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FOOD TERMINAL INCORPORATED (FTI) REVISED CODE OF CORPORATE GOVERNANCE

It is the policy of the FOOD TERMINAL INCORPORATED (FTI) to actively promote and pursue corporate governance reforms and to consciously observe principles of accountability and transparency. The Board of Directors of the FTI hereby adopts this Code of Good Corporate Governance as a conscious attempt to significantly enhance the corporate organization of FTI to make it a valuable partner of the government in national development and to make it a corporation that is competitive both locally and globally.

I DEFINITION OF TERMS

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1.1 "Act” refers to Republic Act No. 10149, otherwise known as the "GOCC Governance Act

of 2011 1.2 “Appointive Directors” refer to members of FTI Board of Directors whom the State

nominates, or is entitled to nominate 1.3 "Articles of Incorporation" refers to the primary franchise of FTI, approved and registered

with the Securities and Exchange Commission (SEC) by the issuance of the certificate of incorporation under its official seal, and it commenced the existence of FTI as a separate juridical person with a right of succession and the powers, attributes and properties expressly authorized by law or incident to its existence.

1.4 "Board of Directors," "Board," or "Governing Board" refers to the collegial body that

exercises the corporate powers of the Company, conducts all business and controls or holds all property, as specified in its Articles of Incorporation. It is charged with the functions of governing and conducting the business of the Company and monitoring Management

1.5 "Board Officers" refer to the Officers whose primary task is to serve the Board or to

pursue the immediate functions of the Board, such as the Chairman, Vice Chairman and the Corporate Secretary.

1.6 "By-Laws" refers to the basic instrument adopted by a Non-chartered GOCC and duly

registered with the SEC for its internal government, and to regulate the conduct and prescribe the rights and duties of its members towards itself and among themselves in reference to the management of its affairs.

1.7 "Charter Statement” refers to the statement of the GOCC's vision, mission and core

values. 1.8 "Chief Executive Officer” ("CEO") refers to the highest-ranking corporate executive who

heads Management, who could be the President or Chairman of the Company. 1.9 "Confidential Information" refers to all non-public information entrusted to or obtained by a

member of the Board or Officer by reason of his position as such with the Company. It includes, but is not limited to, non-public information that might be of use to competitors or harmful to the Company or its customers/stakeholders if disclosed, such as: (a) non-public information about the Company's financial condition, prospects or plans, its marketing and sales program and research and development information, as well as information relating to mergers, acquisitions, divestitures, stock splits and similar transactions; (b) non-public information concerning possible transactions or ventures with

1 Added terms from the GCG Code of Corporate Governance for GOCCs (GCG Memorandum

Circular 2012-07), Chap. I.

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other companies, or information about suppliers, joint venture partners, or any information that the Company is under obligation to keep confidential; and (c) non-public information about internal discussions, deliberations and decisions, between and among Directors and Officers.

1.10 "Corporate Governance" is one key element in improving economic efficiency and growth

as well as enhancing investor confidence. It involves a set of relationships between a corporation's Management, its Board, its shareholders and other stakeholders. It also provides the structure through which the objectives of a corporation are set, and the means of achieving those objectives and monitoring performance are determined.

1.11 "Director" refers to any member of the Board of Directors of the Company. 1.12 "Ex Officio Board Member/Director" refers to any individual who sits or acts as a member

of the Board of Directors by virtue of one's title to another office, and without further warrant or appointment.

1.13 "Executive Officer" ("Officer') refers to the CEO or whoever is the highest-ranking officer

in the Company, and such other corporate officer as expressly provided in its By-Laws, such as Vice-President and Treasurer/Chief Financial Officer. As distinguished from Board Officers, Executive Officers primarily form part of the Management of the Company.

1.14 "Extraordinary Diligence" refers to the measure of care and diligence that must be

exercised by Directors and Officers in discharging their functions, in conducting the business and dealing with the properties and monies of the Company, which is deemed met when Directors and Officers act using the utmost diligence of a very cautious person taking into serious consideration all the prevailing circumstances and "Material Facts," giving due regard to the legitimate interests of all affected stakeholders.

1.15 "Fit and Proper Rule" refers to a set of standards for determining whether a member of

the Board of Directors or the CEO is qualified to hold a position in a GOCC which shall include, but not be limited to, standards on integrity, experience, education, training and competence as such standards are set forth under GCG Memorandum Circular No. 2012-05.

1.16 "GCG" refers to the Governance Commission for GOCCs. 1.17 "Government Agency" refers to any of the various units of the Government of the

Republic of the Philippines, including a department, bureau, office, instrumentality of GOCC, or a local government or distinct unit therein.

1.18 "Government-Owned and -Controlled Corporation" ("GOCC") refers to any agency

organized as a stock or non-stock corporation, vested with functions relating to public needs, whether governmental or proprietary in nature and owned by the Government of the Republic of the Philippines, directly or through its instrumentalities, either wholly or, where applicable, as in the case of stock corporations, to the extent of at least a majority of its outstanding capital stock. The term includes Government Instrumentalities with Corporate Powers (GICP), Government Corporate Entities (GCE) and Government Financial Institutions (GFI). The term also includes a Subsidiary of a GOCC.

1.19 "Internal Auditing" refers to an independent, objective assurance and consulting activity

designed to add value and improve a corporation's operations. It helps a corporation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance processes.

1.20 "Internal Control" refers to the process effected by a corporation's Board, Management

and other personnel, designed to provide reasonable assurance regarding the achievement of objectives in the effectiveness and efficiency of operations, the reliability

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of financial reporting, and compliance with applicable laws, regulations, and internal policies.

1.21 "Management" refers to the body given the authority to implement the policies determined

by the Board in directing the course and business activities of the GOCC. 1.22 "Material Information" ("Material Fact") refers to any information which a reasonable

investor, stakeholder or Supervising Agency would consider important in determining whether: (1) to buy, sell, hold or otherwise transact with the securities issued by a GOCC; or (2) to exercise with reasonable prudence the voting rights related to securities held with such GOCC, or relating to corporate acts, contracts and transactions which would adversely affect the operations of the GOCC.

1.23 "Non-chartered GOCC” refers to a GOCC organized and operating under Batas

Pambansa Bilang 68, otherwise known as the "Corporation Code of the Philippines" 1.24 "Officers" refer to both Board Officers and Executive Officers. 1.25 "Per Diems" refer to the compensation granted to members of the Board of Directors of a

GOCC for actual attendance in meetings. 1.26 "Performance Evaluation System" ("PES") refers to the process of appraising the

accomplishments of GOCCs in a given fiscal year based on set performance criteria, targets and weights.

1.27 "Performance Scorecard' refers to a governance and management tool forming part of the

performance evaluation system, which consists of a set of measures, targets and initiatives that facilitate the achievement of breakthrough results and performance through the effective and efficient monitoring and coordination of the strategic objectives of the GOCC.

1.28 "Public Officials" or "Public Officers" refer to elective and appointive officials and

employees, whether permanent or temporary, whether in the career or non-career service, whether or not they receive compensation, regardless of amount, who are in the National Government, and all other instrumentalities, agencies or branches of the Republic of the Philippines, including GOCCs and their subsidiaries.

1.29 "Shareholders" pertain to equity investors of the company to the extent of at least fifty-one

percent (51%) of its capital stock. 1.30 "Stakeholder" refers to any individual or entity for whose benefit the GOCC has been

constituted, or whose life, occupation, business or well-being is directly affected, whether favorably or adversely, by the regular transactions, operations or pursuit of the business or social enterprise for which the GOCC has been constituted, and which would include a stockholder, member, or other investor in the GOCC, management, employees, supply creditors, or the community in which the GOCC operates.

1.31 "Strategy Map" refers to an integrated set of strategic choices or objectives drawn by the

governing body, the successful execution of which results in the achievement of the GOCC's vision in relation to its mission or purpose for having been created.

1.32 "Subsidiary" refers to a corporation where at least a majority of the outstanding capital

stock is owned or controlled, directly or indirectly, through one or more intermediaries, by the GOCC.

1.33 "Supervising Agency" refers to a Government Agency to which a GOCC is attached to for

purposes of policy and program coordination and for general supervision.

