Procurement Guidelines

1Strategic Procurement UnitProcurement Proceduresand Guidelines Dated June 01, 2015 Revised June 6, 2017

2SPU FUNCTIONThe Strategic Procurement Unit (SPU) is the Magsaysay Group ofCompanies’ (Magsaysay) centralized unit for Procurement Planning, Strategic Sourcing, Tactical Purchasing, Spend Analysis, Compliance with procurement policies and procedures.In addition, SPU is responsible for innovative and inclusive procure-ment programs such as: Green Procurement Initiatives Inclusive programs for MSMEs Support for women-owned and run business.The SPU shall conduct their activities in accordance with all appli-cable laws, rules, regulations and policies with the highest ethicalstandards.CODE OF CONDUCT and ETHICSThe ethical rules specified in the Magsaysay Code of Ethics pro-hibits SPU managers and staff from personally, or through anyfamily member, relative, or related interest, shall demand, request,take, accept, or receive a gift, bequest, commission, share, per-centage, benefit or other preference, or any promise thereof,whether material or non-material, to which there is no basis or en-titlement.The ethical rules also prohibit any MP with the power to decide onprocurement to enter into any illegal arrangement or agreementwith other suppliers or contractors employee, personally orthrough any family member, relative, or related interest, in orderto manipulate the price, price components or other contract ele-ments to obtain an advantage.

3SPU GOALS AND RESPONSIBILITYThe SPU has the responsibility to ensure that Magsaysay has anexcellent and reliable supplier base that provides quality goodsand services at the right time and with competitive prices. The SPUis responsible for developing good business relationships with sup-pliers and service providers leveraging on economies of scaleacross the group when possible, always acting with integrity, fair-ness and inclusiveness. Magsaysay is looking for excellent suppliers who:offer proven high quality products and services (Quality of prod-ucts) have capacity and reliability (Supplier Capacity and Reliabil- ity) are able to develop long term contractual relationships fulfill the commitment without any delay offer reasonable and competitive prices have updated Product Range supply fresh and not expired products BUSINESS NAME provide After Sales Support with the capability to replace defective goods or offer a solution have lower Lead times – have systems efficiency provide the product and service within agreed lead times are in the proximity and distance when response is important to minimize time in shipping and delivery of the product have the capacity, insurances to cover warranties and guar- antees practice strong ethics and ensure transparency in business dealings comply with government rules and regulations

4SPU FUNCTIONThe Strategic Procurement Unit (SPU) is the Magsaysay Group ofCompanies’ (Magsaysay) centralized unit for Procurement Planning, Strategic Sourcing, Tactical Purchasing, Spend Analysis,Compliance with procurement policies and procedures.In addition, SPU is responsible for innovative and inclusive procure-ment programs such as: Green Procurement Initiatives Inclusive programs for MSMEsSupport for women-owned and run business.The SPU shall conduct their activities in accordance with all appli-cable laws, rules, regulations and policies with the highest ethicalstandards.CODE OF CONDUCT and ETHICSThe ethical rules specified in the Magsaysay Code of Ethics pro-hibits SPU managers and staff from personally, or through anyfamily member, relative, or related interest, shall demand, request,take, accept, or receive a gift, bequest, commission, share, per-centage, benefit or other preference, or any promise thereof,whether material or non-material, to which there is no basis or en-titlement.The ethical rules also prohibit any MP with the power to decide onprocurement to enter into any illegal arrangement or agreementwith other suppliers or contractors employee, personally orthrough any family member, relative, or related interest, in orderto manipulate the price, price components or other contract ele-ments to obtain an advantage.

5SPU GOALS AND RESPONSIBILITYThe SPU has the responsibility to ensure that Magsaysay has anexcellent and reliable supplier base that provides quality goodsand services at the right time and with competitive prices. The SPUis responsible for developing good business relationships with sup-pliers and service providers leveraging on economies of scaleacross the group when possible, always acting with integrity, fair-ness and inclusiveness. Magsaysay is looking for excellent suppliers who:offer proven high quality products and services (Quality of prod-ucts) have capacity and reliability (Supplier Capacity and Reliabil- ity) are able to develop long term contractual relationships fulfill the commitment without any delay offer reasonable and competitive prices have updated Product Range supply fresh and not expired products BUSINESS NAME provide After Sales Support with the capability to replace defective goods or offer a solution have lower Lead times – have systems efficiency provide the product and service within agreed lead times are in the proximity and distance when response is important to minimize time in shipping and delivery of the product have the capacity, insurances to cover warranties and guar- antees practice strong ethics and ensure transparency in business dealings comply with government rules and regulations

6DEFINITION OF TERMSI. PROCUREMENT PLANNINGPlanning for Projects, Capital Expenditure, New Construction andNew Leasehold Improvements ProcurementSPU’s ability to efficiently plan and discharge procurement/canvass responsibilities is dependent on the completeness andaccuracy of specifications based on plans for approval by therespective Chart of Authorities . SPU has the responsibility to refuseto initiate procurement canvas and purchasing without completeconstruction and layouts, and bills of material.Listed below are the asset types and the respective accountableparty to ensure completeness and accuracy of procurementspecifications.ASSET TYPE ACCOUNTABLE PARTYContainer equipment, specialized Ship owning companycontainersEducational and training schools, MIHCA / MMMA / MIS / MLRIfacilities, equipmentBuilding and warehouse construc- Masayation, owner supplied materials, One Stop Logisticsequipment, elevators, air- One Stop Warehousingconditions, leasehold improve- SBU/SSUs involvedments for offices, apartment units,warehousesTransportation, LBEs, cranes, Masaya / MSL /trucks, cars SBU/SSUs involvedKitchen and other hospitality MIHCA / SCIequipmentIT equipment and services IT DepartmentProject Management, other ser- Masayavices SBU/SSU involved

