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BOARD RESOLUTION NO. RM-10-05. SERIES OF 2015

APPROVING AND ADOPTING THE CLARK INTERNATIONAL AIRPORTCORPORATION (CIAC) REVISED MANUAL ON CORPORATE GOVERNANCE

"WHEREAS, in compliance with Section 42 of the Governance Commission for GOCCs(GCG) Memorandum Circular No. 2012-07 (Code of Corporate Governance for GOCCs), the ClarklnternationalAirport Corporation (CIAC) Manual on Corporate Governance was approved liy the CIACBoard of Directors on 26 March 2014;

WHEREAS, upon evaluation of the manual, the GCG instructed that several revisions bemadeascontainedintheirlettersdated02 April2014,26August2014,and20May2O1S;

WHEREAS, after acting on the instructions of the GCG, the revised manual was submitted tothe GCG on 23 September 2015 for its provisional acceptance;

WHEREAS, the GCG, in its letter dated 06 October 2015, has accepted the CIAC RevisedManual on Corporate Governance, with the condition that the same has to be approved and adoptedby the Governing Board of CIAC to serve as proof that it has become official and legally bindingdocument to the CIAC Board, Management and employees;

NOW BE IT -RESOLVED, that the Clark lnternational Airport Corporation (CIAC) Revised Manual on

Corporate Governance, as herein attached and made an integral part of this resolution, beAPPROVED and ADOPTED, as it is hereby APPROVED and ADOPTED.',

DONE, this 28th day of October, 20{5 in Clark Freeport Zone, pampanga.

(On Leave)JOSE PERPETUO M. LOTTLLA

Alternate Chairman

fikl"wM.,W cASMIN

Alternate Vice Chairpe on

CAPT. BEDA B. BADIOLARepresentative of William K. Hotchkiss lll

Board

DEZ, JR.

(onFELIPE

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ATCO ilrMember

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Board Mdmber

Board Member

Board Member

Corporate Office Bldg., Civil Aviation Complex, Clark Freeport Zone, Pampanga, Philippines 2023Telephone Nos. 1+63 45) 599-2888 to 97 / Fax No. (+ 63 45) 599-2044 / http://www.ctarkairport.com

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BOARD RESOLUTION NO. RM-I0-05, SERIES OF 2015

THE CLARK INTERNATIONAL AIRPORT CORPORATTON (C!AC)MANUAL ON

CORPORATE GOVERNANCE

The GLARK INTERNATIONAL AIRPORT CORPORATION (CIAC), cognizant ofthe State declared policy of treating Government-Owned and ControlledCorporations (GOCCs) as significant tools for economic development, and thestatutorily-mandated obligation of the State to ensure that the governance ofGOCCs is carried out in a transparent, responsible and accountable manner andwith the utmost degree of professionalism and effectiveness, under governingboards which are competent to carry out their functions, fully accountable to theState as its fiduciaries and always acting for the best interests of the State,hereby adopts this Manual of Corporate Governance pursuant to Section 42 ofthe Code of Corporate Governance for GOCCs;

NOW, THEREFORE, CIAC hereby formally promulgates and implements theCode as follows:

1.DEFINITION OF TERMS

1.1. Definition of Terms. - For purposes of this Manual, the following termsshall have the following meanings:

"Act" refets to Republic Act No. 10149, and officially named the "GOCCGovernance Act of 2011 .'

"Appointive Directors" refer to members of its Board of Directors whom theState nominates, or is entitled to nominate, to the extent of its percentageshareholdings in such GOCC.

"Articles of lncorporation" refers to primary franchise of the CIAC asapproved and registered with the Securities and Exchange Commission(SEC) and upon issuance of the certificate of incorporation under its officialseal, commences the existence of the CIAC as a separate juridical personwith a right of succession and the powers, attributes and propertiesexpressly authorized by law or incident to its existence.l

"Board Officers" refer to Officers whose primary task is to serve the Boardor to pursue the immediate functions of the Board, such as the Chairman,

";:^:::';:,;: ::;:j,,", ;#7,g a.u,a (B.ard ,refers,.,he 0rcollegial body that exercises the corporate powers, conducts all business

' Adopted from Ses. 2 and 19,

"By-laws" refers to the basic instrument adopted by the CIAC dulyregistered with the securities and Exchange commission (sEC) for itsinternal government, and to regulate the conduct and prescribe the rightsand duties of its stockholders or members towards the Gocc and amongthemselves in reference to the management of its affairs.2

'chief Executive officef' ('cEo) refers to the highest ranking corporateexecutive who heads Management, who could be named as the presidentor the General Manager, Chairman or the Administrator of a GOCC.3

"Clark lnternational Airport Corporation" ('C)AC") refers to the corporationduly organized and existing under the laws of the Republic of thePhilippines, with the primary purpose of developing, operating, managirigand maintaining the Clark CivilAviation Complex.

"Confidentiat lnformation" refers to all non-public informal,ion entrusted toor obtained by a member of the Board or Officer by reason of hislherposition as such with the CAIC. lt includes, but is not limited to, non-publicinformation that might be of use to competitors or harmful to CIAC or itscustomers/stakeholders if disclosed, such as: (1) non-public informationabout the CIAC's financial condition, prospects or plans, its marketing andsales programs and research and development information, as well asinformation relating to mergers, acquisitions, divestitures, stock splits andsimilar transactions; (2) non-public information concerning' possibletransactions or ventures with other companies, or information aborirtsuppliers, joint venture partners, or any information that the CIAC is underobligation to keep confidential; and (3) non-public information aboutinternal discussions, deliberations and decisions, between and amongDirectors and Officers

"Director'' refers to any member of the Governing Board of CIAC.

"Ex Officio Board Membef' (Ex Officio Director) refers to any individualwho sits or acts as a member of the Board of Directors by virtue of oneistitle to another office, and without further warrant or appointment.a

"Executive Officef' ("Officef') refers to the CEO and such other corporateofficer of CIAC as expressly provided for in its By-laws such as thre

Executive Vice President and Chief Operations Officer and other VioePresidents. As distinguished from Board Officers, Executive Officersprimarily form part of the Management of the CIAC.

"Extraordinary Ditigence" refers to the measure of care and diligence thatmust be exercised by Directors and Officers in discharging theirfunctions, in conducting the business and dealing with the properties anidmonies of CIAC, which is deemed met when Directors and Officers aetusing the utmost diligence of a very cautious person taking into seriousconsideration allthe prevailing circumstances and Material Facts, givingdue regard to the legitimate interests.of all affected Stakeholders.s l

"Fit and Proper Rltle" refers to a set of standardswhether a member of the Board of Directors or the

for determiningCEO is gualifiedr,l

2 Gokongwei, Jr. v. Securitiesand Exchange Commission, 89 SCRA 336 (1979)

'sec- e191, R.A. No. 10149.

'sec. 3(i), R.A. No. 10149.5 Derived from Sections 19 and 21 of R.A. No. 10149.

to hold a position in the CIAC, which shall include, but not be limited to,standards on integrity, experience, education, training and competence, assuch standards are set forth under GCG Memorandum CircularNo.2012-05.6

"Government Agency" refers to any of the various units of theGovernment of the Republic of the Philippines, including adepartment, . bureau, office, instrumentality or GOCC, or a localgovernment or a distinct unit therein.T

"Managemenf" refers to the body given the authority to implement thepolicies determined by- the Board in directing the course and businessactivities of the GOCC.8

"Mateial lnformation" (.Material Fact") refers to inforrnation which areasonable investor, stakeholder or Supervising Agency would considerimportant in determining whether: (1) to buy, sell, hold or otherwisetransact with the securities issued by a GOCC; or (2) to the exercise withreasonable prudence voting rights related to securities held with suchGOCC, or relating to corporate acts, contracts and transactions whichwould adversely affect the operations of the GOCC.e

"Officers" refer to both Board Officers and Executive Officers.l0

"Per Diems" refer to the compensation granted to members of GoverningBoards of a GOCC for actual attendance in meetings.ll

lPerformance Evaluation Sysfern" ('PES) refers to the process ofappraising the accomplishments of GOCCs in a given fiscal year based onsei performance criteria, targets and weights.12

"Petformance Scorecard" refers to a governance and management toolforming part of the performance evaluation system which consists of a setof measures, targets and initiatives that facilitate the achievement ofbreakthrough results and performance through the effective and efficientmonitoring ind coordination of the strategic objectives of thre GOCC.13

"Public Officials" or "Public Officers" refer to elective and appointiveofficials and employees, whether permanent or temporary, whether in thecareer or non-career service, whether or not they receive compensation,regardless of amount,la who are in the National Government, and all otherinstrumentalities, agencies or branches of the Republic of the Philippines,including government-owned-or-controlled corporations, and theirsubsidiaries.ls

"Stakeholdel' refers to anyGOCC has been constituted,

individual or entity for whose benefit theor whose life, occupation, businer" * *"t

(5Sec.3(.,), R.A. No. 10149.

