SEC Form 17-A 2022
SEC Form 17-A 2022
SEC Form 17-A 2022
Re: Metro Alliance Holdings and Equities Corp_SEC Form 17-A 2022_02May2023
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COVER SHEET
0 0 0 0 0 0 0 2 9 6
SEC Registration No.
M E T R O A L L I A N C E H O L D I N G S &
E Q U I T I E S C O R P . & S U B S I D I A R I E S
3 5 T H F L R. O N E C O R P O R A T E C E N T R E
D O Ñ A J U L I A V A R G A S C O R. M E R A L C O
A V E S. O R T I G A S C E N T E R P A S I G C I T Y
(Business Address : No. Street City / Town / Province)
STAMPS
7. 35th Flr. One Corporate Centre, Doña Julia Vargas cor. Meralco Aves., Ortigas Center, Pasig
Address of principal office
9. Not applicable
Former name, former address, and former fiscal year, if changed since last report.
10. Securities registered pursuant to Sections 8 and 12 of the SRC, or Sec. 4 and 8 of the RSA
Yes [ x ] No [ ]
If yes, state the name of such stock exchange and the classes of securities listed therein:
2
Philippine Stock Exchange Common – Class A
Common – Class B
(a) has filed all reports required to be filed by Section 17 of the SRC and SRC Rule 17
thereunder or Section 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections 26 and
141 of The Corporation Code of the Philippines during the preceding twelve (12) months (or
for such shorter period that the registrant was required to file such reports);
Yes [ x ] No [ ]
(b) has been subject to such filing requirements for the past ninety (90) days.
Yes [ x ] No [ ]
13. Aggregate market value of the voting stock held by non-affiliates: Php 49,435,711
3
PART I - BUSINESS AND GENERAL INFORMATION
Item 1. Business
Business Development
Metro Alliance Holdings & Equities Corp. (MAHEC or the Parent Company) is incorporated in the
Philippines. The Parent Company and its subsidiaries (collectively referred to as “the Group) are involved
in contract logistics. Certain subsidiaries previously engaged in the importation and distribution of
polypropylene resin and pharmacy management have cease operations.
The Parent Company was first incorporated in October 15, 1929 as a management and trading company
called Marsman & Company, Inc. (Marsman). Marsman was listed on the Philippine Stock Exchange (the
‘Exchange’) in 1947. The Parent Company changed its name to Metro Alliance Holdings & Equities Corp.
as approved by the stockholders on the annual meeting on April 6, 1999 and subsequently approved by
Securities and Exchange Commission on October 11, 1999.
The new registered office address of the Parent Company is at 35th Flr. One Corporate Centre, Doña
Julia Vargas cor. Meralco Aves., Ortigas Center, Pasig City last November 2010. Amendment of Articles
of Incorporation was approved by the Securities and Exchange Commission last March 14, 2016.
Status of Operation
The Parent Company and Polymax Worldwide Limited (Polymax), a special purpose entity incorporated in
British Virgin Island, entered into a series of acquisition transactions (see details below) to acquire
ownership of the petrochemical plant of NPC Alliance Corp. (NPCA), which resulted in a 2006 disputed
sale of Polymax’s 60% interest in NPCA to NPC International Limited (NPCI) and Petrochemical
Industries Investment Company (PIIC). Subsequently on August 27, 2013 the Parent Company and
Polymax entered into a settlement agreement with NPCI, PII and NPC to resolve the dispute. On the
basis of the settlement agreement, the previously issued 2006 consolidated financial statements of the
Parent Company and its subsidiaries were restated to reflect the sale of Polymax’s 60% interest in the
petrochemical plant.
The remaining 20% of Polymax’s interest is valued at ₱347.7 million, which is the estimated recoverable
amount from the sale of investment. The realization of the Parent Company’s advances to Polymax and
the settlement Polymax’s past due liabilities for which the Parent Company is jointly and severally liable,
depends on whether sufficient cash flows can be generated from Polymax’s 20% interest in NPCA, which
is for sale, and from a letter of comfort issued by the Wellex Group of Companies in favor of the
Company. The consolidated financial statements do not include any adjustments that might result from
the outcome of these uncertainties.
Acquisition Transactions
On December 4, 2003, the Parent Company entered into a Memorandum of Agreement (MOA) with
Polymax, whereby the Parent Company confirmed the designation of Polymax as the acquiring company
in the proposed acquisition of the senior secured debt papers of BPC from International Finance
Corporation (IFC). Under the MOA, the Parent Company and Polymax agreed that (a) the acquisition of
the secured debt paper would be for the account and benefit of the Parent Company; (b) the funding for
the acquisition would be provided and arranged by the Parent Company; and (c) the exercise of creditor
rights arising from the secured debts via foreclosure and takeover of the assets of BPC would be directed
by and for the account and benefit of the Parent Company. In addition, the Parent Company would make
certain advances to Polymax.
On December 19, 2003, Polymax and IFC entered into an Assignment and Transfer Agreement (the
Agreement) for the purchase by the former of the senior secured debt papers of BPC. The Parent
Company advanced to Polymax the initial deposit of US$5 million, which was remitted to IFC for the
assignment payment, pursuant to the terms of the Agreement. On February 11, 2004, IFC confirmed that
it has received the full payment for the assignment of the senior secured debt papers of BPC.
To partially finance the Parent Company’s advances relating to the Petrochemical Project, the Parent
Company obtained short-term loans from local banks. With the delay in the completion of the activities
4
and the conditions required for the Petrochemical Project, the Parent Company was unable to pay the
bank loans on maturity dates. As of December 31, 2006, the amounts payable to the banks totaled
₱866.7 million, consisting of the outstanding principal balance of ₱378.3 million and finance charges of
₱488.4 million. In 2007, these past due liabilities were unilaterally transferred to and applied against the
advances made to Polymax as discussed in Note 15.
Pursuant to the Parent Company’s plan of acquiring full control of BPC, instead of exercising creditor
rights, the Parent Company, on April 16, 2004, entered into a Share Purchase Agreement (SPA) with
BPC, Tybalt Investment Limited (TIL), BP Holdings International B.V. (BPHI) and Petronas Philippines,
Inc. (PPI), with TIL as the purchaser of the 83% interest of the foreign shareholders of BPC. As agreed by
the parties, the SPA is to take effect as of March 31, 2004, subject to closing conditions, as defined in the
SPA, which the parties have to comply with within a period of 60 days or later if the conditions are not
met.
On July 7, 2005, Polymax and BPC executed a Deed of Conveyance, transferring to Polymax under an
asset for share swap, the petrochemical plant of BPC in exchange for 85 million common shares of
Polymax with par value of US$1 per share, or a total par value of US$85 million.
On July 20, 2005, the Parent Company, Polymax and NPC International Limited (NPCI) entered into an
SPA which provided that, subject to certain conditions, including the transfer of the petrochemical plant of
BPC free from encumbrances, NPCI will acquire 60% of the issued share capital of NPCA from Polymax.
On August 9, 2005, Polymax and NPCA executed a Deed of Conveyance, transferring to NPCA, under
an asset for share swap, the same petrochemical plant in exchange for 4.8 million shares of common
stock of NPCA with a total par value of ₱4.8 billion, resulting in 100% ownership interest of Polymax in
NPCA.
On November 15, 2005, BPC and Polymax executed a Deed of Assignment whereby BPC transferred
and conveyed to Polymax all its rights and interest to Polymax’s 85 million shares of common stock, with
a total value of US$85 million, in exchange for the discharge of a portion of BPC’s secured debt, which
was acquired by Polymax from IFC, up to the extent of the value of the shares transferred. Polymax
retired the said shares 10 days from the date the Deed of Assignment.
On December 16, 2005, Polymax, NPCI, Petrochemical Industries Investment Company (PIIC) and the
Parent Company entered into an amended SPA whereby NPCI and PIIC will purchase 40% and 20% of
NPCA’s shares of common stock, respectively, from Polymax. In addition to the conditions set forth in the
original SPA, the amended SPA also involves advances to be provided by NPCI amounting to US$15
million representing an advance payment which may be used to fund the bona fide third-party costs of
NPCA or BPC for the recommissioning, operation and maintenance of the petrochemical plant or such
other third-party cost or expenses, taxes or duties as agreed between Polymax and NPCI.
On the same date, the Parent Company, NPCI and PIIC entered into a Guarantee and Indemnity
agreement whereby the Parent Company irrevocably and unconditionally guaranteed the prompt
performance and observance by Polymax and the payment on demand by Polymax of all moneys,
obligations and liabilities, which are now or at any time after the execution of the agreement become due
from or owing or incurred by Polymax under or in connection with any of the SPA and the Shareholders’
Agreement. The Parent Company also guaranteed that it shall be liable for Polymax’s obligations, as if it
were a principal debtor, if Polymax’s obligations are no longer recoverable from Polymax.
On March 18, 2006, Polymax, NPCI, PIIC and the Parent Company entered into an Agreement of
Variation (March 2006 Variation Agreement) to vary and amend the terms of the “Amended and Restated
Share Purchase Agreement (ARSPA) and the Shareholders’ Agreement” entered on December 16, 2005.
Under the March 2006 Variation Agreement, completion of the conditions and conditions subsequent set
forth in the ARSPA was extended to April 30, 2006. Moreover, additional conditions that Polymax needs
to satisfy prior to completion were agreed upon.
On the same date, Polymax and NPCI executed a Deed of Absolute Sale whereby Polymax sold,
transferred and conveyed to NPCI all the rights, title and interest in 19,090,000 NPCA shares of common
stock, equivalent to 40% ownership interest, for a consideration of ₱1.91 billion.
5
On September 11, 2006, Polymax, NPCI, PIIC, the Parent Company and NPCA entered into another
Agreement of Variation (September 2006 Variation Agreement) to further vary and amend the terms of
the ARSPA and the Shareholders’ Agreement (both initially amended and varied by the March 2006
Variation Agreement). Polymax, in accordance with its obligations under the ARSPA, had notified NPCI
and PIIC that it is aware that certain conditions will not be fulfilled by April 30, 2006. As a result, the
parties agreed to transfer to PIIC the 9,545,000 NPCA shares of common stock prior to completion, while
certain conditions will become conditions subsequent to be completed on December 31, 2006.
On September 20, 2006, Polymax and PIIC executed a Deed of Absolute Sale whereby Polymax sold,
transferred and conveyed to PIIC all the rights, title and interest in 9,545,000 NPCA shares of common
stock, equivalent to 20% ownership interest, for a consideration of ₱954.5 million.
On December 31, 2006, the ARSPA Variation Agreement expired with the conditions subsequent
remaining unsettled. Nevertheless, NPCI and PCII took control of the petrochemical plant resulting in a
dispute with the Parent Company and Polymax, who considered the sale of Polymax’s 40% and 20%
interest in the petrochemical plant to NPCI and PCII, respectively, as null and void.
On August 21, 2007, the petrochemical plant started commercial operations under NPCI and PIIC.
Subsequently on August 27, 2013, the Parent Company and Polymax entered into a settlement
agreement with NPCI, PIIC and NAC to resolve, fully and finally, the dispute arising from the uncompleted
acquisition transactions described above. Under the agreement, NCPI shall, among others, pay Polymax
the remaining balance of the purchase price of the 60% NPCA shares net of deductions agreed by the
parties. Simultaneous with the execution of the agreement, Polymax shall also sell to NPCI an additional
20% of Polymax’s interest in NPCA from the remaining 40% equity holding in NPCA at US$8 million or its
equivalent in Philippine peso. In September 2013 and August 2014, the remaining balance due to
Polymax was paid by NCPI and the 20% interest of Polymax in NPCA was sold to NCPI, respectively, in
accordance with the agreement.
As a result of the foregoing settlement, the arbitration tribunal issued on October 2, 2014 an order for
withdrawal of the arbitration cases (under the United Nations Commission on International Trade Law
Rules of Arbitration), which were earlier filed by the parties due to the dispute arising from their various
agreements.
Non-operating Subsidiaries
Consumer Products Distribution Services, Inc. (CPDSI) is a wholly owned subsidiary of Metro Alliance. It
was first incorporated on November 11, 1993 as Metro Drug Distribution, Inc. (MDDI). In November 7,
1997, the Securities and Exchange Commission approved the renaming of MDDI to CPDSI. Prior to
2002, CPDSI was involved in providing logistics and administrative services in connection with the sale
and distribution of principals’ products. The last service agreement expired in 2002. In January 2002,
CPDSI shifted into the business of importation and toll manufacturing of propylene and distribution of
polypropylene in the local market. In April 2003, CPDSI ceased its polypropylene business operations
due to the substantial increase in prices of imported raw materials. Currently, CPDSI has no business
operations.
FEZ-EAC Holdings, Inc. became a wholly owned subsidiary of the Corporation in November 11, 2002. It
was incorporated in February 3, 1994. It ceased operations at the end of 2001 following the expiration of
the third party logistics contract of its subsidiary with Phillip Morris Philippines, Inc.
6
Zuellig Distributors, Inc. is a wholly owned subsidiary of the Corporation. It ceased operations in June 30,
1999 following the expiration of its exclusive distribution agreement with its single principal. It was
incorporated in October 18, 1985.
Asia Healthcare, Inc. is 60% owned by the Corporation. AHI was first incorporated in July 2, 1918. In
August 2000, the Corporation invested in AHI. However, in 2002, it ceased operations due to heavy
losses. The low volume and minimal margin on the sales of pharmaceutical products have not been
sufficient to cover the costs of the services and products provided by AHI. Consequently, AHI was
constrained to terminate contracts with its clients and cease its business operations. On December 17,
2002, AHI filed a voluntary petition for insolvency with the Pasig City Regional Trial Court (RTC). On
February 27, 2003, the Pasig City RTC declared AHI as insolvent.
Export sales
Metro Alliance and its subsidiaries are not engaged in export sales.
7
Distribution Methods of the Products
The core of MCLSI contract logistics services is warehouse and transport management. It leases
dedicated warehouses or operates warehouses leased/owned by its principals and contracts dedicated
personnel to manage its warehouses. Its principal’s products are shipped mostly in four and six-wheeler
closed van through a shipping and cargo services company.
Competition
MCLSI’s main competitors include IDS Logistics, DHL-Exel, Shenker, Fast Services, Agility (formerly
Geologistics) and Air 21. The quality of MCLSI’s services compared to their competitors is extremely
difficult to determine. However, the fact that MCLSI has been able to secure new contracts with new
principals as well additional contracts with existing principals is indicative that service levels are
satisfactory.
Estimate of the amount spent during each of the last three calendar years on research and
development activities
There are no such activities in Metro Alliance and its other subsidiaries.
8
MCLSI
There is no Collective Bargaining Agreement (CBA). There has been no strike or similar threat within the
last three (3) years. There are no supplemental and incentive arrangements with its employees. The
number of employees will be increased only upon entry of new principals.
Major Risks
Metro Alliance
Capital availability, access to credit and high borrowing rates. Negotiations with local and foreign
investors, both banking and non-banking institutions are currently being pursued.
Metro Alliance’s financial instruments consist of cash, due from affiliates, equity instruments and due to
related parties. The main purpose of these financial instruments is to finance the Metro Alliance’s
operations. Other financial liabilities consist of accrued expenses and other liabilities, which arise directly
from the Metro Alliance’s operations. The main risk arising from Metro Alliance’s financial instruments are
credit risk and liquidity risk. The Board of Directors reviews and approves policies for managing each of
the risks.
Credit risk
It is Metro Alliance’s policy to require all concerned related parties to comply and undergo a credit
verification process with emphasis on their capacity, character and willingness to pay. In addition,
receivables are closely monitored so that exposure to bad debts is minimized.
Liquidity risk
Metro Alliance objective is to maintain a balance between flexibility and continuity of funding. However,
because of past due liabilities for which Metro Alliance is jointly and severally liable, Metro Alliance’s
access to funds has been limited to those of its related parties in the form of advances. Current working
capital requirements will continue to be sourced from short-term loans and advances from related parties.
MCLSI
MCLSI’s principal financial instruments consist of cash. The main purpose of MCLSI’s financial
instruments is to finance the company’s operation. MCLSI has various other financial asset and financial
liabilities, such as trade and other receivables, refundable deposits under other current asset, and trade
and other payables and accrued expenses, which arise directly from operations.
The main risks arising from the use of financial instruments are credit risk, foreign currency risk and
liquidity risk. The Board of Directors is responsible for the overall risk management approach and for
approving by the Board of Directors as follows:
Credit risk
Credit risk is the risk that the MCLSI will incur a loss because its counterparties failed to discharge their
contraction obligations. MCLSI manages credit risk by transacting only with entities with established good
credit standing. In addition, receivable balances are monitored on a regular basis with the result that
MCLSI’s exposure to bad debt is not significant.
9
Liquidity Risk
Liquidity risk is the risk that MCLSI will be unable to meet its payment obligations when they fall due
under normal and stress circumstances. To limit the risk, MCLSI maintains a balance between continuity
of funding and flexibility through cash planning.
Item 2. Properties
Description of Property
Metro Alliance
The Parent Company entered into a lease agreement with The Wellex Group, Inc. for a business space in
the 35th floor of One Corporate Centre, Dona Julia Vargas cor. Meralco Ave., Ortigas Center Pasig City.
The term of the lease is from May 1, 2020 until April 30, 2022 and was renewed for another period of two
(2) years from May 1, 2022 to April 30, 2024. The leased period shall be renewable for another period of
two (2) years with adjustments in the rental rates as agreed by the parties. Monthly rental for the leased
premises amounts to ₱15,000, exclusive of VAT.
Following the adoption of PFRS 16, Metro Alliance recognized right-of-use asset and lease liability over
the life of the lease. The asset is calculated as the initial amount of the lease liability, plus any lease
payments made to the lessor before the lease commencement date, plus any initial direct costs incurred,
minus any lease incentives received.
MCLSI
MCLSI entered into several lease agreements covering its office premises and warehouses. The terms of
the lease agreements range from 1 to 5 years under renewable options. Other leases entered into include
clauses to enable upward revision of the rental charged on an annual basis – based on prevailing market
rates. In 2021, MCLSI entered into lease agreements with terms of 2 years ending October 11, 2023 and
November 2, 2023, all under renewable options.
On July 5, 2002, the Parent Company received a decision from the Court of Tax Appeals (CTA)
denying the Parent Company’s Petition for Review and ordering the payment of ₱83.8 million for
withholding tax assessments for the taxable years 1989 to 1991. The Parent Company filed a Motion
for Reconsideration on July 31, 2002 but this was subsequently denied by the CTA. A Petition for
Review was filed with the CTA on November 8, 2002, which was also denied by the CTA. The
Parent Company then appealed the decision of the CTA to the Court of Appeals (CA), which likewise
denied the appeal and upheld the assessment against the Parent Company. The Parent Company,
through its legal counsel, filed a Motion for Reconsideration with the CA in December 2003.
On July 9, 2004, the Parent Company received the CA resolution denying the Motion for
Reconsideration. On July 22, 2004, the Parent Company filed with the CA a Motion for Extension of
time to file an appeal to the Supreme Court (SC). On August 20, 2004, the Parent Company filed
said appeal. On October 20, 2004, the Parent Company received the resolution of the SC denying its
Petition for Review for lack of reversible error. The Parent Company filed a Motion for
Reconsideration. On January 10, 2005, the SC issued an Order stating that it found no ground to
sustain the Parent Company’s appeal and dismissed the Parent Company’s petition with finality.
On April 26, 2006, the Parent Company filed a Petition for Review before the CTA en banc. On
March 7, 2007, the CTA en banc dismissed the Petition for lack of merit. The CTA en banc affirmed
the CTA’s decision granting the Motion for Issuance of Writ of Execution filed by the Commissioner
of Internal Revenue.
10
As of December 31, 2022, the Parent Company has not received any order of Execution relative to
this case. Accordingly, the related obligation is not currently determinable.
(b) Metro Alliance and Philippine Estate Corporation vs. Philippine Trust Company, et al., Civil Case
SCA#TG-05-2519, RTC Tagaytay City Branch 18
Civil Action for Declaratory Relief, Accounting, Reformation of Contracts, Annulment in Decrease in
Interest Rates, Service Charge, Penalties and Notice of Sheriffs Sales plus Damages
On September 14, 2005, the Parent Company (MAHEC) and Philippine Estate Corporation (PHES)
filed a Civil Action for Declaratory Relief, Accounting, Reformation of Contracts, and Annulment in
Decrease in Interest rates, Service Charge, Penalties and Notice of Sheriffs Sale, plus Damages
with prayer for the Issuance of a Temporary Restraining Order and/or Writ of Preliminary Injunction.
