROP through the DOTr confirmed their obligations
under the MRT 7 Agreement dated June 18, 2008 through the Performance
Undertaking issued by the Department of Finance, which was received by
ULC BVI on August 19, 2014. The Performance Undertaking is a recognition
of the obligations of the ROP through the DOTr under the Concession
Agreement, particularly the remittance of semi-annual amortization payment
in favor of ULC BVI. The issuance of the Performance Undertaking triggers
the obligation of ULC BVI to achieve financial closure within 18 months from
the date of the receipt of the Performance Undertaking. Within the
aforementioned period, ULC BVI achieved Financial Closure, as defined in
the MRT 7 Agreement. There were no changes in the terms of the
Concession Agreement in 2022.
On April 20, 2016, ULC BVI through the Parent Company, led the ground
breaking ceremony for the MRT 7 Project.
Pursuant to Section 19.1 of the Concession Agreement, on September 30,

2016, ULC BVI sent a request letter to the ROP through the DOTr to secure
the latter’s prior approval in relation to the intention of ULC BVI to assign all
its rights and obligations under the Concession Agreement to SMC MRT 7,
the designated special purpose company for the MRT 7 Project. The
assignment of the rights and obligations from ULC BVI to SMC MRT 7 will be
achieved through execution of Accession Agreement. Based on the
Concession Agreement, ULC BVI may assign its rights, title, interests or
obligations therein, provided that the following conditions are met:
▪ The assignment will not in any way diminish ULC BVI’s principal liability
under the Concession Agreement; and
▪ ULC BVI secures from ROP, through the DOTr, its prior approval, which
shall not be unreasonably withheld.
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In addition, the letter dated September 30, 2016 from ULC BVI also
requested that upon submission by SMC MRT 7 of the lenders’ recognition
that the Financing Agreements for the MRT 7 Project is for its benefit, the
DOTr shall cause the amendment of the Performance Undertaking dated
July 23, 2014 by changing the addressee and beneficiary thereof from ULC
BVI to SMC MRT 7.
On December 12, 2016, the ROP through the DOTr gave its consent to the
assignment of all the rights and obligations of ULC BVI under the Concession
Agreement to SMC MRT 7.
Following the DOTr’s approval, SMC MRT 7 and ULC BVI carried out the
Accession Agreement on January 12, 2017.
o Toll Road Concession Agreements
i. SLEX
SMC SLEX. On February 1, 2006, SMC SLEX executed the

Supplemental Toll Operation Agreement (STOA) with MATES, Philippine
National Construction Corporation (PNCC) and the ROP through the
TRB. The STOA authorizes SMC SLEX by virtue of a joint venture to
carry out the rehabilitation, construction and expansion of the SLEX,
comprising of: Toll Road (TR)1 (Alabang viaduct), TR2 (Filinvest to
Calamba, Laguna), TR3 (Calamba, Laguna to Sto. Tomas, Batangas)
and TR4 (Sto. Tomas, Batangas to Lucena City). The concession
granted shall expire 30 years from February 1, 2006.
On December 14, 2010, the TRB issued the Toll Operations Certificate
for Phase 1 of the SLEX i.e., TR1, TR2 and TR3, and approved the
implementation of the initial toll rate starting April 1, 2011.
In 2012, SMC SLEX received a letter from the Department of Finance

informing SMC SLEX of the conveyance by PNCC to the ROP of its
shares of stock in SMC SLEX, by way of deed of assignment. Moreover,
SMC SLEX also received the Declarations of Trust signed by the
individual nominees of PNCC, in favor of the ROP, in which each
nominee affirmed their holding of single, qualifying share in SMC SLEX in
favor of the ROP.
On July 21, 2015, SMC SLEX entered into a MOA with Ayala Corporation
(AC), on the inter-operability of the SLEX and Muntinlupa-Cavite
Expressway (MCX) (formerly known as the Daang Hari-SLEX Connector
Road). AC is the concession holder of MCX while MCX Tollway, Inc. is
the facility operator of MCX.
The MOA on inter-operability provides the framework that will govern the
interface and integration of the technical operations and toll operation
systems between the MCX and the SLEX, to ensure seamless travel
access into MCX and SLEX for road users. MCX opened and operated
as a toll expressway on July 24, 2015.
In 2019, SMC SLEX commenced the construction of TR4 and is ongoing

as at December 31, 2022.
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SLEXTR5. On June 3, 2022, a STOA was executed by and among the
ROP as the Grantor, acting by and through the TRB, PNCC, SLEXTR5
as the Investor, and MATES as the Operator, wherein the SLEXTR5 was
granted the exclusive right, privilege, responsibility, and obligation to
design and construct the TR5 Project, and to finance the same, while
MATES was granted the exclusive right, privilege, responsibility, and
obligation to operate and maintain the TR5 Project.
The TR5 Project is a 420-kilometer extension of SLEX from Lucena City,

Quezon to Matnog, Sorsogon.
The TR5 Project shall be owned by the ROP, without prejudice to the
rights and the entitlements of SLEXTR5 and MATES under the STOA.
The legal transfer of ownership of the TR5 Project to the ROP shall be
deemed to occur automatically on a continuous basis in accordance with
the progress of the construction thereof.
The franchise period for the TR5 Project shall be 30 consecutive years
commencing from the issuance of the Toll Operation Certificate or the
Toll Operation Permit for the entire TR5 Project to SLEXTR5 and/or
MATES.
ii. NAIA Expressway
On July 8, 2013, SMC NAIAX entered into a Concession Agreement with

the ROP, through the Department of Public Works and Highways
(DPWH), wherein SMC NAIAX was granted the right to finance, design,
construct, and operate and maintain the NAIA Expressway Project. The
NAIA Expressway Project links the three NAIA terminals to the Skyway,
the Manila-Cavite Toll Expressway and the Entertainment City of the
Philippine Amusement and Gaming Corporation.
On September 22, 2016, SMC NAIAX started commercial operations of

NAIA Expressway upon receipt of the Toll Operations Permit from the
TRB. The Toll Operations Permit for Phase II A and B was issued on
September 9, 2016 and December 19, 2016, respectively.
At the end of the concession period, SMC NAIAX shall turnover the NAIA
Expressway to the DPWH in the condition required for turnover as
described in the Minimum Performance Standards Specifications of the
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iii. Skyway
On June 10, 1994, PNCC, the franchise holder for the construction,
operations and maintenance of the Metro Manila Expressway, including
any and all extensions, linkages or stretches thereof, such as the
proposed Skyway, and PT Citra Lamtoro Gung Persada (Citra), as joint
proponents, submitted to the ROP through the TRB, the Joint Investment
Proposal covering not only the proposed Skyway but also the planned
Metro Manila Tollways. The Joint Investment Proposal embodied, among
others, that Citra in cooperation with PNCC committed itself to finance,
design and construct the Skyway in three stages, consisting of: (a) South
Metro Manila Skyway (SMMS) as Stages 1 and 2; (b) North Metro Manila
Skyway and the Central Metro Manila Skyway as Stage 3; and (c) Metro
Manila Tollways as Stage 4. The Joint Investment Proposal was
approved by the TRB on November 27, 1995.
o Skyway Stages 1 and 2
The STOA for SMMS was executed on November 27, 1995 by and
among SMC Skyway, PNCC and the ROP acting through the TRB.
Under the STOA, the design and the construction of the SMMS and
the financing thereof, shall be the primary and exclusive privilege,
responsibility and obligation of SMC Skyway as investor. On the
other hand, the operations and maintenance of the SMMS shall be
the primary and exclusive privilege, responsibility and obligation of
PNCC, through its wholly-owned subsidiary, the PNCC Skyway
Corporation (PSC).
On July 18, 2007, the STOA was amended, to cover among others,
the implementation of Stage 2 of the SMMS (Stage 2); the functional
and financial integration of Stage 1 of the SMMS (Stage 1) and
Stage 2 upon the completion of the construction of Stage 2; and the
grant of right to SMC Skyway to nominate to the TRB a qualified
party to perform the operations and maintenance of the SMMS to
replace PSC. SMC Skyway, PNCC and PSC then entered into a
MOA for the successful and seamless turnover of the operations and
maintenance responsibilities for the SMMS from PSC to SOMCO.
The SMMS shall be owned by the ROP, without prejudice to the

rights and entitlement of SMC Skyway and SOMCO under the STOA.
The legal transfer of ownership of the SMMS to the ROP shall be
deemed to occur automatically on a continuous basis in accordance
with the progress of construction. The toll revenues are shared or
distributed among SMC Skyway, SOMCO and PNCC for the
operations and maintenance of the SMMS.
The 30-year franchise period for the Integrated Stage 1 and Stage 2
commenced on April 25, 2011.
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Under the STOA, SMC Skyway may file an application to adjust the
toll rates which shall be of two kinds, namely periodic and provisional
adjustments. Periodic adjustments for the Integrated Stage 1 and
Stage 2 may be applied for every year. SMC Skyway may file an
application for provisional adjustment upon the occurrence of a force
majeure event or significant currency devaluation. A currency
devaluation shall be deemed significant if it results in a depreciation
of the value of the Philippine peso relative to the US dollar by at least
five percent. The applicable exchange rate shall be the exchange
rate between the currencies in effect as at the date of approval of the
prevailing preceding toll rate.
o Skyway Stage 3
The Stage 3 STOA was executed on July 8, 2013 by and among the
ROP as the Grantor, acting by and through the TRB, PNCC, MMSS3
as the Investor, and Central Metro Manila Skyway Corporation
(CMMSC) as the Operator, wherein MMSS3 was granted the primary
and exclusive privilege, responsibility, and obligation to design and
construct the Skyway Stage 3 Project, and to finance the same, while
CMMSC was granted the primary and exclusive privilege,
responsibility, and obligation to operate and maintain the Skyway
Stage 3 Project.
The Skyway Stage 3 Project is an elevated roadway with the entire

length of approximately 18.83 km from Buendia Avenue in Makati to
Balintawak, Quezon City and will connect to the existing Skyway
Stage 1 and 2. This is envisioned to inter-connect the northern and
southern areas of Metro Manila to help decongest traffic in Metro
Manila and stimulate the growth of trade and industry in Luzon,
outside of Metro Manila.
The Skyway Stage 3 Project shall be owned by the ROP, without

prejudice to the rights and the entitlements of MMSS3 and CMMSC
under the Stage 3 STOA. The legal transfer of ownership of the
Skyway Stage 3 Project to the ROP shall be deemed to occur
automatically on a continuous basis in accordance with the progress
of the construction thereof.
The franchise period for the Skyway Stage 3 Project is

30 consecutive years commencing from the issuance of the Toll
Operation Certificate for the entire Skyway Stage 3 Project to
MMSS3 and/or CMMSC.
MMSS3 and CMMSC shall enter into a revenue sharing agreement

to set forth the terms and conditions of their sharing of the toll
revenues from the Skyway Stage 3 Project.
On December 29, 2020, the Skyway Stage 3 Project was partially

opened to the public. It was formally inaugurated and opened to
motorists on January 14, 2021, free of toll fee. On July 1, 2021,
MMSS3 received the Toll Operation Permit and started its toll
operation.
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o Skyway Stage 4
On July 14, 2014, the Stage 4 STOA was executed by and among
the ROP as the Grantor, acting through the TRB and PNCC, MMSS4
as the Investor, and Metro O&M Corporation (MOMCO) as the
Operator. MMSS4 was granted the primary and exclusive privilege,
responsibility, and obligation to finance the design and construction
of Skyway Stage 4 Project, while MOMCO was granted the primary
and exclusive privilege, responsibility and obligation to operate and
maintain the same.
The Skyway Stage 4 Project shall be owned by the ROP, without

prejudice to the rights and the entitlements of MMSS4 and MOMCO
under the Stage 4 STOA. The legal transfer of ownership shall be
deemed to occur automatically on a continuous basis in accordance
with the progress of the construction thereof. The 30-year concession
period shall commence from the date of issuance of the Toll
Operation Certificate by the TRB to MMSS4 and/or MOMCO.
As at December 31, 2022, the Skyway Stage 4 Project is in the

inception of its construction stage.
iv. TPLEX
SMCTC entered into a Concession Agreement with the ROP through the
DPWH and the TRB to finance, design, construct, operate and maintain
and impose and collect tolls from the users of the TPLEX Project. The
TPLEX Project is a toll expressway from La Paz, Tarlac to Rosario, La
Union which is approximately 89.21 kilometers and consists of four-lane
expressway with nine toll plazas from start to end.
The TPLEX Project shall be owned by the ROP without prejudice to the
rights and entitlement of SMCTC. The legal transfer of ownership of the
TPLEX Project shall be deemed to occur automatically on a continuous
basis in accordance with the progress of construction and upon issuance
of the Certificate of Substantial Completion for each segment of the
TPLEX Project.
The toll revenue collected from the operation of the TPLEX Project is the
property of SMCTC. SMCTC shall have the right to assign or to enter into
such agreements with regard to the toll revenue and its collection,
custody, security and safekeeping.
The concession period shall be for a term of 35 years starting from the
effective date of the Concession Agreement and may be extended.
On October 31, 2013, SMCTC opened the first section of the TPLEX
Project from Tarlac to Gerona. The Section 1B from Gerona to Rosales
was opened to motorists on December 23, 2013. The 30.31-km stretch
from Gerona to Carmen was fully operational on April 16, 2014. The
14.91-km stretch from Carmen (Tomana) to Urdaneta was fully
operational starting February 17, 2015.
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On July 28, 2016, the Segment 7A (Urdaneta to Binalonan) was opened.
Segment 7B (Binalonan to Pozorrubio) was opened to motorists on
December 7, 2017, while Segment 8 (Pozorrubio to Rosario), which is
the final phase of the TPLEX Project, was completed and became
operational on July 15, 2020.
v. STAR
On June 18, 1998, SIDC and the ROP, individually and collectively
through the DPWH and the TRB, entered into a Toll Concession
Agreement covering the STAR Project. The STAR Project consists of two
stages as follows:
Stage Project Description

Stage I Operations and maintenance of the 22.16-km toll
road from Sto. Tomas, Batangas to Lipa City,
Batangas
Stage II Finance, design, construction, operations and
(Phases I and II) maintenance of the 19.74-km toll road from Lipa
City, Batangas to Batangas City, Batangas
Under the Toll Concession Agreement, the STAR Project and any stage
or phase or ancillary facilities thereof of a fixed and permanent nature
shall be owned by the ROP, without prejudice to the rights and
entitlements of SIDC. The legal transfer of ownership of the STAR
Project and/or any stage, phase or ancillary thereof shall be deemed to
occur automatically on a continuous basis in accordance with the
progress of the construction and upon the ROP’s issuance of the
Certificate of Substantial Completion. The right of way shall be titled in
the ROP’s name regardless of the construction.
In December 2006, the Toll Concession Agreement was amended to

extend the original concession period from 30 years beginning
January 1, 2000 to 36 years and shall be valid until December 31, 2035.
The TRB issued the Toll Operations Certificate for Stage II Phase II on
December 13, 2016.
vi. PAREX
On November 29, 2019, the PNCC and SMHC, as joint proponents,

submitted to the ROP through the TRB, the Joint Investment Proposal
covering the PAREX Project. The said proposal embodied, among
others, that SMHC in cooperation with PNCC committed itself to finance,
design and construct the PAREX Project in three segments. The Joint
Investment Proposal was approved by the TRB on March 4, 2020 and
the STOA was executed on September 21, 2021 by and among PREC,
SOMCO, PNCC and the ROP acting through the TRB. Under the STOA,
the design and the construction of the PAREX Project and the financing
thereof, shall be the primary and exclusive privilege, responsibility and
obligation of PREC as investor. Whereas, the operations and
maintenance of the PAREX Project shall be the primary and exclusive
privilege, responsibility and obligation of SOMCO as operator.
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The PAREX Project shall consist of three segments:
Segment I - Radial Road No. 10 to Skyway Stage 3 to Plaza Azul,

approximately 5.740 km
Segment II - Skyway Stage 3 to San Juan River Circumferential
Road No. 5 (C-5), approximately 7.325 km
Segment III - C-5 to Southeast Metro Manila Expressway or (C-6),
approximately 6.300 km
The PAREX shall be owned by the ROP, without prejudice to the rights
and entitlement of PREC and SOMCO under the STOA. The legal
transfer of ownership of the PAREX to the ROP shall be deemed to occur
automatically on a continuous basis in accordance with the progress of
construction. The toll revenues are shared or distributed between PREC
and SOMCO for the operations and maintenance of the PAREX.
The 30‐year franchise period shall commence from the issuance of the
Toll Operation Certificate.
Under the STOA, PREC may file an application to adjust the toll rates
which shall be of two kinds, namely periodic and contingency. Periodic
adjustments can be applied every two years of the existing toll rate to a
new toll rate on the respective toll review date. On the other hand,
contingency adjustment can be applied upon the occurrence of a force
majeure event and/or additional cost of any required repair or
reconstruction works arising out of force majeure to the extent not
covered by insurance.
vii. NALEX
On March 21, 2022, a STOA was executed by and among the ROP as
the Grantor, acting by and through the TRB, PNCC, NALEC as the
Investor, and SOMCO as the Operator, wherein NALEC was granted the
exclusive right, privilege, responsibility, and obligation to design and
construct the NALEX Project, and to finance the same, while SOMCO
was granted the exclusive right, privilege, responsibility, and obligation to
operate and maintain the NALEX Project.
The NALEX Project is a mixed at-grade and elevated viaduct

expressway, with the entire length of approximately 136.4 kilometers
from Balintawak, Quezon City to Tarlac City, that will link the existing
Skyway Stage 3 to TPLEX.
The NALEX Project shall be owned by the ROP, without prejudice to the
rights and the entitlements of NALEC and SOMCO under the STOA.
The legal transfer of ownership of the NALEX Project to the ROP shall be
The franchise period for the NALEX Project shall be 30 consecutive

years commencing from the issuance of the Toll Operation Certificate or
the Toll Operation Permit for the entire NALEX Project to NALEC and/or
SOMCO.
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viii. SALEX
On June 20, 2022, a STOA was executed by and among the ROP as the
Grantor, acting by and through the TRB, PNCC, SALEC as the Investor,
and SOMCO as the Operator, wherein SALEC was granted the exclusive
right, privilege, responsibility, and obligation to design and construct the
SALEX Project, and to finance the same, while SOMCO was granted the
exclusive right, privilege, responsibility, and obligation to operate and
maintain the SALEX Project.
The SALEX Project is a mixed at-grade and elevated viaduct

expressway, with the entire length of approximately 40.62 kilometers,
that will link the existing Skyway Stage 3, PAREX, NAIA Expressway to
the Manila International Airport.
The SALEX Project shall be owned by the ROP, without prejudice to the
rights and the entitlements of SALEC and SOMCO under the STOA. The
legal transfer of ownership of the SALEX Project to the ROP shall be
The franchise period for the SALEX Project shall be 30 consecutive

years commencing from the issuance of the Toll Operation Certificate or
the Toll Operation Permit for the entire SALEX Project to SALEC and/or
SOMCO.
o Water Concession Agreements
On December 7, 2015, MWSS issued a NOA to SMC - K-water Consortium

(the Consortium) awarding the Bulacan Bulk Water Supply Project. In
accordance with the NOA, the LCWDC was registered by the Consortium as
the concessionaire.
On January 15, 2016, a Concession Agreement was executed between

MWSS and LCWDC for a 30-year period, subject to extensions as may be
provided for under the Concession Agreement. The Bulacan Bulk Water
Supply Project shall comprise of the supply of treated bulk water, planning,
financing, development, design, engineering and construction of facilities
including the management, operation and maintenance in order to alleviate
the chronic water shortage and provide potable water needs of the province
of Bulacan.
On January 24, 2019, LCWDC commenced operations upon issuance of the

Certificate of Final Acceptance by the MWSS for the completion of all works
required under Stage 1 of the Bulacan Bulk Water Supply Project.
On April 25, 2019, the MWSS issued the Certificate of Final Acceptance for
Stage 2 of the Bulacan Bulk Water Supply Project.
Upon issuance of the Certificate of Final Acceptance by MWSS for

completion of all works for Stage 1, LCWDC has officially commenced its
operations and started delivery of potable bulk water to the first seven Water
Districts of Bulacan. Thereafter, on 24 April 2020, LCWDC has successfully
completed Stages 1 & 2 of the Project and delivered bulk water to a total of
12 Water Districts.
- 171 -
Other salient features of the Concession Agreement are as follows:
1. LCWDC shall pay annual water rights fee to the Provincial Government
of Bulacan amounting to P5 for the first five years of operation, subject to
adjustment based on the Concession Agreement starting on the sixth
contract year onwards.
2. LCWDC shall pay an annual Concession Fee and Operation and

Maintenance Fee to MWSS amounting to the equivalent of 2.5% of the
Annual Gross Revenue of LCWDC and P5, respectively.
3. MWSS and the Water Service Providers (WSPs) of the Province of

Bulacan entered into a Memoranda of Understanding where the parties
agreed to cooperate with each other towards the successful
implementation of the Bulacan Bulk Water Service Project. Pursuant
thereto, MWSS, LCWDC, and the individual WSPs for Stages 1 & 2 has
entered into individual MOA where the MWSS, through LCWDC, has
committed to supply the potable bulk water and the WSPs have agreed
to accept the water and/or pay the Bulk Water Charges at the rate of
Eight Pesos and Fifty Centavos plus VAT, subject to certain adjustments
as provided under the Concession Agreement and the MOA.
4. LCWDC utilized the National Housing Authority (NHA) site for the water
treatment facility. The NHA site is the 5.5 hectares located at Pleasant
Hills, San Jose Del Monte, Bulacan intended as the site for the water
treatment facility. LCWDC paid in staggered cash in the aggregate
amount of P165.
5. At the end of the concession period, LCWDC shall transfer the facilities
to MWSS in the condition required for turnover as described in the
Minimum Performance Standards and Specifications of the Concession
Agreement.
▪ Food and Beverage
o Toll Agreements
The significant subsidiaries of SMFB have entered into toll processing with
various contract growers, breeders, contractors and processing plant
operators (collectively referred to as the “Parties”). The terms of the
agreements include the following, among others:
▪ The Parties have the qualifications to provide the contracted services and
have the necessary manpower, facilities and equipment to perform the
services contracted.
▪ Tolling fees paid to the Parties are based on the agreed rate per
acceptable output or processed product. The fees are normally subject to
review in cases of changes in costs, volume and other factors.
▪ The periods of the agreement vary. Negotiations for the renewal of any
agreement generally commence six months before expiry date.
Total tolling expenses included as part of “Cost of sales” account in the

consolidated statements of income amounted to P6,692, P6,816 and P7,493
in 2022, 2021 and 2020, respectively (Note 26).
- 172 -
▪ Cement
o Mineral Production Sharing Agreement (MPSA)
NCC, ECC and its subsidiaries have the following existing MPSAs granted by
the Philippine Government through the Mines and Geosciences Bureau
(MGB) and the DENR. Details of the MPSA are as follows:
i. NCC
Date of
MPSA No. Location Issuance
106-98-1 Labayug, Sison, Pangasinan March 12, 1998
This MPSA has a term of 25 years from the date of issuance and may be
renewed thereafter for another term not exceeding 25 years.
NCC has the following key commitments under its MPSA:
o The Philippine Government share shall be the excise tax on mineral

products at the time of removal and at the rate provided for in
RA No. 7729 amending Section 151 (a) of the Revised National
Internal Revenue Code, as well as other taxes, duties and fees levied
by existing laws.
Excise taxes paid to the Philippine Government aggregated to P11

and P12 in 2022 and 2021, respectively.
o Allotment of a minimum of 1.75% of the direct drilling and milling

costs necessary to implement the activities for community
development.
As at December 31, 2022, allotment made amounted to P6.
On July 23, 2021, NCC filed its MPSA renewal to the DENR, as part of
the covenants of the OLSA. The application was consequently received
by the Office of the Regional Director, Mines and Geoscience Bureau
Region I on July 26, 2021. As at March 9, 2023, NCC is yet to receive the
approval by the DENR.
ii. ECC and subsidiaries
MPSA No. Location Date of Issuance

245-2007-III Dona Remedios Trinidad and July 25, 2007
San Ildefonso, Bulacan
181-2002-III Akle, San Ildefonso, Bulacan December 9, 2002
161-00-III Akle, San Ildefonso, Bulacan September 12, 2000
100-97-VII Ginatilan, Cebu December 29, 1997
101-97-VII Ginatilan and Malabuyoc, December 29, 1997
Cebu
059-96-VII Lo-oc, Malabuyoc, Cebu November 18, 2021
060-96-VII Lo-oc, Malabuyoc, Cebu November 18, 2021
083-97-IX Siayan, Sindangan and Jose November 20, 1997
Dalman, Zamboanga del
Norte
- 173 -
The MPSAs have a term of 25 years from the issuance date and may be
renewed thereafter for another term not exceeding 25 years. On
August 6, 2020, the MGB approved the extension of the terms of the
MPSAs 059-96-VII and 060-96-VII from Cebu sites for a period of nine
years until November 18, 2030.
In August 2022, ECC applied for an extension of the term of MPSAs 100-
97-VII and 101-97-VII from Cebu sites. As of March 9, 2023, ECC has
not yet received the approval for the extension.
ECC and subsidiaries have the following key commitments under the
MPSAs:
o Payment to the Philippine Government of 4% excise tax of the

market value of the minerals or mineral products extracted from the
area and annual occupation fee based on the rate provided in the
existing rules and regulations.
o Allotment of a minimum of 1% of the direct drilling and milling costs

necessary to implement the activities for community development.
Pursuant to Administrative Order No. 2010-21: “Revised Implementing

Rules and Regulations of RA No. 7942, otherwise known as the
Philippine Mining Act of 1995,” the allotment for community development
activities was revised to 1.5% of the operating costs.
As at December 31, 2022, ECC and subsidiaries are compliant with the
foregoing commitments and obligations.
Lease Commitments
▪ Group as Lessor
The Group has entered into operating leases on its investment property portfolio,
consisting of certain service stations and other related structures, machinery and
equipment, surplus office spaces as well as leased property (Note 15). These
non-cancellable leases will expire up to year 2036. All leases include a clause to
enable upward revision of the rental charge on an annual basis based on
prevailing market conditions.
The future minimum lease receipts under non-cancellable operating leases are
as follows:
2022 2021
Within one year P1,149 P532
One to two years 701 508
Two to three years 396 501
Three to four years 316 495
Four to five years 305 497
More than five years 2,656 6,733
P5,523 P9,266
- 174 -
Rent income recognized in the consolidated statements of income amounted to
P1,766, P1,496 and P1,382 in 2022, 2021 and 2020, respectively (Notes 4
and 32). Income from sub-leasing recognized in the consolidated statements of
income amounted to P1,275, P796 and P1,054 in 2022, 2021 and 2020,
respectively.
35. Retirement Plans
The Parent Company and majority of its subsidiaries have funded, noncontributory,
defined benefit retirement plans (collectively, the Retirement Plans) covering all of
their permanent employees. The Retirement Plans of the Parent Company and
majority of its subsidiaries pay out benefits based on final pay. Contributions and
costs are determined in accordance with the actuarial studies made for the
Retirement Plans. Annual cost is determined using the projected unit credit method.
Majority of the Group’s latest actuarial valuation date is December 31, 2022.
Valuations are obtained on a periodic basis.
Majority of the Retirement Plans are registered with the BIR as tax-qualified plans
under RA No. 4917, as amended. The control and administration of the Group’s
Retirement Plans are vested in the Board of Trustees of each Retirement Plan.
Majority of the Board of Trustees of the Group’s Retirement Plans who exercises
voting rights over the shares and approves material transactions are employees
and/or officers of the Parent Company and its subsidiaries. The Retirement Plans’
accounting and administrative functions are undertaken by the Retirement Funds
Office of the Parent Company.
- 175 -
The following table shows a reconciliation of the net defined benefit retirement asset (liability) and its components:
Present Value of Defined

Fair Value of Benefit Retirement Effect of Net Defined Benefit
Plan Assets Obligation Asset Ceiling Retirement Liability
2022 2021 2022 2021 2022 2021 2022 2021
Balance at beginning of year P29,505 P29,064 (P30,539) (P31,617) (P1,821) (P1,642) (P2,855) (P4,195)
Benefit asset (obligation) of consolidated
subsidiaries 99 - (172) - - - (73) -
Recognized in profit or loss
Current service costs - - (1,770) (1,735) - - (1,770) (1,735)
Past service costs - - (258) (1,708) - - (258) (1,708)
Interest expense - - (1,532) (1,225) - - (1,532) (1,225)
Interest income 1,506 1,101 - - - - 1,506 1,101
Interest on the effect of asset ceiling - - - - (93) (62) (93) (62)
1,506 1,101 (3,560) (4,668) (93) (62) (2,147) (3,629)
Recognized in other comprehensive income
Remeasurements
Actuarial gains (losses) arising from:
Experience adjustments - - (501) 862 - - (501) 862
Changes in financial assumptions - - (148) 2,014 - - (148) 2,014
Changes in demographic assumptions - - 1,028 (10) - - 1,028 (10)
Return on plan assets excluding interest income (10,445) (606) - - - - (10,445) (606)
Changes in the effect of asset ceiling - - - - 1,908 (117) 1,908 (117)
(10,445) (606) 379 2,866 1,908 (117) (8,158) 2,143
Others
Contributions 3,507 2,650 - - - - 3,507 2,650
Benefits paid (1,984) (2,760) 2,246 2,876 - - 262 116
Transfers from other plans 16 3 (21) (3) - - (5) -
Transfers to other plans (16) (1) 21 1 - - 5 -
Other adjustments 61 54 (227) 6 - - (166) 60
1,584 (54) 2,019 2,880 - - 3,603 2,826
Balance at end of year P22,249 P29,505 (P31,873) (P30,539) (P6) (P1,821) (P9,630) (P2,855)
- 176 -
The Group’s annual contribution to the Retirement Plans consists of payments
covering the current service cost plus amortization of unfunded past service liability.
Retirement costs recognized as part of “Personnel expenses” in the consolidated

statements of income by the Parent Company amounted to P87, P108 and P139 in
2022, 2021 and 2020, respectively (Note 29).
Retirement costs recognized as part of “Personnel expenses” in the consolidated

statements of income by the subsidiaries amounted to P1,941, P3,335 and P1,691 in
2022, 2021 and 2020, respectively (Note 29). In 2022 and 2021, certain subsidiaries
made amendments to their respective Retirement Plans in terms of the percentage
of final pay based on the adjusted credited years of service. As a result, the Group
recognized past service costs amounting to P258 and P1,708 in 2022 and 2021,
respectively.
The net interest on the defined benefit retirement asset recognized as part of
“Interest income” account in the consolidated statements of income by the Parent
Company amounted to P191, P91 and P105 in 2022, 2021 and 2020, respectively
(Notes 30 and 31).
The net interest on the defined benefit retirement asset recognized as part of
“Interest Expense and Other Financing Charges” and “Interest income” accounts in
the consolidated statements of income by the subsidiaries amounted to (P72), P95
and 108 in 2022, 2021 and 2020, respectively (Notes 30 and 31).
As at December 31, 2022, net retirement assets and liabilities, included as part of
“Other noncurrent assets - net” account, amounted to P31 (Note 18) and under
accounts, amounted to P122 and P9,539, respectively (Notes 20 and 22).
As at December 31, 2021, net retirement assets and liabilities, included as part of
“Other noncurrent assets - net” account, amounted to P4,175 (Note 18) and under
accounts, amounted to P187 and P6,843, respectively (Notes 20 and 22).
The carrying amounts of the Group’s retirement fund approximate fair values as at
The Group’s plan assets consist of the following:
In Percentages
2022 2021
Investments in marketable securities and shares of stock 76.41 76.87
Investments in pooled funds:
Fixed income portfolio 6.42 6.58
Stock trading portfolio 1.06 1.45
Investments in real estate 3.02 1.53
Others 13.09 13.57
- 177 -
Investments in Marketable Securities
As at December 31, 2022 the plan assets include:
▪ 48,939,687 common shares and 8,923,000 Subseries “2-F”, 9,782,770

Subseries “2-I”, 3,884,220 Subseries “2-J” and 4,008,450 Subseries “2-K”
preferred shares of the Parent Company with fair market value per share of
P92.95, P75.00, P75.00, P72.85 and P71.00, respectively;
▪ 753,454,797 common shares and 12,960 Series 3A and 474,160 Series 3B

preferred shares of Petron with fair market value per share of P2.40, P1,015.00
and P1,030.00, respectively;
▪ 33,635,700 common shares of SMB with fair market value per share of P20.00;
▪ 19,154,430 common shares of GSMI with fair market value per share of
P105.00;
▪ 16,887,260 common shares of SMFB with fair market value per share of P38.70;
▪ 300 common shares of SMPI with fair market value per share of P134.12; and
▪ 5,997,311 common shares of Top Frontier with fair market value per share of
P95.00.
As at December 31, 2021 the plan assets include:
▪ 49,564,147 common shares and 8,038,270 Subseries “2-F”, 264,840 Subseries

