Mariano Marcos State UniversityCollege of Business, Economics and Accountancy

Batac, Ilocos Norte

CORPORATE SOCIAL RESPONSIBILITY OF

PETRON CORPORATION

Submitted by

Kyle Zmellic CastuerasRevianne DoroniPeter John Juan

Meliza MadambaHazel Ann Martinez

BS Accountancy II

Submitted to

Dr. Ninfa S. AsiaDean

Summer SY 2010-2011

THE PHILIPPINES’ LEADING OIL COMPANY

PETRON CORPORATION is the largest oil refining and marketing company in the Philippines. Supplying nearly 40% of the country’s oil requirements, our world-class products and quality services fuel the lives of millions of Filipinos.

BUSINESS DESCRIPTION

Petron Corporation (Petron) is a Philippines-based company. The Company is the refiner and marketer of petroleum products in the Philippines. As of December 31, 2010, Petron had seven subsidiaries:

New Ventures Realty Corporation engaged in acquiring and developing land; Petrogen Insurance Corporation engaged in serving the insurance requirements of Petron and its allied business partners, such as contractors, suppliers and dealers;

Overseas Insurance Corporation engaged in expediting the reinsurance of Petron's insurable interests as covered by Petrogen Insurance Corporation; Petron Foundation, Inc. engaged in functioning and operating as a charitable and research foundation;

Petron Freeport Corporation engaged in selling fuels, including gasoline, kerosene, diesel, lubricants and greases, as well as operate retail outlets, restaurants, and convenience stores;

Petron Marketing Corporation is engaged in the fuel business, and Petron Singapore Trading Pte. Ltd. established in 2010.

Petron Corporation's over 75 years of existence in the Philippines is a further testament to its commitment to providing quality products and services.

Petron's colorful history dates back to September 7, 1933 when the Socony Vacuum Oil Company of New York and the Standard

Oil Company of New Jersey formed the Standard Vacuum Oil Company (Stanvac). The end of the venture in the early '60s split the marketing and refining interests of the company between Esso and Mobil.

In 1973, Esso sold its business to the government which became the Philippine National Oil Company or PNOC. Subsequently, Mobil also sold its share of the refinery to PNOC.

The oil refining and marketing units in PNOC were eventually merged to form Petrophil, which was later renamed as Petron.

As part of the government's privatization program, PNOC sought a strategic partner that would give Petron a reliable supply of oil, plus access to state-of-the-art refining technology. The result was a partnership with the world's largest oil producer, Saudi Aramco.

On February 3, 1994, PNOC and Aramco Overseas Company BV signed a share purchase agreement that gave both a 40% stake in Petron. The remaining 20% of Petron shares were sold to the public.

In May 2008, the Ashmore Group acquired Aramco’s 40% stake in Petron. Following a mandatory tender offer, an additional 10.57% was acquired by the London-based fund. The PNOC likewise sold its share to another Ashmore subsidiary. Such divestment resulted in the Ashmore Group holding approximately 90.57 percent of the outstanding shares of the company.

Leaders Behind The Success

RAMON S. ANG, Filipino, 56 years old, is the Chairman/Chief Executive Officer and Executive Director of Petron since January 8, 2009. He is also the Chairman of the Board Executive Committee and Compensation Committee. He is currently the Vice Chairman of San Miguel Corporation (SMC) and President & Chief Operating Officer of SMC, Chairman of Liberty Telecom Holdings Inc. and Vice Chairman and Director of Manila Electric Company. He also holds executive and directorship positions in various SMC subsidiaries.

ERIC O. RECTO, Filipino, 46 years old, is the President/Executive Director of the company since October 7, 2008.He became a director of Petron on July 31, 2008. He is a member of the Board Executive Committee and the Nomination and Compensation Committees. He is currently the Chief Executive Officer of Eastern Telecommunications Philippines, Inc. (ETPI) and Vice Chairman & President of ISM Communications Corporation, ETPI’s parent company. He is also Vice Chairman of Philweb Corporation and Alphaland Corporation. He was previously Undersecretary of the Department of Finance, in charge of both the International Finance Group and the Privatization Office.

BERNARDINO R. ABES, Filipino, 79 years old, has been a non-executive Director of the company since July 2001. He is currently the Chairman of the Government Service Insurance System, following a three-year term as Chairman of the Social Security Commission.

EDUARDO M. COJUANGCO, JR., Filipino, 74, is a non- executive Director of Petron since January 8, 2009. He is also the Chairman and Chief Executive Officer of San Miguel Corporation. He is also the Chairman and Chief Executive Officer of Ginebra San Miguel Inc.; Chairman of ECJ & Sons Agricultural Enterprises Inc., Eduardo Cojuangco Jr. Foundation Inc., and San Miguel Purefoods Company Inc..

RON W. HADDOCK, American, 69 years old, is a non-executive Director since December 2, 2008. He is a member of the Audit Committee and an alternate member of the Executive Committee. He sits as the Chairman of the Board of Ashmore Energy International which he has occupied since September 2006.

Management committee

RAMON S. ANGChairman & CEO

ERIC O. RECTOPresident

LUBIN B. NEPOMUCENOSenior Vice President & Gen. Manager

EMMANUEL E. ERAÑASenior Vice President & Chief Financial Officer

RAMON V. DEL ROSARIOVice President, Retail Marketing

MIGUEL V. ANGELESVice President, Commercial Marketing

ROWENA O. CORTEZVice President, Supply

PETER PAUL V. SHOTWELLVice President, Depot & Plant Operations

SUSAN Y. YUVice President, Procurement

FREDDIE P. YUMANGVice President, Refinery

MA. CONCEPCION F. DE CLAROVice President, Corporate Planning

MA. CRISTINA M. MENORCAVice President, Controllers

ALBERT S. SARTEVice President, Treasurers

Petron's leadership extends across various segments of the downstream oil sector capturing over 38% of the total market.