7A. Planning for the Procurement for MaintenanceSPU’s ability to efficiently procure for maintenance is dependenton the Planned Maintenance systems and goals of the SBU re-sponsible for the operation and maintenance of company as-sets.ASSET TYPE ACCOUNTABLE PARTYConsumables for Ships, related Magsaysay Ship management,equipment, spares and materi- Inc.als and servicesFor training equipment and MIHCA / MMMA / MIS / MLRIspares, materials and servicesBuilding equipment, elevators, Masayaair-conditioning, etc. for build- One Stop Logisticsings, rental floors, apartmentunits, warehouses One Stop WarehousingTransportation, LBE, cranes, Masaya / SBUs / MSLtrucks, reefer van, carsKitchenBUSINESS NAME and other hospitality MICHA / SCIequipment and servicesIT equipment, office equip- IT Departmentment and servicesOffice Supplies SBU/SSU with SPUEach accountable party is responsible for :1. Managing Planned Maintenance Systems (Spectec) or other software/manual systems to ensure PMS is per- formed.2. Safekeeping of all manuals and drawings of assets/vessels/ equipment under their responsibility. These files will be au- dited yearly . When assets/equipment are disposed of, the manuals and drawings should be archived or given to the seller.

84. Ensuring that the SPU is briefed on the Planned MaintenanceProgram including leasehold maintenance so they can sourcespares and contractors by October of each year during Budgetperiod.5. Accuracy of Purchase Requests of spare parts/materials/consumables is the responsibility of the Accountable Party.II. STRATEGIC SOURCINGA. For Projects, Capital Expenditure, New Construction and New Leasehold Improvements ProcurementSPU is responsible for creating a project team working with the accountable SBU to: Ensure the completeness of the designs and plans ap- proved by the authorizing body involved. Ensure the completeness of the Bill of Materials. It may be necessary to appoint an independent Project Manager and/or a technical supervisor if the project is large. Ensure complete tender documents. With the SBU involved, create a shortlist of contractors, suppliers and service providers. Manage the bidding process. A minimum of 3 bidders should be invited to submit their tender documents for the project. It may be necessary to outsource this for large projects . Require complete deliveries and checking against speci- fications including the completeness of manuals for turno- ver to the SBU involved.Project team shall have at least a member who have the tech-nical expertise to review and critique the construction plans,cost and related documents. The construction project is proneto corruption and a technical expert serves as a control orcheck and balance.For Supplier/Contractor SelectionThe SPU is responsible for sourcing and developing a robust sup-plier/contractor source list based on the requirements by theMagsaysay Employees . SPU shall invite at least three (3) suppli-ers/contractors per category spend (and location when neces-sary)

91. SPU will collate suppliers and contractors from the followingresources : Makers and authorized distributors of Maker and original spares OEMs and authorized distributors of OEM (Original Equip- ment Manufacturer) and replacement parts Internationally or nationally recognized suppliers and con- tractors Shipyards that have been accredited International Class Societies, International surveyors, ac- credited certifying bodies Suppliers and contractors that have proven track record with the company. Wholesalers2. Suppliers in the list are rated as Registered, Preferred and Part-ners ,For Suppliers/Contractors Registration Process: BUSINESS NAMENew suppliers are most welcome to seek accreditation/registration to be part of the suppliers/contractor list especiallyfor critical items that the company is always looking for goodsources.Subject to Code of Conduct rules, SBU’s are encouraged tomake recommendations for new suppliers/contractors.All vendors must apply for vendor registration to SPU which isbeing evaluated by DUNS and BRADSTREET.The process for registration/accreditation is done through Dunand Bradstreet Philippines. Supplier/Contractor will go throughthe following:Pre-qualification1. Based on need of the company.

102. Registration and Accreditation3. Once pre-qualified, the supplier/contractor will be invited to register.For New Unknown Supplier/Contractors/ One Time VendorsMandatory inspection shall be required for any vendor/supplierunder the following conditions:1. has a single PO value of P 150,000 or above in its business dealings with Magsaysay2. If there is a required advance or down payment3. Food Suppliers4. Security Agencies5. Manpower Agencies6. Construction7. ClinicsIn these cases, the SBU/SSU together with SPU Personnel willpersonally meet the supplier and do an ocular of their premisesfor inspection of latest business permits, BIR Certificate of Regis-tration, photographs of the premises and determine the quality,ability and veracity of the company.In case that the transaction is classified as an URGENT matter,and supplier / contractor is the only reliable company to ren-der/cater for the service required, such mandatory ocular in-spection may be waived as long as the President / COO , willapprove the waiver, but company documents must still be pro-vided.

11“One Time Vendor or Waive Request ” is highly discouraged.Vendors/contractors who are under One Time Vendor / Waiveand/or Non Trade suppliers/contractors must go through theOnline Vendor Registration System for processing and approvalpurposes.Any vendors who are used for a second time, must go throughregistration. If for urgent purchases and used a second time aOne Time Vendor may be used if approved by the President ofthe relevant group.See SPU Procedure on SUPPLIER/CONTRACTOR REGISTRATIONPROCEDURE for further information. BUSINESS NAME

12III. TACTICAL PURCHASINGASSET TYPE PROCESSConsumables for  MSI PMS establishes and uploads PMSShips, related into Shipserv. Briefs and copies SPUequipment,spares and mate-  Vessel Crew prepare a on Shiplink /rials and services AMOS putting similar SKUs together  Vessel Crew checks and compares to inventory, last purchase if items needed  SPU Buyer uses Shipserv/AMOS to can- vass accredited suppliers  SPU Buyer sends canvass to the approval party  SPU completes purchase, advises the requestor with a copy of the PO and contractual delivery  Warehouse coordinator receives the items schedule the issuance to the ves- sel, based on the advise of the Superin- tendent.  Vessel Master checks delivery against Delivery Receipt and PO. Signs Delivery Receipt. Sends signed DR to Accounting.  PO and Invoice checked against DR by Accounting .For training  Magsaysay Training Center, MMMAequipment andspares, materials  MIS establish and upload PMS into a sys- temand services  Brief and copy SPU  SPU and SBU determine shortlist of suppli- ers and service providers.  Set out a bidding document for the sup- ply .