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II COMMITMENT TO PRINCIPLES

OF GOOD CORPORATE GOVERNANCE 2.1 FTI as an Active Partner of the Government in National Development. The Company

acknowledges that its corporate organization is essential to the performance of its functions as an active partner of the government in national development. Such functions include the exploration of energy, the production and creation of wealth necessary to support vital government initiatives, as well as delivery of public services.

2.2 Governing Principles of Good Corporate Governance of FTI. The corporate

governance framework for the Company shall be governed by the following principles:

(a) The Company shall promote transparency, accountability and fairness, and its business shall be conducted strictly in accordance with the rule of law and shall be supportive of the primary goals and objectives of the government.

(b) Timely and accurate disclosure shall be made on all material aspects and

development regarding the Company, including its financial condition, performance, ownership, and governance.

(c) The strategic guidance of the Company shall be in accord with the objectives set by

the government, the effective monitoring of Management by the Board, and the Board's accountability to the corporation and the shareholders.

(d) The exercise of shareholders' rights, when applicable, shall be protected and

facilitated. Likewise, when applicable, the Company shall ensure the equitable treatment of all shareholders, including minority shareholders.

(e) Active cooperation between the Company and its stakeholders in creating wealth,

jobs, and the sustainability of a financially sound enterprise shall be encouraged. 2.3 Commitment to Institutionalize the Principles of Corporate Governance. The

Company is committed to institutionalize the principles of good corporate governance in the entire organization. The Board of Directors, Management and Employees of the Company equally commit to the principles contained in this Code and acknowledge that this Code will serve as a guide in the achievement of corporate goals.

2.4 Promotion of Corporate Governance. The Board of Directors, Management and

Employees believe that good corporate governance is an integral component of sound strategic business management and of transparency and accountability in public corporate governance, and will therefore undertake every effort necessary to create awareness within the Company.

2.5 Care, Diligence and Skill in the Conduct of the Business of the Company. The

members of the Board and the Officers must exercise extraordinary diligence in the conduct of business and in dealing with the properties of the Company. Such degree of diligence requires using the utmost diligence of very cautious persons with due regard for all circumstances.

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III THE FTI BOARD

3.1 Board Directly Vested with Corporate Powers. Haying been vested directly by law with

the legal capacity and authority to exercise all corporate powers, conduct all the business,

2 Republic Act No. 10149 (GOCC Governance Act of 2011), Sec. 21

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and to hold all the properties of the Company, the Governing Board is primarily responsible for the governance of the Company. Consequently, it is the Board and not Management that is primarily accountable to the State for the operations and performance of the Company.

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3.2 Board Duty to Properly Select and Provide Independent Check on Management.

Concomitant with the power to elect the CEO from among their rank and to appoint other Officers of the Company, it is the duty of the Governing Board to ensure that they elect and/or employ only Officers who are fit and proper to hold such offices with due regard to their qualifications, competence, experience and integrity. The Board is therefore obliged to provide an independent check on Management.

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3.3 Mandate and Responsibility for the Company's Performance. Although the day-to-

day management of the Company's affairs may be with Management, the Board is, however, responsible for providing policy directions, monitoring and overseeing Management actions, as articulated in the Company's Articles of Incorporation, By-Laws, and other relevant laws, rules and regulations. These responsibilities include the following:

(a) Provide corporate leadership in the Company subject to the rule of law and the objectives set by the National Government through the Supervising Agencies and the GCG.

(b) Establish the Company's vision and mission, strategic objectives, policies and procedures;

(c) Define the Company's values and standards through (I) Charter Statements, (ii) Strategy Maps, and (iii) other control mechanism mandated by best business practices;

(d) Determine important policies that bear in the character of the Company to foster its long-term success, ensure its long-term viability and strength, and secure its sustained competitiveness;

(e) Determine the organizational structure of the Company, defining the duties and responsibilities of its Officers and employees and adopting a compensation and benefit scheme that is consistent with the 60CC Compensation and Position Classification System (CPCS) developed by the GCG and formally approved by the President of the Philippines;

(f) Ensure that personnel selection and promotion shall be based on merit and fitness and that all personnel action shall be pursuant to applicable laws, rules and regulations;

(g) Provide sound written policies and strategic guidelines on the Company's operating budget and major capital expenditures, and prepare the Company's annual and supplemental budgets;

(h) Comply with all reportorial requirements, as required by the Company's Articles of Incorporation and By-Laws, as well as applicable laws, rules and regulations;

(i) Comply with all reportorial requirements, as required by the Company's Articles of Incorporation and By-Laws, as well as applicable laws, rules and regulations;

(j) Carry out the mandate of the Company, as provided in its Articles of Incorporation;

3 GCG Code of Corporate Governance for GOCCs, Chap. III, Sec. 5

4 Ibid. Sec. 6

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(k) Act as an effective and independent check on Management; and

(l) Ensure the fair and equitable treatment of all stakeholders, enhancing the Company's relations with them.

3.4 Specific Functions of the Company's Board. In addition to those specified in its

Articles of Incorporation and By-Laws, the FTI Board shall perform, among others, the following functions:

(a) Meet regularly, ideally at least once every month, to properly discharge its

responsibilities. Independent views during the Board meetings shall be given due consideration, and all such meetings shall be documented in the minutes of the Board Meeting;

(b) Determine the Company's purpose and value, as well as strategies and general

policies, including risk management policies and programs, to ensure that the Company survives and thrives despite financial crises, and that its assets, name and reputation are adequately protected;

(c) Determine important policies that bear on the character of the Company with a view

towards ensuring its long-term viability and strength;

(d) Monitor and evaluate on a regular basis the implementation of corporate strategies and policies, business plans and operating budgets, and Management's over-all performance to ensure optimum results;

(e) Ensure that the Company complies with all relevant laws, rules, regulations and

codes of best business practices;

(f) Select and appoint a President/CEO and such other Executive Officers of the Company with the appropriate level of motivation, integrity, competence and professionalism;

(g) Adopt a competitive selection and promotion process, a professional development

program, as well as a succession plan, to ensure that the Officers of the Company have the necessary motivation, integrity, competence and professionalism;

(h) Monitor and manage potential conflicts of interest of Directors, Management, and

shareholders, including misuse of corporate assets and abuse in related party transactions;

(i) Ensure the integrity of the Company's accounting and financial reporting systems,

including independent audit, and that appropriate systems of control are in place, in particular, systems for risk management, financial and operational control, and compliance with the law and relevant standards;

(j) Adopt, implement and oversee the process of disclosure and communications;

(k) Provide sound written policies and strategic guidelines on the Company's operating

budget and major capital expenditures;

(l) Implement a system of internal checks and balances, which may be applied in the first instance to the Board. Such systems should be regularly reviewed and updated;

(m) Identify and monitor, and provide appropriate technology and systems for the

identification and monitoring of key risks and key performance areas.

(n) Constitute an Audit Committee and such other specialized committees as may be necessary, or required by applicable regulations, to assist the Board in discharging its functions; and

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(o) Conduct and maintain the affairs of the Company within the scope of its authority, as

prescribed in its Articles of Incorporation, By-Laws, and applicable laws, rules and regulations.

3.5 Specific Duties and Responsibilities of Each Director. A Director assumes a position

of trust and confidence and as such, he must act in the best interest of the Company. His actions must be characterized by transparency, accountability, fairness and responsibility and he must exercise leadership, prudence and integrity in directing the Company towards sustained progress over the long term. In this regard, in addition to the duties and responsibilities of a director as set forth in the Company's By-Laws, a director shall observe the following: (a) Remain fit and proper for the position for the duration of his term. (b) Conduct fair business transaction with the Company and ensure that personal

interest does not compromise Board decisions. A director shall not use his position to make profit or acquire benefit or advantage for himself and/or his related interest. He should avoid situations that may compromise his impartiality. He should observe the conflict of interest policy stated in this Code.

(c) Devote time and attention necessary to properly and effectively perform his duties

and responsibilities. A director should prepare for, attend and actively participate in Board meetings. He is expected to devote substantial time and attention to the affairs of the Company, and keep himself informed about the Company's business.

(d) Act honestly and in good faith, in the best interest of the Company, including its

stakeholders. Before deciding on any matter brought before the Board of Directors, every director should evaluate the issues, ask questions and seek such clarifications, as he may deem appropriate.

