SECURITIES AND EXCHANGE COMMISSION SEC FORM ACGR … · 2019. 6. 13. · SECURITIES AND EXCHANGE COMMISSION SEC FORM – ACGR ANNUAL CORPORATE GOVERNANCE REPORT 1. Report is Filed

SECURITIES AND EXCHANGE COMMISSION

SEC FORM – ACGR

ANNUAL CORPORATE GOVERNANCE REPORT

1. Report is Filed for the Year 2014 2. Exact Name of Registrant as Specified in its Charter METRO PACIFIC INVESTMENTS CORPORATION 3. 10th Floor, MGO BUILDING, LEGAZPI CORNER DELA ROSA STREETS, LEGASPI VILLAGE, MAKATI CITY, PHILIPINES 1200 Address of Principal Office Postal Code 4. SEC Identification Number CS200604494

5. Industry Classification Code (SEC Use Only)

6. BIR Tax Identification Number 244-520-457-000

7. (632) 888-0888 Issuer’s Telephone number, including area code

8. N/A Former name or former address, if changed from the last report

TABLE OF CONTENTS A. BOARD MATTERS ........................................................................................................................................1

1. BOARD OF DIRECTORS ..............................................................................................................................1

a. COMPOSITION OF THE BOARD ..........................................................................................................1

b. DIRECTORSHIP IN OTHER COMPANIES ..............................................................................................4

c. SHAREHOLDING IN THE COMPANY ....................................................................................................9

2. CHAIRMAN AND CEO ............................................................................................................................. 10

3. OTHER EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS ................................................ 12

4. CHANGES IN THE BOARD OF DIRECTORS ............................................................................................. 18

5. ORIENTATION AND EDUCATION PROGRAM ......................................................................................... 49

B. CODE OF BUSINESS CONDUCT & ETHICS ................................................................................................. 58

1. POLICIES ................................................................................................................................................. 58

2. DISSEMINATION OF CODE ..................................................................................................................... 60

3. COMPLIANCE WITH CODE ..................................................................................................................... 60

4. RELATED PARTY TRANSACTIONS ........................................................................................................... 61

a. Policies and Procedures .................................................................................................................. 61

b. Conflict of Interest .......................................................................................................................... 62

5. FAMILY, COMMERCIAL AND CONTRACTUAL RELATIONS...................................................................... 64

6. ALTERNATIVE DISPUTE RESOLUTION .................................................................................................... 65

C. BOARD MEETINGS & ATTENDANCE ......................................................................................................... 65

1. SCHEDULE OF MEETINGS ...................................................................................................................... 65

2. DETAILS OF ATTENDANCE OF DIRECTORS ............................................................................................. 65

3. SEPARATE MEETINGS OF NON-EXECUTIVE DIRECTORS ........................................................................ 66

4. ACCESS TO INFORMATION .................................................................................................................... 66

5. EXTERNAL ADVICE ................................................................................................................................. 70

6. CHANGE/S IN EXISTING POLICIES .......................................................................................................... 71

D. REMUNERATION MATTERS ...................................................................................................................... 71

1. REMUNERATION PROCESS .................................................................................................................... 71

2. REMUNERATION POLICY AND STRUCTURE FOR DIRECTORS ................................................................ 72

3. AGGREGATE REMUNERATION ............................................................................................................... 73

4. STOCK RIGHTS, OPTIONS AND WARRANTS ........................................................................................... 74

5. REMUNERATION OF MANAGEMENT .................................................................................................... 75

E. BOARD COMMITTEES............................................................................................................................... 76

1. NUMBER OF MEMBERS, FUNCTIONS AND RESPONSIBILITIES .............................................................. 76

2. COMMITTEE MEMBERS ......................................................................................................................... 82

3. CHANGES IN COMMITTEE MEMBERS.................................................................................................... 85

4. WORK DONE AND ISSUES ADDRESSED ................................................................................................. 86

5. COMMITTEE PROGRAM ........................................................................................................................ 88

F. RISK MANAGEMENT SYSTEM ................................................................................................................... 89

1. STATEMENT ON EFFECTIVENESS OF RISK MANAGEMENT SYSTEM ...................................................... 89

2. RISK POLICY ........................................................................................................................................... 90

3. CONTROL SYSTEM SET UP ..................................................................................................................... 96

G. INTERNAL AUDIT AND CONTROL ........................................................................................................... 100

1. STATEMENT ON EFFECTIVENESS OF INTERNAL CONTROL SYSTEM .................................................... 100

2. INTERNAL AUDIT.................................................................................................................................. 101

a. Role, Scope and Internal Audit Function ...................................................................................... 101

b. Appointment/Removal of Internal Auditor .................................................................................. 102

c. Reporting Relationship with the Audit Committee ....................................................................... 102

d. Resignation, Re-Assignment and Reasons .................................................................................... 102

e. Progress Against Plans, Issues, Findings and Examination Trends ............................................... 102

f. Audit Control Policies and Procedures ......................................................................................... 103

g. Mechanism and Safeguards .......................................................................................................... 103

H. ROLE OF STAKEHOLDERS ....................................................................................................................... 105

I. DISCLOSURE AND TRANSPARENCY ........................................................................................................ 115

1. Ownership Structure ........................................................................................................................... 115

2. Annual Report ..................................................................................................................................... 115

3. External Auditor’s fee .......................................................................................................................... 116

4. Medium of Communication ................................................................................................................ 116

5. Release of Audited Financial Report ................................................................................................... 117

6. Company Website ............................................................................................................................... 117

7. Disclosure of RPT ................................................................................................................................. 118

J. RIGHTS OF STOCKHOLDERS ................................................................................................................... 119

1. Right to participate effectively in and vote in Annual/Special Stockholders’ Meetings ..................... 119

2. Treatment of Minority Stockholders ................................................................................................... 126

K. INVESTORS RELATIONS PROGRAM ........................................................................................................ 127

L. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES ................................................................................ 128

M. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL ......................................................................... 130

N. INTERNAL BREACHES AND SANCTIONS ................................................................................................. 131

1

A. BOARD MATTERS

1. BOARD OF DIRECTORS

Number of Directors per Articles of Incorporation Fifteen (15)

Actual number of Directors for the year Fifteen (15)

a. COMPOSITION OF THE BOARD

Please see below the updated composition of the Board of Directors of the Corporation:

Director’s Name

Type [Executive (ED), Non-Executive (NED)

or Independent Director (ID)]

If nominee, identify the

principal

Nominator in the last election

(if ID, state the relationship with the nominator)

Date first elected Date last elected (if ID, state the number of years served as ID)

1

Elected when (Annual / Special

Meeting)

No. of years served as director

Manuel V. Pangilinan Chairman, Non-Executive Director

Metro Pacific Holdings Inc.

(MPHI)

Metro Pacific Holdings Inc. (MPHI)

March 2006 May 30, 2014 AGM 8

Jose Ma. K. Lim Executive Director, President and CEO


(MPHI)


March 2006 May 30, 2014 AGM 8

Ray C. Espinosa Non-Executive Director Metro Pacific Holdings Inc.

(MPHI)


November 2009 May 30, 2014 AGM 4

Ramoncito S. Fernandez Non-Executive Director Metro Pacific Holdings Inc.

(MPHI)


June 2009 May 30, 2014 AGM 4

Robert C. Nicholson Non-Executive Director Metro Pacific Holdings Inc.

(MPHI)



Augusto P. Palisoc, Jr. Executive Director Metro Pacific Holdings Inc.

(MPHI)


March 2006 May 30, 2014 AGM 8

Antonio A. Picazo Non-Executive Director and Corporate

Secretary


(MPHI)


March 2006 May 30, 2014 AGM 8

Amado R. Santiago III Non-Executive Director Metro Pacific Holdings Inc.

(MPHI)


July 2006 May 30, 2014 AGM 7

Edward A. Tortorici Executive Director and Executive Advisor


(MPHI)



Victorico P. Vargas Non-Executive Director Metro Pacific Metro Pacific Holdings Inc. May 2011 May 30, 2014 AGM 3

1 Reckoned from the election immediately following May 30, 2014 AGM.

2

Holdings Inc. (MPHI)

(MPHI)

Washington Z. SyCip Independent Director Flordeliza Anibigno (Registered Stockholder); Relationship -

None

August 2011 May 30, 2014 AGM 3

Edward S. Go Independent Director Flordeliza Anibigno (Registered Stockholder); Relationship -

None

July 2006 May 30, 2014 AGM 7

Lydia B. Echauz Independent Director Flordeliza Anibigno (Registered Stockholder); Relationship -

None


Chief Justice Artemio V. Panganiban

Independent Director Flordeliza Anibigno (Registered Stockholder); Relationship -

None

August 2007 May 30, 2014 AGM 6

1) Provide a brief summary of the corporate governance policy that the board of directors has adopted. Please emphasize the policy/ies relative to the treatment of all

shareholders, respect for the rights of minority shareholders and of other stakeholders, disclosure duties, and board responsibilities. The Board adheres to the Corporation’s Revised Manual of Corporate Governance which provides guidance to the Board in executing their duties and responsibilities in accordance with the Securities and Exchange Commission’s (SEC) Revised Manual of Corporate Governance and best practices. The Corporation’s Revised Manual of Corporate Governance includes provisions on the following items: (i) Board Governance The Board Governance Section discusses the composition of the Board; the guidelines on multiple board seats; the duties and responsibilities of the Chairman and the Chief Executive Officer; the rules on the qualifications and disqualifications of the directors; the responsibilities, duties and functions of the Board; the Internal Control responsibilities of the Board; the Board meetings and quorum requirement; the remuneration of directors and officers; the description of the different board committees; and the functions of the board secretary and the compliance officer. (ii) Adequate and Timely Information This section of the Revised Manual of Corporate Governance tackles the Management’s provision to the Board of complete, adequate and timely information about the matters to be taken in their meetings and for them to be able to properly fulfill their duties and responsibilities. This section also states that the members of the Board, either individually or as a Board, and in furtherance of their duties and responsibilities, should have access to independent professional advice at the corporation’s expense. (iii) Accountability and Audit The Board is primarily accountable to the stockholders and it should provide them with a balanced and comprehensible assessment of the corporation's performance, position and prospects on a quarterly basis, including interim and other reports that could adversely affect its business, as well as reports to regulators that are required by law.

3

The Board, after consultations with the Audit and Risk Management Committee, shall recommend to the stockholders an external auditor duly accredited by the Commission who shall undertake an independent audit of the corporation, and shall provide an objective assurance on the manner by which the financial statements shall be prepared and presented to the stockholders. (iv) Stockholders’ Rights and Protection of Minority Stockholders’ Interests The Board shall respect the rights of the stockholders as provided for in the Corporation Code, namely:

1) Right to vote on all matters that require their consent or approval; 2) Pre-emptive right to all stock issuances of the corporation; 3) Right to inspect corporate books and records; 4) Right to information; 5) Right to dividends; and 6) Appraisal right.

The Board should be transparent and fair in the conduct of the annual and special stockholders’ meetings of the corporation. The stockholders should be encouraged to personally attend such meetings. If they cannot attend, they should be apprised ahead of time of their right to appoint a proxy. Subject to the requirements of the by- laws, the exercise of that right shall not be unduly restricted and any doubt about the validity of a proxy should be resolved in the stockholders favor. It is the duty of the Board to promote the rights of the stockholders, remove impediments to the exercise of those rights and provide an adequate avenue for them to seek timely redress for breach of their rights. The Board should take the appropriate steps to remove excessive or unnecessary costs and other administrative impediments to the stockholders’ meaningful participation in meetings, whether in person or by proxy. Accurate and timely information should be made available to the stockholders to enable them to make a sound judgment on all matters brought to their attention for consideration or approval. Although all stockholders should be treated equally or without discrimination, the Board should give minority stockholders the right to propose the holding of meetings and the items for discussion in the agenda that relate directly to the business of the corporation. (v) Disclosure and Transparency The essence of corporate governance is transparency. The more transparent the internal workings of the corporation are, the more difficult it will be for Management and dominant stockholders to mismanage the corporation or misappropriate its assets. All material information about the corporation which could adversely affect its viability or the interests of the stockholders should be publicly and timely disclosed. All such information should be disclosed through the appropriate Exchange mechanisms and submissions to the Commission.

2) How often does the Board review and approve the vision and mission?

4

The Corporation reviews its Mission and Vision from time to time as may be needed.

b. DIRECTORSHIP IN OTHER COMPANIES

(i) Directorship in the Company’s Group2

Identify, as and if applicable, the members of the company’s Board of Directors who hold the office of director in other companies within its Group:

Director’s Name Corporate Name of the

Group Company

Type of Directorship (Executive, Non-Executive, Independent). Indicate if

director is also the Chairman.

Manuel V. Pangilinan

Philippine Long Distance Telephone Company

Chairman, Non-Executive Director

PLDT Communications and Energy Ventures Inc. (PCEV)

Smart Communications, Inc.

ePLDT, Inc.

Landco Pacific Corporation

Maynilad Water Services Corporation

Philex Mining Corporation

Manila Electric Company

Metro Pacific Tollways Corporation

Manila North Tollways Corporation

Medical Doctors, Inc. (Makati Medical Center)

Colinas Verdes, Inc.(Cardinal Santos Medical Center)

Davao Doctors, Inc.

Beacon Electric Asset Holdings, Inc

Riverside Medical Center, Inc

Our Lady of Lourdes Hospital

Asian Hospital, Inc

Mediaquest, Inc

Associated Broadcasting Corporation (TV5)

Jose Ma. K. Lim

Beacon Electric Asset Holdings Inc.

Non-Executive Director




Tollways Management Corporation

Maynilad Water Services, Inc.

2 The Group is composed of the parent, subsidiaries, associates and joint ventures of the company.

5

Indra Philippines

Meralco Powergen

Medical Doctors, Inc.

Colinas Verdes Hospital Managers Corporation

Our Lady of Lourdes Hospital

Asian Hospital

Davao Doctors Hospital (Clinica Hilario) Inc. Chairman, Non-Executive Director

Riverside Medical Center

Metro Strategic Infrastructure Holdings, Inc. Executive Director, President

Edward S. Go*

PLDT Communications and Energy Ventures, Inc. (PCEV) Independent Director

TV5 Network, Inc. (formerly ABC Development Corporation)

Non-Executive Director Mediaquest Holdings, Inc.

Cignal TV Inc.(formerly Mediascape, Inc.)

Augusto P. Palisoc, Jr.


Executive Director

Colinas Verdes Hospital Managers Corporation

Colinas Healthcare Inc.

East Manila Hospital Managers Corporation

Asian Hospital Inc.

Riverside Medical Center Inc.

Riverside College Inc.

Davao Doctors Hospital (Clinica Hilario) Inc.

Davao Doctors College Inc.

De Los Santos Medical Center Inc.

De Los Santos – STI Megaclinic Inc.

Central Luzon Doctors Hospital Inc.

Artemio V. Panganiban*


Independent Director Metro Pacific Tollways Corporation

Tollways Management Corporation

Philippine Long Distance Tel. Co.

Ramoncito S. Fernandez


Executive Director, President and CEO Tollways Management Corporation

Metro Pacific Tollways Development Corporation


Non-Executive Director Cavitex Infrastructure Corp.

PEA Tollway Corporation

PLDT Subic Telecom, Inc.

6

PLDT Clark Telecom, Inc.

TAHANAN

PLDT Global Corporation

Pacific Global One Aviation Company Inc.

Edward A Tortorici Philex Mining Corporation

Non-Executive Director Maynilad Water Services, Inc.

Ray C. Espinosa

Mediaquest Holdings, Inc.


ABC Development Corporation

Mediascape, Inc.

Digital Telecommunications Philippines

Digitel Crossing

Nation Broadcasting Corporation Executive Director, President

Philippine Long Distance Telephone Company Executive Director


Meralco PowerGen Corporation


Philippine Telecommunications Investment Corp.

Metro Pacific Assets Holdings

BTF Holdings, Inc

Inc Metro Pacific Resources, Inc. - Director

Metro Pacific Holdings

Two Rivers Pacific Holdings Corporation

Tahanan Mutual Building and Loan Association, Inc.


Cignal TV, Inc. (formerly Mediascape, Inc.)

Media5 Marketing Corporation

Robert C. Nicholson Philex Mining Corporation

Non-Executive Director Philex Petroleum Corporation

Victorico P. Vargas

Maynilad Water Services, Inc. Executive Director, President

PLDT Global Corporation

Non-Executive Director Metropac Water Investments Corporation

Philippine Hydro, Inc.

Washington Z. SyCip* None

David J. Nicol


Non-Executive Director Colinas Verdes Hospital Managers Corporation

Asian Hospital, Inc.

MPIC Infrastructure Holdings, Inc.

7


Antonio A. Picazo None

Amado R. Santiago III None

Lydia B. Echauz*

Philippine Long Distance Telephone Company

Independent Director

Cignal TV, Inc. (formerly Mediascape, Inc.)


ABC Development Corporation

BTF Holdings, Inc

(ii) Directorship in Other Listed Companies Identify, as and if applicable, the members of the company’s Board of Directors who are also directors of publicly-listed companies outside of its Group:

Director’s Name Name of Listed Company Type of Directorship (Executive, Non-Executive, Independent). Indicate if

director is also the Chairman.

Manuel V. Pangilinan None None

Jose Ma. K. Lim None None

David J. Nicol None None

Edward S. Go None None

Augusto P. Palisoc, Jr. None None

Antonio A. Picazo None None

Amado R. Santiago III None None

Artemio V. Panganiban

Petron Corporation


Bank of Philippine Islands

First Philippine Holdings Corporation

Robinsons Land Corporation

GMA Network, Inc.

GMA Holdings, Inc.

Jollibee Foods Corporation

Asian Terminals

Ramoncito S. Fernandez None None

Lydia B. Echauz Far Eastern University Inc. Non-executive Director

Edward A Tortorici None None

Ray C. Espinosa Lepanto Consolidated Mining Corporation Independent Director

8

Philweb Corporation Non-Executive Director, Vice Chairman

Robert C. Nicholson None None

Victorico P. Vargas None None

Washington Z. SyCip

Lopez Holdings Corporation

Independent Director Belle Corporation

First Philippine Holdings Corporation

Highlands Prime Inc.

Century Properties Group Inc.

Cityland Development Corp. Chairman, Independent Director

MacroAsia Corporation Chairman, Non-Executive Director

Philippine National Bank Non-Executive Director

(iii) Relationship within the Company and its Group

Provide details, as and if applicable, of any relation among the members of the Board of Directors, which links them to significant shareholders in the company and/or in its group: As disclosed in its Definitive Information Statement, the Corporation has no other significant employee other than its Executive Officers. None of the aforementioned Directors or Executive Officers or persons nominated or chosen by the Corporation to become Directors or Executive Officers is related to the others by consanguinity or affinity within the fourth civil degree.

Director’s Name Name of the Significant Shareholder Description of the relationship

None None None

(iv) Has the company set a limit on the number of board seats in other companies (publicly listed, ordinary and companies with secondary license) that an individual

director or CEO may hold simultaneously? In particular, is the limit of five board seats in other publicly listed companies imposed and observed? If yes, briefly describe other guidelines:

Guidelines Maximum Number of Directorships in other

companies

Executive Director

The Corporation’s Revised Manual of Corporate Governance states a provision that Corporation’s Board may consider the adoption of guidelines on the number of directorships that its members can hold in stock and non-stock corporations. The optimum number should take into consideration the capacity of a director to diligently and efficiently perform his duties and responsibilities. (Article 3. Board

The Corporation has not set a limit, although the Corporation’s Revised Manual of Corporate Governance states that the optimum number should take into consideration the capacity of a non-director to diligently and efficiently perform his duties and responsibilities. (Article 3. Board

9

Governance, Section B. Multiple Board Seats) Governance, Section B. Multiple Board Seats)


The Corporation’s Revised Manual of Corporate Governance contains a provision that Corporation’s Board may consider the adoption of guidelines on the number of directorships that its members can hold in stock and non-stock corporations. The optimum number should take into consideration the capacity of a director to diligently and efficiently perform his duties and responsibilities. (Article 3. Board Governance, Section B. Multiple Board Seats)

The Corporation has not set a limit, although the Corporation’s Revised Manual of Corporate Governance states that the optimum number should take into consideration the capacity of a non-executive director to diligently and efficiently perform his duties and responsibilities. (Article 3. Board Governance, Section B. Multiple Board Seats)

CEO

The Corporation’s Revised Manual of Corporate Governance states that for the CEO and other executives, they may be covered by a lower indicative limit for membership in other boards. A similar limit may apply to independent or non-executive directors who, at the same time, serve as full-time executives in other corporations. (Article 3. Board Governance, Section B. Multiple Board Seats)

The Corporation has not set a limit, although the Corporation’s Revised Manual of Corporate Governance states that the optimum number should take into consideration the capacity of the CEO to diligently and efficiently perform his duties and responsibilities. (Article 3. Board Governance, Section B. Multiple Board Seats)

c. SHAREHOLDINGS IN THE COMPANY

Complete the following table on the members of the Company’s Board of Directors who directly and indirectly own shares in the company: As disclosed in the Corporation’s Definitive Information Statement, the following are the number of common shares of stock owned of record and beneficially by the directors of the Company, and the percentage of shareholdings of each, as of April 15, 2014:

Name of Director Number of Direct

shares

Number of Indirect shares / Through (name of record owner)

% of Capital Stock

Manuel V. Pangilinan 21,342,405 None 0.08%

Jose Ma. K. Lim 11,000,000 None 0.04%

David J. Nicol 1,000,001 None 0.00%

Lydia B. Echauz 30,000 None 0.00%

Ray C. Espinosa Nil* 1 0.00%

Ramoncito S. Fernandez 4,612,000 None 0.01%

10

Edward S. Go 500,000 None 0.00%

Robert C. Nicholson Nil* 1 0.00%

Augusto P. Palisoc, Jr. 2,500,000 None 0.04%

Artemio V. Panganiban 250,001 None 0.00%

Antonio A. Picazo 1,001 None 0.00%

Amado R. Santiago III 2,500,001 None 0.01%

Edward A. Tortorici 10,729,596 None 0.04%

Victorico P. Vargas 800,000 None 0.00%

Washington Z. SyCip Nil* 1 0.00%

TOTAL 55,265,007 None

*Each of these directors is the registered owner of at least one (1) qualifying share.

2. CHAIRMAN AND CEO

(a) Do different persons assume the role of Chairman of the Board of Directors and CEO? If no, describe the checks and balances laid down to ensure that the Board gets the benefit of independent views.

Yes X No (v)

Identify the Chair and CEO:

Chairman of the Board Manuel V. Pangilinan

CEO/President Jose Ma. K. Lim

(b) Roles, Accountabilities and Deliverables

1. Define and clarify the roles, accountabilities and deliverables of the Chairman and CEO. The roles of the Chairman and CEO is separated to foster and appropriate balance of power, increased accountability and better capacity for independent decision-making by the Board. The summary of the roles, accountabilities and deliverables of the Chairman and the Chief Executive Officer as defined in the Corporation’s Amended By-Laws, and Revised Manual of Corporate Governance is stated in the table shown below.

11

Chairman Chief Executive Officer

Roles

The Chairman’s roles are as follows:

a. Preside at the meetings of the directors and the stockholders.

b. Ensure that the meetings of the Board are held in accordance with the By-Laws or as the Chair may deem necessary.

c. Supervise the preparation of the agenda of the meeting in coordination with the Corporate Secretary, taking into consideration the suggestions of the CEO, Management and the directors; and

d. Maintain qualitative and timely lines of communication and information between the Board and Management

e. Exercise such power and perform such duties as the Board of Directors may assign to him.

The Chief Executive Officer’s (CEO) roles are as follows: a. To preside at the meetings of the Board of Directors and of the

stockholders in the absence of the Chairman or Vice Chairman of the Board of Directors.

b. To initiate and develop corporate objectives and policies and formulate long range projects, plans and programs for the approval of the Board of Directors including those for executive training, development and compensation.

c. Administer and direct the day-to-day business of the Corporation. d. To have general supervision and management of the business affairs

and property of the Corporation. e. To ensure that the administrative and operational policies of the

corporation are carried out under his supervision and control. f. Subject to guidelines prescribed by the law, to appoint, remove,

suspend, or discipline employees of the Corporation, prescribe their duties, and determine their salaries.

g. To oversee the preparation of budgets and the statements of accounts of the Corporation.

h. To prepare such statements and reports of the Corporation as may be required of him by law.

i. To represent the Corporation at all functions and proceedings. j. To execute on behalf of the Corporation all contracts, agreements and

other instruments affecting the interests of the Corporation which require the approval of the Board of Directors, except as otherwise directed by the Board of Directors.

k. To make reports to the Board of Directors and stockholders. l. To sign certificates of stocks. m. To perform such other duties as are incident to his office or are

entrusted to him by the Board of Directors.

Accountabilities The Chairman is accountable to all shareholders of the Corporation.

The CEO is accountable to the Board of Directors in achieving goals and targets set by the Corporation.

Deliverables

The following are the deliverables of the Chairman: a. Ensure that the meetings of the Board are held in

accordance with the By-Laws or as the Chair may deem necessary.

The Chief Executive Officer’s (CEO) roles are as follows: a. To initiate and develop corporate objectives and policies and formulate

long range projects, plans and programs for the approval of the Board of Directors including those for executive training, development and

12

b. Supervise the preparation of the agenda of the meeting in coordination with the Corporate Secretary, taking into consideration the suggestions of the CEO, Management and the directors; and

c. Maintain qualitative and timely lines of communication and information between the Board and Management

compensation. b. Administer and direct the day-to-day business of the Corporation. c. To have general supervision and management of the business affairs and

property of the Corporation. d. To ensure that the administrative and operational policies of the

corporation are carried out under his supervision and control. e. To oversee the preparation of budgets and the statements of accounts

of the Corporation. f. To prepare such statements and reports of the Corporation as may be

required of him by law. g. To represent the Corporation at all functions and proceedings. h. To execute on behalf of the Corporation all contracts, agreements and

other instruments affecting the interests of the Corporation which require the approval of the Board of Directors, except as otherwise directed by the Board of Directors.

i. To make reports to the Board of Directors and stockholders. j. To sign certificates of stocks.

2. Explain how the Board of Directors plans for the succession of the CEO/Managing Director/President and the top key management positions?

The Board has the responsibility of adopting an effective succession planning program for Management. As part of its internal control responsibilities, the Board evaluates the proposed senior management appointments and reviews the Corporation’s management succession plan. The First Pacific Leadership Academy (FPLA), the group’s executive learning and development arm, is in charge of high level executive succession planning. FPLA gathers data on current and potential leaders across the First Pacific group of companies, and create development programs for those who are considered high potentials for future CEO/President positions. The academy continually conducts reviews with the Corporation’s Chairman on the development of the pipeline and replacing vacant key positions. Key leaders within the group are regularly rotated to ensure that high potentials are being developed.

3. OTHER EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS

(a) Does the company have a policy of ensuring diversity of experience and background of directors in the board? Please explain. The Corporation has a Diversity Policy, as disclosed in its website, which states the following:

“MPIC embraces and promotes diversity at all levels, including at Board level. Diversity, in terms of age, gender, culture and religion, exists in the workplace of the Corporation. The Corporation is committed to providing opportunities that allow individuals to reach their full potential irrespective of individual background or difference. In selecting new directors, The Corporation takes diversity of background into account in, addition to experience, skills and qualifications. Each year the Board will set measurable objectives to determine compliance with diversity related initiatives. The Nomination Committee will monitor and evaluate implementation thereof. “

(b) Does it ensure that at least one non-executive director has an experience in the sector or industry the company belongs to? Please explain.