13ASSET PROCESSBuilding equipment,  Masaya, One Stop Logistics, other SBUs establish and upload PMS into aelevators, aircondi- systemtioning, etc. for Brief and copy SPUbuildings, rental SPU and SBU determine shortlist offloors, apartment  suppliers and service providers.units, warehouses   Set out a bidding document for the supply.Transportation, LBE,  Masaya, SBUs, MSLcranes, trucks, cars establish and upload PMS into a sys-  tem  Brief and copy SPU  SPU and SBU determine shortlist of suppliers and service providers.BUSINESS NAME  Set out a bidding document for the supply.Kitchen and other  MIHCA establishes and uploads PMShospitality equip- into a systemment and services Brief and copy SPU   SPU and SBU determine shortlist of suppliers and service providers.  Set out a bidding document for the supply.IT equipment, office  IT Department establishes and up- loads PMS into a systemequipment and ser- Brief and copy SPUvices   SPU and SBU determine shortlist of suppliers and service providers.  Set out a bidding document for the supply.

14Office and cleaning sup-  SBU/SSU lists all standard of-plies fice and cleaning supplies with clear specifications  SPU will input into a Cata- logue  SPU will tender to suppliersFood  MIHCA, MIS, MMMA, and Sun Cruises shall develop menus and cycles around targeted costings  MIHCA shall develop a standard list of materials needed for courses  Based on the planned food and supply needs, SPU shall create a buying system for regular order and replenish- mentUrgent Purchase RequestNormal purchasing procedures must be followed at all times.Planning for all purchases should be made by the respectiveoffice/Department Heads and should allow for normal purchas-ing lead time. However, when there is an urgent, on-the-spotneed for the purchase of goods and services and normal pur-chasing methods may seem impractical, the purchase of goodsand services through regular canvass or sealed bidding may bewaived to give way to an urgent purchase upon the approvalof the President.The company realizes the importance and urgency of certainpurchase requests , hence the Urgent Purchase request wasmade. But this not recommended to any type of purchase butwith exception for certain purchase criteria.

15Criteria of Urgent request/purchase are as follows: Items that has been classified as urgent by requestor with attached justifications of the urgency (i.e. stop vessel oper- ation Items that are related to safety issues Client requested items (cost plus) Sample Items Instruction/s given by the President/Board of Directors/ ChairmanSee SPU Procedure on PROCUREMENT PROCEDURE & UR-GENT PURCHASE REQUEST PROCEDUREPayment termsSPU shall negotiate credit term with the vendor to be at least 30days. AsBUSINESS NAME much as possible, no advance or down payment shallbe required. Absolutely no full payment to vendors unless full de-livery has been made.If full payment will be required prior to delivery, we will requirethe Head of SSU/SBU to approve such arrangements.IV. SPECIAL PROJECTS PROCUREMENTAn overall procurement project plan bidding strategy must bepresented and get approval from the Project ManagementCommittee (PMC) for projects more than PHP 10 million ( orequivalent in other currencies) or projects outside the Philippines,depending on the value of the items supplied or the works to be

16 Committee , Quorum and Approving Respon- Authority sible PartyChairman /  Co Chairman – SPU Head / CFOMembers SBU  Members – Legal / Finance-SBU / BU representative / Masaya  Secretariat – SPU-VPMQuorum  Chairman  At least two membersDelivera-  Procurement Plan SBU/SSU bles  Corresponding Budget SBU/SSU  Procurement Methodology SPU  ensure the plans and designs SBU/SSU have been approved and com- SBU/SSU pleted  ensure that clear specifications SPU done by the project manager or specifier is done and approved SPU to cover service supply and ma- terial and equipment needs  ensure bids are done according to strict procurement bidding guidelines  review compliance with the pre- defined strict supplier vetting and purchasing policies and that in every step of the wayThe members of PMC are comprised of respective Business / Ser-vice Units Head from Finance Services, Legal, Audit and SPU.Therefore, in every meeting, if a member is not able to attend,the Business / Service Unit Heads may send a representative. Note: The participation of the members from different Busi-ness/Service Units will be based on the relevance of the supplier/contractor on the unit itself based on the frequency and high valuetransactions.

17See SPU Procedure on SPECIAL PROJECTS PROCUREMENT.V. SPEND ANALYSIS AND SUPPLIER EVALUA-TIONA Spend Analysis and Supplier Evaluation should be performedat the beginning of the year.Spend AnalysisSPU will make Spend Report Analysis yearly for analysis with ac-countable SBU/SSU concerned By expense category By supplier By fulfillment within KPIs By lack of fulfilled POs to determine where suppliers are needed or when they should be blacklistedSuBUpSINEpSS NlAiMeE r/Service Provider’s Evaluation and Reporting of Results: Performance evaluations of suppliers and service providers should be done every first month of the year. A summary of the Performance Reports will be finalized by the SPU and provided to the accountable SBU/SSU/Group Head during the yearly review. Feedback on performance should be given to the suppli- er/service with the goal to improve. Suppliers/service providers who do not meet requirements shall be deleted from the Supplier’s Master list . *blacklisted vendorsSee SPU Procedure on SUPPLIER/CONTRACTOR ASSESSMENT& CONSEQUENCE MANAGEMENT