7 Sec. 3(k), R.A. No. 10149.

BAdopted from Art. 1(d), sEc Revised code of corporale Governanc (sEc Memorandum circular No.06, s. 2009)

e Adopted from SRC Rule 3, lmplementing Rules and Regulations to the Securities Regulation Code.

'o Sec. 3(q), R.A. No. '10149.

11 Sec. 3(s1, R.A. No.6713.

1i Sec.3(t), R,A. No. 10149.

" Sec. 31u1, R.A. No. 10149.14 sec. g(b), R.A. No. 6713.15 sec. 3(a), R.A. No. 10149. tfl {-'

,3

1.2.

being is direcfly affected, whether favorably or adversely, by the regulartransactjons, operations, or pursuit of the business oi "o6i"r

enterprise forwhich the Gocc has been constituted, and which wourd include astockholder, member, or other investor in the oocc, management,employees, supply creditors, or the community in which the Goccoperates.

"strategy Map" refers to an integrated set of strategic choices or objectivesdrawn.by the governing body, the successful exec-ution of which resutts inthe achievement of the Gocc's vision in relation to its missio;;;;;;;J;for having been created.16

singular Term lnclude the plura! - Unress otherwise indicated in thiscode, any reference to a singular, shall apply as well to the plural, and viceversa.

clAG as an Active partner in National Development. clAC, cognizant of itsrole as a partner of the government in national development, commits toprovide quality management of the airport infrastructure ano'serv#;i; ;rd"r. i;realize the vision to be a premiere world class airport of the philippines ,ro

-,competitive aviation services center in the Asia pacific Region.

Governing Principles of Good corporate Governance of clAC. ln ensuringthat CIAC abides with its commitment, CIAC shall be governed by the toffowin!principles:

a.) clAC shall draw up and accomplish measurable quality objectivesconsistent with its mandates and strategic directions oi its'visions andmissions;

b.) CIAC will develop and adhere to documented procedures that will provideconsistency and predictability of output;

c.) CIAC shall determine and provide adequate resources to sustain serviceexcellence, commitment and accountability; and

d.) clAc shall commit to principles of continual improvement underpinned bycustomer satisfaction, regulations and adherence to euality ManagemeniSystem Standards.

care, Diligence and skill in the conduct of the Business of clAC. Themembers of the Board must exercise extraordinary diligence in the conduct ofbusiness and in dealing with the properties of CIAC. Such clegree of diligencerequires using the lrtmost diligence of very cautious person with due regald forall circumstances. 17.1

,l

2.1.

2.2.

2.3.

r] Sec. a1y1, R.A. No. 10'149.

'' Sec 21. RA 10'149 4(

L\

A

3.GOVERNING BOARD

3.1. Board Directly Vested with Corporate Powers - Having been vested direcgyby law with the legal capacity and authority to exercise all corporate powers,conduct all the business, and to hold all the properties of the ClACl8 theGoverning Board is primarily responsible for the governance of CilAC.consequently, it is the Board, and not the Management, that is primarilyaccountable to the State for the operations and performance of CIAC.le

3.2. Board Duty to Properly Select and Provide tndependent Check onManagement - Concomitant with the power to elect the Chief Executive Officerfrom among their ranks and to appoint other Officers of CIAC, it is the duty ofthe CIAC Board to ensure that they elect and/or employ only Officers who arefit and proper to hold such offices with due regards to their qualifications,competence, experience and integrity." The _Board is therefore obliged toprovide an independent check on Management.2l

3.3. Mandate and Responsibility of the Board - Although the day-to=daymanagement of the affairs of the CIAC may be with Management, the Board is,however, responsiblef-or providing policy directions, monitoring and overseeingManagement actions,22 as articulated in its Articles of lncorporation, and otheirelevant legislation, rules and regulations. These mandated functions andresponsibilities include the following:

a) Provide the corporate leadership of CIAC subject to the rule of law, and theobjectives set by the National Government through the SupervisingAgencies and the GCG;

b) Establish CIAC's vision and mission, strategic objectives, policies andprocedures, as well as defining its values and standards through:

tr Charter Statements;tr Strategy Maps; andE Other control mechanism mandated by best business practices;

c) Determine important policies that bear on the character of CIAC tofoster its long-term success, ensure its long-term viability and strength,landsecure its sustained competitiveness;

d) Determine the organizational structure of CIAC, defining the duties andresponsibilities of its Officers and employees and adoptingl acompensation and benefit scheme that is consistent with the GOCCCompensation and Position Classification System (CPCS) developed byGCG and formally approved by the President of the Philippines;

e) Ensure that personnel selection and promotion shall be on the basis ofmerit and fitness and that all personnel action shall be in pursuit of theapplicable laws, rules and reOulatiohs;

14

t6 Adooiino Sec. 23 of the Corooration Codere sec's. dcc Memorandum circular No 201247D sec 1b(e) RA No loteg2' Adoptei Sec ll(2)(a), SEC Code of Corporate Governance, Memorandum circular No. 2, s 2oo22 toid

3.4.

0 Provide sound written policies and strategic guidelines on clAC,soperating budget and major capital expenditures, and prepare the annualand supplemental budgets of CIAC;

g) comply with all reportorial requirements, as required in Articles oflncorporation and By-laws, as well as applicable laws, rules andregulations;

h) Formally adopt and conduct annually the mandated performanceEvaluation system (PES) and the Performance scorecard and timelyand accurate report the results to the GCG; and

i) Ensure the fair ahd equitable treatment of all Stakeholders and enhancingCIAC's relations with its Stakeholders.2o

Powers of the Board - Unless othenvise provided by L.aw, the corporatepowers of CIAC shall be exercised, all business conducted and all property ofthe clAC controlled and held by the Board of Directors to be elected by andfrom among the stockholders. Without prejudice to such general powers andsuch other powers as may be granted by law, the Board of Directors shall havethe following express powers:

a) Upon prior approval of the Department of Transportation andCommunications (DOTC), promulgate policies and prescribed such rulesregulations as may be necessary to implement the intent and provision ofExecutive Order Nos. 716 and 64, and such other legislation that may beissued in connection therewith;

b) Approved the annual budget and such supplemental budgets which may besubmitted to it by the Management subject to final confirmation thereof bythe DOTC;

c) Determine the structure of the organization and the number, compensation,and benefits of officers, employees and consultant of the Corporation: Asfar as practicable, the remuneration and allowance shall be competitive iivithrates prevailing in the private sector.

d) Enter by itself any contract or agreement as may be necessary for theproper and efficient conduct of the business of the corporation and for theattainment of the purposed and objective for which it was created;

e) Delegate, from time to time, any of the powers of the Board which maylawfully be delegated in the course of the current business or business ofthe Corporation to any standing or special committee or to any officer oragent and to appoint any person to be agents of the Corporation with suchpowers (including the power to sub-delegate), and upon such terms, asmay be deemed fit;

0 Undertake and regulate the establishment, operation and maintenance ofbusiness services, building construction, and operational facilities within theClark lnternational Airport Complex and fix just and reasonable rates,charges and other prices thereof; ll

I

66 Adopted ftom Sec 7, Code of Corporate Governance for GOCCS, Memorandum Circular No. 2012-07$=t/ rI

Accept any local or foreign investment, business or enterprise in the areasowned or managed by the corporation subject to existing laws, rules andregulation imposed by the clark Development corporation within GlarkFreeport Zone (CFZ);

From time to time make and change rules and regulations not inconsistentwith these By-Laws for the management of the corporation's business andaffairs;