(e) Act judiciously and exercise independent, competent, honest and courageous

judgment. A director should decide on each problem/situation in utmost good faith, being reasonably informed thereon and rationally believing the action he takes is in the best interest of the company and support plans and ideas which he believes are beneficial to the Company.

(f) Have working knowledge of the statutory and regulatory requirements affecting the

Company. This includes a firm knowledge of the contents of the Company's Articles of Incorporation and By-Laws and the amendments thereto, and where applicable, the requirements of other regulatory agencies.

(g) Observe confidentiality. A director shall observe the confidentiality of non-public

information acquired by reason of his position as a director. He should not disclose any information to any other person without the authority of the Board.

(h) Ensure the continuing soundness, effectiveness and adequacy of the Company's

control environment. Each director is responsible for assuring that actions taken by the Board maintain the adequacy of the control environment within the Company.

(i) Prior to assuming office, if possible, or soon thereafter, attend a seminar on

corporate governance, which shall be conducted by a duly recognized private or government institution. If necessary, funds shall be allocated by the Company for this purpose.

3.6 Charter of Expectations.

5 The Board recognizes its duties and adopts a formal Charter

of expectations as a general statement of its expectations as to how it will discharge its duties. Copy of the Charter of Expectations is attached to this Code as Annex "A.'1 The

5 GCG Code of Corporate Governance for GOCCs, Sec. 42.2

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Charter will also serve as a tool in assessing the Board's performance and that of individual directors.

3.7 Responsibility on the Financial Statements.

6 The Board, after a thorough review and

evaluation, shall confirm the truth and fairness of the Company's annual financial statements in accordance with the prescribed financial reporting framework indicated therein. Copy of the Statement of Directors' responsibility is attached to this Code as Annex "B."

3.8 Composition of FTI Board.

7 FTI shall have a Board of Directors composed of ELEVEN

(11) Members elected by its stockholders during a meeting specifically called for that purpose in accordance with its Articles of Incorporation and By-Laws.

3.9 Term of Office.

8 Pursuant to Section 17 of Republic Act No. 10149, any provision of the

Company's Articles of Incorporation and By-Laws to the contrary notwithstanding, the term of office of the Chairman and each Member of the Board shall be for one (1) year, unless sooner removed for cause; Provided, however, that each Appointive Director shall continue to hold office until the successor is appointed and qualified.

The one (1) year term of office shall begin on 01 July of the year of appointment and end on 30 June of the following year. Appointment to any vacancy shall only be for the unexpired term of the predecessor.

3.10 Multiple Board seats. The capacity of Board members to serve with diligence shall not

be compromised. As such, no Director may hold more than two (2) other Board seats in other GOCC’s, Subsidiaries and/or Affiliates.

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3.11 Fit and Proper. All Members of the Board, the CEO and other Officers of the Company

shall be qualified by the Fit and Proper Rule adopted by the GCG in consultation and coordination with the relevant government agencies to which the Company is attached, and approved by the President of the Philippines, and shall include by reference the qualifications expressly provided for in the Company's Articles of Incorporation and By-Laws.

To maintain the quality of management of the Company, the GCG, in coordination with the relevant government agencies, shall, subject to the approval of the President of the Philippines, prescribe, pass upon and review the qualifications and disqualifications of individuals appointed as Directors, CEO and other Executive Officers and shall disqualify those found unfit. In determining whether an individual is fit and proper to hold the position of an Appointive Director, CEO or Executive Officer of the Company, due regard shall be given to one's integrity, experience, education, training and competence.

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3.12 Collective and Individual Liability of Board Members. Board members who willfully

and knowingly vote or consent to patently unlawful acts of the Company or who are guilty of gross negligence or bad faith in directing the affairs of the Company or acquire any personal or pecuniary interest in conflict with their duty as such members, shall be liable jointly and severally for all damages resulting therefrom suffered by the Company, shareholders, stakeholders and/or persons, without prejudice to the imposition of criminal or administrative penalties.

In addition, when a Board Member attempts to acquire or acquires, in violation of his duty, any interest adverse to the Company in respect of any matter which has been reposed in

6 Ibid. Sec. 42.4

7 Ibid. Sec. 12 (a)

8 Ibid. Sec. 14

9 Ibid. Sec. 11

10 Ibid. Sec. 13

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him to deal in his own behalf, he shall be liable as a trustee for the Company and must account for the profits which otherwise would have accrued to the Company. Any board member who enters into a transaction or contract grossly disadvantageous to the government, whether he profited from it or not, shall be liable for violation of Republic Act No. 3019 or the Anti-Graft and Corrupt Practices Act.

3.13 Exercise of Objective and Independent Judgment. Unless otherwise provided in the

Company's Articles of Incorporation and By-Laws, good practice calls for the separation of the positions of Chairman and President/Chief Executive Officer ("CEO") to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making. However, where both positions of the Chairman and CEO are unified, there is clearly one leader to provide a single vision and mission. In this instance, checks and balances should be clearly provided to help ensure that independent, outside views, perspectives, and judgments are given proper hearing in the board.

3.14 Board Officers.

11 The Board Officers of FTI are the Chairman of the Board (who is the

highest ranking of the Board Officers) the Vice-Chairman, the Corporate Secretary, and the Compliance Officer, who must all be Filipino citizens.

(a) Chairman of the Board

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The Chairman shall, when present, preside at all meetings of the Board. The Chairman's responsibilities may include:

(i) Calling meetings to enable the Board to perform its duties and responsibilities;

(ii) Approving meeting agenda in consultation with the CEO and the

Corporate Secretary;

(iii) Exercising control over quality, quantity and timeliness of the flow of information between Management and the Board; and

(iv) Assisting in ensuring compliance with the Company's guidelines on

corporate governance.

The responsibilities set out above may pertain only to the Chairman's role in respect to the Board proceedings, and shall not be taken as a comprehensive list of all the duties and responsibilities of a Chairman. For legal purposes, the Chairman of the Governing Board shall be considered as the "Head of Agency" of FTI.

(b) Vice Chairman13

In the absence of the Chairman of the Board, the Vice-Chairman shall preside at the meetings of the Board, as well as all other functions of the Chairman.

(c) Corporate Secretary

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The Corporate Secretary need not be a member of the Governing Board. The Corporate Secretary must possess organizational and interpersonal skills, and the legal skills of a Chief Legal Officer. The Corporate Secretary shall have the following functions:

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Ibid. Sec. 15 12

Ibid. Sec. 15.1 13

Ibid. Sec. 15.2 14

Ibid. Sec. 15.3

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(i) Serve as an adviser to the Board Members on their responsibilities and

obligations; (ii) Keep the minutes of meetings of the shareholders, the Board, the Executive

Committee, and all other committees in a book or books kept for that purpose, and furnish copies thereof to the Chairman, the CEO and other members of the Board as appropriate;

(iii) Keep in safe custody the seal of the Company and affix it to any instrument

requiring the same; (iv) Have charge of the stock certificate book and such other books and papers as

the Board may direct; (v) Attend to the giving and serving of notices of Board and shareholder meetings; (vi) Be fully informed and be part of the scheduling process of other activities of

the Board; (vii) Receive instructions from the Chairman on the preparation of an annual

schedule, the calling of Board meetings, the preparation of regular agenda for meetings, and notifying the Board of such agenda at every meeting;

(viii) Oversee the adequate flow of information to the Board prior to meetings; and (ix) Ensure fulfillment of disclosure requirements to regulatory bodies.

The Corporate Secretary shall have such other responsibilities as the Board may impose upon him. The Board shall have separate and independent access to the Corporate Secretary.

