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Manual on Corporate Governance

The Board of Trustees and Management, i.e. officers and staff, of Postal Services Mutual Benefit Association, Inc. (the "Corporation") hereby commit themselves to the principles and the best practices contained in this Manual, and acknowledge that the same may guide the attainment of their corporate goals.



This Manual shall institutionalize the principles of good corporate governance in the entire organization.


The Board of Trustees and Management, employees and stakeholders, believe that good corporate governance is a necessary component of what constitutes sound strategic business management and will therefore undertake every effort necessary to create awareness thereof within the organization as soon as possible.



II.1. Compliance Officer

II.1.1. To ensure adherence to corporate principles and best practices, the Board of Trustees shall designate a Compliance Officer who shall hold the position of at least a Vice President or its equivalent. He or she shall have direct reporting responsibilities to the Chairman of the Board.

II.1.2. He or she shall perform the following duties:


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

  • Appear before the Insurance Commission (the "Commission") upon summons on relevant matters that need to be clarified by the same;

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

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

  • Identify, monitor and control compliance risks.

II.1.3. The appointment of the Compliance Officer shall be immediately disclosed to the Insurance Commission in the Corporation's Annual Statement supported by the PSMBAI Board Resolution. All correspondents relative to his or her functions as such shall be addressed to said Officer.

II.2. Plan of Compliance

II.2.1. Board of Trustees Compliance with the principles of good corporate governance shall start with the Board of Trustees. It shall be the Board's responsibility to foster the long-term success of the Corporation and secure its sustained competitiveness in a manner consistent with its fiduciary responsibility, which it shall exercise in the best interest of the Corporation and its members/stakeholders. The Board shall conduct itself with utmost honesty and integrity in the discharge of its duties, functions and responsibilities. The PSMBAI shall have at least two (2) independent trustees or such number as will constitute 20% of the members of the Board, but in no case less than two (2).

II.2.1.1. General Responsibility

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


II.2.1.2. Specific Duties and Functions

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

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

  • Determine the Corporation's purpose, vision, mission and strategies to carry out its objectives;

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

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

  • Adopt a system of internal checks and balances;

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

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

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

  • Each elected trustee shall, before assumption of office, be required to attend a seminar on corporate governance conducted by a duly recognized private or government institute;

  • Formulate and implement policies to ensure the integrity of related party transactions between and among the PSMBAl and its related companies, business associates, stakeholders, officers, trustees and their spouses, children, dependent siblings and parents, and of interlocking trustee relationships, and

  • Establish and maintain an alternative dispute resolution system to settle conflicts between the PSMBAl and its members/stakeholders or other third parties, including regulatory authorities.

II.2.1.3. Duties and Responsibilities of a Trustee

A trustee shall have the following duties and responsibilities:

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

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

  • To act judiciously;

  • To exercise independent judgment;

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

  • To observe confidentiality;

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

II.2.1.4. To enable the Board to properly fulfill their duties and responsibilities, management should provide trustees with complete and timely information about the matters in the agenda of the meetings. Trustees should be given independent access to management and the Corporate Secretary, as well as to independent professional advice.

II.2.2. Board Committees 

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

II.2.2.1. Nomination Committee

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

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


  • He/she should be a member of the Postal Services Mutual Benefit Association, lnc. , a Phil. Postal Corporation employee and official, in the active, retired, and separated status;

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

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

  • He shall be assiduous.

In addition to the qualifications for membership in the Board required in relevant laws, the Board may provide for additional qualifications, which may include practical understanding of the PSMBAl's business.


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

  • Any PSMBAl member finally found by the Commission or a court or other administrative body to have willfully violated, or willfully aided, abetted, counseled, induced or procured the violation of, any provision of the Insurance Code or any other law administered by the Commission or Bangko Sentral ng Pilipinas;

  • Any PSMBAl member judicially declared to be insolvent;

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

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

  • No PSMBAl member shall qualify or be eligible for nomination or election to the Board of Trustees if he is engaged in any business which competes with or is antagonistic to that of the Corporation. Without limiting the generality of the foregoing, a PSMBAI member shall be deemed to be so engaged:

  1. If he is an officer, manager or controlling person of which is an adverse party in any suit, action or proceeding (of whatever nature, whether civil, criminal, administrative or judicial) by or against the Corporation, which has been actually filed or threatened imminent or probable, to be filed;

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

  • Refusal to fully disclose the extent of his business interest as required under the Insurance Code and its implementing rules and regulations. This disqualification shall be in effect as long as his refusal Persists;

