Compliance System

2.1.Compliance Officer

2.1.1. To insure adherence to corporate principles and best practices, the Chairman of the Board shall designate a Compliance Officer . He shall have direct reporting responsibilities to the Chairman of the Board.

2.1.2.He shall perform the following duties:

•Monitor compliance with the provisions and requirements of this Manual;

•Appear before the Securities and Exchange Commission upon summon on similar matters that need to be clarified by the same;

•Determine violation/s of the Manual and recommend penalty for violation thereof for further review and approval of the Board;

•Issue a certification every January 30th of the year on the extent of the Corporation's compliance with this Manual for the completed year, explaining the reason/s of the latter's deviation from the same; and

•Identify, monitor and control compliance risks.

2.1.3. The appointment of the compliance officer shall be immediately disclosed to the Securities and Exchange Commission on SEC For 17-C. All correspondence relative to his functions as such shall be addressed to said Officer.


- 2 -


2.1. Plan of Compliance


2.2.1. Board of Directors

Compliance with the principles of good corporate governance shall start with the Board of Directors.

It shall be the Board's responsibility to foster the long-term success of the Corporation and secure its sustained competitiveness in a manner consistent with its fiduciary responsibility, which it shall exercise in the best interest of the Corporation, its shareholders and other stakeholders. The Board shall conduct itself with utmost honesty and integrity in the discharge of its duties, functions and responsibilities.

2.2.1.1. General Responsibility

A director's office is one of trust and confidence. He shall act in a manner characterized by transparency, accountability and fairness.


2.2.1.2. Specific Duties and Functions

To insure a high standard of best practice for the Corporation and its stakeholders, the Board shall:

•Install a process of selection to ensure a mix of competent directors and officers

•Determine the Corporation's purpose, its vision and mission and strategies t carry out its objectives.

•Ensure that the Corporation complies with all relevant laws, regulations and codes of best business practices;

•Identify the Corporation's major and other stakeholders and formulate a clear policy on communicating or relating with them through an effective investor relations program;

•Adopt a system of internal checks and balances;

•Identify key risk areas and key performance indicators and monitor these factors with due diligence;

•Properly discharge Board functions by meeting regularly. Independent views during Board meetings shall be given due consideration and all such meetings shall be duly minuted; and


- 3 -


•Keep Board authority within the powers of the institution as prescribed in the Articles of Incorporation, By-Laws and in existing laws, rules and regulation.

2.2.1.3. Duties and Responsibilities of a Director

A director shall have the following duties and responsibilities:

•To conduct fair business transactions with the Corporation and to ensure that personal interest does not bias Board decisions;

•To devote time and attention necessary to properly discharge his duties and responsibilities;

•To act judiciously;

•To exercise independent judgment;

•To have a working knowledge of the statutory and regulatory requirements affecting the Corporation, including the contents of its Articles of Incorporation and By-Laws, the requirements of the Commission, and where applicable, the requirements of other regulatory agencies.

•To observe confidentiality;

•To ensure the continuing soundness, effectiveness and adequacy of the Corporation's control environment.


2.2.2. Board Committees

To aid in complying with the principles of good corporate governance, the Board shall constitute Committees.

2.2.2.1. Nomination Committee

The Board shall create a Nomination Committee which shall have at least three (3) voting (one of whom must be independent) and one (1) non-voting Director in the person of the HR Director/Manager.


2.2.2.1.1. It shall pre-screen and shortlist all candidates nominated to become a member of the board of directors in accordance with the following qualifications and disqualifications:


- 4 -

Qualifications


* Holder of at least one (1) share of stock of the Corporation;

• He shall be at least a college graduate or have sufficient experience in managing the business to substitute for such formal education;

•He shall be at least twenty one (21) years old;

•He shall have proven to possess integrity and probity; and

•He shall be assiduous.


Disqualifications


•Any person finally convicted judicially of an offense involving moral turpitude or fraudulent act or transgressions;

•Any person finally found by the Commission or a court or other administrative body to have willfully violated, or willfully aided, abetted, counseled, induced or procured the violation of, any provision of the Securities Regulation Code, the Corporation Code, or any other law administered by the Commission or Bangko Sentral ng Pilipinas, or any rule, regulation or order of the Commission or Bangko Sentral ng Pilipinas;

•Any person judicially declared to be insolvent;

•Any person finally found guilty by a foreign court or equivalent financial regulatory authority of acts, violations or misconduct similar to any of the acts, violations or misconduct listed in the foregoing paragraphs; and

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


Any of the following shall be a ground for the temporary disqualification of a director:


- 5 -


•Refusal to fully disclose the extent of his business interest as required under the Securities Regulation Code and its Implementing Rules and Regulations. This disqualification shall be in effect as long as his refusal persists;

•Absence or non-participation for whatever reason/s for more than fifty percent (50%) of all meetings, both regular and special, of the Board of directors during his incumbency, or any twelve (12) month period during said incumbency. This disqualification applies for purposes of the succeeding election;

•Dismissal/termination from directorship in another listed corporation for cause. This disqualification shall be in effect until he has cleared himself of any involvement in the alleged irregularity;

* Being under preventive suspension by the corporation;

* If the independent director becomes an officer or employee of the same corporation he shall be automatically disqualified from being an independent director;

* Conviction that has not yet become final referred to in the grounds for the disqualification of directors.


2.2.2.1.2. In consultation with the executive or management committee/s re-define the role, duties and responsibilities of the Chief Executive Officer by integrating the dynamic requirements of the business as a going concern and future expansionary prospects within the realm of good corporate governance at all times.