Purchase, receive, take or otherwise acquire in any lawful manner, for andin the name of the Corporation, any and all property rights, interest orprivileges, including securities and bonds of other corporations, as: thetransaction of the business of the Corporation may reasonably ornecessarily require, for such consideration and upon such terms andconditions as the Board may deem proper or convenient;

lnvest the funds of the Corporation in another corporation or business orpurposes other than those for which the Corporation was organized,whenever in the judgment of the Board of Directors, the interest of theCorporation would thereby be promoted, subject to such stockholder'sapproval as may be required by law;

lncur such indebtedness as the Board may deem necessary and for suchpurpose, to make and issue evidence of such indebtedness including notes,deed of trusts, instruments, bonds, debentures and securities, anLd/orpledge, mortgage, or otherwise encumber all part of the property and rightsof the Corporation, subject to such stockholder's approval as may berequired by law;

Make provision for the discharge of the obligations of the Corporation asthey mature, including payment for any property, or stock, bonds,debentur'es, or other securities of the Corporation lawfully issued for thepurpose;

Subject to existing laws, sell, lease, exchange, transfer or otherwisedispose, of any property, real or personal, belonging to the Corporationwhenever in the Board's judgement, the Corporation's interest wouldthereby be promoted;

Prosecute, maintain defend, compromise or abandon any lawsuit in whichthe Corporation or its officers are either plaintiffs or defendants inconnection with business of the Corporations, and likewise, grant theprivilege to pay in instalments for the payment or settlement of whatsoeverdebts are payable to the Corporations; and

To implement the provisions of its By-Laws and to act on any matter notcovered by the By-Laws, provided such matter does not require theapproval or consent of the stockholders under any existing law, rule andreiSulation.2?

yy

s)

h)

i)

k)

m)

n)

0o)

727 Sec 1, Article lV Amended By-laws of CIAC

3.5. Specific Functions of the Board - ln addition to those specified in its Articlesof lncorporation and/or By-laws, the Board shall perform the following functions:

a.) Meet regularly, ideally at least once every month, to properly discharge itsresponsibilities, with independent views expressed during such meetingsbeing given due consideration, and that all such meetings shall be properly. documented or minuted;

b.) Determine the CIAC's purpose and value, as well as adopt strategiesand policies, including risk management policies and programs, in order toensure that the CIAC survives and thrives despite financial crises and thatits assets and reputation are adequately protected;

c.) Monitor and evaluate on a regular basis the implementation of corporatestrategies and policies, business plans and operating budgets, as well asManagement's over-all performance to ensure optimum results;

d.) Adopt a competitive selection and promotion process, aprofessional development program, as well as a succession plan, to ensurethat the Officers of the CIAC have the necessary motivation, integrity,competence and professionalism;

e.) Monitor and manage potential conflicts of interest of Directors,Management, and shareholders, including misuse of corporate assetsand abuse in related party transactions;

f.) lmplement a system of internal checks and balances, which may be appliedin the first instance to the Board; and ensure that such systems arereviewed and updated on a regular basis;

g.) Ensure the integrity of the CIAC's accounting and financial repor,tingsystems, including independent audit, and that appropriate systemts ofcontrol are in place, in particular, systems for risk management,financial and operational control, and compliance with the law andrelevant standards;

h.) ldentify and monitor, and provide appropriate technology and systemsfor the identification and monitoring of key risks and performance areas;:

i.) Adopt, implement and oversee the process of disclosure andcommunications;

j) Constitute an Audit Committee and such other specialized committees asmay be necessary, or required by applicable regulations, to assist rtheBoard in discharging its functions; and

k.) Conduct and maintain the affairs of the CIAC within the scope of its

authority, as prescribed in its Artiqles of lncorporation, By-laws, andapplicable laws, rules and regulation.2syT

tlt

a Sec 8. GCG Memorandum Circular No 2012{7

3.6. Charters of Expectations - The members of the Board of Directors of theCIAC, in pursuance of good corporate governance, hereby commit to be gulidedby the following Charter of Expectations in the discharge its functions:

Expectations in the Conduct of Functionsa.) Conduct fair business transactions with the CIAC, ensure that perspnat

'interest does not compromise his decisions; and shall not use his/herposition to gain profit or to acquire benefit or advantage for himself/herselfor his/her related interests. The Director must avoid conflict of interestswhich may compromise his/her impartiality at alltimes;

b.) Familiarize himself/herself with the business of CIAC in order to effectivelydischarge his/her duties. He/she must be updated of the situations and/orevents that would have impact in the operations of CIAC. Knowledge of thebusiness would enable him/her to give valuable contribution in theevaluation of issues necessitating decisions;

c.) Obtain working knowledge and information of the statutory and regulatoryrequirements affecting the CIAC, including the various Executive Ordersand government issuances affecting its incorporation and mandates;

d.) Act judiciously. The Director must thoroughly evaluate issues, askquestions and seek clarifications when necessary before deciding on anymatter brought before him/her;

e.) Exercise independent judgment. The Director should be objective in theassessment of each problem/situation. He/she must be able to come up

with his own position on matters where there may be opposing views;

f.) Observe Confidentiality. The Director must not disclose non-publicinformation, which he/she acquired by reason of his/her position as directorof the CIAC. He/she must seek prior approval of the Board in disclosinginformation which in his/her mind might compromise the interest of CIAC;

g.) Demonstrate high ethical standards and integrity in his/her dealings. TheDirector shall not solicit, nor accept, directly or indirectly, any gift, gratuity,

favor, loan or anything of monetary value from person when the same

would influence friimeiOecision making;

Expectations when AttendinE Meetinga.) prepare for each Board and committee meetings by reading the minutes

and other background materials for the meeting;

b.) Make an effort to attend Board and Committee meetings. For appointivedirectors, they should have attended at least 90% of all authorized and duly

called for Board and Committee meetings in order to qualify to the

Performance-Based I ncentive (PBl);

c.) Participate in the discussions duiing Board and Committee. meeting? ilorder io arrive at a well thought of and properly evaluated decisions that

would affect CIAC; and

d.) Participate on committee meetings and become knowledgeable of lthe- duties, purpose and goal of the committee where he/she is a member;r/

I

Expe ctatio n s o n Co m m u n ication sa.) Participate frankly and in the deliberations and discussions of the Board;

b.) Respect the opinions of others by hearing the same and giving others theopportunity to explain their positions in certain issues. The Director mustalso demonstrate openness in considering the ideas of other without rpre-judging the same;

c.) Approach others assertively albeit responsibly, in a manner thatencourages open discussion; and

d.) Focus on inquiries and resolutionpolicy, and results rather thanmanagement of the Corporation.

Vice-Chairperson :

Members :

of issues, which relates to strategy,issues relating to the day-to'day

3.7. Composition of the Board of Directors - At present, the powers,andfunctions of the CIAC shall be vested in and exercised by a Board of Directorsto be composed of eleven (11) members, as follows:

Chairperson : Secretary of Transportation andCommunications;Secretary of TourismGeneral Manager, MIAA;Director General, Civil Aviation Authority of the

Philippines (CAAP); andSeven (7) other members to be appointed by the

President of the PhiliPPines uponconsultation with the Secretary ofTransportation and Communications,representing the equity in the capitalstock of the National Government in

CIAC, provided each of them is a

Filipino citizen, of good moral character,and of recognized comPetence in a

relevant field, including, but not limitedto civil aViation, economics, tourism, lawor engineering; provided, however thatthe nomination and appointment of theseven (7) appointive directors shall

.' comply with the provisions of RA 101419,

otherwise known as the "GOCCGovernance Act."2e

The composition of the Board will be consequently amended as may be

directed by the issuance of the revised Executive order No. 64.

Ex Officio Atternates - Ex Officio Directors may designate their respective

alternates, who ideally should be the officials.next-in-rank to them, and whose

acts shall be considered the acts of thbir principals'3o

3.9. Multiple Board seats - The capacity of Appointive Directors to serv.e^v.v1t!

Jirig"i." shatt not be compromised. As such,. no Aoogrltivg Director of CIAC

,n"-y noto more than two (2) other Board seats in other Goccs.

I€ Sec. 2 EO 64x

Sec. 14, R.A. No. 10149.

3.8.