  • Absence or non-participation for whatever reason/s for more than fifty percent (50%) of all meetings, both regular and special, of the Board of Trustees during his incumbency, or any twelve (12) month period during his incumbency, unless the absence is due to illness, death in the immediate family, or serious accident. This disqualification applies for purposes of the succeeding election;

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

  • If the independent trustee becomes an officer or employee of the same corporation, he shall be automatically disqualified from being an independent trustee;

  • Conviction that has not yet become final referred to in the grounds for disqualification of trustees;

II.2.2.I.2. In consultation with the appropriate executive or management committee/s, re-define the role, duties and responsibilities of the Chief Executive Officer by integrating the dynamic requirements of the business as a going concern and future expansionary prospects within the realm of good corporate governance at all times.

II. The Nomination Committee shall consider the following guidelines in the determination of the number of trusteeship which a member of the Board may hold:

  1. The nature of the business of the corporations of which he is a trustee;

  2. Age of the trustee;

  3. Number of trusteeship/active memberships and officer-ships in other corporations or organizations; and

  4. Possible conflict of interest.

The optimum number shall be related to the capacity of a trustee to perform his duties diligently.

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

II.2.2.2. Compensation and Remuneration Committee

II. The Compensation and Remuneration Committee shall be composed of at least three (3) members, one of whom shall be an independent trustee

II. Duties and Responsibilities

  • Establish a formal and transparent procedure for developing a policy on executive remuneration and for fixing the remuneration packages of corporate officers and trustees, and provide oversight over remuneration of senior management and other key personnel, ensuring that compensation is consistent with the Corporation's culture, strategy and control environment.

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

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

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

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

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

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


II.2.2.3. Audit Committee

II. The Audit Committee shall be composed of at least three (3) members of the Board, one (1 ) of whom shall be an independent trustee, who shall be the Chairman thereof.

Each member shall have adequate understanding at least or competence at most of the PSMBAl's financial management systems and environment.

II. Duties and Responsibilities

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

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

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

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

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

  1. A definite timetable within which the accounting system of the Corporation will be 100% International Accounting Standards (lAS) compliant.

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

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


II.3. Corporate Secretary

II.3.1. The Corporate Secretary is an officer of the PSMBAl and his or her loyalty to the mission, vision and specific business objectives of the corporate entity come with his or her duties.

II.3.2. The Corporate Secretary shall be a Filipino citizen.

II.3.3. Considering the varied functions and duties, the Corporate Secretary must possess administrative and interpersonal skills, and if not the general counsel, must have some legal skills and a working knowledge of the operations of the PSMBAI.

II.3.3.1. Duties and Responsibilities​

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

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

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

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

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

II.4. External Auditor

II.4.1. An external auditor shall enable an environment of good corporate governance as reflected in the financial records and reports of the Corporation. An external auditor shall be selected and appointed by the stakeholders upon recommendation of the Audit Committee.

II.4.2. The reason/s for the resignation, dismissal or cessation from service and the date thereof of an external auditor shall be reported in the PSMBAl's annual and current reports. Said report shall include a discussion of any disagreement with said former .external auditor on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure.

II.4.3. The external auditor of the PSMBAl shall not at the same time provide the services of an internal auditor to the same Corporation. The Corporation shall ensure that the other non-audit work shall not be in conflict with the functions of the external auditor.

II.4.4. The PSMBAl's external auditor shall be rotated or the handling partner shall be changed every five (5) years or earlier.

II.4.5. If an external auditor believes that the statements made in the PSMB'Al's annual report, information statement or proxy statement filed during his engagement is incorrect or incomplete, she shall present his views in said reports.

II.5. Internal Auditor

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

11.5.2. The internal Auditor shall report to the Audit Committee.

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

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


III.1. This Manual shall be available for inspection by any stakeholder of the Corporation at reasonable hours on business days.

III.2. All trustees, executives, division and department heads are tasked to ensure the thorough dissemination of this Manual to all employees and related third parties, and to likewise enjoin compliance in the process.

III.3. An adequate number of printed copies of this Manual must be reproduced under the supervision of the Corporate Governance Department, with a minimum of at least one (1 ) hard copy of the Manual per department.


IV.1. If necessary, funds shall be allocated by the Chief Financial Officer or its equivalent officer for the purpose of conducting an orientation program or workshop to make this Manual operational.


V.1. The reports or disclosures required under this Manual shall be prepared and submitted to the Commission by the responsible Committee or officer through the Corporation's Compliance Officer.