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19 TABLE OF CONTENTS1 OBJECTIVE 202 SCOPE 20 203 REFERENCES4 DEFINITIONS 205 PROCESS FLOW 22 5.1 Competitive Bidding for new purchases 22 (CAPEX /OPEX) 24 5.2 Tender Waiver (Manufacturer/Maker/OEM/ Exclusive Distributor) 25 5.3 Price / Frame Agreement/Affiliates/Repeat 25 Order (CAPEX/OPEX) 25 266 PROCEDURE 27 6.1 Receive and Verify Request 27 27 6.2 Prepare Approved Source List 28 28 6.3 Issue Tender Document 28 28 6.4 Conduct Technical / Commercial Bid 29 Opening & Evaluation 29BU SINESS NAME 30 31 6.5 Perform Negotiation 31 31 6.6 Award Recommendation 31 6.7 Issue Purchase / Service Order 6.8 Cost Plus (Material / Services) 6.9 Variation Order 6.10 Goods Receiving 6.11 Tender Waiver Activity 6.12 Price / Frame Agreement Activity 6.13 Repeat Order 6.14 Abort of Tenders and Re-Bid 6.15 Requirement for Performance Bond (PB) 6.16 Record7 APPENDICES

201 OBJECTIVE The purpose of this procedure is to ensure and procurematerials / services are in a most cost-effective manner, andefficiently, and satisfying the requirements of work/order specifi-cation on a timely basis, in accordance with Companyobjectives and maintaining the controls necessary based onthe Company’s policy.2 SCOPE This procedure covers the tendering activities from re-ceipt of approved request until receipt of materials/services bybuyer/requisitioner/end-users3 REFERENCES 3.1 AMI and Magsaysay Group of CompaniesChart of Authority (COA)4 DEFINITIONS 4.1 AffiliatesBUSINESS NAME Refers to Magsaysay and all legal entities un der the umbrella of Magsaysay Group of Companies 4.2 Approved Source/ List (ASL) List of suppliers / contractors approved for the issuance of Invitation to Bid (ITB) / Request for Quota ion (RFQ). 4.3 Approving Authority (AA) As defined in the COA 4.4 Bid Evaluation This is a process carried out by Evaluation Per sonnel (EP) based on the agreed technical / comer cial criteria - on the required items. 4.5 Business Unit (BU) As defined in the COA e.g. Masaya

21to suppliers/contractors.4.8 Chart of Authority (COA) Defines the approved level of authority of au-thorized personnel per Business Unit.4.9 Evaluation Personnel (EP) The authorized personnel that is entitled tocarry out technical bid evaluation process4.10 Originator / User / RequestorRefer to respective personnel that initiates request forpurchase4.11 Price/Frame Agreement A contract entered between the Companyand the supplier/contractor whereby the supplier/contractor agrees to supply the material/services atan agreed price over a specified period of time withmutually agreed terms and conditions.4.12 Purchase Order (PO) A binding agreement between the AMI andMagsaysay Group of Companies and supplier/contractor on the material/services being purchased orengaged.4.13 Purchase Requisition (PR) A request to procure raised by users for material / services -, where the description(s), specification(s), and other instruction(s) are specified, in which theapproving limits is defined in the COA.4.14 SAP Good Receipt Note (GRN) A function module in SAP where the materialsand services receiving details are provided.4.15 Service Unit (SU)As defined as temporary provision of any material in

22 As defined as temporary provision of any ma terial in lieu of the original purchase item. 4.16 SPU Strategic Procurement Unit 4.17 Supplier/ Contractor Provider of materials (supplier) and services (contractor) based on the specifications provided by the buyer. 4.18 Tender/Bid Document The requirements of tender, detailed technical information, scope of work, terms and conditions and contractual obligations, also includes instruction to bidder to prepare the tender, expectations and spe cific guidelines to be followed by bidder e.g. Request for Quotation (RFQ) / Invitation to Bid (ITB). 4.19 Tender (Bidding) Process This is a process that requires the material / service provider to provide its technical and comer cial criteria for evaluation in terms of its technical and commercial feasibility and value. BUSINESS NAME 4.20 Work Accomplishment Report (WAR) Refers to the detail report of the service ren- dered by contractor 4.21 CAPEX/OPEX Refers to Capital Expenditures (CAPEX) and Op erational Expenditures (OPEX)5 PROCESS FLOW 5.1 Competitive Bidding for new purchases( CAPEX / OPEX)Responsibility Activity Interface / Outcome · Buyer · Purchase Requisition Approved · Approved CAPEX Form (if applicable) · Evaluation Criteria

· Buyer 23· Buyer · Approved Source List · Relevant Document(s)· Buyer · Tender Document· Buyer / · Relevant Document(s)EvaluationPersonnel · Technical / Commer- cial Bid Document from· Buyer Supplier/ Contractor· Buyer/Approving · Bid DocumentAuthorities · Relevant Document(s)· Buyer / · Relevant Document(s)Approving · Minutes of MeetingAuthorities · Email communications· Requestor/ · Revised ProposalSupplier · Canvass Sheetor Contrac- · Relevant Document(s)tor/ Buyer · Chart of Authority · Purchase Order · Chart of Authority · Delivery Receipt signed · SAP GRN

24 5.2 Tender Waiver (Manufacturer/Maker/OEM/Exclusive Distributor/ Single or Sole source) – (CAPEX / OPEX) Responsibility Activity Interface / Outcome· Buyer · Purchase Requisition Approved· Buyer · Approved CAPEX· Buyer Form (if applicable) · Tender Document· Buyer · Relevant Document (s) BUSINESS NAME · Technical / Commer· Buyer cial Bid Document from Supplier/ Contractor· Buyer /Approving · Relevant DocumentAuthorities (s) · Minutes of Meeting · Email correspond- ents · Revised Proposal · Canvass Sheet · Relevant Document (s) · Chart of Authority · Purchase Order · Chart of Authority· Requestor/ · Delivery Receipt signedSupplieror Contrac- · SAP GRNtor/ Buyer