13

Yes, the Corporation ensures that least one non-executive director has an experience in the sector or industry the company belongs to. The non-executive directors that have experiences in investments are Mr. Edward S. Go (Independent Director) who has over 40 years of management experience in banking and finance; and Atty. Ray C. Espinosa who is a President and CEO of various companies within the group and who holds directorships (either as Executive, Non-Executive or Independent Director) in different publicly listed corporations. (c) Define and clarify the roles, accountabilities and deliverables of the Executive, Non-Executive and Independent Directors:

Executive Non-Executive Independent Director

Roles

The Executive director is a director who is also the head of a department or unit of the Corporation or performs any work related to its operation. The following are the roles of an Executive Director as stated in the Corporation’s By-Laws and Revised Manual of Corporate Governance:

It is the Board’s responsibility to foster the long-term success of the corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the best interests of its stockholders.

The Board should formulate the corporation’s vision, mission, strategic objectives, policies and procedures that shall guide its activities, including the means to effectively monitor Management’s performance.

To ensure a high standard of best practice for the corporation and its stockholders, the Board should conduct itself with honesty and integrity in the performance of, among others, the following duties

The Non-executive director is a director who is not the head of a department or unit of the corporation nor performs any work related to its operation. The following are the roles of a Non-Executive Director as stated in the Corporation’s By-Laws and Revised Manual of Corporate Governance:



To ensure a high standard of best practice for the corporation and its stockholders, the Board should conduct itself with honesty and integrity in the performance of, among others, the following duties and

An Independent director is a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to; materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director. The following are the roles of an Independent Director as stated in the Corporation’s By-Laws and Revised Manual of Corporate Governance:

Independent directors should always attend Board meetings. Unless otherwise provided in the By-laws, their absence shall not affect the quorum requirement. However, the Board may, to promote transparency, require the presence of at least one independent director in all its meetings.


14

and functions:

a. Implement a process for the selection of directors who can add value and contribute independent judgment to the formulation of sound corporate strategies and policies .Appoint competent, professional, honest and highly-motivated management officers. Adopt an effective succession planning program for Management.

b. Provide sound strategic policies and guidelines to the corporation on major capital expenditures. Establish programs that can sustain its long-term viability and strength. Periodically evaluate and monitor the implementation of such policies and strategies, including the business plans, operating budgets and Management’s overall performance.

c. Ensure the corporations faithful compliance with all applicable laws, regulations and best business practices.

d. Establish and maintain an investor relations program that will keep the stockholders informed of important developments in the corporation. If feasible, the corporations CEO or chief financial officer shall exercise oversight responsibility over this program.

e. Identify the sectors in the community in which the corporation operates or are directly affected by its operations, and formulate a clear policy of accurate, timely and effective

functions:




d. Establish and maintain an investor relations program that will keep the stockholders informed of important developments in the corporation. If feasible, the corporations CEO or chief financial officer shall exercise oversight responsibility over this program.

e. Identify the sectors in the community in which the corporation operates or are directly affected by its operations, and formulate a clear policy of accurate, timely and effective communication with them.

f. Adopt a system of check and balance


To ensure a high standard of best practice for the corporation and its stockholders, the Board should conduct itself with honesty and integrity in the performance of, among others, the following duties and functions:




d. Establish and maintain an investor relations program that will keep the

15

communication with them. f. Adopt a system of check and balance

within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be a continuing review of the corporation’s internal control system in order to maintain its adequacy and effectiveness.

g. Identify key risk areas and performance indicators and monitor these factors with due diligence to enable the corporation to anticipate and prepare for possible threats to its operational and financial viability.

h. Formulate and implement policies and procedures that would ensure the integrity and transparency of related party transactions between and among the corporation and its parent company, joint ventures, subsidiaries, associates, affiliates, major stockholders, officers and directors, including their spouses, children and dependent siblings and parents, and of interlocking director relationships by members of the Board.

i. Constitute an Audit Committee and such other committees it deems necessary to assist the Board in the performance of its duties and responsibilities.

j. Establish and maintain an alternative dispute resolution system in the corporation that can amicably settle conflicts or differences between the corporation and its stockholders, and

within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be a continuing review of the corporation’s internal control system in order to maintain its adequacy and effectiveness.



i. Constitute an Audit Committee and such other committees it deems necessary to assist the Board in the performance of its duties and responsibilities.

j. Establish and maintain an alternative dispute resolution system in the corporation that can amicably settle conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including the regulatory authorities.

stockholders informed of important developments in the corporation. If feasible, the corporations CEO or chief financial officer shall exercise oversight responsibility over this program.

e. Identify the sectors in the community in which the corporation operates or are directly affected by its operations, and formulate a clear policy of accurate, timely and effective communication with them.

f. Adopt a system of check and balance within the Board. A regular review of the effectiveness of such system should be conducted to ensure the integrity of the decision-making and reporting processes at all times. There should be a continuing review of the corporation’s internal control system in order to maintain its adequacy and effectiveness.



i. Constitute an Audit Committee and such other committees it deems

16

the corporation and third parties, including the regulatory authorities.

k. Meet at such times or frequency as may be needed. The minutes of such meetings should be duly recorded. Independent views during Board meetings should be encouraged and given due consideration.

l. Keep the activities and decisions of the Board within its authority under the articles of incorporation and by-laws, and in accordance with existing laws, rules and regulations.

m. Appoint a Compliance Officer who shall have the rank of at least vice president. In the absence of such appointment, the Corporate Secretary, preferably a lawyer shall act as Compliance Officer.

A director’s office is one of trust and confidence. A director should act in the best interest of the corporation in a manner characterized by transparency, accountability and fairness. He should also exercise leadership, prudence and integrity in directing the corporation towards sustained progress. A director should observe the following norms of conduct:

a. Conduct fair business transactions with the corporation, and ensure that his personal interest does not conflict with the interests of the corporation.

b. Devote the time and attention necessary to properly and effectively perform his duties and




A director’s office is one of trust and confidence. A director should act in the best interest of the corporation in a manner characterized by transparency, accountability and fairness. He should also exercise leadership, prudence and integrity in directing the corporation towards sustained progress. A director should observe the following norms of conduct:

a. Conduct fair business transactions with the corporation, and ensure that his personal interest does not conflict with the interests of the corporation.

b. Devote the time and attention necessary to properly and effectively perform his duties and responsibilities.

c. Act judiciously. d. Exercise independent judgment.

necessary to assist the Board in the performance of its duties and responsibilities.

j. Establish and maintain an alternative dispute resolution system in the corporation that can amicably settle conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including the regulatory authorities.




A director’s office is one of trust and confidence. A director should act in the best interest of the corporation in a manner characterized by transparency, accountability and fairness. He should also exercise leadership, prudence and integrity in directing the corporation towards sustained progress. A director should observe the following

17

responsibilities. c. Act judiciously. d. Exercise independent judgment. e. Have a working knowledge of the

statutory and regulatory requirements that affect the corporation, including its articles of incorporation and bylaws, the rules and regulations of the Commission and, where applicable, the requirements of relevant regulatory agencies.

f. Observe confidentiality.

e. Have a working knowledge of the statutory and regulatory requirements that affect the corporation, including its articles of incorporation and bylaws, the rules and regulations of the Commission and, where applicable, the requirements of relevant regulatory agencies.


norms of conduct: a. Conduct fair business transactions with

the corporation, and ensure that his personal interest does not conflict with the interests of the corporation.

b. Devote the time and attention necessary to properly and effectively perform his duties and responsibilities.

c. Act judiciously. d. Exercise independent judgment. e. Have a working knowledge of the

statutory and regulatory requirements that affect the corporation, including its articles of incorporation and bylaws, the rules and regulations of the Commission and, where applicable, the requirements of relevant regulatory agencies.


Accountabilities

Executive directors are accountable to the shareholders of the Corporation as they are involved in the day-to-day activities of the Company and are responsible for execution of business strategies and plans.

Non-Executive Directors are accountable to the shareholders of the Corporation as they are part of the Board which has responsibility to foster the long-term success of the corporation, and to sustain its competitiveness and profitability in a manner consistent with its corporate objectives and the best interests of its stockholders.

Independent directors also have the same accountability to the shareholders. They are expected to be independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director. As Independent Directors, as much as possible, they are expected to be in attendance during board meetings to promote transparency and independence.

Deliverables Improved shareholder value. Improved shareholder value. Improved shareholder value.

(d) Provide the company’s definition of “independence” and describe the company’s compliance to the definition.

In compliance with Corporation’s By-Laws and Revised Manual of Corporate Governance, the Board shall be composed of at least five (5), but not more than fifteen (15), members who are elected by the stockholders. At least two (2) or twenty percent (20%) of the Board shall be composed of Independent directors, while the rest of the members is a combination of executive and non-executive directors. An Independent director is a person who, apart from his fees and shareholdings, is independent of

18

management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director. The Corporation has fifteen (15) directors, four (4) of which are Independent.

(e) Does the company have a term limit of five consecutive years for independent directors? If after two years, the company wishes to bring back an independent

director who had served for five years, does it limit the term for no more than four additional years? Please explain.

The Corporation’s By-Laws stipulates that the Board of Directors shall be elected during each regular meeting of stockholders and shall hold office for (1) year and until their successors are elected. The Nomination Committee formulates screening policies to enable the committee to effectively review the qualification of the nominees for independent directors, and conduct nominations for independent directors prior to the stockholders’ meeting.

4. CHANGES IN THE BOARD OF DIRECTORS (EXECUTIVE, NON-EXECUTIVE AND INDEPENDENT DIRECTORS)

e. Resignation/Death/Removal Indicate any changes in the composition of the Board of Directors that happened during the period: No Director has resigned or declined to stand for re-election to the Board of Directors since the date of the last annual stockholders’ meeting due to disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Name Position Date of Cessation Reason

None None None None

(b) Selection/Appointment, Re-election, Disqualification, Removal, Reinstatement and Suspension

1) Describe the procedures for the selection/appointment, re-election, disqualification, removal, reinstatement and suspension of the members of the Board of Directors. Provide details of the processes adopted (including the frequency of election) and the criteria employed in each procedure:

The following are the procedures for the selection/appointment, re-election, disqualification, removal, reinstatement and suspension of the members of the Board of Directors as taken from the Securities and Regulation Code (SRC), the Corporation’s By-Laws and Revised Manual of Corporate Governance.

Procedure Process Adopted Criteria

a. Selection/Appointment

(i) Executive Directors

Company By-Laws Article III Section 3 Election and Term The Board of Directors shall be elected during each

Company By-Laws Article III Section 2 Qualifications of the Members of the Board Any person having at least one share of stock registered in his name in the

19

regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.

books of the Corporation may be nominated and elected to the Board of Directors, provided, however, that no person shall qualify or be eligible for nomination or election to the Board of Directors if he is engaged in any business which competes with or is antagonistic to that of the Corporation or any of its subsidiaries or affiliates. Without limiting the generality of the foregoing, a person shall be deemed to be so engaged:

i. if he is an officer, manager or controlling person of, or the owner (either of record or beneficial) of 20% or more of any outstanding class of shares of any corporation (other than one in which this Corporation owns at least 30% of the capital stock) engaged in business which the Board, by at least two-thirds (2/3) vote determines to be competitive or antagonistic to that of the Corporation or any of its subsidiaries or affiliates;

ii. if he is an officer, manager or controlling person of, or the owner (either of record or beneficial) of 20% or more of any outstanding class of shares of, any corporation or entity engaged in any line of business if the Corporation or any of its subsidiaries or affiliates, when in the judgment of the Board, by at least two-thirds (2/3) vote, the law against combinations in restraint of trade shall be violated by such person’s membership in the Board of Directors; or

iii. if the Board, in the exercise of its judgment in good faith, determines by at least two-thirds (2/3) vote that he is the nominee of any person set forth in (i) or (ii).

In determining whether or not a person is a controlling person, beneficial owner or nominee of another, the Board may take into account such factors as business and family relationships. For proper implementation of this provision, all nominations for election for Directors by the stockholders shall be submitted in writing to the Board of Directors and be received at the Corporation’s principal place of business at least thirty (30) working days before the date of the regular or special meeting of stockholders for the purpose of electing directors.

Revised Manual of Corporate Governance Article 3 Part D. Qualifications of Directors

In addition to the qualifications for membership in the Board provided for in the Corporation Code, Securities Regulation Code and other relevant laws, the Board may provide for additional qualifications which include, among others, the following:

20

(i) College education or equivalent academic degree; (ii) Practical understanding of the business of the corporation; (iii) Membership in good standing in relevant industry, business or

professional Organizations; and (iv) Previous business experience.

(ii) Non-Executive Directors

Company By-Laws Article III Section 3 Election and Term The Board of Directors shall be elected during each regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.

Company By-Laws Article III Section 2 Qualifications of the Members of the Board Any person having at least one share of stock registered in his name in the books of the Corporation may be nominated and elected to the Board of Directors, provided, however, that no person shall qualify or be eligible for nomination or election to the Board of Directors if he is engaged in any business which competes with or is antagonistic to that of the Corporation or any of its subsidiaries or affiliates. Without limiting the generality of the foregoing, a person shall be deemed to be so engaged:




In determining whether or not a person is a controlling person, beneficial owner or nominee of another, the Board may take into account such factors as business and family relationships.

21

For proper implementation of this provision, all nominations for election for Directors by the stockholders shall be submitted in writing to the Board of Directors and be received at the Corporation’s principal place of business at least thirty (30) working days before the date of the regular or special meeting of stockholders for the purpose of electing directors.


Revised Manual of Corporate Governance Article 3 Part D. Qualifications of Directors In addition to the qualifications for membership in the Board provided for in the Corporation Code, Securities Regulation Code and other relevant laws, the Board may provide for additional qualifications which include, among others, the following:



(iii) Independent Directors

Company By-Laws Article III Section 3 Election and Term The Board of Directors shall be elected during each regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the

Company By-Laws Article III Section 2A Independent Directors The Corporation shall have at least two (2) independent directors or at least twenty percent (20%) of the entire Board membership, whichever is lesser. The independent directors shall have all the qualifications and none of the disqualifications set forth in Section 38 of the Securities and Regulation Code and its Implementing Rules and Regulations, as the same may be amended from time to time.

22

nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.

Republic Act No. 8799 Amended Implementing Rules and Regulation of the Securities Regulation Code (SRC) Rule 38 – Requirements on Nomination and Election of Independent Directors, Item (2)


2. As used in Section 38 of the Code, independent director means a person

who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director in any covered company and includes, among others, any person who: A. Is not a director or officer of the covered company or of its related

companies or any of its substantial shareholders except when the same shall be an independent director of any of the foregoing;

B. Does not own more than two percent (2%) of the shares of the covered company and/or its related companies or any of its substantial shareholders;

C. Is not related to any director, officer or substantial shareholder of the covered company, any of its related companies or any of its substantial shareholders. For this purpose, relatives include spouse, parent, child, brother, sister, and the spouse of such child, brother or sister;

D. Is not acting as a nominee or representative of any director or substantial shareholder of the covered company, and/or any of its related companies and/or any of its substantial shareholders, pursuant to a Deed of Trust or under any contract or arrangement;

E. Has not been employed in any executive capacity by the covered company, any of its related companies and/or by any of its

23

substantial shareholders within the last five (5) years; F. Is not retained, either personally or through his firm or any similar

entity, as professional adviser, by that covered company, any of its related companies and/or any of its substantial shareholders, within the last five (5) years; or

G. Has not engaged and does not engage in any transaction with the covered company and/or with any of its related companies and/or with any of its substantial shareholders, whether by himself and/or with other persons and/or through a firm of which he is a partner and/or a company of which he is a director or substantial shareholder, other than transactions which are conducted at arm’s length and are immaterial.





b. Re-appointment


Company By-Laws Article III Section 3 Election and Term The Board of Directors shall be elected during each regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director.

Company By-Laws Article III Section 2 Qualifications of the Members of the Board Any person having at least one share of stock registered in his name in the books of the Corporation may be nominated and elected to the Board of Directors, provided, however, that no person shall qualify or be eligible for nomination or election to the Board of Directors if he is engaged in any business which competes with or is antagonistic to that of the Corporation or any of its subsidiaries or affiliates. Without limiting the generality of the foregoing, a person shall be deemed to be so engaged:

i. if he is an officer, manager or controlling person of, or the owner (either of record or beneficial) of 20% or more of any outstanding class of shares of any corporation (other than one in which this Corporation

24

The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.

owns at least 30% of the capital stock) engaged in business which the Board, by at least two-thirds (2/3) vote determines to be competitive or antagonistic to that of the Corporation or any of its subsidiaries or affiliates;

ii. if he is an officer, manager or controlling person of, or the owner (either

of record or beneficial) of 20% or more of any outstanding class of shares of, any corporation or entity engaged in any line of business if the Corporation or any of its subsidiaries or affiliates, when in the judgment of the Board, by at least two-thirds (2/3) vote, the law against combinations in restraint of trade shall be violated by such person’s membership in the Board of Directors; or

iii. if the Board, in the exercise of its judgment in good faith, determines by

at least two-thirds (2/3) vote that he is the nominee of any person set forth in (i) or (ii).






(ii) Non-Executive Company By-Laws Company By-Laws

25

Directors Article III Section 3 Election and Term The Board of Directors shall be elected during each regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.

Article III Section 2 Qualifications of the Members of the Board Any person having at least one share of stock registered in his name in the books of the Corporation may be nominated and elected to the Board of Directors, provided, however, that no person shall qualify or be eligible for nomination or election to the Board of Directors if he is engaged in any business which competes with or is antagonistic to that of the Corporation or any of its subsidiaries or affiliates. Without limiting the generality of the foregoing, a person shall be deemed to be so engaged:





26








Republic Act No. 8799 Amended Implementing Rules and Regulation of the Securities Regulation Code (SRC) Rule 38 – Requirements on Nomination and Election of

2. As used in Section 38 of the Code, independent director means a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his

27

Independent Directors, Item (2) exercise of independent judgment in carrying out his responsibilities as a director in any covered company and includes, among others, any person who: A. Is not a director or officer of the covered company or of its related


B. Does not own more than two percent (2%) of the shares of the covered company and/or its related companies or any of its substantial shareholders;



E. Has not been employed in any executive capacity by the covered company, any of its related companies and/or by any of its substantial shareholders within the last five (5) years;

F. Is not retained, either personally or through his firm or any similar entity, as professional adviser, by that covered company, any of its related companies and/or any of its substantial shareholders, within the last five (5) years; or




(i) College education or equivalent academic degree;

28

(ii) Practical understanding of the business of the corporation; (iii) Membership in good standing in relevant industry, business or


Securities and Exchange Commission (SEC) Memorandum Circular No. 9, Series of 2011 on Term Limits for Independent Directors.

1. There shall be no limit in the number of covered companies that a

person may be elected as Independent Director (ID), except in business conglomerates where an ID can be elected to only five (5) companies of the conglomerate, i.e., parent company, subsidiary or affiliate;

2. IDs can serve as such for five (5) consecutive years, provided that service for a period of at least six (6) months shall be equivalent to one (1) year, regardless of the manner by which the ID position was relinquished or terminated;

3. After completion of the five-year service period, an ID shall be ineligible for election as such in the same company unless the ID has undergone a “cooling off” period of two (2) years, provided, that during such period, the ID concerned has not engaged in any activity that under existing rules disqualifies a person from being elected as ID in the same company;

4. An ID re-elected as such in the same company after the “cooling off” period can serve for another five (5) consecutive years under the conditions mentioned in paragraph 2 above;

5. After serving as ID for ten (10) years, the ID shall be perpetually barred from being elected as such in the same company, without prejudice to being elected as ID in other companies outside of the business conglomerate, where applicable, under the same conditions provided for in this Circular.

c. Permanent Disqualification


Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification

The following shall be grounds for the permanent disqualification of a director:

(i) Any person convicted by final judgment or order by a competent judicial or administrative body of any crime that (a) involves the purchase or sale of securities, as defined in the Securities Regulation Code; (b) arises out of the person’s conduct as an underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor

29

broker; or (c) arises out of his fiduciary relationship with a bank, quasi-bank, trust company, investment house or as an affiliated person of any of them;

(ii) Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the Commission or any court or administrative body of competent jurisdiction from: (a) acting as underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as director or officer of a bank, quasi-bank, trust company, investment house, or investment company; (c) engaging in or continuing any conduct or practice in any of the capacities mentioned in subparagraphs (a) and (b) above, or willfully violating the laws that govern securities and banking activities. The disqualification shall also apply if such person is currently the subject of an order of the Commission or any court or administrative body denying, revoking or suspending any registration, license or permit issued to him under the Corporation Code, Securities Regulation Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas (BSP), or under any rule or regulation issued by the Commission or BSP, or has otherwise been restrained to engage in any activity involving securities and banking; or such person is currently the subject of an effective order of a self-regulatory organization suspending or expelling him from membership, participation or association with a member or participant of the organization;

(iii) Any person convicted by final judgment or order by a court or competent administrative body of an offense involving moral turpitude, fraud, embezzlement, theft, estafa, counterfeiting, misappropriation, forgery, bribery, false affirmation, perjury or other fraudulent acts;

(iv) Any person who has been adjudged by final judgment or order of the Commission, court, or competent administrative body to have willfully violated, or willfully aided, abetted, counseled, induced or procured the violation of any provision of the Corporation Code, Securities Regulation Code or any other law administered by the Commission or BSP, or any of its rule, regulation or order;

(v) Any person earlier elected as independent director who becomes an

30

officer, employee or consultant of the same corporation; (vi) Any person judicially declared as insolvent; (vii) Any person found guilty by final judgment or order of a foreign court

or equivalent financial regulatory authority of acts, violations or misconduct similar to any of the acts, violations or misconduct enumerated in sub-paragraphs (i) to (v) above;

(viii) Conviction by final judgment of an offense punishable by imprisonment for more than six (6) years, or a violation of the Corporation Code committed within five (5) years prior to the date of his election or appointment.




(i) Any person convicted by final judgment or order by a competent judicial or administrative body of any crime that (a) involves the purchase or sale of securities, as defined in the Securities Regulation Code; (b) arises out of the person’s conduct as an underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; or (c) arises out of his fiduciary relationship with a bank, quasi-bank, trust company, investment house or as an affiliated person of any of them;

(ii) Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the Commission or any court or administrative body of competent jurisdiction from: (a) acting as underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as director or officer of a bank, quasi-bank, trust company, investment house, or investment company; (c) engaging in or continuing any conduct or practice in any of the capacities mentioned in subparagraphs (a) and (b) above, or willfully violating the laws that govern securities and banking activities. The disqualification shall also apply if such person is currently the subject of an order of the Commission or any court or administrative body denying, revoking or suspending any registration, license or permit issued to him under the Corporation Code, Securities

31

Regulation Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas (BSP), or under any rule or regulation issued by the Commission or BSP, or has otherwise been restrained to engage in any activity involving securities and banking; or such person is currently the subject of an effective order of a self-regulatory organization suspending or expelling him from membership, participation or association with a member or participant of the organization;



(v) Any person earlier elected as independent director who becomes an officer, employee or consultant of the same corporation;

(vi) Any person judicially declared as insolvent; (vii) Any person found guilty by final judgment or order of a foreign court






(i) Any person convicted by final judgment or order by a competent judicial or administrative body of any crime that (a) involves the purchase or sale of securities, as defined in the Securities Regulation Code; (b) arises out of the person’s conduct as an underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer,

32

futures commission merchant, commodity trading advisor, or floor broker; or (c) arises out of his fiduciary relationship with a bank, quasi-bank, trust company, investment house or as an affiliated person of any of them;




33





d. Temporary Disqualification


Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (2) Temporary Disqualification

The Board may provide for the temporary disqualification of a director for any of the following reasons:

(i) Refusal to comply with the disclosure requirements of the Securities Regulation Code and its implementing Rules and Regulations. The disqualification shall be in effect as long as the refusal persists.

(ii) Absence in more than fifty (50) percent of all regular and special meetings of the Board during his incumbency, or any twelve (12) month period during the said incumbency, unless the absence is due to illness, death in the immediate family or serious accident. The disqualification shall apply for purposes of the succeeding election.

(iii) Dismissal or termination for cause as director of any corporation covered by this Code. The disqualification shall be in effect until he has cleared himself from any involvement in the cause that gave rise to his dismissal or termination.

(v) If any of the judgments or orders cited in the grounds for permanent disqualification has not yet become final. A temporarily disqualified director shall, within sixty (60) business days from such disqualification, take the appropriate action to remedy or correct the disqualification. If he fails or refuses to do so for unjustified reasons, the disqualification shall become permanent.




34











(iv) if the beneficial equity ownership of an independent director in the corporation or its subsidiaries and affiliates exceeds two percent of its subscribed capital stock. The disqualification shall be lifted if the limit is later complied with.

35


e. Permanent Disqualification


Aside from the provisions cited in Section 28 (Removal of directors or trustees) of the Philippine Corporation Code, in the event that an executive director is subject to removal from his directorship, the Company follows the provision of its Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification



(ii) Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the Commission or any court or administrative body of competent jurisdiction from: (a) acting as underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as director or officer of a bank, quasi-bank, trust company, investment house, or investment company; (c) engaging in or continuing any conduct or practice in any of the capacities mentioned in subparagraphs (a) and (b) above, or willfully violating the laws that govern securities and banking activities. The disqualification shall also apply if such person is currently the subject of an order of the Commission or any court or administrative body denying, revoking or suspending any registration, license or permit issued to him under the Corporation Code, Securities Regulation Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas (BSP), or under any rule or regulation issued by the Commission or BSP, or has otherwise been restrained to

36

engage in any activity involving securities and banking; or such person is currently the subject of an effective order of a self-regulatory organization suspending or expelling him from membership, participation or association with a member or participant of the organization;

(iii) Any person convicted by final judgment or order by a court or

competent administrative body of an offense involving moral turpitude, fraud, embezzlement, theft, estafa, counterfeiting, misappropriation, forgery, bribery, false affirmation, perjury or other fraudulent acts;







Aside from the provisions cited in Section 28 (Removal of directors or trustees) of the Philippine Corporation Code, in the event that a non-executive director is subject to removal from his directorship, the Company follows the provision of its Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification


(i) Any person convicted by final judgment or order by a competent judicial or administrative body of any crime that (a) involves the purchase or sale of securities, as defined in the Securities Regulation Code; (b) arises out of the person’s conduct as an underwriter, broker, dealer, investment adviser, principal, distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; or (c) arises out of his fiduciary relationship with a bank, quasi-

37

bank, trust company, investment house or as an affiliated person of any of them;





(v) Any person earlier elected as independent director who becomes an

38

officer, employee or consultant of the same corporation; (vi) Any person judicially declared as insolvent; (vii) Any person found guilty by final judgment or order of a foreign court




Aside from the provisions cited in Section 28 (Removal of directors or trustees) of the Philippine Corporation Code, in the event that an independent director is subject to removal from his directorship, the Company follows the provision of its Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification



(ii) Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the Commission or any court or administrative body of competent jurisdiction from: (a) acting as underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as director or officer of a bank, quasi-bank, trust company, investment house, or investment company; (c) engaging in or continuing any conduct or practice in any of the capacities mentioned in subparagraphs (a) and (b) above, or willfully violating the laws that govern securities and banking activities. The disqualification shall also apply if such person is currently the subject of an order of the Commission or any court or administrative body denying, revoking or suspending any registration, license or permit issued to him under the Corporation Code, Securities

39

Regulation Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas (BSP), or under any rule or regulation issued by the Commission or BSP, or has otherwise been restrained to engage in any activity involving securities and banking; or such person is currently the subject of an effective order of a self-regulatory organization suspending or expelling him from membership, participation or association with a member or participant of the organization;








f. Re-instatement


In the event that a removed/suspended executive director is subject to reinstatement as a director of the Company, the Company follows the provision of its Company By-Laws Article III Section 3 Election and Term

Company By-Laws Article III Section 2 Qualifications of the Members of the Board Any person having at least one share of stock registered in his name in the books of the Corporation may be nominated and elected to the Board of

40

The Board of Directors shall be elected during each regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.