V.2. All material information, i.e., anything that could potentially affect pricing, shall be publicly disclosed. Such information shall include earning results, acquisition or disposal of major assets, Board changes, related party transactions, and Changes of ownership.

V.3. Other information that shall always be disclosed includes remuneration of all trustees and senior management, and off-balance sheet transactions.

V.4. All disclosed information shall be released via the annual report.

V.5. The Board shall commit at all times to fully disclose material information. It shall cause the filing of all required information for the interest of the stakeholders.


The Corporation recognizes that the most cogent proof of good corporate governance is that which is visible to the eyes of its investors. Therefore, the following provisions are issued for the guidance of all internal and external parties concerned, as governance covenant between the PSMBAl and all its investors.

VI.1.1. Rights of Stakeholders and Their Interests

The Board shall be committed to respect the following nights of the stakeholders:

VI.1.2. Voting Rights

VI.1.2.1. Members/Stakeholders shall have the night to elect, remove and replace directors and vote on certain corporate acts in accordance with the Corporation Code.

VI.1.2.2. Cumulative voting may be used in the election of trustees.

VI.1.2.3. A trustee shall not be removed without cause if it will deny stakeholders representation in the Board.

VI.1.3. Power of Inspection

All members/stakeholders shall be allowed to inspect corporate books and records including minutes of Board meetings and registrants in accordance with the Corporation Code and shall be furnished with annual reports, including financial statements, without cost or restrictions.

VI.1.4. Rights to Information

VI.1.4.1. The members/stakeholders shall be provided, upon request, with periodic reports which disclose relevant personal and professional information about the trustees and officers and certain other matters, such as their dealings with the PSMBAl, relationships among trustees and key officers, and the aggregate compensation of trustees and officers.

VI.1.4.2. The members/stakeholders shall be granted 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, and in accordance with law, jurisprudence and best practice.

VI.1.4.3. The members/stakeholders shall have access to any and all information relating to matters for which the management is accountable, and to those relating to matters for which the management shall include such information and, if not included, then the stakeholders shall be allowed to propose to include such matters in the agenda of stakeholders' meeting, being within the definition `` of "legitimate purposes", and in accordance with law, jurisprudence and best practice.

VI.1.5. In Case of Merger or Consolidation

It shall be the duty of the trustees to promote members/stakeholders rights, remove impediments to the exercise of stakeholders rights and allow possibilities to seek redress for violation of their rights. They shall encourage the exercise of stakeholders' voting rights and the solution of collective action problems through appropriate mechanisms. They shall be instrumental in removing excessive costs and other administrative or practical impediments to stakeholders participating in meetings and/or voting in person. The trustees shall pave the way for the electronic filing and distribution of member/stakeholder information necessary to make informed decisions, subject to legal constraints.

Members/Stakeholders should be .encouraged to personally attend members/stakeholders' meetings. If they cannot attend, they should be apprised ahead of time of their right to appoint a proxy.


VII.1. Each Committee shall report regularly to the Board of Trustees.

VII.2. The Compliance Officer shall establish an evaluation system to determine and measure compliance with this Manual. Any violation thereof shall subject the responsible officer or employees to the penalty provided under Part 8 of this Manual.

VII.3. The establishment of such evaluation system, including the features thereof, shall be disclosed in the PSMBAl's annual report or in such form of report that is applicable to the Corporation. The adoption of such performance evaluation system must be covered by a Board`.approval.

VII.4. This Manual shall be subject to quarterly review unless the same frequency is amended by the Board.

VII.5. All business processes and practices being performed within any department or business unit of Postal Services Mutual Benefit Association, Inc. (PSMBAl) that are not consistent with any portion of this Manual shall be revoked unless upgraded to be compliant with this Manual.


VIII.1. To strictly observe and implement the provisions of this Manual, the following penalties shall be imposed, after notice and hearing, on the PSMBAl's trustees, officers, staff, subsidiaries and affiliates and their respective trustees, officers and staff in case of violation of any of the provisions of this Manual:

VIII.1.1. In case of first violation, the subject person shall be reprimanded.

VIII.I.2. Suspension from the office shall be imposed in case of second violation. The duration of the suspension shall depend on the gravity of the violation. This shall not be applicable to trustees.

VIII.1.3. For third violation, the maxi.mum penalty of removal from office shall be imposed. With regard to trustees, the provision of Section 28 of the Corporation Code shall be observed.

VIII.2. The Compliance Officer shall be responsible for determining violation/s through notice and hearing and shall recommend to the Chairman of the Board the imposable penalty for such violation, for further review and approval of the Board.

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