The case stemmed from imminent extra-judicial foreclosure of four (4) mortgaged Tagaytay lots
covered by Transfer Certificate of Title (TCT) Nos. T-355222, T-35523, T-35524 and T-35552
subject to the Real Estate Mortgage executed by MAHEC and PHES securing ₱280 million loan last
December 2003.
On October 6, 2005, the Regional Trial Court (RTC) of Tagaytay City issued and granted the Writ of
Preliminary Injunction (first injunction). The preliminary injunction issued by the RTC stopping the
foreclosure was nullified by both Court of Appeals and Supreme Court, after which Philtrust
proceeded to foreclose, and acquired those properties for only ₱165.8 million. When MAHEC and
PHES failed to redeem, Philtrust consolidated title and Tagaytay registry issued new TCTs
cancelling PHES’ TCT. On October 10, 2011, MAHEC filed Notice Lis Pendens vs. four (4) new
TCTs of Philtrust.
The case is now back to Tagaytay RTC for trial hearings under new acting Judge Jaime Santiago.
MAHEC and PHES already presented witnesses. Next trial hearing was set on April 12, 2016 for
presentation of plaintiff’s last witness for explanation of why the checks issued in 2004 in favor of
Philtrust Bank intended to settle the loan were all dishonored and were returned unpaid.
The Parent Company was able to get the formal trial started and on-going. The Parent Company’s
most important move was the presentation of a very competent real estate appraiser, realtor, Cesar
Santos, who was able to successfully defend in court his ₱811.6 million valuation of the foreclosed
Tagaytay properties. Trial hearings are on-going, and it is now defendant Bank’s turn to adduce
evidence. Plaintiffs have closed their evidence presentation wherein all offered evidence were
admitted, over the objections of defendant Bank. At the last hearing held on December 6, 2016,
defendant Bank’s star witness was subjected to Plaintiff’s cross examination wherein they obtained
many damaging admissions against the Bank. Plaintiff’s counsels’ cross-examination resumed at
trial hearing last April 25, 2017.
Damages sought are ₱1,000,000 as and by way of exemplary damages and ₱500,000 as and by
way of attorney’s fees, litigation expenses and cost of suit.
On February 21, 2019, the defense presented its second witness, Mr. Godofredo Gonzales, an
appraiser of Philippine Trust Company. However, the cross-examination of the witness was reset to
June 27, 2019.
In 2020, the Parent Company acknowledged the obligation to PHES, which was due and
demandable on June 30, 2020. The Parent Company, however, failed to pay the amount on that
date, for which, legal interest has been accrued at the end of the year.
(c) MAHEC, POLYMAX & WELLEX vs. Phil. Veterans Bank., et al., Civil Case #08-555, RTC Makati
Branch 145 now SC GR 2405495 and 240513
Civil Action with Damages to Nullify the Foreclosure of Property
11
The case is an injunction suit with damages filed on July 23, 2008 in RTC-Makati to nullify the
foreclosure of Pasig lot securing a ₱350 million loan obtained by MAHEC, Polymax and Wellex.
Initially, Temporary Restraining Order (TRO) and preliminary injunction was issued, but afterwards, it
was lifted, enabling Philippine Veterans Bank (PVB) to foreclose. In successive certiorari cases that
plaintiffs filed, both Court of Appeals (CA) and Supreme Court (SC) upheld PVB. Worse yet, due to
major lapse of the plaintiff’s original counsels, lis pendens on foreclosed Pasig lot was cancelled, and
in March 2012, PVB sold the lots to Zen Sen Realty Development Corporation who got new Transfer
Certificate of Title (TCT). The above case was consolidated with other case of affiliated company
with the same RTC. In 2013, Parent Company’s legal counsel brought Zen Sen Realty Development.
Corporation. as defendant also and prayed that the PVB sale to it be nullified. In October 2014,
Parent Company’s legal counsel dropped Zen Sen Realty as an unnecessary defendant, after which
DECISION was rendered vs. PVB on January 9, 2015, declaring the ₱550M loan (total loan of
MAHEC, Polymax, Wellex and other affiliated companies) as fully paid, and even over-paid;
discharging all the mortgages, and voiding the 2012 sale made to Zen Sen. PVB was ordered to
refund to plaintiffs the ₱3.25 million overpayment. PVB filed a motion for reconsideration which was
denied. PVB filed Notice of Appeal to Court of Appeal on May 8, 2015, which the Parent Company’s
legal counsel questioned as defective, but the RTC ruled against the company in its May 12, 2015
Order.
Upon appeal thereof by both parties, the Court of Appeals rendered its Decision dated June 29,
2017, partly granting PVB’s appeal, and declared that: (a) the legal interest of 12% per annum be
applied to the principal amounts; and (b) that MAHEC, et al. remain liable to pay PVB the amount of
₱69.7 million as of November 2006. MAHEC, et al. filed their “Motion for Reconsideration” dated July
31, 2017. The Court of Appeals rendered its Amended Decision dated February 28, 2018, stating
that the outstanding obligation of MAHEC, at al., if any, shall earn interest at 6% per annum from
July 1, 2013 onwards, pursuant to Central Bank Circular No. 799. The Court of Appeals denied
PVB’s Motion for Reconsideration thereof in its Resolution dated July 2, 2018.
On August 24, 2018, MAHEC, et.al filed with the Supreme Court its “Petition for Review on
Certiorari” dated August 22, 2018. This was consolidated with PVB’s “Petition for Review” dated
August 24, 2018, which was previously raffled to the Supreme Court’s Third Division.
In G.R. No. 240495, Parent Company received a copy of PVB’s ‘Comment/Opposition” dated
October 30, 2019. On December 4, 2019, MAHEC, et al. filed “Motion to Admit Reply” with attached
Reply, both dated November 28, 2019.
In G.R. No. 240513, MAHEC, et al. already “Comment (On the Petition for Review dated August 24,
2018)” dated August 30, 2019.
On February 23, 2021, the case was set for the presentation of plaintiffs’ evidence. However, the
case was rescheduled on June 22, 2021 due to lack of return card of the notice of the hearing sent to
defendant’s counsel.
On April 18, 2022, MAHEC et al received the Supreme Court’s Notice of Judgment dated April 4,
2022 with attached Decision dated September 15, 2021, rendered in the case which they filed to
restrain PVB from foreclosing on the Pasig property. Thereafter, PVB filed its undated Motion for
Reconsideration on May 5, 2022.
In its Resolution dated August 15, 2022, the Supreme Court denied PVB’s Motion for
Reconsideration, and issued the Entry of Judgment dated August 15, 2022 on October 13, 2022,
stating that the Decision became final and executory on August 15, 2022. Thus MAHEC, et al filed
their Motion for Issuance of a Writ of Partial Execution dated October 24, 2022, praying that the trial
court issue a writ of partial execution.
In response, PVB filed its Opposition dated November 2, 2022, praying that MAHEC, et al.’s Motion
should be denied. In its order dated November 7, 2022, the trial court partially granted MAHEC et
al.’s Motion and issued a Writ of Execution and thereafter, the parties filed their respective Motions
for Partial Reconsideration.
12
During the hearing at the trial court on January 18, 2023. MAHEC, et al. advised the court of the
Register of Deeds’ failure to cancel the title issued to Zen Sen Realty Development Corporation due
to nullification of the foreclosure. The court suggested that MAHEC, et. al. file a motion for
clarification with the Supreme Court. Due to MAHEC, et. al. loss of faith that the trial court would be
able to duly execute the Supreme Court’s Decision, it filed its Omnibus Motion for (A) Inhibition of the
Honorable Presiding Judge; and (B) Reconsideration of the order on February 1, 2023. The trial
court granted the prayer of MAHEC, et. al.
(d) MAHEC, POLYMAX, Renato B. Magadia (Metro Group/plaintiffs) vs NPC International Limited, et al.
(NPC Group/defendants) Civil Case No. R-PSG 19-02106, RTC Pasig City Branch 159 and related
cases
Corporate Mismanagement and Damages with Application for Temporary Restraining Order and
Injunction
On August 1, 2019, MAHEC together with co-plaintiffs, Polymax Worldwide Limited (Polymax) and
Renato B. Magadia instituted a civil case in the Regional Trial Court (RTC) of Pasig City – Branch
159 against NPC International Limited (NPCI), NPC Alliance Corporation (NCPA), et. al. docketed as
Civil Case No. R-PSG 19-02106CV for mismanagement and damages, restitution of 80% equity in
NPCA, deletion from the accounting books and financial statements of NPCA the accounts due to
Parent Company and trade payables due to NPCI and PGPCI as reflected in the audited financial
statements of NPCA, reimbursement of total accumulated losses as reflected in 2018 audited
financial statements of NPCA as well as reimbursement of opportunity losses in the amount of
Php100 million.
After failure of settlement in both Mediation and Judicial Dispute Resolution proceedings, the case is
now set for pre-trial. Parties are awaiting the Honorable Court to set the hearing dates.
Subsequently, NPCI filed a countersuit with the Permanent Court of Arbitration at the Hague. This
counter suit prays for payment by the MAHEC and Polymax of costs and damages that the NPCI has
incurred for the preservation of the Bataan polyethylene plant from 2018 to the date of the award.
MAHEC and Polymax questioned the jurisdiction of the Permanent Court of Arbitration. Nonetheless,
the arbitral court refused to bifurcate the issue on jurisdiction but proceeded with the arbitration
proceedings. As a matter of courtesy, but without prejudice to its position that they are not subject to
the jurisdiction of the Honorable Tribunal, MAHEC and Polymax submitted all its Replies on the
arguments presented by NPCI. This case is now awaiting resolution by the Honorable Tribunal.
Corollary to this case, a pending Petition for Review on Certiorari under Rule 45 of the Revised
Rules of Court has been filed by MAHEC et. al. with the Supreme Court to nullify and set aside the
Resolution dated July 28, 2021 and Resolution dated June 3, 2022 of the Court of Appeals (CA)
former Twelfth Division in the case of CA-GR SP. No. 166958. The parties are currently awaiting
Court’s Resolution.
(e) There are other pending minor legal cases against the Parent Company. Based on the facts of these
cases, management believes that its positions have legal merits and the resolution thereof will not
materially affect the Parent Company’s financial position and result of operations.
No matter was submitted during the fourth quarter of the fiscal year covered by this report to a vote of
security holders.
13
PART II – OPERATIONAL AND FINANCIAL INFORMATION
Item 5. Market for Issuer’s Common Equity and Related Stockholder Matters
Market Information
The principal market of Metro Alliance Holdings & Equities Corp.’s common equity is the Philippine Stock
Exchange (PSE) where it was listed 1947. The high and low sales prices by quarter for the last three (3)
years are as follows:
Class A Class B
High Low High Low
2022 First Quarter 1.19 0.95 1.19 0.95
Second Quarter 1.00 0.90 1.00 0.90
Third Quarter 0.81 0.73 0.81 0.73
Fourth Quarter 0.66 0.64 0.66 0.64
2021 First Quarter 4.08 1.84 4.08 1.84
Second Quarter 2.64 1.93 2.64 1.93
Third Quarter 2.36 1.40 2.36 1.40
Fourth Quarter 1.75 1.02 1.75 1.02
2020 First Quarter 3.30 0.89 3.30 0.89
Second Quarter 3.19 1.36 3.19 1.36
Third Quarter 2.37 1.40 2.37 1.40
Fourth Quarter 2.37 1.62 2.37 1.62
The high, low and close market prices are ₱0.73 as of April 26, 2023 (latest practicable trading date).
Holders
There are 306,122,449 shares outstanding: 183,673,470 shares are Class “A” and 122,448,979 shares
are Class “B”. As of December 31, 2022, there are 606 holders of Class “A” shares and 389 holders of
Class “B” shares.
Top 20 Stockholders
As of December 31, 2022
Number of Shares % to
Stockholder's Name Class A Class B Total
1 PCD NOMINEE CORPORATION (FILIPINO) 43,096,501 30,705,833 24.109
2 CRESTON GLOBAL LIMITED 56,378,388 18.417
3 CHESA HOLDINGS INC. 40,500,000 13.230
4 PACIFIC WIDE REALTY & DEVELOPMENT CORP. 31,498,000 10.289
5 FORUM HOLDINGS CORPORATION 14,442,356 13,432,644 9.106
6 PACIFIC CONCORDE CORPORATION 6,329,500 9,503,908 5.172
7 REXLON REALTY GROUP, INC. 12,200,000 2,673,112 4.859
8 CHARTERED COMMODITIES CORP. 11,296,000 3.690
9 MIZPAH HOLDINGS, INC. 10,128,700 3.309
10 WILLIAM GATCHALIAN 2,091,000 1,481,500 1.167
11 PACIFIC REHOUSE CORP. 1,258,000 1,670,000 0.956
12 FORUM HOLDINGS CORPORATION 1,934,500 0.632
13 PCD NOMINEE CORPORATION (NON-FILIPINO) 1,494,911 1.488
14 TIN FU OR TRAJANO 820,000 0.268
15 CTBC TA# 5-C184: ZUELLIG CORP. 684,829 0.224
16 VICTOR GAN SY 400,000 200,000 0.196
17 W. DUMERMUTH 472,600 0.154
18 VICTOR G. SY 178,000 290,000 0.153
19 AB CAPITAL & INVESTMENT CORPORATION 162,000 268,000 0.140
20 MARY ANGUS BROWN 309,910 0.101
14
Dividends
No dividends were declared by Metro Alliance in the last two fiscal years and in the interim period. There
are no restrictions that limit the ability to pay dividends.
Plan of Operation
In the previous management letter, the Company cited several factors that brought about positive
developments for the Company. The management summarized the projected plans.
MAHEC’s remaining operating subsidiary, Metro Combined Logistics Solutions, Inc. (MCLSI), has steadily
grown with additional business from its existing principals. As a means of diversification, MCLSI is also
exploring business opportunities in the transport field, including computer app solutions, warehousing and
cold storage; in medical distribution and pharmaceutical business logistics, operation of hospice care and
management of medical clinics, importation of medical equipment; and also, in document storage, car
parking, sea travel, river ferry and airport/seaport terminal management.
a) Commitment by the majority shareholders of the Parent Company to guaranty the recoverable
value of the remaining “assets for sale” in its books in order that the Parent Company’s equity be
preserved;
b) Pressing the majority shareholders of NPCA to write down the obligation of NPCAC to its
principal shareholders to pave the way for restructured financial statements;
c) Increasing the number of Board Directors from 7 to 9 in order to pave the way for a broader
representation of stakeholders;
d) Removing the “A” and “B” classification of the Parent Company shares to integrate common
shares into just one class;
e) Working out a stock rights offer for take advantage of unissued shares from our authorized capital
stock.
Simultaneous with the conduct of stock right offering, the Parent Company will pursue its pending
application with the SEC to increase its authorized capital stock to ₱5 billion, in order to meet its projected
investments. In sum, the Parent Company is expected to satisfy its cash requirements to finance its
projected plans and investments in new ventures throughout the calendar year 2023.
15
Realization of Outstanding Receivables from Polymax Worldwide in the Amount of ₱347,720,003 as of
December 31, 2022
If ever the negotiations with the Iranians will stall, these are other alternatives to address the issue. In
order that this outstanding receivable will be fully recovered, a payment via dacion of the remaining 20%
NPCA shares held by Polymax in NPC Alliance may be assigned to Metro Alliance, thus, making the
Parent Company the direct shareholders of NPCA.
In 2022, provision for estimated credit losses amounting to ₱227 million was recognized in compliance
with the requirements of PFRS 9.
Manpower Requirements
The Group does not expect significant changes in the number of employees as it is still in the stage of
exploring new business opportunities. Manpower will be outsourced if needed.
COVID-19 Impact
The impact of COVID-19 has greatly lessened in 2022. The Group’s management has determined that
COVID-19 no longer presents a material uncertainty that casts significant doubt upon the Group’s ability
to continue as a going concern.
Therefore, the financial statements continue to be prepared on the going concern basis.
Metro Alliance
1. Net income
2. Earnings per share – net income attributable to each share of common stock. (net income / weighted
number of shares outstanding)
3. Return on average equity – ability to generate returns on investment of stockholders. (net income /
average equity)
4. Debt to total asset ratio – the proportion to total assets financed by creditors. (total debt / total assets)
5. Debt to Equity ratio – an indicator of which group has the greater representation in the assets of the
company (total debt / equity)
Metro Alliance (Parent Company) registered a net loss of ₱5.6 million, ₱175.3 million and ₱4.8 million in
2022, 2021 and 2020, respectively. Decrease in net loss in 2022 as compared in 2021 is mainly attributed
by the recognition of provision for estimated credit losses, as required under PFRS 9 ,in 2021.
Decrease in net loss in 2022 as compared in 2021 is mainly attributable to increase in professional fee by
₱0.5 million, decrease in provision for credit losses by ₱222.4 million, increase in entertainment by ₱0.05
million, increase in provision for impairment by ₱0.2 million, decrease in office supplies by ₱0.02 million,
increase in personnel cost by ₱0.08 million, decrease in taxes and licenses by ₱2 million and increase in
other expenses by ₱0.03 million.
16
MCLSI
1. Profitability
a. Gross profit margin – measures the profitability of revenues (services) in relation to the cost of
services. (gross profit / revenues)
b. Net profit margin – ability to generate surplus for stockholders. (net income / sales)
c. Return on assets – ability to generate returns from assets. (net income / assets)
d. Return on equity – ability to generate returns on investment of stockholders. (net income /
stockholders equity)
2. Liquidity ratios
a. Current ratio – capacity to meet current obligations out of its liquid assets. (current assets /
current liabilities)
b. Receivables turnover and days’ sales in receivables – measures the ability to collect receivables.
(net credit sales / average trade receivables) (365 days / receivables turnover)
MCLSI’s profitability is more favorable in 2022 as compared to 2021 and 2020. This is mainly due to the
increase in the Company’s revenue. The favorable profitability is attributable to rental fees and adhoc and
reimbursable charges for the year.
December 31
Performance indicator 2022 2021 2020
Profitability
a. Gross profit margin 0.184 0.177 0.153
b. Net profit margin 0.053 0.058 0.030
c. Return on assets 0.062 0.060 0.590
d. Return in equity 0.131 0.144 0.187
Liquidity
a. Current ratio 2.369 1.868 1.691
b. Receivables turnover 2.48 2.17 2.27
c. Days’ sales in receivables 147 168 161
Financial Highlights
The following companies are included in Metro Alliance consolidated financial statement: MCLSI, CPDSI,
FEZ-EAC, ZDI and AHI.
The table below shows the consolidated financial highlights of Metro Alliance and subsidiaries for the
years ended December 31, 2022, 2021 and 2020:
17
Income Statement As of December 31 (In Php’000)
2022 2021 2020
Sales and services ₱334,134 ₱293,463 ₱273,670
Cost of sales and services (272,785) (241,599) (228,228)
Gross profit 61,349 51,864 45,442
Finance income 70 71 164
Finance costs (2,759) (2,630) (3,505)
Other income 180 2,152 1,655
General and administrative expenses (40,820) (259,364) (34,500)
Net income before tax 18,020 (207,907) 9,256
Income tax – Current (6,737) (4,947) (4,646)
Deferred 683 55,956 147
Net income (loss) after tax 11,967 (156,898) 4,758
Net income (loss) attributable to:
Equity Holders of the Parent Company 3,323 (165,082) 204
Non-controlling interest 8,644 8,184 4,534
11,967 (156,898) 4,758
Earnings (Loss) Per Share Attributable to
holders of Parent Company ₱0.011 (₱0.539) ₱0.001
The Group is exploring business opportunities. As of report date, biggest contributor to the Group’s
revenue is its logistic arm, MCLSI when it steadily growing for the past several years after. The Group will
reorganize its operations; evaluate its remaining assets; review all pending legal cases; and settle and
resolve its outstanding issues with other regulatory government bodies. The Group will focus on
traditionally stable industries or sunrise sectors in order to maintain strong and healthy cash flows, and at
the same time, aspiring for maximized potential earnings.