Directors, provided, however, that no person shall qualify or be eligible for nomination or election to the Board of Directors if he is engaged in any business which competes with or is antagonistic to that of the Corporation or any of its subsidiaries or affiliates. Without limiting the generality of the foregoing, a person shall be deemed to be so engaged:








In the event that a removed/suspended non-executive director is subject to reinstatement as a director of the Company, the Company follows the provision of its

Company By-Laws Article III Section 2 Qualifications of the Members of the Board

41


Any person having at least one share of stock registered in his name in the books of the Corporation may be nominated and elected to the Board of Directors, provided, however, that no person shall qualify or be eligible for nomination or election to the Board of Directors if he is engaged in any business which competes with or is antagonistic to that of the Corporation or any of its subsidiaries or affiliates. Without limiting the generality of the foregoing, a person shall be deemed to be so engaged:







42


In the event that a removed/suspended independent director is subject to reinstatement as a director of the Company, the Company follows the provision of its Company By-Laws Article III Section 3 Election and Term The Board of Directors shall be elected during each regular meeting of stockholders and snail hold office for one (1) year and until their successors are elected and qualified. A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities and Regulation Code, as the same may be amended from time to time.



2. As used in Section 38 of the Code, independent director means a person who, apart from his fees and shareholdings, is independent of management and free from any business or other relationship which could, or could reasonably be perceived to, materially interfere with his exercise of independent judgment in carrying out his responsibilities as a director in any covered company and includes, among others, any person who: A. Is not a director or officer of the covered company or of its related


B. Does not own more than two percent (2%) of the shares of the

43

covered company and/or its related companies or any of its substantial shareholders;



E. Has not been employed in any executive capacity by the covered company, any of its related companies and/or by any of its substantial shareholders within the last five (5) years;

F. Is not retained, either personally or through his firm or any similar entity, as professional adviser, by that covered company, any of its related companies and/or any of its substantial shareholders, within the last five (5) years; or


g. Suspension


In the event that an executive director is subject to suspension from his duty as a director of the Company, the Company follows the provision of its Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification



44






45




In the event that a non-executive director is subject to suspension from his duty as a director of the Company, the Company follows the provision of its Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification



(ii) Any person who, by reason of misconduct, after hearing, is permanently enjoined by a final judgment or order of the Commission or any court or administrative body of competent jurisdiction from: (a) acting as underwriter, broker, dealer, investment adviser, principal distributor, mutual fund dealer, futures commission merchant, commodity trading advisor, or floor broker; (b) acting as director or officer of a bank, quasi-bank, trust company, investment house, or investment company; (c) engaging in or continuing any conduct or practice in any of the capacities mentioned in subparagraphs (a) and (b) above, or willfully violating the laws that govern securities and banking activities. The disqualification shall also apply if such person is currently the subject of an order of the Commission or any court or administrative body denying, revoking or suspending any registration, license or permit issued to him under the Corporation Code, Securities Regulation Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas (BSP), or under any rule or regulation issued by the Commission or BSP, or has otherwise been restrained to engage in any activity involving securities and banking; or such person

46

is currently the subject of an effective order of a self-regulatory organization suspending or expelling him from membership, participation or association with a member or participant of the organization;








In the event that an independent director is subject to suspension from his duty as a director of the Company, the Company follows the provision of its Revised Manual of Corporate Governance Article 3 Part E. Disqualification of Directors, Item (1) Permanent Disqualification



47






48



2) Stockholders' Meeting, Results and Attendance As previously disclosed to the Securities and Exchange Commission (“SEC”) and the Philippine Stock Exchange (“PSE”), the Corporation held its 2014 Annual Stockholders’ Meeting on 30 May 2014. Below are the results of such meeting:

Resolution Approving Dissenting Abstaining

Approval of the Chief Financial Officer’s Report and the Annual Report for the year 2013 100% of SH in attendance 0% of SH in attendance 0% of SH in attendance

Adoption of the Audited Financial Statements for the year ended 31st December 2013

contained in the Annual Report 100% of SH in attendance 0% of SH in attendance 0% of SH in attendance

Ratification of all acts of the Board of Directors and Management for the year 2013 100% of SH in attendance 0% of SH in attendance 0% of SH in attendance

Appointment of the external auditor of the Company for the year 2014 100% of SH in attendance 0% of SH in attendance 0% of SH in attendance

Election of Directors:

Name of Director Votes Received

Manuel V. Pangilinan 20,683,075,913

Jose Ma. K. Lim 21,107,485,620

David J. Nicol 21,107,485,620

Lydia B. Echauz 21,535,400,889

Ray C. Espinosa 21,098,112,321

Ramoncito S. Fernandez 21,107,485,620

Edward S. Go 21,498,790,982

Robert C. Nicholson 20,683,075,913

Augusto P. Palisoc, Jr. 21,107,485,620


20,674,248,020

49

Antonio A. Picazo 21,099,708,721

Amado R. Santiago III 21,066,693,220

Edward A. Tortorici 20,690,220,913

Victorico P. Vargas 21,107,485,620

Washington Z. SyCip 20,685,128,013

Below is a summary of the attendance in the last stockholders’ meeting:

Type of Meeting Names of Board members / Officers present Date of Meeting Voting Procedure (by poll, show of

hands, etc.)

% of SH Attending in Person

% of SH in Proxy Total % of SH

attendance

Annual

Atty. Amado R. Santiago III Atty. Ray C. Espinosa Ms. Lydia B. Echauz Chief Justice Artemio V. Panganiban Mr. Washington Z. SyCip Atty. Antonio A. Picazo Mr. Augusto P. Palisoc, Jr. Mr. Ramoncito S. Fernandez Mr. Victorico P. Vargas Mr. David J. Nicol Mr. Jose Ma. K. Lim

30 May 2014 Votes were

counted thru Proxies.

0.09% 69.69% 69.78%

5. ORIENTATION AND EDUCATION PROGRAM

(a) Disclose details of the company’s orientation program for new directors, if any. The Corporation has no formal orientation program for new directors. Starting 2013, the Corporation shall devise a structured orientation program for upcoming directors.

(b) State any in-house training and external courses attended by Directors and Senior Management

3 for the past three (3) years:

Name of Director/Officer Date of Training Program Name of Training Institution


12/2/2013 Ensuring Effective Board Oversight of Ethics and Compliance: Emerging Trends and Lessons Learned

Mr. Winthrop Swenson

11/19/2012 First Pacific Companies: Navigating the New World of Business

Thomas Donaldson The Wharton School

3 Senior Management refers to the CEO and other persons having authority and responsibility for planning, directing and controlling the activities of the company.

50

08/29/2012 Corporate Governance Practices for Listed Company’s Directors Under The New Listing Rules

Ms Cecelia Ng

12/8/2011

Board Governance Responsibilities: Risks, Culture and Leadership conducted by PLDT's CG education program together with Global Compliance Services, Inc. 13950 Ballantyne Corp Place, Suite 300 Charlotte, NC 28277 USA

Mr. Steven John Priest, Senior Advisor, held at First Pacific Company's Board Room, 24th Floor, Two Exchange Square, Central, Hong Kong

Jose Ma. K. Lim



12/8/2011

Performance, Principles and People: A Discussion with the PLDT Board of Directors Global Compliance Services Inc., 13950 Ballantyne Corp Place, Suite 300 Charlotte NC 28277 USA

Mr. Steven John Priest, Senior Advisor, held at First Pacific Company's Board Room, 24th Floor, Two Exchange Square,Connaught Road, Central Hong Kong

David J. Nicol 8/15/2012 Corporate Governance Asia's First Philippine International CG Forum: Marching Towards Economic Sustainability

Aldrin Monsod Corporate Governance Asia New Initiative Media Limited Rm 2301, 23th Floor, World Wide House 19 Des Voeux Road, Central, Hong Kong

Edward S. Go 11/19/2012 First Pacific Companies: Navigating the New World of Business





8/17/2012 MVP “Back to School Lecture” Series Ateneo de Manila University

8/8-9/2012 Competitive Intelligence & Business Wargaming Kamia Room, G/F, EDSA, Shangri-La

5/21/2012 Innovation Forum: The First 90 Days First Pacific Leadership Academy Antipolo City, Philippines

Scott Anthony

04/18-19/2012 Leading the Self First Pacific Leadership Academy Antipolo City, Philippines

First Pacific Leadership Academy

3/15/2012 Executive Talks: On Higher Ground First Pacific Leadership Academy Antipolo City, Philippines

Archbishop Luis Antonio Tagle

02/02-03/2012 “Future Proofing our Business” First Pacific Leadership Academy Antipolo City, Philippines

Mr. Karl Ronn and Mr. Bob Johansen, Facilitators thru the invitation of First Pacific Leadership Academy

51

1/12/2012 UBS Global Outlook 2012 Rigodon Ballroom, The Peninsula Manila

7/6/2011 UBS Global Economist: Politics Against the World Rigodon Ballroom, The Peninsula Manila

06/13-17/2011 Private Healthcare World Singapore

04/15/2011 UBS Healthcare Conference Singapore

10/26-28/2010 APAX Healthcare Forum New York, United States of America

09/01/2010 Corporate Governance Orientation Program Manila, Philippines

Institute of Corporate Directors

Antonio A. Picazo 11/19/2012 First Pacific Companies: Navigating the New World of Business


Amado R. Santiago III

2012 Corporate Governance Course

Douglas Henck Vice Chairman of the Asian Corporate Governance Association

2011 Corporate Governance Course

Donald Jacobs Dean Emeritus, Gaylord Freeman Professor of Banking




8/15/2012 Corporate Governance Asia's First Philippine International CG Forum: Marching Towards Economic Sustainability Marriot Hotel, Resorts World Manila, Philippines

Aldrin Monsod Corporate Governance Asia New Initiative Media Limited Rm 2301, 23th Floor, World Wide House, 19 Des Voeux Road, Central, Hong Kong

12/8/2011

Board Governance Responsibilities: Risks, Culture and Leadership conducted by PLDT's CG education program together with Global Compliance Services, Inc. 13950 Ballantyne Corp Place, Suite 300 Charlotte, NC 28277 USA

Mr. Steven John Priest, Senior Advisor, held at First Pacific Company's Board Room, 24th Floor, Two Exchange Square, Central, Hong Kong

12/14/2010

Board of Directors Fiduciary Duties and Role in Relation to ERM: Best Practices in Dealing with the Agency Dilemma and Setting a Company's Risk Appetite PLDT's CG Education Program with Asia Risk Management Institute (ARiMI), 9 Penang Road, #12-01, Park Mall, Singapore

Mr. Marc Ronez, Managing Director - AriMI, held at the Marikina and Mandaluyong Rooms, The Lighthouse, 14th Floor, Lopez Building, MERALCO, Pasig City

52


5/15-17/ 2011 Interoperability and All Electronic Toll Collection Workshop Dallas, Texas, USA

IBTTA

3/1/2011 Orientation Course on Corporate Governance Makati City

The Institute of Corporate Directors

3/1/2011, 3/8/2011, 3/17/2011, 9/5/2011,

9/6/2011

Professional Directors Program Makati City


11/23-24/2011 Evaluating Enterprise Risk Management At Eastwood Richmonde Hotel, Bagumbayan, Q.C.

The Institute of Internal Auditors – Philippines Centre for Professional Development



2/15/2012 Seminar-Workshop on New Media Strategies for Issues Management Discovery Suites, Pasig City

Creative Point International, Inc.

11/8/2012 PPP and Infrastructure Forum New World Hotel, Makati City

British Embassy Manila and The UK Trade and Investment (UKTI)

11/19/2012

First Pacific Companies: Navigating the New World of Business Topic: Corporate Government Enhancement Guest Speaker: Thomas Donaldson, The Wharton School


11/22/2012 PPP: On the Road to Investment Grade Manila Peninsula Hotel, Makati City

Economic Journalists Association of the Philippines (EJAP)

1/14-19/2013 Advanced Management Program Module 1 : Business Executive as Corporate Citizen Venue: Oakwood Hotel, Ortigas

University of Asia and the Pacific

3/4-9/2013 Advanced Management Program Module 2: Business Executive as Global Entrepreneur In Jakarta, Indonesia


4/22-27/2013 Advanced Management Program Module 3: Business Executive as Value Creator In Cebu City


6/19/2013 2013 Mid-Year Business Economics Briefing (Gearing UP for the Asean Economic Community)


7/6/2013 MVP Lecture Series (last session) Chiang-Tan Room,School of Management 111, Ateneo

MVP/Ateneo

8/22/2013 AIM CEO Forum | The Creation of Corporate Culture: “Building Values as the Basis of Corporate Culture” at

AIM

53

Meralco Caseroom, Ground floor, AIM Building, Makati

9/10/2013

11th

MAP International CEO Forum Conference: Sept. 10, 2013 from8am to 5:30pm Rizal Ballroom, Makati Shangrila Hotel, Makati City Conference Theme: Business Beyond Borders: Global Perspectives, Domestic Dynamics

MAP

9/19-26/2013 81st

IBTTA Conference in Vancouver, Canada IBTTA

11/7/2013 FPLA’s Series: The Business of Innovation: Transcending Business Through Innovation SMX Convention Center, SM Aura, The Fort


11/27/2013 2013 Year-end Economics Briefing entitled Infrastructure Spending: Sustaining Philippine Growth: Nov. 27, 2013 from 1pm-5pm at Li Seng Giap Auditorium, UA&P


12/2/2013 Joint Corporate Governance Symposium of MVP Companies: Dec. 2 , 10am to 1:30pm Makati Shangrila Hotel


Lydia B. Echauz



12/2/2013 Executive Talks: Corporate Governance Enchancement Session

Manila AB, Makati Shangri-la Hotel

11/28-29/2013 Corporate Governance Seminar The Institute of Corporate Directors

01/15-17/2014 Good Governance Summit PICC

Edward A Tortorici

12/5/2012 "Synopsis on Legal and Regulatory, First Pacific Company Limited, Hong Kong."



8/29/2012 “Corporate governance practices for listed company’s directors under the new Listing Rules” First Pacific Company Limited, Hong Kong

Cecelia Ng, Director of Ernst & Young

8/29/2012 “Effective risk management and internal controls” First Pacific Company Limited, Hong Kong

Tim Clough, Keith Stephenson and Wong Hung Han, Risk & Controls Solutions, Price Waterhouse Coopers

Ray C. Espinosa



12/8/2011 Board Governance Responsibilities: Risks, Culture and Leadership conducted by PLDT's CG education program

Mr. Steven John Priest, Senior Advisor, held at First Pacific Company's Board

54

together with Global Compliance Services, Inc. 13950 Ballantyne Corp Place, Suite 300 Charlotte, NC 28277 USA

Room, 24th Floor, Two Exchange Square, Central, Hong Kong

12/14/2010

Board of Directors Fiduciary Duties and Role in Relation to ERM: Best Practices in Dealing with the Agency Dilemma and Setting a Company's Risk Appetite PLDT's CG Education Program with Asia Risk Management Institute (ARiMI), 9 Penang Road, #12-01, Park Mall, Singapore

Marc Ronez, Managing Director of Asia Risk Management Institute (ARiMI)

Robert C. Nicholson







8/30/2012 Directors’ Training Lifestyle Properties Development Limited

Lifestyle Properties Development Limited

Victorico P. Vargas

11/07/2013

Executive Series: The Business Innovation: Transcending

Business Through Innovation

SMX Convention Center, SM Aura Premier Bonifacio Global City


12/02/213 Corporate Governance Enhancement Session

Makati Shangri-La, Makati City First Pacific Leadership Academy








Scott Anthony

55



Washington Z. SyCip



12/2/2013 Executive Talks: Corporate Governance Enchancement Session

Manila AB, Makati Shangri-la Hotel

(c) Continuing education programs for directors: programs and seminars and roundtables attended during the year.

Name of Director/Officer Date of Training Program Name of Training Institution

Manuel V. Pangilinan 11/19/2012 First Pacific Companies: Navigating the New World of Business


Jose Ma. K. Lim 11/19/2012 First Pacific Companies: Navigating the New World of Business


David J. Nicol 8/15/2012 Corporate Governance Asia's First Philippine International CG Forum: Marching Towards Economic Sustainability

Aldrin Monsod Corporate Governance Asia New Initiative Media Limited Rm 2301, 23th Floor, World Wide House 19 Des Voeux Road, Central, Hong Kong

Edward S. Go 11/19/2012 First Pacific Companies: Navigating the New World of Business


11/1/2013 UBS Asia Healthcare CEO Summit Hong Kong




8/17/2012 MVP “Back to School Lecture” Series Ateneo de Manila University

8/8-9/2012 Competitive Intelligence & Business Wargaming Kamia Room, G/F, EDSA, Shangri-La


Scott Anthony





02/02-03/2012 “Future Proofing our Business” Mr. Karl Ronn and Mr. Bob Johansen,

56

First Pacific Leadership Academy Antipolo City, Philippines

Facilitators thru the invitation of First Pacific Leadership Academy

1/12/2012 UBS Global Outlook 2012 Rigodon Ballroom, The Peninsula Manila

Antonio A. Picazo 11/19/2012 First Pacific Companies: Navigating the New World of Business


Amado R. Santiago III 2012 Corporate Governance Course Douglas Henck Vice Chairman of the Asian Corporate Governance Association




8/15/2012 Corporate Governance Asia's First Philippine International CG Forum: Marching Towards Economic Sustainability Marriot Hotel, Resorts World Manila, Philippines

Aldrin Monsod Corporate Governance Asia New Initiative Media Limited Rm 2301, 23th Floor, World Wide House, 19 Des Voeux Road, Central, Hong Kong

12/8/2011

“Board Governance Responsibilities: Risks, Culture and Leadership” conducted by PLDT's CG education program together with Global Compliance Services, Inc. 13950 Ballantyne Corp Place, Suite 300 Charlotte, NC 28277 USA; held at First Pacific Company’s Board Room, 24

th Floor, Two

Exchange Square, Central, Hong Kong

Mr. Steven John Priest, Senior Advisor, Global Compliance Services


3/1/2011 Orientation Course on Corporate Governance Makati City


3/1/2011, 3/8/2011, 3/17/2011, 9/5/2011,

9/6/2011

Professional Directors Program Makati City




Lydia B. Echauz 11/19/2012 First Pacific Companies: Navigating the New World of Business


Edward A Tortorici





8/29/2012 “Effective risk management and internal controls” Tim Clough, Keith Stephenson and Wong

57

First Pacific Company Limited, Hong Kong Hung Han, Risk & Controls Solutions, Price Waterhouse Coopers

Ray C. Espinosa 11/20/2012 First Pacific Companies: Navigating the New World of Business


Robert C. Nicholson







Victorico P. Vargas

11/07/2013

Executive Series: The Business Innovation: Transcending

Business Through Innovation

SMX Convention Center, SM Aura Premier Bonifacio Global City


12/02/213 Corporate Governance Enhancement Session

Makati Shangri-La, Makati City First Pacific Leadership Academy








Scott Anthony



Washington Z. SyCip 11/19/2012 First Pacific Companies: Navigating the New World of Business


58

B. CODE OF BUSINESS CONDUCT & ETHICS

1. POLICIES

Discuss briefly the company’s policies on the following business conduct or ethics affecting directors, senior management and employees:

The Corporation’s Code of Business Conduct and Ethics sets forth MPIC’s business principles and values which shall guide and govern all business relationships of MPIC, its directors, officers and employees, including their decisions and actions when performing their respective duties and responsibilities.

Business Conduct & Ethics

Directors Senior Management Employees

(a) Conflict of Interest

1. Avoid any actual or apparent conflicts of interest between your private interest, including the private interest of a member of your family, and the interests of MPIC, unless you have obtained prior approval by the appropriate approving authorities as designated in applicable policies of MPIC. Any actual or apparent conflict of interest, and any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest, should be disclosed to the Corporate Governance Office.

2. Avoid activities and interests that could significantly affect the objective or effective performance of duties and responsibilities in MPIC, including business interests or unauthorized employment outside MPIC, the receipt from and giving of gifts to persons or entities with whom MPIC relates, as well as insider dealing.

3. Be loyal to MPIC. As such, all business decisions and actions must be based on the best interest of MPIC and must not be motivated by personal considerations and other relationships, which may interfere with the exercise of independent judgment.

4. Advance MPIC’s legitimate interests when the opportunity arises. Avoid competing with MPIC on a business opportunity or acquiring an interest adverse to that of MPIC’s. Refrain from taking advantage of Company property, information or position, or opportunities arising from these, for personal gain, to compete with MPIC, or act against the best interest of MPIC. Directors, officers and employees who intend to make use of Company property or services in a manner not solely for the benefit of MPIC should obtain prior approval from appropriate approving authorities as designated in applicable policies of MPIC.

5. Refrain from the direct or indirect, grant or arrangements of loans to any director or officer, including loans granted or arranged by MPIC’s subsidiaries and affiliates, unless such grant or arrangement is allowed by all applicable laws and regulations.

(b) Conduct of Business and Fair Dealings

1. Avoid taking unfair advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.

2. Deal fairly with MPIC’s customers, service providers, suppliers, competitors and employees.

59

(c) Receipt of gifts from third parties


(d) Compliance with Laws & Regulations

1. Engage in honest conduct and comply with all applicable laws, rules and regulations, including prohibitions on insider trading, both in letter and spirit. Demands brought on by prevailing business conditions or perceived pressures are not excuses for violating any law, rules or regulations.

2. Personally adhere to the standards and restrictions imposed by those laws, rules and regulations.

3. Avoid the direct or indirect commission of bribery and corruption of representatives of governments or regulators to facilitate any transaction or gain any perceived or actual favor or advantage, excluding permissible additional payments for routine governmental actions allowed by all applicable laws and regulations.

(e) Respect for Trade Secrets/Use of Non-public Information

1. Maintain and safeguard the confidentiality of information entrusted by MPIC, its subsidiaries, affiliates, customers, business partners, or such other parties with whom MPIC relates, except when disclosure is authorized or legally mandated. Confidential information includes any nonpublic information that might be of use to competitors, or harmful to MPIC, its subsidiaries, affiliates, customers, business partners, or such other parties with whom MPIC relates, if disclosed.

2. Follow Company policy and applicable laws regarding business records retention. Ensure that records are not altered, concealed,

destroyed or falsified to impede, obstruct or influence any investigation by, or proceeding before any official Company committee or body, governmental, regulatory or judicial body having jurisdiction.

3. Avoid trading any of MPIC’s securities or those of its subsidiaries and affiliates using price sensitive information that is not normally

available publicly, and obtained by reason of position, contact within, or other relationship with MPIC.

(f) Use of Company Funds, Assets and Information

1. Use Company property and resources, including Company time, supplies and software, efficiently, responsibly and only for legitimate business purposes.

2. Protect the assets of MPIC from loss, damage, misuse or theft.

(g) Employment & Labor Laws & Policies


(h) Disciplinary action

1. The Corporate Governance Office is responsible for applying the Code to specific situations in which questions or concerns may arise,

and has the authority to interpret and decide on such issues arising from the implementation of the Code. 2. There shall be no waiver of any of the provisions of this Code in favor of any directors, officer, or employee, except when expressly

granted by the Board of Directors or the Governance and Nomination Committee in the case of waivers for directors and officers or by the Corporate Governance Office in the case of waivers for employees. Any such waiver for any director or executive officer or any material amendment to the Code must be promptly disclosed to the shareholders of MPIC.

60

3. Disciplinary actions against violators include measures such as dismissal and/or the filing of appropriate civil and criminal actions. For

purposes of this Code, “violators” are defined as a)persons who commit prohibited acts or who fail to implement prescribed acts when there is an obvious opportunity to do so; b) employees who knowingly abet such acts of commission or omission or who fail to report such acts that violate the Code; and c) persons of authority who fail to impose the necessary disciplinary measures against violators.

4. Retaliation or discrimination, whether direct or indirect and in any form, against any director, officer, or employee who reports,

honestly and in good faith, any violation or perceived violation of this Code shall not be tolerated.

(i) Whistle Blower

1. Any director, officer or employee is encouraged to contact the Corporate Governance Office when in doubt about the best course of action in a particular situation relating to a subject matter of the Code.

2. Any director, officer or employee who is aware of any existing or potential violation of the Code is required to notify the Corporate

Governance Office promptly. The Corporate Governance Office shall take all action it considers appropriate to investigate any violations reported to it. If a violation has occurred, MPIC shall take such disciplinary or preventive action as it deems appropriate.

(j) Conflict Resolution

1. The Corporate Governance Office is responsible for applying the Code to specific situations in which questions or concerns may arise, and has the authority to interpret and decide on such issues arising from the implementation of the Code.

2. There shall be no waiver of any of the provisions of this Code in favor of any directors, officer, or employee, except when expressly granted by the Board of Directors or the Governance and Nomination Committee in the case of waivers for directors and officers or by the Corporate Governance Office in the case of waivers for employees. Any such waiver for any director or executive officer or any material amendment to the Code must be promptly disclosed to the shareholders of MPIC.

2. DISSEMINATION OF CODE Has the code of ethics or conduct been disseminated to all directors, senior management and employees? Yes, the Corporation’s Code of Business Conduct and Ethics are made available to all directors, senior management and employees. It is also published in the company website for ease of access and reference.

3. COMPLIANCE WITH CODE

Discuss how the company implements and monitors compliance with the code of ethics or conduct. Directors, officers, and employees of the Corporation commit to comply with both the letter and spirit of the Code of Business Conduct and Ethics and MPIC endeavors to obtain the same commitment from its business partners. The Corporation’s Corporate Governance Office is responsible for monitoring compliance and implementing the Code to specific situations in which questions or concerns may arise, and has the authority to interpret and decide on such issues arising from the implementation of the Code. The Corporation also established a whistleblowing policy, to be used as a communication or reporting channel on observed non-compliance in the Revised Manual of Corporate Governance, Code of Business Conduct and Ethics, and other existing Corporate Governance policies and procedures. This policy is further discussed in item H.

61

Role of Stakeholders.