255.3 Price/Frame Agreement/Affiliates and Repeat Order (CAPEX/ OPEX)Responsibility Activity Interface / Outcome Buyer  Purchase Requisition Receive & Verify Approved Request  Approved CAPEX Buyer Check PA / FA Check PA / FA Price/Frame Agree- Contract and Contract and Buyer / clarify with PA clarify with PA ment Contract Supplier / FA Supplier / FA Approv- contractor on contractor on Previous Purchase ing Au- thorities availability availability History PO number and delivery and delivery Relevant Document Obtain AA approval / Issue PO (s) Note: Repeat order is valid only for purchase transac- tions within 6 months from the last order, more than that it is classified as new purchase. Purchase Order Chart of Authority Requesto Goods Receiving Delivery Receipt signed  SAP GRN r/Supplier or Con- tractors /Buyer Process Responsibility6. PROCEDURE – Competitive Bidding6.1 Receive and Verify Request 6.1.1 Receive approved Purchase Requisition (PR) for Ma- Buyerterial / Service and relevant supporting document(mandatory evaluation, criteria, specifications, drawings, ap-proved CAPEX and others) from Originator/User. 6.1.2 Verify the request received. Any discrepancy or incom- Buyerplete request shall be notified to the Originator/User6.2 Prepare Approved Source List Buyer6.2.1 Prepare ASL (minimum of 3 suppliers/contractors),based on Vendor Registration Database and Ship Serve listing,comprises the registration information such as supplier/contractor category and registration expiry date. 6.2.3 Provide justification if to include non-registered bidders Buyerin the ASL. Once award is recommended , prepare One TimeRegistration / advise bidder to register with SPU under thesupplier/contractor accreditation process .

26 Process Responsibility6.3 Issue Tender Document6.3.1 Issue tender document to bidder via e- Buyermail / fax / ShipServ or AMOS, whichever is appli- 6.3.2 The bid/tender submission closing date must Buyer be provided in the email or fax contents.6.4 Conduct Technical / Commercial Bid Opening & Evaluation 6.4.1 Bid opening can be done before or after Buyer the bid closing date. Acceptance of late bids must be in discretion of the Buyer, but must be highlighted in the canvass sheet. Justification must be also indicated in the canvass sheet.6.5 Perform Negotiation 6.5.1 Conduct negotiation with the lowest bid- Buyer ders based on factors such as time frame, availa- bility, differences in prices (price analysis), etc. 6.5.2 For multi-party negotiation, submit revised Buyer proposal for finalization to Buyer based on agreed submission timeline.6.6 AwardBUSINESS NAME Recommendation 6.6.1 Prepare Canvass Sheet and submit recom- mended successful supplier / contractor for re- view and approval t by approving authorities 6.6.2 If negotiated/final value is higher than the Buyer/ approved budget (CAPEX/OPEX), upon comple- Evaluation tion of the multi-party negotiation, then highlight Personnel this in the canvass sheet, so the corresponding approval work flow will take place.

27 6.6.3 Obtain approval for the recommended suc- Buyer cessful supplier /contractor. Advise the unsuccess-6.7 Issue Purchase Order 6.7.1 Prepare, get approval and issue Purchase Buyer Order to supplier contractor via SAP , email/fax , Shipserv or AMOS, whichever is applicable. 6.7.2 Receive acknowledgement of PO from sup- Buyer plier / contractor 6.7.3 Finalize the contract for service transaction Buyer6.8 Cost Plus (Material / Services purchased in behalf of clients) 6.8.1 For cost plus (material/services), approval Buyer /AA from Client shall be obtained from the PR, in which the client may recommend the specification re- quired for such request.6.9 Variation Order 6.9.1 Receive variation / extension of contract/ Buyer/SPU delivery completion from supplier / contractor. Head/AA 6.9.2 For material procurement, obtain approval from Buyer the requestor on the variation or extension of contract before issuance of Purchase Variation Order is furnished6.10 Goods Receiving 6.10.1 Receive advice from supplier/contractor of the Buyer delivery/completed work on the purchased items or services to the originator/user/requestor. 6.10.2 Requestor will conduct a visual or comprehen- Buyer/ sive inspection (depending on the requirements) prior to Evaluation signing (signature, full name and date signed) the deliv- Personnel ery receipt or Work Accomplishment Report (WAR) as a proof of acceptance. 6.10.3 Receive the copy of signed delivery receipt or Buyer WAR to the Buyer through email (scanned documents) and/or hand carry/submit the original documents (Invoice, DR and/or WAR and PO, etc.) to the Buyer, Head of Vessel Warehouse at Malabon, or through the Countering Process, whichever is applicable.