“2-H”, 9,782,770 Subseries “2-I”, 3,491,300 Subseries “2-J” and 4,007,900
Subseries “2-K” preferred shares of the Parent Company with fair market value
per share of P114.90, P79.25, P75.95, P79.65, P76.50 and P75.85, respectively;
▪ 753,454,797 common shares and 474,160 preferred shares of Petron with fair
market value per share of P3.17 and P1,119.00, respectively;
▪ 33,635,700 common shares of SMB with fair market value per share of P20.00;
▪ 19,386,620 common shares of GSMI with fair market value per share of
P113.80;
▪ 15,245,750 common shares of SMFB with fair market value per share of P71.40;
▪ 300 common shares of SMPI with fair market value per share of P134.12; and
▪ 5,997,311 common shares of Top Frontier with fair market value per share of
P127.70.
The fair market value per share of the above marketable securities is determined
based on quoted market prices in active markets as at the reporting date (Note 4).
The Group’s Retirement Plans recognized a gain (loss) on the investment in

marketable securities of Top Frontier, Parent Company and its subsidiaries
amounting to (P9,544), P21 and (P1,876) in 2022, 2021 and 2020, respectively.
Dividend income from the investment in shares of stock of the Parent Company and
its subsidiaries amounted to P395, P369 and P375 in 2022, 2021 and 2020,
respectively.
- 178 -
Investments in Shares of Stock
a. BOC
San Miguel Corporation Retirement Plan (SMCRP) has 432,626,860 common

shares, representing 38.54% equity interest in BOC, accounted for under the
equity method of accounting amounting to P10,064 as at December 31, 2021.
SMCRP recognized its share in total comprehensive income of BOC amounting
to P468 in 2021.
As discussed in Note 11, SMCRP sold to SMCEC its 1,571,600 common shares
of BOC, equivalent to 1.4% equity interest, amounting to P356 in October 2021.
The Articles of Incorporation of BOC was amended for the change in the par
value of its common and preferred shares from P100.00 per share to P10.00 per
share. As a result, SMCRP’s investment in BOC’s common shares increased
from 43,262,686 to 432,626,860 common shares.
In March 2022, BOC listed its common shares through Initial Public Offering for
P12.00 per share with the PSE. Accordingly, SMCRP remeasured its investment
in shares of stock of BOC using the available quoted price and the investment
was reclassified as investment in marketable securities. The change in the
valuation estimate from equity method to available quoted price resulted to the
recognition by SMCRP of unrealized loss on marketable securities amounting to
P6,651 in 2022.
b. BPI
The Group’s plan assets also include San Miguel Brewery Inc. Retirement Plan’s
investment in 8,608,494 preferred shares of stock of BPI (inclusive of nominee
shares), accounted for under the cost method since cost approximates fair value,
amounting to P859 as at December 31, 2022 and 2021.
Investments in Pooled Funds

Investments in pooled funds were established mainly to put together a portion of the
funds of the Retirement Plans of the Group to be able to draw, negotiate and obtain
the best terms and financial deals for the investments resulting from big volume
transactions.
The Board of Trustees approved the percentage of asset to be allocated to fixed

income instruments and equities. The Retirement Plans have set maximum exposure
limits for each type of permissible investments in marketable securities and deposit
instruments. The Board of Trustees may, from time to time, in the exercise of its
reasonable discretion and taking into account existing investment opportunities,
review and revise such allocation and limits.
Approximately 84% and 65% of the Retirement Plans’ investments in pooled funds in
stock trading portfolio include investments in shares of stock of the Parent Company
and its subsidiaries as at December 31, 2022 and 2021, respectively.
Approximately 61% and 67% of the Retirement Plans’ investments in pooled funds in
fixed income portfolio include investments in shares of stock of the Parent Company
and its subsidiaries as at December 31, 2022 and 2021, respectively.
Investments in Real Estate

The Retirement Plans of the Group have investments in real estate properties. The
fair value of investment property amounted to P989 and P634 as at December 31,
- 179 -
Others
Others include the Retirement Plans’ investments in trust account, government
securities, bonds and notes, cash and cash equivalents and receivables which earn
interest. Investment in trust account represents funds entrusted to a financial
institution for the purpose of maximizing the yield on investible funds.
The Board of Trustees reviews the level of funding required for the retirement fund.
Such a review includes the asset-liability matching (ALM) strategy and investment
risk management policy. The Group’s ALM objective is to match maturities of the
plan assets to the defined benefit retirement obligation as they fall due. The Group
monitors how the duration and expected yield of the investments are matching the
expected cash outflows arising from the retirement benefit obligation. The Group is
expected to contribute P2,646 to the Retirement Plans in 2023.
The Retirement Plans expose the Group to actuarial risks such as investment risk,
interest rate risk, longevity risk and salary risk as follows:
Investment and Interest Rate Risks. The present value of the defined benefit
retirement obligation is calculated using a discount rate determined by reference to
market yields to government bonds. Generally, a decrease in the interest rate of a
reference government bond will increase the defined benefit retirement obligation.
However, this will be partially offset by an increase in the return on the Retirement
Plans’ investments and if the return on plan asset falls below this rate, it will create a
deficit in the Retirement Plans. Due to the long-term nature of the defined benefit
retirement obligation, a level of continuing equity investments is an appropriate
element of the long-term strategy of the Group to manage the Retirement Plans
efficiently.
Longevity and Salary Risks. The present value of the defined benefit retirement
obligation is calculated by reference to the best estimates of: (1) the mortality of the
plan participants, and (2) the future salaries of the plan participants. Consequently,
increases in the life expectancy and salary of the plan participants will result in an
increase in the defined benefit retirement obligation.
The overall expected rate of return is determined based on historical performance of

the investments.
The principal actuarial assumptions used to determine retirement benefits are as

follows:
In Percentages
2022 2021
Discount rate 4.60 - 7.62 0.40 - 6.75
Salary increase rate 2.00 - 8.00 2.00 - 8.00
Assumptions for mortality and disability rates are based on published statistics and
mortality and disability tables.
The weighted average duration of defined benefit retirement obligation ranges from
3.6 to 19 years and 3.9 to 24.9 years as at December 31, 2022 and 2021,
respectively.
- 180 -
As at December 31, 2022 and 2021, the reasonably possible changes to one of the
relevant actuarial assumptions, while holding all other assumptions constant, would
have affected the defined benefit retirement obligation by the amounts below,
respectively:
Defined Benefit
Retirement Obligation
2022 2021
1 Percent 1 Percent 1 Percent 1 Percent
Increase Decrease Increase Decrease
Discount rate (P1,646) P1,859 (P1,648) P1,954
Salary increase rate 1,920 (1,698) 2,148 (1,880)
The outstanding balances of the Group’s receivable from the retirement plans are as
follows:
a. The Parent Company has advances to and receivables from SMCRP amounting
to P6,713 and P7,666 as at December 31, 2022 and 2021, respectively, included
as part of “Amounts owed by related parties” under “Trade and other
receivables - net” account in the consolidated statements of financial position
(Notes 8 and 33). Portion of the advances are subject to interest per annum of
5.75% in 2022 and 2021. Interest income earned from the advances amounted
to P188 in 2022 and 2021 (Notes 31 and 33).
b. Petron has advances to Petron Corporation Employee Retirement Plan (PCERP)

amounting to P894 and P1,138 as at December 31, 2022 and 2021, respectively,
included as part of “Amounts owed by related parties” under “Trade and other
receivables - net” account in the consolidated statements of financial position
(Notes 8 and 33). The advances are subject to interest per annum of 5% in 2022
and 2021. Interest income earned from the advances amounted to P58 and P78
in 2022 and 2021, respectively (Notes 31 and 33).
In 2022 and 2021, portion of Petron’s advances to PCERP were converted into
contribution to the retirement plan.
Transactions with the Retirement Plans are made at normal market prices and terms.
Outstanding balances as at December 31, 2022 and 2021 are unsecured and
settlements are made in cash. There have been no guarantees provided for any
retirement plan receivables. The Group has not made any provision for impairment
losses relating to the receivables from the Retirement Plans in 2022, 2021 and 2020.
- 181 -
36. Cash Dividends and Distributions
Cash dividends
The BOD of the Parent Company approved the declaration and payment of the
following cash dividends for common and preferred shares as follows:
2022
Dividend Per
Class of Shares Date of Declaration Date of Record Date of Payment Share
Common
March 10, 2022 April 1, 2022 April 29, 2022 P0.35
June 14, 2022 July 1, 2022 July 27, 2022 0.35
September 22, 2022 October 7, 2022 October 28, 2022 0.35
December 7, 2022 January 6, 2023 January 27, 2023 0.35
Preferred
SMC2F February 10, 2022 March 21, 2022 April 1, 2022 1.27635
May 5, 2022 June 21, 2022 July 4, 2022 1.27635
August 4, 2022 September 21, 2022 October 4, 2022 1.27635
November 14, 2022 December 21, 2022 January 3, 2023 1.27635
SMC2H February 10, 2022 March 21, 2022 April 1, 2022 1.1854125
May 5, 2022 June 21, 2022 July 4, 2022 1.1854125
SMC2I February 10, 2022 March 21, 2022 April 1, 2022 1.18790625
May 5, 2022 June 21, 2022 July 4, 2022 1.18790625
SMC2J February 10, 2022 March 21, 2022 April 1, 2022 0.890625
May 5, 2022 June 21, 2022 July 4, 2022 0.890625
SMC2K February 10, 2022 March 21, 2021 April 1, 2022 0.84375
May 5, 2022 June 21, 2022 July 4, 2022 0.84375
2021
Dividend Per
Common
March 11, 2021 April 5, 2021 April 30, 2021 P0.35
June 8, 2021 July 2, 2021 July 28, 2021 0.35
September 9, 2021 October 8, 2021 October 29, 2021 0.35
December 2, 2021 January 4, 2022 January 21, 2022 0.35
Preferred
SMC2C January 21, 2021 March 19, 2021 April 5, 2021 1.50
May 6, 2021 June 21, 2021 July 2, 2021 1.50
SMC2E January 21, 2021 March 19, 2021 April 5, 2021 1.18603125
May 6, 2021 June 21, 2021 July 2, 2021 1.18603125
SMC2F January 21, 2021 March 19, 2021 April 5, 2021 1.27635
May 6, 2021 June 21, 2021 July 2, 2021 1.27635
SMC2G January 21, 2021 March 19, 2021 April 5, 2021 1.23361875
SMC2H January 21, 2021 March 19, 2021 April 5, 2021 1.1854125
May 6, 2021 June 21, 2021 July 2, 2021 1.1854125
Forward
- 182 -
Dividend Per
SMC2I January 21, 2021 March 19, 2021 April 5, 2021 P1.18790625
May 6, 2021 June 21, 2021 July 2, 2021 1.18790625
SMC2J January 21, 2021 March 19, 2021 April 5, 2021 0.890625
May 6, 2021 June 21, 2021 July 2, 2021 0.890625
SMC2K January 21, 2021 March 19, 2021 April 5, 2021 0.84375
May 6, 2021 June 21, 2021 July 2, 2021 0.84375
On January 26, 2023, the BOD of the Parent Company declared cash dividends to
all preferred shareholders of record as at March 21, 2023 on the following shares to
be paid on April 4, 2023, as follows:
Class of Shares Dividends Per Share

SMC2F P1.27635
SMC2I 1.18790625
SMC2J 0.890625
SMC2K 0.84375
On March 9, 2023, the BOD of the Parent Company declared cash dividends at
P0.35 per share to all common shareholders of record as at March 31, 2023 to be
paid on April 28, 2023.
Distributions
The Parent Company paid P1,957 and P200 to the holders of SPCS and RPS,
respectively, in 2022, and P1,804 and P200 to the holders of SPCS and RPS,
respectively, in 2021, as distributions in accordance with the terms and conditions of
their respective separate subscription agreements with the Parent Company.
37. Basic and Diluted Earnings Per Share
Basic and diluted EPS is computed as follows:
Note 2022 2021 2020

Net income (loss) attributable to
equity holders of the Parent
Company (P12,968) P13,925 P2,973
Dividends on preferred shares 24, 36 (4,293) (6,002) (6,083)
Distributions to capital securities 24, 36 (2,157) (2,004) (857)
Net income (loss) attributable to
common shareholders of the
Parent Company (a) (P19,418) P5,919 (P3,967)
Weighted average number of

common shares outstanding
(in millions) - basic and diluted (b) 2,384 2,384 2,384
Basic and diluted earnings (loss)

per common share attributable to
equity holders of the Parent
Company (a/b) (P8.15) P2.48 (P1.66)
As at December 31, 2022, 2021 and 2020, the Parent Company has no dilutive debt
or equity instruments.
- 183 -
38. Supplemental Cash Flow Information
Supplemental information with respect to the consolidated statements of cash flows

is presented below:
a. Changes in noncash current assets, certain current liabilities and others are as
follows (amounts reflect actual cash flows rather than increases or decreases of
the accounts in the consolidated statements of financial position):
2022 2021 2020

Trade and other receivables - net (P66,502) (P34,503) P8,591
Inventories (43,902) (36,751) 26,503
Prepaid expenses and other
current assets (19,926) (13,006) (5,329)
Accounts payable and accrued
expenses 16,744 37,519 (18,154)
Income and other taxes payable
and others 19,817 3,133 1,212
(P93,769) (P43,608) P12,823
b. Acquisition of subsidiaries, net of cash and cash equivalents acquired.
Note 2022
Trade and other receivables - net 2,155
Inventories 2,299
Prepaid expenses and other current assets 10 4,724
Investments and advances 165
Property, plant and equipment - net 36,969
Right-of-use assets - net 26
Other intangible assets - net 1,346
Deferred tax assets 103
Other noncurrent assets - net 1,108
Income and other taxes payable (205)
Long-term debt - net of debt issue costs (4,040)
Deferred tax liabilities (13)
Other noncurrent liabilities (170)
Lease liabilities (36)
Non-controlling interests (23)
Net assets 47,860
Cash and cash equivalents (12,957)
Goodwill in subsidiaries 54,273
Other intangible assets 6,960
Investments in equity and debt instruments 4,077
Investments and advances (2,987)
Gain on consolidation (22)
Net cash flows P97,204
- 184 -
c. Changes in liabilities arising from financing activities
Dividends
Loans Payable Long-term Debt Lease Liabilities Payable
Balance as at January 1, 2022 P190,779 P813,965 P94,992 P4,296
Changes from Financing Cash Flows
Proceeds from borrowings 1,148,669 353,451 - -
Payments of borrowings (1,074,087) (115,948) - -
Payments of lease liabilities - - (26,031) -
Dividends and distributions paid - - - (42,123)
Total Changes from Financing Cash Flows 74,582 237,503 (26,031) (42,123)
The Effect of Changes in Foreign Exchange Rates 2,343 29,588 3,369 1
Acquisition of Subsidiaries and Other Changes - 7,140 3,145 41,863
Balance as at December 31, 2022 P267,704 P1,088,196 P75,475 P4,037
Dividends
Loans Payable Long-term Debt Lease Liabilities Payable
Balance as at January 1, 2021 P140,645 P766,909 P117,037 P4,231
Changes from Financing Cash Flows
Proceeds from borrowings 760,746 140,777 - -
Payments of borrowings (711,147) (113,419) - -
Payments of lease liabilities - - (26,151) -
Dividends and distributions paid - - - (39,310)
Total Changes from Financing Cash Flows 49,599 27,358 (26,151) (39,310)
The Effect of Changes in Foreign Exchange Rates 535 17,319 2,681 1
Other Changes - 2,379 1,425 39,374
Balance as at December 31, 2021 P190,779 P813,965 P94,992 P4,296
- 185 -
39. Financial Risk and Capital Management Objectives and Policies
Objectives and Policies

The Group has significant exposure to the following financial risks primarily from its
use of financial instruments:
▪ Market Risk (Interest Rate Risk, Foreign Currency Risk and Commodity Price
Risk)
▪ Liquidity Risk
▪ Credit Risk
This note presents information about the exposure to each of the foregoing risks, the
objectives, policies and processes for measuring and managing these risks, and for
management of capital.
The principal non-trade related financial instruments of the Group include cash and
cash equivalents, financial assets at FVPL, investments in equity and debt
instruments, restricted cash, short-term and long-term loans, and derivative
instruments. These financial instruments, except financial assets at FVPL and
derivative instruments, are used mainly for working capital management purposes.
The trade-related financial assets and financial liabilities of the Group such as trade
and other receivables, noncurrent receivables and deposits, accounts payable and
accrued expenses, lease liabilities and other noncurrent liabilities arise directly from
and are used to facilitate its daily operations.
The outstanding derivative instruments of the Group such as options, forwards and
swaps are intended mainly for risk management purposes. The Group uses
derivatives to manage its exposures to foreign currency, interest rate and commodity
price risks arising from the operating and financing activities. The accounting policies
in relation to derivatives are set out in Note 3 to the consolidated financial
statements.
The BOD has the overall responsibility for the establishment and oversight of the risk
management framework of the Group.
The risk management policies of the Group are established to identify and analyze
the risks faced by the Group, to set appropriate risk limits and controls, and to
monitor risks and adherence to limits. Risk management policies and systems are
reviewed regularly to reflect changes in market conditions and activities. The Group,
through its training and management standards and procedures, aims to develop a
disciplined and constructive control environment in which all employees understand
their roles and obligations.
The BOD constituted the Audit and Risk Oversight Committee to assist the BOD in
fulfilling its oversight responsibility of the Group’s corporate governance process
relating to the: a) quality and integrity of the consolidated financial statements and
financial reporting process and the systems of internal accounting and financial
controls; b) performance of the internal auditors; c) annual independent audit of the
consolidated financial statements, the engagement of the independent auditors and
the evaluation of the independent auditors’ qualifications, independence and
performance; d) compliance with tax, legal and regulatory requirements;
e) evaluation of management’s process to assess and manage the enterprise risk
issues; and f) fulfillment of the other responsibilities set out by the BOD. The Audit
and Risk Oversight Committee shall prepare such reports as may be necessary to
document the activities of the committee in the performance of its functions and
duties. Such reports shall be included in the annual report of the Group and other
corporate disclosures as may be required by the SEC and/or the PSE.
- 186 -
The Audit and Risk Oversight Committee also oversees how management monitors
compliance with the risk management policies and procedures of the Group and
reviews the adequacy of the risk management framework in relation to the risks
faced by the Group. Internal Audit assists the Audit and Risk Oversight Committee in
monitoring and evaluating the effectiveness of the risk management and governance
processes of the Group. Internal Audit undertakes both regular and special reviews
of risk management controls and procedures, the results of which are reported to the
Audit and Risk Oversight Committee.
Interest Rate Risk

Interest rate risk is the risk that future cash flows from a financial instrument
(cash flow interest rate risk) or its fair value (fair value interest rate risk) will fluctuate
because of changes in market interest rates. The Group’s exposure to changes in
interest rates relates primarily to the long-term borrowings and investment securities.
Investment securities acquired or borrowings issued at fixed rates expose the Group
to fair value interest rate risk. On the other hand, investment securities acquired or
borrowings issued at variable rates expose the Group to cash flow interest rate risk.
The Group manages its interest cost by using an optimal combination of fixed and
variable rate debt instruments. The management is responsible for monitoring the
prevailing market-based interest rate and ensures that the mark-up rates charged on
its borrowings are optimal and benchmarked against the rates charged by other
creditor banks.
On the other hand, the investment policy of the Group is to maintain an adequate
yield to match or reduce the net interest cost from its borrowings pending the
deployment of funds to their intended use in the operations and working capital
management. However, the Group invests only in high-quality securities while
maintaining the necessary diversification to avoid concentration risk.
In managing interest rate risk, the Group aims to reduce the impact of short-term
fluctuations on the earnings. Over the longer term, however, permanent changes in
interest rates would have an impact on profit or loss.
The management of interest rate risk is also supplemented by monitoring the

sensitivity of the Group’s financial instruments to various standard and non-standard
interest rate scenarios.
The Group uses interest rate swaps as hedges of the variability in cash flows
attributable to movements in interest rates. The Group applies a hedge ratio of 1:1
and determines the existence of an economic relationship between the hedging
instrument and hedged item based on the reference interest rates, tenors, repricing
dates and maturities, and notional amounts. The Group assesses whether the
derivative designated in the hedging relationship is expected to be effective in
offsetting changes in cash flows of the hedged item using the hypothetical derivative
method.
The following are the main sources of ineffectiveness in the hedge relationships:
▪ the effect of the counterparty’s and the Group’s own credit risk on the fair value
of the derivative contracts, which is not reflected in the change in the fair value of
the hedged cash flows attributable to the change in interest rates; and
▪ changes in the timing of the hedged transactions.
- 187 -
Interest Rate Risk Table
The terms and maturity profile of the interest-bearing financial instruments, together with its gross amounts, are shown in the following tables:
December 31, 2022 <1 Year 1-2 Years >2-3 Years >3-4 Years >4-5 Years >5 Years Total
Fixed Rate
Philippine Peso-denominated P58,936 P98,015 P71,237 P71,549 P109,409 P174,118 P583,264
Interest rate 3.284% - 9.635% 3.284% - 9.635% 3.284% - 9.635% 3.284% - 9.635% 3.3832% - 9.635% 3.5483% - 9.635%
Foreign currency-denominated
(expressed in Philippine peso) 7,491 1,339 1,401 1,464 1,531 11,637 24,863
Interest rate 4.7776% - 5.5959% 5.5959% 5.5959% 5.5959% 5.5959% 5.5959%
Floating Rate
Philippine Peso-denominated 2,002 1,122 16,335 536 536 8,446 28,977
Interest rate BVAL + margin or BVAL + margin or BVAL + margin or BVAL + margin or BVAL + margin or BVAL + margin or
applicable reference applicable reference applicable reference applicable reference applicable reference applicable reference
rate, whichever is rate, whichever is rate, whichever is rate, whichever is rate, whichever is rate, whichever is
higher higher higher higher higher higher
Interest rate LIBOR/SOFR/ LIBOR/SOFR/ LIBOR/SOFR/ LIBOR/SOFR/ LIBOR/SOFR/ LIBOR/SOFR/
rate + margin rate + margin rate + margin rate + margin rate + margin rate + margin
P170,751 P241,146 P104,334 P154,897 P181,968 P246,607 P1,099,703
December 31, 2021 <1 Year 1-2 Years >2-3 Years >3-4 Years >4-5 Years >5 Years Total
Fixed Rate
Philippine Peso-denominated P68,436 P57,685 P95,030 P55,159 P68,051 P145,335 P489,696
Interest rate 3.875% - 9.8754% 3.284% - 9.8754% 3.284% - 9.8754% 3.284% - 9.8754% 3.284% - 9.8754% 3.3832% - 9.8754%
Interest rate 4.7776% - 5.5959% 4.7776% - 5.5959% 5.5959% 5.5959% 5.5959% 5.5959%
Floating Rate
Philippine Peso-denominated 3,139 1,585 706 119 119 7,524 13,192
Interest rate BVAL + margin or BVAL + margin or BVAL + margin or BVAL + margin or BVAL + margin or BVAL + margin or
rate, whichever is rate, whichever is rate, whichever is rate, whichever is rate, whichever is rate, whichever is
higher higher higher higher higher higher
Interest rate LIBOR/applicable LIBOR/applicable LIBOR/applicable LIBOR/applicable LIBOR/applicable LIBOR/applicable
reference rate + reference rate + reference rate + reference rate + reference rate + reference rate +
margin margin margin margin margin margin
P89,610 P179,259 P212,083 P58,333 P114,324 P168,867 P822,476
- 188 -
The sensitivity to a reasonably possible 1% increase in the interest rates, with all
other variables held constant, would have decreased the Group’s profit before tax
(through the impact on floating rate borrowings) by P4,916, P3,080 and P2,895 in
2022, 2021 and 2020, respectively. A 1% decrease in the interest rate would have
had the equal but opposite effect. These changes are considered to be reasonably
possible given the observation of prevailing market conditions in those
periods. There is no impact on the Group’s other comprehensive income.
Foreign Currency Risk

The functional currency is the Philippine peso, which is the denomination of the bulk
of the Group’s revenues. The exposure to foreign currency risk results from
significant movements in foreign exchange rates that adversely affect the foreign
currency-denominated transactions of the Group. The risk management objective
with respect to foreign currency risk is to reduce or eliminate earnings volatility and
any adverse impact on equity. The Group enters into foreign currency hedges using
a combination of non-derivative and derivative instruments such as foreign currency
forwards, options or swaps to manage its foreign currency risk exposure.
Short-term currency forward contracts (deliverable and non-deliverable) and options

are entered into to manage foreign currency risks arising from importations, revenue
and expense transactions, and other foreign currency-denominated obligations.
Currency swaps are entered into to manage foreign currency risks relating to
long-term foreign currency-denominated borrowings.
Certain derivative contracts are designated as cash flow hedges. The Group applies
a hedge ratio of 1:1 and determines the existence of an economic relationship
between the hedging instrument and hedged item based on the currency, amount
and timing of the cash flows. The Group assesses whether the derivatives
designated in the hedging relationship is expected to be effective in offsetting
changes in cash flows of the hedged item using the cumulative dollar-offset and
hypothetical derivative method.
The following are the main sources of ineffectiveness in the hedge relationships:
▪ the effect of the counterparty’s and the Group’s own credit risk on the fair value
of the derivative contracts, which is not reflected in the change in the fair value of
the hedged cash flows attributable to the change in foreign exchange rates; and
▪ changes in the timing of the hedged transactions.
- 189 -
Information on the Group’s foreign currency-denominated monetary assets and
monetary liabilities and their Philippine peso equivalents is as follows:

US Peso US Peso
Dollar Equivalent Dollar Equivalent
Assets
Cash and cash
equivalents US$3,024 P168,753 US$3,177 P162,053
Trade and other
receivables 1,163 64,833 1,215 61,951
Prepaid expenses and
other current assets 99 5,525 14 715
Noncurrent receivables 24 1,379 3 138
4,310 240,490 4,409 224,857
Liabilities
Loans payable 890 49,613 331 16,884
Accounts payable and
accrued expenses 2,702 150,725 2,573 131,235
Long-term debt
(including current
maturities) 8,743 487,462 6,267 319,588
Lease liabilities
(including current
portion) 616 34,363 847 43,210
Other noncurrent
liabilities 118 6,516 63 3,200
13,069 728,679 10,081 514,117
Net foreign currency-
denominated
monetary liabilities (US$8,759) (P488,189) (US$5,672) (P289,260)
The Group reported net gains (losses) on foreign exchange amounting to (P21,518),
(P4,846) and P5,444 in 2022, 2021 and 2020, respectively, with the translation of its
foreign currency-denominated assets and liabilities (Note 32). These mainly resulted
from the movements of the Philippine peso against the US dollar as shown in the
following table:
US Dollar
to Philippine Peso
December 31, 2022 55.755
December 31, 2021 50.999
December 31, 2020 48.023
The management of foreign currency risk is also supplemented by monitoring the

sensitivity of the Group’s financial instruments to various foreign currency exchange
rate scenarios.
- 190 -
The following table demonstrates the sensitivity to a reasonably possible change in
the US dollar exchange rate, with all other variables held constant, of the Group’s
profit before tax (due to changes in the fair value of monetary assets and liabilities)
and the Group’s equity (due to translation of results and financial position of foreign
operations):
P1 Decrease in the P1 Increase in the

US Dollar Exchange Rate US Dollar Exchange Rate
Effect on Effect on
Income before Effect on Income before Effect on
December 31, 2022 Income Tax Equity Income Tax Equity
Cash and cash equivalents (P2,586) (P2,389) P2,586 P2,389
Trade and other receivables (284) (914) 284 914
other current assets (93) (76) 93 76
Noncurrent receivables (22) (19) 22 19
(2,985) (3,398) 2,985 3,398
Loans payable 600 739 (600) (739)
accrued expenses 1,462 2,378 (1,462) (2,378)
Long-term debt (including
current maturities) 8,695 6,917 (8,695) (6,917)
Lease liabilities (including
current portion) 533 483 (533) (483)
Other noncurrent liabilities 108 95 (108) (95)
11,398 10,612 (11,398) (10,612)
P8,413 P7,214 (P8,413) (P7,214)
P1 Decrease in the P1 Increase in the

US Dollar Exchange Rate US Dollar Exchange Rate
Effect on Effect on
Income before Effect on Income before Effect on
December 31, 2021 Income Tax Equity Income Tax Equity
Cash and cash equivalents (P2,722) (P2,608) P2,722 P2,608
Trade and other receivables (404) (870) 404 870
other current assets (12) (11) 12 11
Noncurrent receivables - (2) - 2
(3,138) (3,491) 3,138 3,491
Loans payable 30 324 (30) (324)
accrued expenses 1,086 1,865 (1,086) (1,865)
current maturities) 6,215 4,917 (6,215) (4,917)
current portion) 762 657 (762) (657)
Other noncurrent liabilities 54 48 (54) (48)
8,147 7,811 (8,147) (7,811)
P5,009 P4,320 (P5,009) (P4,320)
Exposures to foreign exchange rates vary during the year depending on the volume
of overseas transactions. Nonetheless, the analysis above is considered to be
representative of the Group’s foreign currency risk.
- 191 -
Commodity Price Risk
Commodity price risk is the risk that future cash flows from a financial instrument will
fluctuate because of changes in commodity prices.
The Group enters into various commodity derivatives to manage its price risks on
strategic commodities. Commodity hedging allows stability in prices, thus offsetting
the risk of volatile market fluctuations. Through hedging, prices of commodities are
fixed at levels acceptable to the Group, thus protecting raw material cost and
preserving margins. For hedging transactions, if prices go down, hedge positions
may show marked-to-market losses; however, any loss in the marked-to-market
position is offset by the resulting lower physical raw material cost.
The Parent Company enters into commodity derivative transactions on behalf of its
subsidiaries to reduce cost by optimizing purchasing synergies within the Group and
managing inventory levels of common materials.
Commodity Swaps, Futures and Options. Commodity swaps, futures and options are
used to manage the Group’s exposures to volatility in prices of certain commodities
such as fuel oil, crude oil, coal, aluminum, soybean meal and wheat.
Commodity Forwards. The Group enters into forward purchases of various

commodities. The prices of the commodity forwards are fixed either through direct
agreement with suppliers or by reference to a relevant commodity price index.
Liquidity Risk
Liquidity risk pertains to the risk that the Group will encounter difficulty to meet
payment obligations when they fall due under normal and stress circumstances.
The Group’s objectives to manage its liquidity risk are as follows: a) to ensure that
adequate funding is available at all times; b) to meet commitments as they arise
without incurring unnecessary costs; c) to be able to access funding when needed at
the least possible cost; and d) to maintain an adequate time spread of refinancing
maturities.
The Group constantly monitors and manages its liquidity position, liquidity gaps and
surplus on a daily basis. A committed stand-by credit facility from several local banks
is also available to ensure availability of funds when necessary. The Group also uses
derivative instruments such as forwards and swaps to manage liquidity.
- 192 -
The table below summarizes the maturity profile of the Group’s financial assets and
financial liabilities based on contractual undiscounted receipts and payments used
for liquidity management.
Carrying Contractual 1 Year or > 1 Year - > 2 Years - Over
December 31, 2022 Amount Cash Flow Less 2 Years 5 Years 5 Years
Financial Assets
Cash and cash equivalents P318,214 P318,214 P318,214 P - P - P -
Trade and other receivables - net 238,782 238,782 238,782 - - -
Derivative assets (included
under “Prepaid expenses
and other current assets”
and “Other noncurrent
assets - net” accounts) 3,624 3,624 2,486 850 288 -
Financial assets at FVPL
(included under “Prepaid
assets” account) 1,349 1,349 1,349 - - -
Financial assets at FVOCI
accounts) 7,319 7,617 54 54 930 6,579
cost (included under
“Prepaid expenses and other
current assets” and
“Investments in equity and
debt instruments” accounts) 12,134 16,917 1,414 846 2,642 12,015
deposits - net (included
under “Other noncurrent
assets - net” account) 39,700 39,825 923 10,435 18,404 10,063
Restricted cash (included
and other current assets”
and “Other noncurrent
assets - net” accounts) 19,050 19,050 17,411 358 - 1,281
Loans payable 267,704 269,289 269,289 - - -
expenses (excluding current
retirement liabilities,
derivative liabilities, IRO,
ARO, deferred income and
other current non-financial
liabilities) 222,851 222,851 222,851 - - -
Derivative liabilities (included
under “Accounts payable
and accrued expenses”
account) 2,832 2,832 2,832 - - -
current maturities) 1,088,196 1,343,871 231,452 291,910 531,319 289,190
current portion) 75,475 92,498 24,624 21,709 24,585 21,580
Other noncurrent liabilities
(excluding noncurrent
retirement liabilities, IRO,
ARO, MRO, deferred income
and other noncurrent non-
financial liabilities) 11,334 11,411 - 2,596 7,659 1,156
- 193 -
Carrying Contractual 1 Year or > 1 Year - > 2 Years - 5 Over
December 31, 2021 Amount Cash Flow Less 2 Years Years 5 Years
Financial Assets
Cash and cash equivalents P300,030 P300,030 P300,030 P - P - P -
Trade and other receivables - net 161,808 161,808 161,808 - - -
Derivative assets (included
and other current assets” and
“Other noncurrent assets -
net” accounts) 1,529 1,529 870 61 598 -
Financial assets at FVPL
assets” account) 298 298 298 - - -
Financial assets at FVOCI
accounts) 41,982 42,016 47 32 - 41,937
cost (included under “Prepaid
accounts) 577 586 556 30 - -
deposits - net (included
under “Other noncurrent
assets - net” account) 32,310 32,902 - 7,085 20,475 5,342
Restricted cash (included
and other current assets” and
“Other noncurrent assets -
net” accounts) 12,965 12,965 10,872 629 - 1,464
Loans payable 190,779 191,186 191,186 - - -
expenses (excluding current
ARO, deferred income and
other current non-financial
liabilities) 191,864 191,864 191,864 - - -
Derivative liabilities (included
under “Accounts payable and
accrued expenses” and
“Other noncurrent liabilities”
accounts) 1,992 1,992 1,247 23 722 -
current maturities) 813,965 946,870 123,060 206,989 433,488 183,333
current portion) 94,992 120,223 27,788 23,175 36,545 32,715
Other noncurrent liabilities
(excluding noncurrent
ARO, MRO, deferred income
and other noncurrent non-
financial liabilities) 7,897 8,097 - 3,453 3,553 1,091
Credit Risk
Credit risk is the risk of financial loss to the Group when a customer or counterparty
to a financial instrument fails to meet its contractual obligations and arises principally
from trade and other receivables and investment securities. The Group manages its
credit risk mainly through the application of transaction limits and close risk
monitoring. It is the Group’s policy to enter into transactions with a wide diversity of
creditworthy counterparties to mitigate any significant concentration of credit risk.
The Group has regular internal control reviews to monitor the granting of credit and
management of credit exposures.
Trade and Other Receivables