Petron sell fuel oil and diesel in bulk to industrial customers in power generation, construction, land and marine transports, fishing, and various manufacturing sectors.

They also supply jet fuel to airlines, including Philippine Airlines and other international and domestic carriers.

Petron retail gasoline, diesel, and kerosene to motorists, public transport operators through our more than 1,400 retail stations. Petron Gasul, the leading LPG brand is likewise available to consumers through our nationwide dealership network.

Petron likewise started to embark on the production of high-value petrochemical products, a strategic decision which further improves not only Petron's financial viability but likewise its deliberate positioning in the regional market.

PETRON FOUNDATION. Corporate citizenship and social responsibility are values firmly held in Petron Corporation. This is highlighted in the company’s corporate mission: caring for the community and the environment. In pursuit of this mandate, Petron Foundation implements programs to secure the future of the Filipino children and fuel their hopes through corporate social responsibility endeavors in the areas of education, environment, health & human services and advocacy.

COMMUNITY SERVICE

Bataan Integrated Coastal Management Program

A comprehensive and long-term program to manage the coastal and marine resources of the province. It aims to promote sustainable development in the province, calling for the effective resolution of conflicts arising from the multiple uses of coastal and marine resources through an interactive, multi-sectoral and interdisciplinary approach to develop and implement a strategic environmental management plan. It seeks to manage the coastal and marine resources of the province and, in the long term, help rehabilitate the Manila Bay.

Project H.O.P.E. - Helping Filipinos Overcome Poverty through Education

It is focused on providing a specialized learning program for the underserved children and youth. For the children, the focus will be on sending elementary-aged kids from Grades 1 to 6, keep them there, keep them well, and make sure that they learn. Support programs for the scholars’ parents are also provided. Parallel to this is the building of Petron Schools in areas where the need for a venue for education is greatest. The program for the youth, on the other hand, will be focused on promoting entrepreneurship among the youth.

Tulong Aral ng Petron

A long-term program undertaken by Petron Foundation that hopes to secure a better future for our country’s less privileged children by giving children the chance to get into school, keeping them there, keeping them well, and making sure that they learn.

Beyond giving its scholars an educational assistance of school uniforms, supplies and a daily meal allowance, Tulong Aral is providing reading programs in partnership with Sa Aklat Sisikat Foundation and Ronald McDonalds House Charities through their Bright Minds Read program.

Presently, there are over 3,000 Tulong Aral ng Petron scholars in 80 public elementary schools across Metro Manila. There are another 730 scholars in Mindanao.

COMMUNITY REDEVELOPMENT

Petron Schools

Petron Foundation is building the PETRON SCHOOLS to give children access to venues for learning, especially in the most remote or conflict-afflicted areas in the Philippines.

Youth Entrepreneurship Education

The company is taking a step further by initiating an entrepreneurial education and development program, which hopes to develop the Filipino youth to become wealth creators. By leveraging on Petron’s competencies, the company can help enhance the current high school curriculum on entrepreneurship, give them opportunities for employment and, in the long-term, guide them to become entrepreneurs.

Together with the Technical Education, Skills and Development Authority (TESDA) and the DepEd, a competency-based entrepreneurship education curriculum is being developed and piloted in the Muntinlupa Business High School, the first and only business high school in the Philippines.

Caring for the COMMUNITY.

Petron Foundation looks to providing assistance to indigent communities with programs to address basic health and human services. These include the Lakbayanihan medical missions and disaster management and relief operations. There is also continued support to Lakbay Alalay, the 19-year, Marketing-led motorist assistance project that has become a tradition for people trekking to the provinces during the Lenten break.

EMPLOYEE DEVELOPMENT

Volunteerism in action or VIA

Petron is able to exhibit the kind of corporate leadership where promises are fulfilled, commitments are honored and pronouncements are lived up to. With VIA, the company has been able to do so with programs that engage the employees, the earliest going back to 1988. Quite fittingly, the acronym VIA also best describes how the volunteerism program appeals to employees: VIA is a way, a path or an opportunity by which employees can get directly involved in doing good for society in whatever way they can.

By taking part in the various CSR programs, Petron employees are able to go beyond their professional chores and be involved in making a difference in society, be it planting trees, distributing relief goods, building houses, telling stories to grade school children, sharing time with street kids or cleaning the coast. It is during these instances that the employees get a deeper sense of fulfillment in what they do for others, and galvanizes their commitment to serve beyond their duties.

ENVIRONMENTAL SAFETY

Petron’s terminals and depots across the country have been regularly leading coastal cleanups, tree and mangrove planting, environmental awareness programs and other ecology friendly initiatives.

Petron also has a major stake in the rehabilitation of the La Mesa Watershed, the last remaining forest of its kind in Metro Manila. In 2005, we inaugurated the 1.2-kilometer Petron Fitness and Nature Trail and the 2,500-seater Petron Amphitheater at the La Mesa Ecopark inside the watershed.

Reaping the REWARDS of corporate citizenship

Happily, Petron has had the good fortune to be rewarded in its efforts “to do good” to others. One success indicator has been the windfall of recognitions that its CSR programs have received from respected organizations, among them the prestigious Anvil and Gold Quill Awards.

The Anvil and Gold Quill awards were in recognition of outstanding public relations efforts to advocate and sustain Petron’s programs to as many of our publics as possible. These acknowledgments validate the company’s work as good corporate citizens and consequently its leadership role in social responsibility.