10

3.10. Appointment of Appointive Directors -3.10.{. All Appointive Directors of CIAC shall be appointed by the President of

the Philippines from a shortlist prepared by the GovernanceCommission for GOCCs (GCG).32

3.10.2. The selection and nomination, and short listing of prospectiveappointive directors shall be pursued in accordance with the rules andcriteria formulated by the GCG, which shall include the followingstatutorily mandated conditions, thus:

a) The GCG shall cause the creation of the Search Committee topursue the process of selection, nomination and short listing ofprospective appointees;

b) All nominees included in the list submitted by the GCG to thePresidential shall meet the Fit and Proper Rule, and such otherqualifications which the GCG may determine taking intoconsideration the unique requirements of each GOCC;

c) The GCG shall ensure that the shortlist shall exceed by at least fiftypercent (50%) of the number of directors to be appointed; and

d) ln the event that the President does not see fit to appoint any of thenominees inctuded in the shortlist, the President shall ask the GCGto submit additional nominees.

3.10.3. The term of office of each Appointive Director shall be for one (1) yearunless sooner removed for cause: Provided, however, that theAppointive Director shall continue to hold office until the successor isappointed. An Appointive Director may be nominated by the GCG forre-appointment of the President only if one obtains a performancescore of above average or its equivalent or higher in the immediatelypreceding year of tenure as Appointive Director based on theperformance criteria for Appointive Directors for the GOCC.

Appointment to any vacancy shall only be for the unexpired term of thepiedecessor. The appointment of a director to fill such vacancy shall bein accordance with the manner provided in Section 3-10.1.

The incumbent CEO and appointive members of the Board shallcontinue in office until the successor has been appointed by the' President.33

g.11. Fit and Proper Rule - All members of the Board, the CEO and other Offiaers

of CIAC shall be qualified by the Fit and Proper Rule adopted by the GCG inconsultation and coordination with the relevant government agencies to which

CIAC is attached, and approved by the President,3s and shall include by

referencethequalificationsexpresslyprovidedforintheBy-lawsofClAC;

To maintain the quality of management of the Goccs, the GCG,

u Sec. 15, R.A. No. 101493 Sec. 17. R.A. No. 10149$

Sec. 16, RA. No. 10149 ,; hr

coordination with the Supervising Agencies shall, subject to the approval of thePresident, prescribe, pass upon and review the qualifications anddisqualifications of individuals appointed as Directors, CEO and otherExecutive Officers and shall'disqualify those found unfit.37

ln determining whether an individual is fit and proper to hold the position of anAppointive Director, CEO or Officer of the GOCC, due regard shall be given toone's integrity, experience, education, training and competence.3s

3.12. Fines, Penalties and other Consequences for Violations and Liabilities ofBoard Members - The Board members of CIAC shall be subject to the finesand/or penalties provided in the following:

a) Section 11 on Penalties under Republic Act No. 6713 (Code of Conductand Ethical Standards for Public Officials and Employees);

b) Section 3 on Corrupt Practices of Public Officers and Section 9 onPenalties for Violations under Republic Act No. 3019 (Anti-Graft andCorrupt Practices Act); and

c) Such rules and regulations as may be prescribed by the GCG.

3.13. Board Officers - The Board Officers of CIAC are the following:

3.13.1.Ghairperson of the Board. - He shall preside over the meetings,regular or special, of the Board of Directors. He shall also exercisesuch power and perform such duties as the Board of Directors mayassign to him.3e

The Chairperson of CIAC is the Secretary of the Department ofTransportation and Communications.a0

g.13.2.Vice-Chairperson. - The Vice-Chairperson of the Board of Director,sshall preside at the meetings of the directors and the stockholders inthe absence of the Chairperson. He shall also exercise such powersand performs such duties as the Board of Directors may assign tohim.al

The Vice Chairperson of CIAC is the Secretary of Tourism.a2

3.13.3.Corporate Secretary - The Corporate Secretary shall be thecustodian of and shall maintain the corporate books and records andshall be recorder of the Corporation's formal actions and transaction.He shall have the following specific power and duties:

a) To record or oversee the proper recording of the minutes andtransaction of all meeting of the directors and stockholders and tomaintain a journal of such meetings in the form and mannerrequired bV lbw; ,1

:

I

"',ld'8 td.

3e sec 2, Article Vofthe clACAmended By-Laws4 Sec 2, Executive order No. 6411 Soc 3, Article V of the CIAC Amended By-Lawsa2 Sec 2, Executive Order No. 64

fl t'- 12(il

b) To keep or cause to be kept record books showing the detailrequired by law with respect to the stock certificate of tlleCorporation, including ledgers and stock transfer books showingall shares of the Corporation subscribed, issued and transferred;

c) To keep the corporate seal and affix it to all papers and documentsrequiring a seal, and to attest by his signature all corporatedocuments requiring the same;

d) To send and serve notices of the Corporation required by law orthese by-law to be given stockholders, directors, officers and otherconcerned;

e) To certify to corporate acts, countersign corporate documents orcertificates, and make reports and statement as may be requiredof him by law of by government rules and regulations;

0 To act as the inspector at the election of directors and, as such, todetermine the number of shares of stock outstanding and entitledto vote; the shares of stock represented at the meeting; theexistence of a quorum, the validity and effect of proxies, and toreceive votes, ballots or consents; hear and determine allchallenges and questions arising in connection with right to vote,count and tabulate all votes, ballots or consents, determine theresult, and do such acts as are proper to conduct the election orvote. The Secretary may assign the exercise or performance ofany or all foregoing duties, powers and functions to any otherperson or persons, subject always to his supervision and control;and

g) To perform such other duties as are incidental to his office or asmdy be assigned to him by the Board of Directors or theChairman.a5

3.1g.4.Corporate Treasurerou - The Treasurer of the Corporation, who maynot

-be a member of the Board, shall be the Chief Fiscal Officer and

the custodian of funds, securities and properties. The Treasurer shallhave the following duties:

a) To keep full and accurate account of receipts disbursements in

the books of the Cg;Poration;

To have custody of, and be responsible for all the securities andbonds of the Corporation;

To deposit in the name and to the credit of the Corporation insuch bank or banks as may be designated from time to time by

the Board of Directors, all moneys, funds, securities, bonds, and

similar valuable effects belonging to the Corporation which mdy

come under his control; ilI

b)

c)

6 sc 6, Article v of the clAC Amended By'Laws€ Soc 7, Article V of the CIAC Amended By-Laws

13

d) To render an annual statement showing the financial conditiontofthe Corporation and such other reports as the Board of Directors,the Chairman, or the President may, from time to time require;

e) To prepare such financial reports, statements, certificates andother documents which may, from time to time, be required bygovernment rules and regulations and to submit the same toproper government agencies; and

0 To exereise such powers and perform such duties and functionsas may be assigned to him by the Board of Directors or theChairman.

3.13.5. Comptiance Officer - The Board shall appoint a Compliance Officerwho shall report directly to the Chairman. ln the absence of suchoffice or appointment, the Corporate Secretary, who is preferably alawyer, shall act as Compliance Officer." The Compliance Officershail perform the following duties:ae

a) Monitor compliance by the CIAC of the requirements under theAct, this Code, the rules and regulations of theappropriate Government Agencies and, if any violations are found,r6iorf the matter to the Board and recommend the imposition ofappropriate disciplinary action on the responsible parties andthe adoption of measures to prevent a repetition of the violation;

b) Appear before the GCG when summoned in relation to compliancewith this Code or other compliance issues; and

c) lssue a certification every 30 May of the year on the extent of the

CIAC's compliance with the government corporate standardsgoverning GOCCs for the period beginning 01 July of theimmediately preceding calendar year and, if there are anydeviations, explain the reason for such deviation.

The appointment of a compliance officer shall not relieve theGoverning Board of its primary responsibility vis-dr-vis the State,

acting thr6ugh the GCG, to ensuie that CIAC has complied with all its

reportorial, monitgring and compliance.obligations.

4.

BOARD COMMITTEES

4.1. ln order for the members of the CIAC Board to efficiently practice sound

corporate governance in the administration of its various concerns, Boaqd

Committees shall be created, as the Board may deem necessary. This will

likewise enable the Board to effectively utilize the expertise of its Directors.