18
General Administrative Expense
General Administrative expenses for the years 2022, 2021 and 2020 amounted to ₱40.8 million, ₱259.4
million and ₱34.5 million, respectively. Decrease was mainly attributable to the following net effect:
decrease in provision for credit losses by ₱222.4 million, increase in personnel cost by ₱1.1 million,
decrease in communication and office supplies by ₱2.3 million, decrease in taxes and licenses by ₱2.5
million, increase in professional fee by ₱1.1 million, increase in depreciation expense by ₱0.6 million,
increase in rent and utilities by ₱0.5 million, decrease in amortization of intangible assets by ₱0.1 million,
increase in entertainment by ₱0.09 million, increase in insurance by ₱0.2 million, increase in provision for
impairment by ₱0.2 million, increase in transportation by ₱0.3 million and increase in other expenses by
₱4.6 million (Note 28).
As discussed in Note 3 to the Consolidated Financial Statements, the following companies are included in
Metro Alliance consolidated financial statement: MCLSI, CPDSI, FEZ-EAC, ZDI and AHI. A subsidiary is
an entity in which the Company has control. Subsidiaries are consolidated from the date on which control
is transferred out of the Company.
Polymax is the Company’s special purpose entity incorporated in British Virgin Island solely for the
purpose of acquiring the petrochemical plant of NPCA which resulted in a 2006 disputed sale of
Polymax’s 60% interest in NPCA to NPC International Limited (NPCI) and Petrochemical Industries
Investment Company (PIIC). Subsequently on August 27, 2013 the Company and Polymax entered into a
settlement agreement with NPCI, PII and NPC to resolve the dispute. On the basis of the settlement
agreement, the previously issued 2006 consolidated financial statements of the Company and its
subsidiaries were restated to reflect the sale of Polymax’s 60% interest in the petrochemical plant.
The remaining 20% of Polymax’s interest which is valued at ₱366.2 million, which is estimated
recoverable amount from the sale of investment. The realization of the Company’s advances to Polymax
(a special purpose entity in 2007) and the settlement Polymax’s past due liabilities for which the Company
is jointly and severally liable, depends on whether sufficient cash flows can be generated from Polymax’s
20% interest in NPCA, which is for sale, and from a letter of comfort issued by the Wellex Group of
Companies in favor of the Parent Company. The consolidated financial statements do not include any
adjustments that might result from the outcome of these uncertainties. As explained in the notes to
financial statements, management’s plan is to infuse additional capital to address the going concern
uncertainty.
Assets
Cash and cash equivalents for the years 2022 and 2021 amounted to ₱53.5 million and ₱40.4 million,
respectively. Increase by ₱13.0 million or 32.18% in 2022 is net effect of net cash flows from operating
activities amounting ₱55.8 million, net cash flows from investing activities of (₱10.7 million) and net cash
flows for financing activities of (₱32.2) million (Note 12).
Receivables amounted to ₱178.5 million in 2022 and ₱177.4 million in 2021 (net of allowance for doubtful
accounts of ₱149.3 million and ₱149.0 million as of December 31, 2022 and 2021, respectively). Net
trade and other receivables increase by ₱1.0 million or 0.58% (Note 13).
Other current assets amounted to ₱20.4 million in 2022 and ₱18.1 million in 2021 (net of allowance for
probable losses of ₱14.6 million and ₱14.3 million for 2022 and 2021, respectively. Increase by ₱2.3
million or 12.77% was mostly due to the decrease in creditable withholding taxes by ₱4.6 million, increase
in input taxes by ₱0.5 million and increase in prepayments ₱6.6 million Note 14).
Advances to Related Party. In 2021, the account was reclassified from Asset held for sale to Advances to
Related Parties - Polymax due to its nature of account. Total amount is ₱347.7 million (net of allowance
of credit losses of ₱227 million, ₱224.5 million in 2022 and 2021, respectively), which constitute 46% and
47% of the Group’s total assets as of December 31, 2022 and 2021, respectively. In 2021, provision for
estimated credit losses on Advances to Polymax was recognized in compliance with the requirements of
PFRS 9. This represents advances to Polymax, the Group’s special purpose entity incorporated in British
19
Virgin Island solely for the purpose of acquiring the petrochemical plant of NPC Alliance Corporation
(NPCA). During 2022, 2021 and 2020, the Company made additional collections of the advances from
Polymax amounting to ₱3,786,176, ₱11,369,681, and ₱57,371,345, respectively (Note 15).
Financial Assets at Fair Value through Other Comprehensive Income (FVOCI) amounted to ₱19.2 million
in 2022, ₱19.2 million in 2021 and ₱20.9 million in 2020. This account includes shares of stocks owned in
publicly-listed company and non-listed entity. The fair value of these shares has been determined directly
by reference to published prices in the active market (Note 16).
Property, plant and equipment-net amounted to ₱56.1 million and ₱67.5 million in 2022 and 2021,
respectively with a decrease in property, plant and equipment by ₱11.4 million. The Group has no
outstanding contractual commitments to acquire certain property and equipment as of December 31,
2022 and 2021. In 2022 and 2021, the Group carried out a review of the recoverable amounts of its
property and equipment. The Group has determined that there is no indication that an impairment loss
has occurred on its property and equipment. In 2022, a Group subsidiary’s adjusted its Right-of-use
account to effect the overstatement of the account, its accumulated depreciation of right-of-use asset and
lease liability amounting to ₱55,884,101, ₱50,436,663, and ₱5,714,219, respectively due to early
termination of the lease contract during 2021. None of the properties were pledged or mortgaged as
collateral to secure any of the Company’s loans. (Note 17).
Other non-current assets for the years 2022 and 2021 amounted to ₱11.3 million and ₱11.0 million,
respectively. Increase by ₱0.3 million or 2.42% is due to the increase of refundable deposits and
intangible assets. This account consists of intangible asset pertaining to non-exclusive software license
cost for use in MCSLI’s warehouse management system and non-current portion of refundable deposits
(Note 18).
Liabilities
Current Liabilities
Accounts payable and accrued expenses for the years 2022 and 2021 amounted to ₱288.9 million and
₱288.3 million, respectively. Trade payables are noninterest bearing and have credit terms of 30 to 60
days. Accrued expenses include provisions for liabilities arising in the ordinary conduct of business, which
are either pending decision by government authorities or are being contested, the outcome of which is not
presently determinable. In the opinion of management and its legal counsel, adequate provisions have
been made to cover tax and other liabilities that may arise as a result of an adverse decision that may be
rendered. Provisions relate to pending claims jointly and severally against the Parent Company and
Polymax and pending claims and tax assessment solely against the Parent Company. The information
usually required by PAS 37, Provisions, Contingent Liabilities and Contingent Assets, is not disclosed as
it may prejudice the outcome of the related claims and tax assessments. The net increase for year 2022
by ₱0.6 million or 0.14% is attributable to increase in trade payables by ₱1.9 million, decrease in accrued
expenses by ₱2.0 million and increase in other current liabilities by ₱0.7 million. Other liabilities mainly
pertain to payable to government agencies. These liabilities are unsecured and noninterest-bearing (Note
19).
Noncurrent Liabilities
Accrued expenses – noncurrent portion amounted to ₱123,438,803 which composed of management fee
and reserve for contingency BIR (Note 19).
Lease Liability is the liability recognized in relation to the adoption of PFRS 16. As of December 31, 2022,
the Company’s determined incremental rate used is between 3% and 5%. Current lease liability
amounted to ₱16.5 million and ₱31.5 million in years 2022 and 2021, respectively. Noncurrent portion of
Lease liability amounted to ₱24.5 million and ₱24.5 million in years 2022 and 2021. Interest expense
pertaining to lease liability amounted to ₱2,758,781 and ₱2,629,721 for the years ended December 31,
2022 and 2021, respectively (Note 20).
Due to related parties - current for the years 2022 and 2021 amounted to ₱0.7 million and ₱0.7 million,
respectively. Due to related parties - noncurrent for the years 2022 and 2021 amounted to ₱280.7 million
and ₱274.8 million, respectively. In 2020, The Group issued a 5-year promissory note to its affiliate,
Philippine Estates Corporation (PHES), with a principal amount of ₱263,000,345 and a 2% interest per
annum until the maturity date of March 15, 2026. The aforesaid amount pertains to advances made by
20
the affiliate in favor of the Parent Company. In 2022 and 2021, interest incurred amounted to ₱5,260,007.
The other amounts due to related parties pertain to unsecured and noninterest bearing advances
provided to the Group to finance its working capital requirements, capital expenditures, petrochemical
project support and for other investments and have no definite repayment terms (Note 30)
Accrued retirement benefit cost amounted to ₱12.9 million and ₱10.7 million as of December 31, 2022
and 2021. MAHEC and MCLSI has unfunded, non-contributory defined benefit requirement plan providing
retirement benefits to all its regular employees. An independent actuary, using the projected unit credit
method, conducts an actuarial valuation of the fund. The accrued actuarial liability is determined
according to the plan formula taking into account the years of service rendered and compensation of
covered employees as of valuation date. There is no provision for retirement benefit for 2022 as the
management determined that current accrual is sufficient enough to cover retirement benefits of
remaining employees. The Group expects no contributions are to be made yet in the future years out of
the defined benefit plan obligation. In 2020, the Board of Directors approved to write-off the remaining
retirement benefit payable of the Parent Company since it has no longer have employees. (Note 29).
Cumulative Deficit is an account that consists of cumulative balance of periodic earnings and prior period
adjustments, if any. In 2022 and 2021, the Group recognized provision for estimated credit losses of ₱227
million ₱224.5 million, respectively, on advances to a related party which contributes to the material
losses for the year. The provision is in compliance with the requirements of PFRS 9 (Note 24).
As of December 31, 2022 and 2021, the Group has significant advances to Polymax Worldwide Limited
(Polymax), a special purpose entity incorporated in British Virgin Islands, amounting to ₱347.7 million,
relating to the acquisition of the petrochemical plant of Bataan Polyethylene Corporation (BPC) involving
a series of acquisition transactions described in the next section below. On the other hand, Polymax
(jointly and severally with the Parent Company) has past due liabilities, including interest and penalties,
amounting to ₱994.7 million as of December 31, 2022 and 2021, respectively, which were obtained to
partially finance the acquisition of the petrochemical plant, resulting from the transfer of past due loans as
discussed in the next paragraph.
In 2007, the Parent Company unilaterally transferred to Polymax two significant past due liabilities totaling
₱866.7 million as of December 31, 2006 that were obtained (jointly and severally with Polymax) to
partially finance the acquisition of the petrochemical plant, and applied these against the Parent
Company’s advances to Polymax, in order to reflect the economic substance of the acquisition and
related loan transactions. The remaining 20% of Polymax’s interest in the petrochemical plant is for sale.
The realization of the Parent Company’s advances to Polymax and the settlement of the past due
liabilities carried in the books of Polymax, for which the Parent Company is jointly and severally liable,
depend on whether sufficient cash flows can be generated from the sale of Polymax’s remaining 20%
interest in NPC Alliance Corporation (NPCA).
Asset held for sale was reclassified to its correct account which is Advances to related parties amounting
to ₱347.7 million and ₱347.7 million (net of allowance of credit losses of ₱227 million and ₱225 million)
for years ended December 31, 2022 and 2021, respectively, which constitute 46% and 47% of the
Group’s total assets as of December 31, 2022 and 2021, respectively. This advances represent advances
to Polymax, the Group’s special purpose entity incorporated in British Virgin Island solely for the purpose
of acquiring the petrochemical plant of NPC Alliance Corporation (NPCA).
The consolidated financial statements do not include any adjustments that might result from the outcome
of these uncertainties. Management’s plan is to infuse additional capital to address the going concern
uncertainty.
21
(iii) Material Off-balance Sheet Transactions, Arrangements, Obligations
There are no material off-balance sheet transactions, arrangements, obligations (including contingent
obligations), and other relationships of Metro Alliance with unconsolidated entities or other persons
created during the reporting period. Completed transactions in connection with our investment in the
petrochemical project were fully disclosed in the audited consolidated financial statements.
(v) Any Known Trends, Events of Uncertainties (Impact On Net Sales / Net Income)
Since CPDSI, AHI, FEZ-EAC and ZDI have ceased commercial operations and MCLSI is the only
operating subsidiary among the Group, sales will rely solely on MCLSI’s results of operations.
The Group registered a consolidated net income of ₱11.97 million in 2022 as against net loss of ₱156.9
million in 2021 and net income of ₱4.8 million in 2020. Net loss was recognized in 2021 as compared to
2022’s net income due to recognition of provision for estimated credit losses, which is required by PFRS
9. Earnings (loss) per share for 2022, 2021 and 2020 for equity holders of the Parent Company are
₱0.011, (₱0.539) and ₱0.001, respectively. Since certain subsidiaries have ceased operations, MCLSI is
the only subsidiary that contributed to the revenue of the Group.
The Group registered gross service revenue of ₱334.1 million, ₱293.5 million and ₱273.7 million for the
years ended December 31, 2022, 2021 and 2020, respectively, with an increase in revenue by ₱40.67
million or 13.86% due to more clients in 2022.
(vi) Significant Element of Income or Loss That Did Not Arise from Continuing Operations.
There is no significant element of income or loss that did not arise from continuing operations.
The Group adopted PFRS 16 on the year 2019 which reported a Right-of-Use Asset and Lease Liability
(Note17 and 20) and PFRS 9 on the year 2021 for the recognition of Probable of Estimated Credit
Losses.
(viii) Effect of Seasonal Changes in the Financial Condition or Results of Operations of the
Corporation
The financial condition or results of operations is not affected by any seasonal change.
The consolidated financial statements and schedules listed in the accompanying Index to Financial
Statements and Supplementary Schedules are filed as part of this Form 17-A.
The Group has initially adopted all the requirements of PFRS 16 Leases from January 1, 2019 (Note 3).
Starting 2021, the Group recognized Provision of Estimated Credit Losses which was a requirement in
PFRS 9.
22
Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
External Audit Fees and Services
Audit and related fees including VAT for Metro Alliance are ₱418,880 for the year 2022 and ₱406,560 for
the year 2021 for expressing an opinion on the financial statements and assistance in preparing the
annual income tax return, in addition, to bring to the attention of management, any deficiencies in internal
control and detected misstatements and fraudulent or illegal acts.
Audit committee’s approval policies and procedures for the above services – the committee will evaluate
the proposals from known external audit firms. The review will focus on quality of service, commitment to
deadline and fees as a whole, and no one factor should necessarily be determinable.
23
PART III– CONTROL AND COMPENSATION INFORMATION
Business experience during the past five (5) years and other directorships.
24
The Wellex Group, Inc. President/Director
Forum Pacific, Inc. Treasurer/ Director
Orient Pacific Corp. President/Director
Wellex Mining Corp. Chairman/President/Director
Westland Pacific Properties Corp. Corp. Treasurer/Director
Wellex Petroleum, Inc. Corp. Secretary/Director
Recovery Dev’t. Corp. Chairman/President/Director
Novateknika Land Corp. Corp. Secretary/Director
Pacific Rehouse Corp. Chairman/President/Director
Crisanta Realty Dev’t. Corp. Corp. Secretary/Director
Palawan Estate Corp. Corp. Secretary/Director
Philippine International Airways Corp. Secretary/Director
Philfoods Asia, Inc. Chairman/President/Director
Sourthernpec Phils., Inc. Corp. Treasurer/Director
Manila Bay Front Hotels, Inc. Chairman/Director
Poly Premier Property Dev’t. Corp. President/Director
Wanda Prime Property Dev’t., Inc. Chairman/Director
North Luzon Premier Dev’t. Corp. Chairman/Director
Pacific Concorde Corp Chairman/Director
Forum Holdings Corp Chairman/President/Director
Rexlon Realty Group, Inc. Corp. Secretary/Director
Heritage Pacific Corp. Asst. Corp. Sec./Director
Seabrook Resources & Dev’t. Corp. Chairman/President/Director
Recovery Real Estate Corp. Chairman/President/Director
Shanghai Global Estate Ventures Corp. President/Director
Altai Philippines Mining Corp. Director
Bulacan Harbour Dev’t. Corp. Asst. Corp. Sec./Director
Bulacan Country Garden Dev’t. Corp. Chairman/President/Director
Atty. Lamberto B. Mercado, Jr.
Director/Compliance Officer Asia Healthcare, Inc. Director
Filipino FEZ-EAC Holdings, Inc. Director
58 years old Wellex Industries, Inc. Director
Bachelor of Laws (L.L.B.) Acesite (Phils.) Hotels Corp. Chief Risk Officer/Director
Ateneo de Manila University Forum Pacific, Inc. Director
School of Law Philippine National Construction Corp. Director
Consumer Product Distribution Services Director
Rexlon Realty Group, Inc. Assist. Cop. Sec./Director
Wellex Mining Corp. Corp. Secretary/Director
Southernpec Phils., Inc. Corp. Secretary/Director
Dubai Gold Mining Corp. Corp. Secretary/Director
Sands Mining & Dev’t. Corp. Director
Bulacan Harbour Dev’t. Corp. Corp. Secretary/Director
Wanda Prime Property Dev’t., Inc. Director
Seabrook Resources & Devt Corp. Corp. Secretary/Director
Country Garden Agri-Tourism Dev’t., Inc. President
Bulacan Country Garden Dev’t. Corp. Director
Aristeo R. Cruz
Independent Director Forum Pacific, Inc. Independent Director
Filipino Wellex Industries, Inc. Independent Director
56 years old Acesite (Phils.) Hotel Corp. Independent Director
CPA Lawyer Waterfront Philippines Inc Independent Director
B.S. in Commerce Major in Liberty Bank (A Rural Bank), Inc. Vice-President
Accountancy Meycauayan College, Inc. Vice-Chairman of the Board,
De La Salle University Executive Vice-President
Bachelor of Laws (LLB) Cruz Altares & Associates Law Office Founding and Managing Partner
New Era University (formerly Cruz, Castro & Altares Law Office)
Idealland Realty & Dev’t. Corp. President and Chief Operating
Officer (COO)
Statosphere Realty & Dev’t. Corp. President and Chief Operating
Officer (COO)
Waterstreet Realty Corp. President
Jose & Luz Locsin Foundation President
25
Reno I. Magadia
Director Metro Combined Logistics Solution, Inc. Managing Director
Filipino Misons Industrial & Development Corp. Director
53 years old Waterfront Philippines, Inc. Director
BA in TV and Radio
Broadcasting
California State University
Master’s Degree – Business
Administration
Pepperdine University
Los Angeles, California
Nestor S. Romulo
Corp. Secretary/Director Westmont Investment Corp. Chairman of the Board
Filipino Wincorp Securities Director
78 years old Misons Industrial & Development Corp Corporate Secretary
Lawyer Romulo, Serrano & Camello Law Offices Partner
Bachelor of Laws (LLB) JMP Development, Inc. Corporate Secretary
University of the Philippines Reyno, Tiu, Domingo & Santos Law Offices
Consultant
JP Consultancy Resources & Management,
Inc. Corporate Secretary
Zuellig Distributors, Inc. Corporate Secretary
Asia Healthcare, Inc. Corporate Secretary
FEZ-EAC Holdings, Inc. Corporate Secretary
Byoung Hyun Suh
Independent Director Pan Islands, Inc. President
Korean Philippines Estates Corporation Independent Director
66 years old Overseas Korean Traders Associations Director
BS in Business Administration Bonamis Pharmacy Phil’s. Corp. President
Korea University, Seoul Korea
Richard L. Ricardo
Corp. Treasurer/Investor Wellex Industries, Inc. Corp. Treasurer/Investor
Relations Officer Relations Officer/Director
Filipino
59 years old Waterfront Philippines, Inc. Corporate Affairs
B.S. in Business Management Officer/Compliance Officer
A.B. in Economics Acesite (Phils.) Hotel Corp. Vice President for Corporate
Ateneo de Manila University Affairs/Compliance Officer
Forum Pacific, Inc. Investor Relations Officer/Director
Philippine Estates Corp. Corp. Treasurer/Investor
Relations Officer/Director
The Wellex Group, Inc. Corp. Secretary/Director
Rexlon Realty Group, Inc. Vice President/Director
Westland Pacific Properties Corp. Corp. Secretary/Director
Wellex Petroleum, Inc. Corp. Treasurer/Director
Wellex Mining Corp. Assist. Corp. Sec./Director
Bocaue Prime Estate Corp. Corp. Secretary/Director
Taguig Lake City Dev’t. Corp. Corp. Secretary/Director
Pacific Wide Holdings, Inc. Corp. Treasurer/Director
Dubai Gold Mining Corp. Chairman/President/Director
Sand Mining & Dev’t. Corp. Corp. Treasurer/Director
Manila Bay Front Hotels, Inc. Corp. Treasurer/Director
Shanghai Global Estate Ventures Corp. Corp. Secretary/Director
Bulacan Country Garden Dev’t. Corp. Corp. Secretary/Director
Alliance Energy Power & Dev’t. Inc. President/Director
26
Annabelle T. Abunda
Finance Officer Pacific Rehouse Corp. Finance & Administration
Filipino Manager
46 years old Pacific Wide Holdings, Inc. Accounting Manager
CPA and Licensed Real Estate Wellex Industries, Inc. Finance and Compliance Officer
Broker Forum Pacific, Inc. Finance and Compliance Officer
B.S. in Accountancy
University of the Philippines in
the Visayas
Significant Employees
There are no other employees other than the officers mentioned in the preceding subsection who are
expected to make significant contribution to the business.