4. RELATED PARTY TRANSACTIONS

a. Policies and Procedures

Describe the company’s policies and procedures for the review, approval or ratification, monitoring and recording of related party transactions between and among the company and its parent, joint ventures, subsidiaries, associates, affiliates, substantial stockholders, officers and directors, including their spouses, children and dependent siblings and parents and of interlocking director relationships of members of the Board. The Corporation discloses in its financial statements transaction with related parties during the year. As disclosed in the Corporation’s Annual Report for Year 2012, related party transactions pertain to enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are controlled by or under common control with the Corporation, including holding companies, subsidiaries and fellow subsidiaries. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Corporation that gives them significant influence over the enterprise, key management personnel, including directors a officers of the Corporation and close members of the family of these individuals and companies associated with these individuals also constitute related parties. In considering each possible related entity relationship, attention is directed to the substance of the relationship and not merely the legal form.

Related Party Transactions Policies and Procedures

(1) Parent Company All transactions with Corporation goes through the same approval process as any normal business transaction with third party and is done at arm’s length basis. These are disclosed in the Audited Financial Statements of the Corporation.

(2) Joint Ventures All transactions with Corporation goes through the same approval process as any normal business transaction with third party and is done at arm’s length basis. These are disclosed in the Audited Financial Statements of the Corporation.

(3) Subsidiaries All transactions with Corporation goes through the same approval process as any normal business transaction with third party and is done at arm’s length basis. These are disclosed in the Audited Financial Statements of the Corporation.

(4) Entities Under Common Control

All transactions with Corporation goes through the same approval process as any normal business transaction with third party and is done at arm’s length basis. These are disclosed in the Audited Financial Statements of the Corporation.

(5) Substantial Stockholders All transactions with Corporation goes through the same approval process as any normal business transaction with third party and is done at arm’s length basis. These are disclosed in the Audited Financial Statements of the Corporation.

(6) Officers including spouse/children/siblings/parents

As provided in the Corporation’s Code of Business Conduct and Ethics, officers including spouse/children/siblings/parents are mandated to avoid any actual or apparent conflict of interest between the officer’s private interest and interest of the Corporation. They are also mandated to disclose to the Corporate Governance Office any actual or apparent conflict of interest, and any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest.

(7) Directors including spouse/children/siblings/parents

As provided in the Corporation’s Revised Manual of Corporate Governance, a director should not use his position to profit or gain some benefit or advantage for himself and/or his related interests. He should avoid situations that may compromise his impartiality. If an actual or potential conflict of interest may arise on the part of a director, he should fully and immediately disclose it and should not participate in the decision-making process. A director who has a continuing material conflict of interest should seriously consider resigning from his position.

62

A conflict of interest shall be considered material if the director’s personal or business interest is antagonistic to that of the corporation, or stands to acquire or gain financial advantage at the expense of the Corporation.

(8) Interlocking director relationship of Board of Directors

As provided in the Corporation’s Revised Manual of Corporate Governance, a director should not use his position to profit or gain some benefit or advantage for himself and/or his related interests. He should avoid situations that may compromise his impartiality. If an actual or potential conflict of interest may arise on the part of a director, he should fully and immediately disclose it and should not participate in the decision-making process. A director who has a continuing material conflict of interest should seriously consider resigning from his position. A conflict of interest shall be considered material if the director’s personal or business interest is antagonistic to that of the corporation, or stands to acquire or gain financial advantage at the expense of the Corporation.

b. Conflict of Interest

(i) Directors/Officers and 5% or more Shareholders

Identify any actual or probable conflict of interest to which directors/officers/5% or more shareholders may be involved. There is no actual or potential conflict of interest to which directors/ officers/ shareholders owning 5% or more are involved.

Details of Conflict of Interest (Actual or Probable)

Name of Director/s None

Name of Officer/s None

Name of Significant Shareholders None

(ii) Mechanism

Describe the mechanism laid down to detect, determine and resolve any possible conflict of interest between the company and/or its group and their directors, officers and significant shareholders.

Directors/Officers/Significant Shareholders

Company

The Corporation’s Code of Business Conduct and Ethics states the following provisions related to Conflict of Interest : D. CONFLICTS OF INTEREST AND CORPORATE OPPORTUNITIES 1. Avoid any actual or apparent conflicts of interest between your private interest, including the private interest of a member

of your family, and the interests of MPIC, unless you have obtained prior approval by the appropriate approving authorities

63

as designated in applicable policies of MPIC. Any actual or apparent conflict of interest, and any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest, should be disclosed to the Corporate Governance Office.

2. Avoid activities and interests that could significantly affect the objective or effective performance of duties and responsibilities in MPIC, including business interests or unauthorized employment outside MPIC, the receipt from and giving of gifts to persons or entities with whom MPIC relates, as well as insider dealing. \

3. Be loyal to MPIC. As such, all business decisions and actions must be based on the best interest of MPIC and must not be

motivated by personal considerations and other relationships, which may interfere with the exercise of independent judgment.

4. Advance MPIC’s legitimate interests when the opportunity arises. Avoid competing with MPIC on a business opportunity or

acquiring an interest adverse to that of MPIC’s. Refrain from taking advantage of Company property, information or position, or opportunities arising from these, for personal gain, to compete with MPIC, or act against the best interest of MPIC. Directors, officers and employees who intend to make use of Company property or services in a manner not solely for the benefit of MPIC should obtain prior approval from appropriate approving authorities as designated in applicable policies of MPIC.

5. Refrain from the direct or indirect, grant or arrangements of loans to any director or officer, including loans granted or

arranged by MPIC’s subsidiaries and affiliates, unless such grant or arrangement is allowed by all applicable laws and regulations.

Group

The Corporation, as a Parent Company, has a Code of Business Conduct and Ethics stating the following provisions related to Conflict of Interest : D. CONFLICTS OF INTEREST AND CORPORATE OPPORTUNITIES 1. Avoid any actual or apparent conflicts of interest between your private interest, including the private interest of a member

of your family, and the interests of MPIC, unless you have obtained prior approval by the appropriate approving authorities as designated in applicable policies of MPIC. Any actual or apparent conflict of interest, and any material transaction or relationship that could reasonably be expected to give rise to a conflict of interest, should be disclosed to the Corporate Governance Office.

2. Avoid activities and interests that could significantly affect the objective or effective performance of duties and responsibilities in MPIC, including business interests or unauthorized employment outside MPIC, the receipt from and giving of gifts to persons or entities with whom MPIC relates, as well as insider dealing. \

3. Be loyal to MPIC. As such, all business decisions and actions must be based on the best interest of MPIC and must not be motivated by personal considerations and other relationships, which may interfere with the exercise of independent

64

judgment.

4. Advance MPIC’s legitimate interests when the opportunity arises. Avoid competing with MPIC on a business opportunity or acquiring an interest adverse to that of MPIC’s. Refrain from taking advantage of Company property, information or position, or opportunities arising from these, for personal gain, to compete with MPIC, or act against the best interest of MPIC. Directors, officers and employees who intend to make use of Company property or services in a manner not solely for the benefit of MPIC should obtain prior approval from appropriate approving authorities as designated in applicable policies of MPIC.

Refrain from the direct or indirect, grant or arrangements of loans to any director or officer, including loans granted or arranged by MPIC’s subsidiaries and affiliates, unless such grant or arrangement is allowed by all applicable laws and regulations.

5. FAMILY, COMMERCIAL AND CONTRACTUAL RELATIONS

(a) Indicate, if applicable, any relation of a family,4 commercial, contractual or business nature that exists between the holders of significant equity (5% or more), to the

extent that they are known to the company: As disclosed in the Corporation’s Definitive Information Statement, the Corporation has not had any transaction during the last two (2) years in which any Director or Executive Officer or any of their immediate family members, or relations of commercial, contractual or business nature, had a direct or indirect interest.

Names of Related Significant Shareholders Type of Relationship Brief Description of the Relationship

None None None

(b) Indicate, if applicable, any relation of a commercial, contractual or business nature that exists between the holders of significant equity (5% or more) and the

company: As disclosed in the Corporation’s Definitive Information Statement, the Corporation has not had any transaction during the last two (2) years in which any Director or Executive Officer or any relations of commercial, contractual or business nature, had a direct or indirect interest.

Names of Related Significant Shareholders Type of Relationship Brief Description

None None None

(c) Indicate any shareholder agreements that may impact on the control, ownership and strategic direction of the company:

Name of Shareholders % of Capital Stock affected (Parties) Brief Description of the Transaction

4 Family relationship up to the fourth civil degree either by consanguinity or affinity.

65

None None None

6. ALTERNATIVE DISPUTE RESOLUTION

Describe the alternative dispute resolution system adopted by the company for the last three (3) years in amicably settling conflicts or differences between the corporation and its stockholders, and the corporation and third parties, including regulatory authorities.

Alternative Dispute Resolution System

Corporation & Stockholders

The Corporation does not have a formal dispute resolution system set-up to resolve disputes between the Corporation and its Stockholders. However, it maintains good relationships with its stockholders and attends to the resolution of their concerns and issues, if there’s any. Such opportunity for stockholders to raise their concerns is during the Annual Stockholders’ Meeting. If such a situation arise, the Corporation may adopt the Rules of the Philippine Dispute Resolution Center Inc.

Corporation & Third Parties

The Corporation does not have a formal dispute resolution system set-up to resolve disputes between the Corporation and Third Parties. However, it maintains good relationships with third parties and resolve concerns and issues amicably. If such a situation arise, the Corporation may adopt the Rules of the Philippine Dispute Resolution Center Inc.

Corporation & Regulatory Authorities

The Corporation does not have a formal dispute resolution system set-up to resolve disputes between the Corporation and Regulatory Authorities. However, the Corporation proactively and amicably engages the SEC, PSE and other agencies in resolving issues affecting the Company and the concerned agencies.

C. BOARD MEETINGS & ATTENDANCE

1. SCHEDULE OF MEETINGS Are Board of Directors’ meetings scheduled before or at the beginning of the year? Yes, the schedule of regular board meetings is set at the beginning of the year.

2. DETAILS OF ATTENDANCE OF DIRECTORS Attendance of Directors

Board Name Date of Election

No. of Meetings Held

during the year

No. of Meetings Attended

%

Chairman Manuel V. Pangilinan 30 May 2014 10 8 80%

Member Jose Ma. K. Lim 30 May 2014 10 10 100%

Member David J. Nicol 30 May 2014 10 10 100%

66

Member Ray C. Espinosa 30 May 2014 10 9 90%

Member Ramoncito S. Fernandez 30 May 2014 10 7 70%

Member Robert C. Nicholson 30 May 2014 10 6 60%

Member Augusto P. Palisoc, Jr. 30 May 2014 10 9 90%

Member Antonio A. Picazo 30 May 2014 10 9 90%

Member Amado R. Santiago III 30 May 2014 10 9 90%

Member Edward A. Tortorici 30 May 2014 10 7 70%

Member Victorico P. Vargas 30 May 2014 10 10 100%


Washington Z. SyCip 30 May 2014 10 9 90%


Edward S. Go 30 May 2014 10 8 80%


Lydia B. Echauz 30 May 2014 10 10 100%



30 May 2014 10 10 100%

3. SEPARATE MEETINGS OF NON-EXECUTIVE DIRECTORS (a) Do non-executive directors have a separate meeting during the year without the presence of any executive? If yes, how many times?

The Board of Directors agrees that non-executive directors can meet from time to time as they deem necessary. (b) Is the minimum quorum requirement for Board decisions set at two-thirds of board members? Please explain.

The Corporation’s By-Laws state that a majority of the number of directors as fixed in the Corporation’s Articles of Incorporation shall constitute a quorum for the transaction of corporate business in every decision of at least a majority of the directors present at a meeting at which there is a quorum shall be valid as a corporate act, except for the election of officers which shall be valid as a corporate act, except for the elections of officers which shall require the vote of a majority of all the members of the Board. This is in compliance with Section 25 of the Philippine Corporation Code. The Corporation aims to achieve a 100% attendance in each Board meeting as the directors had confirmed their availability on the scheduled Board meeting dates as agreed upon at the start of the year. However, due to certain reasons, it can be observed that the average attendance per meeting is at 90%, which is more that 2/3 of the board members.

4. ACCESS TO INFORMATION

(a) How many days in advance are board papers5 for board of directors meetings provided to the board?

5 Board papers consist of complete and adequate information about the matters to be taken in the board meeting. Information includes the background or explanation on matters brought before the Board, disclosures,

67

In practice, the Corporation provides its directors the agenda and materials for board and board committee meetings days in advance of the scheduled board or board committee meeting to provide them with ample time in evaluating and understanding the issues and concerns that will be raised in the meeting.

(b) Do board members have independent access to Management and the Corporate Secretary? The members of the Board have independent access to Management and the Corporate Secretary. The Revised Manual of Corporate Governance Article (4) – Adequate and Timely Information states the provision below:

“ To enable the members of the Board to properly fulfill their duties and responsibilities, Management should provide them with complete, adequate and timely information about the matters to be taken in their meetings. Reliance on information volunteered by Management would not be sufficient in all circumstances and further inquiries may have to be made by a member of the Board to enable him to properly perform his duties and responsibilities. Hence, the members should be given independent access to Management and the Corporate Secretary.”

(c) State the policy of the role of the company secretary. Does such role include assisting the Chairman in preparing the board agenda, facilitating training of directors,

keeping directors updated regarding any relevant statutory and regulatory changes, etc?

According to the Corporation’s By-Laws, the Corporate Secretary shall be the custodian of and shall maintain the corporate books and record and shall be the recorder of the Corporations formal actions and transactions. The Corporate secretary shall have the following specific roles and duties: (a) to record or see the proper recording of the minutes and transactions of all meetings of the directors and the stockholders and to maintain minute books of such meetings in the form and manner required by the law; (b) to keep or cause to be kept record books showing the details required by law with respect to the stock certificates if the Corporation, including ledgers and transfer books showing all shares of the Corporation subscribed, issued and transferred; (c) to keep the corporate seal and affix it in all papers and documents requiring seal, and to attest by his signature all corporate documents requiring the same; (d) to attend to the giving and serving of all notices of the Corporation required by law or the By-Laws to be given; (e) to certify to such corporate acts, countersign corporate documents or certificates, and make reports or statements as may be required of him by law or by government rules and regulations; (f) to act as the inspector at the election of directors and, as such, to determine the number of shares of stocks outstanding and entitled to vote, the shares of stocks represented at the meeting, the existence of a quorum, the validity and effect of proxies, and to receive votes, ballots, or consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate all votes, ballots or consents, determine the result, and do such acts as are proper to conduct the election or vote. The Secretary may assign the exercise or performance of any of the forgoing duties, powers and functions to any other person or persons, subject always to his supervision and control; and (g) to perform such duties as are incident to his office or as may be assigned by the Board of Directors or the President. The Revised Manual of Corporate Governance on the other hand states the following roles, duties and qualifications of the Corporate Secretary: (a) be responsible for the safekeeping and preservation of integrity of the minutes of the meetings of the Board and its committees, as well as the other official records of the corporation; (b)

budgets, forecasts and internal financial documents.

68

be loyal to the mission, vision and objectives of the corporation; (c) work fairly and objectively with the Board, Management and stockholders; (d) have appropriate administrative and interpersonal skills; (e) if he is not at the same time the corporate legal counsel, be aware of the laws, rules and regulations necessary in the performance of his duties and responsibilities; (f) have a working knowledge of the operations of the corporation; (g) inform the members of the Board, in accordance with the By-Laws, of the agenda of their meetings and ensure that the members have before them accurate information that will enable them to arrive at intelligent decisions on matters that require their approval; (h) attend all Board meetings, except when justifiable causes, such as illness, death in the immediate family and serious accidents, prevent him from doing so; (i) ensure that all Board procedures, rules and regulations are strictly followed by the members; and (j) if he is the Compliance Officer, perform all duties and responsibilities of the said officer as provided for in the Code. In practice, the facilitation of the trainings for the directors, specifically on Corporate Governance matters, is done as a function of the Compliance Officer. The Corporation’s group of companies conducts various corporate governance trainings and seminars, through third party facilitators, to equip its directors and officers on the relevant corporate governance best practices.

(d) Is the company secretary trained in legal, accountancy or company secretarial practices? Please explain should the answer be in the negative. The Corporate Secretary, Mr. Antonio A. Picazo, is a well trained Legal and corporate secretarial practitioner. Mr. Picazo is currently the Managing Partner of Picazo Buyco Tan Fider & Santos Law Offices. He serves as a Director and/or Corporate Secretary of several large Philippine corporations, including Metro Pacific Investments Corporation, a position he has held since 2006. Mr. Picazo obtained his Bachelor of Laws degree from the University of the Philippines and passed the 1964 Philippine Bar Examinations with the 5th highest rating. In 1967, he obtained a Master of Laws degree, Major in Taxation from the University of Pennsylvania.

(e) Committee Procedures

Disclose whether there is a procedure that Directors can avail of to enable them to get information necessary to be able to prepare in advance for the meetings of different committees:

Yes x No

Committee Details of the procedures

Executive

The Revised Manual of Corporate Governance Article (4) – Adequate and Timely Information states the provision below: “To enable the members of the Board to properly fulfill their duties and responsibilities, Management should provide them with complete, adequate and timely information about the matters to be taken in their meetings. Reliance on information volunteered by Management would not be sufficient in all circumstances and further inquiries may have to be made by a member of the Board to enable him to properly perform his duties and responsibilities. Hence, the members should be given independence access to Management and the Corporate Secretary. The information may include the background or explanation of matters brought before the Board, disclosures, budgets, forecasts and internal financial documents.

69

The members, either individually or as a Board, in the furtherance of their duties and responsibilities, should have access to independent professional advice at the corporation’s expense.”

Audit and Risk Management

The Revised Manual of Corporate Governance Article (4) – Adequate and Timely Information states the provision below: “To enable the members of the Board to properly fulfill their duties and responsibilities, Management should provide them with complete, adequate and timely information about the matters to be taken in their meetings. Reliance on information volunteered by Management would not be sufficient in all circumstances and further inquiries may have to be made by a member of the Board to enable him to properly perform his duties and responsibilities. Hence, the members should be given independent access to Management and the Corporate Secretary. The information may include the background or explanation of matters brought before the Board, disclosures, budgets, forecasts and internal financial documents. The members, either individually or as a Board, in the furtherance of their duties and responsibilities, should have access to independent professional advice at the corporation’s expense.”

Nomination


Compensation

The Revised Manual of Corporate Governance Article (4) – Adequate and Timely Information states the provision below: “To enable the members of the Board to properly fulfill their duties and responsibilities, Management should provide them with complete, adequate and timely information about the matters to be taken in their meetings. Reliance on information volunteered by Management would not be sufficient in all circumstances and further inquiries may have to be made by a member of the Board to enable him to properly perform his duties and responsibilities. Hence, the members should be given independent access to Management and the Corporate Secretary.

70

The information may include the background or explanation of matters brought before the Board, disclosures, budgets, forecasts and internal financial documents. The members, either individually or as a Board, in the furtherance of their duties and responsibilities, should have access to independent professional advice at the corporation’s expense.”

Governance


5. EXTERNAL ADVICE

Indicate whether or not a procedure exists whereby directors can receive external advice and, if so, provide details:

Procedures Details

The procedure stating that the directors can receive external advice is stated in the Revised Manual of Corporate Governance Article (4) – Adequate and Timely Information.

The Revised Manual of Corporate Governance Article (4) – Adequate and Timely Information states the provision below: “To enable the members of the Board to properly fulfill their duties and responsibilities, Management should provide them with complete, adequate and timely information about the matters to be taken in their meetings. Reliance on information volunteered by Management would not be sufficient in all circumstances and further inquiries may have to be made by a member of the Board to enable him to properly perform his duties and responsibilities. Hence, the members should be given independent access to Management and the Corporate Secretary. The information may include the background or explanation of matters brought before the Board, disclosures, budgets, forecasts and

71

internal financial documents. The members, either individually or as a Board, in the furtherance of their duties and responsibilities, should have access to independent professional advice at the corporation’s expense.”

6. CHANGE/S IN EXISTING POLICIES

Indicate, if applicable, any change/s introduced by the Board of Directors (during its most recent term) on existing policies that may have an effect on the business of the company and the reason/s for the change:

Existing Policies Changes Reason

Audit and Risk Management Committee Charter

(a) Structure and membership; (b) meetings and procedures; (c) functions and responsibilities; and (d) powers of the Audit and Risk Management Committee.

Pursuant to SEC Memorandum Circular No. 4 Series of 2012, entitled “GUIDELINES FOR THE ASSESSMENT OF THE PERFORMANCE OF AUDIT COMMITTEES OF COMPANIES LISTED ON THE EXCHANGE”.

D. REMUNERATION MATTERS

1. REMUNERATION PROCESS

Disclose the process used for determining the remuneration of the CEO and the four (4) most highly compensated management officers: The Corporation’s executive officers are covered by standard employment contracts and employees’ retirement plan and can be terminated upon appropriate notice. The following are the procedures followed by the Corporation:

Process CEO Top 4 Highest Paid Management Officers

(1) Fixed remuneration

Remuneration of the Corporation’s CEO is positioned in the top quartile of Industry figures based on the market data obtained from Tower Watsons, a world-leader in Human Resource consultancy. The fixed remuneration also includes a 13

th month

pay as required by Law.

Remuneration of the Corporation’s top executives is positioned in the top quartile of Industry figures based on the market data obtained from Tower Watsons, a world-leader in Human Resource consultancy. The fixed remuneration also includes a 13

th month pay as required by

Law.

(2) Variable remuneration

The Corporation’s Long Term Incentive Plan (LTIP) is aimed at providing a competitive level of financial incentives for eligible employees to encourage them to achieve performance targets consistently. The amount of LTIP is fixed upon achievement of the target Core Income and is not affected by changes in future salaries of the employees covered. The LTIP is composed of a cash

The Corporation’s Long Term Incentive Plan (LTIP) is aimed at providing a competitive level of financial incentives for eligible employees to encourage them to achieve performance targets consistently. The amount of LTIP is fixed upon achievement of the target Core Income and is not affected by changes in future salaries of the employees covered. The LTIP is composed of a cash pay-out and

72

pay-out and an ESOP. The ESOP is for eligible executives to receive remuneration in the form of share-based payment transactions, whereby executives render services in exchange for the share option.

an ESOP. The ESOP is for eligible executives to receive remuneration in the form of share-based payment transactions, whereby executives render services in exchange for the share option.

(3) Per diem allowance The Corporation does not provide per diem allowance to CEO for attending Regular and Special Board, and Board Committee meetings.

The Corporation does not provide per diem allowance to its four highly compensated officers for attending Regular and Special Board, and Board Committee meetings.

(4) Bonus The CEO receives variable bonuses depending on the performance of the Corporation for the year.

The Corporation’s executives receive variable bonuses depending on the performance of the Corporation for the year.

(5) Stock Options and other financial instruments

Stock options are included in the Corporation’s Long Term Incentive Plan (LTIP).

Stock options are included in the Corporation’s Long Term Incentive Plan (LTIP).

2. REMUNERATION POLICY AND STRUCTURE FOR DIRECTORS

(a) Remuneration Policy and Structure for Executive and Non-Executive Directors

Disclose the company’s policy on remuneration and the structure of its compensation package. Explain how the compensation of Executive and Non-Executive Directors is calculated. Except as aggregately disclosed in the section below, and as disclosed in the Corporation’s Definitive Information Statement and Annual Report, none of the Directors and Executive Officers is covered by a special compensatory plan or arrangement, nor do any of them hold any outstanding warrants or options in respect of the Corporation or its shares. The Corporation’s By Laws provide that, additionally, an amount equivalent to 1 percent (1%) of net profit after tax shall be allocated and distributed amongst the directors of the Corporation who are not officers thereof or of any of its subsidiaries or affiliates, in such manner as the Board may deem proper. There are no other special arrangements pursuant to which any director was compensated.

Remuneration Policy Structure of Compensation Packages How Compensation is Calculated

Executive Directors

Remuneration of the Company’s top executives is positioned in the top quartile of Industry figures based on the market data obtained from Tower Watsons, a world-leader in Human Resource consultancy.

The Company provides its executives with 13 months guaranteed basic pay, a variable bonus, and a Long Term Incentive Plan (LTIP).

The compensation of the Company’s executives is computed based on Market/ Industry Practice.

73

Non-Executive Directors

Non-Executive directors do not receive any remuneration aside from the diem allowance for each attendance in Board and Board Committee meetings.

Non-executive Directors are entitled to a per diem allowance of Php50,000 for each attendance in MPIC’s Regular Board meetings; Php30,000 for Special Board meetings; and Php30,000 for Board Committee Meetings.

As per the Company’s By-Laws, the amount of per diem allowance may be fixed by the Board of Directors or by resolution of the stockholders.

(b) Do stockholders have the opportunity to approve the decision on total remuneration (fees, allowances, benefits-in-kind and other emoluments) of board of

directors? Provide details for the last three (3) years.

The Corporation’s By-Laws, which was approved by the stockholders, states that: “Each director of the Corporation shall receive per diem allowance for his attendance at each meeting of the Board, in such amount as may be fixed by the Board or by resolution of the stockholders. Additionally, an amount equivalent to 1 percent (1%) of net profit after tax shall be allocated and distributed amongst the directors of the Company who are not officers thereof or of any of its subsidiaries or affiliates, in such manner as the Board may deem proper.“

Remuneration Scheme Date of

Stockholders’ Approval

- -

3. AGGREGATE REMUNERATION

Complete the following table on the aggregate remuneration accrued during the most recent year: As disclosed in the Corporation’s Definitive Information Statement and Annual Report, the annual remuneration of the directors amounted to Php 7.0 million, Php 8.2 million and Php 9.5 million in 2013, 2012 and 2011, respectively. Non-executive directors are entitled to a per diem allowance of Php 50,000 for each attendance in the Company’s Board meetings; and Php 30,000 for each attendance in Special Board and Board Committee meetings. The Company’s By-Laws provide that an amount equivalent to 1.0% of net profit after tax of the Company shall be allocated and distributed among the directors of the Company who are not officers of the Company or its subsidiaries and affiliates, in such manner as the Board may deem proper. No accruals were made with respect to this scheme for the years ended December 31, 2013, 2012 and 2011 in the absence of resolution from the Board. There are no other special arrangements pursuant to which any director will be compensated. The aggregate compensation for 2013 of the Chairman and the four most highly compensated management officers, including the CEO and the CFO, is shown below (in Php).

Process Chairman Top 4 Highest Paid Management Officers

(1) Fixed remuneration Php 90,530,980

(2) Variable remuneration The Corporation provided Php 194,538,455 LTIP payout in 2013.

74

(3) Per diem allowance The Corporation does not provide per diem allowance to executive directors.

(4) Bonuses Php 65,920,634

(5) Stock Options and other financial Instruments The Corporation issued 82.2 million stock options in 2013.

(6) Others (specify) Php 194,538,455

* The aggregated number of options presented includes those awarded to the directors and officers of the Company. This was disclosed by the Company in its Definitive Information Statement, Item 6. Compensation of Directors and Executive Officers.