The CIAC Board shall therefore constitute the proper committees to assist

them in performing their duties and responsibilities,s2 providing each of..the

;;;itiJ";'*itn rir'iit"n t"rtnt of reference defining the duties, authoritiesyf

I

€Adopted from Art. 3(F)(2Xm), SEC Revised Code of Corporate Govemance (SEC MemorandumoircularNo 6's 2009)

4 Adopted from Art. 3(M), SEC Revised Code of CorPorate Govemance (SEC Memorandum Circular No 6' s 2009)'

flSee OECD Guidelines - Annotations to "The Responsibilities of the Boards of State-OwnedEnterprises'' p 52'

14

6.5.

b) Apply sound business principles to ensure the financial soundness ofCIAC;"78 and

c) Elect and/or employ only Officers who are.fit and proper to hold such officewith due

^ regard to the qualifications, competence, experience and

integrity."Te

Every Director or officer, by the act of accepting such position in: theclAC, affirms and agrees: (1) to have a working knowledge of the statutory andregulatory requirements affecting the clAC, including its Articles oflncorporation and By-laws, the requirements of the GCG, and whereapplicable, the requirements of other Supervising Agencies; and (2) toalways keep himself informed of industry developments and business trends inorder to safeguard CIAC's interests and preserve its competitiveness.s0

Duty of Loyalty. - The fiduciary duty of loyalty of Directors and officers toalways act in the best interest of CIAC, with utmost good faith in all its dealingswiththepropertyandmoniesoftheClAC,includestheobligationto:

a) Act with utmost and undivided loyalty to the CIAC;8l

b) Avoid conflicts of interest and declare any interest they may have in anyparticular matter before the Board;82 and

c) Avoid (1) taking for themselves opportunities related to the CIAC'sbusiness; (2) using the CIAC's property, information or position for perSonalgain; or (3) competing with the CIAC's business opportunities.

6.5.1. Avoid Conflict of lnterest - Directors and Officers of CIAC shall at alltimes avoid any actual or potential conflict of interest with the CllAC.Each shall also avoid any conduct, or situation, which could reasonablybe construed as creating an appearance of a conflict of interest.

Any question about a Director's or Officer's actual or potential conflict ofinterest with the CIAC shall be brought promptly to the attention of theChairman of the Board, who will review the question and determinb anappropriate course of action.83

6.5.2. Trustee Relation to CIAC Properties, lnterests anrJ Monies - Exceptfor the per diem.received for actual attendance in board meetings,andthe reimbursement for actual and reasonable expenses and incentivesas authorized by the GCG, any and all realized and unrealized profitsand/or benefits including, but not limited to, the share in the profits,incentives of Directors or Officers in excess of that authorized by theGCG, stock options, dividends and other similar offers or grants fromcorporations where the CIAC is a stockholder or investor, and anybenefit from the performance of Directors or Officers acting for and inbehalf of the CIAC in dealing with its properties, investments in othercorporations, and other interest, are to be held in trust by suchDirector or Officer for the exclusive benefit of the dAC.8a

y1

ro Sec. 19(d), R.A. No. 10149.

" Sec. 19(e), R.A. No. 10149.s Adopting Sec 26 of the GCG Memorandum C'rculat 2o12-o7u' Sec. 19(a). R.A. No. 10149.e Sec. 19(c). R.A. No. 10149.B aoootinir Sec zz,t of the GCG Memorandum Circular 2012-07q

Adobtind sec 20 of RA No 10149

20

4.2.

and the composition of the committees constituted. The committees shallreport to the entire Board as a collegial body and the minutes of thbirmeetings shall be circulated to all members of the Board.s3 The existence ofthe committees shall not excuse the Board of Directors of its collectiveresponsibility for all matters that are within the primary responsibility andaccountability of the Board.5a

Regular committees - The Board, at the very least, shall be supported bythe following regular committees:

4.2.1. Executive committee. - There shall be an Executive committeecomposed of five (5) members, to be appointed by the Board. proriidedthat, at least 3 members of the committee must be members of the Board.The President shall be the Chairman of the Committee. The ExecutiveCommittee shall, in the interim between meetings of the Board of Direotors,perform such duties as the Board of Directors may confer upon ,it inaccordance with law and the By-laws of the Corporation.ss

The Executive Committee, in accordance with the authority granted by theBoard, or during the absence of the Board, shall act by a vote of at Xeasttwothirds (2/3) of its members on such specific matters within thecompetence of the Board as may from time to time be delegated to theExecutive Committee in accordance with CIAC's By-Laws, except withrespect to:57

a) Approval of any action for which shareholders' approval is alsorequired;

b) Filling of vacancies on the Board or in the Executive Committee;

c) Amendment or repeal of By-Laws or the adoption of new By-Laws;

d) Amendment or repeal of any resolution of the Board which by itsexpress terms cannot be amended or subject to repeal;

e) Distribution of cash dividends; and

0 Exercise of powers delegated by the Board exclusively to othercommittees

The Executive Committee shall also function as the GovernanceCommittee, Nomination and Remunerations Committee and RiskManagement Committee. The functions provided in Sections 16.2.3, 16t2.4,and 16.2.5 of the Code of Corporate Governance for the GOCC Sector' shall be exercise by the Executive Committee.

4.2.2. Audit Committee - The Audit Committee shall consist of at least three (3)Directors, whose Chairman should have audit, accounting or financebackground. The Committee shall'be responsible for the following:s84

vl

oldv td.s Sec 1, Article Vl of the CIAC Amended By-Laws57

See Sec. 35, Corporation Code of the Philippines.s Adopted from Sec. 9(A), SEC Memorandum Circular No. 2, s. 2002

15

4.3.

4.4.

a) Overseeing, monitoring and evaluating the adequacy andeffectiveness of CIAC's internal control system, engagel andprovide oversight of CIAC's internal and external auditors, andcoordinate with the Commission on Audit (COA);

b) Reviewing and approving audit scope and frequency, the annualinternal audit plan, quarterly, semi-annual and annual finalncialstatements before submission to Board, focusing on changds inaccounting policies and practices, major judgmental areas, significantadjustments resulting from the audit, going concern assumptions,compliance with accounting standards, and compliance with tax, legal,regulatory and COA requirements;

c) Receiving and reviewing reports of internal and external auditors and. regulatory agencies, ind ensuring that Management is tJfingappropriate corrective actions, in a timely manner in addressing cointroland compliance functions with regulatory agencies;

i

d) Ensuring that internal auditors have free and full access to all CIAC's' records, properties and personnel relevant to and required by itsfunction and that the internal audit activity shall be free frominterference in determining its scope, performing its work andcommunicating its results; and

e) Developing a transparent financial management system that will ensurethe integriiy of internal control activities throughout CIAC throughl aprocedures and policies handbook that will be used by the entireorganization.

Specialized Committees - ln addition to the regular committees required bythe Code of Corporate Governance for the GOCC Sector (GCG MemorantlumCircular No 2012-07), the Board may create specialized committees to assilt in

the effective performance of its functions.

Committee Meetings and Reports - The Committee(s) shall meet at statedtimes, or upon the request of any of their members upon notice to eachmember. The presence of a majority of the members thereof, and all actions ofthe committees must be authorized by the affirmative vote of a majority of themembers present in the meeting and constituting a quorum.60

The Executive Committee and all other committee created by the Board shallkeep regular minutes of the proceedings and report the same at the hext

Per Diems for Committee Meetings - The maximum per diem per Commftteemeeting actually attended provided to members of the Board shall be inaccordince with the rules issued by the GCG in accordance with Section 23 ofRA 10149.

i

4.5.

competent to carry out their functions, fully accountable to the state as itsfiduciaries and always acting for the best interests of the State. 62

A Performance Evaluation for Directors (PED) shall serve as a tool to furtherstrengthen the competence and character of the members of the CIACBoard. Thus, the performance of the members of the CIAC Board shall beevaluated based on the criteria set forth under the GCG MemorandumCircular No. 2014-03 [Performance Evaluation for Directors (PED) in theGOCC Sectorl and subsequent amendments thereto, if any. The results ofthe PED shall serve as bases for the GCG in determining the Boardmembers' eligibility for reappointment.

5.MANAGEMENT

5.1. Role of Management - The CIAC Management stands as the center ofdecision-making for the dayto-day affairs of CIAC. lt detennines the CIAC'sactivities by putting the targets set by the Board in concrete terms and byimplementing basic strategies for achieving those targets.