The exposure to credit risk is influenced mainly by the individual characteristics of
each customer. However, management also considers the demographics of the
Group’s customer base, including the default risk of the industry and country in which
customers operate, as these factors may have an influence on the credit risk.
- 194 -
The Group obtains collateral or arranges master netting agreements, where
appropriate, so that in the event of default, the Group would have a secured claim.
The Group has established a credit policy under which each new customer is
analyzed individually for creditworthiness before the standard payment and delivery
terms and conditions are offered. The Group ensures that sales on account are
made to customers with appropriate credit history. The Group has detailed credit
criteria and several layers of credit approval requirements before engaging a
particular customer or counterparty. The review includes external ratings, when
available, and in some cases bank references. Purchase limits are established for
each customer and are reviewed on a regular basis. Customers that fail to meet the
benchmark creditworthiness may transact with the Group only on a prepayment
basis.
Investment in Debt Instruments

The Group limits its exposure to credit risk by investing only in liquid debt
instruments with counterparties that have high credit ratings. The Group monitors
changes in credit risk by tracking published external credit ratings. To determine
whether published ratings remain up to date and to assess whether there has been a
significant increase in credit risk at the reporting date that has not been reflected in
published ratings, the Group supplements this by reviewing changes in bond yields.
Credit Quality
In monitoring and controlling credit extended to counterparty, the Group adopts a
comprehensive credit rating system based on financial and non-financial
assessments of its customers. Financial factors being considered comprised the
financial standing of the customer while the non-financial aspects include but are not
limited to the assessment of the customer’s nature of business, management profile,
industry background, payment habit and both present and potential business
dealings with the Group.
The credit quality of financial assets is being managed by the Group using internal
credit ratings. Credit quality of the financial assets were determined as follows:
High grade includes deposits or placements to reputable banks and companies with
good credit standing. High grade financial assets include cash and cash equivalents
and derivative assets.
Standard grade pertains to receivables from counterparties with satisfactory financial

capability and credit standing based on historical data, current conditions and the
Group's view of forward-looking information over the expected lives of the
receivables. Standard grade financial assets include trade and other receivables and
noncurrent receivables and deposits.
Receivables with high probability of delinquency and default were fully provided with
allowance for impairment losses.
- 195 -
Financial information on the Group’s maximum exposure to credit risk, without
considering the effects of collaterals and other risk mitigation techniques, is
presented below.
Note 2022 2021

Cash and cash equivalents (excluding
cash on hand) 7 P315,823 P298,783
Trade and other receivables - net 8 238,782 161,808
Derivative assets 10, 18 3,624 1,529
Investment in debt instruments at
FVOCI 10, 12 740 46
Investment in debt instruments at
amortized cost 10, 12 12,134 577
Noncurrent receivables and deposits - net 18 39,700 32,310
Restricted cash 10, 18 19,050 12,965
P629,853 P508,018
The table below presents the Group’s exposure to credit risk and shows the credit
quality of the financial assets by indicating whether the financial assets are subjected
to 12-month ECL or lifetime ECL. Assets that are credit-impaired are separately
presented.
2022
Financial Assets at Amortized Cost
Lifetime ECL Lifetime ECL Financial Financial
12-Month not Credit Credit Assets at Assets at
ECL Impaired Impaired FVPL FVOCI Total
(excluding cash on hand) P315,823 P - P - P - P - P315,823
Trade and other receivables 238,782 - 12,913 - - 251,695
Derivative assets - - - 1,592 2,032 3,624
Investment in debt
instruments at FVOCI - - - 740 740
Investment in debt instruments
at amortized cost 12,134 - - - - 12,134
deposits - 39,700 582 - - 40,282
Restricted cash 17,411 1,639 - - - 19,050
2021
Financial Assets at Amortized Cost
Lifetime ECL Lifetime ECL Financial Financial
12-Month not Credit Credit Assets at Assets at
ECL Impaired Impaired FVPL FVOCI Total
(excluding cash on hand) P298,783 P - P - P - P - P298,783
Trade and other receivables 161,808 - 13,268 - - 175,076
Derivative assets - - - 851 678 1,529
Investment in debt
instruments at FVOCI - - - - 46 46
Investment in debt instruments
at amortized cost 547 30 - - - 577
deposits - 32,310 572 - - 32,882
Restricted cash 10,872 2,093 - - - 12,965
- 196 -
The aging of receivables is as follows:
Amounts
Owed by
Related
December 31, 2022 Trade Non-trade Parties Total
Current P118,097 P39,480 P8,509 P166,086
Past due:
1 - 30 days 16,555 776 83 17,414
31 - 60 days 7,207 926 133 8,266
61 - 90 days 6,086 4,015 5 10,106
Over 90 days 24,428 24,475 920 49,823
P172,373 P69,672 P9,650 P251,695
Amounts
Owed by
Related
December 31, 2021 Trade Non-trade Parties Total
Current P69,571 P30,459 P14,151 P114,181
Past due:
1 - 30 days 10,052 1,063 386 11,501
31 - 60 days 3,135 1,790 37 4,962
61 - 90 days 1,947 2,418 30 4,395
Over 90 days 14,351 24,727 959 40,037
P99,056 P60,457 P15,563 P175,076
Various collaterals for trade receivables such as bank guarantees, time deposits and
real estate mortgages are held by the Group for certain credit limits.
The Group believes that the unimpaired amounts that are past due by more than
30 days are still collectible based on historical payment behavior and analyses of the
underlying customer credit ratings. There are no significant changes in their credit
quality.
The Group computes impairment loss on receivables based on past collection

experience, current circumstances and the impact of future economic conditions, if
any, available at the reporting period (Note 4). There are no significant changes in
the credit quality of the counterparties during the year.
The Group’s cash and cash equivalents, derivative assets, investment in debt
instruments at FVOCI, investment in debt instruments at amortized cost and
restricted cash are placed with reputable entities with high quality external credit
ratings.
The Group’s exposure to credit risk arises from default of counterparty. Generally,
the maximum credit risk exposure of trade and other receivables and noncurrent
receivables and deposits is its carrying amount without considering collaterals or
credit enhancements, if any. The Group has no significant concentration of credit risk
since the Group deals with a large number of homogenous counterparties.
The Group does not execute any credit guarantee in favor of any counterparty.
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Financial and Other Risks Relating to Livestock
The Group is exposed to financial risks arising from the change in cost and supply of
feed ingredients and the selling prices of chicken, hogs and cattle and related
products, all of which are determined by constantly changing market forces such as
supply and demand and other factors. The other factors include environmental
regulations, weather conditions and livestock diseases for which the Group has little
control. The mitigating factors are listed below:
▪ The Group is subject to risks affecting the food industry, generally, including risks
posed by food spoilage and contamination. Specifically, the fresh meat industry
is regulated by environmental, health and food safety organizations and
regulatory sanctions. The Group has put into place systems to monitor food
safety risks throughout all stages of manufacturing and processing to mitigate
these risks. Furthermore, representatives from the government regulatory
agencies are present at all times during the processing of dressed chicken, hogs
and cattle in all dressing and meat plants and issue certificates accordingly. The
authorities, however, may impose additional regulatory requirements that may
require significant capital investment at short notice.
▪ The Group is subject to risks relating to its ability to maintain animal health status
considering that it has no control over neighboring livestock farms. Livestock
health problems could adversely impact production and consumer confidence.
However, the Group monitors the health of its livestock on a daily basis and
proper procedures are put in place.
▪ The livestock industry is exposed to risk associated with the supply and price of
raw materials, mainly grain prices. Grain prices fluctuate depending on the
harvest results. The shortage in the supply of grain will result in adverse
fluctuation in the price of grain and will ultimately increase the Group’s production
cost. If necessary, the Group enters into forward contracts to secure the supply
of raw materials at a reasonable price.
Other Market Price Risk

The Group’s market price risk arises from its investments carried at fair value
(financial assets at FVPL and FVOCI). The Group manages its risk arising from
changes in market price by monitoring the changes in the market price of the
investments.
Capital Management
The Group maintains a sound capital base to ensure its ability to continue as a going
concern, thereby continue to provide returns to stockholders and benefits to other
stakeholders and to maintain an optimal capital structure to reduce cost of capital.
The Group manages its capital structure and makes adjustments in the light of
changes in economic conditions. To maintain or adjust the capital structure, the
Group may adjust the dividend payment to shareholders, pay-off existing debts,
return capital to shareholders or issue new shares.
The Group monitors capital on the basis of debt-to-equity ratio, which is calculated
as total debt divided by total equity. Total debt is defined as total current liabilities
and total noncurrent liabilities, while equity is total equity as shown in the
consolidated statements of financial position.
The BOD has overall responsibility for monitoring capital in proportion to risk.
Profiles for capital ratios are set in the light of changes in the external environment
and the risks underlying the Group’s business, operation and industry.
- 198 -
The Group, except for BOC which is subject to certain capitalization requirements by
the BSP, is not subject to externally imposed capital requirements.
40. Financial Assets and Financial Liabilities
The table below presents a comparison by category of the carrying amounts and fair
values of the Group’s financial instruments:

Carrying Fair Carrying Fair
Amount Value Amount Value
Financial Assets
Cash and cash equivalents P318,214 P318,214 P300,030 P300,030
Trade and other receivables - net 238,782 238,782 161,808 161,808
Derivative assets (included under “Prepaid
expenses and other current assets” and “Other
noncurrent assets - net" accounts) 3,624 3,624 1,529 1,529
Financial assets at FVPL (included under “Prepaid
expenses and other current assets” account) 1,349 1,349 298 298
Financial assets at FVOCI (included under
“Prepaid expenses and other current assets” and
“Investments in equity and debt instruments”
accounts) 7,319 7,213 41,982 41,982
Financial assets at amortized cost (included under
“Prepaid expenses and other current assets” and
“Investments in equity and debt instruments”
accounts) 12,134 12,134 577 577
Noncurrent receivables and deposits - net
(included under “Other noncurrent assets - net”
account) 39,700 39,700 32,310 32,310
Restricted cash (included under “Prepaid expenses
and other current assets” and “Other noncurrent
assets - net" accounts) 19,050 19,050 12,965 12,965
Loans payable 267,704 267,704 190,779 190,779
Accounts payable and accrued expenses
(excluding current retirement liabilities, derivative
liabilities, IRO, ARO, deferred income and other
current non-financial liabilities) 222,851 222,851 191,864 191,864
Derivative liabilities (included under “Accounts
payable and accrued expenses” and “Other
noncurrent liabilities” accounts) 2,832 2,832 1,992 1,992
Long-term debt (including current maturities) 1,088,196 1,091,731 813,965 854,665
Lease liabilities (including current portion) 75,475 75,475 94,992 94,992
Other noncurrent liabilities (excluding noncurrent
retirement liabilities, derivative liabilities, IRO,
ARO, MRO, deferred income and other
noncurrent non-financial liabilities) 11,334 11,334 7,897 7,897
The following methods and assumptions are used to estimate the fair value of each
class of financial instruments:
Cash and Cash Equivalents, Trade and Other Receivables, Noncurrent Receivables
and Deposits and Restricted Cash. The carrying amount of cash and cash
equivalents and trade and other receivables approximates fair value primarily due to
the relatively short-term maturities of these financial instruments. In the case of
financial assets at amortized cost, noncurrent receivables and deposits and
restricted cash, the fair value is based on the present value of expected future cash
flows using the applicable discount rates based on current market rates of identical
or similar quoted instruments.
- 199 -
Derivatives. The fair values of forward exchange contracts are calculated by
reference to current forward exchange rates. In the case of freestanding currency
and commodity derivatives, the fair values are determined based on quoted prices
obtained from their respective active markets. Fair values for stand-alone derivative
instruments that are not quoted from an active market and for embedded derivatives
are based on valuation models used for similar instruments using both observable
and non-observable inputs.
Financial Assets at FVPL and Financial Assets at FVOCI. The fair values of publicly
traded instruments and similar investments are based on quoted market prices in an
active market. For debt instruments with no quoted market prices, a reasonable
estimate of their fair values is calculated based on the expected cash flows from the
instruments discounted using the applicable discount rates of comparable
instruments quoted in active markets.
Loans Payable and Accounts Payable and Accrued Expenses. The carrying amount
of loans payable and accounts payable and accrued expenses approximates fair
value due to the relatively short-term maturities of these financial instruments.
Long-term Debt, Lease Liabilities and Other Noncurrent Liabilities. The fair value of
interest-bearing fixed rate loans is based on the discounted value of expected future
cash flows using the applicable market rates for similar types of instruments as at
reporting date. Discount rates used for Philippine Peso-denominated loans range
from 2.9% to 7.0% and 1.0% to 4.8% as at December 31, 2022 and 2021,
respectively. The discount rates used for foreign currency-denominated loans range
from 3.1% to 5.4% and 0.3% to 1.5% as at December 31, 2022 and 2021,
respectively. The carrying amounts of floating rate loans with quarterly interest rate
repricing approximate their fair values.
Derivative Financial Instruments

The Group’s derivative financial instruments according to the type of financial risk
being managed and the details of freestanding and embedded derivative financial
instruments that are categorized into those accounted for as cash flow hedges and
those that are not designated as accounting hedges are discussed below.
The Group enters into various foreign currency, interest rate and commodity
derivative contracts to manage its exposure on foreign currency, interest rate and
commodity price risks. The portfolio is a mixture of instruments including forwards,
swaps and options.
Derivative Instruments Accounted for as Cash Flow Hedges

The Group designated the following derivative financial instruments as cash flow
hedges:
Maturity
> 1 Year - > 2 Years -
December 31, 2022 1 Year or Less 2 Years 5 Years Total
Foreign currency risk:
Call spread swaps:
Notional amount US$60 US$190 US$40 US$290
Average strike rate P52.95 to P56.15 P48.00 to 53.70 P51.35 to 55.40
Foreign currency and interest
rate risks:
Cross currency swap:
Notional amount US$240 US$40 - US$280
Average strike rate P47.00 to P56.50 P47.00 to P56.50 -
Fixed interest rate 4.19% to 5.80% 3.60% to 5.75% -
Interest rate risk:
Interest rate collar:
Interest rate 0.44% to 1.99% 0.44% to 1.99% 0.50% to 3.00%
- 200 -
Maturity
> 1 Year - > 2 Years -
December 31, 2021 1 Year or Less 2 Years 5 Years Total
Call spread swaps:
Average strike rate P51.96 to P54.47 P52.95 to P56.15 P48.00 to P53.70
Foreign currency and interest
rate risks:
Cross currency swap:
Average strike rate P47.00 to P57.00 P47.00 to P56.50 P47.00 to P56.50
Fixed interest rate 4.19% to 5.75% 4.19% to 5.80% 3.60% to 5.75%
Interest rate risk:
Interest rate collar:
Interest rate 0.44% to 1.99% 0.44% to 1.99% 0.44% to 1.99%
The following are the amounts relating to hedged items:
Change in Fair
Value Used for
Measuring Cost of
Hedge Hedging Hedging
December 31, 2022 Ineffectiveness Reserve Reserve
US dollar-denominated borrowings (P552) P - (P454)
Foreign currency and interest rate risks:
US dollar-denominated borrowings (2,059) 89 (51)
Interest rate risk:
US dollar-denominated borrowings (339) 250 (90)
Change in Fair
Value Used for
Measuring Cost of
Hedge Hedging Hedging
December 31, 2021 Ineffectiveness Reserve Reserve
US dollar-denominated borrowings (P577) P - (P304)
US dollar-denominated borrowings (680) (802) 576
Interest rate risk:
US dollar-denominated borrowings 4 (3) -
There are no amounts remaining in the hedging reserve from hedging relationships
for which hedge accounting is no longer applied.
- 201 -
The following are the amounts related to the designated hedging instruments:
Amount
Changes in the Fair Amount Reclassified Reclassified from
Line Item in the Value of the Cost of Hedging from Hedging Cost of Hedging Line Item in the
Consolidated Statement of Hedging Instrument Recognized in Reserve to the Reserve to the Consolidated
Financial Position where Recognized in Other Other Consolidated Consolidated Statement of Income
Notional Carrying Amount the Hedging Instrument is Comprehensive Comprehensive Statement of Statement of Affected by the
December 31, 2022 Amount Assets Liabilities Included Income Income Income Income Reclassification
Call spread swaps US$290 P887 P - Prepaid expenses and other P552 (P397) (P553) P209 Interest expense and
current assets, and Other other financing
noncurrent assets - net charges and Other
income - net
Cross currency swap 280 931 - Prepaid expenses and other 2,059 (886) (1,048) 51 Interest expense and
noncurrent assets - net charges and Other
income - net
Interest rate risk:
Interest rate collar 270 214 - Prepaid expenses and other 339 (102) (5) (17) Interest expense and
noncurrent assets - net charges
Amount
Changes in the Fair Amount Reclassified Reclassified from
Line Item in the Value of the Cost of Hedging from Hedging Cost of Hedging Line Item in the
Consolidated Statement of Hedging Instrument Recognized in Reserve to the Reserve to the Consolidated
Financial Position where Recognized in Other Other Consolidated Consolidated Statement of Income
Notional Carrying Amount the Hedging Instrument is Comprehensive Comprehensive Statement of Statement of Affected by the
December 31, 2021 Amount Assets Liabilities Included Income Income Income Income Reclassification
Call spread swaps US$290 P635 P12 Prepaid expenses and P577 (P497) (P597) P194 Interest expense and
other current assets, Other other financing
noncurrent assets - net, charges and Other
and Accounts payable and income - net
accrued expenses
Cross currency swap 300 42 817 Other noncurrent assets - 680 (340) (476) 168 Interest expense and
net, Accounts payable and other financing
accrued expenses and charges and Other
Other noncurrent liabilities income - net
Interest rate risk:
Interest rate collar 60 1 5 Other noncurrent assets - (4) (16) - 16 Interest expense and
net, and Accounts payable other financing
and accrued expenses charges
No ineffectiveness was recognized in the 2022 and 2021 consolidated statement of income.
- 202 -
The table below provides a reconciliation by risk category of components of equity
and analysis of other comprehensive income items, net of tax, resulting from cash
flow hedge accounting.
2022 2021
Cost of Cost of
Hedging Hedging Hedging Hedging
Reserve Reserve Reserve Reserve
Beginning balance (P805) P272 (P1,271) P570
Changes in fair value:
Foreign currency risk 552 (397) 597 (497)
Foreign currency and
interest rate risks 2,236 (886) 1,195 (340)
Interest rate risk 343 (102) 24 (16)
Amount reclassified to
profit or loss (1,606) 243 (1,073) 378
Tax effect (381) 275 (277) 177
Ending balance P339 (P595) (P805) P272
Derivative Instruments Not Designated as Hedges

The Group enters into certain derivatives as economic hedges of certain underlying
exposures. These include freestanding and embedded derivatives found in host
contracts, which are not designated as accounting hedges. Changes in fair value of
these instruments are accounted for directly in the consolidated statements of
income. Details are as follows:
Freestanding Derivatives
Freestanding derivatives consist of interest rate, foreign currency and commodity
derivatives entered into by the Group.
Interest Rate Swap

The Group has outstanding interest rate swap with notional amount of US$365 as at
December 31, 2022. Under the agreement, the Group receives floating interest rate
based on LIBOR and pays fixed interest rate up to 2026. The net positive fair value
of the swap amounted to P45 as at December 31, 2022.
Currency Forwards
The Group has outstanding foreign currency forward contracts with aggregate
notional amount of US$959 and US$748 as at December 31, 2022 and 2021,
respectively, and with various maturities in 2022 and 2023. The positive (negative)
fair value of these currency forwards amounted to (P47) and P380 as at
Currency Options
The Group has outstanding currency options with aggregate notional amount of
US$1,665 and US$400 as at December 31, 2022 and 2021, respectively, and with
various maturities in 2022 and 2023. The net negative fair value of these currency
options amounted to P1,801 and P7 as at December 31, 2022 and 2021,
respectively.
Commodity Swaps
The Group has outstanding swap agreements covering its fuel oil, coal and
aluminum requirements, with various maturities in 2022 and 2023. Under the
agreements, payment is made either by the Group or its counterparty for the
difference between the hedged fixed price and the relevant price index.
- 203 -
The outstanding notional quantity of fuel oil were 31.4 million barrels and 24.6 million
barrels as at December 31, 2022 and 2021, respectively. The net positive (negative)
fair value of these swaps amounted to P506 and (P533) as at December 31, 2022
The outstanding notional quantity of coal was 117,000 metric tons and 96,000 metric
tons as at December 31, 2022 and 2021, respectively. The positive fair value of
these swaps amounted to P178 and P62 as at December 31, 2022 and 2021,
respectively.
Embedded Derivatives
The Group’s embedded derivatives include currency forwards embedded in
non-financial contracts.
Embedded Currency Forwards

The total outstanding notional amount of currency forwards embedded in non-
financial contracts amounted to US$141 and US$260 as at December 31, 2022 and
2021, respectively. These non-financial contracts consist mainly of foreign currency-
denominated purchase orders, sales agreements and capital expenditures. The
embedded forwards are not clearly and closely related to their respective host
contracts. The net negative fair value of these embedded currency forwards
amounted to P121 and P209 as at December 31, 2022 and 2021, respectively.
The Group recognized marked-to-market losses from freestanding and embedded

derivatives amounting to P23,601, P9,427 and P5,007 in 2022, 2021 and 2020,
Fair Value Changes on Derivatives

The net movements in fair value of all derivative instruments are as follows:
2022 2021
Balance at beginning of year (P463) (P3,263)
Net change in fair value of derivatives:
Designated as accounting hedge 1,746 1,492
Not designated as accounting hedge (23,589) (9,366)
(22,306) (11,137)
Less fair value of settled instruments (23,098) (10,674)
Balance at end of year P792 (P463)
Fair Value Hierarchy

Financial assets and financial liabilities measured at fair value in the consolidated
statements of financial position are categorized in accordance with the fair value
hierarchy. This hierarchy groups financial assets and financial liabilities into three
levels based on the significance of inputs used in measuring the fair value of the
financial assets and financial liabilities (Note 3).
- 204 -
The table below analyzes financial instruments carried at fair value by valuation
method:

Level 1 Level 2 Total Level 1 Level 2 Total
Financial Assets
Derivative assets P - P3,624 P3,624 P - P1,529 P1,529
Financial assets at FVPL - 1,349 1,349 - 298 298
Financial assets at FVOCI 843 6,476 7,319 777 41,205 41,982
Derivative liabilities - 2,832 2,832 - 1,992 1,992
The Group has no financial instruments valued based on Level 3 as at December 31,
2022 and 2021. In 2022 and 2021, there were no transfers between Level 1 and
Level 2 fair value measurements, and no transfers into and out of Level 3 fair value
measurement.
41. Event After the Reporting Date
Petron
Partial Redemption of US$500 SPCS
On January 4, 2023, Petron conducted a tender offer of up to US$50 to the holders

of its outstanding US$500 SPCS issued and listed with the SGX-ST in January 2018.
On January 12, 2023, the expiration deadline of the tender offer, a total of US$22
(P1,118) in principal amount of SPCS were accepted by Petron. Security holders that
validly tendered their securities at or prior to the expiration deadline and which
Petron accepted for purchase from such security holder were paid the applicable
purchase price of US$927.00 per US$1,000.00 on January 19, 2023.
42. Registration with the Board of Investments (BOI) and Others
a. San Miguel Global Power
o In 2013, MPI and LPI were granted incentives by the BOI on a pioneer status
for six years subject to the representations and commitments set forth in the
application for registration, the provisions of Omnibus Investments Code of
1987 (Executive Order (EO) No. 226), the rules and regulations of the BOI
and the terms and conditions prescribed. On October 5, 2016, BOI granted
LPI's request to move the start of its commercial operation and Income Tax
Holiday (ITH) reckoning date from February 2016 to September 2017 or
when the first kilowatt-hour (kWh) of energy was transmitted after
commissioning or testing, or one month from the date of such commissioning
or testing, whichever comes earlier as certified by NGCP. Subsequently, on
December 21, 2016, BOI granted a similar request of MPI to move the start
of its commercial operation and ITH reckoning date from December 2015 to
July 2016, or the actual date of commercial operations subject to compliance
with the specific terms and conditions, due to delay in the implementation of
the project for reasons beyond its control. MPI’s request on the further
extension of the ITH reckoning date from July 2016 to September 2017 was
likewise approved by the BOI on December 5, 2018. The ITH period for Unit
1 and Unit 2 of LPI commenced on May 26, 2017. The ITH incentives shall
only be limited to the conditions given under the specific terms and
conditions of their respective BOI registrations.
- 205 -
o On September 20, 2016, LETI was registered with the BOI under EO No. 226
as expanding operator of 2 x 150 MW Circulating Fluidized Bed Coal-fired
Power Plant (Phase II Limay Greenfield Power Plant) on a non-pioneer
status. The BOI categorized LETI as an "Expansion" based on the 2014 to
2016 IPP's Specific Guidelines for "Energy" in relation to LPI's 2 x 150 MW
Coal-fired Power Plant (Phase I Limay Greenfield Power Plant). As a
registered entity, LETI is entitled to certain incentives that include, among
others, an ITH for three years from January 2018 or date of actual start of
commercial operations, whichever is earlier, but in no case earlier than the
date of registration. The ITH incentives shall only be limited to the conditions
given under the specific terms and conditions of LETI’s BOI registrations.
In June 2017, the BOI approved the transfer of ownership and registration of
Phase II Limay Greenfield Power Plant from LETI to LPI. On
July 13, 2018, BOI granted the request of LPI to move the start of its
commercial operation and ITH reckoning date from January 2018 to March
2018 or actual start of commercial operations, whichever is earlier. The ITH
period for Unit 3 and Unit 4 commenced on March 26, 2018 and expired in
2021.
o SPI, SRHI and SPPC are registered with the BOI as administrator of their
respective power plants, on a pioneer status with non-pioneer incentives and
were granted ITH for four years without extension beginning August 1, 2010
up to July 31, 2014, subject to compliance with certain requirements under
their registrations. The ITH incentive availed was limited only to the sale of
power generated from the power plants. Upon expiration of the ITH in 2014,
SPI, SRHI and SPPC are now subject to the regular income tax rate.
Accordingly, applications for deregistration have been filed by SPI, SRHI and
SPPC and the same were approved by the BOI on its letter dated
February 22, 2022.
o On August 21, 2007, SEPC was registered with the BOI under EO No. 226,
as New Domestic Producer of Coal on a Non-pioneer Status.
o On October 12, 2012, MPPCL received the BOI approval for the application
as expanding operator of 600 MW Coal-Fired Thermal Power Plant. As a
registered entity, MPPCL is entitled to ITH for three years from June 2017 or
actual start of commercial operations, whichever is earlier (but not earlier
than the date of registration) subject to compliance with the specific terms
and conditions set forth in the BOI registration. On May 27, 2014, the BOI
approved MPPCL’s request to move the start of its commercial operation and
the reckoning date of the ITH entitlement from June 2017 to December 2018.
On June 17, 2015, the BOI subsequently granted MPPCL’s requests to
downgrade the registered capacity from 600 MW to 300 MW.
On December 21, 2015, MPPCL received the BOI approval for the
application as new operator of 10 MW BESS Project on a pioneer status. The
BESS Facility provides 10 MW of interconnected capacity and enhances the
reliability of the Luzon grid using the Advancion energy storage solution. As a
registered entity, MPPCL is entitled to incentives that include, among others,
an ITH for six years from December 2018 or date of actual start of
commercial operations, whichever is earlier (but not earlier than the date of
registration) subject to compliance with the specific terms and conditions of
MPPCL’s BOI registration. The ITH period for the 10 MW BESS of MPPCL
commenced on December 1, 2018. On October 1, 2020, MPPCL likewise
received the BOI approval on the additional 20 MW BESS Phase 2 Project of
MPPCL.
- 206 -
On February 23, 2021, MPPCL received the BOI approval for the
applications as new operator of 315 MW Super Critical Pulverized Coal
Thermal Power Plant Unit 4, and as new operator of 315 MW Super Critical
Pulverized Coal Thermal Power Plant Unit 5. Each registered activity is
entitled to a four-year ITH reckoned from the start of commercial operations
in September 2024 and November 2024, respectively.
o On August 24, 2016, SPESC received the BOI approval for the application as
new operator of 2 x 20 MW Kabankalan Advancion Energy Storage Array on
a pioneer status. SPESC, a registered entity, is entitled to incentives that
include, among others, an ITH for six years from July 2019 to December
2024 or date of actual start of commercial operations, whichever is earlier
(but not earlier than the date of registration). On November 27, 2019, SPESC
filed a request with the BOI to move the reckoning date of the ITH entitlement
from July 2019 to July 2021. Due to the delays brought about by the
pandemic, a subsequent request was filed to move the reckoning date to
January 2022. On December 17, 2021, the BOI granted the request of
SPESC Storage for the movement of start of commercial operations and ITH
reckoning to January 2022. The incentives shall be limited to the specific
terms and conditions of SPESC’s BOI registration.
o On November 29, 2019, the BOI has approved the application of UPSI as
new operator of BESS Component of Integrated Renewable Power Facility
(R-Hub) covering various sites across the Philippines. The BOI has also
approved UPSI’s subsequent applications covering additional sites. Each
registered site was granted with certain incentives including ITH, among
others.
o On February 23, 2021, EERI received the BOI approval for the applications
as new operator of 850 MW BCCPP Phase 1, and 850 MW BCCPP Phase 2
located in Barangay Dela Paz Proper, Batangas City, Batangas. Each
registered activity is entitled to a four-year ITH reckoned from April 2023 and
October 2026, for Phase 1 and Phase 2, respectively, or date of actual start
of commercial operations, whichever is earlier, but in no case earlier than the
date of registration.
o On November 29, 2022, the BOI has approved the application of San Miguel
Global Power Light and Power Corp. (SGLPC) as a Renewable Energy
Developer of Solar Energy Resources located at Lucanin Industrial Estate,
Mariveles, Bataan. SGLPC was granted with certain incentives including a
seven-year ITH reckoned from the start of commercial operation in October
2023, among others.
Registration with the Authority of the Freeport Area of Bataan (AFAB)