28 pass through the Buyer) 6.10.4 Receive the copy of original invoice 6.10.5 Once the Buyer received the delivery re- ceipt or WAR, will update the SAP system, Goods Receipt module.6.11 Tender Waiver (Single Source- Manufacturer/ Maker/OEM/Exclusive Distributor) – (CAPEX / OPEX) 6.11.1 Receive approved PR for Material / Ser- Buyer vice and relevant supporting documents (mandatory evaluation, criteria, specifications, drawings, approved CAPEX and others) from requestor. 6.11.2 Verify the request received. Notify the re- Buyer questor of any discrepancy or incomplete re- quest. 6.11.3 Identify the supplier/contractor which pro- Buyer vides exclusivity on works and provisions for the requested materials or services. 6.11.4 Request and receive proposal / infor- Buyer mation from supplier / contractor, for exclusive distributor, required the letter from the manufac- turer or maker on their exclusivity authorization. BUSINESS NAME 6.11.5 Perform negotiation to identified supplier / Buyer contractor in terms of delivery/completion sched- ule, availability, incidental and logistic cost and total service/material price (especially if the cost is higher than the budget). 6.11.6 Prepare the canvass sheet and state the Buyer reason for single source or why the bidding pro- cess has been waived 6.11.7 If negotiated/final value is higher than Buyer the approved budget (CAPEX/OPEX), upon com- pletion of the negotiation, then highlight this in the canvass sheet, so the corresponding approval work flow will took place. 6.11.8 Prepare, get approval and issue Purchase Buyer/SPU Order to supplier contractor via SAP, email/fax, Head/AA Shipserv, whichever is applicable. 6.11.9 Receive acknowledgement of PO from Buyer supplier / contractor 6.11.10 Finalize the contract for service transact- Buyer

29-tion for value above PHP 1.0 million.6.11.11 Variation Order – follow clause 6.96.11.12 Goods Receiving – follow clause 6.106.12 Price / Frame Agreement / Affiliates6.12.1 Receive approved PR for Material / Ser- Buyervice and relevant supporting documents(mandatory evaluation, criteria, specifications,drawings, approved CAPEX and others) from re-questor.6.12.2 Verify the request received. Notify the re- Buyerquestor of any discrepancy or incomplete re-quest.6.12.3 Identify with supplier/contractor the Buyersigned price or frame agreement or affiliatesagreed price based on the requested materials orservices. 6.12.4 Advise the requestor if the total contract Buyer or purchased value is higher than the approved CAPEX/OPEX budget. 6.12.5 Amend the CAPEX/OPEX budget and get Requestor necessary approval for the amended budget. 6.12.6 Receive approved amended CAPEX/OPEX Buyer budget. 6.12.7 Prepare, get approval and issue Purchase Buyer/SPU Order to supplier contractor via SAP , email/fax , Head/AA Shipserv, whichever is applicable. 6.12.8 Receive acknowledgement of PO from Buyer supplier / contractor 6.12.9 Finalize the contract for service transaction Buyer for value above PHP 1.0 million. 6.12.10 Variation Order – follow clause 6.9 6.12.11 Goods Receiving – follow clause 6.106.13 Repeat Order 6.13.1 Repeat Order is allowed based on the be- Buyer low criteria: i. Purchase transactions within 6 months from the last order, more than that it is classified as new purchase. Ii. Material / services with same specification and same or less than previous rates OR

30same or less than previous rates ORIii. Minor change in specification with same rates /less than from previous rates.6.13.2 Receive approved PR for Material / Ser- Buyervice and relevant supporting documents(mandatory evaluation, criteria, specifications,drawings, approved CAPEX and others)from requestor.6.13.3 Verify the request received. Any discrep- Buyerancy or incomplete request shall be notified tothe requestor.16.13.4 Identify the repeat order or previous Buyertransaction based on the requested materials orservices.16.13.5 Advise the requestor if the total contract Buyeror purchased value is higher than the approvedCAPEX/OPEX budget.16.13.6 Amend the CAPEX/OPEX budget and get Requestornecessary approval for the amended budget. 16.13.7 Receive approved amended CAPEX/ Buyer OPEX budgetBUSINESS NAME16.13.7 Prepare, get approval and issue Purchase Buyer/SPUOrder to supplier contractor via SAP , email/fax , Head/AAShipserv, whichever is applicable.16.13.8 Receive acknowledgement of PO from Buyersupplier / contractor16.13.9 Finalize the contract for service transac- Buyertion for value above PHP 1.0 million.16.13.10 Variation Order – follow clause 6.9 16.13.11 Goods Receiving – follow clause 6.1016.14 Abort of Tenders and Re-Bid6.14.1 Obtain approval from SPU head , if there is Buyera need to abort / re-bid the tender and buyershould provide justification for the action basedon the following criteria:1. Non submission of bids2. Leakage of information, especially on price

31 3. Mediation of Higher Management 4. None adherence of the winning supplier or contractor on their proposed bid, in terms of price and agreed terms. 5. Lack or limitation in budget 6. Changes in company direction/strategy 7. Connivance of suppliers/contractors or AMI and Group of Companies employees. 6.11.11 Variation Order – follow clause 6.9 6.11.12 Goods Receiving – follow clause 6.106.15 Requirement for Performance Bond (PB)- if appli- cable 6.15.1 Advise and remind supplier to furnish the Buyer PerformanceBond upon receiving of PO.6.16 Record 6.16.1 All the relevant documents i.e. purchase Buyer order, canvass sheet, quotations, purchase requi- sitions, capex, etc. shall be kept and made avail- able upon request / for audit purposes.7 APPENDICES 7.1 CAPEX approval form 7.1.1 AMI/MMC 7.1.2 MSL 7.2 Purchase Requisition 7.2.1 AMI/MMC 7.2.2 MSL ( MATERIAL REQUISTION ) 7.2.3 MSL JOB ORDER ( SERVICE REQUISITION ) 7.3 Canvass Sheet 7.3.1 AMI/MMC 7.3.2 MSL