Remuneration Item Executive Directors Non-Executive Directors (other

than independent directors) Independent Directors

(a) Fixed Remuneration (Please see above table) (Please see above table) (Please see above table)

(b) Variable Remuneration (Please see above table) (Please see above table) (Please see above table)

(c) Per diem Allowance (Please see above table) (Please see above table) (Please see above table)

(d) Bonuses (Please see above table) (Please see above table) (Please see above table)

(e) Stock Options and/or other financial instruments (Please see above table) (Please see above table) (Please see above table)

(f) Others (Specify) (Please see above table) (Please see above table) (Please see above table)

Total (Please see above table) (Please see above table) (Please see above table)

Other Benefits Executive Directors Non-Executive Director (other than independent directors)

Independent Directors

1) Advances (Please see above table) (Please see above table) (Please see above table)

2) Credit granted (Please see above table) (Please see above table) (Please see above table)

3) Pension Plan/s Contributions (Please see above table) (Please see above table) (Please see above table)

(d) Pension Plans, Obligations incurred (Please see above table) (Please see above table) (Please see above table)

(e) Life Insurance Premium (Please see above table) (Please see above table) (Please see above table)

(f) Hospitalization Plan (Please see above table) (Please see above table) (Please see above table)

(g) Car Plan (Please see above table) (Please see above table) (Please see above table)

(h) Others (Specify) (Please see above table) (Please see above table) (Please see above table)

Total (Please see above table) (Please see above table) (Please see above table)

4. STOCK RIGHTS, OPTIONS AND WARRANTS

(a) Board of Directors

Complete the following table, on the members of the company’s Board of Directors who own or are entitled to stock rights, options or warrants over the company’s shares:

75

Except as disclosed in Item 2 above and in the Corporation’s Definitive Information Statement and Annual Report, none of the aforementioned Directors are covered by a special compensatory plan or arrangement, nor do any of them hold any outstanding warrants or options in respect of the Corporation or its shares.

Director’s Name Number of Direct Option/

Rights/Warrants Number of Indirect Option/

Rights/Warrants Number of Equivalent Shares Total % from Capital Stock

None None None None None

(b) Amendments of Incentive Programs

Indicate any amendments and discontinuation of any incentive programs introduced, including the criteria used in the creation of the program. Disclose whether these are subject to approval during the Annual Stockholders’ Meeting: The Corporation has done no amendments and discontinuation of any incentive programs, such as the Long-Term Incentive Plan, within year 2012. The Corporation’s LTIP is aimed at providing a competitive level of financial incentives for eligible employees to encourage them to achieve performance targets consistent with Corporation’s long-term business plans; recognizing and rewarding the contribution of eligible employees to the overall profitability and performance of the Corporation; and attracting and retaining talented employees to ensure the sustained growth and success of the Corporation.

Incentive Program Amendments Date of Stockholders’ Approval

None None None

5. REMUNERATION OF MANAGEMENT

Identify the five (5) members of management who are not at the same time executive directors and indicate the total remuneration received during the financial year: The aggregate remuneration received by the top five (5) members of management and other officers of the Corporation in 2013, as disclosed in the Definitive Information Statement and Annual Report, is shown in the table below.

Name of Officer/Position Total Remuneration

Jose Ma. K. Lim

Php 350,990,069

David J. Nicol

Augusto P. Palisoc Jr.


Robin Michael L. Velasco

All Other Directors and Officers as a group excluding the abovenamed officers Php 223,542,214.00

76

E. BOARD COMMITTEES

1. NUMBER OF MEMBERS, FUNCTIONS AND RESPONSIBILITIES

Provide details on the number of members of each committee, its functions, key responsibilities and the power/authority delegated to it by the Board:

Committee

No. of Members

Committee Charter Functions Key Responsibilities Power Executive Director

(ED)

Non-executive Director

(NED)


(ID)

Executive None* None* None*

Corporation’s By-Laws Article III, Section 10, Executive Committee An executive Committee is hereby created which may be organized from time to time upon the determination of the Board of Directors. The Committee shall be composed of not less than three (3) members, which shall include the President. The Board shall have the power at anytime to remove and replace the members of, and fill vacancies, in the Executive Committee. The Executive Committee, when the Board is not in session, shall have and may exercise the powers of the Board in the management of the business and affairs of the Corporation, except with respect to: (1) approval of any action for which stockholders’ approval is also required; (2) the filing of vacancies in the Board; (3) the amendment or repeal of these By-Laws or the adoption of new By-Laws; (4) the amendment or repeal of any resolution of the Board which by it express terms is not so amenable or repealable; (5) a distribution of dividends to the stockholders; (6) such other matters as may be specifically excluded or limited to the Board.

Audit and Risk Management

- 1 2

Section 1. Basis and Purpose The Revised Manual on Corporate Governance (the “Governance Manual”) of Metro Pacific Investments Corporation (the “Corporation”) provides that its Board shall constitute, among others, an Audit Committee to assist it in good corporate governance. The purpose of the Audit and Risk Management Committee (the “Committee") is to assist the Board of Directors in fulfilling its oversight responsibilities over the following:

a. the Corporation's financial statements and reporting system; b. the Corporation's compliance with legal and regulatory requirements;

c. the external auditor's qualifications, independence, and performance;

d. the performance of the Corporation's internal audit function and internal auditors;

77

e. risk management policy and execution; and

f. the business practices and ethical standards of the Corporation.

Section 2. Structure and Membership

2.1 Composition. The members of the Committee shall be appointed by the Board of Directors. The Committee shall be composed of at least three (3) Board members (the “Members”), preferably with accounting and finance background. The Chairman of the Committee shall be an independent director and one member shall have related audit experience as defined by the Securities and Exchange Commission (SEC). An independent director is one who is independent of management and who, apart from his fees and shareholdings, is free from any business or other relationship which could materially interfere with the exercise of his independent judgment. The Board may appoint one or more persons to serve as advisor(s) (“Adviser”) to the Committee. Advisors shall have the right to attend and speak at any meeting of the Committee but shall have no right to vote on any action of the Committee.

In addition to the qualifications required for election as director of the Corporation provided under the Corporation's By-Laws and Governance Manual, the Members of the Committee shall preferably have accounting and finance backgrounds, one of whom shall be an independent director and another shall have audit experience. The Members shall be disqualified for any of the grounds for disqualification of a director provided under the Corporation's Governance Manual, the Corporation Code of the Philippines, Securities Regulation Code and its Implementing Rules and Regulations, and other relevant laws, rules and regulations of the Securities and Exchange Commission. The Chairman or any member or advisor of the Committee may be removed and replaced only by the Board.

2.2 Appointment. The Chairman and members of the Committee shall be appointed by, and removed from office,

only by the Board. In case of vacancy in the Committee, the Board shall appoint a new Committee member from among the directors.

2.3 Committee Secretary. The Committee shall appoint a Committee Secretary who shall prepare the minutes of the

meetings and keep the records of the Committee. Section 3. Meetings and Procedures

3.1 Meetings, Quorum and Voting. The Committee shall meet at least once every quarter or more frequently as

78

circumstances require. During these meetings, the Committee may meet privately with senior management, the external auditors, or as a Committee to discuss any matters that need to be discussed.

The time and place of the meetings and procedures at such meetings shall be determined by the Committee. A majority of the members of the Committee shall constitute a quorum provided an Independent Director is present (unless he has been duly notified but deliberately and without justifiable cause fails to attend the meeting).

3.2 Meeting through Teleconference, Video Conference or Similar Means. Members and Advisors may participate in

any meetings of the Committee through teleconference, video conference or other similar means, provided that all persons participating in the meeting can hear each other.

3.3 Notices. Notices of the meetings of the Committee shall be sent to the Members and Advisors by personal

delivery, mail, facsimile, electronic mail or other similar means at least two (2) days prior to the meeting and specifying the place, date and time of the meeting, as well as the matters to be discussed during the meeting. For this purpose, the Committee Secretary shall obtain the addresses, facsimile numbers and electronic mail addresses of each Member and Advisor where notices of meetings may be sent.

3.4 Remuneration. No fees or other remuneration shall be payable to the members and advisors of the Committee

for services provided or attendance to Committee meetings, except fees or remuneration authorized and approved by the Board. No fees or compensation shall be paid directly or indirectly to any member of the committee as consultant or legal or financial Advisor or to such member's firm for such consulting or advisory services even if such member is not the actual service provider.

Section 4. Functions and Responsibilities The Committee's specific duties and responsibilities are as follows:

4.1 On External Auditors:

a) Review and evaluate the qualifications, performance and independence of the external auditors and the lead partner.

b) Select and appoint the external auditors and remove or replace the external auditors as it may deem necessary.

c) Discuss with the external auditor before the audit commences the nature and scope of the audit. d) Review and approve the fees charged by the external auditor for audit and non-audit services. e) Evaluate and determine non-audit work by external auditor and keep under review the non-audit fees paid to

the external auditor in relation to their significance to the auditor. f) Ensure that the external auditor or the lead, engagement, or handling partner having primary responsibility

79

for the audit or review of the Corporation is rotated at least once every five (5) years.

4.2 On Financial Statements:

a) Review and discuss with management and the external auditor the Corporation's quarterly, half-year, and annual financial statements before submission to the Board, focusing particularly on the following:

Critical accounting policies and practices to be used.

Major financial reporting issues and judgments made.

Significant adjustments resulting from the audit.

Unusual or complex transactions.

Going concern assumption.

Compliance with accounting standards.

Compliance with tax, legal, and stock exchange requirements.

b) Review interim financial reports, with management and the external auditors, before filing with regulators and consider whether these are complete and consistent with the information known to the Committee.

c) Evaluate relationship that senior management, financial management, external auditors, and internal auditors have to ensure accurate and timely financial reporting.

d) Resolve any disagreement between management and the external auditors regarding financial reporting. e) Review the management representation letter to the external auditor.

4.3 On Internal Audit Function:

a) Review the appointment and replacement of the internal auditor. b) Review and approve the Internal Audit Charter and annual audit plan. c) Review the significant issues raised in internal audit reports to management and management's responses and

ensure appropriate corrective actions are undertaken. d) Review the effectiveness of the internal audit function, its budget and staffing, and compliance with the

Standards for the Professional Practice of Internal Auditing. e) Ensure the Internal Auditor is given full and unrestricted access to all company records, properties and

personnel relevant to the internal audit activity. f) Establish direct functional reporting of the internal auditor to the Audit Committee to allow it to effectively

fulfill its responsibilities. g) Require the internal auditor to render to the Committee an annual report on the activities and performance of

the internal audit organization relative to the audit plan approved by the Committee, including significant risk exposures and control issues, corporate governance issues, and other matters requested by the Committee.

4.4 On Internal Controls:

80

a) Appoint and designate an Internal auditor b) Review with the Corporation's management and the Internal auditors findings on the adequacy and

effectiveness of internal controls and their recommendations for improving the internal control environment, including information technology security and controls.

c) Review the adequacy of the Corporation's system of internal control over financial reporting including the reliability of its financial reporting systems.

4.5 On Legal, Regulatory, and Ethical Standards Compliance:

a) Monitor compliance and adherence by the Corporation to all Board policies as well as applicable laws, rules and regulations covering the conduct of its operations and business activities.

b) Review reports and findings of any examinations by regulatory agencies and ensure appropriate and timely corrective action by management.

c) Review and oversee related party transactions and other potential conflicts of interest situations where appropriate considering that the Corporation is a public service firm subject to regulatory scrutiny and public perception.

d) Evaluate and monitor compliance with Code of Ethics for management. e) Review Whistle Blowing Policy.

4.6 On Risk Management:

a) Appoint or designate a Chief Risk Officer. b) Discuss with management policies with respect to risk assessment and risk management. c) Inquire on major risk exposures and the steps management has taken to monitor and control such exposures. d) Review Business Continuity Plan.

4.7 On Reporting

Report regularly to the Board of Directors about committee activities, issues, and any related recommendations. Section 5. Powers of the Committee The Committee has authority to conduct or authorize investigations into any matters within its scope of responsibility. It is empowered to:

a) Retain external legal counsel, accountants, or other advisors to advise the Committee or assist in the conduct of an investigation.

b) Seek information it requires from employees - all of whom are directed to cooperate with the Committee's

81

requests - or external parties. c) Appoint or replace the external auditors and pre-approve all auditing and non-auditing services (including the

fees and terms thereof) to be provided by independent auditors. d) Meet with Company Officers, external auditors or outside counsel, as necessary. e) Obtain appropriate funding and resources necessary to carry out its duties and responsibilities.

Nomination 1** 1 2

The Nomination Committee, which may be composed of at least three (3) members and one of whom should be an independent director, to review and evaluate the qualifications of all persons nominated to the Board and other appointments that require Board approval, and to assess the effectiveness of the Board‘s processes and procedures in the election or replacement of director. Corporation By-Laws Article III, Section 3, Election and Term A nomination committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The nomination committee shall be composed of at least three (3) members, one of whom shall be an independent director. The nomination committee shall have the following functions: (A) formulate screening policies to enable the committee to effectively review the qualification of the nominees for independent directors; and (B) conduct nominations for independent directors prior to the stockholders’ meeting in accordance with the procedures set forth in Rule 38 of the Amended Implementing Rules and Regulations of the Securities Regulation Code, as the same may be amended from time to time.

Compensation 1 2

The Compensation or Remuneration Committee, which may be composed of at least three (3) members and one of whom should be an independent director, to establish a formal and transparent procedure for developing a policy on remuneration of directors and officers to ensure that their compensation is consistent with the corporation's culture, strategy and the business environment in which it operates. Corporation By-Laws Article III, Section 11, Compensation and Remuneration Committee A compensation and remuneration committee is hereby created which may be organized from time to time upon determination of the Board of Directors. The compensation and remuneration committee shall be composed of at least three (3) members, one of whom shall be an independent director. The compensation and remuneration committee shall have the following functions: (A) establish a formal and transparent procedure for developing policy on executive remuneration and for fixing the remuneration packages of corporate officers and directors, and provide oversight over remuneration of senior management and other key personnel, ensuring that compensation is consistent with the Corporation’s culture, strategy and control environment; (B) designate the amount of remuneration of directors and officers, which shall be in a sufficient level to attract and retain directors and officers, who are needed to run the Corporation successfully; (C) establish a formal and transparent procedure for developing policy on executive remuneration and for transparent procedure for developing a policy on executive remuneration and for fixing remuneration packages of individual directors, if any, and officers; (D) develop a form on full business interest

82

disclosure as part of the pre-employment requirements for all incoming officers, which among others, compel all officers to declare under the penalty of perjury, all their existing business interest or shareholding that may directly of indirectly conflict in their performance of duties once hired; (E) disallow any director to decide his or her own remuneration; (F) provide in the Corporation’s annual reports, information and proxy statement, a clear, concise, and understandable disclosure of compensation of its executive officers for the previous fiscal year and the ensuing year; and (G) review of the human resources development or personnel handbook, if any, to strengthen provisions on conflict of interest, salaries and benefit policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts, or in the absence of such human resources development or personnel handbook, cause the development of such, covering the same parameters of governance as stated above.

Governance 1 2

Corporate Governance Committee ensures overall governance framework is robust and compares favorably with best in class practices. The Committee is tasked to develop and oversee the implementation of the Corporation’s Revised Manual of Corporate Governance. The Committee has the power to review, endorse to the Board recommendations of the Compliance officer in relation to violations of provisions and requirements of the Revised Code of Corporate Governance and other corporate governance rules applicable to the Company, including the Company’s Manual of Corporate Governance and the Code of Business Conduct and Ethics. It is responsible for recommending to the Board the development of corporate governance principles, structure, best practices and rules for adoption by the Company, and assists the Board in the implementation thereof. Finally, it has the responsibility of facilitating the assessment of the Board processes, procedures and performance in line with Corporate Governance practices and metrics.

* The Board finds that there is no need to organize an Executive Committee because all corporate agenda and items for decision are discussed and managed by the Board.

** One (1) executive director is a non-voting member of the Committee.

2. COMMITTEE MEMBERS

(a) Executive Committee The Corporation’s By-Laws, Article 3, Section 10, Executive Committee states that “An executive Committee is hereby created which may be organized from time to time upon the determination of the Board of Directors. The Committee shall be composed of not less than three (3) members, which shall include the President. The Board shall have the power at anytime to remove and replace the members of, and fill vacancies, in the Executive Committee.” To date, the Board finds that there is no need to organize an Executive Committee because all corporate agenda and items for decision are discussed and managed by the Board.

Office Name Date of

Appointment

No. of Meetings

Held


%

Length of Service in

the Committee

Chairman None None None None None None

Member (ED) None None None None None None

Member (NED) None None None None None None

83

Member (ID) None None None None None None

Member None None None None None None

(b) Audit and Risk Management Committee

Office Name Date of

Appointment

No. of Meetings

Held


%


the Committee*

Chairman Edward S. Go (ID) May 24, 2013 4 4 100 6

Member (NED) Amado R. Santiago III May 24, 2013 4 4 100 4

Member (NED) - - - - - -

Member (ID) Lydia B. Echauz May 24, 2013 4 4 100 4

Member - - - - - - *Number of non-consecutive years as Committee Member since 2008.

i. Disclose the profile or qualifications of the Audit Committee members.

As stated in the Board’s Audit and Risk Management Committee Charter, the members of the Committee shall be appointed by the Board of Directors. The Committee shall be composed of at least three (3) Board members, preferably with accounting and finance background. The Chairman of the committee shall be an independent director and one member shall have related audit experience as defined by the Securities and Exchange Commission (SEC). An independent director is one who is independent of management and who, apart from his fees and shareholdings, is free from any form of business or other relationship which could materially interfere with the exercise of his independent judgment. In addition to the qualifications required for election as director of the Corporation provided under the Corporation's By-Laws and Governance Manual, the Members of the Committee shall preferably have accounting and finance backgrounds, one of whom shall be an independent director and another shall have audit experience. The members shall be disqualified for any of the grounds for disqualification of a director provided under the Corporation's Governance Manual, the Corporation Code of the Philippines, Securities Regulation Code and its Implementing Rules and Regulations, and other relevant laws, rules and regulations of the Securities and Exchange Commission. Below are the profiles of the members of the Audit and Risk Management Committee members as disclosed in the Annual Report, Definitive Information Statement, and the corporate website: Edward S. Go (Independent Director), Committee Chairman Edward S. Go currently serves as Chairman of the Board of Hyundai Asia Resources, Inc. and of ASA Philippines Foundation. He is an Independent Director of Metro Pacific Investments Corporation, PLDT Communications and Energy Ventures, Inc. (PCEV) and Filipino Fund Inc. He is also Chairman of the PLDT Beneficial Trust Fund and member of the Board of ABC Development Corporation, Mediaquest Holdings, Inc., Mediascape Inc., AB Capital Investment Corporation and Vicsal Investment

84

Corporation. He has over 40 years of management experience in banking and finance, starting as Executive Trainee with Citibank N.A. and became President of Philippine Bank of Communications in 1974 and Chairman and Chief Executive Officer of Chinabank in 1985. Mr. Go is also Chairman of the Audit Committees of MPIC and PCEV. He obtained his Bachelor of Arts Degree, magna cum laude, and underwent postgraduate studies at the Ateneo de Manila University, where he currently serves as Chairman of the Board of Trustees. Lydia Balatbat-Echauz (Independent Director), Committee Member Lydia Echauz is recently retired from academe. She was for ten years President of Far Eastern University and its three other affiliate schools. Prior to joining FEU in 2002, she served as Dean of De La Salle University Graduate School of Business, Associate Director of the MBA program of the Ateneo de Manila University Graduate School of Business, and Associate Professor of the University of the East, College of Business Administration. She is currently a member of the Board of Trustees of a few organizations, member and former governor of the Management Association of the Philippines, and past President of the Association of Southeast Asian Institutions of Higher Learning, RP Council. She has been awarded most outstanding Filipino and also most distinguished alumna of ADMU, DLSU, and St. Theresa’s College. Amado R. Santiago III, Committee Member Amado R. Santiago III is the Managing Partner of the Santiago & Santiago Law Offices and is engaged in the general practice of law. He specializes in corporate litigation, which includes corporate rehabilitation proceedings under the Securities and Exchange Commission Rules on Corporate Recovery, Interim Rules of Procedure on Corporate Rehabilitation and the Rules of Procedure on Corporate Rehabilitation, as well as taxation law. He acts as director, corporate secretary, and/or corporate counsel of various corporate clients. He graduated from the Ateneo de Manila School of Law in 1992 and passed the Philippines Bar Examinations given in the same year. He received his degree of Bachelor of Science in Legal Management in 1988 from the Ateneo de Manila University.

ii. Describe the Audit Committee’s responsibility relative to the external auditor. The Audit and Risk Management Committee's specific duties and responsibilities in relation to the External Auditors are as follows: a. Review and evaluate the qualifications, performance and independence of the external auditor and the lead partner; b. Select and appoint the external auditors and remove or replace the external auditors as it may deem necessary; c. Discuss with the external auditor before the audit commences the nature and scope of the audit; d. Review and approve the fees charged by the external auditor for audit and non-audit services; e. Evaluate and determine non-audit work by external auditor and keep under review the non-audit fees paid to the external auditor in relation to their significance to

the auditor; and f. Ensure that the external auditor or the lead, engagement, or handling partner having primary responsibility for the audit or review of the Corporation is rotated at

least once every five (5) years.

(c) Nomination Committee

Office Name Date of

Appointment

No. of Meetings

Held


% Length of Service in

the

85

Committee*

Chairman Edward S. Go (ID) May 24, 2013 1 1 100 6

Member (ED) Robert C. Nicholson May 24, 2013 1 1 100 3

Member (ID) Lydia B. Echauz May 24, 2013 1 1 100 4

Member Jose Ma. K. Lim (ED / Non-Voting)

May 24, 2013 1 1 100 6

*Number of non-consecutive years as Committee Member since 2008.

(d) Compensation Committee

Office Name Date of

Appointment

No. of Meetings

Held


%


the Committee*

Chairman Lydia B. Echauz (ID) May 24, 2013 2 2 100 4

Member (NED) Manuel V. Pangilinan May 24, 2013 2 2 100 4

Member (ID) Edward S. Go May 24, 2013 2 2 100 6 *Number of non-consecutive years as Committee Member since 2008.

(e) Governance Committee

Provide the same information on all other committees constituted by the Board of Directors:

Office Name Date of

Appointment

No. of Meetings

Held


%


the Committee*

Chairman Artemio V. Panganiban (ID) May 24, 2013 2 2 100 6

Member (NED) Amado R. Santiago III May 24, 2013 2 2 100 3

Member (ID) Edward S. Go May 24, 2013 2 2 100 4

*Number of non-consecutive years as Committee Member since 2008. 3. CHANGES IN COMMITTEE MEMBERS

Indicate any changes in committee membership that occurred during the year and the reason for the changes: There were no changes in the committee memberships in the past year after the appointment of the members during last year'sOrganization Meeting.

86

Name of Committee Name Reason

Executive None None

Audit None None Nomination None None Compensation None None Governance None None

4. WORK DONE AND ISSUES ADDRESSED

Describe the work done by each committee and the significant issues addressed during the recent years.

Name of Committee Work Done Issues Addressed

Executive Not Applicable Not Applicable

Audit

The Audit and Risk Management Committee accomplished the following:

Reviewed and approved all audit and review services provided by the external auditor to MPIC, and the related fees for such services;

Discussed with the external auditor the matters required to be discussed by the prevailing applicable Auditing Standard, and the committee has received written disclosures and the letter from the external auditor as required by the prevailing applicable Independence Standards (Statement as to Independence) and have discussed with external auditor its independence from the MPIC Group and MPIC Group’s management;

Approved the creation of the Internal Audit Office and the appointment of the Internal Auditor;

Together with Management and with the Internal Auditor, conducted a review of the effectiveness of the Company's internal control systems;In the performance of its oversight responsibilities, the Committee have reviewed and discussed the audited financial statements of MPIC Group with the MPIC Group’s management, which has the primary responsibility for the financial statements, and with the external auditor, the MPIC Group’s independent auditor, who is responsible for expressing an opinion on the conformity of the MPIC Group’s audited financial statements with Philippine Financial Reporting Standards (PFRS);

Approved and endorsed to the Board, which subsequently approved, the Whistle Blower Policy;

All audit and review services provided by the external auditor and related fees;

Amendment of the Audit and Risk Management Charter;

Matters required to be discussed on applicable Auditing Standard;

Creation of the Internal Audit Office and the appointment of the Internal Auditor;

Review of the audited financial statements of MPIC Group as of and for the year ended December 31, 2012; and

The Company’s Whistle Blower Policy.

Nomination The Nomination Committee is responsible for vetting and recommending members for nomination to the Board of Directors, including membership in the various Board

Nomination and screening of nominees to the Board of Directors.

87

Committees. In 2011, the committee recommended Victorico P. Vargas and Washington Sycip for nomination to the Board of Directors. During the same year, the committee recommended the appointment of Alberto G. Romulo and Alfred A. Xerez-Burgos as Board Advisers. As a result of the nomination and election of Washington Sycip to the Board of Directors, we have increased the number of independent directors to four from three in the prior year.

Compensation

The Compensation Committee directly oversees compensation and benefits packages of senior executives of the company. Periodic meetings are conducted by the committee to review current and proposed compensation structure and benefits package of senior executives. It is the role of the committee to ensure that the senior executives are fairly compensated as well as to ensure the correctness and the appropriateness of all compensation and benefits provided to its senior executives.

Compensation and incentive framework.

Governance

The Governance Committee ensures overall governance framework is robust and compares favorably with best in class practices. The committee proposed the Revised Manual on Corporate Governance to the Board of Directors, which was adopted by the Board on the same date, on 3 March 2011. The Revised Manual was formulated to address gaps in the process used to implement our Corporate Governance framework. The Governance Committee supported the Corporation in joining various Corporate Governance groups, through the Corporate Governance Officer, the Institute of Corporate Directors (ICD) and the Ethics and Compliance Officers Association (ECOA). These institutions regularly meet to discuss current best practices and conduct seminars on developments in Corporate Governance. In addition, the committee supported the Corporation’s employees in attending various seminars on governance throughout the year in order to expand their knowledge of past misdeeds and potential pitfalls in order to better prepare for any eventuality. Through these efforts, the Corporation received the following awards:

1. Finance Asia (April 2014) – 10th Best Managed Companies in the Philippines, 6th Best in Corporate Governance and 3rd Best in Investor Relations

2. IR Magazine (December 2013) - 2nd Place for Grand Prix for Best Overall Investor Relations – Small or Mid-cap; 2nd Place for Best Investor Relations by a Philippine Company; 2nd Place for Best Investor Relations by a CFO; 3rd Place for Best Investor Relations for Diversified Industrials / Conglomerates

3. The Asset (November 2013) – Gold Award for Excellence in Management and

Company’s compliance to the regulatory requirements on Corporate Governance.

Continuous support, membership, and participation to various CG groups.

88

Corporate Governance

4. Institutional Investor (July 2013) - All Asia Executive Team: Conglomerates Sector 1st place for Best CFO

5. Corporate Governance Asia (December 2012) – Asia’s Best CEO; Asia’s Best CFO; and Best Investor Relations Website

6. Institutional Investor (June 2012) – All Asia Executive Team; Conglomerates Sector

1st place for Best CFO and IR Professional; 2nd place for Best Investor Relations 7. Asia Money (January 2012) - #1 for Investor Relations in the Philippines and #2 for

disclosure and transparency in the Philippines 8.

3.

9. COMMITTEE PROGRAM

Provide a list of programs that each committee plans to undertake to address relevant issues in the improvement or enforcement of effective governance for the coming year.