On April 24, 2019, MPGC was registered with the AFAB, subject to annual
renewal, as engaged in business of producing and generating electricity, and
processing fuels alternative for power generation, among others, at the Freeport
Area of Bataan (FAB). As a FAB enterprise, MPGC will operate a 4 x 150 MW
power plant located in Mariveles, Bataan. FAB granted MPGC certain incentives
that include, among others, an ITH for four years for original project effective on
the committed date or actual date of start of commercial operations, whichever is
earlier. On December 13, 2021, MPGC has been granted a renewed certificate
of registration with AFAB which now remains valid and in effect as long as
MPGC remains in good standing or until revoked or cancelled.
- 207 -
License Granted by the ERC
On August 4, 2008, August 22, 2011 and August 24, 2016, MPPCL, SMELC and
LPI, respectively, were granted a RES License by the ERC pursuant to
Section 29 of the EPIRA, which requires all suppliers of electricity to the
contestable market to secure a license from the ERC. The term of the RES
License is for a period of five years from the time it was granted and renewable
thereafter.
On August 19, 2016, the ERC approved the renewal of SMELC’s RES License
for another five years from August 22, 2016 up to August 21, 2021. On
August 18, 2021, the ERC has granted the extension of the validity of the RES
License for 15 days from August 21, 2021 until September 5, 2021 to allow
SMELC to complete the transfer of its remaining contestable customer to LPI.
On August 3, 2022, the ERC has extended the validity of LPI’s and MPPCL’s
RES License for one year from September 30, 2022 until September 29, 2023,
pending final evaluation of its RES license renewal application.
b. SMFB
SMFI
SMFI is registered with the BOI and AFAB for certain feedmill, poultry, meats and
ready-to-eat meals projects. In accordance with the provisions of EO No. 226
and the RA No. 9728, also known as “The Freeport Area of Bataan Act of 2009”,
pursuant to RA No. 11534 or the CREATE Act, the projects are entitled, among
others, to fiscal incentives described as follows:
o New Producer of Hogs. SMFI’s (formerly Monterey Foods Corporation)

Sumilao Hog Project (Sumilao Hog Project) was registered with the BOI on a
pioneer status on July 30, 2008 under Certificate of Registration
No. 2008-192. The Sumilao Hog Project was entitled to ITH for a period of
six years, extendable under certain conditions to eight years.
SMFI’s six-year ITH for the Sumilao Hog Project ended on January 31, 2015.
SMFI’s application for one year extension of ITH from February 1, 2015 to
January 31, 2016 was approved by the BOI on May 20, 2016. Application for
the second year extension of ITH was no longer pursued by SMFI.
Notwithstanding the expiration of ITH benefit in 2016, SMFI is still required to

continue the submission of annual reports to the BOI for a period of five
years from the last year of ITH availment pursuant to BOI Circular
No. 2014-01.
On February 11, 2021, SMFI requested for the cancellation of its Certificate
of Registration No. 2008-192. On July 21, 2021, by virtue of Resolution
No. 27-02, series of 2021, the Management Committee of the BOI noted the
action taken by the Executive Director in approving the request for
cancellation and removal of said registration from the BOI’s Book of Registry.
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o New Producer of Animal Feeds (Pellet, Crumble and Mash). The San
Ildefonso, Bulacan feedmill project (Bulacan Feedmill Project) was registered
with the BOI on a non-pioneer status on April 14, 2016 under Certificate of
Registration No. 2016-074. The Bulacan Feedmill Project is entitled to ITH
for four years from July 2018 or actual start of commercial operations,
whichever is earlier, but in no case earlier than the date of registration,
extendable under certain conditions, but in no case should the aggregate ITH
period exceed eight years. The four-year ITH period of the project which
commenced on July 1, 2018 had expired last June 30, 2022.
o New Producer of Animal and Aqua Feeds. The Sta. Cruz, Davao feedmill
project (Davao Feedmill Project) was registered with the BOI on a non-
pioneer status on April 14, 2016 under Certificate of Registration
No. 2016-073. The Davao Feedmill Project is entitled to ITH for four years
from July 2018 or actual start of commercial operations, whichever is earlier,
but in no case earlier than the date of registration, extendable under certain
conditions, but in no case should the aggregate ITH period exceed eight
years.
On May 24, 2019, the BOI approved SMFI’s request to move the Davao
Feedmill Project’s start of commercial operations and ITH reckoning date to
April 2019. The ITH period of the project commenced on April 1, 2019 and
will expire on March 31, 2023.
o New Producer of Animal Feeds (Pellet, Crumble and Mash). The Mandaue,
Cebu feedmill project (Cebu Feedmill Project) was registered with the BOI on
a non-pioneer status on November 10, 2015 under Certificate of Registration
No. 2015-251. The Cebu Feedmill Project is entitled to ITH for four years
from July 2018 or actual start of commercial operations, whichever is earlier,
but in no case earlier than the date of registration, extendable under certain
conditions, but in no case should the aggregate ITH period exceed
eight years.
On May 24, 2019, the BOI approved SMFI’s request to move the Cebu
Feedmill Project’s start of commercial operations and ITH reckoning date to
December 2019 and will expire on November 2023.
o SMFI’s Bataan feedmill project (Bataan Feedmill Project) was registered with
the AFAB as a Manufacturer of Feeds for Poultry, Livestock and Marine
Species on January 6, 2017 under Certificate of Registration No. 2017-057,
valid for a period of one year, renewable annually subject to qualifications as
determined by AFAB.
Said AFAB registration of the Bataan Feedmill Project has been renewed
accordingly as follows:
Registration Certificate of Annual Period

Renewal Date Registration No. Covered
March 6, 2018 2018-096 2018
February 14, 2019 2019-079 2019
December 10, 2019 2020-047 2020
December 29, 2020 2021-081 2021
May 30, 2022 2022-111 2022
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Under the terms of SMFI’s AFAB registration, the Bataan Feedmill Project is
entitled to incentives which include, among others, ITH for four years from
May 2018 or actual start of commercial operations, whichever is earlier, but
in no case earlier than the date of registration. The ITH period of the project
which commenced on May 1, 2018 had expired last April 2022.
o New Producer of Ready-to-Eat Meals. The Sta. Rosa, Laguna Food Service
project (Ready-to-Eat Project) was registered with the BOI on a non-pioneer
status on December 13, 2017 under Certificate of Registration No. 2017-335.
The Ready-to-Eat Project is entitled to ITH for four years from March 2019 or
actual start of commercial operations, whichever is earlier, but in no case
earlier than the date of registration.
On March 19, 2021, SMFI requested for the cancellation of its Certificate of
Registration No. 2017-335. On May 19, 2021, by virtue of Resolution
No. 19-07, series of 2021, the Management Committee of the BOI noted the
cancellation of said registration undertaken by the Executive Director and the
deletion of the registration from the BOI’s Book of Registry.
o New Domestic Producer of Animal Feeds (in Pellet, Crumble and Mash). The
Phividec, Tagoloan, Misamis Oriental feedmill project (CDO Feedmill Project)
was registered with the BOI on a non-pioneer status on May 27, 2020 under
Certificate of Registration No. 2020-075. The CDO Feedmill Project is
entitled to ITH for four years from June 2020 or actual start of commercial
operations, whichever is earlier, but in no case earlier than the date of
registration, extendable under certain conditions, but in no case should the
aggregate ITH period exceed eight years. ITH period of the project
commenced on June 1, 2020 and will expire on May 2024.
With the current provisions of RA No. 11534 or the CREATE Act, registered
investment projects prior to CREATE granted with ITH are entitled to finish their
ITH entitlement as scheduled, and are given an option to reapply for new tax
incentives for the same activity as provided under Section 294 (B) of the same
Act.
PF-Hormel
PF-Hormel was registered with the BOI under Registration No. 2017-033 on a
non-pioneer status as an Expanding Producer of Processed Meat (Hotdog) for its
project in General Trias, Cavite on January 31, 2017.
Under the terms of PF-Hormel’s BOI registration and subject to certain

requirements as provided in EO No. 226, PF-Hormel is entitled to incentives
which include, among others, ITH for three years from December 2017 or actual
start of commercial operations, whichever is earlier, but in no case earlier than
the date of registration. The ITH period of the project commenced on
December 1, 2017 until November 2020.
Notwithstanding the expiration of ITH benefit in 2020, PF-Hormel is still required

to submit the annual reports to the BOI until 2025, or for a period of five years
from the last year of ITH availment pursuant to BOI Circular No. 2014-01.
SMMI
SMMI was registered with the BOI under Registration No. 2016-035 on a
non-pioneer status as an Expanding Producer of Wheat Flour and its
By-Products (Bran and Pollard) for its flour mill expansion project in Mabini,
Batangas on February 16, 2016.
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Under the terms of SMMI’s BOI registration and subject to certain requirements
as provided in EO No. 226, SMMI is entitled to incentives which include, among
others, ITH for three years from July 2017 or actual start of commercial
registration.
On October 25, 2017, the BOI approved SMMI’s request to adjust the ITH
reckoning date to December 2018 or actual start of commercial operations,
whichever is earlier. SMMI subsequently requested to further adjust the ITH
reckoning date to July 2019 or actual start of commercial operations, whichever
is earlier which was approved by BOI on July 25, 2019.
On July 25, 2019, the BOI approved SMMI’s subsequent request to further adjust
the ITH reckoning date to July 2019 or actual start of commercial operations,
whichever is earlier. The ITH period of the project commenced on December 1,
2019.
On August 7, 2020, by virtue of Resolution No. 15-19, Series of 2020, the BOI
granted SMMI’s request for amendment of ITH Base Figure from peso sales
value of P9,582 to sales volume of 388,447 metric tons, which shall be effective
only from taxable year 2020 onwards.
The three-year ITH period of the project which commenced on December 1,

2019 had expired last June 30, 2022.
c. Petron
Refinery Master Plan 2 (RMP-2) Project

On June 3, 2011, the BOI approved Petron’s application under the Downstream
Oil Industry Deregulation Act (RA No. 8479) as an Existing Industry Participant
with New Investment in Modernization/Conversion of Bataan Refinery’s RMP-2.
The BOI is extending the following major incentives:
i. ITH for five years without extension or bonus year from July 2015 or actual
start of commercial operations, whichever is earlier, but in no case earlier
than the date of registration based on the formula of the ITH rate of
exemption.
ii. Minimum duty of three percent and VAT on imported capital equipment and
accompanying spare parts.
iii. Importation of consigned equipment for a period of five years from date of
registration subject to posting of the appropriate re-export bond; provided
that such consigned equipment shall be for the exclusive use of the
registered activity.
iv. Tax credit on domestic capital equipment shall be granted on locally

fabricated capital equipment which is equivalent to the difference between
the tariff rate and the three percent duty imposed on the imported
counterpart.
v. Exemption from real property tax on production equipment or machinery.
vi. Exemption from contractor’s tax.
The RMP-2 Project commenced its commercial operations on January 1, 2016

and the ITH entitlement period ended in June 2020.
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Petron Bataan Refinery
In December 2021, Petron Bataan Refinery renewed its registration with the
AFAB as a registered enterprise. The registration shall be valid and in effect as
long as the registered enterprise remains in good standing or until revoked or
cancelled. FAB-registered enterprises are entitled to avail of fiscal incentives
under the Special Economic Zone Act of 1995 or the Omnibus Investment Code
of 1987 such as (i) tax- and duty-free importation of merchandise which include
raw materials, capital equipment machineries and spare parts; (ii) exemption
from export wharfage dues, export taxes, imposts, and fees; and (iii) VAT zero-
rating of local purchases, subject to compliance with BIR and AFAB
requirements. Further, VAT will only be imposed on the company as a FAB
Registered Enterprise upon the withdrawal of products from the refinery instead
of the VAT being payable upon importation of crude oil.
d. Packaging
SMYPC
On December 7, 2018, the BOI issued the certificate of registration to SMYPC’s
Plastic Caps Plant in Laguna as an expanding producer of injection plastic caps
on a non-pioneer status under EO No. 226. The registration entitles SMYPC to
certain tax and other incentives including but not limited to a three-year ITH
starting June 1, 2019 when it started its commercial operations and will expire on
May 31, 2022. On May 13, 2022, the BOI approved SMYPC’s request for the
deferment of its ITH availment for the year 2021. SMYPC is therefore entitled for
the remaining ITH entitlement period from January 2022 to May 31, 2023.
On June 19, 2019, the BOI issued the certificate of registration to SMYPC’s
Plastics Plant in Cebu as a new producer of plastic products such as but not
limited to crates and poultry flooring on a non-pioneer status. The registration
entitles SMYPC to a four-year ITH starting July 1, 2019 when it started its
commercial operations and will expire on June 30, 2023.
In addition to the ITH, SMYPC is entitled to the following benefits:
i. Importation of capital equipment, spare parts and accessories at zero duty

from the date of effectivity of EO No. 85 and its Implementing Rules and
Regulations for a period of three years from the effectivity of the EO or on
July 25, 2019 and until July 24, 2022.
ii. Exemption from taxes and duties on imported spare parts and consumable
supplies for export producers with Custom Bonded Manufacturing
Warehouse (CBMW) exporting at least 70% of production.
iii. Tax credit equivalent to the national internal revenue taxes and duties paid
on raw materials and supplies and semi-manufactured products used in
producing its export product and forming part thereof for a period of ten years
from start of commercial operations.
iv. Additional deduction for labor expense for a period of five years from
registration an amount equivalent to 50% of the wages corresponding to the
increment in number of direct labor for skilled and unskilled workers in the
year of availment as against the previous year, if the project meets the
prescribed ratio of capital equipment to the number of workers set by the
Board. This may be availed of for the first five years from the date of
registration but not simultaneously with ITH.
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v. Importation of consigned equipment for a period of ten years from the date of
registration, subject to posting of re-export bond.
vi. Employment of foreign nationals.
vii. Simplification of Customs procedures for the importation of equipment, spare

parts, raw materials and supplies.
viii. Exemption from wharfage dues, and any export tax, duty, impost and fee for
a period of ten years from the date of registration.
ix. Access to CBMW subject to the Customs rules and regulations.
The BOI issued a certificate of registration for SMYPC’s Glass Plant in Cavite for
its Glass Expansion Project under EO No. 226 was transferred to SMYPC. The
registration entitles SMYPC to certain tax and other incentives including but not
limited to ITH incentive starting March 1, 2019 and will expire on February 28,
2022. On May 13, 2022, the BOI approved SMYPC’s request for the deferment
of its ITH availment for the year 2021. SMYPC is therefore entitled for the
remaining ITH entitlement period from January 2022 to February 28, 2023.
SYFMC
On December 3, 2019, the BOI issued the certificate of registration to SYFMC’s
project as a new producer of molds for glass on a pioneer status under EO
No. 226. The registration entitles SYFMC to certain tax and other incentives.
The ITH incentive is for a period of six years starting May 1, 2020 when it started
its commercial operations. The income qualified for ITH shall be limited to the
income directly attributable to the eligible revenue granted from the registered
project.
e. SMCSLC
SMCSLC
SMCSLC is registered with the BOI under the Omnibus Investments Code of
1987 for the operation of domestic cargo vessels and motor tankers, where
SMCSLC is entitled to the following incentives:
i. Employment of Foreign Nationals. This may be allowed in supervisory,

technical or advisory positions for five years from the date of registration of
the project as indicated above. The president, general manager and
treasurer of foreign-owned registered firms or their equivalent shall not be
subjected to the foregoing limitations.
ii. Additional Deduction for Labor Expense. For the first five years from
registration, SMCSLC shall be allowed an additional deduction from taxable
income equivalent to 50% of the wages of additional skilled and unskilled
workers in the direct labor force. The incentive shall be granted only if the
enterprise meets a prescribed capital to labor ratio and shall not be availed
simultaneously with the ITH.
iii. Importation of Capital Equipment, Spare Parts and Accessories. For the
operation of motor tankers, SMCSLC may import capital equipment, spare
parts and accessories at zero percent duty from the date of registration of the
project as indicated above pursuant to EO No. 528 and its implementing
rules and regulations.
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The incentives with no specific number of years of entitlement as discussed in
the foregoing may be enjoyed for a maximum period of ten years from the start of
commercial operations and/or date of registration.
SLHBTC
In 2015, SLHBTC registered its own fuel storage facilities at Limay, Bataan under
Registration No. 2015-027. In 2016, its newly built oil terminal located at
Tagoloan, Cagayan de Oro was also registered with the BOI under Registration
No. 2016-145. With the registration, SLHBTC is entitled to the following
incentives under the RA No. 8479 from date of registration or date of actual start
of commercial operations, whichever is earlier, and upon fulfillment of the terms
enumerated below:
i. ITH
SLHBTC is entitled to ITH for five years without extension until August 31,
2021.
Only income directly attributable to the revenue generated from the

registered project [Storage and Bulk Marketing of 172,000,000 liters
(Tagoloan) or 35,000,000 liters (Limay) of petroleum products covered by
Import Entry Declaration or sourced locally from new industry participants]
pertaining to the capacity of the registered storage terminal shall be qualified
for the ITH.
ii. Additional Deduction from Taxable Income. SLHBTC shall be allowed an

additional deduction from taxable income of 50% of the wages corresponding
to the increment in number of direct labor for skilled and unskilled workers in
the year of availment as against the previous year if the project meets the
prescribed ratio of capital equipment to the number of workers set by the BOI
and provided that this incentive shall not be availed of simultaneously with
the ITH.
iii. Minimum Duty of 3% and VAT on Imported Capital Equipment. Importation

of brand new capital equipment, machinery and accompanying spare parts,
shall be entitled to this incentive subject to the following conditions:
o they are not manufactured domestically in sufficient quantity of

comparable quality and at reasonable prices;
o the equipment is reasonably needed and will be exclusively used in the

registered activity; and
o prior BOI approval is obtained for the importation as endorsed by the

DOE.
iv. Tax Credit on Domestic Capital Equipment. This shall be granted on locally
fabricated capital equipment equivalent to the difference between the tariff
rate and the three percent duty imposed on the imported counterpart.
v. Importation of Consigned Equipment. SLHBTC is entitled for importation of

consigned equipment for a period of five years from the date of registration
subject to posting of the appropriate bond, provided that such consigned
equipment shall be for the exclusive use of the registered activity.
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vi. Exemption from Taxes and Duties on Imported Spare Parts for Consigned
Equipment with Bonded Manufacturing Warehouse. SLHBTC is entitled to
this exemption upon compliance with the following requirements:
o at least 70% of production is imported;
o such spare parts and supplies are not locally available at reasonable
prices, sufficient quantity and comparable quality; and
o all such spare and supplies shall be used only on bonded manufacturing
warehouse on the registered enterprise under such requirements as the
Bureau of Customs may impose.
vii. Exemption from Real Property Tax on Production Equipment or Machinery.

Equipment and machineries shall refer to those reasonably needed in the
operations of the registered enterprise and will be used exclusively in its
registered activity. BOI Certification to the appropriate Local Government
Unit will be issued stating therein the fact of the applicant’s registration with
the BOI.
viii. Exemption from the Contractor’s Tax. BOI certification to the BIR will be
issued stating therein the fact of the applicant’s registration with the BOI.
ix. Employment of Foreign Nationals. This may be allowed in supervisory,

technical or advisory positions for five years from date of registration. The
President, General Manager and Treasurer of foreign-owned registered
enterprise or their equivalent shall not be subject to the foregoing limitations.
The incentives with no specific number of years of entitlement above may be

enjoyed for a maximum period of ten years from the start of commercial
operation and/or date of registration.
No ITH incentive was availed in 2022 because entitlements were already

expired. ITH incentives availed in 2021 amounted to P21.
Molave Tanker Corporation (MTC)

MTC is registered with the BOI under the Omnibus Investments Code of 1987 for
the operation of domestic cargo vessels and motor tankers where MTC is entitled
to the following incentives:
i. ITH
o New Domestic Shipping Operator (Oil Tanker Vessel - MTC Apitong,

2,993GT). The project was registered on January 11, 2017, where MTC
is entitled to ITH for four years until January 10, 2021. The 100% ITH
incentive shall be limited only to the revenue generated by the registered
project.
o New Domestic Shipping Operator (Oil Tanker Vessel - MTC Guijo - 2,993
GT). The project was registered on May 24, 2017, where MTC is entitled
to ITH for four years until May 23, 2021. The 100% ITH incentives shall
be limited only to the revenue generated by the registered project.
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ii. Employment of Foreign Nationals. This may be allowed in supervisory,
the project as indicated above. The President, General Manager and
Treasurer of foreign-owned registered firms or their equivalent shall not be
iii. Importation of Consigned Equipment. For the operation of cargo vessels,

MTC is entitled to importation of consigned equipment for a period of ten
years from the date of registration, subject to the posting of re-export bond.
iv. Importation of Capital Equipment, Spare Parts and Accessories. For the
operation of motor tankers, MTC may import capital equipment, spare parts
and accessories at zero percent duty from the date of registration of the
project as indicated above, pursuant to EO No. 528 and its implementing
v. Additional Deduction for Labor Expense. For the first five years from
registration, MTC shall be allowed an additional deduction from taxable
vi. Simplification of Customs procedures for the importation of equipment, spare


No ITH incentive was availed in 2022 because entitlements were already

expired. ITH incentives availed in 2021 amounted to P9.
Balyena Tanker Corporation (BTC)

BTC is registered with the BOI under the Omnibus Investments Code of 1987, as
amended, for the operation of domestic cargo vessels and motor tankers where
BTC is entitled to the following incentives:
i. ITH
o New Domestic Shipping Operator (LPG Carrier/Tanker Vessel - BTC

Balyena, 3,404 GT). The project was registered on December 14, 2016,
where BTC is entitled to ITH for four years until December 13, 2020.
o New Domestic Shipping Operator (One (1) Cargo Vessel - BTC Mt.
Samat, 1,685 GT). The project was registered on July 30, 2018, where
BTC is entitled to ITH for four years until July 29, 2022.
o New Domestic Shipping Operator (Cargo Vessel BTC - Harina, 872 GT).
The project was registered on November 9, 2018, where BTC is entitled
to ITH for four years until November 8, 2022.
o New Domestic Shipping Operator (Deck Cargo Vessel - BTC Mount

Makiling, 1,685 GT). The project was registered on November 9, 2018,
where BTC is entitled to ITH for four years until November 8, 2022.
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o New Domestic Shipping Operator (Cargo Vessel - BTC Soya, 2,426 GT).
The project was registered on July 19, 2019, where BTC is entitled to ITH
for four years until July 18, 2023.
o New Domestic Shipping Operator (Cargo Vessel - BTC Cassava, 2,426

GT). The project was registered on July 19, 2019, where BTC is entitled
to ITH for four years until July 18, 2023.
The 100% ITH incentives shall be limited only to the revenue generated by
the registered project.


BTC is entitled for importation of consigned equipment for a period of ten
operation of motor tankers, BTC may import capital equipment, spare parts
project as indicated above pursuant to EO No. 528 and its implementing
v. Additional deduction for labor expense. For the first five years from
registration, BTC shall be allowed an additional deduction from taxable

vii. Exemption from wharfage dues and any export tax, duty, impost and fees for
a period of ten years from date of registration.

ITH incentives availed in 2022 amounted to P1. No ITH incentive was availed in
2021.
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Narra Tanker Corporation (NTC)
NTC is registered with the BOI under the Omnibus Investments Code of 1987 for
the operation of domestic cargo vessels and motor tankers where NTC is entitled
to the following incentives:
i. ITH
o New Domestic Shipping Operator (Oil Tanker Vessel - NTC Agila,

1-2,112 GT). The project was registered on May 24, 2017, where NTC is
entitled to ITH for four years from May 2017, or actual start of commercial
registration. The 100% ITH incentives shall be limited only to the revenue
generated by the registered project.
o New Domestic Shipping Operator (Oil Tanker Vessel/Barge Ship - NTC

Haribon, 2,467 GT). The project was registered on May 15, 2019, where
NTC is entitled to ITH for four years from May 2019 or actual start of
commercial operations, whichever is earlier, but in no case earlier than
the date of registration. The 100% ITH incentives shall be limited only to
the revenue generated by the registered project.

Falcon, 2,467 GT). The project was registered on May 15, 2019, where
NTC is entitled to ITH for four years from May 2019 or actual start of

Heron, 2,219 GT). The project was registered on October 3, 2019, where
NTC is entitled to ITH for four years from October 2019 or actual start of

Flamingo, 2,219 GT). The project was registered on October 3, 2019,
where NTC is entitled to ITH for four years from October 2019 or actual
start of commercial operations, whichever is earlier, but in no case earlier
than the date of registration. The 100% ITH incentive shall be limited only
to the revenue generated by the registered project.


NTC is entitled for importation of consigned equipment for a period of ten
operation of motor tankers, NTC may import capital equipment, spare parts
project as indicated above, pursuant to EO No. 528 and its implementing
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v. Additional deduction for labor expense. For the first five years from
registration, NTC shall be allowed an additional deduction from taxable


ITH incentives availed in 2022 and 2021 amounted to P47 and P57, respectively.
f. Cement
ECC
On July 31, 2017, the BOI approved the application of ECC as an expanding.
producer of cement (Line 3) in Bulacan on a nonpioneer status. ECC's
registration with the BOI entitles it to the following fiscal and nonfiscal incentives
available to its registered project, among others:
i. ITH for income directly attributable to Line 3 for three (3) years from May
2018 or actual start of commercial operations, whichever is earlier;
ii. Importation of capital equipment, spare parts and accessories at zero duty;
iii. Additional deduction from taxable income of 50% of the wages

corresponding to the increment in number of direct labor for skilled and
unskilled workers in the year of availment as against the previous year if the
project meets the requirements as stated in the BOI certificate;
iv. Importation of consigned equipment for a period of 10 years from date of

registration, subject to posting of re-export bond;
v. Tax credit equivalent to the national internal revenue taxes and duties paid
producing export product and forming part thereof for a period of 10 years
from start of commercial operation;
vi. Exemption from wharfage dues, and any export tax, duty, impost and fee for
a period of 10 years from date of registration;
vii. Employment of foreign nationals which may be allowed in supervisory,

technical or advisory positions for five years from the date of registration; and
viii. Simplification of customs procedures for the importation of equipment, spare

In 2022, ECC availed benefits from ITH amounting to P706.
On November 4, 2020, the BOI granted the deferment of ECC's ITH availment
for 2020 due to the adverse effect of COVID-19 pandemic. Accordingly, ECC's
income tax for the 2020 was computed based on 30% regular corporate income
tax. No ITH incentive was availed in 2020.
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NCC
On January 15, 2018, SMNCI was registered with the BOI as a new producer of
cement on a non-pioneer status. SMNCI’s registration with the BOI entitles it to
the following fiscal and non-fiscal incentives available to its registered project,
among others:
i. ITH for four years from January 2023 or actual start of commercial
registration.
ii. Importation of capital equipment, spare parts and accessories at zero duty
under EO No. 22 and its Implementing Rules and Regulation.
iii. Additional deduction from taxable income of 50% of wages corresponding to

the increment in number of direct labor for skilled and unskilled workers in
the year of availment as against the previous year, if the project meets the
requirements as stated in the BOI Certificate.
iv. Importation of consigned equipment for a period of ten years from the date of
registration, subject to posting of re-export bond.
producing its export product and forming part thereof for a period of ten years
from start of commercial operations.
a period of ten years from date of registration.
vii. Employment of foreign nationals which may be allowed in supervisory,

technical or advisory positions for five years from date of registration.
viii. Simplification of Customs procedures for the importation of equipment, spare

As a result of the merger of NCC and SMNCI, the BOI registration for SMNCI’s
Lines A and B Cement Plant and Grinding Facility was transferred to NCC per
BOI Management Committee Resolution No.38-07, Series of 2021.
NCC’s cement lines A and B has not started its commercial operations as at
December 31, 2022. Thus, NCC has not availed yet of any tax incentives.
Solid North Mineral Corp. (SNMC)

On March 23, 2018, the BOI approved the application of SNMC as a new
producer of good, fine and coarse limestone on a non-pioneer status. SNMC's
registration with the BOI entitles it to the following fiscal and nonfiscal incentives
available to its registered project, among others:
i. Four-year ITH incentive, starting April 1, 2019, for activities directly

attributable in producing good, fine and coarse limestone;
ii. Importation of capital equipment, spare parts and accessories at zero duty;

unskilled workers in the year of availment as against the previous year if the
project meets the requirements as stated in the BOI certificate;
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iv. importation of consigned equipment for a period of 10 years from date of
v. Exemption from wharfage dues, and any export tax, duty, impost and fee for
a period of 10 years from date of registration; and
vi. Additional deduction from taxable income of expenses incurred in the

development of necessary and major infrastructure facilities
South Western Cement Corporation (SWCC)

On August 23, 2017, SWCC was registered with the BOI as a new producer of
cement on a non-pioneer status but with pioneer incentives (the project being
located in a less-developed area) under the heading "All Qualified Manufacturing
Activities including Agro-Processing" of the 2017 Investment Priorities Plan under
Executive Order No. 226. SWCC's registration with BOI entitles it to the following
fiscal and non-fiscal incentives available to its registered project, among others:
i. ITH for six years from May 2020 or actual start of commercial operations,
whichever is earlier but in no case earlier than the date of registration;
ii. Importation of capital equipment, spare parts and accessories at zero duty
under EO No. 22 and its implementing rules and regulations. Only equipment
directly needed and exclusively used in its operation shall be entitled to
capital equipment incentives.

unskilled workers in the year of availment as against the previous year, if the
project meets the prescribed ratio of capital equipment to the number of
workers set by the Board. This may be availed of for the first five years from
date of registration but not simultaneously with ITH;
iv. Importation of consigned equipment for a period of 10 years from the date of
on raw materials and suppliers and semi-manufactured products used in
producing its export product and forming part thereof for a period of 10 years
from start of commercial operations;
a period of 10 years from date of registration;
vii. Employment of foreign nationals may be allowed in supervisory, technical or

advisory positions for five years from date of registration. The president,
general manager and treasurer of foreign-owned registered enterprises or
their equivalent shall not subject to the foregoing limitations;
viii. Simplification of customs procedures for the importation of equipment, spare

parts, raw materials and supplies; and
ix. Additional deduction from taxable income equivalent to 100% of expenses

incurred in the development of necessary and major infrastructure and
facilities.
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On August 26, 2020, the BOI approved the request of SWCC for the movement
of start of commercial operation and ITH reckoning date of its registered activity
from May 2020 to December 2023, due to the delay in the processing of permits
in the Cebu site. Accordingly, no tax benefits from ITH incentives have been
availed of in 2021 and 2020.
Ionic Cementworks Industries Inc. (ICII)

o New Producer of Cement (Barangay Ilayang Palsabangon, Pagbilao,
Quezon). ICII was registered with the BOI on a non-pioneer status on
April 17, 2018 under Certificate of Registration No. 2018-086. ICII’s
registration with the BOI entitles it to the following fiscal and non-fiscal
incentives available to its registered project, among others:
i. ITH
a) ITH for four years from May 2021 or actual start of commercial
operations, whichever is earlier, but in no case earlier than the date
of registration.
b) Application for Bonus years, provided that the aggregate availment

shall not exceed eight years.
ii. Importation of capital equipment, spare parts and accessories at zero

duty under EO No.22 and its Implementing Rules and Regulation.
iii. Additional deduction from taxable income for a period of five years of
50% of wages corresponding to the increment in number of direct labor
for skilled and unskilled workers in the year of availment as against the
previous year, if the project meets the requirements as stated in the BOI
Certificate.
iv. Importation of consigned equipment for a period of ten years from the
date of registration, subject to posting of re-export bond.
v. Employment of foreign nationals which may be allowed in supervisory,

vi. Simplification of Customs procedures for the importation of equipment,

spare parts, raw materials and supplies.
vii. Exemption from wharfage dues, and any export tax, duty, impost and fee
for a period of ten years from date of registration.
o New Producer of Cement (Malicboy Cement Plant Project, Barangay