Management is responsible to the Board for implementing the infrastructure forthe CIAC's success through the following mechanisms in its organization as setby the Board: organizational structures that work effectively and efficienlly inattaining the goals of the CIAC; useful planning, control, and risk managementsystems that assess risks on an integrated cross-functional approach;information systems that are defined and aligned with an informationtechnology stiategy and the business goals of the CIAC; and a plan ofsuccession that formalizes the process of identifying, training and selection ofsuccessors in key positions in the ClAC.6a

5.2. Managemeht Primarily Accountable to the Board - Management is primarilyaccountable to the Board for the operations of CIAC. As part of itsaccountability, Management shall provide all members of the Board with abalanced and understandable account of CIAC's performance, position andprospects on a monthly basis. This responsibility shall extend to interim andother price sensitive puOtic reports and reports to regulators.65

S.3. Corporate Officers - The Board, on its first annual meeting following theirappointment, shallformdlly organize by electing the Chairman, Vice Chairman,the Presideht and Chief Executive Officer, one or more Vice Presidents, theTreasurer, and the Corporate Secretary.66

5.4. President and Chief Executive Officer - The President shall be the Chief' Executive Officer of the Corporation and shall also have the administration,

direction and control of the day{o-day business affairs of the Corporation. He

shall exercise the following functions: 0a) To preside over the meeting of the Board of Directors and of the'

stockhotders in the absence of the Chairman and Vice Chairman of theBoard of Directors;

flI

e Adootino Sec. 1 of GCG Memorandum Circular No. 2014-03 (R+lssued)q

Adobtin6 Sec 18 of GCG Memorandum Circular No 2012-07

" Adopting Sec 19 of GCG Memorandum circular No 2012-076

Sec. 1. Article V ofthe CIAC Amended By-Laws.

rr17y

b)

c)

d)

To have general supervision and management of the business affairs andproperty of the Corporation;

To ensure that the administrative and operational policies of theCorporation are carried out;

Subject to legal requirements, to appoint, transfer, suspend, remove orothenrise discipline any employee or managerial officer of the corporationbelow third level, and engage either on contractual basis or other suitablearrangements the services of highly qualified professionals, experts,technical advisors or consulting firms and subject to Board approval,determine their salaries, compensation, oi fees including other terms andconditions of employment. For officers within the third level, to initiaterandrecommend to the Board appropriate disciplinary action against any erringofficers;

To oversee the preparation of the budgets and statements of accounts ofthe Corporation;

To prepare such statements and reports of the Corporation as may berequired of him by law;

To represent the Corporation at allfunctions and proceeclings;

To make reports to the Board of Directors and stockholders;

To perform such other duties as are incidental to his office or are entrusted

to him by the Board of Directors;

To direct and supervise the management, operation and administration ofthe Clark lnternational Airport Complex, and its integral units including its

buildings, runways, facilities and equipment, so as to provide internationalstandirds of service to the Clark international airport Complex users, and

ensure its financial stability in accordance with the approve programs,

plans, policies, procedures, and guidelines;

To provide general supervisions and overall coordination of all government

agencies olerating within the Clark lnternational Airport Complex with

rJspect to the allocltion and use of building space and airport premises;

To undertake researches, studies, investigations and other activities related

to the present operations and future development requirement of the Clark

lnternational Airport Complex, at his own initiative or upon instruction of the

Board, and to submit comprehensive reports and appropiiate

recommendations to the Board for. its information and action;

To establish and maintain a system, in coordination with the appropriategor"inr"nt agencies for the regular and prompt dissemination of financial

itatisticat and other relevant data within the Clark lnternational Air,port

Complex; yl

e)

s)

h)

i)

i)

k)

m)

n)

'$ilr

6.7.

6.5'3. Taking of Corporate Opportunities - Where a Director or an Ofificer,by reason of his being a member of the clAC Board or an o,fficeithereof, acquires or receives for himself/herself a benefit or profit ofwhatever kind or nature, including but not limited to, the acquisition ofshares in corporations where such clAC has an interest, the use theproperties of the clAC for his/her own benefit, the receipt ofcommission(s) on contract(s) with the clAC or its assets, or. thetaking advantage of corporate opportunities of the CIAC, all such profitsor benefits shall be subject to restitution pursuant to Section 24 of theRepublic Act No. 10149, without prejudice to any administrative, civil orcriminal action against members of the such Director or Officer. Theremedy of restitution shall apply notwithstanding the fact that suchDirector or Officer risked his/her own funds in the venture.ss

6.5.4. Restitution - Pursuant to section 24 of the Republic Act No.10149, upon the determination and report of the commissionon Audit (coA) pursuant to a Notice of Disallowance which, hasbecome final and executory, that properties or monies belonging to theCIAC are in the possession of a Director or Officer of thereof withoutauthority, or that profits are earned by the Director or Officer in violationof his/her fiduciary duty, or the aggregate per diems, allowances andincentives received in a particular year are in excess of the llimitsprovided under the Act, the Director or Officer receiving suchproperties or monies shall immediately return the same to theCIAC.

Failure by a Director or Officer to make the restitution within thirty (30)days after a written demand has been served shall, after trial and ,finaljudgment, subject such Director or Officer to the punishment ofimprisonment for one (1) year and a fine equivalent to twice the amountto be restituted and, in the discretion of the court of competentjurisdiction, disqualification to hold public office.86

Limits to Compensation, Per Diems, Atlowances and lncentivesPursuant to Section 23 of Republic Act No. 10149:

a) The Charters or By-laws of the GOCCs to the contrary notwithstanding;, thecompensation, per diems, allowances and incentives of the AppointiveDirectors shall be in accordance with the rules issued by the GCG; and

b) Directors shall not 'be entitled to retirement benefits acting as suchdirectors.

No Gift PolicysT. - ln order to avoid conflict of interest, the appearance of aconflict of interest, CIAC officers and employees shall NOT SOLICIT orACCEPT directly or indirectly, any gift, gratuity, favor, entertainment, loan, oruse, anything of monetary value from a person, groups, associations, or judicialentities, whether from the public or the private sectors, at any time, or on off thework premises, in the course of their official duties or in connection with'anyoperation being regulated by, or any transaction which may be affected by thefunctions of their office. All officers and employees shall refuse gifts that mightconnote bribery in any way and not detrimental to the interest ofr thecorporation.

T Last paragraph of Sec. 1 9, R.A. No. 10149.*An.24, R.A. No.10149.87 Memorandum from the Office of the Presidenl, 20 January 2014

21

PROHIBITIONS shall include, but not limited to:

1. Honoraria given as speaker or resource person in seminars or whether theCIAC officer or employee is participating by reason of his/her office withCIAC;

2. sponsorship in any form of any of the internal programs, activities, andaffairs of clAC, such as christmas parties, anniversary commemorations,etc;

3. Advertisements in the publications of CIAC;

4. Discounts, rebates, waivers and other forms of monetary incentives orbenefits given to CIAC, its officers and employees, in availing of theservices and/or facilities of persons or entities under the jurisdiction ofCIAC; and

5. Acceptance of invitations to social lunches and dinners with persons orentities under jurisdiction of CIAC.

EXCEPTIONS: Exempted to this "NO GIFT POLICY" are the following:

1. The acceptance and retention of certificates, plaques, cards, thank younotes, or other written forms of souvenir or mark of courtesy;

2. The acceptance of seminar bags and contents, and partaking of moderatelypriced meals and beverages that officers and employees obtain at events,such as conferences and seminars, and which are offered equally to allmembers of the public attending the event;

3. Acceptance of books, pamphlets, publications, and data and otherinformation or reading materials that are directly useful to CIAC in theperformance of its mandates, objectives and, which books and othermaterials are given by individuals or organizations that have no penrdingbusiness with CIAC as to create an actual or potential conflict of interest;

4. The acceptance by CIAC officers and employees of a scholarship orfellowship grant, travel grants or expense for travel taking place within oroutside of the Philippines (such as allowances, transportation, food andlodging) or more than nominal value, if such acceptance is appropriate andconsistent with the interests of the Government, and permitted byt ttreChairman of CIAC; and

5. The acceptance or availment by CIAC of grants from local or foreigninstitutions in the pursuit of the mandates, projects and activities, such asthose coming from ADB, World Bank, USAID, etc., provided thatr theavailment thereof shall be strictly in compliance with applicableprocurement laws, rules and regulations.

All officers and employees are required to professionally inform any individualor organization with any actual or potential business with the corporation of this"No Gift Policy", the reasons the corporation has adopted this policy, andrequest that such individual or organizatioh respect such policy. Noticesinforming walk-in clients and visitors of the Policy shall likewi$e be posted inconspicuous areas within CIAC premises.