(d) Compliance Officer15

The Board shall appoint a Compliance Officer who shall report directly to the Chairman. In the absence of such office or appointment, the Corporate Secretary, who is preferably a lawyer, shall act as Compliance Officer. In addition to the Compliance Officer's primary function to comply with the Company's reportorial and other obligations to government and private regulatory agencies, and make disclosures about the Company for transparency, the Compliance Officer shall perform the following duties: (i) Monitor compliance by the Company of the requirements under Republic Act

No. 10149, the Code of Corporate Governance for GOCCs (GCG Memorandum Circular No. 2012-07), and the rules and regulations of the appropriate Government Agencies and, if any violations are found, report the matter to the Board and recommend the imposition of appropriate disciplinary action on the responsible parties and the adoption of measures to prevent a repetition of the violation;

(ii) Appear before the GCG when summoned in relation to compliance with the

Code of Corporate Governance for GOCCs (GCG Memorandum Circular No. 2012-07) or other compliance issues; and

(iii) Issue a certification every 30 May of the year on the extent of the Company's

compliance with the government corporate standards governing GOCC5 for the

15

Ibid. Sec. 15.4

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period beginning 01 July of the immediately preceding calendar year and, if there are any deviations, explain the reason for such deviation.

The appointment of a Compliance Officer shall not relieve the Governing Board of its primary responsibility vis-á-vis the State, acting through the GCG, to ensure that the Company had complied with all its reportorial, monitoring and compliance obligations The Compliance Officer shall have such other responsibilities as the Board may impose upon him. The Board shall have separate and independent access to the Compliance Officer.

3.15 Board Committees.

16 The Governing Board of FTI shall constitute the proper committees

to assist them in performing their duties and responsibilities, providing each of the committees with written terms of reference defining the duties, authorities and the composition of the committees constituted. The committees shall report to the entire Board as a collegial body and the minutes of their meetings shall be circulated to all members of the Board. The existence of the committees shall not excuse the Board of Directors of its collective responsibility for all matters that are within the primary responsibility and accountability of the Board.

As a minimum, the Board shall be supported by the following specialized committees: (a) Executive Committee

Prior to assuming office, if possible, or soon thereafter, attend a seminar on corporate governance, which shall be conducted by a duly recognized private or government institution. If necessary, funds shall be allocated by the Company for this purpose. The Executive Committee, in accordance with the authority granted by the Board, or during the absence of the Board, shall act by a vote of at least two-thirds (2/3) of its members on such specific matters within the competence of the Board as may from time to time be delegated to the Executive Committee in accordance with the Company's By-Laws, except with respect to: (i) Approval of any action for which shareholders approval is also required; (ii) Filling of vacancies on the Board or in the Executive Committee; (iii) Amendment or repeal of By-Laws or the adoption of new By-Laws; (iv) Amendment or repeal of any resolution of the Board which by its express terms

is not so amendable or repealable; (v) Distribution of cash dividends; and (vi) Exercise of powers delegated by the Board exclusively to other committees, if

any.

The Executive Committee shall fix its own rules of procedure. An act of the Executive Committee which is within the scope of its powers shall not require ratification or approval for its validity and effectivity; Provided, however, that the Board may, at any time, enlarge or redefine the powers of the Executive Committee. All actions of the Executive Committee shall be reported to the Board at the meeting thereof following such action and shall be subject to revision or alteration by the Board, provided that no rights or acts of third parties shall be affected by any such revision or alteration.

16

Ibid. Sec. 16

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(b) Audit Committee

There shall be an audit committee composed of at least three (3) members, whose Chairman should have an adequate understanding of accounting and auditing principles in general and of the Company's financial management systems and environment in particular. The Audit Committee is expected, through the provision of checks and balances, to bring positive results in supervising and supporting the management of the Company. It shall have the following particular duties and responsibilities: (i) Assist the Board in the performance of its oversight responsibility for the

financial reporting process, system of internal control, audit process, and monitoring of compliance with applicable laws, rules and regulations including Commission on Audit (COA) requirements;

(ii) Provide oversight over Management's activities in managing credit, market,

liquidity, operational, legal, and other risks of the Company. This function shall include regular receipt from Management of information on risk exposures and risk management activities;

(iii) Perform oversight functions over the Company's internal and external auditors,

and coordinate with COA. It should ensure that the internal and external auditors act independently from each other, and that both auditors are given unrestricted access to all records, properties and personnel to enable them to perform their respective audit functions;

(iv) Review the annual internal audit plan to ensure its conformity with the objectives

of the Company. The plan shall include the audit scope, resources and budget necessary to implement it;

(v) Prior to the commencement of the audit, discuss with the external auditor the

nature, scope and expenses of the audit, and ensure proper coordination if more than one audit firm is involved in the activity to secure proper coverage and minimize duplication of efforts;

(vi) Organize an internal audit department and consider the appointment of an

independent internal auditor and the terms and conditions of its engagement and removal;

(vii) Monitor and evaluate the adequacy and effectiveness of the Company's internal

control system, including financial reporting control and information technology security;

(viii) Review the reports submitted by the internal and external auditors; (ix) Review the quarterly, half-year and annual financial statements before

submission to the Board, with particular focus on the following matters:

a. Any change/s in accounting policies and practices

b. Major judgmental areas

c. Significant adjustments resulting from the audit

d. Going concern assumptions

e. Compliance with accounting standards

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f. Compliance with tax, legal and regulatory requirements;

(x) Coordinate, monitor and facilitate compliance with laws, rules and regulations;

(xi) Evaluate and determine the non-audit work, if any, of the external auditor, and review periodically the non-audit fees paid to the external auditor in relation to their significance to the total annual income of the external auditor and to the Company's overall consultancy expenses. The Committee shall disallow any non-audit work that will conflict with his duties as an external auditor or may pose a threat to his independence. The non-audit work, if allowed, should be disclosed in the Company's annual report; and

(xii) Establish and identify the reporting line of the Internal Auditor to enable him to

properly fulfill his duties and responsibilities. He shall functionally report directly to the Audit Committee. The Audit Committee shall ensure that, in the performance of the work of the Internal Auditor, he shall be free from interference by outside parties.

(xiii) Develop a transparent financial management system that will ensure the

integrity of internal control activities throughout the Company through a procedures and policies handbook that will be used by the entire organization.

(c) Governance Committee

17

The Governance Committee shall assist the Board of Directors in fulfilling its corporate governance responsibilities. The Committee shall be composed of at least three (3) members of the board, and chaired by the Chairman of the Board. The Committee shall be responsible for the following: (i) Oversee the periodic performance evaluation of the Board and its committees

and Management; and shall also conduct an annual self-evaluation of their performance;

(ii) Decide whether or not a Director is able to and has been adequately carrying

out his duties as director bearing in mind the Director's contribution and performance (e.g. competence, candor, attendance, preparedness and participation). Internal guidelines shall be adopted that address the competing time commitments that are faced when directors serve on multiple boards;

(iii) Recommend to the Board regarding the continuing education of Directors,

assignment to Board Committees, succession plan for the Executive Officers, and their remuneration, commensurate with corporate and individual performance; and

(iv) Recommend by which manner the Board's performance may be evaluated and

propose an objective performance criteria approved by the Board. Such performance indicators shall address how the Board will enhance long-term shareholder's value.

(d) Nomination and Remunerations Committee

The Nomination and Remunerations Committee shall be composed of at least three (3) members. The Committee shall have the following functions: (i) Install and maintain a process to ensure that all Board Members and Officers to

be nominated or appointed shall have the qualifications and none of the disqualifications mandated under the law, rules and regulations;

17

GCG Code of Corporate Governance for GOCCs, Sec. 16.3

14

14

(ii) Encourage the selection of a mix of competent Board Members, each of whom can add value and create independent judgment as to the formulation of sound corporate strategies and policies;

(iii) Review and evaluate the qualifications of all persons nominated to the positions

in the Company which require appointment by the Board; (iv) Recommend to the GCG nominees for the shortlist in line with the Company's

Board composition and succession plan; and18

(v) Develop recommendations to the GCG for updating the CPCS and ensuring that

the same continues to be consistent with the Company's culture, strategy, control environment, as well as the pertinent laws, rules and regulations.

19

(e) Risk Management Committee

20

The Risk Management Committee shall consist of at least three (3) members, with at least one (1) member having a background in finance and investments. The Risk Management Committee shall be responsible for the following: (i) Perform oversight risk management functions specifically in the areas of

managing credit, market, liquidity, operational, legal, reputational and other risks of the Company, and crisis management, which shall include receiving from Senior Management periodic information on risk exposures and risk management activities;

(ii) Develop the Risk Management Policy of the Company, ensuring compliance

with the same and ensure that the risk management process and compliance are embedded throughout the operations of the Company, especially at the Board and Management level; and

(iii) Provide quarterly reporting and update the Board on key risk management

issues as well as ad hoc reporting and evaluation on investment proposals.