Family Relationships
Ms. Elvira A. Ting, the Chairman, is the aunt of Mr. Kenneth T. Gatchalian, the President. There are no family
relationships up to the fourth civil degree either by consanguinity or affinity among directors, executive officers,
persons nominated or chosen by the corporation to become directors, or executive officers other than the
above.
27
Compensation of Directors
Except for a per diem amounting to ₱10,000 for each Independent Director that will attend a regular
meeting, there is no standard arrangement with regard to election, any bonus, profit sharing,
pension/retirement plan, granting of any option, warrant or right to purchase any securities. There are no
other arrangements or consulting contracts or other form of services with directors.
28
Security Ownership of Management
As of December 31, 2022, the security ownership of individual directors, executive officers and nominees
of Metro Alliance is as follows:
Changes in Control
There is no change in control of Metro Alliance and there is no arrangement which may result in change
in control.
The Group, in the normal course of business, has transactions with related parties. The following table
summarizes the transactions with related parties for the year ended December 31, 2022 and 2021.
Please refer to Note 30 of the Audited Consolidated Financial Statements attached to this report for the
broad discussions.
The other amounts due to related parties pertain to unsecured and noninterest bearing advances
provided to the Group to finance its working capital requirements, capital expenditures, petrochemical
project support and for other investments and have no definite repayment terms.
The amounts due to related parties pertain to advances provided to the Parent Company to finance
its working capital requirements, capital expenditures, Petrochemical Project support and for other
investments and have no definite repayment terms. These are unsecured and noninterest bearing,
except the liability to WPI, which is interest bearing but the related finance charges are being charged
to Polymax, since the corresponding liability were obtained in relation to the Petrochemical Project.
There are no agreements between the Group and any of its directors and key officers providing for
benefits upon termination of employment, except for such benefits to which they may be entitled
under their respective entity’s retirement plan.
29
c. The related amounts applicable to the Group’s outstanding balances with related parties are as
follows:
30
Part IV – CORPORATE GOVERNANCE
Pease refer to separate “Annual Corporate Governance Report (ACGR)” to be submitted to Securities
and Exchange Commission.
Exhibits
Financial Statements
Statement of Management’s Responsibility for Financial Statements
Report of Independent Auditor
Statements of Financial Position as of December 31, 2022 and 2021
Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020
Statements of Changes in Equity for each of the three years ended December 31, 2022, 2021 and
2020
Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
Notes to Financial Statements
Supplementary Schedules
Report of Independent Public Accountants on Supplementary Schedules:
Financial Assets
Amounts Receivable from Directors, Officers, Employees, Related Parties and Principal Stockholders
(Other than Related Parties)
Amounts Receivables and Payable from/to Related Parties which are Eliminated during Consolidation
Process of Financial Statements
Intangible Assets - Other Assets
Long-term Debt (Not Applicable)
Indebtedness to Related Parties (Long-Term Loans from Related Parties)
Guarantees of Securities of Other Issuers (Not Applicable)
Capital Stock
Map of the relationship of the parent company within the parent company for the year ended
December 31, 2022
Schedule of Reconciliation of Retained Earnings Available for Dividend Declaration as required by
Revised SRC Rule Annex 69-D
Schedule of Financial Soundness Indicators as required by Revised SRC Rule Annex 68-E
31
the documents and have them printed which are required to be filed with the regulatory agencies for the
holding of stockholders’ meeting.
1. Call to Order
2. Certification of Notice and Quorum
3. Approval of the Minutes of the Annual Meeting of Stockholders held on October 28, 2021
4. Report of the President
5. Presentation and approval of the Annual Financial Statements
6. Ratifications of the actions and proceedings taken by the Board of Directors and Corporate
Officers since October 28, 2021
7. Election of the Members of the Board of Directors
8. Appointment of External Auditor
9. Other business/matters
10. Adjournment
October 6, 2022
The Corporation submitted the result of the Annual Stockholders’ Meeting and the Organizational Meeting
of the Board of Directors held last October 6, 2022 via remote communication.
32
2 9 6
M E T R 0 A L L I A N C E H O L D I N G S &
E Q U I T I E S C O R P . A N D
S U B S I D I A R I E S
3 5 T H F L R . O N E C O R P O R A T E C E N T E R
D O Ñ A J U L I A V A R G A S C O R . M E R A L C O
A V E . O R T I G A S C E N T E R P A S I G C I T Y
A A F S C R M D
35TH FLOOR ONE CORPORATE CENTER DONA JULIA VARGAS COR. MERALCO AVE., ORTIGAS CENTER PASIG CITY
Mrrno HoLDTNGS &
ATUANCE
Eeururs Conp.
The managcmcnt ol NIE'IRO ALLIANC0 HOLDINCS & EQUITIES CORP.. AND SUBSIDIARIES is responsible lor
the preparation and tair presentation ofthe consolidated finanoial statcnrents inclucling the schedulcs attached therein^ fbr ihc
1,enrs ended December 31,2022 and 2021. in accordance rvith the prcscribed flnancial reporting frameuork indicated therein"
ar-rd fbl such intcrnal control as management detennines is nccr'ssarr to L-nable the preparation of ci:nsolidated tinancial
slatements that arc fiee fl'om matcrial misstatement. rvhether due to fiaud or error.
ln preparing thc consolidated tlna.ncial statemcnls. management is responsible tbr assessing il.rc Cornpany's abiiitl'to continue
as a going concern. disclosing. as applicable matters related to going concern and using the going concern basis ofaccounling
unless management either intends to liquidate the Companv or to cease operations. of has no realistic alternative but to do so.
-l'he
Board of Direclors is responsible firr ovelseeing the Cornpany's llnancial reporling prllcess.
The Board ofDirectors reviervs and approves the consolidatcd financial staterirents including the schedules attached therein.
and submits the same to the stockholders or members-
\raldes Abad & Company. CPAs. the independent auditors- appointed by the stockholders has auditcd the consolidated
statcments of the Company in accordance with Philippine Standards on Auditing. and in its report to the
has its opinion on the tairness olpresentation upon completion o1'such audit.
T. GATCHALTAN
RICIIARD L,
Corporate
Name raxrdenrincationNumbeXl
W. drCMUOn
1. ELVTRAA. TrNG rt7-e22-r53 __- IiOta,-y public
2. KENNETHT. GATCHALIAN 167-406-526 ,, Pasig, Pateros A S.i.l,,rn
, 3. RICHARD L. RICARD0 140'853-850 ,V;lid
.1,.tJntil O.r"nlrJ, if .'iOZl
Roii l,Jo. 2218C
\D AND SEAL on rhe dare and ar rhe prace above wrirren. , fTR LA,lji. ofizioolir-03-23
wITNEssMyHANDAND'EALonthedateandattheplaceabovew.r*rurr.
Liferi*reil,ir.Meni,aerrug.OiZ;O
DocNo: /'/T, Orricrar R*.:ltuig Jiiibe,jel,r;prer
;aB?I,?,%;
ll:
SERIES oF
^l?::,iTl,i1*jx,yl'ord,?i,o 3,oie
35th Ftr. one corporate center Dofra Jutia Vargas Avenue ,Yf 'utto'
Ave'.
' *e^' vriv
""fi{d;;;'oj"l;u;
MeralcoAve., Ortigas Center, Pasig City, Phils. 1605
Trunkline (02) 706-7888 " Fax No. (02) 706-5982
I
METRO ALLIANCE HOLDINGS & EQUITIES CORPORATION AND SUBSIDIARIES
METRO ALLIANCE HOLDINGS & EQUITIES CORP. (MAHEC or the Parent Company) is incorporated
in the Philippines. The Parent Company and its subsidiaries (collectively referred to as “the Group”) are involved
in contract logistics. Certain subsidiaries previously engaged in the importation and distribution of polypropylene
resin and pharmacy management had ceased operations.
The new registered office address of the Parent Company is at 35th Floor One Corporate Center, Dona Julia Vargas
Ave. cor. Meralco Ave., Ortigas Center, Pasig City.
In 2015, the SEC approved the amendment made to Article III of the Parent Company’s Articles of Incorporation
in regard to the change of Group’s official business address from 22nd Floor Citibank Tower, 8741 Paseo de Roxas,
Makati City to 35th Floor One Corporate Center, Dona Julia Vargas Ave. cor. Meralco Ave., Ortigas Center, Pasig
City.
On June 4, 2018, the Exchange has resolved to grant the Parent Company’s request to lift the trading suspension
of its shares after a careful consideration of the facts and circumstances of the Parent Company’s case and a
comprehensive review of the Parent Company’s disclosures and representations vis-à-vis the requirements under
the Disclosure Rules. The Exchange considered, among others: (i) the Parent Company’s compliance with the
disclosure requirements of the Exchange, thus addressing the grounds and reasons why the Exchange imposed the
trading suspension on May 21, 2007; and (ii) the SEC’s decision setting aside the Order of Revocation on the Parent
Company’s registration and permit to sell securities. The Exchange has likewise noted the Parent Company’s
representations regarding its business plans, including its capital build-up program.
The accompanying consolidated financial statements as of December 31, 2022 (including comparative amounts
as at December 31, 2022 and for the years ended December 31, 2021 and 2020) were approved and authorized for
issue by the Board of Directors (BOD) on April 12, 2023.
The accompanying consolidated financial statements have been prepared assuming that the Group will continue
as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course
of business.
As of December 31, 2022 and 2021, the Parent Company has significant advances to Polymax Worldwide Limited
(Polymax), a special purpose entity incorporated in British Virgin Islands, amounting to ₱347.7 million, relating
to the acquisition of the petrochemical plant of Bataan Polyethylene Corporation (BPC) involving a series of
acquisition transactions described in the next section below. On the other hand, Polymax (jointly and severally
with the Parent Company) has past due liabilities, including accrued interest and penalties, amounting to ₱994.7
million for both years, which were obtained to partially finance the acquisition of the petrochemical plant,
resulting from the transfer of past due loans as discussed in the next paragraph.
In 2007, the Parent Company unilaterally transferred to Polymax two significant past due liabilities totaling ₱866.7
million as of December 31, 2006 that were obtained (jointly and severally with Polymax) to partially finance the
acquisition of the petrochemical plant and applied these against the Parent Company’s advances to Polymax, in
order to reflect the economic substance of the acquisition and related loan transactions.
As explained in Note 15, the remaining 20% of Polymax’s interest in the petrochemical plant is for sale. The
realization of the Parent Company’s advances to Polymax and the settlement of the past due liabilities carried in
the books of Polymax, for which the Parent Company is jointly and severally liable, depend on whether sufficient
MAHEC’s remaining operating subsidiary, Metro Combined Logistics Solutions, Inc. (MCLSI), is steadily
growing with additional business from its existing principals. As a means of diversification, MCLSI is also
exploring business opportunities in the transport field, including computer app solutions, warehousing and cold
storage; in medical distribution and pharmaceutical business logistics, operation of hospice care and management
of medical clinics, importation of medical equipment; and also, in document storage, car parking, sea travel, river
ferry and airport/seaport terminal management.
a) Commitment by the majority shareholders of the Parent Company to guaranty the recoverable value of
the remaining “assets for sale” in its books in order that the Parent Company’s equity be preserved;
b) Pressing the majority shareholders of NPCA to write down the obligation of NPCAC to its principal
shareholders to pave the way for restructured financial statements;
c) Increasing the number of Board Directors from 7 to 9 in order to pave the way for a broader representation
of stakeholders;
d) Removing the “A” and “B” classification of the Parent Company shares to integrate common shares into
just one class;
e) Working out a stock rights offer for take advantage of unissued shares from our authorized capital stock.
Simultaneous with the conduct of stock right offering, the Parent Company will pursue its pending application
with the SEC to increase its authorized capital stock to ₱5 billion, in order to meet its projected investment plan.
In sum, the Parent Company is expected to satisfy its cash requirements to finance its projected plans and
investments in new ventures throughout the calendar year 2023.
Realization of Outstanding Receivables from Polymax Worldwide in the Amount of ₱ 347,720,003 as of December
31, 2022
If ever the negotiations with the Iranians will stall, there are other alternatives to address the issue. In order that
this outstanding receivable will be fully recovered, a payment via dacion of the remaining 20% NPCA shares held
by Polymax in NPC Alliance may be assigned to Metro Alliance, thus, making the company the direct
shareholders of NPCA.
In 2022, provision for expected credit losses amounting to ₱227 million was recognized in compliance with the
requirements of PFRS 9.
Manpower Requirements
The Group does not expect significant changes in the number of employees as it is still in the stage of exploring
new business opportunities. Manpower will be outsourced if needed.
COVID-19 Impact
The impact of COVID-19 has greatly lessened in 2022. The Group’s management has determined that COVID-
19 no longer presents a material uncertainty that casts significant doubt upon the Group’s ability to continue as a
going concern.
Therefore, the consolidated financial statements continue to be prepared on the going concern basis.
On December 4, 2003, the Parent Company entered into a Memorandum of Agreement (MOA) with Polymax,
whereby the Parent Company confirmed the designation of Polymax as the acquiring Company in the proposed
acquisition of the senior secured debt papers of BPC from International Finance Corporation (IFC). Under the
MOA, the Parent Company and Polymax agreed that (a) the acquisition of the secured debt paper would be for
the account and benefit of the Parent Company; (b) the funding for the acquisition would be provided and arranged
by the Parent Company; and (c) the exercise of creditor rights arising from the secured debts via foreclosure and
takeover of the assets of BPC would be directed by and for the account and benefit of the Parent Company. In
addition, the Parent Company would make certain advances to Polymax.
On December 19, 2003, Polymax and IFC entered into an Assignment and Transfer Agreement (the Agreement)
for the purchase by the former of the senior secured debt papers of BPC. The Parent Company advanced to
Polymax the initial deposit of US$5 million, which was remitted to IFC for the assignment payment, pursuant to
the terms of the Agreement. On February 11, 2004, IFC confirmed that it has received the full payment for the
assignment of the senior secured debt papers of BPC.
To partially finance the Parent Company’s advances relating to the Petrochemical Project, the Parent Company
obtained short-term loans from local banks. With the delay in the completion of the activities and the conditions
required for the Petrochemical Project, the Parent Company was unable to pay the bank loans on maturity dates.
As of December 31, 2006, the amounts payable to the banks totaled ₱866.7 million, consisting of the outstanding
principal balance of ₱378.3 million and finance charges of ₱488.4 million. In 2007, these past due liabilities were
unilaterally transferred to and applied against the advances made to Polymax as discussed in Note 15.
Pursuant to the Parent Company’s plan of acquiring full control of BPC, instead of exercising creditor rights, the
Parent Company, on April 16, 2004, entered into a Share Purchase Agreement (SPA) with BPC, Tybalt Investment
Limited (TIL), BP Holdings International B.V. (BPHI) and Petronas Philippines, Inc. (PPI), with TIL as the
purchaser of the 83% interest of the foreign shareholders of BPC. As agreed by the parties, the SPA is to take
effect as of March 31, 2004, subject to closing conditions, as defined in the SPA, which the parties have to comply
with within a period of 60 days or later if the conditions are not met.
On July 7, 2005, Polymax and BPC executed a Deed of Conveyance, transferring to Polymax under an asset for
share swap, the petrochemical plant of BPC in exchange for 85 million common shares of Polymax with par value
of US$1 per share, or a total par value of US$85 million.
On July 20, 2005, the Parent Company, Polymax and NPC International Limited (NPCI) entered into an SPA
which provided that, subject to certain conditions, including the transfer of the petrochemical plant of BPC free
from encumbrances, NPCI will acquire 60% of the issued share capital of NPCA from Polymax.
On August 9, 2005, Polymax and NPCA executed a Deed of Conveyance, transferring to NPCA, under an asset
for share swap, the same petrochemical plant in exchange for 4.8 million shares of common stock of NPCA with
a total par value of ₱4.8 billion, resulting in 100% ownership interest of Polymax in NPCA.
On November 15, 2005, BPC and Polymax executed a Deed of Assignment whereby BPC transferred and
conveyed to Polymax all its rights and interest to Polymax’s 85 million shares of common stock, with a total value
of US$85 million, in exchange for the discharge of a portion of BPC’s secured debt, which was acquired by
Polymax from IFC, up to the extent of the value of the shares transferred. Polymax retired the said shares 10 days
from the date the Deed of Assignment.
On the same date, the Parent Company, NPCI and PIIC entered into a Guarantee and Indemnity agreement
whereby the Parent Company irrevocably and unconditionally guaranteed the prompt performance and observance
by Polymax and the payment on demand by Polymax of all moneys, obligations and liabilities, which are now or
at any time after the execution of the agreement become due from or owing or incurred by Polymax under or in
connection with any of the SPA and the Shareholders’ Agreement. The Parent Company also guaranteed that it
shall be liable for Polymax’s obligations, as if it were a principal debtor, if Polymax’s obligations are no longer
recoverable from Polymax.
On March 18, 2006, Polymax, NPCI, PIIC and the Parent Company entered into an Agreement of Variation
(March 2006 Variation Agreement) to vary and amend the terms of the “Amended and Restated Share Purchase
Agreement (ARSPA) and the Shareholders’ Agreement” entered on December 16, 2005. Under the March 2006
Variation Agreement, completion of the conditions and conditions subsequent set forth in the ARSPA was
extended to April 30, 2006. Moreover, additional conditions that Polymax needs to satisfy prior to completion
were agreed upon.
On the same date, Polymax and NPCI executed a Deed of Absolute Sale whereby Polymax sold, transferred and
conveyed to NPCI all the rights, title and interest in 19,090,000 NPCA shares of common stock, equivalent to
40% ownership interest, for a consideration of ₱1.91 billion.
On September 11, 2006, Polymax, NPCI, PIIC, the Parent Company and NPCA entered into another Agreement
of Variation (September 2006 Variation Agreement) to further vary and amend the terms of the ARSPA and the
Shareholders’ Agreement (both initially amended and varied by the March 2006 Variation Agreement). Polymax,
in accordance with its obligations under the ARSPA, had notified NPCI and PIIC that it is aware that certain
conditions will not be fulfilled by April 30, 2006. As a result, the parties agreed to transfer to PIIC the 9,545,000
NPCA shares of common stock prior to completion, while certain conditions will become conditions subsequent
to be completed on December 31, 2006.
On September 20, 2006, Polymax and PIIC executed a Deed of Absolute Sale whereby Polymax sold, transferred
and conveyed to PIIC all the rights, title and interest in 9,545,000 NPCA shares of common stock, equivalent to
20% ownership interest, for a consideration of ₱954.5 million.
On December 31, 2006, the ARSPA Variation Agreement expired with the conditions subsequent remaining
unsettled. Nevertheless, NPCI and PCII took control of the petrochemical plant resulting in a dispute with the
Parent Company and Polymax, who considered the sale of Polymax’s 40% and 20% interest in the petrochemical
plant to NPCI and PCII, respectively, as null and void.
On August 21, 2007, the petrochemical plant started commercial operations under NPCI and PIIC.
Subsequently on August 27, 2013, the Parent Company and Polymax entered into a settlement agreement with
NPCI, PIIC and NAC to resolve, fully and finally, the dispute arising from the uncompleted acquisition
transactions described above. Under the agreement, NCPI shall, among others, pay Polymax the remaining
balance of the purchase price of the 60% NPCA shares net of deductions agreed by the parties. Simultaneous with
the execution of the agreement, Polymax shall also sell to NPCI an additional 20% of Polymax’s interest in NPCA
from the remaining 40% equity holding in NPCA at US$8 million or its equivalent in Philippine peso. In
September 2013 and August 2014, the remaining balance due to Polymax was paid by NCPI and the 20% interest
of Polymax in NPCA was sold to NCPI, respectively, in accordance with the agreement.