Ul n - '

,,

fl ru+l

RETURN AND ACKNOWLEDGEMENT OF GIFT:

1. lf any of clAC's officers or employees, receives a gift covered by thispolicy:

a. lf feasibre, shafl immediatery and poritery be decrined.

b' lf not feasible, or it is inappropriate or impractical, to return the gift,e'9. a perishable item, the gift shall be donatecl to an appropriatecharitable or social welfare institution.

2. An acknowledgement letter shall be sent to the donor informing him/her ofthe "No Gift Policy" or that the gift has been returned or donated to acharitable or welfare institution.

DISCIPLINARY ACTION:

An employee who violates this policy will be subject to disciplinary action inaccordance to the existing company code of conduct and othbr existinggovernment rules and regulations, policies and laws.

6.8. Duty of Confidentiality - Pursuant to their duties of diligence and loyalty, amember of the Board or an Officer shall not use or divulge confidentiai orclassified information officially made known to them by reason of their officeand not made available to the public, either: (1) to further their private interests,or give undue advantage to anyone; or (2) which may prejudice the publicinterest.

Providing for staff support to Directors - The clAC shall provide themembers of its Governing Board with reasonable support staff and qfficefacilities to allow them to properly discharge their duties andresponsibilities.

7.2. Obtaining of Directors and Officers Liability Insurance (DOLI). - Havingimposed the highest level of responsibility and accountability on the membersof the Board and Officers, I.e., that of extraordinary diligence, it is equitable thatwhen the CIAC itself and/or the members of the Board and Management aresued before tribunals on matters that are within the official functions andcapacity and on matters where business judgment has been exercised in goodfaith, that there be proper recovery of the costs of litigation and the judgmentliability imposed. lt is prudent measure therefore for every GOCC to obtain"Directors and Officers Liability lnsurance" (DOLI) coverage for itself andithemembers of the Governing Board and Officers against contingent claims andliabilities that may arise from, as well as the expenses that may be incurred inprosecuting, the actions that may be filed against the CIAC arising from theactions of the Governing Board and/or Management that may cause lossor damage to third parties. y1

I

7.

7.1.

@ Adopting Article Vl of GCG Memorandum Circular 2012-07

23

8.2.

8.3. Formal Recognition of CIAC Stakehotders - As mandated by the GCG, thisManual shall incorporate and formally recognize the stakeholders of theCIAC,so thus:

a. Airline Passenoers: ^

Nothing in this section shail be construed as to authorize thereimbursement or the incurring of costs, sygh as the payment of premiurnson DoLt coverage, by the ctnc on the ritigatio" ;-i6;;" i;drr"d";;;the judgment liabitity decreed against a Direclor ; offi;;fir breach of anyof his fiduciary duties or for fraul committed in the performance of his or herduties to the CIAC and/or its stakeholders.

Duty to Be Responsive to Stakehotders - Every Director and officer acceptsthe positiol fuily aware that he assumes certaih responsibirities not;;it";clAc and its stockhorders, but arso with oireieni- constituencies orstakeholders, who have the right to expect that ctAC is oein!-iu-n'l;';;;;imanner and with due regard to the interests of all stakeholders.

consequently, members of the Board and officers shall deal fairly with thec.JAc egnloyees, c-ustomers, suppliers and other stakehoftJers. No mernberof the Board or officer may take unfair advantage "i tn"- cr,qc

'"rirr"'r""".customers, suppriers and other stakehorde-rs throuqh ;;;il;;ti;;-concealment, abuse of confidential or privileged information,-rirr"pi"J"nilil;of materialfacts, or any other unfair-dealing fractice

csR Principles - As an integral part of the National Government, clAC isinherently mandated to b_e socially responsible, to act and operate * gooJcorporate citizens. The Governing Board sharr recognize and p"rroir"ineobligations clAC has towards the National Gorlernment, its majoritvstockholder, as well as the minority stockholders when existing, togetheil*itithe employees, suppriers, customers and other starerrotie;.:-;;;

'il;communities in which it operates.

The Directors, officers and all its employees are required to abide by ethicalpolicies as mandated by the GCG. The protection of the refutation- unJgoodwill of every Gocc is of fundamental importance, and Direciors, om."i,and employees should be aware of the discipiinary implications of Oreacnes oipolicy.

Every member of the Board is encouraged to prompfly report any potentiallyillegal, improper and/or unethical conduct that ihey b"to*" aware of at itheirworkplace or in connection with their work. CIRC witt have an

"nrironr"ntif,aienables its people to raise genuine and legitimate concerns internally. Uowerei,in the event that the people of CIAC, and/or the stockholders believe theiireporting to management may result in harassment, or undue oistress,ltneymay contact the GCG support to report such matters. The GCG provides io, anopportunity for concerns to be investigated and ensures appropriate action istaken to resolve the matter effectively.

8.csR ANp REL TTONS WITH STAKEHOLpERSI

8.1_

24

Air Carriers;Business, Commerce, Tourism Organizations and NGOs;General Aviation Users;Locators and Concessionaires;Service Providers;G round Transportation Providers;Airport Suppliers;Employees;Other Government Agencies;Credit lnvestors;National and Local Government;LocalCommunity; andGeneral public

8.3.i. Nature of Stakeholder's lnterests. To be able to effectively estalblishgood relations with the CIAC Stakeholders, it is important to understandthe nature of their legitimate interests in the operations anddevelopment Plans of CIAC.

The table below contains the nature of interests of the CIAC Stakeholders'

) On-time departure and arrival of flightsF Convenience (i.e. travelling via CRK proved

to be convenient especially for passengerscoming from Region l, ll, lll and NorthernManila)

F Quality service from the airport staff down tothe airlines' crew

F Access to affordable and budget-friendly

AirlinePassengers

> CRK's contribution to ensure air carrier's on-

time performance

aeronautical, landing and take-off, andparking fees)

airport ground/surface

F Maximize passenger and traffic volumesF Maximize number of destinations served and

frequencY of those services

Business,Commerce,TourismOrganizations andNGOs

> Access point to the air transpo(ation system

by providing good availability and high

cipabilities in terms of instrumentation and'

General AviationUsers

F Maximize Passenger volume

D Minimize fees Pai{lo !!e affieF Minimize Concessionaire Privilege Fee/RateD Maximize traffic volume

+

/

i. Those concerning airport suppliers;j. Those concerning the business, commerce, tourism organizations

and NGOs;k. Those concerning local community and general public.

8.3.3. Communication with Stakeholders - Stakeholders are encouraged toaddress their concerns to the clAC through its corporateCommunications Office (CCO), which shall fonrrrard the same to theCIAC Department that can best handle such concern.

a. Dissemination of CIAC Poticies and Programs AffectingStakeholders. The CIAC, through its Corporate Communications Office(CCO), shall. prepare information materials to disseminate every newpolicy or program being implemented for its stakeholders.

b. lnter-agency Consultative Meetings. To ensure stakeholders'awareness of the rules and regulations implemented by the variousgovernment agencies, CIAC shall exert efforts to initiate regular llnter-Agency Consultative Meetings.

c. Consultation Meetings with Touism Associations and NGOs. TheCIAC shall ensure that consultation meetings with the various tourismassociations and NGOs were conducted prior to implementation of anypol icies affecti n g the stakeholders' i nterests.

d. Communication with Stakeholders through Muttimedia. The CIACshall likewise utilize multimedia as a communication tool. lt shall takeadvantage of technological innovations in communicative media tofurther its relationship with its stakeholders and maintain theimplementation of its current activities utilizing print, radio, TV, socialnetworUinternet, SMS and the like.

8.3.4. Monitoring of Stakeholder Satisfaction - The use of survey and otherfeedback mechanism shall be employed as a tool to determine whetherthe stakeholders' interests have been served and to identify areas forimprovement.

8.3.5. CSR Statement of CIAC - CIAC commits to creating positive impact onthe communities affected by operating the Clark Airport Business. Thiswill be done by initiating, facilitating and sustaining wlth government andprivate agencies'concerned, certain strategies, programs and activitiesthat promote the well-being of the Overseas Filipino Workers and theirfamilies, host communities and all other stakeholders of the Clarklnternational Airport. ln performing our corporation social responsibility,

, we will consistently implement program initiatives that will bring asignificant socialvalue proposition into our corporate strategy.

8.4. Employees - Every employee in CIAC is encouraged to - '

a) Remember that the biggest stakeholder is the Government;bi Share the vision of CIAC;c) Be accountable to the Public;d) Listen and learn from his/her co-employees;e) Think and act as a team;

0 Focus on the customers and strive for customer satisfaction;g) Respect others;

yl

27

8.5.

h) Communicate with stockholders and customers;r,i) Deliver results and celebrate success; andD Protect the reputation of CIAC.