(f) Combining the Mandatory Committees.21

The Governing Board may formally combine the functions of the committees into such combinations that will best serve the interest of the Company.

3.16 Annual Performance Evaluation of the Board. A systematic evaluation process of the

FTI Board shall be developed as a necessary tool in enhancing its professionalism and as a useful incentive for Board Members to devote sufficient time and effort to their duties. The evaluation should also be instrumental in developing effective and appropriate induction and training programs for new and existing Board Members.

IV MANAGEMENT

The Management stands as the locus of decision-making for the day-to-day affairs of the Company. It determines the Company's activities by putting its targets in concrete terms and by implementing basic strategies for achieving these targets. It also puts in place the infrastructure for the Company's success by establishing the following mechanisms in its organization; organizational structures that work effectively and efficiently in attaining the goals of the Company; useful planning, control, and risk management systems that assess risks on an

18

Ibid. Sec. 16.4 (c) 19

Ibid. Sec. 16.4 (d) 20

Ibid. Sec. 16.5 21

Ibid. Sec. 16.6

15

15

integrated cross-functional approach; information systems that are defined and aligned with an information technology strategy and the business goals of the Company; and a plan of succession that formalizes the process of identifying, training and selection of successors in key positions in the Company. 4.1 Management Primarily Accountable to the Board. Management is primarily

accountable to the Board for the operations of the Company. As part of its accountability, Management shall provide all members of the Board with a balanced and understandable account of the Company's performance, position and prospects on a monthly basis.

4.2 Executive Officers. Subject to the provisions of the Articles of Incorporation and By-

Laws of the Company, the Executive Officers to be appointed/elected by the Board shall include the following:

(a) President/Chief Executive Officer (CEO)

Pursuant to the Company's By-Laws, the President shall be the CEO of the Company. He shall be elected annually by the members of the Board from among its ranks, and shall be subject to the disciplinary powers of the Board and may be removed by the Board for cause. In addition to the duties imposed on him by the Board, the President/CEO shall: (i) Exercise general supervision and authority over the regular course of

business, affairs, and property of the Company, and over its employees and officers;

(ii) See to it that all orders and resources of the Board are carried into effect; (iii) Submit to the Board as soon as possible after the close of each fiscal year,

and to the shareholders at the annual meeting, if applicable, a complete report of the operations of the Company for the preceding year, and the state of its affairs;

(iv) Report to the Board from time to time all matters which the interest of the

Company may require to be brought to its notice; and

(v) Preside in all meetings of the Board of Directors in the absence of the Chairman.

The President/CEO shall have such other responsibilities as the Board may impose upon him.

(b) Corporate Treasurer

The Treasurer of the Company shall have charge of the funds, securities, receipts and disbursements of the Company. Unless otherwise provided in the Articles of Incorporation or By-Laws, he shall have the following functions: (i) Deposit or cause to be deposited all monies and other valuable effects in the

name and to the credit of the Company in compliance with applicable laws, rules and regulations;

(ii) Regularly and at least every quarter render to the President/CEO or to the

Board an account of the fund condition of the Company and all his transactions as such;

(iii) Ensure fund availability on a timely basis and at the most economical means; (iv) Optimize yields in temporary excess funds;

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16

(v) Provide relevant and timely financial market information; and (vi) Ensure appropriate coverage and management risk to resources.

The Treasure shall have such other responsibilities as the Board and/or the President/CEO may impose upon him.

(c) Chief Finance Officer (“CFO”)

The CFO who may also be the Treasurer shall be responsible for the following: (i) Provide management with accurate, relevant, and timely operating and

financial reports and analysis necessary for financial planning and strategy formulation, and monitor actual implementation of budgets, plans and programs towards the achievement of corporate goals;

(ii) Maintain the integrity of accounting records as the basis of the financial

statements and reports provided to Management for decision-making and to government regulatory bodies in compliance with statutory requirements.

(iii) Promote investor and public confidence in the Company by addressing the

various information requirements of the investing public and ensuring that all other legal reportorial obligations to the concerned agencies are complied with; and

(iv) Strengthen internal controls by monitoring compliance with policies and

recommending to Management appropriate actions and changes in systems and procedures in the exigencies of the service.

The CFO shall have such other responsibilities as the Board and/or the President/CEO may impose upon him.

4.3 Power of the Governing Board to Discipline/Remove Officers. Subject to existing

laws, rules and regulations, and with ensuring compliance with the requirements of due process, the Board shall have the authority to discipline, or remove from office, the President/CEO, or any other Officer, upon a majority vote of the members of the Board who actually took part in the investigation and deliberation.

22

V GOVERNANCE POLICY ON CONFLICT OF INTEREST

Public policy dictates that the personal interest of Board Members and Officers should never prevail over the interest of the Company. As such, Board Members and Officers may not directly or indirectly derive any personal profit or advantage by reason of their position in the Company. 5.1 Determination of Conflict of Interest. A conflict of interest exists when a Board Member

or Officer of the Company:

(a) Supplies or is attempting or applying to supply goods or services to the Company; (b) Supplies or is attempting to supply goods, services or information to an entity in

competition with the Company; (c) By virtue of his office, acquires or is attempting to acquire for himself a business

opportunity which should belong to the Company;

22

Ibid. Sec. 22

17

17

(d) Is offered or receives consideration for delivering the Company's business to a third party; and

(e) Is engaged or is attempting to engage in a business or activity which competes with

or works contrary to the best interests of the Company. 5.2 Disclosure of Conflict of Interest. If an actual or potential conflict of interest should

arise on the part of Board Members, it should be fully disclosed and the concerned Board Member should not participate in the decision-making. A Board Member, including the President/CEO, who has a continuing conflict of interest of a material nature should either resign or, if the Board deems appropriate, be removed from the Board.

5.3 A contract of the Company with one or more of its Board Members or Officers is

voidable, at the option of the Company, unless all the following conditions are present:

(a) The presence of such director in the board meeting in which the contract was approved was not necessary to constitute a quorum for such meeting;

(b) The vote of such director was not necessary for the approval of the contract;

(c) The contract is fair and reasonable under the circumstances; and

(d) In case of an Officer, the contract has been previously approved by the Board.

Where any of the first two conditions set forth in the preceding paragraph is absent, in the case of a contract with a Board Member, such contract may be ratified by the vote of shareholders representing two-thirds (2/3) of the outstanding capital stock in a meeting called for that purpose; Provided, that full disclosure of the adverse interest of the Board Member involved is made at such meeting; and Provided, further, that the contract is fair and reasonable under the circumstances.

5.4 Liability of Board Members. Where a Board Member, by virtue of his office, acquires for

himself a business opportunity which should belong to the Company, thereby obtaining profits to the prejudice of the Company, the Board Member must account to the latter for all such profits by refunding the same, unless his act has been ratified by a vote of the shareholders owning or representing at least two-thirds (2/3) of the outstanding capital stock. This provision shall be applicable notwithstanding the fact that the Board Member risked his own funds for the venture. The foregoing is without prejudice to the Company's existing Rules or Code of Conduct and Ethics for its officers, employees and staff.

5.5 Trustee Relation to FTI Properties, Interests and Monies. Except for the per diem

received for actual attendance in board meetings and the reimbursement of actual and reasonable expenses and incentives as authorized by the GCG, any and all realized and unrealized profits and/or benefits including, but not limited to, the share in the profits, incentives of Directors or Officers in excess of that authorized by the GCG, stock options, dividends and other similar offers or grants from corporations where FTI is a stockholder or investor, and any benefits from the performance of Directors or Officers acting for and in behalf of FTI in dealing with Subsidiaries and other interest, are to be held in trust by such Director or Officer for the exclusive benefit of FTI.

23

5.6 Taking of Corporate Opportunities. Where a Director or Officer, by reason of his being

a member of the Board or an Officer of FTI, acquires or receives for himself a benefit or profit of whatever kind or nature, including but not limited to, the acquisition of shares in corporations where FTI has an interest, the use of the properties of FTI for his own benefit, the receipt of commission(s) on contract(s) with FTI or its assets, or the taking advantage of corporate opportunities of FTI, all such profits or benefits shall be subject to restitution pursuant to Section 24 of the Act, without prejudice to any administrative, civil

23

Ibid. Sec. 27.2

18

18

or criminal action against such Director or Officer. The remedy of restitution shall apply notwithstanding the fact that such Director or Officer risked his own funds in the venture.