As a result of the foregoing settlement, the arbitration tribunal issued on October 2, 2014 an order for withdrawal
of the arbitration cases (under the United Nations Commission on International Trade Law Rules of Arbitration),
which were earlier filed by the parties due to the dispute arising from their various agreements.
The accompanying consolidated financial statements have been prepared in compliance with Philippine Financial
Reporting Standards (PFRS). PFRS are based on International Financial Reporting Standards issued by the
International Accounting Standards Board (PASB). PFRS consist of PFRS, Philippine Accounting Standards
(PAS) and Philippine Interpretations issued by the Philippine Financial Reporting Standards Council (FRSC).
The consolidated financial statements of the Group have been prepared using the measurement bases specified by
Philippine Financial Reporting Standards (PFRS) for each type of asset, liability, income and expense. The
measurement bases are more fully described in the accounting policies that follow.
The preparation of the accompanying condensed consolidated financial statements of the Group is based on the
premise that the Group operates on a going concern basis, which contemplate the realization of assets and
settlement of liabilities in the normal course of business. The management does not intend to liquidate.
The consolidated financial statements are prepared in Philippine Peso (₱), which is the Group's functional and
presentation currency.
Items included in the consolidated financial statements of the Group are measured using its functional currency.
Functional currency is the currency of the primary economic environment in which the Group operates.
All values are presented in absolute amounts and are rounded off to the nearest peso except when otherwise
indicated.
The consolidated financial statements of the Group comprise the financial statements of the Parent Company,
Metro Alliance Holdings and Equities Corp., and the following subsidiaries, after the elimination of intercompany
transactions:
Percentage of Ownership
2022 2021
Operating subsidiaries:
Metro Combined Logistics Solutions, Inc. (MCLSI) (formerly GAC Logistics, Inc.) 51% 51%
Non-operating subsidiaries:
Consumer Products Distribution Services, Inc. (CPDSI) 100% 100%
FEZ-EAC Holdings, Inc. (FEZ-EAC) 100% 100%
Zuellig Distributors, Inc. (ZDI) 100% 100%
Asia Healthcare, Inc. (AHI) 60% 60%
The financial statements of the subsidiary are prepared for the same reporting year as the Parent Company.
Consolidated financial statements are prepared using uniform accounting policies for similar transactions and
other events in similar circumstances. Intercompany balances and transactions, including intercompany profits
and losses, are eliminated in full. Unrealized profits and losses from intercompany transactions that are recognized
in assets are also eliminated in full. Intercompany losses that indicate impairment are recognized in the
consolidated financial statements.
Investment in subsidiary
Control is achieved when the Parent Company is exposed, or has rights, to variable returns from its involvement
with the investee and has the ability to affect those returns through its power over the investee (i.e. existing rights
that give it the current ability to direct the relevant activities of the investee).
The Parent Company re-assesses whether or not it controls an investee if facts and circumstances indicate that
there are changes to one or more elements of control. Consolidation of a subsidiary begins when control is obtained
over the subsidiary and ceases when the Parent Company loses control of the subsidiary. Assets, liabilities, income
and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial
statements from the date the Parent Company gains control until the date the Parent Company ceases to control
the subsidiary.
Non-controlling interests
Non-controlling interests represent the portion of net results and net assets not held by the Parent Company. These
are presented in the consolidated statement of financial position within equity, apart from equity attributable to
equity holders of the Parent Company and are separately disclosed in the consolidated statement of comprehensive
income. Non-controlling interests consist of the amount of those interests at the date of original business
combination and the non-controlling interests’ share on changes in equity since the date of the business
combination.
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as
the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-
controlling interest in the acquiree. For each business combination, the Group elects whether to measure the non-
controlling interest in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net
assets. Acquisition related costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and financial liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic circumstances and
pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host
contracts by the acquiree.
If the business combination is achieved in stages, the previously held equity interest is remeasured at its acquisition
date fair value and any resulting gain or loss is recognized in profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at the acquisition
date. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope
of PAS 39, is measured at fair value with changes in fair value recognized either in profit or loss or as a change
to other comprehensive income. If the contingent consideration is not within the scope of PAS 39, it is measured
in accordance with the appropriate PFRS. Contingent consideration that is classified as equity is not remeasured
and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the
amount recognized for non-controlling interest over the net identifiable assets acquired and liabilities assumed.
If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the gain is
recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of
impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each
of the Group’s cash-generating units (CGU) that are expected to benefit from the combination, irrespective of
whether other assets or liabilities of the acquiree are assigned to those units.
The preparation of the Group’s consolidated financial statements requires management to make judgments,
estimates and assumptions that affect the amounts reported in the Group’s consolidated financial statements and
accompanying notes.
Judgments are made by management in the development, selection and disclosure of the Group significant
accounting policies and estimates and the application of these policies and estimates.
The estimates and assumptions are reviewed on an on-going basis. These are based on management’s evaluation
of relevant facts and circumstances as of the reporting date. Actual results could differ from such estimates.
Revision to accounting estimates are recognized in the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future periods if the revision affects both current and future
periods.
The areas where significant judgments and estimates have been made in preparing the consolidated financial
statements and their effects are disclosed in Note 5.
The Group’s accounting policies are consistent with those of the previous financial year, except for the adoption
of the following new accounting pronouncements:
The accounting policies adopted are consistent with those of the previous financial year, except for the adoption
of the following new and amended PFRS which the Group adopted:
Amendments to PFRS 16, COVID-19-related Rent Concessions beyond 30 June 2021 – The pronouncement
amended IFRS 16 Leases to provide lessees with an exemption from assessing whether a COVID-19-related rent
concession is a lease modification. On issuance, the practical expedient was limited to rent concessions for which
any reduction in lease payments affects only payments originally due on or before 30 June 2021.
Since lessors continue to grant COVID-19-related rent concessions to lessees and since the effects of the COVID-
19 pandemic are ongoing and significant, the IASB decided to extend the time period over which the practical
expedient is available for use.
1. permit a lessee to apply the practical expedient regarding COVID-19-related rent concessions to rent
concessions for which any reduction in lease payments affects only payments originally due on or before
30 June 2022 (rather than only payments originally due on or before 30 June 2021);
2. require a lessee applying the amendment to do so for annual reporting periods beginning on or after 1
April 2021;
3. require a lessee applying the amendment to do so retrospectively, recognising the cumulative effect of
initially applying the amendment as an adjustment to the opening balance of retained earnings (or other
component of equity, as appropriate) at the beginning of the annual reporting period in which the lessee
first applies the amendment; and
4. specify that, in the reporting period in which a lessee first applies the amendment, a lessee is not required
to disclose the information required by paragraph 28(f) of IAS 8.
The amendment is effective for annual reporting periods beginning on or after 1 April 2021 (earlier application
permitted, including in financial statements not yet authorized for issue at the date the amendment is issued).
Amendments to PAS 16, Property, Plant and Equipment - Proceeds before Intended Use - the purpose of the
amendments is to prohibit deducting from the cost of an item of property, plant and equipment any proceeds from
selling items produced while bringing that asset to the location and condition necessary for it to be capable of
operating in the manner intended by management. Instead, an entity recognizes the proceeds from selling such
items, and the cost of producing those items, in profit or loss.
PAS 16 "Property, Plant and Equipment" outlines the accounting treatment for most types of property, plant and
equipment. Property, plant and equipment is initially measured at its cost, subsequently measured either using a
cost or revaluation model, and depreciated so that its depreciable amount is allocated on a systematic basis over
its useful life.
Amendments to PAS 37, Onerous Contracts - Cost of Fulfilling a Contract – the amendment is regarding costs a
company should include as the cost of fulfilling a contract when assessing whether a contract is onerous. The
amendments specify that the ‘cost of fulfilling’ a contract comprises the ‘costs that relate directly to the contract’.
Costs that relate directly to a contract can either be incremental costs of fulfilling that contract (examples would
be direct labour, materials) or an allocation of other costs that relate directly to fulfilling contracts (an example
would be the allocation of the depreciation charge for an item of property, plant and equipment used in fulfilling
the contract).
PAS 37 "Provisions, Contingent Liabilities and Contingent Assets" outlines the accounting for provisions
(liabilities of uncertain timing or amount), together with contingent assets (possible assets) and contingent
liabilities (possible obligations and present obligations that are not probable or not reliably measurable).
Amendments to PFRS 3, Reference to the Conceptual Framework with amendments to PFRS 3 'Business
Combinations – the amendments update an outdated reference in PFRS 3 without significantly changing its
requirements. The changes are: update PFRS 3 so that it refers to the 2018 Conceptual Framework instead of the
1989 Framework; add to PFRS 3 a requirement that, for transactions and other events within the scope of PAS 37
or IFRIC 21, an acquirer applies PAS 37 or IFRIC 21 (instead of the Conceptual Framework) to identify the
liabilities it has assumed in a business combination; and add to PFRS 3 an explicit statement that an acquirer does
not recognize contingent assets acquired in a business combination.
PFRS 3 "Business Combinations" outlines the accounting when an acquirer obtains control of a business (e.g. an
acquisition or merger). Such business combinations are accounted for using the 'acquisition method', which
generally requires assets acquired and liabilities assumed to be measured at their fair values at the acquisition date.
PAS 1 "Presentation of Financial Statements" sets out the overall requirements for financial statements, including
how they should be structured, the minimum requirements for their content and overriding concepts such as going
concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete
set of financial statements to comprise a statement of financial position, a statement of profit or loss and other
comprehensive income, a statement of changes in equity and a statement of cash flows.
PFRS 1 "First-time Adoption of International Financial Reporting Standards" sets out the procedures that an
entity must follow when it adopts PFRS for the first time as the basis for preparing its general purpose financial
statements. The PFRS grants limited exemptions from the general requirement to comply with each PFRS
effective at the end of its first PFRS reporting period.
2018-2020 Cycle
The Annual Improvements to PFRSs (2018-2020 Cycle) are effective for annual periods beginning on or after
January 1, 2022, with retrospective application. The amendments to the following standards:
• PFRS 1, Subsidiary as a first-time adopter - The amendment permits a subsidiary to measure cumulative
translation differences using the amounts reported by its parent, based on the parent’s date of transition
to PFRSs. As a result of the amendment, a subsidiary that uses the exemption in PFRS 1: D16 (a) can
now also elect to measure cumulative translation differences for all foreign operations at the carrying
amount that would be included in the parent’s consolidated financial statements, based on the parent’s
date of transition to PRFS Standards, if no adjustments were made for consolidation procedures and for
the effects of the business combination in which the parent acquired the subsidiary. A similar election is
available to an associate or joint venture that uses the exemption in PFRS 1: D16 (a).
• PFRS 9, Fees in the ‘10 per cent’ test for derecognition of financial liabilities - The amendment clarifies
which fees an entity includes when it applies the ‘10 per cent’ test in assessing whether to derecognize a
financial liability. An entity includes only fees paid or received between the entity (the borrower) and
the lender, including fees paid or received by either the entity or the lender on the other’s behalf.
• The Company will apply the amendments to financial liabilities that are modified or exchanged on or
after the beginning of the annual reporting period in which the entity first applies the amendment. The
amendments are not expected to have a material impact on the financial statements.
• PFRS 16, Lease Incentives - The amendment removes from the example the illustration of the
reimbursement of leasehold improvements by the lessor in order to resolve any potential confusion
regarding the treatment of lease incentives that might arise because of how lease incentives are illustrated
in that example.
• PAS 41, Taxation in fair value measurements - The amendment removes the requirement for entities to
exclude taxation cash flows when measuring the fair value of a biological asset using a present value
technique. This will ensure consistency with the requirements in PFRS 13.
The amendments do not have material impact on the consolidated financial statements.
New and Amended Standards Effective Subsequent to 2022 but not Early Adopted
Pronouncements issued but not yet effective as at December 31, 2022 are listed below. The Group intends to
adopt the following pronouncements when they become effective. Except as otherwise indicated, the Group does
not expect the adoption of these new pronouncements to have a significant impact on the consolidated financial
statements.
Amendments to PAS 1, Classification of Liabilities as Current or Non-current – the amendments provide a more
general approach to the classification of liabilities under PAS 1 based on the contractual arrangements in place at
the reporting date. The amendments affect only the presentation of liabilities in the statement of financial position
not the amount or timing of recognition of any asset, liability income or expenses, or the information that entities
disclose about those items. To:
- clarify that the classification of liabilities as current or non-current should be based on rights that are in
existence at the end of the reporting period and align the wording in all affected paragraphs to refer to
The Group is still assessing the impact of the preceding amendments to the consolidated financial statements.
Amendments to PFRS 17, Insurance Contracts – the amendments’ purpose is to address concerns and
implementation challenges that were identified after PFRS 17 'Insurance Contracts' was published in 2017. The
main changes are: deferral of the date of initial application of PFRS 17 by two years to annual periods beginning
on or after January 1, 2023; additional scope exclusion for credit card contracts and similar contracts that provide
insurance coverage as well as optional scope exclusion for loan contracts that transfer significant insurance risk;
recognition of insurance acquisition cash flows relating to expected contract renewals, including transition
provisions and guidance for insurance acquisition cash flows recognized in a business acquired in a business
combination; extension of the risk mitigation option to include reinsurance contracts held and non-financial
derivatives; amendments to require an entity that at initial recognition recognizes losses on onerous insurance
contracts issued to also recognize a gain on reinsurance contracts held; simplified presentation of insurance
contracts in the statement of financial position so that entities would present insurance contract assets and
liabilities in the statement of financial position determined using portfolios of insurance contracts rather than
groups of insurance contracts; and several small amendments regarding minor application issues.
PFRS 17 establishes the principles for the recognition, measurement, presentation and disclosure of insurance
contracts within the scope of the standard. The objective of PFRS 17 is to ensure that an entity provides relevant
information that faithfully represents those contracts. This information gives a basis for users of financial
statements to assess the effect that insurance contracts have on the entity's financial position, financial
performance and cash flows.
The amendments are not expected to have a significant impact on the preparation of consolidated financial
statements.
Disclosure of Accounting Policies (Amendments to PAS 1, Presentation of Financial Statements, and IFRS
Practice Statement 2, Making Materiality Judgements), continues the IASB's clarifications on applying the
concept of materiality. These amendments help companies provide useful accounting policy disclosures, and they
include:
• requiring companies to disclose their material accounting policies instead of their significant
accounting policies;
• clarifying that accounting policies related to immaterial transactions, other events or conditions are
themselves immaterial and do not need to be disclosed; and
• clarifying that not all accounting policies that relate to material transactions, other events or conditions
are themselves material.
The IASB also amended IFRS Practice Statement 2 to include guidance and examples on applying materiality to
accounting policy disclosures.
The Group is still assessing the impact of the preceding amendments to the consolidated financial statements.
The amendments clarify that accounting estimates are monetary amounts in the financial statements subject to
measurement uncertainty. The amendments also clarify the relationship between accounting policies and
accounting estimates by specifying that a company develops an accounting estimate to achieve the objective set
out by an accounting policy.
The Group is still assessing the impact of the preceding amendments to the consolidated financial statements.
Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to PAS 12, Income
Taxes), clarifies how companies account for deferred taxes on transactions such as leases and decommissioning
obligations, with a focus on reducing diversity in practice.
The amendments narrow the scope of the initial recognition exemption so that it does not apply to transactions
that give rise to equal and offsetting temporary differences. As a result, companies will need to recognize a
deferred tax asset and a deferred tax liability for temporary differences arising on initial recognition of a lease and
a decommissioning provision.
PAS 12, "Income Taxes" implements a so-called 'comprehensive balance sheet method' of accounting for income
taxes which recognizes both the current tax consequences of transactions and events and the future tax
consequences of the future recovery or settlement of the carrying amount of an entity's assets and liabilities.
Differences between the carrying amount and tax base of assets and liabilities, and carried forward tax losses and
credits, are recognized, with limited exceptions, as deferred tax liabilities or deferred tax assets, with the latter
also being subject to a 'probable profits' test.
The Group is still assessing the impact of the preceding amendments to the consolidated financial statements.
PFRS 16, “Leases” specifies how to recognize, measure, present and disclose leases. The standard provides a
single lessee accounting model, requiring the recognition of assets and liabilities for all leases, unless the lease
term is 12 months or less or the underlying asset has a low value. Lessor accounting however remains largely
unchanged from PAS 17 and the distinction between operating and finance leases is retained.
The significant accounting policies used in the preparation of these consolidated financial statements are
summarized below. The policies have been consistently applied to all years presented unless otherwise stated.
Date of Recognition. The Group recognizes a financial asset or a financial liability in the consolidated statements
of financial position when it becomes a party to the contractual provisions of a financial instrument. In the case
of a regular way purchase or sale of financial assets, recognition and derecognition, as applicable, is done using
settlement date accounting.
Initial Recognition and Measurement. Financial instruments are recognized initially at fair value, which is the
fair value of the consideration given (in case of an asset) or received (in case of a liability). The initial
measurement of financial instruments, except for those designated at fair value through profit and loss (FVPL),
includes transaction cost.
“Day 1” Difference. Where the transaction price in a non-active market is different from the fair value of other
observable current market transactions in the same instrument or based on a valuation technique whose variables
include only data from observable market, the Group recognizes the difference between the transaction price and
fair value (a “Day 1” difference) in profit or loss. In cases where there is no observable data on inception, the
Group deems the transaction price as the best estimate of fair value and recognizes “Day 1” difference in profit or
loss when the inputs become observable or when the instrument is derecognized. For each transaction, the Group
determines the appropriate method of recognizing the “Day 1” difference.
As of December 31, 2022 and 2021, the Group does not have financial assets and liabilities measured at FVPL.
Financial Assets at Amortized Cost. Financial assets shall be measured at amortized cost if both of the following
conditions are met:
• the financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows; and
• the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
After initial recognition, financial assets at amortized cost are subsequently measured at amortized cost using the
effective interest method, less allowance for impairment, if any. Amortized cost is calculated by taking into
account any discount or premium on acquisition and fees that are an integral part of the effective interest rate.
Gains and losses are recognized in profit or loss when the financial assets are derecognized and through
amortization process. Financial assets at amortized cost are included under current assets if realizability or
collectability is within 12 months after the reporting period. Otherwise, these are classified as noncurrent assets.
As of December 31, 2022 and 2021, the Group’s cash, trade and other receivables, advances to related parties,
refundable deposits and investment in debt securities are included under this category.
Financial Assets at FVPL. Financial assets at FVPL include financial assets held for trading, financial assets
designated upon initial recognition at FVPL, or financial assets mandatorily required to be measured at fair value.
Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in
the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless
they are designated as effective hedging instruments. Financial assets with cash flows that are not SPPI are
classified and measured at FVPL, irrespective of business model. Notwithstanding the criteria for debt
instruments to be classified at amortized cost or at FVOCI, as described above, debt instruments may be designated
at FVPL on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
Financial assets at FVPL are carried in the consolidated statements of financial position at fair value with net
changes in fair value recognized in the consolidated statements of comprehensive income. As at December 31,
2022 and 2021, the Group has no financial assets at FVPL.
Financial Assets at FVOCI. For debt instruments that meet the contractual cash flow characteristic and are not
designated at FVPL under the fair value option, the financial assets shall be measured at FVOCI if both of the
following conditions are met:
• the financial asset is held within a business model whose objective is to hold financial assets in order to
collect contractual cash flows and selling the financial assets; and
• the contractual terms of the financial asset give rise, on specified dates, to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
For equity instruments, the Group may irrevocably designate the financial asset to be measured at FVOCI in case
the above conditions are not met.
Financial assets at FVOCI are initially measured at fair value plus transaction costs. After initial recognition,
interest income (calculated using the effective interest rate method), foreign currency gains or losses and
impairment losses of debt instruments measured at FVOCI are recognized directly in profit or loss. When the
financial asset is derecognized, the cumulative gains or losses previously recognized in OCI are reclassified from
equity to profit or loss as a reclassification adjustment.
As of December 31, 2022 and 2021, the Group’s equity investments at FVOCI are included under this category.
Financial Liabilities at Amortized Cost. Financial liabilities are categorized as financial liabilities at amortized
cost when the substance of the contractual arrangement results in the Group having an obligation either to deliver
cash or another financial asset to the holder, or to settle the obligation other than by the exchange of a fixed amount
of cash or another financial asset for a fixed number of its own equity instruments.
