CORPORATE GOVERNANCE 
                     MANUAL 
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                            
                TABLE OF CONTENTS                                                             Page Number 
                 
                ARTICLE I INTRODUCTION AND DEFINITION OF TERMS                                       1 
                 
                A. Introduction                                                                  
                B. Definition of Terms                                                           
                 
                ARTICLE II RULES OF INTERPRETATION                                                   3 
                 
                ARTICLE III GOVERNANCE STRUCTURE                                                     3 
                 
                A. Board of Directors                                                                3 
                1. Composition of the Board of Directors                                             3 
                2. Qualifications for or Disqualifications from Directorship                         3 
                3. Responsibilities, Duties and Functions of the Board                               6 
                4. Specific Duties and Responsibilities of a Director                                7 
                5. Internal Control Responsibilities of the Board                                    8 
                6. Board Meetings and Quorum Requirement                                             9 
                7. Remuneration of Directors and Officers                                            9 
                8. Directorships and Officerships in Other Corporations                              9 
                 
                B. Board Committees                                                                  10 
                1. Appointment of Members and Adoption of Committee Charter                          10 
                2. Audit and Risk Management Committee                                               10 
                3. Corporate Governance Committee                                                    13 
                4. Nomination Committee                                                              15 
                5. Compensation Committee                                                            16 
                6. Executive Committee                                                               16 
                7. Related Party Transactions Committee                                              17 
                 
                C. Independent Directors                                                             18 
                1. Qualifications of an Independent Director                                         18 
                2. Term                                                                              20       
                3. Nomination of an Independent Director                                             20 
                 
                ARTICLE IV OFFICERS                                                                  21 
                 
                A. The Chairman                                                                      21 
                 
                B. The CEO                                                                           22 
                 
                C. The President                                                                     22 
                 
                D. The Corporate Secretary                                                           22 
                 
                E. Enterprise Risk Management                                                        25 
               1. Role of ERM                                                                  25 
               2. Appointment of an ERM Head                                                   25 
               3. Functions and Responsibilities of ERM                                        25 
               4. Authority of ERM                                                             26 
                
               F. Compliance Officer                                                           26 
               1. Appointment of the Compliance Officer                                        26 
               2. Duties and Responsibilities                                                  26 
                
               ARTICLE V ADEQUATE AND TIMELY INFORMATION                                       27 
                
               ARTICLE VI ACCOUNTABILITY AND AUDIT                                             28 
                
               ARTICLE VII CORPORATE GOVERNANCE MONITORING  
               AND SELFASSESSMENT                                                              29 
                
               ARTICLE VIII DISCLOSURE AND TRANSPARENCY                                        29 
                
               ARTICLE IX COMMUNICATION, EDUCATION AND TRAINING                                30 
                
               A. Communication                                                                30 
               B. Education and Training                                                       31 
                
               ARTICLE X PENALTIES FOR NON-COMPLIANCE                                          31 
                
               ARTICLE XI SHAREHOLDER’S RIGHTS                                                 31 
                
               1. Voting Rights                                                                32 
               2. Power of Inspection                                                          32 
               3. Right to Information                                                         33 
               4. Right to Dividends                                                           33 
               5. Appraisal Rights                                                             33 
               6. Right to Fair Treatment and Protection                                       34 
               7. Duty of Directors to Shareholders                                            34 
                
               ARTICLE XII ALTERNATIVE DISPUTE RESOLUTION                                      35 
                
               ARTICLE XIII WHISTLEBLOWING POLICY                                              36 
                
               1. Reporting Procedure                                                          36 
               2. Investigation                                                                37 
               3. Non-Retaliation Policy                                                       37 
                
               ARTICLE XIV COMMUNICATION PROCESS                                               38 
                
               ARTICLE XV EFFECTIVITY                                                          38 
                        ARTICLE I 
               INTRODUCTION AND DEFINITION OF TERMS 
                            
        A.  Introduction 
           
          The Board of Directors, officers and employees of PAL Holdings, Inc. (the “Company” or 
        the “Corporation”) are committed to the principles of corporate governance contained in this 
        Corporate  Governance  Manual.  The  Board  recognizes  that  Corporate  Governance  is  a 
        necessary component of sound business management which will in turn contribute to the 
        improvement  of  the  value  of  the  Corporation  for  the  benefit  of  its  shareholders  and 
        stakeholders. 
         
        B.  Definition of Terms 
           
            1. Articles of Incorporation – refers to the Articles of Incorporation of the Corporation 
        and all amendments thereto; 
            
           2. Board of Directors or “Board” – is the governing body elected by the Shareholders 
        that exercises the corporate powers of a Corporation, conducts all its business and controls its 
        properties; 
            
           3. By-Laws – refers to the By-Laws of the Corporation and all amendments thereto; 
            
           4. Compliance Officer – is the highest position in the Corporation responsible for the 
        compliance function; 
            
           5. Corporate Governance – refers to the system of stewardship and control to guide 
        the  Corporation  in  fulfilling  its  long-term  economic,  moral,  legal  and  social  obligations 
        towards its Stakeholders. It is the system of direction, feedback and control using regulations, 
        performance standards and ethical guidelines to hold the Board and Senior Management 
        accountable for ensuring ethical behavior – reconciling long-term customer satisfaction with 
        Shareholders value – to the benefit of all Stakeholders and society; 
            
           6. Enterprise Risk Management or ERM – refers to the process, effected by the 
        Corporation’s Board of Directors, management and other personnel, applied in strategy setting 
        and across the enterprise that is designed to identify potential events that may affect the 
        Corporation, manage risks to be within its risk appetite, and provide reasonable assurance 
        regarding the achievement of the Corporation’s objectives; 
         
           7. Exchange or Philippine Stock Exchange – refers to an organized market place or 
        facility  that  brings  together  buyers  and  sellers,  and  executes  trading  of  securities  and/or 
        commodities; 
         
           8. Independent Director – refers to a person who is independent of management and 
        the controlling Shareholders, and is free from any business or other relationship which could,