327.1.1 CAPEX APPROVAL FORM AMI/MMC7. 1.2 CAPEX APPROVAL FORM MSL

337.2.1 PURCHASE REQUISITION AMI/MMC7.2.2 PURCHASE REQUISITION MSL ( MATERIAL REQUISITION )

347.2.3 MSL JOB ORDER ( SERVICE REQUISITION )7.3.1 CANVASS SHEET AMI/MMC

357.3.2 CANVASS SHEET MSL

36 AMI and MAGSAYSAY GROUP OF COMPANIESURGENT PURCHASE REQUEST PROCEDUREOWNER: STRATEGIC PROCUREMENT UNITDATE OF EFFECTIVITY: APRIL 15, 2015 PREPARED BY: _____________________ CIERIL V. SUSMEÑA PROCUREMENT OFFICERREVIEWED BY: CONTROLLED COPY NO: ______________________ EDGARDO G. APITANA ______________ CHIEF PROCUREMENT OFFICERAPPROVED BY: _____________________ DORIS M. HO PRESIDENT / CEO

37 TABLE OF CONTENTS1 OBJECTIVE 38 382 SCOPE 383 REFERENCES 384 DEFINITIONS 415 PROCESS FLOW 426 PROCEDURE 42 426.1 Categories of Urgent Request 436.2 Receipt and Verify Request 44 446.3 Issue and Receiving of Tender Documents 45 456.4 Perform Negotiation 45 (Repeat Order Bidding) 466.5 Award Recommendation 6.6 Issue Purchase OrderBUSINESS NAME 6.7 Variation Order6.8 Goods Receiving7 APPENDICES

381. OBJECTIVEThis procedure is to ensure that materials / services procured arein accordance with the purchasing guidelines that is necessaryto cover emergency or critical situation. Normal purchasing re-quirements shall be obtained using standard purchasing proce-dure.2. SCOPEThis procedure covers purchase of materials and services whichneed to be purchased immediately due to circumstances thatwill affect the company’s operation and within the value asspecified in this procedure.3. REFERENCES 3.1 AMI and Magsaysay Group of Companies Chartof Authority (COA) 3.2 Procurement Procedure 3.3 General and Admin Revolving Fund Memo - MSL4. DEFINITIONS4.1 Approved Source/Vendor List (ASL) List of suppliers/contractors approved for the issuance of Invitation to Bid (ITB) / Request for Quotation (RFQ) or have been fully accredited by the company.4.2 Approving Authority (AA) As defined in the COA4.3 Business Unit (BU) As defined in the COA e.g. Masaya4.4 Buyer Refer to any responsible Executive / Staff in SPU or other units which has been appointed by SPU to carry out ten der activity, do commercial evaluation and ne gotiation prior to issuance of Purchase Order (PO) to supplier / contractor.4.5 Canvass Sheet (CS) A report / document resulted from the evalua - tion process consisting of technical and commercial –

39Technical Evaluation (TE), Commercial EvaluationReport (CE) and Quotation Compilation (QC)before issuance of PO contractor / supplier.4.6 Chart of Authority (COA) Defines the approved level of authority of au-thorized personnel per Business Unit4.7 Cost Plus Items to be purchased in behalf of the clientand will be for the account of the client.4.8 Originator / User / Requestor Refer to respective personnel that initiates request for purchase4.9 Purchase Order (PO) As binding agreement between the AMI andGroup of Companies and supplier/contractor on thematerials/services being purchased or engaged.4.10BUSINESS NAME Purchase Requisition (PR) A request to procure raised by users for materials / services required, where the description(s), specifi-cation(s), and other instruction(s) are specified, in whichthe approving limits is defined in the COA.4.11 ASAP Good Receipt Note (GRN) A function module in SAP where the materials /services receiving details are provided.4.12 Service Unit (SU) As defined as temporary provision of any materi-als in lieu of the original purchase item.4.13 SPU Strategic Procurement Unit

404.14 Supplier/ Contractor Provider of materials (supplier) and services (contractor) based on the specifications provided by the buyer.4.15 Tender/Bid Document The requirements of tender, detail technical in formation, scope of work, terms and conditions and con- tractual obligations, also includes instruction to bidder to prepare the tender, expectations and specific guide lines to be followed by bidder e.g. Request for Quotation (RFQ) / Invitation to Bid (ITB).4.16 Urgent Purchase An emergency purchase which is serious and urgent in nature that demands immediate purchasing action.4.17 Work Accomplishment Report (WAR) Refers to the detail report of the service rendered by contractor.

5. PROCESS FLOW Activity 41Responsibility Interface/ Outcome Buyer  Purchase Requisi- Buyer tion Approved Buyer  Approved CAPEX Buyer Form (if applica- ble) Buyer  Price/Frame BUSINESS NAME Agreement Con- Buyer tract Buyer  Previous Purchase Re- History PO number questor/  Relevant Docu- Supplier or Con- ment(s) tractors /Buyer  Tender Document  Relevant Docu- ment(s)  Technical / Com- mercial Bid Docu- ment from Suppli- er/Contractor  Relevant Docu- ment(s)  Minutes of Meeting  Email correspond- ents  Relevant Docu- ment(s)  Minutes of Meeting  Email correspond- ents  Purchase Order  Chart of Authority  Delivery Receipt / WAR  SAP GRN

42 Process Responsibility6. PROCEDURE  Buyer6.1 Categories of Urgent Request6.1.1 Criteria of urgent request /purchase are asfollows:I. Item that had been classified as urgent by requestor, attached together with the justifi- cation of the urgency, i.e. stop vessel opera- tionII. Item that is related with safety issue.III.Client request item (cost plus)IV.Sample itemV.Instruction from President/ Board of Directors/ Chairman6.1.2 Solutions that need to be adopted are as  Buyerfollows: I. Repeat order / Direct Negotiation II. Go for minimal bidders (maximum of 3 suppli- ers/contractors and minimum of 2 vendors/ contractors) III.Direct negotiation with 1 accredited vendor6.2. Receive and Verify Request  Buyer6.2.1 Receive approved PR and relevant sup-porting documents from Originator/User. Re-quest can be made either through a requestform (hardcopy), through email or othermeans of communication such as text. Ap-proval on the request could be via signedhard copy, email, text messaging and phonecall.6.2.2 All request approved via phone call or  Requestor text messaging should be properly docu- mented once the requestor has the capa- bility to regularize the said request .