These financial liabilities are initially recognized at fair value less any directly attributable transaction costs. After
initial recognition, these financial liabilities are subsequently measured at amortized cost using the effective
interest method. Amortized cost is calculated by taking into account any discount or premium on the issue and
fees that are an integral part of the effective interest rate. Gains and losses are recognized in profit or loss when
the liabilities are derecognized or through the amortization process.
As of December 31, 2022 and 2021, the Group’s accounts payable and accrued expenses, lease liability and due
to related parties are included under this category.
4.2 Reclassification
The Group reclassifies its financial assets when, and only when, it changes its business model for managing those
financial assets. The reclassification is applied prospectively from the first day of the first reporting period
following the change in the business model (reclassification date).
For a financial asset reclassified out of the financial assets at amortized cost category to financial assets at FVPL,
any gain or loss arising from the difference between the previous amortized cost of the financial asset and fair
value is recognized in profit or loss.
For a financial asset reclassified out of the financial assets at amortized cost category to financial assets at FVOCI,
any gain or loss arising from a difference between the previous amortized cost of the financial asset and fair value
is recognized in OCI.
For a financial asset reclassified out of the financial assets at FVPL category to financial assets at amortized cost,
its fair value at the reclassification date becomes its new gross carrying amount.
For a financial asset reclassified out of the financial assets at FVOCI category to financial assets at amortized cost,
any gain or loss previously recognized in OCI, and any difference between the new amortized cost and maturity
amount, are amortized to profit or loss over the remaining life of the investment using the effective interest method.
If the financial asset is subsequently impaired, any gain or loss that has been recognized in OCI is reclassified
from equity to profit or loss.
In the case of a financial asset that does not have a fixed maturity, the gain or loss shall be recognized in profit or
loss when the financial asset is sold or disposed. If the financial asset is subsequently impaired, any previous gain
or loss that has been recognized in OCI is reclassified from equity to profit or loss.
For a financial asset reclassified out of the financial assets at FVPL category to financial assets at FVOCI, its fair
value at the reclassification date becomes its new gross carrying amount. Meanwhile, for a financial asset
reclassified out of the financial assets at FVOCI category to financial assets at FVPL, the cumulative gain or loss
previously recognized in other comprehensive income is reclassified from equity to profit or loss as a
reclassification adjustment at the reclassification date.
The Group records an allowance for “expected credit loss” (ECL). ECL is based on the difference between the
contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive.
The difference is then discounted at an approximation to the asset’s original effective interest rate.
For debt instruments measured at amortized cost and FVOCI, the ECL is based on the 12-month ECL, which
pertains to the portion of lifetime ECLs that result from default events on a financial instrument that are possible
within 12 months after the reporting date. However, when there has been a significant increase in credit risk since
initial recognition, the allowance will be based on the lifetime ECL. When determining whether the credit risk of
a financial asset has increased significantly since initial recognition, the Group compares the risk of a default
occurring on the financial instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and consider reasonable and supportable information, that is
available without undue cost or effort, that is indicative of significant increases in credit risk since initial
recognition.
At each reporting date, the Group assesses whether financial assets at amortized cost are credit impaired. A
financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Financial Assets. A financial asset (or where applicable, a part of a financial asset or part of a group of similar
financial assets) is derecognized when:
• the right to receive cash flows from the asset has expired;
• the Group retains the right to receive cash flows from the financial asset, but has assumed an obligation
to pay them in full without material delay to a third party under a “pass-through” arrangement; or
• the Group has transferred its right to receive cash flows from the financial asset and either (a) has
transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
When the Group has transferred its right to receive cash flows from a financial asset or has entered into a pass-
through arrangement and has neither transferred nor retained substantially all the risks and rewards of ownership
of the financial asset nor transferred control of the financial asset, the financial asset is recognized to the extent of
the Group’s continuing involvement in the financial asset. Continuing involvement that takes the form of a
guarantee over the transferred financial asset is measured at the lower of the original carrying amount of the
financial asset and the maximum amount of consideration that the Group could be required to repay.
Financial Liabilities. A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or has expired. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original liability and the recognition of a new liability, and
the difference in the respective carrying amounts is recognized in the consolidated statements of comprehensive
income.
A modification is considered substantial if the present value of the cash flows under the new terms, including net
fees paid or received and discounted using the original effective interest rate, is different by at least 10% from the
discounted present value of remaining cash flows of the original liability.
The fair value of the modified financial liability is determined based on its expected cash flows, discounted using
the interest rate at which the Group could raise debt with similar terms and conditions in the market. The
difference between the carrying value of the original liability and fair value of the new liability is recognized in
the consolidated statements of comprehensive income.
On the other hand, if the difference does not meet the 10% threshold, the original debt is not extinguished but
merely modified. In such case, the carrying amount is adjusted by the costs or fees paid or received in the
restructuring.
Financial assets and financial liabilities are offset, and the net amount reported in the consolidated statements of
financial position if, and only if, there is currently enforceable legal right to offset the recognized amounts and
there is an intention to settle on a net basis, or to realize the asset and settle the liability simultaneously. This is
not generally the case with master netting agreements, and the related assets and liabilities are presented gross in
the consolidated statements of financial position.
If the Group does not have an unconditional right to avoid delivering cash or another financial asset to settle its
contractual obligation, the obligation meets the definition of a financial liability.
The Group presents assets and liabilities in the statement of financial position based on current/noncurrent
classification.
Transactions in foreign currencies are initially recorded by the Group at the respective functional currency rates
prevailing at the date of the transaction.
Monetary assets and monetary liabilities denominated in foreign currencies are retranslated at the functional
currency spot rate of exchange ruling at the reporting date.
All differences are taken to the statements of comprehensive income with the exception of all monetary items that
provide an effective hedge for a net investment in a foreign operation. These are recognized in OCI until the
disposal of the net investment, at which time they are recognized in profit or loss. Tax charges and credits
applicable to exchange differences on these monetary items are also recorded in the OCI.
Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rates as the dates of the initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the date when the par value is determined.
The Group measures a number of financial and non-financial assets and liabilities at fair value at each reporting
date.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place either: (a) in the principal market for the
asset or liability; or (b) in the absence of a principal market, in the most advantageous market for the asset or
liability. The principal or most advantageous market must be accessible to the Group.
The fair value of an asset or liability is measured using the assumptions that market participants would use when
pricing the asset or liability, assuming that market participants act in their best economic interest.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are
available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of
unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statement are categorized
within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair
value measurement as a whole:
• Level 1: quoted prices (unadjusted) in active market for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the
asset or liability, either directly or indirectly; and
• Level 3: inputs for the asset or liability that are not based on observable market data.
For assets and liabilities that are recognized in the financial statements on a recurring basis, the Group determines
whether transfers have occurred between levels in the hierarchy by re-assessing the categorization at the end of
each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of
the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy.
Operating segments are reported in a manner consistent with the internal reporting provided to the Group’s
Executive Committee (ExeCom), its chief operating decision-maker. The ExeCom is responsible for allocating
resources and assessing performance of the operating segments.
In identifying its operating segments, management generally follows the Group’s main service lines as disclosed
in Note 6, which represent the main services provided by the Group.
Each of these operating segments is managed separately as each of these service lines require different resources
as well as marketing approaches. All intersegment transfers are carried out at arm’s length prices.
The measurement policies the Group uses for segment reporting under PFRS 8, Operating Segments, are the same
as those used in its consolidated financial statements.
There have been no significant changes from prior periods in the measurement methods used to determine reported
segment profit or loss.
4.11 Cash
Cash includes cash funds, undeposited cash collections and customers’ checks. Cash funds are set aside for current
purposes such as petty cash fund. Cash in banks include demand deposits which are unrestricted as to withdrawal.
Cash is valued at face value. Cash in foreign currency is valued at the current exchange rate.
Trade and other receivables are amounts due from clients for services performed in the ordinary course of business,
if collection is expected in one year or less (or in the normal operating cycle of the business longer), they are
classified as current assets. Otherwise, they are presented as non-current assets.
Receivables are measured at the transaction price determined under PFRS 15 (refer to the accounting policies for
Revenue from contract with customers). Accounts and other receivables are recognized initially at fair value and
subsequently measured at amortized cost using the effective interest rate (EIR) method, less provision for
impairment.
Other assets are recognized when the Group expects to receive future economic benefit from the other party, and
the amount can be measured reliably. Other assets are classified in the consolidated statements of financial position
as current assets when the cost of goods or services related to the assets are expected to be incurred within one
year or the Group's normal operating cycle, whichever is longer. Otherwise, other assets are classified as
noncurrent assets.
An asset is classified as asset held for sale when their carrying amount is to be recovered principally through a
sale transaction rather than through continuing use and a sale is highly probable. Asset held for sale is stated at
the lower of its carrying amount and fair value less costs to sell.
Property and equipment are stated at cost less accumulated depreciation and amortization and any impairment in
value.
The initial cost of property and equipment consists of its purchase price, including import duties, taxes and any
directly attributable costs in bringing the asset to its working condition and location for its intended use.
Expenditures incurred after the fixed assets have been put into operation, such as repairs and maintenance costs,
are normally charged to income in the period such costs are incurred. In situations where it can be clearly
demonstrated that the expenditures have resulted in an increase in the future economic benefits expected to be
obtained from the use of an item of property and equipment beyond its originally assessed standard of
performance, the expenditures are capitalized as an additional cost of property and equipment.
Depreciation and amortization of property and equipment commences once the fixed assets are available for use
and is calculated on a straight-line basis over the following estimated useful lives:
Depreciation is computed on the straight-line basis over the estimated useful lives of the depreciable assets.
Further, amortization of right-of-use assets is calculated using the straight-line method to allocate their cost, net
of residual values, over their estimated useful lives being the lesser of the remaining lease term and the life of the
asset.
The remaining useful lives, residual values and depreciation and amortization method are reviewed periodically
to ensure that the periods, estimated residual values and method of depreciation and amortization are consistent
with the expected pattern of economic benefits from the items of property and equipment.
Intangible assets pertaining to software license costs that are acquired separately are initially carried at cost.
Subsequently, intangible assets with definite useful lives are carried at cost less accumulated amortization and
impairment losses. Amortization is recognized on a straight-line basis over their estimated useful lives, which do
not exceed three years.
The remaining useful life and amortization method are reviewed at the end of each annual reporting period, with
the effect of any changes in estimate being accounted for on a prospective basis.
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from use or
disposal. Gains or losses arising from derecognition of an intangible asset are measured as the difference between
the net disposal proceeds and the carrying amount of the asset and are recognized in profit or loss when the asset
is derecognized.
The carrying values of property and equipment and intangible assets are reviewed for impairment when events or
changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists,
and if the carrying value exceeds the estimated recoverable amount, the assets or cash-generating units are written
down to their recoverable amounts. The recoverable amount of the asset is the greater of fair value less costs to
sell or value in use. The fair value less costs to sell is the amount obtainable from the sale of an asset in an arm’s
length transaction between knowledgeable, willing parties, less costs of disposal. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. For an asset that does not
generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to
which the asset belongs. Impairment losses of continuing operations are recognized in the consolidated statements
of comprehensive income in those expense categories consistent with the function of the impaired asset.
An assessment is made at each reporting date as to whether there is any indication that previously recognized
impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount
is estimated. A previously recognized impairment loss is reversed only if there has been a change in the estimates
used to determine the asset’s recoverable amount since the last impairment loss was recognized. If that is the case,
the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the
carrying amount that would have been determined, net of depreciation and amortization, had no impairment loss
been recognized for the asset in prior years. Such reversal is recognized in profit or loss. After such a reversal, the
depreciation and amortization charge is adjusted in future periods to allocate the asset’s revised carrying amount,
less any residual value, on a systematic basis over its remaining useful life.
Accounts payable and accrued expenses are liabilities to pay for goods or services that have been received or
supplied but have not been paid, invoiced, or formally agreed with supplier including amounts due to employees.
It is necessary to estimate the amount of accruals; however, the uncertainty is generally much less than for
provision.
4.19 Equity
Share capital
Share capital is determined using the nominal value of shares that have been issued.
Revenue from contract with customers is recognized at a point in time when control of the goods or services are
transferred to the customer at an amount that reflects the consideration to which the Group expects to be entitled
in exchange for the goods or services. The Group applies this standard with its revenue arrangements on the
holding business interests in companies engaged in the manufacture of chemicals, petrochemical and contract
logistics..
Revenue is recognized only when (or as) the Group satisfies a performance obligation by transferring control of
the promised goods or services to a customer. The transfer of control can occur over time or at a point in time.
A performance obligation is satisfied at a point in time unless it meets one of the following criteria, in which case
it is satisfied over time:
• the customer simultaneously receives and consumes the benefits provided by the Group’s performance
as the Company performs;
• the Group’s performance creates or enhances an asset that the customer controls as the asset is created
or enhanced; and,
• the Group’s performance does not create an asset with an alternative use to the Company and the entity
has an enforceable right to payment for performance completed to date.
The transaction price allocated to the performance obligations satisfied at a point in time is recognized as revenue
when control of goods or services transfers to the customer. As a matter of accounting policy when applicable, if
the performance obligation is satisfied over time, the transaction price allocated to that performance obligation is
recognized as revenue as the performance obligation is satisfied.
The disclosures of significant accounting judgements, estimates and assumptions relating to revenue from contract
with customers are disclosed in Note 5.
Revenue includes only the gross inflow of the economic benefits received and receivable by the Group on its own
account. Amounts collected on behalf of third parties, such as reimbursable transactions are not economic benefits
to the Group and do not result in increase in equity; therefore, they are excluded from revenue.
• Logistics and other services is recognized when the related services are rendered.
• Dividend income is recognized when the right to receive the payment is established.
• Interest income is recognized as the interest accrues, taking into account the effective yield on the asset.
Contract balances
Contract assets
A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the
Group performs by transferring goods or services to a customer before the customer pays consideration or before
payment is due, a contract asset is recognized for the earned consideration that is conditional.
Contract liabilities
A contract liability is the obligation to transfer goods or services to a customer for which the Group has received
consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before
the Group transfers goods or services to the customer, a contract liability is recognized when the payment is made
or the payment is due, whichever is earlier. Contract liabilities are recognized as revenue when the Group performs
under the contract.
Cost and expenses are decreases in economic benefits during the accounting period in the form of outflows or
decrease of assets or incurrence of liabilities that result in decreases in equity, other than those relating to
distributions to equity participants.
Costs and expenses are recognized in profit or loss in the separate statements of comprehensive income:
▪ on the basis of a direct association between the costs incurred and the earning of specific items of income;
▪ on the basis of systematic and rational allocation procedures when economic benefits are expected to
arise over several accounting periods and the association can only be broadly or indirectly determined;
or
▪ immediately when expenditures produce no future economic benefits or when, and to the extent that,
future economic benefits do not qualify or cease to qualify, for recognition in the statement of financial
position as an asset.
Cost of services - include direct material costs, personnel expenses, depreciation, utilities and other service-related
costs. These are recognized when the services are used or the expenses are incurred.
General and administrative expenses - Expenses incurred in the direction and general administration of day-to-
day operation of the Group are generally recognized when the services are used or the expenses incurred.
4.22 Leases
At inception of a contract, an entity shall assess whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in
exchange for consideration.
The Group assesses whether the contract meets three key evaluations which are whether:
a) the contract contains an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made available to the Group,
b) the Group has the right to obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use, considering its rights within the defined scope of
the contract,
The Group shall reassess whether a contract is, or contains, a lease only if the terms and conditions of the contract
are changed.
As a lessor
Lease payment received is recognized as income in the consolidated statements of comprehensive income on a
straight-line basis over the lease term.
As a lessee
The Group applies a single recognition and measurement approach for all leases, except for short-term leases and
leases of low-value assets. The Group recognizes lease liabilities to make lease payments and right-of-use assets
representing the right to use the underlying assets.
At the initial application date, the Group recognizes a right-of-use asset on the consolidated statements of financial
position. The right-of-use asset is measured at cost, which is made up of the initial measurement of the lease
liability, any initial direct costs incurred by the Group, an estimate of any costs to dismantle and remove the asset
at the end of the lease, and any lease payments made in advance of the lease commencement date (net of any
incentives received).
The Group depreciates the right-of-use assets on a straight-line basis from the lease commencement date to the
earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The Group also assesses
the right-of-use asset for impairment when such indicators exist.
At the initial application date, the Group measures the lease liability at the present value of the lease payments
unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily available or the
Group’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments (including in
substance fixed), variable payments based on an index or rate, amounts expected to be payable under a residual
value guarantee and payments arising from options reasonably certain to be exercised.
Subsequent to initial measurement, the liability will be reduced for payments made and increased for interest. It
is remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed payments.
When the lease liability is remeasured, the corresponding adjustment is reflected in the right-of-use asset, or profit
and loss if the right-of-use asset is already reduced to zero.
Employee benefits are all forms of considerations given by the Group in exchange for service rendered by the
employees. It includes short-term employee benefits and post-employment benefits.
Short-term benefits
Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave that
are expected to be settled wholly within 12 months after the end of the period in which the employees render the
related service are recognized in respect of employees’ services up to the end of the reporting period and are
measured at the amounts expected to be paid when the liabilities are settled. The liabilities are presented as current
employee benefit obligations in the balance sheet.
Termination Benefits
Termination benefits are employee benefits provided in exchange for the termination of an employee’s
employment as a result of either the Group’s decision to terminate an employee’s employment before the normal
retirement date or an employee’s decision to accept an offer of benefits in exchange for the termination of
employment.
Retirement benefits
The Group does not have a defined contribution plan or any formal retirement plan that covers the retirement
benefits of its employees. However, under the existing regulatory framework, Republic Act No. 7641, otherwise
known as the Philippine Retirement Pay Law, requires a provision for retirement pay to qualified private sector
employees in the absence of any retirement plan in the entity, provided however that the employee’s retirement
benefits under any collective bargaining agreement and other agreements shall not be less than those provided
under law. The law does not require minimum funding of the plan.
Republic Act No. 7641 relates to a defined benefit plan. A defined benefit plan is a post-employment plan that
defines an amount of post-employment benefit that an employee will receive on retirement, usually dependent on
one or more factors such as age, years of service, and salary. The legal obligation for any benefits from this kind
of post-employment plan remains with the Group.
The Group provides for estimated retirement benefits to be paid under Republic Act (RA) No. 7641 to its
permanent employee. The amount of retirement benefits is dependent on such factors as years of service and
compensation.
Current income tax relating to items recognized directly in equity is recognized in equity and not in the statements
of comprehensive income. Management periodically evaluates positions taken in the tax returns with respect to
situations in which applicable tax regulations are subject to interpretation and establishes provisions where
appropriate.
Deferred tax
Deferred tax is provided using the liability method on all temporary differences between the tax bases of assets
and liabilities and their carrying amounts for reporting purposes.
Deferred tax liabilities are recognized for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction which is not a business combination and at the time of the transaction, affects neither
accounting profit nor taxable profit or loss; and
• In respect of taxable temporary differences associated with investments in subsidiaries, associates and
interest in joint ventures, when timing of the reversal of the temporary differences can be controlled and
it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are recognized for all deductible temporary differences, the carry-forward of unused tax credits
from excess minimum corporate income tax (MCIT) and net operating loss carry over (NOLCO), and any unused
tax losses to the extent that it is probable that taxable profit will be available against which the deductible
temporary differences and the carry-forward of unused tax credits from MCIT and NOLCO and unused tax losses
can be utilized, except:
• When the deferred tax asset relating to the deductible temporary differences arises from the initial
recognition of an asset or liability in a transaction that is not a business combination; and at the time of
the transaction, affects neither the accounting profit nor taxable profit (or loss).
• In respect of deductible temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is
no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be
utilized.
Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has
become probable that future taxable profit will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted at the reporting
date.
Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. Deferred tax
items are recognized in correlation to the underlying transaction either in other comprehensive income or directly
in equity.
Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax
assets against current income tax liabilities and the deferred taxes relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities which intend to either settle the
liabilities simultaneously.
Revenue, expenses and assets are recognized net of the amount of VAT, except:
• where the VAT incurred on a purchase of assets or services is not recoverable from the taxation authority,
in which case the VAT is recognized as part of the cost of acquisition of the asset or as part of the expense
item as applicable; and
• receivables and payables that are stated with the amount of VAT included.
For acquisition of capital goods over ₱1,000,000, the VAT is deferred and amortized over the useful life of the
related capital goods or 60 months, whichever is shorter, commencing on the date of the acquisition.