24

5.7 No Gift Policy.

25 FTI adopts a "No Gift Policy." All FTI employees, Officers and members

of its Board of Directors shall NOT SOLICIT OR ACCEPT, directly or indirectly, any gift, gratuity, favor, entertainment, loan, or anything of monetary value ("Gift") from any person, where such Gift:

(a) Would be illegal or in violation of law; (b) Is part of an attempt or agreement to do anything;

(c) Has a value beyond what is normal and customary in FTI 's business;

(d) Could create the appearance of a conflict of interest.

The “FTI No Gift Policy” and the rules therefore formally adopted by the FTI are published in the Company website.

VI OBLIGATIONS OF FTI TO DIRECTORS AND OFFICERS

26

6.1 Providing for Staff Support to Directors. FTI shall provide the members of its Governing Board with reasonable support staff and office facilities to allow them to properly discharge their duties and responsibilities.

6.2 Obtaining of Directors and Officers Liability Insurance (DOLl). Having imposed the

highest level of responsibility and accountability on the members of the Board and Officers, i.e., that of extraordinary diligence, it is equitable that when the Company itself and/or the members of the Board and Management are hailed before tribunals on matters that are within the official functions and capacity and on matters where business judgment has been exercised in good faith, that there be proper recovery of the costs of litigation and the judgment liability imposed.

As a prudent measure, FTI shall obtain "Directors and Officers liability Insurance" (DOLl) for itself and the members of the Governing Board and Officers against contingent claims and liabilities that may arise from, as well as the expenses that may be incurred in prosecuting, the actions that may be filed against the company arising from the actions of the Governing Board and/or Management that may cause loss or damage to third parties. Nothing herein shall be construed as to authorize the reimbursement or the incurring of costs, such as the payment of premiums on DOLI coverage, by the Company on the litigation expenses incurred and the judgment liability decreed against a Director or Officer for breach of any of his fiduciary duties or for fraud committed in the performance of his duties to the Company and/or its stakeholders.

VII PROTECTION OF SHAREHOLDERS' RIGHTS

AND EQUITABLE TREATMENT OF SHAREHOLDERS

24

Ibid. Sec. 27.3 25

Ibid. Sec. 29 26

Ibid. Chap. VI, Secs. 31-32

19

19

This code protects and facilitates the exercise of rights of FTI's shareholders. It ensures the equitable treatment of all shareholders, including minority shareholders. All shareholders should have the opportunity to obtain effective redress for violation of their rights.

7.1 FTI should protect the rights of shareholders. Whenever a part of FTI's capital is held by private shareholders, institutional or individual, the government and FTI recognize their rights, including the right to secure methods of ownership registration; convey or transfer shares; obtain relevant and material information on the Company on a timely and regular basis; participate and vote in general shareholder meetings; and share in the profits of the Company.

In particular, the Corporation Code grants the following rights to shareholders: (a) The right to vote on certain corporate acts in accordance with the Corporation Code; (b) Pre-emptive rights, unless there is a specific denial of this right in the Articles of

Incorporation or an amendment thereto. Shareholders shall have the right to subscribe to the capital stock of the Company. The Articles of Incorporation may lay down the specific rights and powers of shareholders with respect to the particular shares they hold, all of which are protected by law so long as they are not in conflict with the Corporation Code.

(c) Pre-emptive rights, unless there is a specific denial of this right in the Articles of

Incorporation or an amendment thereto. Shareholders shall have the right to subscribe to the capital stock of the Company. The Articles of Incorporation may lay down the specific rights and powers of shareholders with respect to the particular shares they hold, all of which are protected by law so long as they are not in conflict with the Corporation Code.

(d) For minority shareholders, the right to propose the holding of a meeting, and the right

to propose items in the agenda of the meeting, provided the items are for legitimate business purposes. In accordance with existing law and jurisprudence, minority shareholders shall have access to any and all information relating to matters for which the Management is accountable for and to those relating to matters for which the Management should include such information and, if not included, then the minority shareholders can propose to include such matters in the agenda of shareholders meeting, provided, always, that this right of access is conditioned upon the requesting shareholders having legitimate purpose for such access;

(e) The right to receive dividends subject to the discretion of the Board. By law, however,

a government corporation may be directed to declare dividends when its retained earnings is in excess of 100% of its paid-in capital stock, except: (a) when justified by definite corporate expansion projects or programs approved by the Board; or (b) when the corporation is prohibited under any loan agreement with any financial institution or creditor, whether local or foreign, form declaring dividends without its consent, and such consent has not been secured; or (c) when it can be clearly shown that such retention is necessary under special circumstances obtaining in the corporation, such as when there is a need for a special reserve for probable contingencies;

(f) Appraisal rights under the following circumstances: (a) in case any amendment of the

Articles of Incorporation has the effect of changing or restricting the rights of any shareholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class or of extending or shortening the term of corporate existence; (b) in case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Corporation Code; and (c) in case of merger or consolidation.

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20

7.2 Duty of FTI Board to Promote Shareholders' Rights. It is the duty of the Board to promote shareholders' rights, remove impediments to the exercise of shareholders' rights and provide effective redress for violation of these rights.

7.3 High Degree of Transparency towards All Shareholders. A crucial condition for

protecting minority and other shareholders is to ensure a high degree of transparency. Minority and other shareholders should have access to all the necessary information to be able to make informed investment decisions. Any shareholder agreements, including information agreements covering Board Members, should be disclosed.

7.4 Active Communication and Consultation with All Shareholders. They should identify

with their shareholders and keep them duly informed in a timely and systematic fashion about material events and forthcoming shareholder meetings. They should also provide them with sufficient background information on issues that will be subject to decision. It is the responsibility of the FTI Board to make sure that the Company fulfills its obligations in terms of information to the shareholders. The participation of minority shareholders in shareholder meetings should be facilitated in order to allow them to take part in fundamental corporate decisions.

VIII CORPORATE SOCIAL RESPONSIBILITY (CSR)

27

AND RELATIONS WITH STAKEHOLDERS

In the conduct of its business, FTI is committed to promoting the development of communities by providing relevant CSR initiatives in the areas where it operates. This is FTI's corporate responsibility and the key element in the attainment of its vision and mission as a Company. 8.1 Duty to be Responsive to Stakeholders. Every Director and Officer accepts the position

fully aware that he assumes certain responsibilities not only to the Company and its stockholders, but also with different constituencies or stakeholders, who have the right to expect that the Company is being run in a prudent manner and with due regard to the interests of all stakeholders. Consequently, members of the Board and Officers shall deal fairly with the Company's employees, customers, suppliers and other stakeholders. No member of the Board or Officer may take unfair advantage of the Company's employees, customers, suppliers and other stakeholders through manipulation, concealment, abuse of confidential or privileged information, misrepresentation of material facts, or any other unfair-dealing practice.

8.2 CSR Principles. As an integral part of the National Government, GOCCs are inherently

mandated to be socially responsible, to act and operate as good corporate citizens. The Governing Board shall recognize and perform the obligations the Company has towards the National Government, its majority stockholder, as well as the minority stockholders when existing, together with the employees, suppliers, customers and other stakeholders, and the communities in which it operates.

The Directors, Officers and all its employees are required to abide by ethical policies as mandated by the GCG. The protection of the reputation and goodwill of the Company is of fundamental importance, and Directors. Officers and employees should be aware of the disciplinary implications of breaches of policy. Every member of the Company is encouraged to promptly report any potentially illegal, improper and/or unethical conduct that they have become aware of at their workplace or in connection with their work. FTI should have an environment that enables its people to raise genuine and legitimate concerns internally. However, in the event that the people of the Company, and/or the stockholders believe their reporting to management may result in harassment, or undue distress, they may contact the GCG support to report such

27

Ibid. Chap. VII, Secs. 33-40

21

21

matters. The GCG provides for an opportunity for concerns to be investigated and ensures appropriate action is taken to resolve the matter effectively.