Kanlurang Malicboy, Pagbilao, Quezon). ICII was registered with the BOI on
a non-pioneer status under Certificate of Registration No. 2021-095 on
May 21, 2021. ICII’s registration with the BOI entitles it to the following fiscal
and non-fiscal incentives available to its registered project, among others:
i. ITH
a) ITH for four years from January 2026 or actual start of commercial
operations of Line 1, whichever is earlier, but in no case earlier than
the date of registration.
b) Application for Bonus years, provided that the aggregate availment

shall not exceed eight years.
- 222 -
ii. Importation of capital equipment, spare parts and accessories at zero
duty under EO No. 85 and its Implementing Rules and Regulation.
iii. Additional deduction from taxable income for a period of five years of
50% of wages corresponding to the increment in number of direct labor
for skilled and unskilled workers in the year of availment as against the
previous year, if the project meets the requirements as stated in the BOI
Certificate.
iv. Importation of consigned equipment for a period of ten years from the
date of registration, subject to posting of re-export bond.
v. Employment of foreign nationals which may be allowed in supervisory,

vi. Simplification of Customs procedures for the importation of equipment,

spare parts, raw materials and supplies.
vii. Exemption from wharfage dues, and any export tax, duty, impost and fee
for a period of ten years from date of registration.
ICII has not started commercial operations as at December 31, 2022. Thus, ICII
has not availed yet of any tax incentives.
43. Other Matters
a. Contingencies
The Group is a party to certain lawsuits or claims (mostly labor related cases)
filed by third parties which are either pending decision by the courts or are
subject to settlement agreements. The outcome of these lawsuits or claims
cannot be presently determined. In the opinion of management and its legal
counsel, the eventual liability from these lawsuits or claims, if any, will not have a
material effect on the consolidated financial statements of the Group.
▪ Excess Excise Tax Payments
Filed by the Parent Company
In 2004, the Parent Company was assessed excise taxes by the BIR on “San
Mig Light” which at that time was one of its products. These assessments
were contested by the Parent Company but nonetheless made the
corresponding payments. Consequently, the Parent Company filed three
claims for refund for overpayments of excise taxes with the BIR.
The first and second claims for refund were then elevated to the Court of Tax
Appeals (CTA) and went all the way to the Supreme Court which was
resolved in favor of the Parent Company. On September 8, 2020, the BIR
issued TCC Nos. 121-20-00012 and 121-20-00013 amounting to P782 and
P926, respectively in favor of SMC (Note 32). P255 and P62 out of P782
TCC was partially applied to the Parent Company’s 2022 and 2021 tax
obligations, respectively. As at December 31, 2022, the P926 TCC was not
yet applied to any of the Parent Company’s tax obligations.
- 223 -
The third claim for refund was consolidated with a claim for refund which was
filed by SMB, a company to which, effective October 1, 2007, the Parent
Company had spun off its domestic beer business. The claim was also
favorably resolved in favor of the Parent Company and SMB. On August 10,
2020, the BIR issued TCC No. 121-20-00010 amounting to P105 in favor of
SMC (Note 32), which was applied in full to the Parent Company’s tax
obligations as at December 31, 2021.
Filed by SMB
SMB filed 13 claims for refund for overpayments of excise taxes with the BIR
which were then elevated to the CTA by way of petition for review. Four of
these claims (i.e., CTA Case Nos. 7973, 8209, 8400 and 8591) were decided
by the Supreme Court in favor of SMB and tax credit certificates amounting
to P1,430 and P1,569 were received in 2019 and 2020, respectively. One
claim (CTA Case No. 10241) was withdrawn with the issuance of a tax credit
certificate in the amount of P162 in 2021. The remaining eight claims for
refund are still pending before the courts, as follows:
(a) Claim for refund of overpayments for the period of January 1, 2012 to
December 31, 2012 - Second Division docketed as CTA Case No. 8748
(December 19, 2013);
(b) Claim for refund of overpayments for the period of January 1, 2013 to
December 31, 2013 - Third Division docketed as CTA Case No. 8955
(December 19, 2014);
(c) Claim for refund of overpayments for the period of January 1, 2014 to
December 31, 2014 - Third Division docketed as CTA Case
No. 9223 (December 22, 2015);
(d) Claim for refund of overpayments for the period of January 1, 2015 to
December 31, 2015 - Second Division docketed as CTA Case
No. 9513 (December 28, 2016);
(e) Claim for refund of overpayments for the period from January 1, 2016 to
December 31, 2016 - First Division docketed as CTA Case
No. 9743 (December 29, 2017);
(f) Claim for refund of overpayments for the period from January 1, 2017 to
December 31, 2017 - Third Division docketed as CTA Case
No. 10000 (December 27, 2018);
(g) Claim for refund of overpayments for the period from January 1, 2018 to
December 31, 2018 - First Division docketed as CTA Case
No. 10223 (December 11, 2019); and
(h) Claim for refund for overpayments for the period of January 23, 2020 to
February 9, 2020 - docketed as CTA Case No. 10745 (via electronic mail
on January 21, 2022, registered mail on January 24, 2022, and personal
filing on February 2, 2022).
- 224 -
CTA Case No. 8748 was decided in favor of SMB by the CTA Second
Division, ordering the BIR to refund to SMB the amount of P761. The BIR
appealed the decision to the CTA En Banc by way of a Petition for Review,
which was denied on October 11, 2018. A Motion for Reconsideration was
filed by the BIR on November 5, 2018 (docketed as CTA EB Case No. 1730)
to which SMB filed an opposition. The CTA En Banc denied BIR’s Motion for
Reconsideration. Thus, the BIR filed a Petition for Review with the Supreme
Court in June 2019. The Supreme Court issued a Resolution dated
January 27, 2021 denying the BIR’s Petition for Review for failure to show
any reversible error warranting the exercise by the Supreme Court of its
discretionary appellate jurisdiction. On December 6, 2022, SMB received
from the Clerk of Court of the Supreme Court the corresponding “ENTRY OF
JUDGMENT” certifying that the aforementioned Resolution dated
January 27, 2021 denying the BIR’s Petition for Review had become final
and executory. On January 6, 2023, SMB filed in CTA Case No. 8748 a
Motion for Execution of the final judgment of the CTA Second Division which
granted SMB’s claim for refund of P761. The Writ of Execution was issued on
February 14, 2023.
CTA Case No. 8955, SMB’s claim for refund for P83, was decided against
SMB by the CTA Third Division for having purportedly availed of the wrong
mode of appeal as SMB should have filed the petition with the RTC rather
than through a collateral attack on issuances of the BIR via a judicial claim
for refund. SMB, through counsel, filed a Motion for Reconsideration, arguing
that the case involves a claim for refund and is at the same time a direct
attack on the BIR issuances which imposed excise tax rates which are
contradictory to, and violative of, the rates imposed in the Tax Code. With the
denial of SMB’s Motion for Reconsideration on January 5, 2018, SMB
elevated the case to the CTA En Banc by way of a Petition for Review. On
September 19, 2018, the CTA En Banc reversed and set aside the decision
of the CTA Third Division and remanded the case to the CTA Third Division
for the resolution of the same on the merits (docketed as CTA EB Case
No. 1772). A Motion for Reconsideration was filed by the BIR which was
subsequently denied by the CTA En Banc in a resolution dated January 24,
2019. The BIR sought an extension within which to file a Petition for Review
with the Supreme Court which was docketed as G.R. No. 244738. After the
BIR filed a Manifestation stating that it will no longer file a Petition for Review
on Certiorari, the Supreme Court issued a Resolution dated January 8, 2020
considering the case closed and terminated. The records were remanded to
the CTA Third Division. Upon return of the case to the Division, SMB filed a
motion for leave to file a “Supplemental Formal Offer of Evidence”, where it
offered additional exhibits. The Court granted the motion but directed the
following: (1) holding of a Commissioner’s Hearing for marking of the
additional exhibits; and (2) recall of SMB’s witness. Subsequently, SMB
marked its additional exhibits and its witness testified on recall. SMB filed its
Supplemental Formal Offer of Evidence on April 4, 2022 and its
Supplemental Memorandum on August 11, 2022. On September 20, 2022,
the Court issued a Resolution stating that the case was deemed submitted
for decision.
- 225 -
CTA Case No. 9223, SMB’s claim for refund for P60, was partially decided in
favor of SMB by the CTA Third Division. From the CTA Third Division, SMB
and the BIR filed separate Petitions for Review with the CTA En Banc. On
February 21, 2022, the CTA En Banc rendered a Decision denying the
separate Petitions for Review. On March 21, 2022, SMB elevated the
Decision of the CTA En Banc by way of a Petition for Review to the Supreme
Court, where it was docketed as G.R. No. 258812, insofar as the Decision of
the CTA En Banc did not grant its claim for refund of excess excise taxes
paid on “San Mig Light” in kegs in the amount of P5. On July 28, 2022, the
BIR, on its own and without the assistance of the Office of the Solicitor
General (OSG), also elevated the aforesaid Decision of the CTA En Banc to
the Supreme Court, where it was docketed as G.R. No. 261197. In an earlier
Manifestation and Motion dated July 21, 2022, the OSG informed the SC that
it decided not to file a Petition for Review in G.R. No. 261197 considering
that the Decision and Resolution of the CTA En Banc are in order. In a
Resolution dated July 13, 2022, the Supreme Court in G.R. No. 258812
required the OSG to file a Comment on SMB’s Petition for Review. On
October 13, 2022, the OSG filed a Manifestation and Motion in G.R.
No. 258812 praying that it be excused from filing the required Comment
because the Decision of the CTA En Banc is in order and should be
respected. In a Resolution dated January 11, 2023, the Supreme Court
required SMB in G.R. No. 261197 to file a Comment on the BIR’s Petition for
Review. In its Comment, SMB argued, among other things, that the Petition
for Review filed by the BIR Litigation Division should not be entertained by
the Court because under Section 35, paragraph (1), Chapter 12, Title III, of
the Administrative Code of 1987, the OSG is mandated to directly handle
appellate cases of the BIR in the Supreme Court.
favor of SMB by the CTA Second Division. From the CTA Second Division,
SMB and the BIR filed separate Petitions for Review with the CTA En Banc.
On February 4, 2021, the CTA En Banc affirmed the decision of CTA Second
Division. Both parties filed motions for partial reconsideration of the CTA En
Banc’s Decision. In its October 22, 2021 Resolution, the CTA En Banc
denied the parties’ motion for reconsideration. On December 16, 2021, SMB
filed a Petition for Review on Certiorari with the Supreme Court docketed as
G.R. No. 257784, insofar as the said Decision of the CTA En Banc did not
grant SMB’s claim for refund of excess excise taxes paid on “San Mig Light”
in kegs in the amount of P4. On February 2, 2022, the BIR also elevated by
way of Petition for Review the Decision of the CTA En Banc to the Supreme
Court, where it was docketed as G.R. No. 259263. In a Resolution dated
March 30, 2022, the Supreme Court issued a Resolution which consolidated
G.R. No. 257784 with G.R. No. 259263, and required the BIR to file a
Comment on SMB’s Petition for Review in G.R. No. 257784. On June 3,
2022, the OSG filed the required Comment.
- 226 -
favor of SMB by the CTA First Division. The Motion for Partial New Trial of
SMB and Motion for Reconsideration filed by SMB and the BIR were denied.
Both parties filed their respective Petition for Review with the CTA En Banc.
On February 10, 2022, the CTA En Banc rendered a Decision denying the
Petitions for Review. On March 21, 2022, SMB elevated by way of a Petition
for Review the Decision of the CTA En Banc to the Supreme Court, where it
was docketed as G.R. No. 258813, insofar as the said Decision did not grant
its Claim for Refund of excess excise taxes paid on “San Mig Light” in kegs in
the amount of P3. On July 29, 2022, the BIR also elevated the Decision of
the CTA En Banc by way of a Petition for Review with the Supreme Court,
where it was docketed as G.R. No. 261196. In a Resolution dated June 15,
2022, the Supreme Court required the BIR to file a Comment on SMB’s
Petition for Review in G.R. No. 258813. On July 25, 2022, the OSG, on
behalf of the BIR, filed the required Comment.
CTA Case No. 10000, SMB’s claim for refund for P123, was filed on
December 27, 2018 and is pending with the CTA Third Division. On
September 22, 2021, the CTA Third Division partially granted SMB’s Petition
for Review and ordered the refund of P123. The BIR filed for a motion for
reconsideration. On March 23, 2022, as required by the Court, SMB filed an
opposition to the BIR’s motion for reconsideration. The aforesaid motion of
the BIR was denied in a Resolution of the Court dated April 28, 2022. On
June 10, 2022, the BIR elevated the Decision and Resolution of the CTA
Third Division by way of a Petition for Review to the CTA En Banc, where it
was docketed as CTA EB No. 2625. As required by the CTA En Banc, SMB
filed a Comment on the BIR’s Petition for Review on July 26, 2022. On
August 23, 2022, the CTA En Banc issued a Resolution stating that the BIR’s
Petition for Review was deemed submitted for decision.
CTA Case No. 10223, SMB’s claim for refund for P147, was filed on
December 11, 2019 and is pending with the CTA First Division. After the Pre-
Trial Conference was held on November 11, 2020, SMB’s Motion for the
Commissioning of an Independent Certified Public Accountant (ICPA) was
heard on February 3, 2021. At the hearing held on February 3, 2021, the
ICPA was duly commissioned and SMB’s first witness testified. On May 19,
2021, the ICPA submitted his Report to the Court, and on February 9, 2022,
the ICPA testified on his Report. Thereafter, on February 16, 2022, SMB
submitted its Formal Offer of Evidence. All of SMB’s exhibits were admitted
in evidence. On May 19, 2022, the BIR informed the Court that it was not
presenting any evidence. As required by the Court, SMB submitted its
Memorandum on June 30, 2022, while the BIR submitted its Memorandum
on July 7, 2022. In a Resolution dated July 16, 2022, the Court stated that
this case was deemed for decision.
CTA Case No. 10745, SMB’s claim for refund for P1,069, was personally
filed on February 2, 2022 and is pending with the CTA First Division. The
case is a consolidation of two claims, to wit:
i. P8 under RA No. 10351 - the overpayment arose from the BIR’s

imposition of excise tax of P27.07 per liter on SMB’s beer products for
the period January 23, 2020 to February 9, 2020 based on Revenue
Memorandum Circular (RMC) No. 90-2012 and RR No. 17-2012. Said
BIR issuances are inconsistent with RA No. 10351 which imposes an
excise tax of P26.44 per liter under Section 143 of the National Internal
Revenue Code (NIRC), as amended by RA No. 10351 beginning
January 1, 2020.
- 227 -
ii. P1,061 under RA No. 11467 - the overpayment arose from the BIR’s
imposition of excise tax of P35.00 per liter on SMB’s beer products, as
provided under Section 143 of the NIRC, as amended by RA No. 11467,
for the period January 23, 2020 to February 9, 2020. The said imposition
was based on RMC No. 65-2020, as amended by RMC No. 113-2020,
implementing RA No. 11467 at an earlier date (i.e., January 23, 2020)
which is inconsistent with the actual effectivity date of RA No. 11467
(i.e., February 10, 2020).
The parties are in the process of filing their respective Memoranda after
which the case will be submitted for decision.
Administrative Case
SMB filed an administrative claim for refund of overpayments of excise taxes
for the period of January 1, 2020 to January 22, 2020 in the amount of P8
with the BIR on October 7, 2021. The BIR issued a TCC on December 17,
2021 in favor of SMB in the amount of P8 (Note 32), which was fully utilized
against SMB’s tax obligations in 2022.
Filed by GSMI
GSMI filed two claims for refund for overpayments of excise taxes with the
BIR which were then elevated to the CTA by way of petition for review as
follows:
(a) CTA Case Nos. 8953 and 8954: These cases pertain to GSMI’s Claims
for Refund with the BIR, in the amounts of P582 in Case No. 8953, and
P133 in Case No. 8954, or in the total amount of P715, representing
payments of excise tax erroneously, excessively, illegally, and/or
wrongfully assessed on and collected from GSMI by the BIR on removals
of its distilled spirits or finished products for the periods from January 1,
2013 up to May 31, 2013 in Case No. 8953, and from January 8, 2013 up
to March 31, 2013 in Case No. 8954.
After several hearings and presentation of evidence, both parties filed

their respective Formal Offers of Evidence.
On July 28, 2020, the CTA Third Division rendered its Decision and
denied GSMI’s Petition for Review. GSMI received said Decision on
August 24, 2020, for which it timely filed a Motion for Reconsideration on
the aforementioned Decision on September 2, 2020, to which the CIR
filed its Opposition.
The CTA Third Division issued an Amended Decision dated February 1,

2021 which partially granted GSMI’s Motion for Reconsideration and
ruled that GSMI is entitled to a refund of its erroneously and excessively
paid excise taxes in the amount of P320 out of its original claim of P715.
GSMI and CIR subsequently filed Motions for Reconsideration on the

aforesaid Amended Decision and Oppositions to each other’s Motion for
Reconsideration. In a Resolution dated October 28, 2021, the CTA Third
Division denied for lack of merit GSMI’s Motion for Reconsideration and
CIR’s Motion for Partial Reconsideration of the Amended Decision.
- 228 -
On January 4, 2022, GSMI elevated to the CTA En Banc the Decision
dated July 28, 2020, Amended Decision dated February 1, 2021, and
Resolution dated October 28, 2021 of the CTA Third Division, by way of
a Petition for Review, which was docketed as CTA E.B. No. 2555.
Earlier, the CIR also filed a Petition for Review with the CTA En Banc
elevating thereto the Amended Decision dated February 1, 2021 and
Resolution dated October 28, 2021 of the CTA Third Division and the
same was docketed as CTA E.B. No. 2544.
On March 28, 2022, the Court En Banc ordered the Parties to file their
respective Comments/Oppositions to the Petitions for Review. On April 7,
2022, GSMI filed a Motion for Extension of Time to File Comment on the
Petition for Review in CTA E.B. No. 2544.
On April 21, 2022, GSMI filed its Comment on the Petition for Review. On
May 30, 2022, the Court En Banc promulgated a Resolution which
denied GSMI’s Motion for Extension and submitted the Petitions for
Review for decision. On June 13, 2022, GSMI filed its Motion for
Reconsideration assailing the said Resolution.
On October 4, 2022, the Court En Banc promulgated a Resolution which

set aside the May 30, 2022 Resolution insofar as the Petitions for Review
were submitted for decision. The Resolution likewise directed the CIR to
file a Comment to GSMI’s Motion for Reconsideration, to which the CIR
failed despite due notice.
On January 18, 2023, the CTA En Banc granted GSMI’s Motion for
Extension of Time to File Comment on the Petition for Review in CTA
E.B. No. 2544 and admitted GSMI’s Comment as part of the records of
the case.
These cases are still pending resolution before the CTA En Banc.
(b) CTA Case No. 9059: This case pertains to GSMI’s Claim for Refund with
the BIR, in the total amount of P26, representing payments of excise tax
erroneously, excessively, illegally, and/or wrongfully assessed on and
collected from GSMI by the BIR on removals of its distilled spirits or
finished products for the period from June 1, 2013 up to July 31, 2013.
After presentation of its testimonial and documentary evidence, GSMI

filed its Formal Offer of Evidence and Supplemental Offer of Evidence,
which were all admitted by the CTA. BIR’s presentation of evidence was
set to January 23, 2019.
In a decision dated February 6, 2020, the CTA denied GSMI’s Claim for
Refund for insufficiency of evidence. On February 20, 2020, GSMI filed a
Motion for Reconsideration of the said Decision. However, the Motion for
Reconsideration was denied by the CTA on June 9, 2020. On August 28,
2020, GSMI elevated the case to the CTA En Banc by way of a Petition
for Review.
In a Decision dated November 10, 2021, the CTA En Banc denied the
Petition for Review filed by GSMI. The Decision dated February 6, 2020
and the Resolution dated June 9, 2020 of the CTA Second Division were
affirmed.
- 229 -
On December 10, 2021, GSMI elevated the Decision of the CTA En
Banc to the Supreme Court by way of a Petition for Review, which was
docketed as SC G.R. No. 25839.
As at March 9, 2023, the case is still pending resolution before the

Supreme Court.
The aforementioned assessments and collection cases arose from the

imposition and collection of excise taxes on GSMI’s finished products
processed and produced exclusively from its inventory of ethyl alcohol,
notwithstanding that excise taxes had already been previously paid by GSMI
on the said ethyl alcohol.
▪ Deficiency Tax Liabilities
IBI
(a) The BIR issued a Final Assessment Notice dated March 30, 2012 (2009
Assessment), imposing on IBI deficiency tax liabilities, including interest
and penalties, for the tax year 2009. IBI treated the royalty income
earned from the licensing of its intellectual properties to SMB as passive
income, and therefore subject to 20% final tax. However, the BIR is of the
position that said royalty income is regular business income subject to
the 30% regular corporate income tax.
IBI filed a protest against the assessment which was denied by the BIR.
Thereafter, IBI filed a Petition for Review with the CTA docketed as CTA
Case No. 8607. The CTA found IBI liable to pay the deficiency income
tax, interests and penalties assessed by the BIR but the compromised
penalty was cancelled. On January 22, 2016, IBI filed a Petition for
Review with the CTA En Banc which was docketed as CTA EB Case
No. 1417. The CTA En Banc affirmed the decision of the CTA First
Division.
IBI elevated the case with the Supreme Court by filing a Petition for
Review on September 7, 2018 docketed as G.R. Nos. 241147-48. On
January 16, 2019, the Supreme Court denied IBI’s Petition to which a
Motion for Reconsideration was filed by IBI on April 5, 2019. IBI’s Petition
was denied with finality on June 26, 2019.
On December 16, 2019, IBI and the BIR executed a Compromise

Agreement. The BIR recognized the total payment of IBI in the amount of
P285 as full satisfaction of the latter’s supposed tax liability for taxable
year 2009. On July 6, 2021, the Supreme Court approved the
Compromise Agreement and considered the case closed and terminated.
(b) Maintaining its position that royalties are business income subject to 30%
regular corporate income tax, the BIR assessed IBI for taxable year 2010
with a demand for payment of income tax and VAT deficiencies with
administrative penalties. IBI protested the assessment through a letter
dated November 29, 2013. IBI filed a Petition for Review with the CTA
which was docketed as CTA Case No. 8813. CTA found IBI liable to pay
deficiency income tax, interest and penalties. Thus, IBI filed a Petition for
Review with the CTA En Banc docketed as CTA EB Case Nos. 1563 and
1564.
- 230 -
IBI filed an application for abatement with a corresponding payment of
basic tax in the amount of P110. In the said application, IBI requested for
the cancellation of the surcharge and interests. However, the CTA En
Banc did not consider the payment of basic deficiency tax of P110 for
failure to submit related requirements. Instead, IBI was ordered to pay a
modified amount of P501 in light of the CREATE Act amendments on
interest. IBI filed a Motion for Reconsideration with a submission of
original documents related to the application of abatement. The CTA En
Banc partially granted IBI’s Motion for Reconsideration.
IBI filed Petition for Review with the Supreme Court docketed as G.R.
Nos. 246911-12. On December 27,2019, IBI filed a Manifestation
informing the Supreme Court that on December 5, 2019 and
December 16, 2019, IBI and the BIR, respectively, executed a
Compromise Agreement to amicably settle the tax case. On March 3,
2021, the Supreme Court considered G.R. Nos. 246911-12 closed and
terminated.
(c) On December 27, 2016, IBI received a Formal Letter of Demand for tax
year 2012 with a demand for payment of income tax, VAT, withholding
tax, documentary stamp tax (DST) and miscellaneous tax deficiencies
with administrative penalties. IBI filed a Protest. Due to the inaction of the
BIR, IBI filed a Petition for Review with the CTA Third Division and
docketed as CTA Case No. 9657.
On March 2, 2020, the CTA First Division promulgated its Decision

partially granting IBI’s Petition for Review. The assessment for deficiency
income tax, VAT, DST and compromise penalty are cancelled and set
aside. However, the assessment for deficiency expanded withholding tax
is affirmed, and IBI was ordered to pay deficiency expanded withholding
tax including interest and surcharges amounting to P5.
On October 29, 2020, the BIR filed a Petition for Review with CTA
En Banc. On January 25, 2021, IBI filed its Comment to the Petition for
Review. On July 21, 2022, the CTA En Banc denied the BIR’s Petition for
Review. Thereafter, the BIR filed for a motion for reconsideration which
was also denied by the CTA En Banc.
The BIR filed a Petition for Review on Certiorari dated January 9, 2023
with the Supreme Court docketed as G.R. No. 264402.
SMFI
(a) SMFI (as the surviving corporation in a merger involving Monterey Foods
Corporation [MFC]) vs. CIR CTA Case 9046
In connection with the tax investigation of MFC for the period

January 1 to August 31, 2010, an FDDA was issued by the BIR on
January 14, 2015 upholding the deficiency income tax, VAT and DST
assessments against SMFI.
SMFI filed a Request for Reconsideration which the CIR denied

prompting SMFI to file a Petition for Review with the CTA, docketed as
CTA Case No. 9046.
- 231 -
The CTA First Division granted the Petition for Review filed by SMFI
based on the following grounds: (1) the Formal Letter of Demand/Final
Assessment Notice issued by the BIR was void as it did not contain
demand to pay taxes due within a specific period; and (2) lack of valid
Letter of Authority. Accordingly, the Formal Letter of Demand/Final
Assessment Notice issued against SMFI for deficiency income tax, VAT
and DST for the period January 1 to August 31, 2010 and the FDDA, for
being intrinsically void, were ordered cancelled.
The BIR filed a Motion for Reconsideration with the CTA First Division,
which was denied.
The BIR then filed a Petition for Review before the CTA En Banc, which
was also denied.
While the Petition was pending, the BIR issued a Warrant of Distraint
and/or Levy (WDL) against SMFI (as the surviving corporation). SMFI
requested BIR for the lifting and cancellation of the WDL and filed an
Urgent Omnibus Motion with the CTA to suspend collection of taxes and
declare the WDL null and void.
To put an end to a protracted, expensive and mutually prejudicial

litigation, SMFI and the BIR entered into an amicable settlement through
execution of a Judicial Compromise Agreement (JCA), which the
Supreme Court approved on June 28, 2021. The Supreme Court further
ruled that the case should be considered closed and terminated.
(b) SMFI vs. CIR CTA Case No. 9241
On December 16, 2015, an FDDA was issued by the BIR assessing

deficiency income tax and VAT against SMFI in connection to the tax
investigation for the period January 1 to December 31, 2010.
The deficiency income tax and VAT pertain to the disallowed NOLCO
and input tax credits which were transferred to and vested in SMFI from
MFC by operation of law as a result of the merger between SMFI and
MFC. According to the BIR, as the ruling (BIR Ruling 424-14 dated
October 24, 2014) issued in connection to the merger of SMFI and MFC
did not contain an opinion on the assets and liabilities transferred during
the merger, the NOLCO and input tax credits from MFC were disallowed.
However, it is SMFI’s position that the use of the NOLCO and input tax
credit from MFC, as the surviving corporation pursuant to a statutory
merger is proper, as the same is allowed by law, BIR issuances and
confirmed by several BIR rulings prevailing at the time of the transaction.
SMFI filed a Petition for Review before the CTA, docketed as CTA Case
No. 9241.
The CTA Third Division rendered its decision granting SMFI’s Petition for
Review and cancelling the deficiency income tax and VAT assessment
issued by the BIR. The BIR then filed a Motion for Reconsideration which
was denied.
Despite the finality of the Decision, the BIR issued a WDL against SMFI.
SMFI requested BIR for the lifting and cancellation of the WDL.
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To put an end to a protracted, expensive and mutually prejudicial
litigation, SMFI and the BIR entered into an amicable settlement through
execution of a JCA, which was approved by the CTA Third Division.
The CTA Third Division also declared the WDL null and void and ordered
it to be cancelled and withdrawn.
(c) SMFI vs. Office of the City Treasurer, City of Davao
SMFI filed several protests against the assessments issued by the City
Treasurer of Davao City imposing permit fees to slaughter against its
poultry dressing plants in Sirawan, Toril District and Los Amigos, Tugbok
District both located in Davao City.
Following the dismissal of the appeals filed by SMFI with the Davao RTC,
the following Petitions for review were filed with the CTA:
▪ CTA Case AC No. 209, filed on August 23, 2018

▪ CTA Case AC No. 210, filed on November 12, 2018
▪ CTA Case AC No. 249, filed on February 26, 2021
It is SMFI’s position that Section 367 (a) of the 2005 Revenue Code of
the City of Davao (Revenue Code of Davao City) on the imposition of
permit fee to slaughter is applicable only to slaughterhouses operated by
the City Government of Davao City. SMFI’s poultry dressing plants in
Sirawan, Toril District and Los Amigos, Tugbok District, being privately
owned and operated slaughterhouses are beyond the coverage of
Section 357 (a) of the Revenue Code of Davao City. In addition, given
that SMFI is already paying ante and post-mortem fees for the slaughter
of poultry products pursuant to Section 367 (d) of the same Revenue
Code, the assessment of permit fee to slaughter would constitute double
taxation.
The CTA First Division dismissed the Petition docketed as CTA Case AC
No. 209. SMFI’s Motion for Reconsideration was denied. A Petition for
Review was then filed with the CTA En Banc in May 2021, which is
pending resolution to date.
The CTA First Division also dismissed the Petition docketed as CTA
Case AC No. 210. SMFI’s Motion for Reconsideration was likewise
denied. SMFI’s Petition for Review with the CTA En Banc in October
2021 is likewise pending resolution to date.
Finally, the CTA Special Third Division likewise dismissed the Petition for
Review docketed as CTA Case AC No. 249 on the grounds of lack of
jurisdiction on permit fees as it is not a tax, therefore outside the CTA’s
jurisdiction. In December 2022, SMFI filed a Motion for Reconsideration
which is still pending resolution to date.
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▪ Oil Spill Incident in Guimaras
On August 11, 2006, MT Solar I, a third party vessel contracted by Petron to

transport approximately two million liters of industrial fuel oil, sank 13 nautical
miles southwest of Guimaras, an island province in the Western Visayas
region of the Philippines. In separate investigations by the Philippine
Department of Justice (DOJ) and the Special Board of Marine Inquiry (SBMI),
both agencies found the owners of MT Solar I liable. The DOJ found Petron
not criminally liable, but the SBMI found Petron to have overloaded the
vessel. Petron has appealed the findings of the SBMI to the DOTr and is
awaiting its resolution. Petron believes that SBMI can impose administrative
penalties on vessel owners and crew, but has no authority to penalize other
parties, such as Petron, which are charterers.
Other complaints for non-payment of compensation for the clean-up

operations during the oil spill were filed with the RTC of Guimaras by a total
of 1,063 plaintiffs who allegedly did not receive any payment of their claims
for damages arising from the oil spill. The total claims amounted to P292.
The cases were pending as at December 31, 2022. In the course of plaintiffs’
presentation of evidence, they moved for trial by commissioner, which was
denied by the trial court. The plaintiffs elevated the matter by way of a
petition for certiorari to the Court of Appeals in Cebu City. On January 9,
2020, the Court of Appeals issued a Resolution granting plaintiffs’ motion for
reconsideration of the earlier resolution denying their petition and ordering
Petron to file its comment on plaintiffs’ petition within 10 days. On
February 6, 2020, Petron filed a motion for reconsideration of said Resolution
which remains pending to date. In the meantime, proceedings before the trial
court continues. Less than 200 of the plaintiffs have testified so far. As of
December 31, 2022 and 2021, the Group has not set up any provision
related to this case consistent with Petron’s position, as also advised by its
counsels, that Petron is not liable for the damages resulting from the oil spill
incident because it was only the charterer of the sunken vessel and that it
had no control or supervision over the operation of said vessel. Moreover,
the environmental damage had already been paid and settled by the
International Oil Pollution Compensation Funds where Petron makes
contribution as a member.
▪ Lease Agreements with PNOC
On October 20, 2017, Petron filed with the RTC of Mandaluyong City a
complaint against the PNOC for the reconveyance of the various
landholdings it conveyed to PNOC in 1993 as a result of the government-
mandated privatization of Petron.
The subject landholdings consist of the refinery lots in Limay, Bataan, 23 bulk
plant sites and 66 service station lots located in different parts of the country.
The Deeds of Conveyance covering the landholdings provide that the
transfer of these lots to PNOC was without prejudice to the continued long-
term use by Petron of the conveyed lots for its business operation. Thus,
PNOC and Petron executed three lease agreements covering the refinery
lots, the bulk plants, and the service station sites, all with an initial lease term
of 25 years which expired in August 2018, with a provision for automatic
renewal for another 25 years. In 2009, Petron, through its realty subsidiary,
NVRC, had an early renewal of the lease agreement for the refinery lots with
an initial lease term of 30 years, renewable for another 25 years.
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The complaint alleges that PNOC committed a fundamental breach of the
lease agreements when it refused to honor both the automatic renewal
clause in the lease agreements for the bulk plants and the service station
sites and the renewed lease agreement for the refinery lots on the alleged
ground that all such lease agreements were grossly disadvantageous to
PNOC, a government-owned-and-controlled corporation.
On December 11, 2017, the trial court granted Petron’s prayer for a writ of
preliminary injunction, enjoining PNOC from committing any act aimed at
ousting Petron from possession of the subject properties until the case is
decided.
The court-mandated mediation was terminated on February 5, 2018 without

any agreement between the parties. The judicial dispute resolution
proceedings before the court were likewise terminated on March 28, 2019,
after the parties failed to agree to a settlement. Without prejudice to any
further discussion between the parties regarding settlement, the case was
remanded to the trial court for trial proper, with the pre-trial held on
September 10, 2019. Petron also filed a motion for summary judgment on
May 17, 2019. In a resolution dated November 13, 2019, the trial court
granted Petron’s motion for summary judgment and ordered: (i) the
rescission of the Deeds of Conveyance dated 1993 relating to Petron’s
conveyance of such leased premises to PNOC pursuant to a property
dividend declaration in 1993, (ii) the reconveyance by PNOC to Petron of all
such properties, and (iii) the payment by Petron to PNOC of the amount of
P143, with legal interest from 1993, representing the book value of the
litigated properties at the time of the property dividend declaration. PNOC
filed a motion for reconsideration. Petron also filed a motion for partial
reconsideration seeking a modification of the judgment to include an order
directing PNOC to return to Petron all lease payments the latter had paid to
PNOC since 1993.
Following the trial court’s denial of their separate motions for reconsideration,
both PNOC and Petron filed their respective notices of appeal with the trial
court. The case was raffled off to the 5th Division of the Court of Appeals.
Petron filed its appellant’s brief in October 2020. PNOC filed its appellant’s
brief in November 2020. In a decision dated December 13, 2021, the Court of
Appeals dismissed both appeals of Petron and PNOC and affirmed the
resolution of the trial court as described above. The Court of Appeals upheld
Petron’s position that PNOC committed a substantial breach of its contractual
obligation under the lease agreements when it dishonored the automatic
renewal clause in the lease agreements and threatened to terminate Petron’s
lease thereby depriving Petron a long-term lease consistent with its business
requirements, which was the primordial consideration in the Deeds of
Conveyance. The Court of Appeals ruled, however, that, consistent with
jurisprudence, while rescission repeals the contract from its inception, it does
not disregard all the consequences that the contract has created and that it
was therefore only proper that Petron paid PNOC the rentals for the use and
enjoyment of the properties which PNOC could have enjoyed by virtue of the
Deeds of Conveyance were it not for the lease agreements. On January 11,
2022, Petron filed its motion for reconsideration insofar as the decision
dismissed Petron’s appeal to return the lease payments made by it to PNOC.
PNOC also filed its own motion for reconsideration. In a resolution
promulgated on October 6, 2022, the Court of Appeals denied the respective
motions for reconsideration of Petron and PNOC. In consideration of the
possible delay in the final resolution of the case if Petron were to proceed
with the filing of a petition for review with the Supreme Court on the issue of
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rental payments it seeks to recover and the decision in favor of Petron on the
rescission of the Deeds of Conveyance and the reconveyance to it of the
properties that has been affirmed by the Court of Appeals, Petron has
decided to no longer pursue a petition for review with the Supreme Court.
The PNOC filed a petition for review on certiorari with the Supreme Court in
early December 2022. As of December 31, 2022, Petron is awaiting orders
from the Supreme Court.
▪ Generation Payments to PSALM
SPPC and PSALM are parties to the Ilijan IPPA Agreement covering the
appointment of SPPC as the IPP Administrator of the Ilijan Power Plant.
SPPC and PSALM have an ongoing dispute arising from differing

interpretations of certain provisions related to generation payments under the
Ilijan IPPA Agreement. As a result of such dispute, the parties have arrived at
different computations regarding the subject payments. In a letter dated
August 6, 2015, PSALM has demanded payment of the difference between
the generation payments calculated based on its interpretation and the
amount which has already been paid by SPPC, plus interest, covering the
period December 26, 2012 to April 25, 2015.
On August 12, 2015, SPPC initiated a dispute resolution process with