For sale of real estates including house and lots and other residential dwellings with a selling price of not more
than ₱3,199,200, a tax exemption applies.
Output tax pertains to the 12% VAT received or receivable on the local sale of goods or services by the Company.
Input tax pertains to the 12% VAT paid or payable by the Company in the course of its trade or business on
purchase of goods or services. At the end of each taxable period, if output tax exceeds input tax, the outstanding
balance is paid to the taxation authority. If input tax exceeds output tax, the excess shall be carried over to the
succeeding months.
The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of ‘prepayments
and other current assets’ or ‘accounts and other payables’ in the statements of financial position.
Parties are considered related if one party has control, joint control, or significant influence over the other party
in making financial and operating decisions. The key management personnel of the Group and close members of
the family of nay individuals owning directly or indirectly a significant voting power of the Group that gives them
significant influence in the financial and operating policy decisions of the Group are also considered to be related
parties.
Close members of the family of a person are those family members, who may be expected to influence, or be
influenced by, that person in their dealings with the Group and include that person’s children and spouse or
domestic partner, and dependents of that person’s spouse or domestic partner.
A related party transaction is a transfer of resources, services or obligations between related parties, regardless of
whether a price is charged. An entity is related to the Group when it directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with the Group. Transactions between
related parties are based on terms similar to those offered to non-related entities in an economically comparable
market, except for non-interest-bearing advances with no definite repayment terms.
Basic EPS is calculated by dividing the profit attributable to the weighted average number of ordinary shares in
issue during the year, excluding ordinary shares purchased by the Group and held as treasury shares. Diluted EPS
is calculated by adjusting the weighted average number of ordinary shares outstanding and assume conversion of
all dilutive potential ordinary shares.
If the number of ordinary or potential shares outstanding increases as a result of a capitalization, bonus issue or
share split, or decreases as a result of a reverse share split, the calculation of basic and diluted EPS for all periods
presented shall be adjusted retrospectively. If these changes occur after the reporting period but before the
financial statements are authorized for issue, the per share calculations for those and any prior period financial
statements presented shall be based on the new number of shares.
4.28 Provisions
Provisions are recognized only when the Group has (a) a present obligation (legal or constructive) as a result of
past event; (b) it is probable (i.e., more likely than not) that an outflow of resources embodying economic benefits
will be required to settle the obligation; and (c) a reliable estimate can be made of the amount of the obligation. If
the effect of the time value of money is material, provisions are determined by discounting the expected future
cash flows at a pre-tax rate that reflects current market assessment of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognized as interest expense. Where the Group expects a provision to be reimbursed, the
reimbursement is recognized as a Group asset but only when the receipt of the reimbursement is virtually certain.
4.29 Contingencies
Contingent liabilities are not recognized in the Group consolidated financial statements. They are disclosed unless
the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not
recognized in the Group consolidated financial statements but are disclosed when an inflow of economic benefits
is probable.
Post year-end events that provide additional information about the Group’s position at balance sheet date
(adjusting events) are reflected in the Group’s consolidated financial statements. Post year-end events that are not
adjusting events are disclosed in the notes to the Group consolidated financial statements when material.
The preparation of the consolidated financial statements in conformity with PFRS requires the Group’s
management to make estimates, assumptions and judgments that affect the amounts reported in the consolidated
financial statements and accompanying notes.
The estimates and associated assumptions are based on historical experiences and other various factors that are
believed to be reasonable under the circumstances including expectations of related future events, the results of
which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates.
The estimates, assumptions and judgments are reviewed and evaluated on an ongoing basis. Revisions to
accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that
period or in the period of the revision and future periods if the revision affects both current and future periods.
5.1 Judgments
In the process of applying the Group’s accounting policies, management has made the following judgments, which
have the most significant effect on the amounts recognized in the consolidated financial statements.
Going concern
As of December 31, 2022 and 2021, the Group’s management has made an assessment on the Group’s ability to
continue as a going concern in the current evolving environment especially on the impact of COVID-19 pandemic
and is satisfied that the Group has the resources to continue their business for the foreseeable future. Furthermore,
management is not aware of any material uncertainties that may cast significant doubt upon the Group’s ability to
continue as a going concern. Therefore, the financial statements continue to be prepared on the going concern
basis.
The Group uses market observable data when measuring the fair value of an asset or liability. Fair values are
categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques.
If the inputs used to measure the fair value of an asset or a liability can be categorized in different levels of the
fair value hierarchy, then the fair value measurement is categorized in its entirety in the same level of the fair
value hierarchy based on the lowest level input that is significant to the entire measurement.
In determining the classification of a financial instrument under PFRS 9, the Group evaluates in which business
model a financial instrument or a portfolio of financial instruments belong to taking into consideration the
objectives of each business model established by the Group.
In addition, PFRS 9 emphasizes that if more than an infrequent and more than an insignificant sale is made out of
a portfolio of financial assets carried at amortized cost, an entity should assess whether and how such sales are
consistent with the objective of collecting contractual cash flows. In making this judgment, the Group considers
certain circumstances documented in its business model manual to assess that an increase in the frequency or
value of sales of financial instruments in a particular period is not necessarily inconsistent with a held-to-collect
business model if the Group can explain the reasons for those sales and why those sales do not reflect a change in
the Group’s objective for the business model.
• The contractual arrangement with the other vote holders of the investee.
• Rights arising from other contractual agreements.
• The Group’s voting rights and potential voting rights.
Consolidation of SPE
An entity is considered a SPE and included in consolidation even in cases when the Group owns less than one-
half or none of the SPE’s equity, when the substance of the relationship between the Group and the SPE indicates
that the SPE is controlled by the Group. While the Group has no ownership interest in Polymax, this SPE was
included in the 2006 consolidated financial statements and prior years. However, in 2007 up to the current year,
the SPE was no longer consolidated because it had ceased operating as a going concern (see Note 15).
In addition, part of the assessment of the Group before revenue recognition is to assess the probability that the
Group will collect the consideration to which it will be entitled in exchange for its services that will be transferred
to the customer. In evaluating whether collectability of an amount of consideration is probable, the Group
considers the significance if the customer’s initial payments in relation to the total contract price. Collectability is
also assessed by considering factors such as payment history of customer, age and pricing of the property.
Management regularly evaluates the historical cancellations and back-outs if it would still support its current
threshold of customers’ equity before commencing revenue recognition.
.
Determining performance obligation
With respect to its business, the Group concluded that the transfer of services in each contract constitute a
performance obligation. In particular, the promised services in contracts for holding interests in companies
engaged in the manufacture of chemicals, petrochemical and contract logistics mainly include holding stock or
membership interests in other companies. Generally, the Group is responsible for all of these services and the
overall management of the project. Although these services are capable of being distinct in the context contract.
The Group uses those services as inputs and provides a significant service of integrating them into a combined
output.
The promised services are specifically identified in the contract. In addition, the customer is contractually obliged
to make payments to the seller upon performance of services.
The rent income recognized for the years ended December 31, 2022, 2021 and 2020 amounted to ₱48,670,646,
₱44,117,096, and ₱48,205,450, respectively (Note 32).
Group as a lessee
The Group entered into several lease agreements covering its office premises and warehouses. Terms of the lease
agreements range from 1 year to 5 years under renewable options. Other leases entered into include clauses to
enable upward revision of the rental charged on an annual basis - based on prevailing market rates.
In 2021, the Company entered into lease agreements with terms of 2 years, ending October 11, 2023, and
November 2, 2023. All are under renewable options.
Following the adoption of PFRS 16, the Group recognized right-of-use asset and lease liability over the life of the
lease. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor
before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting period,
which have a significant risk of causing material adjustment to the carrying amounts of assets and liabilities within
the next financial year, are described below.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates
are recognized in the period in which the estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and future periods.
Where the fair values of financial assets and financial liabilities recorded in the statements of financial position
cannot be derived from active markets, their fair values are determined using valuation techniques that are
generally-accepted market valuations including the discounted cash flow model. The inputs to these models are
taken from observable markets where possible, but where this is not feasible, estimates are used in establishing
fair values.
The fair values of financial assets and financial liabilities by category and their fair value hierarchy are set out in
Note 11 to the financial statements.
Receivables (net of allowance for doubtful accounts of ₱149,343,619 and ₱149,004,704 as of December 31, 2022
and 2021) amounted to ₱178,465,891 and ₱177,441,066 as of December 31, 2022 and 2021, respectively (see
Note 13).
The carrying amount of other current assets amounted to ₱20,449,318 and ₱18,133,911 as of December 31, 2022
and 2021, respectively as discussed in Note 14.
In 2022 and 2021, impairment loss, mainly pertaining to creditable withholding and input taxes, amounted to
₱14,565,161 and ₱14,336,880, respectively, as shown also in Note 14.
In 2022, provision for estimated credit losses on advances to related party was recognized in compliance with the
requirements of PFRS 9.
Allowance for estimated credit losses on advances to subsidiaries amounted to ₱177,954,487 and ₱177,937,561
for years ended December 31, 2022 and 2021, respectively. No write-off and recoveries were recognized by the
Company as of December 31, 2022 and 2021.
Estimating useful lives and residual values of property and equipment and intangible assets
The Group estimates the useful lives and residual values of its property and equipment and intangible assets based
on the period over which the assets are expected to be available for use. The Group reviews annually the estimated
useful lives and residual values based on factors that include asset utilization, internal technical evaluation,
technological changes, and anticipated use of the assets. It is possible that future results of operations could be
materially affected by changes in these estimates brought about by changes in factors mentioned. A reduction in
the estimated useful lives of property and equipment and intangible assets would increase depreciation and
There has been no change in the Group’s estimate of the useful lives and residual values of its property and
equipment in 2022 and 2021.
Management believes that there was no indication of impairment on property and equipment as of December 31,
2022 and 2021. As of December 31, 2022 and 2021, property and equipment, net of accumulated depreciation,
amounted to ₱56,057,673 and ₱67,472,370, respectively, (Note 17) and total depreciation charged to operations
amounted to ₱42,430,435 and ₱36,732,216 (Note17) for periods ending December 31, 2022 and 2021,
respectively.
The incremental borrowing rate is determined by the Group on the commencement date of the lease. As a result,
it incorporates the impact of significant economic events and other changes in circumstances arising between lease
inception and commencement.
This incremental rate is used to measure the lease liability at the present value of lease payments that are not paid
at the end of lease term. In 2022 and 2021, the Group’s determined incremental rates used to compute the carrying
value of lease liability amounting to a total of ₱40,948,619 and ₱56,016,706 is ranging from 3% to 5% (Note 21).
The recognized net deferred tax assets amounted to ₱62,216,486 and ₱61,514,282 of December 31, 2022 and
2021, respectively (Note 21).
The Group did not recognize deferred tax assets of the Group and its non-operating subsidiaries amounting to
₱42,595,016 and ₱42,341,696 as of December 31, 2022 and 2021, respectively, as management believes that the
Group and its non-operating subsidiaries may not have sufficient future taxable profits available to allow
utilization of these deferred tax assets as discussed in Note 22.
Retirement benefits
The determination of the obligation and cost of retirement benefits is dependent on certain assumptions used by
the actuary in calculating such amounts. These assumptions are described in Note 29 to the consolidated financial
statements and include, among others, discount rates, salary increase rates and expected rates of return on plan
assets. Actual results that differ from the Group’s assumptions are accumulated and amortized over future periods
and therefore, will generally affect the recognized expense and recorded obligation in such future periods. While
the Group believes that the assumptions are reasonable and appropriate, significant differences in the actual
experience or significant changes in the assumptions may materially affect the retirement obligations.
Accrued retirement benefits costs amounted to ₱12,915,404 and ₱10,670,457 as of December 31, 2022 and
2021, respectively (Note 29).
Judgment is exercised by management to distinguish between provisions and contingencies. The policy on the
recognition and disclosure of provisions is discussed in Note 4.
Contingencies
The Group is currently involved in various legal proceedings, which are normal to its business as discussed in
Note 33. The Group’s estimate of the probable costs for these proceedings and resolution of these claims have
been developed in consultation with outside counsel handling the prosecution and defense of these cases and is
based upon an analysis of potential results. The Group does not believe that these legal proceedings will have a
material adverse effect on its consolidated financial statements. It is possible, however, that changes in estimates
relating to these proceedings may materially affect results of operations.
The Parent Company, Metro Alliance Holdings and Equities Corp., acquired the subsidiaries and are accounted
using the acquisition method. The following subsidiaries are as follows:
Operating subsidiaries
Metro Combined Logistics Solutions, Inc. (MCLSI) (Formerly GAC Logistics, Inc. (GACL)
MCLSI is 51% owned by the Parent Company, by virtue of a joint venture agreement with Gulf Agency Company
(GAC) which owns the other 49%. MCLSI was registered with the Securities and Exchange Commission on
September 30, 1998. MCLSI is primarily engaged in carrying on all or part of the business of contract logistics
and supply chain management services, including third party warehousing and distribution, consultancy and
project management and value-added services to customers throughout the Philippines. MCLSI’s business is
steadily growing with the entry of new principals and additional businesses from its existing principals.
Non-operating subsidiaries
In determining whether an NCI is material to the Parent Company, management employs both quantitative and
qualitative factors to evaluate the nature of, and risks associated with, the Parent Company’s interests in these
entities, and the effects of those interests on the Parent Company’s financial position. Factors considered include,
but not limited to, carrying value of the subsidiary’s NCI relative to the NCI recognized in the Parent Company’s
consolidated financial statements, the subsidiary’s contribution to the Parent Company’s consolidated revenues
and net income, and other relevant qualitative risks associated with the subsidiary’s nature, purpose and size of
activities.
Based on management’s assessment, the Group has concluded that MCLSI is considered a subsidiary with NCI
that is material to the Parent Company.
The ability of the subsidiary to pay dividends or make other distributions or payments to their shareholders
(including the Parent Company) is subject to applicable law and other restrictions contained in financing
agreements, shareholder agreements and other agreements that prohibit or limit the payment of dividends or other
transfers of funds.
The summarized financial information of MCLSI is presented below, before inter-company eliminations but after
consolidation adjustments for goodwill, other fair value adjustments on acquisition and adjustments required to
apply uniform accounting policies at group level.
The Group’s business activities are conducted in the Philippines and it is primarily in the contract logistics and
supply chain management segment in 2022 and 2021.
Segment assets include all operating assets used by a segment and consist principally of operating cash,
receivables, other current assets, asset held for sale and property and equipment, net of allowances and provisions.
Segment liabilities include all operating liabilities and consist principally of accounts payable and accrued
expenses, due to related parties and long-term debt.
The financial information with regard to the Group’s significant business segments as of December 31, 2022 and
2021 and for the years then ended is presented below.
2022
Distribution and Other
Contract Logistics Businesses Total
Results:
Segment result 24,051,575 (292,316,431) (268,264,856)
Other income 249,928 505 250,433
Provision for income tax (6,654,170) 600,842 (6,053,328)
Net income 17,647,333 (291,715,084) (274,067,751)
Other Information:
Segment assets 282,943,459 465,921,331 748,864,789
Segment liabilities 153,913,977 593,690,557 747,604,534
Capital expenditures 10,497,983 - 10,497,983
Depreciation and amortization 42,560,949 174,495 42,735,444
Noncash items other than depreciation and amortization 2,240,955 - 2,240,955
2021
Distribution and Other
Contract Logistics Businesses Total
Results:
Segment result 19,629,408 (231,481,830) (211,852,422)
Other income 2,222,684 711 2,223,395
Provision for income tax (5,135,727) 56,144,129 51,008,402
Net income 16,716,365 (175,336,990) (158,620,625)
Other Information:
Segment assets 277,408,767 465,549,203 742,957,970
Segment liabilities 166,312,588 587,633,565 753,946,153
Capital expenditures 32,131,998 586 32,132,584
Depreciation and amortization 37,006,145 175,082 37,181,227
Noncash items other than depreciation and amortization 2,036,083 - 2,036,083
The Group’s principal financial instruments are composed of cash and cash equivalents, receivable and payables.
The main purpose of these financial instruments is to raise finances for the Group’s operations. The risks arising
from the use of financial instruments are managed through a process of on-going identification, measurement, and
monitoring. This process of risk management is critical to the Group's continuing profitability.
The BOD is ultimately responsible for overall risk management approach, monitoring risk exposures, and
approving risk mitigation strategies and policies.
The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and liquidity risk.
The Group has significant exposure to the following financial risks primarily from its use of financial instruments:
This note presents information about the exposure to each of the foregoing risks, the objectives, policies and
processes for measuring and managing these risks, and for management of capital.
The principal non-trade related financial instruments of the Group is cash. This financial instrument is used mainly
for working capital management purposes. Trade-related financial assets and financial liabilities of the Group
such as trade and other receivables and trade and other payables, excluding statutory liabilities, arise directly from
and are used to facilitate its daily operations.
The BOD has the overall responsibility for the establishment and oversight of the risk management framework of
the Group.
The risk management policies of the Group are established to identify and analyze the risks faced by the Group,
to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies
and systems are reviewed regularly to reflect changes in market conditions and activities. The Group, through its
training and management standards and procedures, aims to develop a disciplined and constructive control
environment in which all employees understand their roles and obligations.
The Group’s interest rate risk management policy centers on reducing the overall interest expense and exposure
to changes in interest rates. Changes in market interest rates relate primarily to the Group’s interest-bearing debt
obligations with floating interest rate as it can cause a change in the amount of interest payments.
The Group follows prudent policies in managing its exposures to interest rate fluctuation, and constantly monitors
its exposure to fluctuation in interest rates to estimate the impact of interest rate movements on its interest expense.
The Group’s exposure to the risk of changes in market interest rates relates primarily to the Group’s long-term
debt. As of December 31, 2022 and 2021, the Group has no significant interest rate risk exposures since the interest
rates are fixed up to the date of maturity.
Liquidity risk pertains to the risk that the Group will encounter difficulty to meet payment obligations when they
fall due under normal and stress circumstances.
The Group’s objectives to manage its liquidity risk are as follows: (a) to ensure that adequate funding is available
at all times; (b) to meet commitments as they arise without incurring unnecessary costs; (c) to be able to access
funding when needed at the least possible cost; and (d) to maintain an adequate time spread of refinancing
maturities.
The table below shows the maturity profile of the Group’s financial assets and financial liabilities based on
contractual undiscounted receipts and payments used for liquidity management.
2022
Within 1 More than
Particulars On Demand Year 1 Year Total
Financial liabilities:
Accounts payable and accrued expenses** ₱ - ₱ 266,814,491 ₱ 123,438,803 ₱ 390,253,294
Lease liability - 16,459,778 24,488,841 40,948,619
Due to related parties - 709,782 280,673,968 281,383,750
Total - 283,984,051 428,601,612 712,585,663
2021
On Within 1 More than
Particulars Demand Year 1 Year Total
Financial liabilities:
Accounts payable and accrued expenses** ₱ - ₱ 266,976,308 ₱ 123,438,803 ₱ 390,375,111
Lease liability - 31,527,865 24,488,841 56,016,706
Due to related parties - 695,497 274,782,761 275,478,258
Total - 299,199,670 422,710,405 721,870,075
Credit risk is the risk of financial loss to the Group when a customer or counterparty to a financial instrument fails
to meet its contractual obligations and arises principally from receivables. The Group manages its credit risk
mainly through the application of transaction limits and close risk monitoring. It is the Group’s policy to enter
into transactions with a wide diversity of creditworthy counterparties to mitigate any significant concentration of
credit risk.
The Group has regular internal control reviews to monitor the granting of credit and management of credit
exposures.
As at December 31, 2022 and 2021, the Group has no financial assets for which credit risk has increased
significantly since initial recognition and that are credit-impaired.
a. Financial information on the Group’s maximum exposure to credit risk as of December 31, 2022 and 2021,
without considering the effects of collaterals and other risk mitigation techniques are presented below.
The Group does not hold any collateral as security or other credit enhancements attached to its financial assets.
The credit risk for is considered negligible, since the counterparties are reputable entities with high quality external
credit ratings.
The Group’s exposure to credit risk arises from default of counterparty. Generally, the maximum credit risk
exposure of receivables is its carrying amount without considering collaterals or credit enhancements, if any. The
Group has no significant concentration of credit risk since the Group deals with a large number of homogenous
counterparties. The Group does not execute any credit guarantee in favor of any counterparty.
High grade - Counterparties that are consistently profitable, have strong fundamentals and pays out dividends.