2.2.2.1.3.The Nomination Committee shall consider the following guidelines in the determination of the number of directorships for the Board:

•the nature of the business of the Corporations which he is a director;

•Age of the director;

•Number of directorships/active memberships and officerships in other corporations or organizations; and

* Possible conflict of interest.

The optimum number shall be related to the capacity of a director to perform his duties diligently in general


- 6 -

2.2.2.1.4. The Chief Executive Officer and other executive directors shall submit themselves to a low indicative limit on membership in other corporate Boards. The same low limit shall apply to independent, non-executive directors who serve as full-time executives in other corporations. In any case, the capacity of directors to serve with diligence shall not be compromised.

2.2.2.2. Compensation and Remuneration Committee

2.2.2.2.1.the Compensation or Remuneration Committee shall be composed of at least three (3) members, one of whom shall be an independent director.

2.2.2.2.2. Duties and Responsibilities

•Establish a formal and transparent procedure for developing a 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.

•Designate amount of remuneration, which shall be in a sufficient level to attract and retain directors and officers who are needed to run the company successfully.

•Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of individual directors, if any, and officers.

•Develop a form on Full Business Interest Disclosure as part of the pre-employment requirements for all incoming officers, which among others compel all officers to declare under the penalty or perjury all their existing business interests or shareholdings that may directly or indirectly conflict in their performance of duties once hired.

•Disallow any director to decide his or her own remuneration.

•Provide in the corporation's annual reports, information and proxy statements a clear, concise and understandable disclosure of compensation of its executive officers for the previous fiscal year and the ensuing year.

•Review (if any) of the existing Human Resources Development or Personnel Handbook, to strengthen provisions on conflict of interest, salaries and benefits policies, promotion and career advancement directives and compliance of personnel concerned with all statutory requirements that must be periodically met in their respective posts.


- 7 -


•Or in the absence of such Personnel Handbook, cause the development of such, covering the same parameters of governance stated above.

2.2.2.3. Audit Committee

2.2.2.3.2. The audit committee shall be composed of at least three (3) members of the Board, one (1) of whom shall be an independent director. Each member shall have adequate understanding at least or competence at most of the company's financial management systems and environment.

2.2.2.3.2. Duties and Responsibilities

* Check all financial reports against its compliance with both the internal financial management handbook and pertinent accounting standards, including regulatory requirements.

* Perform oversight financial management functions specifically in the areas of managing credit, market, liquidity, operational, legal and other risks of the Corporation, and crisis management.

* Pre-approve all audit plans, scope and frequency one (1) month before the conduct of external auditors.

* Perform direct interface functions with the internal and external auditors.

* Elevate to international standards the accounting and auditing processes, practices and methodologies, and develop the following in relation to this reform:

a.A definitive timetable within which the accounting system of the Corporation will be 100% International Accounting Standard (IAS) compliant.

b.An accountability statement that will specifically identify officers and/or personnel directly responsible for the accomplishment of such task.

* Develop a transparent financial management system that will ensure the integrity of internal control activities throughout the company through a step-by-step procedures and policies handbook that will be used by the entire organization.

2.3.3. The Corporate Secretary

2.3.3.1. The Corporate Secretary is an officer of the company and perfection in performance and no surprises are expected of him. Likewise, his loyalty to the mission, vision and specific business objectives of the corporate entity come with his duties.


- 8 -


2.3.3.2.The Corporate Secretary shall be a Filipino citizen.


2.3.3.3. Considering his varied functions and duties, he must possess administrative and interpersonal skills, and if he is not the general counsel, then he must have some legal skills. He must also have some financial and accounting skills.


2.3.3.4. Duties and Responsibilities


•Gather and analyze all documents, records and other information essential to the conduct of his duties and responsibilities to the corporation.

• As to agenda, get a complete schedule thereof at lest for the current year and put the Board on notice before every meeting.

•Assist the Board in making business judgment in good faith and in the performance of their responsibilities and obligations.

•Attend all Board meetings and maintain record of the same.

•Submit to the Commission, at the end of every fiscal year, an annual certification as t the attendance of the directors during Board meetings.


2.3.4. External Auditor


2.3.4.1. An external auditor shall enable an environment of good corporate governance as reflected in the financial records and reports of the company, an external auditor shall be selected and appointed by the stockholders upon recommendation of the Audit Committee.

2.3.4.2. The reason/s for the resignation, dismissal or cessation from service and the date thereof of an external auditor shall be reported in the company's annual and current reports. Said report shall include a discussion of any disagreement with said former external auditor on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

2.3.4.3. The external auditor of the company shall not at the same time provide the services of an internal auditor to the same client. The Corporation shall ensure that other non-audit work shall not be in conflict with the functions of the external auditor.


- 9 -


2.3.4.4. The company's external shall be rotated or the handling partner shall be changed every five (5) years or earlier.

2.3.4.5. If an external auditor believes that the statements made in the company's annual report, information statement or proxy statement filed during his engagement is incorrect or incomplete, he shall present his views in said reports.


2.3.5. Internal Auditor

2.3.5.1. The Corporation shall have in place an independent internal audit function which shall be performed by an Internal Auditor or a group of Internal Auditors, through which its Board, senior management, and stockholders shall be provided with reasonable assurance that its key organizational and procedural controls are effective, appropriate, and complied with.

2.3.5.2. The Internal Auditor shall report to the Audit Committee.

2.3.5.3. The minimum internal control mechanisms for management's operational responsibility shall center on the CEO, being ultimately accountable for the Corporation's organization and procedural controls.

2.3.5.4. The scope and particulars of a system of effective organizational and procedural controls shall be based on the following factors: the nature and complexity of business and the business culture; the volume, size and complexity of transactions; the degree of risk; the degree of centralization and delegation of authority; the extent and effectiveness of information technology; and the extent of regulatory compliance.