43Process Responsibility6.2.3 All urgent request must be justified basing on  Requestor the criteria mentioned in clause 6.1.1 and to the impact made to business operations, oth- erwise it will be treated as normal purchase.6.2.4 Verify the request received. Any discrepancy  Buyer or incomplete request shall be coordinated to the Originator/User/Requestor.6.2.5 Checked the purchase history of the request-  Buyer ed material/service and verify its availability and price, whether it meets the Requestor re- quirements.6.3 Issue and receiving of Tender Document  Requestor/6.3.1 In case there is no purchase history / previous Buyer data and the material/service is new or can- not meet the delivery time required, Buyer may seek the advise of the requestor on those suppliers/contractors that can provide such request, however, the Buyer will still need to issue the tender briefing. BUSINESS NAME 6.3.2 For transparency and competitiveness, a  Buyer maximum of 3 suppliers/contractors and mini- mum of 2 suppliers/contractors (this includes the recommendation from requestor) should be invited for the tender.6.3.3 Issue tender document to bidder via e-  Buyer mail / fax / ShipServ, whichever is applicable.6.3.4 The bid/tender submission closing date as  Buyer well as the date of the delivery must be provid- ed in the email or fax contents.

44Process Responsibility6.4 Perform Negotiation6.4.1 For Repeat Order /Direct Negotiation with1 accredited supplier/contractor , negotia-tion and coordination is required to ensure;  Buyeri. Price accuracyii. Payment termiii. Method of shipmentiv. Delivery date6.4.2 Price should be the same on previous  Buyer price or lower.6.4.3 Total quantity must not be more than  Buyer twice the quantity of the previous purchase.6.4.4 For those transaction under bidding, con- duct negotiation with the lowest bidders based on factors such as lead time, availa- bility and pricing.6.5 Award Recommendation6.5.1 Prepare and submit recommended suc- cessful supplier /contractor for review and  Buyer endorsement to respective approval parties.6.5.2 Approval can be obtain via canvas sheet ,  Buyer/ AA email, text messaging or phone call which- ever is applicable based on the value: Value Approval Note: For pettyPH 0 to PHP 150,000 cash or revolving BU Head fund utilization,PHP 150,001 to PHP pls. utilized the 500,000 BU Head and COO/ existing policies CFO/PRESIDENT (either per company i.e. one could approve). GeneralPHP 500,000 and Chairman Above

45 Process Responsibility6.5.3 All award made via phone call or text mes-  Buyer saging should be properly documented once the requestor has the capability to regularize the award recommendation.6.6 Issue Purchase Order6.6.1 Once the transaction has been regularized,  Buyer/SPU prepare, get approval and issue Purchase Or- Head/ AA der to supplier contractor via SAP , email/fax , ShipServ, whichever is applicable.6.6.2 Receive acknowledgement of PO from sup-  Buyer plier / contractor .6.7 Variation Order  Buyer6.7.1 Receive variation / extension of contract/delivery completion from supplier / contractor. BUSINESS NAME Buyer6.7.2 For material procurement, obtain approval  from the requestor on the variation or exten- sion of contract before issuance of Purchase Variation Order is furnished6.8 Goods Receiving  Requestor6.8.1 Received advise from supplier/contractor of the delivery/completed work on the purchased items or services to the originator/user/ requestor.  Requestor6.8.2 Requestor will conduct a visual or compre-hensive inspection (depending on the re-quirements) prior to signing (signature, full nameand date signed) the delivery receipt and/orWork Accomplishment Report (WAR) as a proofof acceptance .

46Process Responsibility6.8.3 Receive the copy of signed delivery re-  Buyer ceipt or WAR to the Buyer through email (scanned documents) and/or hand carry/ submit the original documents (Invoice, DR and/or WAR and PO, etc.) to the Buyer, Head of Vessel Warehouse at Malabon, or through the Countering Process, whichever is applicable.6.8.4 Once received the delivery receipt or  Buyer WAR, Buyer will update the SAP system, Goods Receipt module.7. APPENDICES7.1 Urgent Purchase Requisition Form7.2 Canvass Sheet 7.2.1 Canvass Sheet AMI/MMC 7.2.2 Canvass Sheet MSL

477.2.1 CANVASS SHEET AMI/MMC7.3.2 CANVASS SHEET MSL BUSINESS NAME

48SPECIAL PROJECTS PROCUREMENTPREPARED BY: _____________________________ CONTROLLED Christophe Henares Chuidian COPY NO. ______________REVIEWED BY: __________________________ Edgardo Guevara ApitanaAPPROVED BY: UNCON- TROLLED COPY NO.____________________ Doris Magsaysay Ho _____________

49 RECORD OF AMENDMENTDate Change / Rev. Prepared Approved Revision / No. by By NewBUSINESS NAME

50 TABLE OF CONTENTS 511 GENERAL 512 DEFINITIONS AND GLOSSARY 523 SCOPE AND RESPONSIBILITIES 52 524 PURCHASING 53 4.1 Material Requisition 53 4.2 Material Classification 54 4.3 Approved Bidders List 55 4.4 Bidding Stage 55 4.5 Single Sourcing/ Direct Award Bid Exercise 57 4.6 Evaluation Stage 57 4.7 Award Recommendation 59 4.8 Purchase Order Stage 59 4.9 Amendments to Purchase Orders 59 4.10 Purchase Order Close Out 60 4.11 Close Out Procedure 60 4.12 Reporting Procurement Status 4.13 Material Receipt at Site