8.3 Formal Recognition of the Stakeholders. FTI shall, as an integral' part of its Charter

Statement and as embodied in this Code, identify and formally recognize the Company's major and other stakeholders, identify the nature of their interests, provide a hierarchy system of their conflicting interest in the Company, and providing a clear policy on communicating or relating with stakeholders accurately, effectively and sufficiently, together with a system of properly rendering an accounting on how the Company has served their legitimate interests.

8.4 Employees. Every employee in FTI is encouraged to:

(a) Remember that the biggest stakeholder is the Government;

(b) Share the vision of the Company;

(c) Be accountable to the public;

(d) Listen and learn from his co-employees;

(e) Think and act as a team;

(f) Focus on the customers and strive for customer satisfaction;

(g) Respect others;

(h) Communicate with stockholders and customers;

(i) Deliver results and celebrate success; and

(j) Protect the reputation of the Company.

There shall be employee development discussions and structured training programs for continuing personal and professional development for employees.

8.5 Customers. Integrity and honesty in dealings with customers is necessary for a

successful and sustained business relationship. FTI shall operate a highly effective and efficient organization, focused on meeting customer objectives with the aim of providing services which give fair value and consistent quality, reliability and safety in return for the price paid for the same. The Company shall operate policies of continuous improvement, of both processes and the skills of the staff, to take best advantage of advances in all aspect of society in order to ensure that it continues to add value to its customers' business.

The Company shall have clear and strong lines of communication which allow it to respond quickly and efficiently to customer and market requirements, as well as the public needs, and for the customers to receive consistent service in order to successfully and consistently deliver what the Company is mandated to do.

8.6 Suppliers. As with other relationships with the stakeholders, FTI shall aim to develop

relationships and improve networking with business partners and suppliers based on mutual trust. The Company shall aim to offer, through partnership with its suppliers, the best combination of state-of-the-art technology and world-class service, strong customer relations and deep industry knowledge and experience, together with the capacity to implement and deliver value-added solutions on time and within budget.

8.7 Health and Safety. FTI shall aim to ensure a safe and healthy working environment for

all its employees, outside contractors and visitors. The Company shall comply with all relevant local legislation or regulations, and best practice guidelines recommended by

22

22

national health and safety authorities. The staff shall be informed regarding the policies and practices of the Company in order to maintain a healthy, safe and enjoyable environment.

8.8 Environment. GOCCs should consider that there are inevitable environmental impacts

associated with daily operations. It shall be the goal of FTI to minimize harmful effects and consider the development and implementation of environmental standards to achive this to be of great importance. As such, FTI strongly encourages the 3 R's: "Reduce", "Re-use" and "Recycle".

In the course of the operations of FTI, it shall identify opportunities to reduce consumption of energy, water and other natural resources. The Company shall also strive to reuse and recycle where possible and dispose of non-recyclable items responsibly, thereby minimizing our impact on the environment. In doing so, by adopting simple, environmentally friendly initiatives, the Company shall raise awareness among the members of the communities it affects.

IX

DISCLOSURE AND TRANSPARENCY

FTI shall continue to enhance transparency and disclosure of all material information to the National Government and the public in general. Timely and accurate disclosure shall be made on all material matters regarding FTI, including its financial situation, performance, ownership and governance. 9.1 Disclosure of material information. FTI shall make a disclosure on, among others, the

following material information:

(a) FTI objectives and their fulfillment. When the government is the majority shareholder or effectively controls the Company, its objectives shall be made clear to all other investors and the general public.

(b) Ownership and voting structure of FTI. The Company shall clarify who retains

legal ownership of the government's shares and where the responsibility for exercising the government's ownership rights is located. Any special rights or agreements that may distort ownership or control structure of the Company should be disclosed.

(c) Any material risk factors and measures taken to manage such risks. FTI

acknowledges the importance of disclosing material risk factors. Without adequate reporting of material risk factors, the Company may give a false representation on its financial situation and overall performance. Appropriate disclosure by the Company of the nature and extent of risk incurred in their operations requires establishment of sound internal risk management systems to identify, manage, control and report on risks. Public-Private partnerships shall also be adequately disclosed as such ventures are often characterized by transfers of risks, resources and rewards between public and private partners for the provision of public services or public infrastructure and may consequently induce new and specific material risks.

(d) Any financial assistance, including guarantees, received from the government

and commitments made on behalf of FTI. To give a fair and complete picture of FTI's financial situation, the mutual obligations, financial assistance or risk-sharing mechanisms between the government and FTI should be appropriately disclosed. Disclosure should include details on any government grant or subsidy received by the Company, any guarantee granted by the government to the Company for its operations, as well as any commitment that the government undertakes on behalf of the Company.

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23

(e) Any material transactions with related entities. Transactions between FTI and related entities, such as an equity investment of one government corporation in another shall be disclosed. Reporting on transactions with related entities shall provide all information that is necessary for assessing the fairness and appropriateness of these transactions.

FTI shall also disclose information on its financial and operating results; remuneration policy for members of the Board and key executives, and information about board members, including their qualifications, the selection process, other company directorships and whether they are regarded as independent by the Board; related party transactions; issues regarding employees and other shareholders; and governance structures and policies and the process by which they are implemented.

9.2 Electronic Disclosure of Information. FTI shall maintain a website and post therein for

unrestricted public access the following:

(a) On institutional Matters:

(i) Being a Non-Chartered GOCC, its Articles of Incorporation and By-Laws;28

(ii) Latest General Information Sheet (CIS) and brief company background

including date of incorporation, history, functions and mandate; (iii) List of Subsidiaries and Affiliates; and (iv) Government Corporate Information Sheet (GCIS) as mandated by the GCG in

its Memorandum Circular No, 2012-01. (b) On the Board and Officers:

(i) Complete listing of the Directors and Officers with attached resume, and their

membership in Board Committees; (ii) Complete compensation package of all the board members and officers,

including travel, representation, transportation and any other form of expenses or allowances.

(iii) Information on Board Committees and their activities; and (iv) Attendance record of Directors in Board and Committee meetings.

(c) On Financial and Operational Matters:

(i) Latest annual Audited Financial and Performance Report within thirty (30) days from receipt of such Report;

(ii) Audited Financial Statements in the immediate past three (3) years; (iii) Quarterly, and Annual Reports and Trial Balance; (iv) Current Corporate Operating Budget (COB); (v) Local and foreign borrowings; (vi) Government subsidies and net lending; (vii) All borrowings guaranteed by the Government;

28

GCG Code of Corporate Governance for GOCCs, Sec. 43

24

24

(viii) Any material risk factors and measures taken to manage such risks; and (ix) Performance Evaluation System (PES).

(d) On Government Matters:

(i) Charter Statement/Mission-Vision Statements; (ii) Performance Scorecards and Strategy Map; (iii) Organizational Chart; (iv) Manual of Corporate Governance; (v) CSR Statement; and (vi) Balance Scorecard

(e) Such other information or report that the GCG may require.

9.3 Mandatory Reports.

29 The Board shall regularly submit, as may be required by the GCG

and other Government Agencies, the following:

(a) Performance Score Cards (b) Implementation of the audit recommendation of COA; and

(c) Compliance with commitments on servicing loans to, and borrowings guaranteed by,

the National Government. 9.4 Other Reportorial Requirements.

30 FTI shall also submit to the GCG periodically in

electronic form the following:

(a) Common Form financial statements based on annual audited financial statements within thirty (30) days from receipt of the report;

(b) Dividend computations and payments in accordance with Republic Act No. 7656, also

known as "The Dividends Law";

(c) Cash and investment balances;

(d) Cash and investment balances;

(e) Cash and investment balances;

(f) Acquisition or disposition of assets;

(g) Off Balance Sheet transactions; and

(h) Reports for the annual corporate budget call such as but not limited to the following:

(i) Physical and Financial Performance reports (the immediately preceding three (3) years); and

(ii) Sources and Uses of Funds [the immediately preceding three (3) years] and the

proposal for the coming year.

29

Ibid. Sec. 45 30

Ibid. Sec. 46

25

25

9.5 Development of internal audit procedures. FTI shall develop efficient internal audit procedures and establish an internal audit function that is monitored by and reports directly to the Board and its Audit Committee.