PSALM as provided under the terms of the Ilijan IPPA Agreement, while
continuing to maintain that it has fully paid all of its obligations to PSALM.
Notwithstanding the bona fide dispute, PSALM issued a notice terminating
the Ilijan IPPA Agreement on September 4, 2015. On the same day, PSALM
also called on the performance bond posted by SPPC pursuant to the Ilijan
IPPA Agreement.
On September 8, 2015, SPPC filed a Complaint with the RTC of

Mandaluyong City requesting the RTC that its interpretation of the relevant
provisions of the Ilijan IPPA Agreement be upheld and asked that a 72-hour
Temporary Restraining Order (TRO) be issued against PSALM for illegally
terminating the Ilijan IPPA Agreement and drawing on the performance bond
of SPPC. On even date, the RTC issued a 72-hour TRO which prohibited
PSALM from treating SPPC as being in Administrator Default and from
performing other acts that would change the status quo ante between the
parties before PSALM issued the termination notice and drew on the
performance bond of SPPC. The TRO was extended for until September 28,
2015.
On September 28, 2015, the RTC issued an order granting a Preliminary

Injunction enjoining PSALM from proceeding with the termination of the Ilijan
IPPA Agreement while the main case is pending. PSALM sought for
reconsideration of the said order but was later on denied by the RTC.
PSALM filed with the Court of Appeals a Petition for Review on Certiorari
assailing the RTC’s order of denial. The Court of Appeals ruled in favor of
SPPC and affirmed the RTC’s issuance of a writ of preliminary injunction
against PSALM prohibiting it from terminating the Ilijan IPPA Agreement
while the main case in the lower court is pending and named Meralco as
intervenor (the “2017 CA Decision”).
PSALM filed a Motion for Reconsideration of the 2017 CA Decision but it was
denied by the Court of Appeals in its resolution dated July 12, 2018 (the
“2018 CA Resolution”).
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On September 4, 2018, PSALM filed a Petition for Certiorari with urgent
prayer for the issuance of a TRO and/or Writ of Preliminary Injunction before
the Supreme Court praying for the reversal and nullification of the 2017 CA
Decision and the 2018 CA Resolution but was denied by the Supreme Court
in its resolution dated March 4, 2019 (the “March 4, 2019 SC Resolution”).
PSALM filed a Motion for Reconsideration thereof and was denied by the
Supreme Court in a resolution dated August 5, 2019 which became final and
executory on the same date.
Prior to the CA Decision, on December 18, 2017, the presiding judge of the
RTC who conducted the judicial dispute resolution issued an order inhibiting
himself from the instant case. The case was then re-raffled to another RTC
judge in Mandaluyong City.
SPPC filed a Motion for Production of Documents on February 28, 2018,

while PSALM filed its Manifestation with Motion to Hear Affirmative Defenses
and Objections Ad Cautelam.
On September 24, 2018, the RTC issued an order denying PSALM’s Motion
to Hear Affirmative Defense and granted SPPC’s Motion for Production of
Documents. In an order dated April 29, 2019, the RTC denied the Motion for
Reconsideration filed by PSALM on the basis that it found no strong and
compelling reason to modify, much less reverse, its order dated
September 24, 2018.
On July 26, 2019, PSALM filed a Petition for Certiorari with Urgent Prayer for
the Issuance of a TRO and/or Writ of Preliminary Injunction with the Court of
Appeals, seeking the reversal of the orders of the RTC dated September 24,
2018 and April 29, 2019 (CA-G.R. SP No. 161706). In compliance with the
Court of Appeal’s directive, PSALM filed an Amended Petition on April 29,
2019 (the “PSALM 2019 CA Petition”).
On April 7, 2022, the Court of Appeals promulgated a Decision dismissing

the PSALM 2019 CA Petition (the “April 7, 2022 CA Decision”). PSALM filed
a Motion for Reconsideration dated April 29, 2022. SPPC filed a Motion for
Leave to File Opposition to the Motion for Reconsideration with an
Opposition to the said Motion for Reconsideration on July 15, 2022.
In a Resolution dated October 4, 2022, the Court of Appeals denied

PSALM’s motion for reconsideration of the April 7, 2022 CA Decision (the
“October 4, 2022 CA Resolution”).
On December 1, 2022, PSALM filed a Petition for Review on Certiorari with

the Supreme Court, appealing the April 7, 2022 CA Decision denying its
petition for certiorari and October 4, 2022 CA Resolution denying its motion
for reconsideration. The Petition for Review has been docketed as G. R. No.
263773. SPPC has not yet received a directive to file a Comment on the
petition.
In January 2020, PSALM also filed with the RTC a Motion Ad Cautelam to
Lift or Dissolve the Writ of Preliminary Injunction with Application to File
Counterbond. SPPC filed its opposition to this motion in March 2020.
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On May 26, 2020, SPPC filed a Supplemental Opposition to PSALM’s Motion
Ad Cautelam to Lift or Dissolve the Writ of Preliminary Injunction citing
SPPC’s letter dated March 6, 2020 informing PSALM of its intention to
advance the full settlement of the Monthly Payments due for the period
March 26, 2020 until the end of the IPPA Agreement on June 26, 2022.
SPPC stated that given this intention, PSALM can no longer assert that it
stands to suffer injury in the form of reduction in expected cash or that the
Government would be exposed to financial risk.
PSALM also filed several other pleadings: (1) Urgent Ex-Parte Motion for
Early Resolution of its Motion for Leave to File Amended Answer Ad
Cautelam dated May 28, 2020; (2) Motion for Reconsideration of the RTC
Order of February 14, 2020, which did not allow PSALM to present witnesses
in support of its Motion to Dissolve the Writ of Preliminary Injunction and
directed the parties to submit pleadings and documents in support of their
respective positions; and (3) Reply to SPPC’s Opposition to its Motion to
Dissolve the Writ of Preliminary Injunction. SPPC filed a Motion for Leave to
File Consolidated Rejoinder with Consolidated Rejoinder dated
September 14, 2020 to PSALM’s Reply to Opposition to the Motion to
Dissolve.
In an Order dated November 27, 2020, the RTC denied PSALM’s Motion for
Leave to File Amended Answer Ad Cautelam (the “November 27, 2020 RTC
Order”). On January 15, 2021, SPPC filed a Motion for Summary Judgment,
praying that judgment be rendered in favor of SPPC on all its causes of
action based on the pleadings, affidavits, and admissions on file. On
January 29, 2021 PSALM filed a Motion for Reconsideration of the
November 27, 2020 RTC Order.
In an Order dated March 23, 2021 (the “March 23, 2021 RTC Order”), the
RTC denied PSALM’s Motion for Reconsideration of the November 27, 2020
RTC Order. In the same Order, the RTC also denied SPPC’s Motion for
Summary Judgment and referred the case to mediation.
On May 21, 2021, SPPC filed a Motion for Reconsideration of the March 23,
2021 RTC Order. PSALM filed an Opposition to the Motion for
Reconsideration and SPPC filed a Motion for Leave to File a Reply to the
Opposition with an incorporated Reply.
In June 2021, PSALM also filed a Petition for Certiorari under Rule 65 of the
rules of Court to annul the November 27, 2020 RTC Order and the March 23,
2021 RTC Order with the Court of Appeals, which was denied by the Court of
Appeals in its Decision dated May 30, 2022 (the “May 30, 2022 CA
Decision”).
On October 3, 2022, the Court of Appeals promulgated a Resolution denying

PSALM’s Motion for Reconsideration of the May 30, 2022 Decision (the
“October 3, 2022 CA Resolution”).
After moving for an extension of time, on November 26, 2022, PSALM filed a
Petition for Review on Certiorari with the Supreme Court, appealing the
May 30, 2022 CA Decision and October 3, 2022 CA Resolution. The petition
for review has been docketed as G. R. No. 263774. SPPC has not yet
received a directive to file a Comment on the petition.
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The mediation scheduled on April 19, 2021 did not push through, in view of
the restrictions imposed by the enhanced community quarantine and
modified enhanced community quarantine.
In an Order dated May 18, 2021, the RTC recalled the portion of the
March 23, 2021 RTC Order, where it set the case for mediation, given that
the parties have already exhausted both court-annexed mediation and
judicial dispute resolution and scheduled the pre-trial of the case on June 18,
2021, which was however cancelled.
On September 13, 2021, the RTC denied SPPC’s Motion for Partial
Reconsideration of the March 23, 2021 RTC Order and scheduled the pre-
trail of the case on November 19, 2021. Pre-trial proceeded on
November 19, 2021 and the parties filed the Joint Stipulation of Facts on
April 6, 2022.
SPPC filed a Motion to Amend Pre-trial Order and Minutes of the Pre-trial
issued by the RTC on April 7, 2022, which was later granted by the RTC on
May 20, 2022 The RTC accordingly issued an Amended Pre-trial Order.
SPPC presented its first witness on July 29, 2022 and its second witness on
November 11, 2022. Comparison and pre-marking of documents were
conducted on January 20, 2023. Trial will resume on April 14, 2023 for the
cross-examination of SPPC’s second witness.
Related to the foregoing, in a Resolution dated December 7, 2021, the RTC

denied PSALM’s Motion Ad Cautelam to Lift or Dissolve the Writ of
Preliminary Injunction on the grounds that: (a) the arguments in the Motion
had been previously denied with finality by the RTC, Court of Appeals, and
Supreme Court and the propriety of the issuance of the writ of preliminary
injunction in favor of SPPC “should be considered a settled matter, so long
as the facts and circumstances upon which the writ was issued still continue
to exist”; (b) “PSALM cannot substantiate its contentions that the continuance
of the preliminary injunction would cause it damage or that SPPC can be fully
compensated for such damages as it may suffer”; and (c) the counter-bond
offered by PSALM would be inadequate to answer for the damages that
SPPC might sustain as a result of the lifting of the preliminary injunction.
In an Order dated February 17, 2022, the RTC denied PSALM’s Motion for
Reconsideration of the Resolution of December 7, 2021 for failing to raise
any new or substantial ground.
PSALM filed a Petition for Certiorari dated May 13, 2022, assailing the RTC’s
Resolution of December 7, 2021 and Order of February 17, 2022 for
allegedly having been rendered with grave abuse of discretion. On
October 14, 2022, SPPC filed its Comment on the petition. In a Resolution
dated February 23, 2023, the Court of Appeals noted that PSALM did not file
a Reply to SPPC’s Comment thus deemed the petition as submitted for
decision.
Although the proceedings before the RTC remain pending, the Ilijan Power
Plant was turned over by PSALM to SPPC pursuant IPPA Agreement and
the Deed of Sale executed between PSALM and SPPC on June 3, 2022.
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▪ Intellectual Property Rights
i. G.R. No. 196372: This case pertains to GSMI’s application for the
registration of the trademark “GINEBRA” under Class 33 covering gin
with the Intellectual Property Office of the Philippines (IPOPHL). The
IPOPHL rejected GSMI’s application on the ground that “GINEBRA” is a
Spanish word for gin, and is a generic term incapable of appropriation.
When the Court of Appeals affirmed the IPOPHL’s ruling, GSMI filed a
Petition for Review on Certiorari (the Petition) with the Supreme Court.
The Supreme Court denied GSMI’s Petition. GSMI moved for a
reconsideration thereof, and likewise filed a Motion to Refer its Motion for
Reconsideration to the Supreme Court En Banc. The Supreme Court
denied GSMI’s Motion for Reconsideration with finality, as well as GSMI’s
Motion to Refer to its Motion for Reconsideration to the Supreme Court
En Banc.
Subsequently, GSMI filed a Manifestation with Motion for Relief from

Judgment (the “Manifestation”) and invoked the case of “League of Cities
vs. Commission of Elections” (G.R. Nos. 176951, 177499 and 178056) to
invite the Supreme Court En Banc to re-examine the case. The Office of
the Solicitor General filed its Comment Opposition to the Manifestation.
On June 26, 2018, the Supreme Court En Banc issued a Resolution

which resolves to: (a) Accept the subject case which was referred to it by
the Third Division in the latter’s resolution dated August 7, 2017; (b) Treat
as a Second Motion for Reconsideration (of the resolution dated June 22,
2011) GSMI’s Manifestation with Motion for Relief from Judgment dated
November 28, 2011; (c) Reinstate the Petition; and (d) Require the
respondents to Comment on the Petition within a non-extendible period
of ten (10) days from notice thereof.
Respondents, through the OSG, filed their Comment dated July 31, 2018
while GSMI filed its Reply with Leave on August 20, 2018.
On January 4, 2019, the Supreme Court Third Division issued a

Resolution ordering the consolidation of the previously consolidated
cases (G.R Nos. 216104, 210224 and 219632) with the En Banc case
(G.R. No. 196372), stating that “considering that all these cases involve
identical parties and raise interrelated issues which ultimately stemmed
from the registration of trademark of [TDI] and [GSMI] before the [IPO].”
On February 3, 2020, GSMI filed a Manifestation with the Supreme Court

Third Division, informing the Court that on January 27, 2020, it received a
copy of a Decision dated December 27, 2019 rendered by the IPO
Director General in the consolidated appealed cases involving GSMI’s
Oppositions to TDI’s applications for the registration of the marks
“Ginebra Lime & Device,” “Ginebra Orange & Device,” “Ginebra Especial
& Device” and “Ginebra Pomelo & Device”, for use on gin products. In
the joint Decision, the IPO Director General ruled in favor of GSMI and
held that despite being generic or descriptive, the term “GINEBRA” had
already attained a secondary meaning in relation to the gin products of
GSMI. The Manifestation was filed to inform the Supreme Court Third
Division of the status of cases in IPOPHL which involve GSMI’s claim
over “GINEBRA”.
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In a Resolution dated March 10, 2020, the Supreme Court En Banc
resolved to transfer the consolidated cases from the Third Division to the
En Banc, where this case which has the lowest docket number, i.e. G.R.
No. 196372, was originally assigned, hence, all four cases are now
consolidated and pending before the Supreme Court En Banc.
Furthermore, the Supreme Court En Banc also noted GSMI’s
Manifestation dated February 3, 2020 on the IPO Director General’s
Decision dated December 27, 2019.
On August 9, 2022, the Supreme Court En Banc promulgated a Decision

in the four consolidated Petitions. For G.R. No. 196372, GSMI’s Petition
for Review was granted. The Director of the Bureau of Trademarks was
directed to reinstate GSMI’s trademark application for “GINEBRA”, cause
its publication and give it due course.
ii. G.R. Nos. 210224 and 219632: These cases pertain to GSMI’s
Complaint for Unfair Competition, Trademark Infringement and Damages
against Tanduay Distillers, Inc. (TDI) filed with the RTC, arising from
TDI’s distribution and sale of its gin product bearing the trademark
“Ginebra Kapitan” and use of a bottle design, which general appearance
was nearly identical and confusingly similar to GSMI’s product. The RTC
dismissed GSMI’s complaint.
When GSMI elevated the case to the Court of Appeals, due to

technicalities, two cases were lodged in the Court of Appeals: 1.) Petition
for Review (CA-G.R. SP No. 127255), and 2.) Appeal (CA-G.R. SP
No. 100332).
Acting on GSMI’s Petition for Review, the Court of Appeals reversed, set
aside the RTC’s Decision, and ruled that “GINEBRA” is associated by the
consuming public with GSMI. Giving probative value to the surveys
submitted by GSMI, the Court of Appeals ruled that TDI’s use of
“GINEBRA” in “Ginebra Kapitan” produces a likelihood of confusion
between GSMI’s “Ginebra San Miguel” gin product and TDI’s “Ginebra
Kapitan” gin product. The Court of Appeals likewise ruled that “TDI knew
fully well that GSMI has been using the mark/word “GINEBRA” in its gin
products and that GSMI’s “Ginebra San Miguel” has already obtained,
over the years, a considerable number of loyal customers who associate
the mark “GINEBRA” with GSMI.
On the other hand, upon GSMI’s Appeal, the Court of Appeals also set
aside the RTC’s Decision and ruled that “GINEBRA” is not a generic
term, there being no evidence to show that an ordinary person in the
Philippines would know that “GINEBRA” is a Spanish word for “gin”.
According to the Court of Appeals, because of GSMI’s use of the term in
the Philippines since the 1800s, the term “GINEBRA” now exclusively
refers to GSMI’s gin products and to GSMI as a manufacturer. The Court
of Appeals added that “the mere use of the word ‘GINEBRA’ in “Ginebra
Kapitan” is sufficient to incite an average person, even a gin-drinker, to
associate it with GSMI’s gin product”, and that TDI “has designed its
bottle and label to somehow make a colorable similarity with the bottle
and label of Ginebra S. Miguel”.
TDI filed separate Petitions for Review on Certiorari with the Supreme
Court, docketed as G.R. Nos. 210224 and 219632, which were
eventually consolidated by the Supreme Court on April 18, 2016.
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On October 26, 2016, GSMI filed its Comment on TDI’s Petition for
Review on Certiorari.
On December 17, 2018, the Supreme Court consolidated this case with
Ginebra San Miguel Inc. vs. Court of Appeals, Director General of the
Intellectual Property Office, and Director of the Bureau of Trademarks
(G.R. No. 196372).

over “GINEBRA”.

En Banc. Furthermore, the Supreme Court En Banc also noted GSMI’s

in the four consolidated Petitions. For G.R. Nos. 210224 and 219632,
TDI’s Petitions for Review were denied, with modification, such that TDI
shall pay GSMI temperate damages of P300 and attorney’s fees of P200;
other awards of damages against TDI are deleted.
iii. G.R. No. 216104: This case pertains to TDI’s application for the
registration of the trademark “GINEBRA KAPITAN” for Class 33 covering
gin with the IPOPHL.
GSMI opposed TDI’s application, alleging that it would be damaged by

the registration of “GINEBRA KAPITAN” because the term “GINEBRA”
has acquired secondary meaning and is now exclusively associated with
GSMI’s gin products. GSMI argued that the registration of “GINEBRA
KAPITAN” for use in TDI’s gin products will confuse the public and cause
damage to GSMI. TDI countered that “GINEBRA” is generic and
incapable of exclusive appropriation, and that “GINEBRA KAPITAN” is
not identical or confusingly similar to GSMI’s mark.
The IPOPHL ruled in favor of TDI and held that: (a) “GINEBRA” is
generic for “gin”; (b) GSMI’s products are too well known for the
purchasing public to be deceived by a new product like “GINEBRA
KAPITAN”; and (c) TDI’s use of “GINEBRA” would supposedly stimulate
market competition.
- 242 -
On July 23, 2014, the Court of Appeals reversed and set aside the
IPOPHL’s ruling and disapproved the registration of “GINEBRA
KAPITAN”. The Court of Appeals ruled that “GINEBRA” could not be
considered as a generic word in the Philippines considering that, to the
Filipino gin-drinking public, it does not relate to a class of liquor/alcohol
but rather has come to refer specifically and exclusively to the gin
products of GSMI.
TDI filed a Petition for Review on Certiorari with the Supreme Court,
which was subsequently consolidated with the case of “Tanduay
Distillers, Inc. vs. Ginebra San Miguel Inc.”, docketed as G.R.
No. 210224 on August 5, 2015.
On October 26, 2016, GSMI filed its Comment on TDI’s Petition for
Review on Certiorari.
On December 17, 2018, the Supreme Court consolidated this case with
Ginebra San Miguel Inc. vs. Court of Appeals, Director General of the
Intellectual Property Office, and Director of the Bureau of Trademarks
(G.R. No. 196372).

over “GINEBRA”.

En Banc. Furthermore, the Supreme Court En Banc also noted GSMI’s

in the four consolidated Petitions. For G.R. No. 216104, TDI’s Petition for
Review for the rejection of TDI’s trademark application for “GINEBRA
KAPITAN” was denied.
- 243 -
▪ Imported Industrial Fuel Oil
SLHBTC has an on-going case with the CTA against the Commissioner of
Customs (the Commissioner). On January 16, 2016, a Warrant of Seizure
and Detention was issued against the 44,000 metric tons of fuel imported by
SLHBTC with approximate value of P751. The Commissioner alleged that
SLHBTC discharged fuel directly from the vessel carrying SLHBTC’s
imported fuel to another vessel via loop loading without paying duties and
taxes and therefore, violating the Customs Modernization Tariff Act and other
customs regulations. On January 20, 2017, the District Collector of Customs
issued a decision forfeiting the fuel in favor of the government.
Subsequently, SLHBTC filed with the CTA a petition seeking the lifting and
termination of the Warrant of Seizure and Detention and the reversal of the
decision issued by the District Collector of Customs.
On April 19, 2017, SLHBTC filed with the CTA a Motion for Special Order to
release the 44,000 metric tons of fuel, which was granted on
January 28, 2018 subject to the posting of a surety bond amounting to P123
or one and one-half times of the assessed amount of P82 representing VAT.
SLHBTC posted the surety bond and the 44,000 metric tons of fuel were
released.
On September 18, 2018, a pre-trial conference was conducted.
However, by Order dated September 25, 2018, the case was transferred to
the CTA First Division.
The latest court hearing for the presentation of evidence was made in
February 2020.
On December 1, 2020, the customs officer representing the District Collector

of Customs was cross-examined by the SLHBTC legal counsel. He admitted
that he did not examine the imported documents prior to recommending the
issuance of a Writ of Seizure and Detention.
On February 2021, the case was deemed submitted for decision. As at the
reporting date, the case is still pending decision with the CTA.
On February 24, 2022, the Petition for Review filed by SLHBTC in March
2017 was granted by the CTA. Accordingly, the Warrant of Seizure and
Detention was lifted, and the decision issued by the District Collector of
Customs in January 2017 was reversed and set aside. In addition, the order
granted by the CTA in January 2018 to release the 44,000 metric tons of fuel
is now permanent and the surety bond of P123 shall be released and
discharged upon finality of judgement.
On November 8, 2022, the CTA En Banc is still completing the technical

requirements of the Bureau of Custom’s petition.
SLHBTC and its legal counsel assessed that it has a meritorious case and
the final outcome will not have a material adverse effect on the SLHBTC’s
business financial condition and results of operations.
- 244 -
▪ Criminal Cases
SPPC
On September 29, 2015, SPPC filed a criminal complaint for estafa and for
violation of Section 3(e) of RA No. 3019, otherwise known as the Anti-Graft
and Corrupt Practices Act, before the DOJ, against certain officers of
PSALM, in connection with the termination of SPPC’s Ilijan’s IPPA
Agreement, which was made by PSALM with manifest partially and evident
bad faith. Further, it was alleged that PSALM fraudulently misrepresented its
entitlement to draw on the performance bond posted by SPPC, resulting in
actual injury to SPPC in the amount US$60. On June 13, 2017, the DOJ
endorsed the complete records of the complaint to the Office of the
Ombudsman for appropriate action.
On a related matter, on November 14, 2018, SPPC filed with the Office of the
Ombudsman-Field Investigation Office, an administrative complaint against
an executive officer of PSALM and several unidentified persons for violation
of the Ombudsman Act and the Revised Administrative Code, in the
performance of their functions as public officers.
In a Resolution dated March 10, 2021, which was approved by the

Ombudsman on February 15, 2022, the Graft Investigation and Prosecution
Officer (“GIPO”) dismissed the criminal complaint against the Respondents.
In a Decision of the same date, approved by the Ombudsman also on
February 15, 2022, the GIPO also dismissed the administrative complaint
against the Respondents.
On March 21, 2022, SPPC filed a Motion for Reconsideration of the

resolution dismissing the criminal complaint.
SPI
On October 21, 2015, SPI filed a criminal complaint for Plunder and violation
of Section 3(e) and 3(f) of RA No. 3019, before the DOJ against a certain
officer of PSALM, and certain officers of TPEC and TSC, relating to the
illegal grant of the so-called “excess capacity” of the Sual Power Plant in
favor of TPEC which enabled it to receive a certain amount at the expense of
the Government and SPI.
In a Resolution dated July 29, 2016, the DOJ found probable cause to file an
Information against the respondents for Plunder and violation of Section 3(e)
and 3(f) of RA No. 3019 (the “July 29, 2016 DOJ Resolution”). The DOJ
further resolved to forward the entire records of the case to the Office of the
Ombudsman for their proper action. Respondents have respectively
appealed said DOJ’s Resolution of July 29, 2016 DOJ Resolution, through
the filing of a Petition for Review with the Secretary of Justice.
On October 25, 2017, the DOJ issued a Resolution partially granting the
Petition for Review by reversing the July 29, 2016 DOJ Resolution insofar as
the conduct of the preliminary investigation. On November 17, 2017, SPI filed
a motion for partial reconsideration of said October 25, 2017 DOJ Resolution
dated October 25, 2017.
- 245 -
While the said Motion for Partial Reconsideration is pending, SPI and the
Respondents filed before the DOJ a Joint Motion to Dismiss dated June 6,
2022 praying for the dismissal of the criminal complaint filed by SPI. The
Joint Motion to Dismiss remains pending as of date.
▪ Civil Case
On June 17, 2016, SPI filed with the RTC Pasig a civil complaint for
consignation against PSALM arising from PSALM’s refusal to accept SPI’s
remittances corresponding to the proceeds of the sale on the WESM for
electricity generated from capacity in excess of the 1,000 MW of the Sual
Power Plant (“Sale of the Excess Capacity”). With the filing of the complaint,
SPI also consigned with the RTC Pasig, the amount corresponding to the
proceeds of the Sale of the Excess Capacity for the billing periods
December 26, 2015 to April 25, 2016.
PSALM filed an Answer dated August 17, 2016 stating that it has no right to,
and is not the owner of, the proceeds of the sale on the WESM of electricity
generated from the capacity in excess of 1,000 MW of the Sual Plant and
that “the consignation should belong to TPEC as it is rightfully entitled to the
200 MW and to the payments which SPI made consequent therewith.”
On October 3, 2016, SPI filed an Omnibus Motion to Admit Supplemental

Complaint and to Allow Future Consignation without Tender (the “Omnibus
Motion”). Together with this Omnibus Motion, SPI consigned with the RTC
Pasig an additional amount corresponding to the proceeds of the Sale of the
Excess Capacity for the billing periods from April 26, 2016 to July 25, 2016.
On July 5, 2017, SPI consigned with the RTC Pasig the amount representing
additional proceeds of Sale of the Excess Capacity for the billing period
July 26, 2016 to August 25, 2016. SPI also filed a Motion to Admit Second
Supplemental Complaint in relation to said consignation.
On May 22, 2018, the RTC Pasig issued an order dismissing the complaint
for consignation filed by SPI on the ground that the court has no jurisdiction
over the subject matter of the complaint and finding that the ERC has the
technical competence to determine the proper interpretation of “contracted
capacity”, the fairness of the settlement formula and the legality of the
memorandum of agreement.
On July 4, 2018, SPI filed its Motion for Reconsideration to the

May 22, 2018 order which dismissed the consignation case. The Motion for
Reconsideration was heard on July 13, 2018 where the parties were given
time to file their responsive pleadings. PSALM filed its Comment dated
July 26, 2018 to the Motion for Reconsideration and SPI filed its Reply to
PSALM’s Comment on August 13, 2018.
In an Order dated November 19, 2019, the presiding judge voluntarily

inhibited herself from further hearing the case.
On December 13, 2019, the case was re-raffled to Branch 268. On

February 7, 2020, a clarificatory hearing was held and Branch 268 noted the
pending incidents, which are: (a) SPI’s Motion for Partial Reconsideration
and Supplemental Motion for Reconsideration of the Order dated May 22,
2018; (b) SPI’s two Motions to Admit Supplemental Complaint; and
(c) PSALM’s Motion to Set Preliminary Hearing on the Special and
Affirmative Defenses.
- 246 -
In an Order dated September 30, 2021, the RTC Branch 268: (a) granted
SPI’s Motion for Reconsideration of the Order of May 22, 2018, which
dismissed the case for lack of jurisdiction; (b) granted SPI’s Omnibus Motion
to Admit Supplemental Complaint and Allow Future Consignations without
Tender; and (c) reinstated the Complaint (the “September 30, 2021 Order”).
RTC Branch 268 scheduled the pre-trial on December 13, 2021 but the pre-
trial was postponed because PSALM filed an Omnibus Motion for
Reconsideration of the September 30, 2021 Order and to Resolve Pending
Motion to Set Preliminary Hearing on Special and Affirmative Defenses, and
to Defer Pre-trial (sic). SPI has already filed an Opposition to the Omnibus
Motion.
In an Order dated May 30, 2022, RTC Branch 268 denied PSALM’s Omnibus
Motion for Reconsideration of the September 30, 2021 Order and to Resolve
Pending Motion to Set Preliminary Hearing on Special and Affirmative
Defenses, and to Defer Pre-trial (sic). In the same Order, RTC Pasig Branch
268 set the pre-trial on August 1, 2022. SPI and PSALM filed a Joint Motion
to Re-Set Pre-trial Conference on the ground that the parties are negotiating
for an amicable settlement. RTC Pasig Branch 268 granted the Joint Motion
and scheduled the resumption on September 1, 2022, in the event that the
parties do not reach an amicable settlement.
The parties filed a Second Joint Motion to Reset Pre-trial Conference as they
were still negotiating an amicable settlement.
On October 5, 2022, SPPC and PSALM filed an Omnibus Motion to Dismiss

and Release Deposited Monies, whereby PSALM, consistent with its
representation and acknowledgment in its Answer that the consigned
amounts rightfully belong to TPEC, agreed to the release of the said amounts
to TPEC and SPI, relying on PSALM’s representation and acknowledgment,
did not object to the release of the consigned amounts to TPEC.
On October 10, 2022, the RTC issued an Order granting the Omnibus Motion
and authorized TPEC’s named representative in the Omnibus Motion to
withdraw the consigned amounts.
Further related thereto, on December 1, 2016, SPI received a copy of a