Name of Committee Planned Programs Issues to be Addressed

Executive Not Applicable Not Applicable

Audit

Review and approval of all audit and review services provided by the external auditor to MPIC, and the related fees for such services;

Discussion with the external auditor the matters required to be discussed by the prevailing applicable Auditing Standard,

Reviewed the audited financial statements of MPIC Group

All audit and review services provided by the external auditor and related fees;

Matters required to be discussed on applicable Auditing Standard; and

Review of the audited financial statements of MPIC Group as of and for the year.

Internal udit plan for the year normally covering the following: o Preparation and approval of internal audit manual o Includes review of policies and procedures, validation/test for compliance and

critical risks identification o Business planning and consolidation process o Identification of coordination activities with Internal Auditors of various

subsidiaries and affiliates

Nomination Vetting and recommending members for

nomination to the Board of Directors, including Promulgate the guidelines or criteria to govern the conduct of the nomination for

directors;

89

membership in the various Board Committees. Pre-screen the qualifications and prepare a final list of all candidates and put in place screening policies and parameters to enable it to effectively review the qualifications of the nominees for directors;

Prepare a Final List of Candidates which shall contain all the information about all the nominees for directors; and

Recommend members for nomination to the Board, including membership in the various Board Committees.

Compensation

Oversee compensation and bonus of senior executives and overall compensation framework for all employees.

Ensure bonus targets are set aggressively and management is motivated for the long term.

Oversee compensation and bonus of senior executives and overall compensation framework for all employees.

Governance

Development of related Corporate Governance Policies and Board Committee Charters.

Continuous review and monitoring of the Corporation’s Corporate Governance Scorecard.

Oversee compliance to regulatory requirements on Corporate Governance.

Development of supporting Corporate Governance Policies.

Development/Review of Board Committee Charters.

Assessment of the Corporation’s Corporate Governance Scorecard.

Compliance to regulatory requirements on Corporate Governance such as (1) the Annual Corporate Governance Report (ACGR); (2) PSE Guidebook Compliance; (3) ASEAN Corporate Governance Scorecard; (4) the Certificate of Compliance to SEC’s Revised Manual of Corporate Governance; and SEC/PSE Regulator Disclosures.

F. RISK MANAGEMENT SYSTEM

1. STATEMENT ON EFFECTIVENESS OF RISK MANAGEMENT SYSTEM

Disclose the following: (a) Overall risk management philosophy of the company; As an investment and management company, Metro Pacific Investments Corporation (MPIC) undertakes risk management at a number of distinct levels: 1. On entering new investments

2. On- going management of the financial stability of the holding company itself; and

3. Within the operating company investments.

(b) A statement that the directors have reviewed the effectiveness of the risk management system and commenting on the adequacy thereof; As disclosed in the Corporation’s Annual Report, the Board reviews the Risk profile of the Company as well as its portfolio investments. The Corporation made the process more robust by incorporating the review process under the aegis of the renamed Audit and Risk Management Committee. In addition, the Corporation has bolstered its internal audit function with the ratification of an Internal Audit Charter that institutionalizes the guidelines for the internal audit function.

90

The Board’s Audit and Risk Management Committee has established the policies and procedures surrounding risk management and is overseeing its successful implementation via oversight of the Chief Risk Officer. The risks reviewed are those associated with entering new investments; ongoing management of the financial stability of the holding company itself; and those within the operating company investments.

(c) Period covered by the review; The period covered by the review is year 2013. (d) How often the risk management system is reviewed and the directors’ criteria for assessing its effectiveness; and The risk management system is reviewed annually.

(e) Where no review was conducted during the year, an explanation why not. Not Applicable.

2. RISK POLICY

(a) Company Give a general description of the company’s risk management policy, setting out and assessing the risk/s covered by the system (ranked according to priority), along with the objective behind the policy for each kind of risk: The Corporation’s Risk Management Policy contains the following provisions:

Risk Exposure Risk Management Policy Objective

On Entering New Investments

MPIC’s geographic focus is predominantly the Philippines within which its management team has extensive experience. Prior to making a new investment, any business to be acquired is subject to an extensive due diligence including financial, operational, regulatory and risk management. Risks to investment returns are then calibrated and specific measures to manage these risks are determined. The Company is highly selective in the investment opportunities it examines. Due diligence is conducted on a phased basis to minimize costs of evaluating opportunities that may ultimately not be pursued. MPIC’s investments involve - to varying degrees - a partnership approach with MPIC taking a controlling position and key operating partners providing operational and technological input and thereby mitigating risks associated with investing in new business areas.

91

These partners are equity partners - and having co-invested with the Company in a particular opportunity, they will participate in the risks and rewards of the business alongside MPIC. Financing of new investments is through a combination of debt and/or equity by reference to the underlying strength of the cashflow of the target business and the overall financing position of MPIC itself.

On Ongoing Management of the Financial Stability of the Holding Company

MPIC does not guarantee the borrowings of its investee companies and there are no cross default provisions from one investee company to another. Financial stability of the holding company is managed by reference to the ability of the investee companies to remit dividends to MPIC to cover operating costs and service borrowings. We avoid currency and investment cycle mismatches by borrowing only in Pesos using primarily long term instruments with fixed rates. The Company sets the level of debt on its own balance sheet so as to withstand variability of dividend receipts from its operating companies associated with regulatory and other risks described below.

Risk Management within the Operating Companies

Operational risks Each of the operating companies has a full management team which is responsible for having their own plan to manage risk which is reviewed annually by the MPIC Audit and Risk Committee, together with MPIC’s designated Chief Risk Officer, and each of the respective operating companies’ board of directors. Regulatory The majority of our invested capital is deployed into businesses which are directly regulated by arms of the state: electricity distribution; water supply and distribution along with sewage treatment; and tollroads. Each of these businesses has concession and / or franchise agreements which involve a degree of operating performance obligation in order to retain our rights and earn our expected returns. In some cases, these agreements provide for retrospective assessment of the extent of our overall operational and financial performance sometimes over a period of years. Risks arising from these types of businesses include the potential for differences with regulators involving interpretation of the relevant concessions – either during the period in question or in retrospect. To manage these risks, the investee companies have established dedicated regulatory management groups with experienced personnel. Their duty is to manage the relationship with regulators, keep management up-to-date on the status of the relationship and ensure companies are well prepared for any forthcoming regulatory changes or challenges. Competition and Market Competitive and market-driven demand risks are most pronounced in Meralco, MPTC and the Healthcare group. Meralco carries a degree of market risk and its returns may be impacted by consumers who elect to self-generate and disconnect from the distribution grid. We are mitigating that risk by improving efficiencies to the point that makes it uneconomic to self-generate. With the move to Open Access from June 2013, Meralco will take on new risks associated with buying and selling power on its own

92

account instead of on a pass through basis. Meralco has long prepared for this and has an experienced management team already in place to lead this new business. Meralco is now also invested in power generation with attendant demand volume and price risks and fuel source price and supply risks. The primary mitigants are contracting to match demand and supply side volumes where possible and employing highly experienced power market professionals to manage any open positions by trading in the market. At MPTC we set tariffs on new road projects based on traffic projections agreed with the regulator. Rising fuel prices, alternative means of transport and existing or prospective alternative routes are all factors that can affect the number of vehicles that use our roads. We alleviate this risk by choosing our projects carefully. Existing high traffic density, difficulty in securing competing routes, a high potential for growth given demographic changes and conservative growth estimates, even with the prior factors included in the assessment, are the important variables we consider when committing to traffic projections with the regulator. For the Hospitals group, investment is taking place to enable more qualified personnel to better serve patients more efficiently and effectively in upgraded facilities and with better equipment. The primary risk is that investment runs ahead of demand and patient ability to pay. Additionally, there are other operators in the market that offer competitive and complementary services. We mitigate that risk by ensuring we know our target market very well and scale our improvements to their ability to pay. The pace of medical innovation is accelerating requiring increased management of the risk that expensive equipment may become out of date before its cost is fully recovered and traditional healthcare delivery models may be disrupted..

The water company has some supply side risk in that: (i) it secures most of its supply from a single source – the Angat dam; and (ii) this water source is shared by another water concessionaire, a hydroelectric plant, and the needs of farmers for irrigation. A water usage protocol is in place to ensure all users receive water as expected within the constraints of available supply. Following significant water supply disruption in late 2009 arising indirectly from typhoons, the business entered 2010 with less water supply available than allowed for in its concession. We have worked to moderate our reliance on Angat by developing the Putatan Water Treatment Plant and are working on other alternative water sources in partnership with our regulator. However, our regulator does not now wish us to invest further in alternative water sources and this means the logical way to mitigate our supply side risk is now largely prohibited to us. Financial MPIC’s investee companies’ financial risks are primarily: interest rate risk, foreign currency risk, liquidity risk, credit risk and equity price risk. The Board of Directors of each company reviews and approves policies for managing each of these risks as follows.

Interest Rate Risk Interest rate exposure is managed by using a mix of fixed and variable rate debt.

Foreign Currency Risk

93

In general the investee companies will place some degree of reliance on their regulated return mechanisms to pass through foreign currency risk. The current liquidity and depth of the Philippine credit market is such that there should be little need for raising new borrowings in foreign currency. Maynilad has some foreign currency borrowing but there is a mechanism in place wherein it can recover currency fluctuations as approved by its Regulator. Asian Hospital Inc. (AHI) has foreign currency risk arising from its cash and cash equivalents; receivables from international insurance companies; and dollar loans. AHI is unable to take on any derivative transaction to hedge these exposures since its loan covenants do not allow it. AHI regularly reviews and manages its ability to generate dollar-based revenue from its foreign patients to mitigate this risk.

Liquidity Risk Each business monitors its cash position using a cash forecasting system wherein all expected collections, check disbursements and other payments are determined to arrive at the projected cash position to cover its obligations.

Credit Risk Credit risk is managed by setting limits on the amount of risk a business is willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

Equity Price Risk Our investee companies are generally not faced with equity price risk beyond that normal for any listed company, where relevant. MPIC’s investment in Meralco, through Beacon Electric, is partly financed by borrowings which require a certain security cover based on the price of Meralco’s shares on the PSE on a volume weighted 30 trading day average calculation. Meralco’s share price would have to decline by 60.8% from its price as at 31st December 2012 before Beacon Electric would be required to top-up collateral with cash or pay-down debt.

(b) Group Give a general description of the Group’s risk management policy, setting out and assessing the risk/s covered by the system (ranked according to priority), along with the objective behind the policy for each kind of risk: As an investment and management holding Company, the Group’s Risk Management Policy contains the following provisions:

Risk Exposure Risk Management Policy Objective

Risk Operational risks

94

Management within the Operating Companies

Each of the operating companies has a full management team which is responsible for having their own plan to manage risk which is reviewed annually by the MPIC Audit and Risk Committee, together with MPIC’s designated Chief Risk Officer, and each of the respective operating companies’ board of directors. Regulatory The majority of our invested capital is deployed into businesses which are directly regulated by arms of the state: electricity distribution; water supply and distribution along with sewage treatment; and tollroads. Each of these businesses has concession and / or franchise agreements which involve a degree of operating performance obligation in order to retain our rights and earn our expected returns. In some cases, these agreements provide for retrospective assessment of the extent of our overall operational and financial performance sometimes over a period of years. Risks arising from these types of businesses include the potential for differences with regulators involving interpretation of the relevant concessions – either during the period in question or in retrospect. To manage these risks, the investee companies have established dedicated regulatory management groups with experienced personnel. Their duty is to manage the relationship with regulators, keep management up-to-date on the status of the relationship and ensure companies are well prepared for any forthcoming regulatory changes or challenges. Competition and Market Competitive and market-driven demand risks are most pronounced in Meralco, MPTC and the Healthcare group. Meralco carries a degree of market risk and its returns may be impacted by consumers who elect to self-generate and disconnect from the distribution grid. We are mitigating that risk by improving efficiencies to the point that makes it uneconomic to self-generate. With the move to Open Access from June 2013, Meralco will take on new risks associated with buying and selling power on its own account instead of on a pass through basis. Meralco has long prepared for this and has an experienced management team already in place to lead this new business. Meralco is now also invested in power generation with attendant demand volume and price risks and fuel source price and supply risks. The primary mitigants are contracting to match demand and supply side volumes where possible and employing higly experienced power market professionals to manage any open positions by trading in the market. At MPTC we set tariffs on new road projects based on traffic projections agreed with the regulator. Rising fuel prices, alternative means of transport and existing or prospective alternative routes are all factors that can affect the number of vehicles that use our roads. We alleviate this risk by choosing our projects carefully. Existing high traffic density, difficulty in securing competing routes, a high potential for growth given demographic changes and conservative growth estimates, even with the prior factors included in the assessment, are the important variables we consider when committing to traffic projections with the regulator. For the Hospitals group, investment is taking place to enable more qualified personnel to better serve patients more efficiently and effectively in upgraded facilities and with better equipment. The primary risk is that investment runs ahead of demand and patient ability

95

to pay. Additionally, there are other operators in the market that offer competitive and complementary services. We mitigate that risk by ensuring we know our target market very well and scale our improvements to their ability to pay. The pace of medical innovation is accelerating requiring increased management of the risk that expensive equipment may become out of date before its cost is fully recovered and traditional healthcare delivery models may be disrupted..

The water company has some supply side risk in that: (i) it secures most of its supply from a single source – the Angat dam; and (ii) this water source is shared by another water concessionaire, a hydroelectric plant, and the needs of farmers for irrigation. A water usage protocol is in place to ensure all users receive water as expected within the constraints of available supply. Following significant water supply disruption in late 2009 arising indirectly from typhoons, the business entered 2010 with less water supply available than allowed for in its concession. We have worked to moderate our reliance on Angat by developing the Putatan Water Treatment Plant and are working on other alternative water sources in partnership with our regulator. However, our regulator does not now wish us to invest further in alternative water sources and this means the logical way to mitigate our supply side risk is now largely prohibited to us. Financial MPIC’s investee companies’ financial risks are primarily: interest rate risk, foreign currency risk, liquidity risk, credit risk and equity price risk. The Board of Directors of each company reviews and approves policies for managing each of these risks as follows.

Interest Rate Risk Interest rate exposure is managed by using a mix of fixed and variable rate debt.

Foreign Currency Risk In general the investee companies will place some degree of reliance on their regulated return mechanisms to pass through foreign currency risk. The current liquidity and depth of the Philippine credit market is such that there should be little need for raising new borrowings in foreign currency. Maynilad has some foreign currency borrowing but there is a mechanism in place wherein it can recover currency fluctuations as approved by its Regulator. Asian Hospital Inc. (AHI) has foreign currency risk arising from its cash and cash equivalents; receivables from international insurance companies; and dollar loans. AHI is unable to take on any derivative transaction to hedge these exposures since its loan covenants do not allow it. AHI regularly reviews and manages its ability to generate dollar-based revenue from its foreign patients to mitigate this risk.

Liquidity Risk Each business monitors its cash position using a cash forecasting system wherein all expected collections, check disbursements and other payments are determined to arrive at the projected cash position to cover its obligations.

Credit Risk

96

Credit risk is managed by setting limits on the amount of risk a business is willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

Equity Price Risk Our investee companies are generally not faced with equity price risk beyond that normal for any listed company, where relevant. MPIC’s investment in Meralco, through Beacon Electric, is partly financed by borrowings which require a certain security cover based on the price of Meralco’s shares on the PSE on a volume weighted 30 trading day average calculation. Meralco’s share price would have to decline by 60.8% from its price as at 31st December 2012 before Beacon Electric would be required to top-up collateral with cash or pay-down debt.

(c) Minority Shareholders

Indicate the principal risk of the exercise of controlling shareholders’ voting power.

Risk to Minority Shareholders

Since the inception of the Company, there have been no disputes or disagreements with minority shareholders. No single shareholder was aggrieved and they are given proper opportunities to raise their concerns to the Corporation during the Annual Stockholders’ Meeting. The Corporation gives due diligence in addressing the said concerns of the shareholders. To date, there have been no objections raised in the items discussed during the Annual Stockholders’ Meeting.

3. CONTROL SYSTEM SET UP

(f) Company

Briefly describe the control systems set up to assess, manage and control the main issue/s faced by the company: As disclosed in the Corporation’s Financial Statements, the following are the Corporation’s control system set-up to assess, manage and control the main issues faced by the Corporation:

Risk Exposure Risk Assessment (Monitoring and Measurement Process)

Risk Management and Control (Structures, Procedures, Actions Taken)

Credit Risk Credit risk is the risk that the Corporation will incur a loss arising from customers, clients or counterparties that fail to discharge their contracted obligations.

The Corporation manages and controls credit risk by setting limits on the amount of risk that the Corporation is willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

Liquidity Risk Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities. The Corporation’s objective is to maintain a balance between continuity of funding and flexibility

The Corporation monitors its cash position using a cash forecasting system. All expected collections, check disbursements and other cash payments are determined daily to arrive at the projected cash position to cover its obligations and to ensure that obligations are met as they fall

97

through the use of bank loans and facilities. due. The Corporation monitors its cash flow position, particularly the collections from receivables, receipts of dividends and the funding requirements of operations, to ensure an adequate balance of inflows and outflows. The Corporation also has online facilities with its depository banks wherein bank balances are monitored daily to determine the Corporation’s actual cash balances at any time. The Corporation’s liquidity and funding management process include the following:

Managing the concentration and profile of debt maturities;

Maintaining debt financing plans; and

Monitoring liquidity ratios against internal and regulatory requirements.

Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As at December 31, 2013 and 2012, the Corporation is subject to fair value and cash flow interest rate risks. Fixed rate financial instruments measured at fair value are subject to fair value interest rate risk while floating rate financial instruments are subject to cash flow interest rate risk.

Interest rate exposure is managed by using a mix of fixed and variable rate debt.


Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. As at December 31, 2013 and 2012, the Corporation’s foreign currency risk results primarily from movements of the Philippine Peso against US Dollar, Euro, Japanese Yen and Thailand Baht.

The Corporation’s exposure to foreign currency risk is minimal as nearly all of its transactions are denominated in Philippine Peso.

Capital Management

Capital includes preferred shares and equity attributable to the equity holders of the Corporation. The primary objective of the Corporation’s capital management policies is to ensure that the Corporation maintains a strong statement of financial position and healthy capital ratios in order to support its business and maximize shareholder value. The Corporation ensures that it is compliant with all debt covenants not only at the consolidated level but also at the

The Corporation manages its capital structure and adjust to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Corporation may obtain additional advances from shareholders; return capital to shareholders, issue new shares or issue new debt or redemption of existing debt. No changes were made in the objectives, policies or processes during the recent years. The Corporation monitors capital on the basis of debt-to-equity ratio. Debt-to-equity ratio is calculated as long-term debts over equity.

98

level of the Corporation and each of its subsidiaries.

Detailed descriptions of the financial exposures of these risks are available in the Note 35 of the 2013 Financial Statements.

(g) Group

Briefly describe the control systems set up to assess, manage and control the main issue/s faced by the Company: As disclosed in the Corporation’s Financial Statements, the following are the Corporation’s control system set-up to assess, manage and control the main issues faced by the Group:

Risk Exposure Risk Assessment (Monitoring and Measurement Process)

Risk Management and Control (Structures, Procedures, Actions Taken)

Credit Risk Credit risk is the risk that the Corporation will incur a loss arising from customers, clients or counterparties that fail to discharge their contracted obligations.

The Corporation manages and controls credit risk by setting limits on the amount of risk that the Corporation is willing to accept for individual counterparties and by monitoring exposures in relation to such limits.

Liquidity Risk

Liquidity risk is the risk that the Corporation will encounter difficulty in meeting obligations associated with financial liabilities. The Corporation’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans and facilities.

The Corporation monitors its cash position using a cash forecasting system. All expected collections, check disbursements and other cash payments are determined daily to arrive at the projected cash position to cover its obligations and to ensure that obligations are met as they fall due. The Corporation monitors its cash flow position, particularly the collections from receivables, receipts of dividends and the funding requirements of operations, to ensure an adequate balance of inflows and outflows. The Corporation also has online facilities with its depository banks wherein bank balances are monitored daily to determine the Corporation’s actual cash balances at any time. The Corporation’s liquidity and funding management process include the following:

Managing the concentration and profile of debt maturities;

Maintaining debt financing plans; and

99

Monitoring liquidity ratios against internal and regulatory requirements.

Interest Rate Risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As at December 31, 2012 and 2011, the Corporation is subject to fair value and cash flow interest rate risks. Fixed rate financial instruments measured at fair value are subject to fair value interest rate risk while floating rate financial instruments are subject to cash flow interest rate risk.

Interest rate exposure is managed by using a mix of fixed and variable rate debt


Foreign Currency Risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. As at December 31, 2013 and 2012, the Corporation’s foreign currency risk results primarily from movements of the Philippine Peso against US Dollar, Euro, Japanese Yen and Thailand Baht.

The Group’s exposure to foreign currency risk is minimal as nearly all of its transactions are denominated in Philippine Peso. Maynilad has some foreign currency borrowing but there is a mechanism in place wherein it can recover currency fluctuations as approved by its Regulator. Asian Hospital Inc. (AHI) has foreign currency risk arising from its cash and cash equivalents; receivables from international insurance companies; and dollar loans. AHI is unable to take on any derivative transaction to hedge these exposures since its loan covenants do not allow it. AHI regularly reviews and manages its ability to generate dollar-based revenue from its foreign patients to mitigate this risk.

Capital Management

Capital includes preferred shares and equity attributable to the equity holders of the Corporation. The primary objective of the Corporation’s capital management policies is to ensure that the Corporation maintains a strong statement of financial position and healthy capital ratios in order to support its business and maximize shareholder value. The Corporation ensures that it is compliant with all debt covenants not only at the consolidated level but also at the level of the Corporation and each of its subsidiaries.

The Group manages its capital structure and adjust to it in light of changes in economic conditions. To maintain or adjust the capital structure, the Corporation may obtain additional advances from shareholders; return capital to shareholders, issue new shares or issue new debt or redemption of existing debt. No changes were made in the objectives, policies or processes during the recent years. The Group monitors capital on the basis of debt-to-equity ratio. Debt-to-equity ratio is calculated as long-term debts over equity.

Detailed descriptions of the financial exposures of these risks are available in the Note 35 of the 2013 Financial Statements.

(h) Committee

Identify the committee or any other body of corporate governance in charge of laying down and supervising these control mechanisms, and give details of its functions:

100

Committee/Unit Control Mechanism Details of its Functions

Internal Audit Provision of independent and objective assurance and consulting services based in risk-based audit plans.

Review and evaluation of the effectiveness of risk management, control, and, governance processes.

Risk Management Office

Provision of risk management policies and procedures including the identification, assessment and monitoring of the existence of risks and its impact to the Corporation

Responsible for the identification, assessment and monitoring of the existence of risks and its impact to the Corporation

Corporate Governance Office

Provision of corporate governance policies and procedures for the guidance of the directors, officers, and employees of the Corporation in executing their responsibilities and functions.

Craft and Implement the Corporate Governance Policies of the Corporation, and monitor the compliance of the directors, officers and employees to these policies. Monitor the compliance of the Corporation to the Corporate Governance Scorecard and regulatory requirements on Corporate Governance.

G. INTERNAL AUDIT AND CONTROL

1. STATEMENT ON EFFECTIVENESS OF INTERNAL CONTROL SYSTEM

Disclose the following information pertaining to the internal control system of the company:

i. Explain how the internal control system is defined for the company; The Company’s internal control is a process – effected by the Company’s Board of Directors, Management and other personnel, designed to provide adequate and effective controls to achieve its objectives in the following categories: i. Compliance to Corporate Governance practices;

ii. Set-up of operations and information systems (including the reliability and integrity of financial and operational information); iii. Effectiveness and efficiency of operations; iv. Protection of assets; and v. Compliance to applicable laws and regulations.

ii. A statement that the directors have reviewed the effectiveness of the internal control system and whether they consider them effective and adequate; The Company’s Management is responsible for establishing and maintaining adequate internal controls. The Audit and Risk Management Committee of the Board of Directors conducts regular meetings and assists the Board in fulfilling its oversight responsibilities for the Company’s system of internal controls.

101

iii. Period covered by the review;

The period covered by the review is the year of 2013.

iv. How often internal controls are reviewed and the directors’ criteria for assessing the effectiveness of the internal control system; and

The Company’s internal controls are reviewed annually as shown in the Statement of Management’s Responsibility in the Corporation’s Annual Report which states that: “The Management of Metro Pacific Investments Corporation and Subsidiaries (the Company) is responsible for the preparation and fair presentation of the consolidated financial statements as of and for the three recent years , including the additional components attached therein, in accordance with Philippine Financial Reporting Standards. This responsibility includes designing and implementing internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selecting and applying appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.”

v. Where no review was conducted during the year, an explanation why not. A review was conducted in 2013 .

2. INTERNAL AUDIT

a. ROLE, SCOPE AND INTERNAL AUDIT FUNCTION

Give a general description of the role, scope of internal audit work and other details of the internal audit function. The following are the roles of the Internal Audit as defined in the Internal Audit Charter of the Corporation.

Role Scope Indicate whether In-house or

Outsource Internal Audit Function

Name of Chief Internal Auditor/Auditing Firm

Reporting process

To determine whether MPIC’s structure of risk management, control and governance processes, as designed and represented by Management, is adequate and functioning effectively.

The mission of Internal Audit, as defined in its charter, is to provide an independent and objective assurance and consulting services designed to add value and improve MPIC’s operations. It was also established to help MPIC accomplish its objectives by bringing a systematic and disciplined approach to evaluate and improve the effectiveness of risk management, control and governance processes.

Outsource

Michael C, Gallego, Partner-in-charge, Punongbayan and Araullo

Functionally to the Audit and Risk Management Committee; Administratively to the President and CEO.

102

b. APPOINTMENT/REMOVAL OF INTERNAL AUDITOR

Do the appointment and/or removal of the Internal Auditor or the accounting /auditing firm or corporation to which the internal audit function is outsourced require the approval of the audit committee? Part of the duties and responsibilities of the Audit and Risk Management Committee, as stated in Section 4.3 of the Committee Charter, is the “review of the appointment and replacement of the Internal Auditor”.

c. REPORTING RELATIONSHIP WITH THE AUDIT COMMITTEE Discuss the internal auditor’s reporting relationship with the audit committee. Does the internal auditor have direct and unfettered access to the board of directors and the audit committee and to all records, properties and personnel? The Internal Auditor functionally reports to the Audit and Risk Management Committee. Regular meetings are conducted with the ARMC to surface issues warranting the attention of the Committee. The ARMC regularly reports to the Board of Directors of MPIC. The Internal Audit Charter authorizes the Internal Auditor to: i. Unrestricted access to all functions, records, property, and personnel;

ii. Full and free access to the ARMC; iii. Allocate resources, set frequencies, select subjects, determine scopes of work, and apply the techniques required to accomplish its audit objectives; and iv. Obtain the necessary assistance of personnel in the units of the organization where they perform audits, as well as other specialized services from within or

outside the organization.

d. RESIGNATION, RE-ASSIGNMENT AND REASONS

Disclose any resignation/s or re-assignment of the internal audit staff (including those employed by the third-party auditing firm) and the reason/s for them. In 2013, the Internal Audit function was outsourced to Punongbayan and Araullo.