The clAC shall adopt an effective system to provide the mechanism by whichthe legitimate interests of the employees is properly communicated- to themanagement, and the inclusion of a method in which the CIAC shall convey itsefforts to recognize these interests. The system shall emphasize

-the

importance of the employees as one of the major stakeholders of clAC andshall indicate conditions where the interests of the National Government imusttake precedence. The effective implementation of a grievance machinery shallbe prioritized as a step towards the recognition of the emptoyees' interests.The clAC shall promote and develop structured programs for continuingpersonal and professional development for employees.

Customers - lntegrity and honesty in dealings with customers is necessary fora successful and sustained business relationship. CIAC should operate a lighlyeffective and efficient organization, focused on meeting customer objeCtiveiwith the aim of providing services which give fair value anct consistent quality,reliability and safety in return for the price paid for the same. clAC shouidoperate policies of continuous improvement, of both processes and the skiills ofthe staff, to take best advantage of advances in all aspect of society in order toensure that it continues to add value to its customers' businesses.

CIAC should have clear and strong lines of communication which allow them torespond quickly and efficiently to customer and market requirements, as wellas the public needs, and for the customers to receive consistent service inorder to successfully and consistently deliver what clAC is mandated to do.

CIAC shall promote the effective implementation of customer satisfactionsurveys. CIAC shall dedicate a customer service channel that will handlecomplaints and provide means to address the concerns in accordance withr theestablished procedures. CIAC shall prioritize the development of a website toachieve its aim of disseminating upto-date, verified and neoessary informationto its customers. clAC shall ensure that the employees handling customerservice are adequately equipped with appropriate and related trainings. CIACshall also conduct consultation meetings with other government agenciesinvolved in the interaction with the CIAC's customers.

Suppliers - As with other relationships with the Stakeholders, CIAC shouldaim to develop relationships and improve networking with business partnersand suppliers based on mutual trust. CIAC should aim to offer, thr<irughpartnership with its suppliers, the best combination of state-of-the- arttechnology and world class service, strong customer relations and deepindustry knowledge and experience, together with the capacity to implementand deliver value-added solutions on time and within budget.

CIAC shall ensure compliance with existing and relevant laws, rules andregulations relative to the procurement of goods and senrices. CIAC shalladopt a system in which the suppliers are encouraged to actively participate inthe activities conducted bv CIAC. ll'fr

I

8.6.

e Taken frcm Sec. ll(2xb)(i), SEC Code of Corporate Govemanco, SEC Memorandum Circular No. 2, s.2002

28

8.7. Health and safety - clAc should aim to ensure a safe and healthy workingenvironment for all its employees, outside contractors and visitors. clidshould comply with all relevant local legislation or regulationr, ,nobest practice guidelines recommended by national heaffit ,nJ ;;i;i;authorities. clAC shall employ a system to regulate the disseminatitn o?information regarding the policies and practiceJ of the clAC in order tomaintain a healthy, safe and enjoyable environment. The clAC shall cohducidialogues with its employees as a means to effectively communicate theprograms and policies affecting the employees' health and safety workingenvironment adopted by CIAC.

Environment - CIAC should consider that there are inevitable environmentalimpacts associated with daily operations. lt shall be the goal of clAC tominimize harmful effects and consider the development and implementation ofenvironmental standards to achieve this to be of great importance. As such,CIAC should strongly encourage 3 R's: "Reduce", "Re- use,,, and "Recycle".

ln the course of the operations of clAC, it should identify opportunities toreduce consumption of energy, water and other natural resources. CIAC shouldalso strive to re-use and recycle where possible and dispose of non- recyilableitems responsibly, thereby minimizing our impact on the environment. ln doingso, by adopting simple, environmentally friendly initiatives, clAC shall naiseawareness among the members of the communities it affects.

9.1. Transparency as the Essence of Corporate Governance - The essenceof corporate governance is transparency; the more transparent the intbrnalworkings of the GOCC are, the more difficult it will be for the Board alrd/orManagement to mismanage the GOCC or to misappropriate its assets., lt istherefore imperative that CIAC disclose all material information to the NationalGovernment and the public, its ultimate stakeholder, in a timely and accrlratemanner at all times.

9.2. Mandatory Website - ln accordance with Section 25 of the Act, CIAC shallmaintain a website and post therein for unrestricted public access:

9.2.1. On Institutional Matters:

a) Latest General lnformation Sheet (GlS) and brief company backgroundincluding date of incorporation, history, functions and mandate; and

b) Government Corporate lnformation Sheet (GCIS) as mandated by theGCG Memorandum Circular No. 2012-01

9.2.2. On the Board and Officers:

a) Complete listing of the Directors and Officers with attached resume, andtheir membership in Board Committees; 4

,

I

8.8.

esAdopting Article Vlll of GCG Memorandum Circular 2012-07

29

complete compensation package of all the board members and officers,including travel, reprelgntation, transportation and any other form ofexpenses or allowances; ea

i

lnformation on Board Committees and their activities;es andAttendance record of Directors in Board and Committee meetings.

9.2.3. On Financial and Operational Matterseo:

a) Their latest annual Audited Financial and Performance Report within,thirty(30) days from receipt of such Report;

b) Audited Financial Statements in the immediate past three (3) years;c) Quarterly, and Annual Reports and Trial Balance;d) Current Corporate Operating Budget (COB);e) Local and foreign borrowings;0 Government subsidies and net lending;g) All borrowings guaranteed by the Government;h) Any material risk factors and measures taken to manage such risks; andi) Performance Evaluation System (PES).

9.2.4. On Governance Matters:A) Charter StatemenVMission-Vision Statements;D) Performance Scorecards and Strategy Map;tuc) OrganizationalChart;d) Manual of Corporate Governance;e) CSR Statement; and0 Balance Scorecard;

Mandatory Reports - The Board shall regularly submit, as may be required bythe GCG and other Government Agencies, the following:

a) Performance Scorecards;b) lmplementation of the audit recommendations of COA;c) Compliance with commitments on servicing loans to, and borrowings

guaranteed by, the National Government; andd) Such other reportorial requirements as may be required by the GCG.

10.HIGHEST STANDARDS PRINCIPLE99

10.1. Public service being a public trust, nothing in this Code shall be construed as:

a) Corporate Government Standards: Relieving or excusing CIAC, their Directorsand Officers, from complying with more rigorous standards of corporate"governance as those required by regulatory agencies having jurisdiction overtheir business enterprises or the industry in which they operate;100

b) Reportorial Requirements: A waiver of the separate reportorial requirementsmandated by the regulatory agencies that have jurisdiction over CIAC and itsbusiness operations; and :

c) Administraiive and Criminal Liabilities: A waiver of the administrative or criminalliabilities imposed by existing laws, rules and regulations, such as the Antr-Graft

y1

I;Sec.

25(e), R A No. '10149.

$ Sec 25, RA 1049

'8Sec.25(g), R.A. No. 10149.e'Adopted

from Sec. 5(c), R.A. No. 10149.looSec. 5(c), R.A. No. 10149.

b)

c)d)

9.3.

r'o

and Corrupt Practices Act,7e and the Code of Conduct and Ethical Standardsfor Public Officials and Employees for Government Officials,so for offenses orbreach of ethical standards committed by Directors, Officers and employees ofctAc.

11.MISCELLANEOUS PROVISIONS

11.1. Amendments. - This code may be amended by the clAC through theissuance of a Board Resolution duly published in the CIAC's website and copyformally submitted to the GCG.

11.2. Effectivity - This Code shall be effective fifteen (15) days after it is publishedin the CIAC website and from the date formal notice of the GCG approval isreceived.

ADOPTED this 2 B ocr 20i5

(On Leave)ATTY. JOSE PERPETUO M. LOTILLA

Alternate Chairman

(On Official Busrness)CAPT. BEDA B. BADIOLA

Representative of William K. Hotchkiss lllBoard Member

VP for Airport Operations & Management

ALIPIO F. DEZ, JR.

(on Eusrness)FELIPE GERARDO MALLARI

Board Member

JOSE ANGELX. HONRADOBoard Member l

ru Rep. Act No. 3019.

@ Rep. Act No.6713.

Board Member

tl/- "$4