Complaint filed by TPEC and TSC with the ERC against SPI and PSALM in
relation to the Excess Capacity issues, which issues have already been
raised in the abovementioned cases. SPI filed a Motion to Dismiss and
Motion to Suspend Proceeding of the instant case.
On June 6, 2022, SPI, TPEC and TSC filed a Joint Motion to Dismiss the
ERC complaint. SPI received the Order from the ERC on June 22, 2022,
asking the parties to submit a copy of the settlement agreement within five
days from receipt of such order. TPEC, TEAM and SPI filed with the ERC a
Compliance and Submission attaching the settlement agreement on
June 28, 2022.
As at December 31, 2021, the total amount consigned with the RTC Pasig
was P491, included under “Other noncurrent assets”, particularly “Restricted
cash” account, in the consolidated statements of financial position (Note 18).
- 247 -
▪ TRO Issued to Meralco
SPI, SPPC, SRHI, MPPCL and other generation companies were impleaded
as parties to a Petition for Certiorari and Prohibition with prayer for TRO
and/or Preliminary Injunction (“Petition”) filed in the Supreme Court by
special interest groups which sought to stop the imposition of the increase in
generation charge of Meralco for the November 2013 billing month. The
approval of the ERC in its December 9, 2013 order on the staggered
imposition by Meralco of its generation rate for November 2013 from its
consumers (the “December 9, 2013 ERC Order”) prompted the filing of these
consolidated petitions. On December 23, 2013, the Supreme Court issued a
TRO ordering Meralco not to collect, and the generators not to demand
payment, for the increase in generation charge for the November 2013 billing
month. As a result, Meralco was constrained to fix its generation rate to its
October 2013 level of P5.67/kWh. Claiming that since the power supplied by
generators is billed to Meralco’s customers on a pass-through basis, Meralco
deferred a portion of its payment on the ground that it was not able to collect
the full amount of its generation cost. The TRO was originally for a period of
60 days.
On January 8, 2014, Meralco filed its Consolidated Comment/Opposition with

Counter-Petition (“Counter-Petition”) which prayed, among others, for the
inclusion of SPI, SPPC, SRHI, MPPCL and several generators as
respondents to the case. On January 10, 2014, the Supreme Court issued an
order treating the Counter-Petition as in the nature of a third party complaint
and granting the prayer to include SPI, SPPC, SRHI and MPPCL as
respondents in the Petition.
On February 18, 2014, the Supreme Court extended the TRO issued on
December 23, 2013 for another 60 days or until April 22, 2014 and granted
additional TROs enjoining PEMC and the generators from demanding and
collecting the deferred amounts. In a resolution dated April 22, 2014, the
Supreme Court extended indefinitely the effectivity of the TROs issued on
December 23, 2013 and February 18, 2014.
In the Petition filed by special interest groups, the Supreme Court was made
aware of the order of the ERC dated March 3, 2014 (the “March 3, 2014 ERC
Order”) (as defined and discussed under “ERC Order Voiding WESM
Prices”), in which the ERC declared void the WESM prices during the
November and December 2013 supply months and imposed regulated prices
in their stead. The March 3, 2014 ERC Order likewise directed PEMC to:
(a) calculate these “regulated prices” based on a formula identified by the
ERC as representative of 2013 market prices under normalized conditions
and (b) to collect the same from the WESM participants involved.
A decision was promulgated by the Supreme Court En Banc on

August 3, 2021 (the “SC Decision”) affirming the December 9, 2013 ERC
Order which approved the staggered imposition by Meralco of its generation
rate for November 2013 from its consumers and declared as null and void
the March 3, 2014 ERC Order. SPI, SPPC, and SRHI however received a
copy of the SC Decision through their counsels only on July 5, 2022, while
MPPCL received the same on July 6, 2022.
- 248 -
On July 26, 2022, the special interest groups sought reconsideration of the
SC Decision by filing separate Motions for Reconsideration where they
prayed that the Supreme Court Petition be granted. The ERC likewise filed a
Motion for Partial Reconsideration of the SC Decision and sought the
reinstatement of the March 3, 2014 ERC Order, among others.
These motions were denied with finality by the Supreme Court En Banc, in its
resolution dated October 11, 2022, which also directed the entry of judgment
of the SC Decision be made immediately. SPI, SPPC and SRHI on
January 4, 2023, while MPPCL on January 5, 2023, received a copy of the
Entry of Judgement from the Supreme Court En Banc dated October 11,
2022.
With this, the relevant subsidiaries namely, SPPC, MPPCL and SPI intend to
discuss with Meralco the implementation of the Supreme Court Decision.
SPPC, MPPCL and SPI have aggregate outstanding receivables from
Meralco estimated at P1,276 included under “Trade and other receivables -
net” account in the consolidated statements of financial position as at
▪ ERC Order Voiding WESM Prices
Relative to the above-cited Petition, on December 27, 2013, the DOE, ERC,
and PEMC, acting as a tripartite committee, issued a joint resolution setting a
reduced price cap on the WESM of P32/kWh. The price was set to be
effective for 90 days until a new cap is decided upon.
On March 3, 2014, the ERC, in the exercise of its police power, issued an
order in Miscellaneous Case No. 2014-021, declaring the November and
December 2013 Luzon WESM prices void, imposed the application of
regulated prices and mandated PEMC, the operator of the WESM, to
calculate and issue adjustment bills using recalculated prices (the “March 3,
2014 ERC Order”).
Subsequent orders were issued by the ERC setting the period for compliance
of the March 3, 2014 ERC Order (collectively, the “2014 ERC Orders”).
Based on these orders, SPI and SRHI recognized a reduction in the sale of
power while MPPCL, SMELC and SPPC recognized a reduction in its power
purchases. Consequently, a payable and receivable were also recognized for
the portion of over-collection or over-payment, the settlement of which have
been covered by a 24-month Special Payment Arrangement with PEMC
which was already completed on May 25, 2016.
SPI, SPPC, SRHI and MPPCL filed various pleadings requesting ERC for the
reconsideration of the March 3, 2014 Order. Other generators also requested
the Supreme Court to stop the implementation of the March 3, 2014 ERC
Order. The ERC denied the motions for reconsideration filed by the
generators.
On June 26, 2014, SPI, SPPC and SRHI, while on December 12, 2014,
MPPCL appealed the said ERC denial before the Court of Appeals through
their respective Petitions for Review.
- 249 -
After consolidating the cases, the Court of Appeals, in its decision dated
November 7, 2017 (the “November 7, 2017 Decision”), granted the Petition
for Review filed by SPI, SPPC, SRHI, and MPPCL, declaring the 2014 ERC
Orders null and void and accordingly reinstated and declared as valid the
WESM prices for Luzon for the supply months of November to
December 2013.
Motions for Reconsideration of the November 7, 2017 Decision and several

other motions were filed by various intervenors, which were denied by the
Court of Appeals through its Omnibus Resolution dated March 29, 2019. The
intervenors filed Petitions for Review on Certiorari before the Supreme Court,
which were also denied by the Supreme Court through its resolutions dated
September 11, 2019 and October 1, 2019. Entries of judgment have been
issued by the Supreme Court certifying that the resolutions denying the
Petitions for Review on Certiorari filed by various intervenors against SPI,
SPPC, SRHI and MPPCL, among others, have become final and executory.
The ERC and Meralco also filed separate Petitions for Review appealing the
November 7, 2017 Decision and Omnibus Resolution dated March 29, 2019
of the Court of Appeals, which nullified and set aside the 2014 ERC Orders,
declaring the WESM prices for November and December 2013 void.
In a Resolution dated November 4, 2020, the Supreme Court directed the

consolidation of the separate petitions filed by the ERC and Meralco
considering that said cases involve the same parties, raise the same issues,
and assail the same decision and resolution, and the transfer of the petition
filed by Meralco to the third division of the Supreme Court handling the
petition by the ERC.
The ERC has also filed its Consolidated Reply to the comments on its
petition dated November 18, 2020.
The Supreme Court has not yet promulgated a decision. However, on

August 3, 2021, a decision was rendered by the Supreme Court En Banc on
a separate case (as discussed under “TRO Issued to Meralco”) declaring the
March 3, 2014 ERC Order as null and void, which are the subject of the
aforementioned Petition. Considering that this decision of the Supreme Court
En Banc (“SC Decision”) covers the March 3, 2014 ERC Order, the
difference between the actual Luzon WESM prices and the regulated prices
(based on the March 3, 2014 ERC Order) for WESM sales and purchases by
SPI, SPPC, SRHI, SMELC and MPPCL will have to be settled with the
IEMOP, the current operator of the WESM .
On July 26, 2022, the special interest groups sought reconsideration of the
SC Decision by filing separate Motions for Reconsideration where they
prayed that the Supreme Court Petition be granted. The ERC likewise filed a
Motion for Partial Reconsideration of the SC Decision and sought the
reinstatement of the March 3, 2014 ERC Order, among others.
These motions were denied with finality by the Supreme Court En Banc, in its
resolution dated October 11, 2022, which also directed the entry of judgment
of the SC Decision be made immediately. SPI, SPPC and SRHI on
January 4, 2023, while MPPCL on January 5, 2023 received a copy of the
Entry of Judgement of the SC Decision from the Supreme Court En Banc
dated October 11, 2022. A claim for refund may be pursued by the relevant
subsidiaries with IEMOP in the aggregate amount of up to P2,322.
- 250 -
b. EPIRA
The EPIRA sets forth the following: (i) Section 49 created PSALM to take
ownership and manage the orderly sale, disposition and privatization of all
existing NPC generation assets, liabilities, IPP contracts, real estate and all other
disposable assets; (ii) Section 31(c) requires the transfer of the management and
control of at least 70% of the total energy output of power plants under contract
with NPC to the IPP Administrators as one of the conditions for retail competition
and open access; and (iii) Pursuant to Section 51(c), PSALM has the power to
take title to and possession of the IPP contracts and to appoint, after a
competitive, transparent and public bidding, qualified independent entities who
shall act as the IPP Administrators in accordance with the EPIRA. In accordance
with the bidding procedures and supplemented bid bulletins thereto to appoint an
IPP Administrator relative to the capacity of the IPP contracts, PSALM has
conducted a competitive, transparent and open public bidding process following
which San Miguel Global Power was selected winning bidder of the IPPA
Agreements (Note 34).
The EPIRA requires generation and DU companies to undergo public offering

within five years from the effective date, and provides cross ownership
restrictions between transmission and generation companies. If the holding
company of generation and DU companies is already listed with the PSE, the
generation company or the DU need not comply with the requirement since such
listing of the holding company is deemed already as compliance with the EPIRA.
A DU is allowed to source from an associated company engaged in generation

up to 50% of its demand except for contracts entered into prior to the effective
date of the EPIRA. Generation companies are restricted from owning more than
30% of the installed generating capacity of a grid and/or 25% of the national
installed generating capacity. The Group is in compliance with the restrictions as
at December 31, 2022 and 2021.
c. Request for Price Adjustment on the Meralco PSAs
On October 22, 2019, SPI and SPPC each filed before the ERC a Joint
Application with Meralco for the approval of their respective PSA with Meralco
with prayer for provisional authority (the “Application”). The PSA of SPPC covers
the supply of 670 MW baseload capacity to Meralco (“SPPC PSA”) while the
PSA of SPI covers the supply of 330 MW baseload capacity to Meralco (“SPI
PSA”) both for a period of 10 years (collectively, the “PSAs”). The PSAs were
awarded by Meralco to each of SPPC and SPI after they emerged as the winning
bidders in the competitive selection process conducted by Meralco in September
2019.
On March 16, 2020, the ERC released Orders both dated December 10, 2019,
granting provisional authority to implement the SPPC PSA and SPI PSA.
On May 11, 2022, each of SPPC and SPI filed a Joint Motion for Price
Adjustment with Meralco (the “Joint Motion”) seeking approval from the ERC to
temporarily increase the contract price under the SPPC PSA and SPI PSA for a
period of six months, to recover incremental fuel costs covering January to May
2022 billing periods arising from a Change in Circumstances (as defined in the
PSAs) to be collected over a period of six months.
On September 29, 2022, the ERC denied the foregoing Joint Motions filed by
each of SPPC and SPI with Meralco requesting for the proposed price
adjustments (the “September 29, 2022 ERC Orders”).
- 251 -
SPPC CA Petition
On November 10, 2022, SPPC filed with the Court of Appeals a Petition for
Certiorari under Rule 65 with Application for the Issuance of a TRO and/or Writ of
Preliminary Injunction to annul, reverse and set aside the September 29, 2022
ERC Order for SPPC (the “SPPC CA Petition”).
In a Resolution dated November 23, 2022, the 14th Division of the Court of
Appeals granted SPPC’s application for a 60-day TRO, conditioned upon the
posting of a bond in the amount of P50 (the “TRO Bond”). SPPC’s prayer for the
issuance of a writ of preliminary injunction was held in abeyance pending receipt
of Respondents’ comments.
On November 24, 2022, SPPC filed an Urgent Motion to Allow Consolidation of

SPI CA Petition with the SPPC CA Petition before the 13th Division of the Court
of Appeals as the SPPC CA Petition was transferred to this division of the Court
of Appeals. This Urgent Motion was granted by the 13th Division subject to the
approval of the Court of Appeals Division handling the SPI CA Petition.
On November 25, 2022, SPPC posted the bond in the amount of P50 (the “TRO
Bond”). This was approved in a Resolution dated December 2, 2022, which
resulted in the issuance of the TRO on the same date.
On December 7, 2022, SPPC received a copy of the Entry of Appearance with

Motion to Lift and/or Dissolve the TRO filed by the ERC through the Office of the
Solicitor General. Meralco also filed a Motion to Lift TRO. SPPC filed its
Oppositions to said Motions to Lift and/or Dissolve the TRO.
Following the hearing on the application for preliminary injunction held on

January 11, 2023, the 13th Division of the Court of Appeals issued on
January 25, 2023, a resolution granting SPPC’s application for the issuance of a
writ of preliminary injunction conditioned upon the posting by SPPC of a bond in
the amount of P100 (the “Preliminary Injunction Bond”). The Court of Appeals
likewise directed Respondents ERC, Meralco and NASECORE to file their
respective comment on the SPPC CA Petition and allowed SPPC to file a reply
within five days from receipt of the Respondents’ comment.
On February 1, 2023, SPPC received copies of the ERC’s Comment Ad

Cautelam and NASECORE’S Manifestation. On February 6, 2023, SPPC
received a copy of MERALCO’s Comment. On February 13, 2023, SPPC filed a
Motion for Leave to File Consolidated Reply.
In a Resolution dated February 23, 2023, the Court of Appeals approved the
Preliminary Injunction Bond posted by SPPC on January 31, 2023, directed the
issuance of a Writ of Preliminary Injunction, and released the TRO Bond.
On February 23, 2023, the writ of preliminary injunction was issued by the Court
of Appeals for the SPPC CA Petition.
SPPC CA Petition remains pending resolution with the 13th Division of the Court
of Appeals.
SPI CA Petition
On November 10, 2022, SPI also filed with the Court of Appeals a Petition for
Certiorari under Rule 65 with Application for the Issuance of a TRO and/or Writ of
Preliminary Injunction to annul, reverse and set aside the September 29, 2022
ERC Order for SPI (the “SPI CA Petition”).
- 252 -
On November 24, 2022, SPI filed an Urgent Motion for Consolidation of the
instant Petition with the SPPC CA Petition pending before the 13th Division of
the Court of Appeals.
On December 27, 2022, SPI received a copy of the Court of Appeals 16th
Division’s Resolution dated November 28, 2022 which directed the private
respondents to file their comment on the petition and show cause why SPI’s
prayer for the issuance of a TRO and/or writ of preliminary injunction should not
be granted, within 10 days from notice. Action on SPI’s prayer for injunctive relief
was held in abeyance pending receipt of the required pleadings.
The ERC has filed an Opposition Ex Abundanti Ad Cautelam to SPI’s Urgent

Motion to Allow Consolidation of Cases.
MERALCO has filed its Opposition to SPI’s application for the issuance of a TRO
and/or writ of preliminary injunction. On January 10, 2023, SPI filed its Reply to
MERALCO’s Opposition.
On January 26, 2023, SPI received the Resolution dated January 13, 2023 of the
16th Division of the Court of Appeals which (i) denied the SPI’s prayer for the
issuance of a TRO and/or writ of preliminary injunction, and (ii) granted the
consolidation of SPI CA Petition with the SPPC CA Petition. The SPI CA Petition
was thus consolidated with the SPPC CA Petition before the 13th Division.
On February 10, 2023, SPI filed a Motion for Partial Reconsideration of the
January 13, 2023 Resolution and prayed for the issuance of a writ of preliminary
injunction.
On February 14, 2023, SPI received copies of the ERC’s Comment Ad Cautelam
on the Petition and Meralco’s Comment.
On February 20, 2023, SPI filed a Motion for Leave to File Consolidated Reply.
SPI’s Motion for Partial Reconsideration (on the issuance of a writ of preliminary
injunction) and the SPI CA Petition remain pending resolution with the 13th
Division of the Court of Appeals.
In a Resolution dated April 3, 2023, the Court of Appeals upheld its decision to
consolidate the cases filed by SPI and SPPC thus denying the Motion for
Reconsideration (Opposition Ex Abundanti Ad Cautelam to SPI’s Urgent Motion
to Allow Consolidation of Cases) filed by the ERC.
d. Effect of COVID-19
The performance of the Parent Company and its subsidiaries over the past two
years showed continuous recovery from the impact of the pandemic with overall
volumes and revenues posting robust growth and even surpassing pre-pandemic
levels. Improving economic activities and the return of social celebrations were
key drivers amidst the challenges brought by economic and ongoing geopolitical
concerns.
The Parent Company and its subsidiaries ended 2022 with strong consolidated
sales, a 60% increase compared to 2021, surpassing 2019 pre-pandemic result.
- 253 -
e. Impact of Russia-Ukraine Conflict
In February 2022, the invasion of Ukraine by Russia resulted to sudden

escalation in prices of several commodities, particularly crude oil, coal and
wheat, which were among the major raw material importations by the Group that
have greatly impacted the operating performance of the Fuel and Oil, Energy and
Food businesses, respectively.
Prices of crude oil which were already inflated even before the war due to
resurgence in demand, soared on the wake of Russia’s aggression in Ukraine.
Dubai crude oil averaged at US$96 per barrel in 2022, nearly 40% higher than
last year’s average of US$69 per barrel. Average price peaked to US$113 per
barrel in June, dropping by 32% in the second half to US$77 per barrel in
December, due to global inflationary and recession fears.
Prices of coal surged to unprecedented levels as economic sanctions imposed

by western countries on Russian oil, gas and coal imports caused global
disruption on energy supply. Coal price index soared to US$404 per metric tons
in December 2022 from US$170 per metric tons in December 2021.
Given the importance of Ukraine and Russia on global wheat market, the
ongoing war’s impact on wheat supply led to food security concerns which drove
up prices worldwide. Prices of wheat increased by 51% to an average of P23.40
per kilogram in 2022 from P15.53 per kilogram in 2021.
Driven by the strong topline growth of the Fuel and Oil, Food and Beverage,
Packaging and Infrastructure businesses coupled with groupwide cost
management and initiatives which mitigated the continuing challenges of
increasing raw material costs, inflationary pressures, and foreign exchange
movements, consolidated operating income grew 10% from the previous year.
This was however tempered by the Energy business which was weighed down
by the significant increase in fuel costs.
f. Commitments
The outstanding purchase commitments of the Group amounted to P266,580

and P154,461 as at December 31, 2022 and 2021, respectively.
These consist mainly of construction, acquisition, upgrade or repair of fixed

assets needed for normal operations of the business and will be funded by
available cash, short-term loans and long-term debt.
g. Foreign Exchange Rates
The foreign exchange rates used in translating the US dollar accounts of foreign
subsidiaries, associates and joint ventures to Philippine peso were closing rates
of P55.755 and P50.999 in 2022 and 2021, respectively, for consolidated
statements of financial position accounts; and average rates of P54.502,
P49.285 and P49.624 in 2022, 2021 and 2020, respectively, for income and
expense accounts.
h. Certain accounts in prior years have been reclassified for consistency with the
current period presentation. These reclassifications had no effect on the reported
financial performance for any period.
- 254 -
Proceeds from the Offering of the Fixed-Rate Bonds Series "L", Series "M" and Series "N"
December 31, 2022
(Amounts in Millions)
i) Gross and Net Proceeds as Disclosed in the Final Prospectus

Gross Proceeds P 60,000
Estimated Fees, Commissions and Expenses Relating to the Issue:
Underwriting fees P 190
Taxes to be paid by the Company 450
Philippine SEC filing and legal research fee 11
Estimated legal and other professional fees 8
Estimated other expenses 11 670
Net Proceeds P 59,330
ii) Actual Gross and Net Proceeds

Gross Proceeds P 60,000
Philippine SEC filing and legal research fee P 16
Other expenses 12 28
Net Proceeds P 59,972
iii) Each Expenditure Item Where the Proceeds were Used

Repayment of Peso-denominated short-term loans used to
redeem the Series A Bonds P 6,484
Repayment of Peso-denominated short-term loans used to
redeem the Series D Bonds 10,000
Optional redemption of the Series "2-H" preferred shares 12,300
Total Expenditure Where the Proceeds Were Used P 28,784
iv) Balance of the Proceeds as of End of Reporting Period P 31,188
ANNEX “C”
SUPPLEMENTARY SCHEDULES
R.G. Manabat & Co.
Philippines 1209
Telephone +63 (2) 8885 7000
Fax +63 (2) 8894 1985

TO ACCOMPANY SUPPLEMENTARY INFORMATION FOR FILING
WITH THE SECURITIES AND EXCHANGE COMMISSION

Mandaluyong City
We have audited, in accordance with Philippine Standards on Auditing, the separate

financial statements of San Miguel Corporation (the Company) as at and for the year
ended December 31, 2022, on which we have rendered our report dated April 15, 2023.
Our audits were made for the purpose of forming an opinion on the separate financial
statements of the Company taken as a whole. The supplementary information included
in the Reconciliation of Retained Earnings Available for Dividend Declaration is the
responsibility of the Company's management.

This supplementary information is presented for purposes of complying with the Revised
Securities Regulation Code Rule 68, and is not a required part of the separate financial
statements. Such supplementary information has been subjected to the auditing
procedures applied in the audit of the separate financial statements and, in our opinion,
is fairly stated, in all material respects, in relation to the separate financial statements
taken as a whole.
R.G. MANABAT & CO.
DARWIN P. VIROCEL
Partner
PTR No. MKT 9563853
April 15, 2023

RECONCILIATION OF RETAINED EARNINGS
AVAILABLE FOR DIVIDEND DECLARATION
AS OF DECEMBER 31, 2022
(In Millions)
SAN MIGUEL CORPORATION

No. 40 San Miguel Avenue, Mandaluyong City
Unappropriated Retained Earnings, January 1, 2022 Adjustments: P480,281

(See adjustments in previous year's reconciliation) (400,704)
Unappropriated retained earnings as adjusted, January 1, 2022 79,577
Add: Net loss actually incurred/realized during the period
Net loss during the period closed to retained earnings (5,215)
Deferred tax assets (2,746)
Net loss actually incurred during the period (7,961)
Less: Dividends and distributions declared during the period (10,018)
Total Unappropriated Retained Earnings Available for Dividend
Declaration, December 31, 2022 P61,598
R.G. Manabat & Co.
Philippines 1209
Telephone +63 (2) 8885 7000
Fax +63 (2) 8894 1985


Mandaluyong City
We have audited, in accordance with Philippine Standards on Auditing, the consolidated

financial statements of San Miguel Corporation (the Company) and Subsidiaries (the
Group), as at and for the year ended December 31, 2022, on which we have rendered
our report dated April 15, 2023.
Our audit was made for the purpose of forming an opinion on the consolidated financial
statements of the Group taken as a whole. The supplementary information included in
the Map of the Conglomerate is the responsibility of the Group’s management.

Securities Regulation Code Rule 68, and is not a required part of the consolidated
financial statements. Such supplementary information has been subjected to the
auditing procedures applied in the audit of the consolidated financial statements and, in
our opinion, is fairly stated, in all material respects, in relation to the consolidated
financial statements taken as a whole.
R.G. MANABAT & CO.
DARWIN P. VIROCEL
Partner
PTR No. MKT 9563853
April 15, 2023

*
GROUP STRUCTURE
As at December 31, 2022
TOP FRONTIER INVESTMENT
HOLDINGS, INC.
100%
61.78%
Mining
CLARIDEN HOLDINGS, INC.

AND SUBSIDIARIES (8)
Food and Beverage Packaging PackaEnergy Fuel and Oil
88.76% 65% San Miguel Yamamura Packaging Corporation and 100%

San Miguel Global Power Holdings Corp. 100%
San Miguel Food and Beverage, Inc. and
subsidiaries, SMC Yamamura Fuso Molds (formerly SMC Global Power Holdings SEA Refinery Corporation
subsidiaries (1a)
Corporation, Can Asia, Inc. and Wine Brothers Corp.) and subsidiaries (3)
Philippines Corporation
99.99% 100% Sual Power Inc.(3) 18.16% 50.10%

San Miguel Foods, Inc. and
(formerly San Miguel Energy Corporation) Petron Corporation and subsidiaries (4)
subsidiary San Miguel Yamamura Packaging International
65% and subsidiary
Limited and subsidiaries (2)
100% San Miguel Mills, Inc. and 100%
South Premiere Power Corp.
subsidiaries 100%
Mindanao Corrugated Fibreboard, Inc.
100% 100% San Roque Hydropower Inc.(3) Infrastructure

Magnolia Inc. and subsidiary
(formerly Strategic Power Devt. Corp.)
100% San Miguel Holdings Corp. and

60% 100% Limay Power Inc.(3) subsidiaries (5)
The Purefoods - Hormel Company
(formerly SMC Consolidated
Inc.
Power Corporation)
100% SMC NAIAX Corporation
75.78% Ginebra San Miguel Inc. and 100% Malita Power Inc.(3) (formerly (formerly, Vertex Tollways Devt. Inc.)
San Miguel Consolidated Power
subsidiaries (1b)
Corporation)
99.92%
Trans Aire Development Holdings Corp.
51.16% San Miguel Brewery Inc. and 99.96% SMCGP Masinloc Partners
subsidiaries (1c) Company Limited (100%)
40% 100%
SMC TPLEX Holdings Company, Inc.
100% 60% SMCGP Masinloc Power
San Miguel Brewing International
Company Limited
Ltd. and subsidiaries (1c)
50.90% 70.11%
49.07% Masinloc Power Partners
SMC TPLEX Corporation
Co. Ltd. (100%)
Other Assets and Investments (6)

100% 100%
PowerOne Ventures Energy Inc. Universal LRT Corporation (BVI) Limited
99.97% (7)
San Miguel Properties, Inc. and subsidiaries
60% (B) 95% Atlantic Aurum Investments BV and
Angat Hydropower Corporation
31.94% (36.80%)(A) 4.87% subsidiaries (5)
Bank of Commerce
60% KWPP Holdings 100%

Wiselink Investment Holdings, Inc.
70% SMC Shipping and Lighterage Corporation and Corporation (B)
subsidiaries 60%
94.55% 40% Cypress Tree Capital Investments, Inc.
Mariveles Power Generation Corp.
100% San Miguel Equity Investments Inc. and and subsidiaries
subsidiaries
100% 66.46% 33.54%

Northern Cement Corporation San Miguel Aerocity Inc.
99.96% Eagle Cement Corporation and 90% Luzon Clean Water Development
subsidiairies Corporation
100% Southern Concrete Industries, Inc. 50%
Manila North Harbour Port, Inc. (A)
(formerly Oro Cemento Industries
Corporation)
65% SMC Asia Car Distributors Corp.

and subsidiaries
100%
SMC Equivest Corporation
74.94% (92.05%) 25.06%

Petrogen Insurance Corp.
* The group structure includes the Parent Company, Top Frontier Investment Holdings, Inc., its co-subsidiary, Clariden Holdings, Inc. and its subsidiaries and San Miguel Corporation’s major subsidiaries, associates and joint ventures.
Note:
(A)
Associate
(B)
Joint Venture
I. Subsidiaries
1. San Miguel Food and Beverage Inc. subsidiaries also include: (a) San Miguel Super Coffeemix Co., Inc., PT San
Miguel Foods Indonesia and San Miguel Foods International, Limited and subsidiary, San Miguel Foods Investment
(BVI) Limited and subsidiary, San Miguel Pure Foods (VN) Co., Ltd.; (b) Ginebra San Miguel Inc. subsidiaries including
Distileria Bago, Inc., East Pacific Star Bottlers Phils Inc., Ginebra San Miguel International, Ltd., GSM International
Holdings Limited, Global Beverage Holdings Limited and Siam Holdings Limited; and (c) San Miguel Brewery Inc.
subsidiaries including Iconic Beverages, Inc. and Brewery Properties Inc. and subsidiary and San Miguel Brewing
International Ltd. and subsidiaries including, San Miguel Brewery Hong Kong Limited and subsidiaries, PT. Delta
Djakarta Tbk. and subsidiary, San Miguel (Baoding) Brewery Co. Ltd., San Miguel Brewery Vietnam Company Limited,
San Miguel Beer (Thailand) Limited and San Miguel Marketing (Thailand) Limited. San Miguel (Baoding) Brewery Co.
Ltd. and PT San Miguel Foods Indonesia are in the process of liquidation as at December 31, 2022.
2. San Miguel Yamamura Packaging International Limited subsidiaries include San Miguel Yamamura Phu Tho
Packaging Company Limited, San Miguel Yamamura Glass (Vietnam) Limited, San Miguel Yamamura Haiphong Glass
Company Limited, Zhaoqing San Miguel Yamamura Glass Company Limited, Foshan San Miguel Yamamura
Packaging Company Limited and subsidiary, San Miguel Yamamura Packaging and Printing Sdn. Bhd., San Miguel
Yamamura Woven Products Sdn. Bhd. and subsidiary, Packaging Research Centre Sdn. Bhd., San Miguel Yamamura
Plastic Films Sdn. Bhd., San Miguel Yamamura Australasia Pty Ltd and subsidiaries including SMYC Pty Ltd and
subsidiary, Foshan Cospak Packaging Co. Ltd., SMYV Pty Ltd, SMYP Pty Ltd, Cospak Limited, SMYBB Pty Ltd, SMYJ
Pty Ltd, Wine Brothers Australasia Pty Ltd and Vinocor Ltd.
3. SMC Global Power Holdings Corp. subsidiaries also include San Miguel Electric Corp., SMC PowerGen Inc., SMC
Power Generation Corp., Albay Power and Energy Corp., Lumiere Energy Technologies Inc., Universal Power
Solutions, Inc., Excellent Energy Resources Inc., Central Luzon Premiere Power Corp., Oceantech Power Generation
and subsidiary, SMCGP Philippines Energy Storage Co. Ltd., and Prime Electric Generation Corporation and
subsidiary.
The Securities and Exchange Commission approved the change in corporate names of the following entities on the
respective dates:
San Miguel Global Power Holdings Corp. (formerly SMC Global Power
Holdings Corp.) March 22, 2023
Sual Power Inc. (formerly San Miguel Energy Corporation) March 9, 2023
San Roque Hydropower Inc. (formerly Strategic Power Devt. Corp.) March 31, 2023
Limay Power Inc. (formerly SMC Consolidated Power Corporation) February 7, 2023
Malita Power Inc. (formerly San Miguel Consolidated Power Corporation) March 9, 2023
4. Petron Corporation subsidiaries include Petron Marketing Corporation, Petron Freeport Corporation, Overseas
Ventures Insurance Corporation Ltd., New Ventures Realty Corporation and subsidiaries, Mema Holdings, Inc. and
subsidiaries, Petron Singapore Trading Pte., Ltd., Petron Global Limited, Petron Oil & Gas International Sdn. Bhd.
and subsidiaries including Petron Fuel International Sdn. Bhd., Petron Oil (M) Sdn. Bhd. and Petron Malaysia
Refining & Marketing Bhd. (collectively Petron Malaysia), Petron Finance (Labuan) Limited and Petrochemical Asia
(HK) Limited and subsidiaries.
5. San Miguel Holdings Corp. subsidiaries include ULCOM Company Inc., Alloy Manila Toll Expressways Inc., SMC
Infraventures, Inc. and subsidiary, SMC Skyway Stage 4 Corporation (formerly Citra Intercity Tollways Inc.), SMC Mass
Rail Transit 7 Inc., Pasig River Expressway Corporation, Intelligent E-Processes Technologies Corp., SMC Northern
Access Link Expressway Corp., SMC Southern Access Link Expressway Corp., South Luzon Toll Road-5 Expressway
Inc. and TPLEX Operations & Maintenance Corp.
Atlantic Aurum Investments B.V. subsidiaries include SMC Tollways Corporation (formerly Atlantic Aurum Investments
Philippines Corporation) and subsidiaries including Stage 3 Connector Tollways Holding Corporation and subsidiary,
SMC Skyway Stage 3 Corporation (formerly Citra Central Expressway Corp.), and SMC Skyway Corporation (formerly
Citra Metro Manila Tollways Corporation) and subsidiary, Skyway O&M Corp., SMC SLEX Holdings Company Inc.
(formerly MTD Manila Expressways Inc.) and subsidiaries, Manila Toll Expressway Systems Inc. and SMC SLEX Inc.
(formerly South Luzon Tollway Corporation).
6. Other Assets and Investments also include San Miguel International Limited and subsidiary, San Miguel Holdings
Limited, SMC Stock Transfer Service Corporation, ArchEn Technologies Inc., SMITS, Inc. and subsidiaries, San Miguel
Integrated Logistics Services, Inc., Anchor Insurance Brokerage Corporation and Davana Heights Development
Corporation and subsidiaries.
7. San Miguel Properties, Inc. subsidiaries include SMPI Makati Flagship Realty Corp. and Bright Ventures Realty, Inc.
II. Co-Subsidiary
8. Clariden Holdings, Inc. subsidiaries include V.I.L. Mines, Incorporated, Asia-Alliance Mining Resources Corp., Prima
Lumina Gold Mining Corp., Excelon Asia Holding Corporation, New Manila Properties, Inc. and Philnico Holdings
Limited and subsidiaries including Pacific Nickel Philippines, Inc., Philnico Industrial Corporation and Philnico
Processing Corp. (collectively the Philnico Group). Asia-Alliance Mining Resources Corp. is held for sale as of
December 31, 2022.
R.G. Manabat & Co.
Philippines 1209
Telephone +63 (2) 8885 7000
Fax +63 (2) 8894 1985


Mandaluyong City

financial statements of San Miguel Corporation (the Company) and Subsidiaries (the
Group), as at and for the year ended December 31, 2022, on which we have rendered
our report dated April 15, 2023.
statements of the Group taken as a whole. The supplementary information included in
the Supplementary Schedules of Annex 68-J is the responsibility of the Group’s
management.