9.6 Conduct of an independent external audit based on international standards. FTI

shall undergo an annual independent external audit based on international standards. This is presently done by the Commission on Audit (COA). However, these specific government audits are designed to monitor the use of public funds and budget resources, rather than the operations of the state-owned enterprise as a whole. Thus, to reinforce trust in the information provided, the government should require that, in addition to government audits, at least all large government corporations should be subjected to external audits that are carried out in accordance with international standards.

9.7 Observance of the highest quality accounting and auditing standards. FTI shall

disclose financial and non-financial information according to high quality internationally recognized standards. A high level of disclosure is also valuable for the Company in pursuing important public policy objectives. It is particularly important when they have significant impact on the National Budget, on the risks carried by the government, or when they have a more global societal impact.

X COMMUNICATION

10.1 Communication within the organization. The Board and Management shall ensure the

thorough dissemination of this Code to all employees and third parties, and shall enjoin the development of the organizational policies and processes consistent with this Code.

10.2 Education on the Code of Good Public Corporation Governance. Funds shall be

allocated for the conduct of an orientation program to operationalize this Code and for the continued education and training of all officers and employees to ensure compliance with this Code. Each Board Member is enjoined to attend the relevant education programs on corporate governance conducted by the GCG or duly recognized private or government entities.

XI PENALTIES FOR NON-COMPLIANCE

Table of Penalties. To ensure faithful compliance with the GCG Code of Corporate Governance for GOCCs and the Fit and Proper Rule, and the strict adherence to and implementation of the provisions of this Code, the following penalties shall be imposed, with due regard to the principles of due process, on Members of the Board who are found liable for any violation, in addition to such penalties as may have been specifically provided by law: 11.1 The penalty of reprimand shall be meted out against the offender for the first infraction;

11.2 The penalty of suspension from office shall be imposed upon the offender for the second

infraction. The duration of suspension, which shall be determined by the Board, shall be for a period depending on the nature and extent of damage caused, and during which the offender shall not be entitled to any emolument;

11.3 For the third infraction, the Board shall recommend to the GCG the imposition of the

penalty of removal from office upon the offender.

The Board may, at its discretion, constitute a committee to conduct a fact-finding investigation or a hearing for this purpose. The results of the investigation and/or hearing

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shall be submitted to the Board for its consideration and approval, and to the GCG for proper action, when appropriate. The suspension or removal of a Director who is also the CEO shall have the legal effect of suspending or removing him as CEO of FTI.

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XII MISCELLANEOUS PROVISIONS

12.1 Severability and Construction. Each paragraph, part, term and/or provision of this Code shall be considered severable, and if, for any reason, any paragraph, part, term and/or provision herein is determined to be invalid or contrary to, or in conflict with, any existing or future law or regulation, such shall not impair the operation of or affect the remaining portions, sections, parts, terms and/or provisions of this Code.

All captions herein are intended solely for the convenience of the parties, and none shall be deemed to affect the meaning or construction of any provision hereof.

12.2 Suppletory Application. The Act, the GCG Code of Corporate Governance, as well as other relevant GCG Memorandum Circulars shall have suppletory application to this Code.

12.3 Approval by the GCG. This Code shall be subject to the review and approval of the

GCG, the comments and suggestions of which shall form an integral part hereof. APPROVED by the Board of Directors of FTI during its Special Meeting on ______________ at _______________.

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GCG Ownership and Operations Manual Governing the GOCC Sector (GCG Memorandum Circular No.

2012-06), Sec. 20.2

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ANNEX "A" FORMAL CHARTER OF EXPECTATIONS OF DIRECTORS Statement of Principles A. FTI as an active partner of the Government in national development. FTI acknowledges that its corporate organization is essential to the performance of its functions as an active partner of the government in national development. Such functions include the exploration, development and production of energy resources, the production and creation of wealth necessary to support vital government initiatives, as well as delivery of public services. B. Governing principles of good corporate governance of FTI. FTI's corporate governance framework shall be governed by the following principles:

1. FTI shall promote transparency, accountability and fairness, and its business shall be conducted strictly in accordance with the rule of law and shall be supportive of the primary goals and objectives of the government.

2. Timely and accurate disclosure shall be made on all material aspects and development

regarding the company, including its financial condition, performance, ownership, and governance.

3. The strategic guidance of FTI shall be in accord with the objectives set by the

government, the effective monitoring of Management by the Board, and the Board's accountability to the corporation and the shareholders.

4. The exercise of shareholders' rights, when applicable, shall be protected and facilitated.

Also, when applicable, the corporation shall ensure the equitable treatment of all shareholders, including minority shareholders.

5. Active cooperation between the company and its stakeholders in creating wealth, jobs,

and the sustainability of a financially sound enterprise shall be encouraged. C. Commitment to Institutionalize the Principles of Corporate Governance. FTI is committed to institutionalize the principles of good corporate governance in the entire organization. The FTI Board of Directors, together with Management and Employees, commit to the principles contained in the Code of Corporate Governance and acknowledge that this Code will serve as a guide in the achievement of corporate goals. D. Promotion of Corporate Governance. The Board of Directors, together with Management and Employees, believe that good corporate governance is an integral component of sound strategic business management and of transparency and accountability in public corporate governance, and will therefore undertake every effort necessary to create awareness within the company. E. Care, Diligence and Skill in the Conduct of the Business of the Company. The members of the Board, together with its Officers, must exercise extraordinary diligence in the conduct of business and in dealing with the properties of the company. Such degree of diligence requires using the utmost diligence of very cautious person with due regard for all circumstances. Expectations of Directors As members of the FTI Board of Directors, we assume a position of trust and confidence and as such, we must act in the best interest of FTI. Our actions must be characterized by transparency 1 accountability, fairness and responsibility and we must exercise leadership, prudence, and integrity in directing FTI towards sustained progress over the long term. In this regard, in addition to the duties and responsibilities of the Board, we shall observe the following:

a. Remain fit and proper for the position for the duration of our term.

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b. Conduct fair business transaction with FTI and ensure that our personal interests do not

compromise Board decisions. We shall not use our position to make profit or acquire benefit or advantage for ourselves and/or our related interest. We should avoid situations that may compromise our impartiality. We should observe the conflict of interest policy stated in FTI 's Manual of Corporate Governance.

c. Devote time and attention necessary to properly and effectively perform our duties and

responsibilities. We should prepare for, attend and actively participate in Board meetings. We are expected to devote substantial time and attention to the affairs of FTI, and keep ourselves informed about FTI 's business.

d. Act honestly and in good faith, in the best interest of FTI, including its stakeholders. Before

deciding on any matter brought before the Board of Directors, we should evaluate the issues, ask questions and seek such clarifications, as we may deem appropriate.

e. Act judiciously and exercise independent, competent, honest and courageous judgment. We

should decide on each problem/situation in utmost good faith, being reasonably informed thereon and rationally believing the action we take is in the best interest of FTI and support plans and ideas which we believe are beneficial to FTI.

f. Have working knowledge of the statutory and regulatory requirements affecting FTI. This

includes a firm knowledge of the contents of the FTI 's Articles of Incorporation and By-Laws and the amendments thereto, and where applicable, the requirements of other regulatory agencies.

g. Observe confidentiality. We shall observe the confidentiality of non-public information

acquired by reason of our position as directors. We should not disclose any information to any other person without the authority of the Board.

h. Ensure the continuing soundness, effectiveness and adequacy of FTI 's control environment.

We are responsible for assuring that actions taken by the Board maintain the adequacy of the control environment within FTI.

i. Prior to assuming office, if possible, or soon thereafter, attend a seminar on corporate

governance, which shall be conducted by a duly recognized private or government institution. If necessary, funds shall be allocated by FTI for this purpose.

ANNEX "B" STATEMENT OF DIRECTORS' RESPONSIBILITY The Board of Directors of FOOD TERMINAL INCORPORATED (FTI) confirms the truth and fairness of the Company's financial statements ending December 31, 2012 and 2011, including the additional components attached therein, in accordance with the prescribed financial reporting framework indicated therein. This responsibility includes confirmation of the truth and fairness in the design and implementation of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error, selection and application of appropriate accounting policies, and making accounting estimates that are reasonable in the circumstances.