Name of Audit Staff Reason

Ms. Cora Raquedan She decided to focus on

tollroads.

e. PROGRESS AGAINST PLANS, ISSUES, FINDINGS AND EXAMINATION TRENDS

State the internal audit’s progress against plans, significant issues, significant findings and examination trends.

103

Progress Against Plans Review of internal operations’ policies and procedures (Status: On-going)

Internal Audit Manual (Status: Completed)

Issues6 There are no significant issues based on the results of the reviews.

Findings7 There are no significant findings based on the results of the reviews.

Examination Trends Policies and procedures require updating to include automated processes.

The relationship among progress, plans, issues and findings should be viewed as an internal control review cycle which involves the following step-by-step activities:

1) Preparation of an audit plan inclusive of a timeline and milestones; 2) Conduct of examination based on the plan; 3) Evaluation of the progress in the implementation of the plan; 4) Documentation of issues and findings as a result of the examination; 5) Determination of the pervasive issues and findings (“examination trends”) based on single year result and/or year-to-year results; 6) Conduct of the foregoing procedures on a regular basis.

f. AUDIT CONTROL POLICIES AND PROCEDURES

Disclose all internal audit controls, policies and procedures that have been established by the company and the result of an assessment as to whether the established controls, policies and procedures have been implemented under the column “Implementation.” The Internal Audit Manual, which contains the Audit Control Policies and Procedures, was completed and approved by the ARMC and is now being implemented by the Company. The said Manual covers the following:

Policies & Procedures Implementation

Audit Planning and Risk Assessment Methodology Implemented

Audit Reporting Guidelines Implemented

Audit Field Work and Working Paper Guidelines Implemented

Audit Follow-Up Guidelines Implemented

Quality Assurance and Improvement Program Implemented

g. MECHANISM AND SAFEGUARDS

i. State the mechanism established by the company to safeguard the independence of the auditors, financial analysts, investment banks and rating agencies (example, restrictions on trading in the company’s shares and imposition of internal approval procedures for these transactions, limitation on the non-audit services that an external auditor may provide to the company):

6 “Issues” are compliance matters that arise from adopting different interpretations.

7 “Findings” are those with concrete basis under the company’s policies and rules.

104

Auditors (Internal and External)

Financial Analysts Investment Banks Rating Agencies

The Internal Audit Code of Ethics is embodied in the Internal Audit Manual which is based on the International Standards for Professional Practice of Internal Auditing. The Internal Auditor is expected to abide by it and to uphold its principles. The appointment of the Internal Auditor underwent a rigorous scrutiny by the ARMC and the Board of Directors to ensure her independence and professional qualifications for the position. The internal auditor follows the Corporation’s Coe of Business Conduct which states that: Code of Business Conduct and Ethics Part C. Confidentiality of Information and Proper Use of Property 2. Maintain and safeguard the

confidentiality of information entrusted by MPIC, its subsidiaries, affiliates, customers, business partners, or such other parties with whom MPIC relates, except when disclosure is authorized or legally mandated. Confidential information includes any non-public information that might be of use to competitors, or harmful to MPIC, its subsidiaries, affiliates, customers, business partners, or such other parties with whom MPIC relates, if disclosed.

Financial Analysts are considered public entities and therefore the PSE Disclosure Rules to protect public interest is being followed. Information received by investors, analysts and media, during briefings are information which were disclosed publicly through the PSE and the Corporation’s website. The Corporation adheres to the objectives of the PSE to provide a fair, orderly, efficient, and transparent market for the trading of securities and to determine the suitability of securities for listing for the protection of the public interest at all times.

Investment Banks are considered public entities and therefore the PSE Disclosure Rules to protect public interest is being followed. Information received by investors, analysts and media, during briefings are information which were disclosed publicly through the PSE and the Corporation’s website. The Corporation adheres to the objectives of the PSE to provide a fair, orderly, efficient, and transparent market for the trading of securities and to determine the suitability of securities for listing for the protection of the public interest at all times.

Rating Agencies are considered public entities and therefore the PSE Disclosure Rules to protect public interest is being followed. Information received by investors, analysts and media, during briefings are information which were disclosed publicly through the PSE and the Corporation’s website. The Corporation adheres to the objectives of the PSE to provide a fair, orderly, efficient, and transparent market for the trading of securities and to determine the suitability of securities for listing for the protection of the public interest at all times.

105

Avoid trading any of MPIC’s securities or those of its subsidiaries and affiliates using price sensitive information that is not normally available publicly, and obtained by reason of position, contact within, or other relationship with MPIC.”

ii. State the officers (preferably the Chairman and the CEO) who will have to attest to the company’s full compliance with the SEC Code of Corporate Governance.

Such confirmation must state that all directors, officers and employees of the company have been given proper instruction on their respective duties as mandated by the Code and that internal mechanisms are in place to ensure that compliance.

The Company’s Compliance Officer, as witnessed and countersigned by the President and CEO, attested that, in 2013, the Company fully complied with the SEC Code of Corporate Governance and its own Revised Manual of Corporate Governance.

H. ROLE OF STAKEHOLDERS

1. Disclose the company’s policy and activities relative to the following:

Policy Activities

Customers' welfare

Code of Business Conduct and Ethics Part B. Competition and Fair Dealing “ 1. Avoid taking unfair advantage of anyone through manipulation,

concealment, abuse of privileged information, misrepresentation of material facts, or any unfair dealing practice.

2. Deal fairly with MPIC’s customers, service providers, suppliers,

competitors and employees.”

The Corporation’s customers are investors and analyst. The Company provides timely and accurate information to its customers through investors/analysts/media briefing. They are encouraged to attend: · Attendance in IR Conferences · Quarterly Financial Results Briefing · Annual Stockholders’ Meeting

In communicating with our investors, we try to be as clear as possible about our strategy, growth catalysts and potential risks. We work towards providing investors and analysts the information they need to build as complete a picture of our business and prospects as possible through this website, our Annual Report, quarterly presentation of results and investor presentations.

106

The challenge rests in determining the level of disclosure - sufficient to show where we want to go but not enough to allow competitors to anticipate and block our steps to get there. Ours is a complex story - we are looking to add to four business lines which on their own have varying degrees of ownership, government oversight and public interest. It takes time and sometimes multiple meetings to tell the story, get it understood and acted upon - either through a research report or an actual investment. That is why we have an active travel schedule. We are cognizant of our own story's complexity and take that into account when determining how much time we spend on the road talking to investors. It is also why we are always available to analysts and sales people of stockbrokers. They expand our reach and make us more efficient - a well conveyed message to a research analyst can be re-told multiple times to investors that we may otherwise not have access to. Our goal for is to have the stock price reflect the future we see for our company.

Supplier/contractor selection practice

Code of Business Conduct and Ethics Part B.2 Competition and Fair Dealing “Deal fairly with MPIC’s customers, service providers, suppliers, competitors and employees.”

Code of Business Conduct and Ethics Part B.2 Competition and Fair Dealing “Deal fairly with MPIC’s customers, service providers, suppliers, competitors and employees.”

Corporation’s Statement on the ROLE OF BUSINESS PARTNERS As an investment and management company, some of the primary tools used by the organization to achieve its goals are funding and financial oversight of its investee companies. It is of vital importance that funding be provided by stable financial institutions that can support their commitments. As such, included among the company's business partners are financial institutions that either extend credit or arrange financing for companies within its sphere of influence. MPIC needs to ensure that the financial statements of each and every company are accurate and reliable. Given that, a strong and independent auditing firm is critical to providing us with an accurate picture of the state of our investments.

MPIC select materials and services that consider the environmental, social, and economic impact in evaluating total cost. It is building relationships with suppliers who operate with the highest ethical and financial standards and comply with all relevant laws and regulations. MPIC communicates its expectations to its suppliers of its commitment to sustainability, assesses its suppliers and monitors their improvement and compliance with the sustainability goals.

107

To continually be at the forefront as the leading infrastructure investment firm in the Philippines, we seek out and adopt best practices and technologies that are applicable to our businesses. We form joint-ventures for this purpose. We view their roles as providing significant technical and/or financial support in each venture we partner with them. To consistently uphold the values central to MPIC's corporate governance policies, financial discipline and accountability as well as integrity and transparency are expected from all suppliers and business partners. MPIC's suppliers and contractors play an essential role in achieving its sustainability goals. MPIC select materials and services that consider the environmental, social, and economic impact in evaluating total cost. It is building relationships with suppliers who operate with the highest ethical and financial standards and comply with all relevant laws and regulations. MPIC communicates its expectations to its suppliers of its commitment to sustainability, assesses its suppliers and monitors their improvement and compliance with the sustainability goals.

Environmentally friendly value-chain

The E's of MPI Foundation's Strategic Thrust : Excellent Education, Environmental Awareness and Economic Empowerment MPI Foundation's (MPIF) strategic program has evolved throughout its five years of existence and is now geared towards three fronts of Social Infrastructure: Education, Environment and Economic Empowerment. In line with Metro Pacific Investments Corporation's (MPIC) commitment to nation-building, MPI Foundation seeks to complement MPIC's efforts on the hard front of infrastructure development. MPIF is committed to implementing all its program - especially to benefit communities, organizations, families and individuals in the areas in which MPIC portfolio companies operate. As MPIC continues to grow and expand, so will MPIF's involvement and participation in noteworthy and transformative corporate social responsibility initiatives continue to evolve. MPIC's portfolio companies, most of which are in regulated industries, are constantly confronted with various environmental issues. The Company, it Foundation, and its portfolio companies established its own environment protection policies and programs to address related key environmental

The Company, its Foundation, and its portfolio companies have the following activities in keeping its value chain environment-friendly. METRO PACIFIC INVESTMENTS CORPORATION The Company engages itself to environmental awareness campaigns such as “SHORE IT UP”. The ‘Shore It Up!’ campaign is an effort towards sustainable development, preservation and conservation of our marine resources. As a yearly program of the Foundation, it also aims to help reduce destructive floods caused by environmental neglect by both businesses and communities. MAYNILAD ENVIRONMENT AND HEALTH AWARENESS Maynilad’s primary thrusts were in the areas of education and environment, using what it came to call as “Daloy Dunong” as its main vehicle, even as it empowered customers by making its business services more accessible through “Maynilad sa Kommunidad”.

108

concerns.

• Water Warriors – The Daloy Dunong program also encourages students to become “Water Warriors” for their respective communities—advocates who promote the importance of clean and safe water to health and the environment. • Global Handwashing Day – Since its soft launch in 15 October 2012 to coincide with the 5th Global Handwashing Day, Maynilad’s Daloy Dunong program has benefited over 10,000 students from 40 public schools in 2012. METRO PACIFIC TOLLWAYS CORPORATION ENVIRONMENT CLEAN-UPS AND GREENING • Tullahan River Clean-up Drive – A program that aims at “Cleaning It Up, Keeping It Clean” the 1-kilometer stretch of the Tullahan River in Quezon City, Valenzuela City and Caloocan City. • Greening the NLEX Belt – MPTC has began to plant ornamental, shade, and fruit trees along the entire stretch of NLEX and SCTEX, thus turning it into a long green belt.

Community interaction

Metro Pacific Investments Corporation (MPIC) through its Foundation remains committed to upholding its 3-pronged approach in the areas of Education, Empowerment and the Environment. The Company provides targeted programs in order to create greater impact and make a difference in the lives of chosen beneficiaries. Such programs include:

Quality Education through Mano Amiga

Empowering People through Manpower for Infrastructure Cooperative

Environmental Awareness through Shore It Up

Special Outreach Activities

Metro Pacific Foundation has the following programs and initiatives: QUALITY EDUCATION THROUGH MANO AMIGA Mano Amiga is a school that provides children from low-income families access to quality education, holistic formation, and other necessary support for them to have a better life. It follows the Kindergarten to 12th Grade model and uses the Integral Formation Program which focuses on the harmonious development of all dimensions of the human person: intellectual, character, spiritual and apostolic formation. EMPOWERING PEOPLE THROUGH MANPOWER FOR INFRASTRUCTURE COOPERATIVE In February 2012, MPIC launched the ManPower for Infrastructure Cooperative Development (MPIC) project - a sustainable Livelihood and Enterprise Development program for 25 urban poor households of Ana Maria Heights, Barangay Calamansian, Caloocan City. In cooperation with the Philippine Business for Social Progress of which MPIC is a member company, the community-based cooperative project embarks on raising the quality of labor skills of its members for possible employment within MPIC’s business portfolio.

109

ENVIRONMENTAL AWARENESS THROUGH SHORE IT UP The ‘Shore It Up!’ campaign is an effort towards sustainable development, preservation and conservation of our marine resources. As a yearly program of the Foundation, it also aims to help reduce destructive floods caused by environmental neglect by both businesses and communities. SPECIAL OUTREACH ACTIVITIES: FAITH, HOPE AND LOVE Started in 2004, the Faith, Hope & Love Kid’s Ranch Inc. was established by the Lamar family to give abandoned, abused, neglected and orphaned children a second chance at life. Currently, the facility has about 40 children under its care and is registered with the Department of Social Welfare and Development. “TULONG KAPATID”: ALIGNING PROGRAMS AND WORKING TOGETHER TO IMPROVE LIVES AND BENEFIT COMMUNITIES The CSR Council composed of foundations and CSR departments in the MVP Group of companies formed “Tulong Kapatid” (Brotherly Help) to collaborate in common activities relating to environmental programs, tree planting, coastal clean-ups, blood banks, medical missions and disaster preparedness and responsiveness. Recent efforts of Tulong Kapatid provided coordination for medical assistance and service restoration in telecommunications, electricity and water. Prompted by one text message and organized in 24 hours, the “Tulong Kapatid” MVP Telethon in December 2012 raised over ₱100 million for victims of typhoon Pablo in just six hours.

110

Anti-corruption programmes and procedures

Code of Business Conduct and Ethics Part A.3 Compliance “Avoid the direct or indirect commission of bribery and corruption of representatives of governments or regulators to facilitate any transaction or gain any perceived or actual favor or advantage, excluding permissible additional payments for routine governmental actions allowed by all applicable laws and regulations.”

The Company established a Whistleblowing Policy is to increase the awareness of maintaining internal corporate justice and regard it as a kind of internal control mechanism. It provides the employees of the Company with reporting channels and guidance on whistleblowing. Continuous monitoring of the implementation of the Company’s Whistleblowing policy is assured through the Corporate Governance Committee of the Board.

MPIC’s Whistleblowing Policy This Policy is intended to assist individual employees (permanent or temporary employees) to disclose information relevant to suspected misconduct, malpractice or irregularity through a confidential reporting channel. It is not designed to further any personal disputes, question financial or business decisions taken by the Corporation nor should it be used to reconsider any staff matters which have been addressed under the grievance procedure already in place.

Whistleblowing matters may include but are not confined to: 1. Malpractice, impropriety or fraud relating to internal controls, accounting,

auditing and financial matters; 2. Violation of the rules and regulations of the Corporation or the Code of

Business Conduct and Ethics of the Corporation 3. Improper conduct or unethical behavior likely to prejudice the standing of

the Corporation 4. Breach of legal or regulatory requirements 5. Criminal offences, breach of civil law and miscarriage of justice 6. Endangerment of the health and safety of an individual 7. Damage caused to the environment 8. Deliberate concealment of any of the above.

Safeguarding creditors' rights

The primary objective of the Corporation’s capital management policies is to ensure that the Corporation maintains a strong statement of financial position and healthy capital ratios in order to support its business and maximize shareholder value. The Corporation ensures that it is compliant with all debt covenants not only at the consolidated level but also at the level

The primary objective of the Corporation’s capital management policies is to ensure that the Corporation maintains a strong statement of financial position and healthy capital ratios in order to support its business and maximize shareholder value. The Corporation ensures that it is compliant with all debt covenants not only at the consolidated level but also at the

111

of Parent Company and each of its subsidiaries. The Corporation complies with these debt covenants as part of maintaining a strong credit rating with its creditors.

level of Parent Company and each of its subsidiaries. The Corporation complies with these debt covenants as part of maintaining a strong credit rating with its creditors.

2. Does the company have a separate corporate responsibility (CR) report/section or sustainability report/section? The Company has a separate Corporate Responsibility Report (CSR) section in its Annual Report (printed and downloadable) and can also be viewed in its website.

3. Performance-Enhancing Mechanisms For Employee Participation

(a) What are the company’s policy for its employees’ safety, health, and welfare? The following are the Corporation’s policies covering its employees’ safety, health and welfare: Training and Development Program “MPIC offers its employees many opportunities to further their career not only within the company, but within the group of companies. Our cross posting opportunity spans across several industries, such as Health Care, Utilities (Water, Electricity & Communications), Road and other Infrastructure Industries all throughout the archipelago including possible assignment in our Hong Kong Office. We want to attract and retain the best talent within and outside of our industry over the long term. MPIC firmly believes that it has an obligation to offer its employees ample training and development opportunities. We maximize our resources where we share training courses and facilities across MPIC Group of Companies including that of our sister company PLDT. It is through this that our employee can avail of a wide array of training and development programs.” Benefits and Incentives “It is our belief that employees drive our success and our future, it is in these that we create a core welfare program which express our respect for human rights, character and individuality. We have an aggressive rewards and compensation program that is centered towards distinct performance recognition and market competitiveness. In our further response to the welfare of our employees, we likewise acknowledge the need to care for employee's family members, where most of our benefit programs and company activities cover and/or consider the welfare of members of the family. As an employee, we promise that you will have access to a wide range of rewards and compensation, such as:

Competitive Compensation

Performance Based Rewards

Exclusive Medical Coverage

Communication Allowance

112

Travel Subsidy & Allowance

Gym Memberships

Personal Loans

Savings Programs

Participative Pension Scheme”

(b) Show data relating to health, safety and welfare of its employees. Part of the Corporation’s benefit is the exclusive medical coverage for its employees. Every year, employees are required to have their annual physical examinations in order to monitor their health and wellness. The following are the employee engagement on the various health programs facilitated by the Corporation in 2013:

64% of the employees has undergone the required annual physical examination;

74% of employees availed the Flu vaccination;

57% of employees enrolled in sponsored gym classes; and

No employee was hospitalized due to work-related safety/health concerns.

(c) State the company’s training and development programmes for its employees. Show the data. The Corporation conducted eight training programs that are open for all its employees in 2012. The various training programs, with an average availment rate of 11 employees per training program, may be summarized in the following categories: 1. Personal, Professional, and Values Development Trainings

a. Business Presentation (Next Step Training and Consulting) b. Business Writing (Next Step Training and Consulting) c. Seven Habits for Highly Effective People (Robin Velasco, Certified Trainer; CLCI, External Counterpart) d. Managerial Coaching (Ancilla)

2. Investments-Related Trainings 3. Computer Based Technical Trainings

a. MS Excel Workshop (DB Wizards)

(d) State the company’s reward/compensation policy that accounts for the performance of the company beyond short-term financial measures The Corporation has established a Long Term Incentive Plan (LTIP) aimed at providing a competitive level of financial incentives for eligible employees to encourage them to achieve performance targets consistent. The amount of LTIP is fixed upon achievement of the target Core Income and is not affected by changes in future salaries of the employees covered.

(e) What are the company’s procedures for handling complaints by employees concerning illegal (including corruption) and unethica l behaviour? Explain how employees are protected from retaliation.

113

The Corporation established a Whistleblowing Policy which is intended to assist individual employees (permanent or temporary employees) to disclose information relevant to suspected misconduct, malpractice or irregularity through a confidential reporting channel. It is not designed to further any personal disputes, question financial or business decisions taken by the Corporation nor should it be used to reconsider any staff matters which have been addressed under the grievance procedure already in place.

Whistleblowing matters may include but are not confined to: 1. Malpractice, impropriety or fraud relating to internal controls, accounting, auditing and financial matters; 2. Violation of the rules and regulations of the Corporation or the Code of Business Conduct and Ethics of the Corporation 3. Improper conduct or unethical behavior likely to prejudice the standing of the Corporation 4. Breach of legal or regulatory requirements 5. Criminal offences, breach of civil law and miscarriage of justice 6. Endangerment of the health and safety of an individual 7. Damage caused to the environment 8. Deliberate concealment of any of the above

Reporting and Investigation Procedures

1. Reporting Channel for the Corporation

Employee who has a legitimate malpractice concern can raise the matter directly with the officer of the Corporate Governance Committee. The officer will review the complaint and decide how the investigation should proceed. Depending on the circumstances, the Corporate Governance Committee may consider nominating an appropriate investigating officer or set up a special committee to investigate the matter independently.

2. Reporting Format and Supporting Documentation

Disclosures can be made in writing or by using the standard form (Whistleblower Report Form) attached to this Policy. While the Corporation does not expect the employee to have absolute proof or evidence of the misconducts, malpractices or irregularities reported, the report should show reasons for the concerns and full disclosure of any relevant details and supporting documentation.

The disclosure should be sent to the Chairman of the Corporate Governance Committee at 10/F MGO Building Legaspi cor Dela Rosa Streets Makati City, 0721 Philippines in a sealed envelope clearly marked “Strictly Private and Confidential – to be opened by Addressee Only” to ensure confidentiality, or through sending emails to [email protected]. Employees should ensure all the attachments to the emails should have passwords in order to ensure confidentiality. Employees are required to put their name to any disclosures they make. Anonymous complaints are usually not considered.

The Company will hold it a serious disciplinary offence for any person who seeks to prevent a communication of malpractice concerned reaching to the designated person, or to impede any investigation which he or anyone on his behalf may make.

3. Investigation Procedure

The format and length of an investigation will vary depending upon the nature and particular circumstances of each complaint made. The matters raised may:

114

i. be investigated internally; ii. be referred to the External Auditor; and/or iii. form the subject of an independent inquiry

The Chairman of the Corporate Governance Committee or the person designated to investigate the complaint will write to the complainant whenever reasonably practicable of the concern being received: i. acknowledging that the concern has been received; ii. advising whether or not the matter is to be investigated further and if so what the nature of the investigation will be; iii. giving an estimate of how long the investigation will take to provide a final response telling the complainant whether any initial inquiries have been made, and

whether further investigation will take place, and if not, why not.

False Reports

If an employee makes a false report maliciously, with an ulterior motive, or for personal gain, the Corporation reserves the right to take appropriate actions against the employee to recover any loss or damage as a result of the false report. In particular, the employee may face disciplinary action, including dismissal, where appropriate.

Anonymous Reports

As the Corporation takes reporting of misconducts, malpractices, and irregularities seriously and wants to conduct warranted investigations of both potential and actual violations, it is preferred that these reports are not made anonymously. However, it is recognized that for any number of reasons, employees may not feel comfortable reporting potential violations directly to the Chairman of the Corporate Governance Committee. In these cases, anonymous reports may be submitted to the HR Department.

Protection and Confidentiality

It is the Corporation's policy to make every effort treating all disclosures in a confidential and sensitive manner after employee reports concern about any of the above matters. The identity of the individual employee making genuine and appropriate allegation under this Policy are assured of fair treatment. In addition, employees are also assured of protection against unfair dismissal, victimization or unwarranted disciplinary action, even if the concerns raised turned out to be unsubstantiated.

The Corporation reserves the right to take appropriate actions against anyone who initiates or threatens to initiate retaliation against those who have raised concerns under this Policy. In particular, employees who initiate or threaten retaliation will be subject to disciplinary actions, which may include summary dismissal.

Management will support all employees and encourage them to raise concerns without fear of reprisals.

115

I. DISCLOSURE AND TRANSPARENCY 1. Ownership Structure As previously disclosed to the SEC and the PSE, below is a list of stockholders holding 5% or more of the total issued and outstanding capital stock of the Corporation:

Shareholder Number of Shares Percent Beneficial Owner

Metro Pacific Holdings, Inc. 14,522,948,170 55.76% Metro Pacific Holdings, Inc.

PCD Nominee Corporation (Foreign) 8,368,656,859 32.96% Public ownership

PCD Nominee Corporation (Filipino) 3,111,897,221 11.14% Public ownership

Below is a list of directors and officers holding shares in the Corporation:

Name of Senior Management Number of

Direct shares

Number of Indirect shares / Through (name

of record owner)

% of Capital Stock

Manuel V. Pangilinan 1 None 0%

Jose Ma. K. Lim 11,000,001 None 0.04%

David J. Nicol 7,250,001 None 0.03%

Ray C. Espinosa 1 None 0%

Ramoncito S. Fernandez 5,862,001 None 0.02%

Robert C. Nicholson 1 None 0%

Augusto P. Palisoc, Jr. 10,000,001 None 0.04%

Antonio A. Picazo 1,001 None 0%

Amado R. Santiago III 2,500,001 None 0.01%

Edward A. Tortorici 10,729,596 None 0.04%

Victorico P. Vargas 1,000,001 None 0%

Washington Z. SyCip 1 None 0%

Edward S. Go 500,000 None 0%

Lydia B. Echauz 30,000 None 0%


250,001 None 0%

TOTAL 49,122,608 0.18%

2. Annual Report

116

Key risks Yes

Corporate objectives Yes

Financial performance indicators Yes

Non-financial performance indicators Yes

Dividend policy Yes

Details of whistle-blowing policy No

Biographical details (at least age, qualifications, date of first appointment, relevant experience, and any other directorships of listed companies) of directors/commissioners

Yes

Training and/or continuing education programme attended by each director/commissioner

No

Number of board of directors/commissioners meetings held during the year Yes

Attendance details of each director/commissioner in respect of meetings held Yes

Details of remuneration of the CEO and each member of the board of directors/commissioners

Yes

Should the Annual Report not disclose any of the above, please indicate the reason for the non-disclosure.

The Annual Report discloses the Board approval of the Company’s Whistleblowing policy. The complete full detailed policy is posted in the Company website. For the trainings and seminars attended, the breakdown of the trainings per director was not included in the Annual Report but there was a mention that the directors and officers of the Company attended different Corporate Governance Trainings and Seminars conducted by third-party entities.

3. External Auditor’s fee

The table below shows the aggregate Audit Fees for 2013.

Name of auditor Audit Fee Non-audit Fee

SGV & Company 23,140,875.00 1,877,641.00

4. Medium of Communication

List down the mode/s of communication that the company is using for disseminating information. The Company’s modes of communication are the following:

i. Corporate Website (http://www.mpic.com.ph) ii. Annual Report (Printed and Downloadable)

iii. SEC/ PSE Disclosures

http://www.mpic.com.ph/

117

a. SEC Form 17-A (Annual Report) b. Corporate Disclosures: SE Form 17-C and Clarifications c. SEC Form 17-Q (Quarterly Financial Report) d. Public Ownership Report e. Report on number of shareholders and foreign ownership report f. Shareholders list: Top 100, Top 20 and Shareholders’ Masterlist g. 20-IS (Preliminary and Definitive Information Statement)

iv. Analysts/ Investors Briefing (close to 300 meetings were conducted) v. Press Releases (26 press releases in 2013)

5. Release of Audited Financial Report

Date of release of audited financial report: The table below shows the summary of the release of the audited annual and interim financial statements for 2013 and 2012.