Securities Regulation Code Rule 68, and is not a required part of the consolidated
financial statements. Such supplementary information has been subjected to the
auditing procedures applied in the audit of the consolidated financial statements and, in
our opinion, is fairly stated, in all material respects, in relation to the consolidated
R.G. MANABAT & CO.
DARWIN P. VIROCEL
Partner
PTR No. MKT 9563853
April 15, 2023

INDEX TO FINANCIAL STATEMENTS AND

SUPPLEMENTARY SCHEDULES
DECEMBER 31, 2022
A - FINANCIAL ASSETS
B - AMOUNTS RECEIVABLE FROM DIRECTORS, OFFICERS,

EMPLOYEES, RELATED PARTIES AND PRINCIPAL STOCKHOLDERS
(OTHER THAN RELATED PARTIES) NOT APPLICABLE
C - AMOUNTS RECEIVABLE/PAYABLE FROM RELATED PARTIES WHICH

ARE ELIMINATED DURING THE CONSOLIDATION OF FINANCIAL
STATEMENTS
D - LONG-TERM DEBT
E - INDEBTEDNESS TO RELATED PARTIES NOT APPLICABLE*
F - GUARANTEES OF SECURITIES OF OTHER ISSUERS NOT APPLICABLE
G - CAPITAL STOCK
* Balance of account is less than 5% of total assets of the Group

SCHEDULE A - FINANCIAL ASSETS
DECEMBER 31, 2022
(Amounts in Millions, except No. of Shares Data)
Amount Value Based

Number of shares Shown in the on Market Income (Loss)
Name of Issuing Entity / or Principal Amount Statements of Quotations at Received
Description of Each Issue of Bonds and Notes Financial Position December 31, 2022 and Accrued
Cash and cash equivalents - P 318,214 Not applicable P 5,958

Trade and other receivables - net - 238,782 Not applicable 113
Derivative assets - 3,624 Not applicable (23,601) *
Financial assets at FVPL - 1,349 Not applicable 54
Financial assets at FVOCI** - 7,319 P 7,319 1,433
Financial assets at amortized cost** - 12,134 12,134 60
Noncurrent receivables and deposits - net - 39,700 Not applicable 329
Restricted cash - 19,050 Not applicable 267
P 640,172 P 19,453 P (15,387)
* This represents net marked-to-market gains/losses from derivative assets and derivative liabilities that have matured
during the year and those that are still outstanding as of year-end.
** The number of shares or principal amounts of bonds and notes are presented in ATTACHMENT TO SCHEDULE A -
FINANCIAL ASSETS.
See Notes 4, 10, 12, 33, 39 and 40 of the Consolidated Financial Statements.
ATTACHMENT TO SCHEDULE A - FINANCIAL ASSETS
DECEMBER 31, 2022
(Amounts in Millions, Except No. of Shares Data)
No. of Shares or
Value Based on Market Quotation at
Name of Issuing Entity Principal Amount of
December 31, 2022 (a)
Bonds and Notes

Alabang Country Club 7 P 76
Alta Vista Golf and Country Club 2 1
Apo Golf & Country Club 3 -
Baguio Country Club 1 6
Bancom Group Inc 999,546 -
Calatagan Golf Club 1 -
Camp John Hay 2 1
Canlubang Golf Club 3 9
Capitol Hills Golf & Country Club 1 -
Casino Espanol de Manila 2 -
Cebu Country Club 1 13
Celebrity Sports Plaza 3 1
Club Filipino 8 3
Continental Potash 7,909 -
Evercrest 2 -
Export & Industry Bank 940,560,000 -
Green Valley Club - Baguio 1 -
Greenfield Tennis Club 3 -
Iloilo Golf Club 1 -
Inter island Broadcasting Corp 4,458,928 -
Landgolf Inc 2 -
Makati Executive Center 1 -
Makati Sports Club 11 9
Manila Bankers Life 250,000 1
Manila Electric Company 100,331 1
Manila Golf & Country Club 3 267
Manila Polo Club 2 60
Manila Southwoods Golf & Country Club 1 3
Medical Doctors Inc. 83,379 203
Merchant Investment 41,660 -
Metropolitan Club 2 1
Metropolitan Theater 198 -
Mimosa Golf & Country Club 3 2
Monserrat Trading 1,000 -
Motor Services 52,500 -
Naga Telephone Co. 220 -
Negros Occidental Golf club 6 -
Norcem Philippines 80,000 -
Orchard Golf & Country Club 5 2
Pacific Club Corporate 1 -
Pantranco South Express 340,992 -
People's Press 1,500 -
Phil. Columbian Club 3 -
Phil. Dealing Sytem Holding Corp. 250,000 25
Phil. International Fair 500 -
Phil. Long Distance Tel. Co 230,594 2
Phil. Overseas Resources 10,000 -
Puerto Azul Golf Club 3 1
Quezon City Sports Club 1 1
Sta Elena Properties 7 5
Sta Elena Golf Club 1 8
Sta Lucia Realty Golf Club 2 1
Subic Bay Yacht Club 1 -
Tagaytay Highland Golf and Country Club 2 3
Tagaytay Midlands Country Club 1 1
The Country Club - Canlubang 2 8
Top Frontier Holdings, Inc. - Common 2,561,031 243
Universal Leisure Club 1 -
No. of Shares or
Value Based on Market Quotation
Name of Issuing Entity Principal Amount of
at December 31, 2022 (a)
Bonds and Notes
Valle Verde Golf Club 53 16

Valley Golf Club Inc. 2 5
Victorias Country Club 1 -
SMC Equivest Corporation

Bank of Commerce - Preferred 416,666,670 5,500
Petrogen Insurance Corporation

Government Security ‐ 133
Treasury Bill ‐ 501
Ayala Bond 1
Corporate Bonds under IMA with BOC 700 739
San Miguel Properties, Inc.

Apo Golf & Country Club 1 1
Mimosa Golf & Country Club 4 2
Sta. Elena Golf & Country Club 1 5
Metro Club 1 -
Meralco 91,011 1
Riviera Golf Course and Country Club 1 4
Tagaytay Midlands Country Club 1 1
San Miguel Paper Packaging Corp.

Phil Long Distance Tel. 5,200 -
Evercrest Golf & Country Club 1 -
Apo Golf & Country Club 1 -
San Miguel Yamamura Packaging Corporation

Canlubang Golf & Country Club 1 3
Manila Southwoods Golf and Country Club 1 9
Puerto Azul Golf Club 1 -
Riviera Golf Course and Country Club 1 1
Mindanao Corrugated Fibreboard, Inc.

Apo Golf Country Club 1 -
Food and Beverage Group

Club Filipino 2 1
Makati Sports Club, Inc. 2 2
Philippine Long Distance Tel. Co. 5,753 1
Valle Verde Country Club 1 1
Capitol Hills Golf and Country Club, Inc. 1 -
Alabang Country Club 1 10
Manila Southwoods Golf & Country Club 1 2
Sta Elena Golf Club 1 6
Manila Electric Co. 14,895 -
Tagaytay Highland Golf and Country Club 1 1
Royal Tagaytay Country Club 1 -
Orchard Golf and Country Club 1 1
HSBC Holdings 20,400 7
Pacific Club Kowloon 1 8
The American Club Hong Kong 1 10
Hong Kong Football Club 1 7
Discovery Bay Golf Club 1 9
Corporate Bonds under IMA with BOC 11,500 11,500
San Miguel Holdings Corp.

Architectural Center Club Inc 1 -
Philippine Expressway Support Service Inc 1 -
Phil Am Properties 1 1
Total Financial Assets P 19,453

SCHEDULE C - AMOUNTS RECEIVABLE FROM RELATED PARTIES WHICH ARE ELIMINATED
DURING THE CONSOLIDATION OF FINANCIAL STATEMENTS
DECEMBER 31, 2022
ADDITIONS/ AMOUNTS
BEGINNING CTA/RECLASS/ COLLECTED/ AMOUNTS ENDING
NAME OF RELATED PARTY BALANCE OTHERS CREDIT MEMO WRITTEN OFF TOTAL CURRENT NONCURRENT BALANCE
San Miguel Holdings Corp. and Subsidiaries P 31,129 P 45,321 P (26,430) P - P 50,020 P 27,590 P 22,430 P 50,020
San Miguel Equity Investments, Inc. and Subsidiaries 503 40,436 (7,929) - 33,010 33,010 - 33,010
Sea Refinery Corporation 31,382 - - - 31,382 31,382 - 31,382
San Miguel Food and Beverage, Inc. and Subsidiaries 12,205 59,355 (52,843) - 18,717 14,686 4,031 18,717
San Miguel Properties, Inc. and Subsidiaries 165 9,807 (1,024) - 8,948 1,731 7,217 8,948
San Miguel Corporation 1,856 24,719 (18,704) - 7,871 7,871 - 7,871
Challenger Aero Air Corporation 6,272 612 - - 6,884 6,884 - 6,884
Petron Corporation and Subsidiaries 1,521 6,108 (2,617) - 5,012 5,012 - 5,012
San Miguel Global Power Holdings Corp. and Subsidiaries* 600 17,802 (14,190) - 4,212 4,108 104 4,212
San Miguel Integrated Logistics Services, Inc. 2,866 1,061 (1,084) - 2,843 591 2,252 2,843
Petrogen Insurance Corporation 2,053 5,655 (5,570) - 2,138 2,138 - 2,138
SMC Shipping and Lighterage Corporation and Subsidiaries 1,658 22,783 (22,326) - 2,115 2,115 - 2,115
Fortunate Land Inc. and a Subsidiary 2,010 - - - 2,010 - 2,010 2,010
San Miguel Yamamura Packaging Corp. and Subsidiaries 1,477 3,927 (3,610) - 1,794 1,794 - 1,794
San Miguel International Limited and Subsidiaries 2,210 (129) (672) - 1,409 1,220 189 1,409
Others 3,875 4,077 (3,471) - 4,481 3,555 926 4,481
P 101,782 P 241,534 P (160,470) P - P 182,846 P 143,687 P 39,159 P 182,846
*Formerly SMC Global Power Holdings Corp. The change in corporate name was approved by the Securities and Exchange Commission on March 22, 2023.
SCHEDULE C - AMOUNTS PAYABLE TO RELATED PARTIES WHICH ARE ELIMINATED
DURING THE CONSOLIDATION OF FINANCIAL STATEMENTS
DECEMBER 31, 2022
ADDITIONS/
BEGINNING CTA/RECLASS/ AMOUNTS PAID/ AMOUNTS ENDING
NAME OF RELATED PARTY BALANCE OTHERS DEBIT MEMO WRITTEN OFF TOTAL CURRENT NONCURRENT BALANCE
San Miguel Corporation P 75,853 P 62,635 P (14,449) P - P 124,039 P 97,024 P 27,015 P 124,039
San Miguel Global Power Holdings Corp. and Subsidiaries* 1,321 22,261 (5,767) - 17,815 5,805 12,010 17,815
San Miguel International Limited and Subsidiaries 1,263 11,290 (2,115) - 10,438 10,438 - 10,438
Petron Corporation and Subsidiaries 2,660 12,464 (8,987) - 6,137 6,137 - 6,137
San Miguel Integrated Logistics Services, Inc. 5,135 7,232 (6,833) - 5,534 5,534 - 5,534
SMC Shipping and Lighterage Corporation and Subsidiaries 3,305 22,773 (21,201) - 4,877 4,877 - 4,877
San Miguel Yamamura Packaging Corp. and Subsidiaries 3,626 14,880 (14,798) - 3,708 3,469 239 3,708
San Miguel Holdings Corp. and Subsidiaries 1,478 5,845 (5,342) - 1,981 1,790 191 1,981
San Miguel Food and Beverage, Inc. and Subsidiaries 950 1,952 (1,329) - 1,573 1,477 96 1,573
Petrogen Insurance Corporation 2,171 5,280 (5,972) - 1,479 1,479 - 1,479
SMITS, Inc. and Subsidiaries 699 2,022 (1,928) - 793 703 90 793
San Miguel Properties, Inc. and Subsidiaries 455 1,131 (1,064) - 522 522 - 522
Others 2,866 9,908 (8,824) - 3,950 3,765 185 3,950
P 101,782 P 179,673 P (98,609) P - P 182,846 P 143,020 P 39,826 P 182,846
*Formerly SMC Global Power Holdings Corp. The change in corporate name was approved by the Securities and Exchange Commission on March 22, 2023.
SCHEDULE D ‐ LONG‐TERM DEBT
DECEMBER 31, 2022
TITLE OF ISSUE Amount Amount Amount Number of

AND TYPE OF Authorized by Shown as Shown as Outstanding Periodic Final
OBLIGATION Indenture Current Noncurrent Balance INTEREST RATES Installments Maturity
Parent Company
Peso denominated Bonds:
March 2028, December 2029 and
PHP 60,000 PHP ‐ PHP 59,165 PHP 59,165 7.4458%, 7.8467% and 8.4890% Bullet December 2032
6.25%, 5.2840%, 5.55%, 6.625%, March 2023, March 2024, October 2024, March 2025,
PHP 60,000 13,138 30,029 43,167 5.7613% and 7.125% Bullet March 2027 and March 2028
PHP 30,000 ‐ 29,700 29,700 3.3832% Bullet July 2027
PHP 30,000 ‐ 29,644 29,644 5.2704% and 5.8434% Bullet March 2027 and March 2029
Peso denominated Term Notes:
PHP 16,000 159 15,214 15,373 6.9375% Amortized June 2026
Foreign currency ‐ denominated Term Notes:

US$ 2,000 ‐ 110,492 110,492 LIBOR + margin Bullet September 2024
US$ 900 ‐ 49,172 49,172 LIBOR + margin Bullet October 2026
US$ 871 47,534 47,534 SOFR + margin Amortized June 2035
US$ 700 38,201 38,201 SOFR + margin Bullet March 2027
US$ 400 22,282 ‐ 22,282 LIBOR + margin Bullet March 2023
US$ 300 16,697 ‐ 16,697 LIBOR + margin Bullet June 2023
US$ 300 16,682 ‐ 16,682 LIBOR + margin Bullet September 2023
US$ 200 11,116 ‐ 11,116 LIBOR + margin Bullet November 2023
US$ 100 ‐ 5,512 5,512 SOFR + margin Bullet May 2027
US$ 100 ‐ 5,510 5,510 LIBOR + margin Bullet December 2026
US$ 300 ‐ 4,999 4,999 LIBOR + margin Bullet October 2024
PHP 80,074 PHP 425,172 PHP 505,246
DECEMBER 31, 2022

Subsidiaries
Peso denominated Bonds:
San Miguel Global Power Holdings Corp (formerly SMC Global Power Holdings Corp.)*
PHP 40,000 PHP ‐ PHP 39,476 PHP 39,476 5.9077%, 7.1051% and 8.0288% Bullet July 2025 July 2028 and July 2032
August 2023, December 2024 and

PHP 35,000 14,972 10,040 25,012 6.75%, 6.25% and 6.625% Bullet December 2027
PHP 30,000 ‐ 16,070 16,070 7.1783% and 7.6000% Bullet April 2024 and April 2026
4,086 4,086 4.7575% Bullet July 2023
PHP 15,000 ‐ 4,735 4,735 5.1792% Bullet July 2026
4,086 4,735 8,821
Petron Corporation
PHP 7,000 6,990 ‐ 6,990 4.5219% Bullet October 2023
‐ 13,144 13,144 7.8183% Bullet April 2024
PHP 20,000
‐ 6,762 6,762 8.0551% Bullet October 2025
6,990 19,906 26,896
‐ 8,917 8,917 3.4408% Bullet October 2025
PHP 18,000
‐ 8,906 8,906 4.3368% Bullet October 2027
‐ 17,823 17,823
San Miguel Food and Beverage
‐ 7,951 7,951 5.0500% Bullet March 2025
PHP 15,000
‐ 6,941 6,941 5.2500% Bullet March 2027
‐ 14,892 14,892
SM Brewery Inc.
PHP 15,000 ‐ 2,534 2,534 6.00% Bullet April 2024
SMC SLEX Inc. (formerly South Luzon Tollway Corporation)

PHP 7,300 ‐ 2,491 2,491 6.4872% Bullet May 2025
DECEMBER 31, 2022

Peso denominated Term Notes:

Petron Corporation
PHP 5,000 PHP 614 PHP 4,355 PHP 4,969 7.4206% Amortized June 2027
PHP 5,000 4,967 4,967 7.1663% Amortized May 2027
PHP 15,000 2,138 1,606 3,744 5.5276% Amortized July 2024
PHP 5,000 1,244 1,872 3,116 4.5900% Amortized April 2025
PHP 2,375 ‐ 2,359 2,359 6.4920% Bullet September 2025
PHP 625 ‐ 621 621 6.8672% Bullet September 2025
San Miguel Global Power Holdings Corp. (formerly SMC Global Power Holdings Corp.)*
PHP 15,000 124 14,092 14,216 6.9265% Amortized April 2024
PHP 5,000 36 4,853 4,889 5.0000% Bullet May 2025
Limay Power Inc. (formerly SMC Consolidated Power Corporation)**

PHP 44,000 2,681 32,497 35,178 6.2836%, 6.5362% and 7.3889% Amortized June 2029
Malita Power Inc. (formerly San Miguel Consolidated Power Corportion)***

PHP 21,300 1,262 14,632 15,894 6.5077% and 7.7521% Amortized August 2030
San Miguel Foods, Inc.

PHP 10,000 148 9,797 9,945 3.5483% Amortized December 2029
BVAL + margin or BSP TDF + margin
PHP 8,000 118 7,838 7,956 whichever is higher Amortized December 2029
The Purefoods‐Hormel Company, Inc.

PHP 7,000 ‐ 6,960 6,960 3.8460% Bullet September 2026
San Miguel Mills, Inc.

DECEMBER 31, 2022

SM Brewery Inc.
PHP 4,000 PHP ‐ PHP 3,980 PHP 3,980 3.80% Bullet March 2026
PHP 2,500 23 2,433 2,456 3.875% Amortized March 2026
PHP 2,000 ‐ 1,990 1,990 3.95% Bullet March 2026
PHP 1,500 ‐ 1,493 1,493 3.95% Bullet March 2026
PHP 2,000 ‐ 1,988 1,988 4.15% Amortized March 2028
12,000 23 11,884 11,907
PHP 4,000 ‐ 3,977 3,977 4.6332% Bullet April 2025

PHP 3,000 ‐ 2,981 2,981 5.7513% Bullet April 2027
7,000 ‐ 6,958 6,958
PHP 10,000 ‐ 9,967 9,967 4.63% Bullet December 2024

PHP 10,000 ‐ 4,963 4,963 6.8412% Bullet December 2027
Ginebra San Miguel Inc.
PHP 500 165 ‐ 165 4.2105% Amortized December 2023
SMC Skyway Stage 3 Corporation (formerly Citra Central Expressway Corp.)
PHP 31,000 3,854 22,832 26,686 8.7118% Amortized August 2027
SMC Tollways Corp (formerly Atlantic Aurum Investments Philippines Corporation)
PHP 41,200 2,389 33,748 36,137 5.556%, 5.825% and 5.997% Amortized December 2029
SMC TPLEX Corp

PHP 12,000 1,061 9,355 10,416 5.6276% Amortized September 2029
SMC NAIAX Corporation (formerly Vertex Tollways Devt. Inc.)
BVAL + credit spread or BSP OLF +
PHP 5,656 408 2,679 3,087 margin whichever is higher Amortized June 2030
Luzon Clean Water Development Corporation

8.17110%, 8.449%, 9.028% and
PHP 5,400 332 3,342 3,674 9.635% Amortized March 2030
Star Infrastructure Development Corporation
PHP 3,500 373 ‐ 373 6.5917% Amortized June 2023
DECEMBER 31, 2022

SMC SLEX Holdings Company Inc. (formerly MTD Manila Expressways Inc.)
PHP 20,000 PHP ‐ PHP 15,628 PHP 15,628 BVAL + margin Amortized January 2025
Northern Cement Corporation

Southern Concrete Industries, Inc. (formerly Oro Cemento Industries Corporation)

Eagle Cement Corporation
PHP 4,049 1,241 2,799 4,040 5.81%, 5.89% and 6.36% Amortized March 2026
SMC Shipping and Lighterage Corporation

PHP 2,000 ‐ 1,989 1,989 4.200% Bullet July 2026
San Miguel Yamamura Packaging Corp

PHP 5,000 731 2,232 2,963 5.1657% Amortized January 2025
PHP 4,000 879 ‐ 879 BVAL + margin Amortized July 2023
PHP 2,000 584 586 1,170 BVAL + margin Amortized December 2024
Foreign currency ‐ denominated Term Notes:

Petron Corporation
US$ 800 ‐ 6,276 6,276 LIBOR + margin Amortized May 2024
US$ 495 ‐ 26,794 26,794 SOFR + Margin Amortized November 2027
YEN 15,000 1,800 2,728 4,528 TONA + margin Amortized March 2025
San Miguel Global Power Holdings Corp. (formerly SMC Global Power Holdings Corp.)*
US$ 700 27,858 ‐ 27,858 LIBOR + margin Bullet March 2023
US$ 300 ‐ 16,455 16,455 LIBOR + margin Bullet March 2026
US$ 50 2,767 ‐ 2,767 LIBOR + margin Bullet October 2023
US$ 300 ‐ 16,282 16,282 SOFR + Margin Bullet August 2027
US$ 200 ‐ 10,955 10,955 LIBOR + Margin Bullet September 2024
US$ 100 ‐ 5,485 5,485 SOFR + Margin Bullet May 2025
DECEMBER 31, 2022

Masinloc Power Partners Co. Ltd.

January 2023 and
US$ 770 PHP 7,455 PHP 17,199 PHP 24,654 4.7776% and 5.5959% Amortized December 2030
January 2023 and
US$ 255 2,480 5,660 8,140 LIBOR + margin Amortized December 2030
San Miguel Yamamura Australasia PTY. Ltd
AUD 80 366 1,785 2,151 BBSY + margin Amortized July 2024
AUD 10 19 358 377 BBSY + margin Amortized November 2027
AUD 5 34 76 110 BBSY + margin Amortized February 2026
PHP 89,958 PHP 492,992 PHP 582,950
Total Long‐term Debt PHP 170,032 PHP 918,164 PHP 1,088,196
* The change in corporate name was approved by the Securities and Exchange Commission on March 22, 2023.
** The change in corporate name was approved by the Securities and Exchange Commission on February 7, 2023.
*** The change in corporate name was approved by the Securities and Exchange Commission on March 9, 2023.
SCHEDULE H - CAPITAL STOCK
December 31, 2022
NUMBER NUMBER OF SHARES HELD BY:

NUMBER NUMBER NUMBER OF SHARES DIRECTORS,
OF SHARES OF SHARES TREASURY OF SHARES RESERVED OFFICERS AND
DESCRIPTION AUTHORIZED ISSUED SHARES OUTSTANDING FOR OPTIONS * AFFILIATES SUBSIDIARY EMPLOYEES
ISSUED SHARES
COMMON STOCK 3,790,000,000 3,288,649,125 904,752,537 2,383,896,588 134,641,564 46,395 - 4,364,533
SERIES "1" PREFERRED SHARES 300,000,000 279,406,667 279,406,667 - - - - -
SERIES "2" PREFERRED SHARES 1,910,000,000 1,758,099,686 914,861,219 843,238,467 - - 1,333,500 408,400
6,000,000,000 5,326,155,478 2,099,020,423 3,227,135,055 134,641,564 46,395 1,333,500 4,772,933
* See Notes 24, 36 and 37 of the Consolidated Financial Statements.

R.G. Manabat & Co.
Philippines 1209
Telephone +63 (2) 8885 7000
Fax +63 (2) 8894 1985

ON COMPONENTS OF FINANCIAL SOUNDNESS INDICATORS

Mandaluyong City

financial statements of San Miguel Corporation (the Company) and Subsidiaries
(the Group), as at and for the year ended December 31, 2022, on which we have
rendered our report dated April 15, 2023.
statements of the Group taken as a whole. The Supplementary Schedule on Financial
Soundness Indicators, including their definitions, formulas, calculation, and their
appropriateness or usefulness to the intended users, is the responsibility of the Group’s
management. These financial soundness indicators are not measures of operating
performance defined by Philippine Financial Reporting Standards and may not be
comparable to similarly titled measures presented by other companies.

This supplementary information is presented for the purpose of complying with the
Revised Securities Regulation Code Rule 68, and is not a required part of the
consolidated financial statements. Such supplementary information has been subjected
to the auditing procedures applied in the audit of the consolidated financial statements
and, in our opinion, is fairly stated, in all material respects, in relation to the consolidated
R.G. MANABAT & CO.
DARWIN P. VIROCEL
Partner
PTR No. MKT 9563853
April 15, 2023

FINANCIAL SOUNDNESS INDICATORS
The following are the major performance measures that San Miguel Corporation and
Subsidiaries (the Group) uses. Analyses are employed by comparisons and measurements
based on the financial data as of December 31, 2022 and 2021 for liquidity, solvency and
profitability ratios and for the periods ending December 31, 2022 and 2021 for operating
efficiency ratios.
December 31
2022 2021
Liquidity:
Current Ratio 1.22 1.36
Quick Ratio 0.77 0.88
Solvency:
Debt to Equity Ratio 2.74 2.01
Asset to Equity Ratio 3.74 3.01
Profitability:
Return on Average Equity Attributable to Equity
Holders of the Parent Company (4.24%) 4.09%
Interest Rate Coverage Ratio 1.66 2.34
Return on Assets 1.20% 2.43%
Operating Efficiency:
Volume Growth 20% 4%
Revenue Growth 60% 30%
Operating Margin 9% 13%
The manner by which the Group calculates the key performance indicators is as follows:
KPI Formula
Current Assets
Current Ratio Current Liabilities
Current Assets - Inventory - Current Portion

Quick Ratio of Biological Assets - Prepayments
Current Liabilities
Total Liabilities (Current + Noncurrent)

Debt to Equity Ratio Equity
Total Assets (Current + Noncurrent)

Asset to Equity Ratio Equity
Net Income Attributable to Equity Holders

of the Parent Company
Return on Average Equity
Average Equity Attributable to Equity Holders
of the Parent Company
Earnings Before Interests and Taxes

Interest Rate Coverage Ratio
Interest Expense and Other Financing Charges
Forward
KPI Formula
Net Income
Return on Assets Average Total Assets
Sum of all Businesses’ Revenue at Prior Period Prices -1

Volume Growth Prior Period Net Sales
Current Period Net Sales -1

Revenue Growth Prior Period Net Sales
Income from Operating Activities

Operating Margin Net Sales
TRADE AND OTHER RECEIVABLES
DECEMBER 31, 2022
(In Millions)
Past Due
Total Current 1 - 30 Days 31 - 60 Days 61 - 90 Days Over 90 Days
Trade 172,373 118,097 16,555 7,207 6,086 24,428
Non-trade 69,672 39,480 776 926 4,015 24,475
Others 9,650 8,509 83 133 5 920
Total 251,695 166,086 17,414 8,266 10,106 49,823
Less allowance for impairment losses 12,913
Net 238,782

Smc-Sec Form 17-A (04.17.2023) Part2-Final

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Smc-Sec Form 17-A (04.17.2023) Part2-Final

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ANNEX “B”

SAN MIGUEL CORPORATION AND SUBSIDIARIES

With Independent Auditors’ Report

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders

Basis for Opinion

We conducted our audits in accordance with Philippine Standards on Auditing (PSA).

Firm Regulatory Registration & Accreditation:

Revenue recognition (P1,506,591 million).

▪ We evaluated and assessed the revenue recognition policies in accordance

▪ We evaluated and assessed the design and operating effectiveness of the

▪ We involved our information technology specialists, as applicable, to assist in

▪ We vouched, on a sampling basis, sales transactions to supporting

▪ We tested, on a sampling basis, journal entries posted to revenue accounts

▪ We assessed management’s determination of the recoverable amounts

▪ We tested the reasonableness of the discounted cash flow model by

▪ We performed our own sensitivity analyses on the key assumptions used in

▪ We evaluated and assessed management’s methodology in identifying any

▪ We assessed management’s determination of the recoverable amounts

▪ We tested the reasonableness of the discounted cash flow model by

▪ We performed our own sensitivity analyses on the key assumptions used in

In preparing the consolidated financial statements, management is responsible for

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

As part of an audit in accordance with PSA, we exercise professional judgment and

▪ Obtain an understanding of internal control relevant to the audit in order to design

▪ Evaluate the appropriateness of accounting policies used and the reasonableness of

▪ Conclude on the appropriateness of management’s use of the going concern basis

Signature Page of KPMG

R.G. MANABAT & CO.

April 15, 2023

Note 2022 2021

LIABILITIES AND EQUITY

See Notes to the Consolidated Financial Statements.

Note 2022 2021 2020

See Notes to the Consolidated Financial Statements.

Note 2022 2021 2020

Items that may be reclassified to profit or

OTHER COMPREHENSIVE INCOME (LOSS) -

See Notes to the Consolidated Financial Statements.

Equity Attributable to Equity Holders of the Parent Company

Gain on exchange differences on

Gain on exchange differences on

Loss on exchange differences on

See Notes to the Consolidated Financial Statements.

Note 2022 2021 2020

CASH FLOWS FROM INVESTING

EFFECT OF EXCHANGE RATE

See Notes to the Consolidated Financial Statements.

The accompanying consolidated financial statements comprise the financial

The Group is engaged in various businesses, including food and beverage,

Items Measurement Basis

Functional and Presentation Currency

A change in the ownership interest in a subsidiary, without a loss of control, is

3. Significant Accounting Policies

The FSRSC approved the adoption of a number of new and amendments to

Adoption of Amendments to Standards

▪ Onerous Contracts - Cost of Fulfilling a Contract (Amendments to PAS 37,

▪ Annual Improvements to PFRS 2018-2020. This cycle of improvements contains

o Fees in the ‘10 percent’ Test for Derecognition of Financial Liabilities