Financial Report Release Date

2012 Reports 2013 Reports

1st

Quarter May 15, 2012 May 15, 2013

2nd

Quarter August 14, 2012 August 14, 2013

3rd

Quarter November 14, 2012 November 14, 2013

Annual Financial Report April 11, 2013 April 15, 2013

6. Company Website

Does the company have a website disclosing up-to-date information about the following? The Company provides information to its stakeholders through its website address http://www.mpic.com.ph

Business operations Yes

Financial statements/reports (current and prior years) Yes

Materials provided in briefings to analysts and media Yes

Shareholding structure Yes

Group corporate structure Yes

Downloadable annual report Yes

Notice of AGM and/or EGM Yes

Company's constitution (company's by-laws, memorandum and articles of association) Yes

http://www.mpic.com.ph/

118

Should any of the foregoing information be not disclosed, please indicate the reason thereto.

None.

7. Disclosure of RPT

RPT* Relationship Nature Value (In millions PhP)

Traffic Management Corporation (TMC)

Associate

TMC provides services as operator to the North Luzon Expressway (NLE) under the Operations & Maintenance (O&M). The O&M contains the terms and

conditions for the operation and maintenance by TMC of Phase I of the NLE and subsequently of Segment 7, and sets forth the scope of its services.

Php 1,532

Smart Communications Other related

party Smart Communications provides wireless communication services to MPIC and its

subsidiaries. Php 33

Advertising agreements between MNTC and Digitel related to various advertising

mediums along NLEX Php 59

PLDT Other related

party PLDT provides landline services to MPIC and its subsidiaries. Php 41

PLDT provides services for various administrative assistance extended to the

Company. It also includes rentals from lease of office space. Php 11

D.M. Consunji Inc.

Non-controlling shareholder in

Maynilad Water Holding

Company, Inc.

Maynilad entered into certain construction contracts with D.M. Consunji, Inc. in relation to the provision of engineering, procurement and construction services

to Maynilad. Php 504

Manila Electric Company (Meralco)

Associate

Meralco provides electricity to MPIC and certain subsidiaries’ offices within its franchise area. The rates charged by Meralco are the same as those with

unrelated parties. Meralco is the sole provider of electricity for the Corporation since it is located within Meralco’s franchise area.

Php 974

* Full details of the Company’s Related Party Transactions are available in the 2013 Annual Report, Financial

Statements Note 21.

When RPTs are involved, what processes are in place to address them in the manner that will safeguard the interest of the company and in particular of its minority shareholders and other stakeholders? Enterprises and individuals that directly, or indirectly through one or more intermediaries, control or are controlled by or under common control with the Company, including holding companies, subsidiaries and fellow subsidiaries, are related parties of the Company. Associates and individuals owning, directly or indirectly, an interest in the voting power of the Company that gives them significant influence over the enterprise, key management personnel, including directors and officers of the Company and close members of the family of these individuals, and companies associated with these individuals also constitute related parties. In considering each possible related entity relationship, attention is directed to the substance of the relationship and not merely the legal form.

119

J. RIGHTS OF STOCKHOLDERS 1. Right to participate effectively in and vote in Annual/Special Stockholders’ Meetings

(a) Quorum

Give details on the quorum required to convene the Annual/Special Stockholders’ Meeting as set forth in its By-laws.

Quorum Required The Corporation’s By-Laws, Article II. Section 5. Quorum states that to have a quorum, the holders of the “Majority of the outstanding capital stock” should be present in the Annual Stockholders Meeting.

(b) System Used to Approve Corporate Acts

Explain the system used to approve corporate acts.

System Used Voting in person or proxy.

Description Stockholders were given an opportunity to “vote in person or proxy” as stated in the Corporation’s By-Laws, Article II. Section 5. Quorum.

(c) Stockholders’ Rights

List any Stockholders’ Rights concerning Annual/Special Stockholders’ Meeting that differ from those laid down in the Corporation Code.

Stockholders’ Rights under The Corporation Code

Stockholders’ Rights not in The Corporation Code

None None

(d) Dividends

Declaration Date Record Date Payment Date

February 28, 2013 March 18, 2013 April 16, 2013

August 8, 2013 August 28, 2013 September 20, 2013

(e) Stockholders’ Participation

120

1. State, if any, the measures adopted to promote stockholder participation in the Annual/Special Stockholders’ Meeting, including the procedure on how stockholders and other parties interested may communicate directly with the Chairman of the Board, individual directors or board committees. Include in the discussion the steps the Board has taken to solicit and understand the views of the stockholders as well as procedures for putting forward proposals at stockholders’ meetings.

Measures Adopted Communication Procedure

During the 2013 Annual Stockholders’ Meeting, the Company’s stockholders were given the opportunity to ask questions or raise their concerns, given the following conditions 1. Only shareholders of the Company are entitled to ask questions; and 2. Before posing your questions, the stockholder should state his/her

name for record purposes.

At the start of the 2013 Annual Stockholders’ Meeting, the Chairman reads the rules to be observed by the Stockholders in raising their questions and concerns during the meeting.

2. State the company policy of asking shareholders to actively participate in corporate decisions regarding: a. Amendments to the company's constitution b. Authorization of additional shares c. Transfer of all or substantially all assets, which in effect results in the sale of the company

Shareholders are encouraged to actively participate in the annual meetings to discuss and approve items a-c.

3. Does the company observe a minimum of 21 business days for giving out of notices to the AGM where items to be resolved by shareholders are taken up? As stated in the Corporation’s By-Laws, which was based on the Philippine Corporation Code, the notices for regular or special meetings of stockholders may be sent by the Corporate Secretary by personal delivery or by mail at least fifteen (15) days prior to the date of the meeting to each stockholder of record.

a. Date of sending out notices:

The Notices for the 2013 Annual Stockholders Meeting was sent to the Stockholders on May 6, 2013, 19 days prior to the May 24, 2013 Annual Stockholders’ Meeting .

b. Date of the Annual/Special Stockholders’ Meeting: The 2013 Annual Stockholders Meeting was held on May 24, 2013.

4. State, if any, questions and answers during the Annual/Special Stockholders’ Meeting. The Company encourages the stockholders to raise their questions or concerns during the Annual Stockholders’ Meeting.

121

5. Result of Annual/Special Stockholders’ Meeting’s Resolutions Result of the Annual Stockholders’ Meeting on May 24, 2013

Resolution Approving Dissenting Abstaining

Approval of the President’s Report and the Annual Report for the year 2012

100% of SH in attendance

- -

Adoption of the Audited Financial Statements for the year ended 31

st December 2012 contained in the Annual Report


- -

Ratification of all acts of the Board of Directors and Management for the year 2012


- -

Appointment of the external auditor of the Company for the year 2013


- -

Result of the Special Stockholders’ Meeting held on May 8, 2013

Resolution

Approving Dissenting Abstaining

Approval of the listing on the Philippine Stock Exchange of certain common shares issued by the Company in accordance with current PSE rules and regulations for placing and subscription transaction


- -

6. Date of publishing of the result of the votes taken during the most recent AGM for all resolutions: The results of the AGM and the Special Stockholders’ Meeting were disclosed on the same day of the meeting.

(f) Modifications

State, if any, the modifications made in the Annual/Special Stockholders’ Meeting regulations during the most recent year and the reason for such modification:

Modifications Reason for Modification

None None

(g) Stockholders’ Attendance

(i) Details of Attendance in the Annual/Special Stockholders’ Meeting Held:

122

Type of Meeting Names of Board members / Officers

present Date of Meeting

Voting Procedure (by poll, show of hands, etc.)

% of SH Attending in Person

% of SH in Proxy

Total % of SH attendance

Annual

Atty. Amado R. Santiago III; Atty. Ray C. Espinosa; Ms. Lydia B. Echauz; Mr. Edward S. Go; Chief Justice Artemio V. Panganiban; Mr. Washington Z. SyCip; Atty. Antonio A. Picazo; Mr. Augusto P. Palisoc, Jr.; Mr. Ramoncito S. Fernandez; Mr. Victorico P. Vargas; Mr. David J. Nicol; Mr. Jose Ma. K. Lim;

24 May 2013 Votes were


0.02% 71.72% 71.75%

Special

Atty. Amado R. Santiago III; Ms. Lydia B. Echauz; Mr. Edward S. Go; Chief Justice Artemio V. Panganiban; Washington Z. SyCip; Atty. Antonio A. Picazo; Mr. Augusto p. Palisoc, Jr.; Mr. Jose Ma. K. Lim

8 March 2013 Votes were


Less than 0.01% 78.27% 78.27%

(ii) Does the company appoint an independent party (inspectors) to count and/or validate the votes at the ASM/SSMs? SGV and Co., external auditor, was appointed by the Corporation as the independent party (inspectors) to count and/or validate the votes and proxies at the AGM and SSM.

(iii) Do the company’s common shares carry one vote for one share? If not, disclose and give reasons for any divergence to this standard. Where the company has more than one class of shares, describe the voting rights attached to each class of shares.

The Corporation’s Common Shares carry one vote for one share. Holders of common and Class A Preferred shares of stock of the Company are entitled to vote on all matters to be voted upon by the stockholders. Stockholders entitled to vote are also entitled to cumulative voting in the election of directors. Section 24 of the Corporation Code provides, in part, that: “….in stock corporations, every stockholder entitled to vote shall have the right to vote in person or by proxy the number of shares of stock standing, at the time fixed in the by-laws, in his own name on the stock books of the corporation, or where the by-laws are silent, at the time of the election; and said stockholder may vote such number of shares for as many persons as there are directors to be elected, or he may cumulate said shares and give one candidate as many votes as the number of directors to be elected multiplied by the number of his shares shall equal, or he may distribute them on the same principle among as many candidates as he shall see fit….”

123

(h) Proxy Voting Policies

State the policies followed by the company regarding proxy voting in the Annual/Special Stockholders’ Meeting.

Company’s Policies

Execution and acceptance of proxies

The following are the requirements for the execution and acceptance of proxies: a. The proxy form must be completed, signed and dated by the stockholder or his duly authorized representative, and received at the

principal office and mailing address of the Company on or before the scheduled meeting where such proxy will be utilized. b. If the shares of stock are owned by two or more joint owners, the proxy form must be signed by all of the joint owners. c. If the shares of stock are owned in an "and/or" capacity, the proxy form must be signed by either one of the owners. d. If the shares of stock are owned by a corporation, association, partnership or unincorporated entity, the proxy form must be

accompanied by a certification, signed by a duly authorized officer, partner or representative of such corporation, association, partnership or unincorporated entity, to the effect that the person signing the proxy form has been authorized by the governing body or has the power pursuant to the By-Laws, constitutive documents or duly approved policies of such corporation, association, partnership or unincorporated entity, for such purpose.

e. A proxy form given by a broker or dealer in respect of shares of stock carried by such broker or dealer for the account of a customer

must be supported by a sworn certification that the same is given with the express prior authorization of such customer. f. If any customer of a broker or dealer who is the beneficial owner of shares of stock executes a sub-proxy, the broker or dealer shall

certify that the signature on the sub-proxy is the true and genuine signature of its customer.

Notary For the convenience of every shareholder and to facilitate the use of proxy voting, NO NOTARIZATION of the pertinent document is required for the validity of Proxy Appointment.

Submission of Proxy

The proxy form must be completed, signed and dated by the stockholder or his duly authorized representative, and received at the principal office and mailing address of the Company on or before the scheduled meeting where such proxy will be utilized.

Several Proxies

The Corporation follows the SRC Rule 20 (11)(b) Proxy Where the corporation receives more than one (1) proxy from the same stockholder and they are all undated, the postmark dates shall be considered. If the proxies are mailed on the same date, the one bearing the latest time of day of postmark is counted. If the proxies are not mailed, then the time of their actual presentation is considered. That which is presented last will be recognized.

124

Where a proxy is given to two (2) or more persons in the alternative in one instrument, the proxy designated as an alternate can only act as proxy in the event of non-attendance of the other designated person. Where the same stockholder gives two (2) or more proxies, the latest one given is to be deemed to revoke all former proxies. If the stockholder intends to designate several proxies, the number of shares of stock to be represented by each proxy shall be specifically indicated in the proxy form. If some of the proxy forms do not indicate the number of shares, the total shareholdings of the stockholder shall be tallied and the balance thereof, if any, shall be allotted to the holder of the proxy form without the number of shares. If all are in blank, the stocks shall be distributed equally among the proxies. The number of persons to be designated as proxies may be limited by the By-laws.

Validity of Proxy

The following are the requirements for the validity of a proxy: a. The proxy form must be completed, signed and dated by the stockholder or his duly authorized representative, and received at the

principal office and mailing address of the Company on or before the scheduled meeting where such proxy will be utilized.

b. If the shares of stock are owned by two or more joint owners, the proxy form must be signed by all of the joint owners.

c. If the shares of stock are owned in an "and/or" capacity, the proxy form must be signed by either one of the owners.

d. If the shares of stock are owned by a corporation, association, partnership or unincorporated entity, the proxy form must be accompanied by a certification, signed by a duly authorized officer, partner or representative of such corporation, association, partnership or unincorporated entity, to the effect that the person signing the proxy form has been authorized by the governing body or has the power pursuant to the By-Laws, constitutive documents or duly approved policies of such corporation, association, partnership or unincorporated entity, for such purpose.

e. A proxy form given by a broker or dealer in respect of shares of stock carried by such broker or dealer for the account of a customer

must be supported by a sworn certification that the same is given with the express prior authorization of such customer.

f. If any customer of a broker or dealer who is the beneficial owner of shares of stock executes a sub-proxy, the broker or dealer shall certify that the signature on the sub-proxy is the true and genuine signature of its customer.

Proxies executed abroad

Proxies executed abroad shall be duly authenticated by the Philippines Embassy or Consular Office.

Invalidated Proxy

Proxies invalidated by the Special Committee of Inspectors shall not be included for quorum and voting purposes.

Validation of Proxy

The Board shall schedule the validation of proxies. The scheduled is indicated in the Notice of Meeting and Information Statement.

Violation of If the instruction of the stockholder as to manner is not followed, then the proxy vote shall not be honored.

125

Proxy

(i) Sending of Notices

State the company’s policies and procedure on the sending of notices of Annual/Special Stockholders’ Meeting.

Policies Procedure

The Company’s By-Laws states that Notices for regular or special meetings of stockholders may be sent by the Secretary by personal delivery or by mail at least fifteen (15) days prior to the date of the meeting to each stockholder of record at his last known post office address or by publication in newspaper of general circulation.

Notices of AGM are sent through courier service, disclosed to SEC and PSE, published in newspaper of general circulation, and posted on the Company website.

(j) Definitive Information Statements and Management Report

Number of Stockholders entitled to receive Definitive Information Statements and Management Report and Other Materials

1,361 Stockholders

Date of Actual Distribution of Definitive Information Statement and Management Report and Other Materials held by market participants/certain beneficial owners

May 6, 2013

Date of Actual Distribution of Definitive Information Statement and Management Report and Other Materials held by stockholders

May 6, 2013

State whether CD format or hard copies were distributed CDs and hard copies of the Definitive Information Statements and Management Report and Other Materials were distributed to the Stockholders.

If yes, indicate whether requesting stockholders were provided hard copies Hard Copies of the Definitive Information Statements and Management Report and Other Materials were distributed to the Stockholders.

(k) Does the Notice of Annual/Special Stockholders’ Meeting include the following:

Each resolution to be taken up deals with only one item. Yes

Profiles of directors (at least age, qualification, date of first appointment, experience, and directorships in other listed companies) nominated for election/re-election.

Yes

126

The auditors to be appointed or re-appointed. Yes

An explanation of the dividend policy, if any dividend is to be declared. Yes

The amount payable for final dividends. Yes

Documents required for proxy vote. No

Should any of the foregoing information be not disclosed, please indicate the reason thereto. There was no template for proxy that was provided by the Company. In the future proxy validation, the Company will provide proxy template for the convenience of the stockholders.

2. Treatment of Minority Stockholders

(a) State the company’s policies with respect to the treatment of minority stockholders.

Policies Implementation

The Corporation’s Revised Manual of Corporate Governance Article 6 - Stockholders’ Rights and Protection of Minority Stockholders’ Interests states the following with respect to the treatment of minority stockholders: “A) The Board shall respect the rights of the stockholders as provided for in the Corporation Code, namely:

(i) Right to vote on all matters that requires their consent or approval; (ii) Pre-emptive right to all stock issuances of the corporation; (iii) Right to inspect corporate books and records; (iv) Right to information; (v) Right to dividends; and (vi) Appraisai right.

B) The Board should be transparent and fair in the conduct of the annual and special stockholders’ meetings of the corporation. The stockholders should be encouraged to personally attend such meetings. If they cannot attend, they should be apprised ahead of time of their right to appoint a proxy. Subject to the requirements of the by- laws, the exercise of that right shall not be unduly restricted and any doubt about the validity of a proxy should be resolved in the stockholders favor. It is the duty of the Board to promote the rights of the stockholders, remove impediments to the exercise of those rights and provide an adequate avenue for them to seek timely redress for breach of their rights. The Board should take the appropriate steps to remove excessive or unnecessary costs and other administrative impediments to the stockholders’ meaningful participation in meetings, whether in person or by proxy. Accurate and timely information should be made available to the stockholders to enable them to

127

make a sound judgment on all matters brought to their attention for consideration or approval. Although all stockholders should be treated equally or without discrimination, the Board should give minority stockholders the right to propose the holding of meetings and the items for discussion in the agenda that relate directly to the business of the corporation.”

(b) Do minority stockholders have a right to nominate candidates for board of directors?

Yes, the minority stockholders have a right to nominate candidates for board of directors, as specifically stated in the Company’s Revised Manual of Corporate Governance.

K. INVESTORS RELATIONS PROGRAM

1. Discuss the company’s external and internal communications policies and how frequently they are reviewed. Disclose who reviews and approves major company announcements. Identify the committee with this responsibility, if it has been assigned to a committee.

The Corporation’s Public Relations (PR) and Corporate Communications office is tasked in crafting, disseminating and managing the information, both internal and external, about the Corporation, its directors, officers, and employees. The said office handles media events and releases for various stakeholders which include the shareholders, various government regulatory agencies and the general public. The Corporation uses different channels of external communication such as press releases, newspaper prints, TV, radio and electronic media (such as the internet and social media sites) and the Corporation’s website. Information is released using these media as events occur. The Corporation provides internal communication and messaging using the corporate email services. The directors, officers and employees are made aware of updates and notices sent by PR and Corporate Communications, the Human Resources and other involved offices. The Head of Public Relations and Corporate Communications Office, reviews and approves the release of the aforementioned information. In the execution of such function, she coordinates with concerned groups including the Board, the Chairman, the President and CEO and other Key Officers to get approval for the disclosure of the information relevant to their offices or functions. The Investor Relations Office, on the other hand, prepares the materials for the analysts and investors’ briefing. This is done in coordination with the Chief Finance Officer and the Corporation’s Finance Office. As a listed Corporation, MPIC is expected to report to the SEC and PSE any material event or pertinent information relating to the company or its subsidiaries. For official disclosures and releases, the Corporation has designated corporate information officers — these being the head of Public Relations and Corporate Communications Office, head of Legal and the Legal Counsel. The said officers are the only authorized disclosure officers of MPIC to the PSE/SEC.

2. Describe the company’s investor relations program including its communications strategy to promote effective communication with its stockholders, other stakeholders

and the public in general. Disclose the contact details (e.g. telephone, fax and email) of the officer responsible for investor relations.

128

Details

(1) Objectives To provide clear, relevant, accurate and timely information about the Corporation, its strategies, and business drivers to current and potential investors, equity analysts, shareholders and the general public.

(2) Principles Excellence – to ensure that the information is relevant and communicated in a professional, clear and orderly manner

Integrity – to ensure that the acts of the company with regard to investor relations are performed within the rules and regulations of its governing bodies (Corporation, SEC, PSE, Philippine government); and that the information communicated is accurate, relevant and timely.

(3) Modes of Communications

Quarterly Results Briefing (Investors/Analysts and Media)

Annual Stockholders’ Meeting

Investor Relations Meetings

Regular Company Disclosures

Conferences and road shows

Responses to calls and emails

Corporate website Announcements and Postings

(4) Investors Relations Officer

Corporation’s Investor Relations Team:

Mr. Jose Ma. K. Lim, President and Chief Executive Officer

Mr. David J. Nicol, Chief Finance Officer

Mr. Albert W. F. Pulido, Vice President and Investor Relations Head Contact Details:

a. Email : [email protected] b. Tel No.: (632) 888-0888 c. Fax: (632) 888-0813

3. What are the company’s rules and procedures governing the acquisition of corporate control in the capital markets, and extraordinary transactions such as mergers, and

sales of substantial portions of corporate assets? The Corporation receives various investment and acquisition proposals through different forms and medium. These proposals are elevated to the Board who may direct the proper officers to conduct the necessary evaluation. The evaluation results are presented to the Board for approval. Should the viability of such acquisition require further evaluation and analysis, the Board normally creates a committee to review the transaction. All the processes are done in accordance with the Corporation Code and the Securities and Regulations Code.

4. Name of the independent party the board of directors of the company appointed to evaluate the fairness of the transaction price. Independent directors who are present at both at the Audit and Risk Management Committee and the Board provide the oversight as to the fairness of the transaction pricing.

L. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

mailto:[email protected]

129

Discuss any initiative undertaken or proposed to be undertaken by the company.

Initiative Beneficiary

Empowering People Through

Manpower For Infrastructure

Cooperative

In February 2012, MPIC launched the ManPower for Infrastructure Cooperative Development (MPIC) project -- a sustainable

Livelihood and Enterprise Development program for 25 urban poor households of Ana Maria Heights, Barangay Calamansian,

Caloocan City. In cooperation with the Philippine Business for Social Progress of which MPIC is a member company, the

community-based cooperative project embarks on raising the quality of labor skills of its members for possible employment

within MPIC’s business portfolio.

The 25 highly-skilled workers on masonry, carpentry, plumbing, electrical lining, and construction painting who signed up for

the project, underwent various strategic planning workshops, including a 1-day course on basic financial management given by

Ms. Maida Bruce, MPIC’s Group Controller.

As part of the cooperative governance and pre-membership education seminars, the group familiarized themselves with their

organizational structure and roles of each officer and formed committees to oversee education, election, ethics, membership,

and mediation and policy formulation. Ongoing trainings on business planning, values formation, skills enhancement with

TESDA assessment and accreditation are expected to be completed by the end of 2013.

Environmental Awareness Through

Shore It Up

The ‘Shore It Up!’ campaign is an effort towards sustainable development, preservation and conservation of our marine

resources. As a yearly program of the Foundation, it also aims to help reduce destructive floods caused by environmental

neglect by both businesses and communities.

Shore It Up 2012 which adopts the relevant slogan: ‘Rescue, Restore, Revive’ – continued to undertake a coastal/underwater

clean-up and environmental protection campaign after its successful start in 2009. Over 13,000 volunteers, including 200

school children from Sta Rita Elementary School, Olongapo City Elementary School, and James Gordon Integrated School were

joined by hundreds of officials and employee volunteers of MPIC, Metro Pacific Tollways Corp., Maynilad Water Services,Inc.,

One Meralco Foundation, Asian Hospital, Cardinal Santos Hospital, as well as PLDT-Smart Foundation, SubicTel, RP Energy, Spi

Global, TV5 and the Philippine Star, and Lighthouse Marina Resorts, founder of the International Coastal cleanup in the

Zambales area, in a two-day environmental awareness event.

Recognized for its sincere commitment to engage various communities in environmental awareness, “Shore it Up” received an

Excellence award for Communication Management: Social responsibility from the International Association of Business

Communicators, an Anvil award of Merit from the Public Relations Society of the Philippines and a Silver award for Excellence

130

from the Global CSR Summit.

Special Outreach Activities: Faith,

Hope And Love

MPIC still has enough room in its heart to be a corporate big brother to abused and orphaned children. Started in 2004, the

Faith, Hope & Love Kid’s Ranch Inc. was established by the Lamar family to give abandoned, abused, neglected and orphaned

children a second chance at life. Currently, the facility has about 40 children under its care and is registered with the

Department of Social Welfare.

Getting ready at the first break of dawn one day in January of 2012, the employees took the long journey to Sariaya in Lucena

City and put together an amazing race around the ranch. The various activities, children’s presentation and the gift supplies

given to the orphans may not be totally sufficient for just a day spent, yet both parted ways feeling bountifully blessed with a

very meaningful experience.

“Tulong Kapatid”: Aligning

Programs And Working Together To

Improve Lives And Benefit

Communities

The CSR Council composed of foundations and CSR departments in the MVP Group of companies formed “Tulong Kapatid”

(Brotherly Help) to collaborate in common activities relating to environmental programs, tree planting, coastal clean-ups, blood

banks, medical missions and disaster preparedness and responsiveness. Recent efforts of Tulong Kapatid provided coordination

for medical assistance and service restoration in telecommunications, electricity and water. Prompted by one text message and

organized in 24 hours, the “Tulong Kapatid” MVP Telethon in December 2012 raised over ₱100 million for victims of typhoon

Pablo in just six hours.

M. BOARD, DIRECTOR, COMMITTEE AND CEO APPRAISAL

Disclose the process followed and criteria used in assessing the annual performance of the board and its committees, individual director, and the CEO/President.

Process Criteria

Board of Directors Annually, the Board conducts a Performance-Self Assessment* in order to measure the performance of the Board.

Board Responsibilities Board Processes

Board Committees The Board conducts a Board Committee Performance Assessment in order to measure the performance of each Board Committee against their functions.

Board Responsibilities Board Processes

Individual Directors The Board conducts a Performance-Self Assessment in order to measure their performance as Individual members of the Board.

Individual Board Member Expectations

CEO/President The Board conducts a CEO/President Performance Assessment in order to measure the performance of the CEO/President as against his expected deliverables for the year.

Management Relationship

* The questionnaire for the Board/ Directors/President/CEO Assessment is available at the Corporation’s Website.

131

N. INTERNAL BREACHES AND SANCTIONS

Discuss the internal policies on sanctions imposed for any violation or breach of the corporate governance manual involving directors, officers, management and employees

Violations Sanctions

Violation to the Company’s Revised Manual of Corporate Governance

The following are the stated sanctions in the Company’s Revised Manual of Corporate Governance, Article 11 – Administrative Sanctions: To avoid non-compliance and to strictly observe the provisions of this Manual, the Board of Directors may impose appropriate sanctions, penalty or corrective measures, after due notice and hearing, on the erring directors, officers and employees. Sanction or penalty may include censure, suspension and removal from office depending on the gravity of the offense, the resulting damage, as well as the frequency of the violation. The commission of a grave violation of this Manual by any member of the Board of the Corporation shall be sufficient cause for removal from directorship.

Violation to the Company’s Employee Handbook

Described below are the types of disciplinary action stated in the Company’s Employee Handbook: 1. Oral Reprimand – an oral admonition or counsel given to erring employee for an infraction of a rule, and warning him that a repetition of

the offense shall be dealt with more severely. 2. Written Reprimand – a written admonition issued to an employee upon repetition of an offense in which an oral reprimand was previously

given; or commission of a more serious offense which requires a stronger disciplinary measure so that the repetition of the same offense subjects the employee to a suspension penalty.

3. Suspension – Cessation of reporting for work by the employee without pay. Such advice shall be made in writing with a warning to the employee that a repetition of the same offense means dismissal from the Company. Suspension shall range from a minimum of 1 to 90 days.

4. Dismissal – Termination of the employee for cause after due process.

Note: All the above answers are based on available Corporation records as of December 31, 2014 and reports of Corporation executives and personnel, not necessarily on the personal knowledge of the affiants.