Standard grade - Counterparties that recently turned profitable and have the potential of becoming a high-
grade Group. These counterparties have sound fundamentals.
Substandard grade - Counterparties that are not yet profitable, speculative in nature but have the potential to
turn around fundamentally.
High grade - High probability of collection (the counterparty has the apparent ability to satisfy its obligation
and the security on the receivables are readily enforceable).
Standard grade - Collections are probable due to the reputation and the financial ability of the counterparty
to pay.
Substandard grade - The counterparty shows probability of impairment based on historical trends.
The credit quality of receivables is managed by the Group using internal credit quality ratings. High and medium
grade accounts consist of receivables from debtors with good financial standing and with relatively low defaults.
The Group constantly monitors the receivables from these customers in order to identify any adverse changes in
credit quality. The allowance for doubtful accounts is provided for those receivables that have been identified as
individually impaired.
The Group maintains a sound capital base to ensure its ability to continue as a going concern, thereby continue to
provide returns to stockholders and benefits to other stakeholders and to maintain an optimal capital structure to
reduce cost of capital.
The Group monitors its financial leverage using the debt-to-equity which is computed as total liabilities divided
by total equity as shown in the table below:
2022 2021
The Group has remained steadfast to regain its equity funding. Several actions were taken to conserve and manage
the capital structure (Note 2).
The table below presents a comparison by category of carrying amounts and fair values of the Group’s financial
instruments for the years ended December 31, 2022 and 2021:
2022 2021
Carrying Carrying
Particulars Value Fair Value Value Fair Value
Financial Liabilities
Accounts payable and accrued expenses ₱ 412,356,761 ₱ 412,356,761 ₱ 411,780,732 ₱ 411,780,732
Lease liability 40,948,619 40,948,619 56,016,706 56,016,706
Due to related parties 281,383,750 281,383,750 275,478,258 275,478,258
The following methods and assumptions were used to estimate the fair value of each class of financial instrument
for which it is practicable to estimate such value:
Financial assets and financial liabilities measured at fair value in the consolidated statements of financial position
are categorized in accordance with the fair value hierarchy. This hierarchy Group’s financial assets and financial
liabilities into three levels based on the significance of inputs used in measuring the fair value of the financial
assets and financial liabilities.
The following table summarizes the fair value hierarchy of the Group’s financial assets and liabilities, which are
measured at fair value or requires disclosure as prescribed by other PFRS, as at December 31, 2022 and 2021:
As at December 31, 2022 and 2021, there are no financial assets or financial liabilities measured at fair value.
There were no transfers between Level 1, Level 2, and Level 3 fair value measurements in 2022 and 2021.
Financial instruments not measured at fair value for which fair value is disclosed
For financial assets with fair values included in Level 1, management considers that the carrying amounts of these
financial instruments approximate their fair values due to their short-term duration.
The fair values of financial assets and financial liabilities included in Level 3, which are not traded in an active
market, are determined based on the expected cash flows of the underlying net asset or liability base of the
instrument where the significant inputs required to determine fair value of such instruments are not based on
observable market data.
NOTE 12 – CASH
Cash in banks earn interest at the respective bank deposit rates. Interest income from banks amounted to ₱70,006
and ₱71,862 in 2022 and 2021, respectively (Note 27).
Trade receivables are non-interest bearing and are generally on 30 to 60 days’ credit terms.
The notes receivable bear interest at 3.5% per annum and are payable in 365 days on demand, subject to renewal
upon mutual consent. Notes receivables are considered impaired and covered with allowance for probable losses;
accordingly, no interest income was recognized in 2022 and 2021.
Due from related parties are noninterest bearing and have no fixed repayment terms.
Input tax is the 12% value added tax (VAT) on purchase of goods or services in the course of its trade or business.
At the end of each taxable period, input tax can be applied against output tax.
Security deposits represent noninterest-bearing deposits made on lease and are usually refundable after the end of
contract or services less any charges. Construction bonds represent noninterest-bearing bonds that are used to
secure against damages during construction and will be refundable after the end of construction, net of any
charges.
Advances amounting to ₱347,720,003 and ₱347,720,000, which constitutes 46% and 47% of the Group’s total
assets as of December 31, 2022 and 2021, respectively, represents advances to Polymax, the Parent Company’s
special purpose entity incorporated in British Virgin Islands solely for the purpose of acquiring the petrochemical
plant of NPCA as discussed in Note 2.
On March 18 and September 20, 2003, Polymax’s interest in NPCA of 40% and 20%, respectively, was sold.
Another 20% of the remaining interest of Polymax in NPCA was sold in late 2014, bringing down Polymax’s
interest in NPCA to 20% as of December 31, 2014.
The remaining 20% interest of Polymax in NPCA is for sale. In this regard and to ensure the recoverability of the
Parent Company’s advances to Polymax, the Parent Company’s major stockholders issued a letter of comfort in
favor of the Parent Company on September 30, 2014. To reiterate assurance of the collectability of the Parent
Company’s advances to Polymax, comfort letters dated March 9, 2022 and March 21, 2021 were issued by the
major stockholders of the Parent Company.
During 2022, 2021 and 2020, the Company made additional collections of the advances from Polymax amounting
to ₱3,786,176, ₱11,369,681, and ₱57,371,345, respectively.
In 2022, 2021, and 2020, provision for credit losses on Advances to Polymax amounting to ₱2,105,032,
₱224,507,563, and nil, respectively, was recognized in compliance with the requirements of PFRS 9.
In 2021, the account was reclassified from Asset Held for Sale due to its nature of account. The reclassification
has no effect in the consolidated retained earnings or cumulative deficit.
The investment in securities consists of investment in shares of stock of a publicly listed Company whose fair
value is based on published prices on Philippine Stock Exchange; and unquoted equity investment carried at cost.
Movements in the net unrealized gain on equity instruments financial assets are as follows:
The net unrealized gain on equity investments is deferred and presented separately as fair value reserve under the
equity section of the consolidated financial position.
Cost:
Leasehold improvements ₱ 5,797,581 1,993,811 - ₱ 7,791,392
Machinery and equipment 35,411,347 6,506,077 - 41,917,424
Office furniture, fixtures, and computer equipment 20,599,042 1,998,095 - 22,597,137
Right-of-use asset 148,996,123 - (29,918,908) 119,077,215
Accumulated depreciation:
Leasehold improvements 3,380,375 1,475,618 - 4,855,993
Machinery and equipment 27,007,205 3,634,783 - 30,641,988
Office furniture, fixtures, and computer equipment 17,916,699 1,684,760 - 19,601,459
Right-of-use asset 95,027,444 35,635,274 (50,436,663) 80,226,055
Cost:
Leasehold improvements ₱ 2,778,559 3,019,022 - ₱ 5,797,581
Machinery and equipment 28,284,724 7,126,623 - 35,411,347
Office furniture, fixtures, and computer equipment 18,170,635 2,428,407 - 20,599,042
Right-of-use asset 129,512,591 - 19,483,532 148,996,123
Accumulated depreciation:
Leasehold improvements 2,511,770 868,605 - 3,380,375
Machinery and equipment 24,345,698 2,661,507 - 27,007,205
Office furniture, fixtures, and computer equipment 16,287,673 1,629,026 - 17,916,699
Right-of-use asset 63,454,366 31,573,078 - 95,027,444
The Group elected to use the cost model in accounting for property and equipment. They also believed that the
carrying amount of its property and equipment during the year are not impaired.
In 2022, a Group subsidiary’s adjusted its Right-of-use account to effect the overstatement of the account, its
accumulated depreciation of right-of-use asset ,and lease liability amounting to ₱55,884,101, ₱50,436,663, and
₱5,714,219, respectively due to early termination of the lease contract during 2021.
None of the properties were pledged or mortgaged as collateral to secure any of the Company’s loans.
2022 2021
Intangible assets pertain to non-exclusive software license costs for use in MCLSI’s warehouse management
system.
Cost:
Software costs ₱ 2,576,181 225,377 - ₱ 2,801,558
Accumulated depreciation:
Software costs 2,080,287 305,009 - 2,385,296
Cost:
Software costs ₱ 2,501,181 75,000 - ₱ 2,576,181
Accumulated depreciation:
Software costs 1,631,276 449,011 - 2,080,287
Intangible assets which have been fully amortized were due to MCLSI’s management assessment that these will
no longer provide a future economic benefit to the Group.
The Group has no intangible assets pledged as security for any liability and has no outstanding contractual
commitments to acquire certain intangible assets.
Current portion
Trade payables ₱ 59,017,983 ₱ 57,142,058
Accrued expenses 170,206,664 172,229,406
Other current liabilities 59,693,311 58,970,465
Subtotal 288,917,958 288,341,929
Non-current portion
Accrued expenses 123,438,803 123,438,803
Trade payables are noninterest bearing and have credit terms of 30 to 60 days.
Accrued expenses include provisions for liabilities arising in the ordinary conduct of business, which are either
pending decision by government authorities or are being contested, the outcome of which is not presently
determinable. In the opinion of management and its legal counsel, adequate provisions have been made to cover
tax and other liabilities that may arise as a result of an adverse decision that may be rendered.
Provisions relate to pending claims jointly and severally against the Parent Company and Polymax and pending
claims and tax assessment solely against the Parent Company. The information usually required by PAS 37,
Provisions, Contingent Liabilities and Contingent Assets, is not disclosed as it may prejudice the outcome of the
related claims and tax assessments.
The Group reclassified to non-current portion the accruals made which pertains to management fee and reserve
for contingency BIR amounting to ₱39,685,406 and ₱83,753,397, respectively. These are not expected to be
settled within one year or the Group’s operating cycle, whichever is longer.
Lease liability relates to liability recognized in relation to the adoption of PFRS 16. As of December 31, 2022 and
2021, the Company’s determined incremental rate used is between 3% and 5%.
Interest expense pertaining to lease liability amounted to ₱2,758,781 and ₱2,629,721 for the years ended
December 31, 2022 and 2021, respectively (Note 27).
The Group issued a 5-year promissory note to its affiliate, Philippine Estates Corporation (PHES), with a principal
amount of ₱263,000,345 and a 2% interest per annum until the maturity date of March 15, 2026.
The aforesaid amount pertains to advances made by the affiliate in favor of the Parent Company. In 2022 and
2021, interest incurred amounted to ₱5,260,007.
The other amounts due to related parties pertain to unsecured and noninterest bearing advances provided to the
Group to finance its working capital requirements, capital expenditures, petrochemical project support and for
other investments and have no definite repayment terms (Note 30).
On March 26, 2021, the Republic Act (RA) 11534, known as “The Corporate Recovery or Tax incentives for
Enterprises Act” (Create Act), was passed into law. The salient provisions of the Create Act applicable to the
Company are as follow:
1. Effective July 1, 2020, the corporate income tax rate is reduced from 30% to 20% for domestic corporations
with net taxable income not exceeding P5,000,000 and with total assets not exceeding P100,000,000,
excluding land on which the particular business entity’s office, plant, and equipment are situated during the
taxable year for which the tax is imposed at 20%. All other domestic corporations and resident foreign
corporations will be subject to 25% income tax;
2. Minimum corporate income tax (MCIT) rate reduced from 2% to 1% effective July 1, 2020, to June 30, 2023;
3. Percentage tax reduced from 3% to 1% effective July 1, 2020, to June 30, 2023; and
4. The imposition of improperly accumulated earnings is repealed.
a. The components of the Group’s benefit from income tax are as follows:
Provision for income tax loss at statutory tax rate ₱ 68,269,814 ₱ 4,965,267
Tax effects of:
Interest income subject to final tax - (17,818)
Deferred tax assets (62,216,486) (55,955,851)
c. The components of Group’s deferred tax assets are the tax effects of the following:
d. Deferred tax assets of the Parent Company and its non-operating subsidiaries amounting to ₱42,595,016
and ₱42,341,696 as of December 31, 2022 and 2021, respectively, pertaining to the items shown below, have not
been recognized as management believes that the Group and its non-operating subsidiaries may not have sufficient
taxable profits or tax liabilities against which these deferred tax assets may be utilized.
The NOLCO can be claimed as deduction from regular taxable income as follows:
Year Valid
incurred Until Amount Applied Expired Balance
a. The Group’s share capital as of December 31, 2022 and 2021 consists of the following common shares:
Issued and outstanding – 183,673,470 shares with par value of ₱1 ₱ 183,673,470 ₱ 183,673,470
Issued and outstanding – 122,448,979 shares with par value of ₱1 ₱ 122,448,979 ₱ 122,448,979
The two classes of common shares are identical in all respects, except that Class “A” shares are restricted to
Philippine nationals and the total number of Class “B” shares is limited to two-thirds of the total outstanding Class
“A” shares.
On July 25, 2003, the Parent Company’s stockholders approved the increase in authorized capital stock from ₱1.2
billion consisting of 1.2 billion shares to ₱5 billion consisting of 5 billion shares, both with par value of ₱1 per
share. The increase did not push through because of dispute in the acquisition of the Petrochemical Project, which
was finally settled in 2013 as discussed in Note 2. After final settlement of the dispute, the Parent Company’s
management has decided to pursue the said increase in authorized capital stock of the Parent Company.
This account consists of cumulative balance of periodic earnings and prior period adjustments, if any.
Net income (loss) based on the face of equity investments 11,962,910 (158,620,625)
(Add) Deduct: Non-actual gain/unrealized loss
Unrealized loss (gain) on re-measurement of equity investments - 1,724,400
Remeasurement loss (gain) on retirement plan 3,992 (1,879)
Non-controlling interest in net income (8,643,652) (8,184,344)
In 2022, the Company’s current year’s operations were restated to effect the adjustments made to deferred tax
asset and retained earnings amounting to ₱18,746 and ₱285,527, respectively.
For the years ended December 31, 2022, 2021 and 2020, the account comprises of sale of services amounting to
₱334,133,810, ₱293,462,629, and ₱273,670,106, respectively.
For the years ended December 31, the account consists of:
Others include software maintenance expense, insurance, and other consumable charges.
For the years ended December 31, the account consists of:
Other income:
Miscellaneous 177,446 472,014 -
Other income 2,981 1,679,519 1,654,529
Subtotal 180,427 2,151,533 1,654,529
In 2020, the Board of Directors approved in its Board Resolution No. 12, dated December 23, 2020, the charge of
gratuity pays of the retired employees, which amounted to ₱297,241, to accrued retirement benefits, and the write-
off of the remaining retirement benefit payable of ₱672,444 since the Parent Company has no longer employees
(Note 29).
For the years ended December 31, the account consists of:
The Parent Company has an unfunded, non-contributory defined benefit retirement plan providing retirement
benefits to its regular employee. MCLSI has a funded, non-contributory defined benefit requirement plan
providing retirement benefits to all its regular employees. An independent actuary, using the projected unit credit
method, conducts an actuarial valuation of MCLSI’s fund. The accrued actuarial liability is determined according
to the plan formula taking into account the years of service rendered and compensation of covered employees as
of valuation date.
The following tables summarize the components of net retirement expense recognized in the consolidated
statements of comprehensive income and the funding status and amounts recognized in the consolidated financial
position.
The components of retirement expense which were charged to operations are as follows:
The details of the retirement obligation recognized in the consolidated financial position are as follows:
The changes in the fair value of plan assets and actual return on plan assets are as follows:
Movements in the net liability recognized in the current period are as follows:
In 2020, the Board of Directors approved in its Board Resolution No. 12, dated December 23, 2020, the charge of
gratuity pays of the retired employees, which amounted to ₱297,241, to accrued retirement benefits, and the write-
off of the remaining retirement benefit payable of ₱672,444 since the Parent Company has no longer employees
(Note 29).
The assumptions used to determine retirement benefits costs for the years ended December 31 are as follows:
The expected rate of return on plan assets assumed at a range of 5% to 6% was based on a reputable fund trustee’s
indicative yield rate for a risk portfolio similar to that of the fund with consideration of the funds’ past
performance.
A quantitative sensitivity analysis for significant assumption as at December 31, 2022 is as shown below:
Sensitivity Level
1% Increase 1% Decrease
Impact on Net Defined Benefit Obligation In % Amount In % Amount
Discount rate 6.73% 3,533,948 4.73% 4,245,920
Future salary increases 4.00% 4,278,704 2.00% 3,500,367
The sensitivity analyses above have been determined based on a method that extrapolates the impact on net defined
benefit obligation as a result of reasonable changes in key assumptions occurring at the end of the reporting period.
The discount rate and the future salary increase rate assumed was 5.73% and 3.00%, respectively.
The average duration of the defined plan obligation at the end of the reporting period is 15.59 years for 2022,
2021 and 2020.
In 2021, the Parent Company acknowledged its obligation to PHES, an affiliate who granted an interest-bearing,
due, and demandable loan in favor of the Parent Company.
The other amounts due to related parties pertain to unsecured and noninterest bearing advances provided to the
Group to finance its working capital requirements, capital expenditures, petrochemical project support and for
other investments and have no definite repayment terms.
There are no agreements between the Group and any of its directors and key officers providing for benefits upon
termination of employment, except for such benefits to which they may be entitled under their respective entity’s
retirement plan.
Country of
Name of the related party Relationship Nature of transaction
incorporation
Total (Note
13) ₱ - ₱ (10) ₱ 5,308,706 ₱ 5,308,706
Advances:
Polymax Represents 20% share
(Note 15) investment in NPCA ₱ 3 ₱ 229,354,835 ₱ 347,720,003 ₱ 347,720,000
The Parent Company issued a 5-year promissory note to its affiliate, Philippine Estates Corporation (PHES), with
a principal amount of ₱263,000,345 and a 2% interest per annum until the maturity date of March 15, 2026.
The following table presents the information necessary to compute the basic income per share attributable to
equity holders of the Group:
Lease Agreements
As a lessor
The rent income recognized by MCLSI, the operating subsidiary of the Parent Company, for the years ended
December 31, 2022, 2021 and 2020 amounted to ₱48,670,646, ₱44,117,096, and ₱48,205,450, respectively.
As a lessee
The Group entered into several lease agreements covering its office premises and warehouses. Terms of the lease
agreements range from 1 year to 5 years under renewable options. Other leases entered into include clauses to
enable upward revision of the rental charged on an annual basis - based on prevailing market rates.
As permitted by PFRS 16, the Group applied the modified retrospective approach to existing operating leases
which are capitalized under the new standard (i.e. retrospectively, with the cumulative effect recognized at the
date of initial application as an adjustment to the opening balance of retained earnings with no restatement of
comparative information in the financial statements).
In 2021, the Company entered into lease agreements with terms of 2 years, ending October 11, 2023, and
November 2, 2023. All are under renewable options.
Following the adoption of PFRS 16, the Group recognized right-of-use asset and lease liability over the life of the
lease. The asset is calculated as the initial amount of the lease liability, plus any lease payments made to the lessor
before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received.
Payments
Beginning (Principal and Present Value
Lessors Balance Additions Interest Interest) (Year-end)
Payments
Beginning (Principal and Present Value
Lessors Balance Additions Interest Interest) (Year-end)
As of December 31, 2022, the Group’s right-of-use asset, net of accumulated depreciation, and lease liability
amounted to ₱38,851,159 (Note 17) and ₱40,948,619 (Note 20), respectively.
Consequently, the Group recognized depreciation expense and interest expense as reduction to the carrying
amount of the asset and lease liability amounted to ₱35,635,274 (Note 17) and ₱2,765,140 (Note 27), respectively
As of December 31, 2021, the Group’s right-of-use asset, net of accumulated depreciation, and lease liability
amounted to ₱53,968,678 (Note 17) and ₱56,016,706 (Note 20), respectively.
Consequently, the Group recognized depreciation expense and interest expense as reduction to the carrying
amount of the asset and lease liability amounted to ₱31,573,080 (Note 17) and ₱2,629,721 (Note 27), respectively
Logistics Agreements
MCLSI has agreements with principals to provide logistics operations services, specifically warehousing and
managing delivery of the principals’ products to their key accounts and sub-distributors nationwide. Under the
terms of these agreements, the principals shall pay MCLSI the agreed monthly fees plus reimbursement of certain
warehouse expenses.
COVID-19 Impact
In early 2020, the world was adversely affected by the COVID-19, which was declared a pandemic by the World
Health Organization. In a move to contain the COVID-19 outbreak, the Philippine government initiated directives
to impose stringent social distancing measures and guidelines under different levels of community quarantine
depending on the assessment of the situation in the numerous parts of the country. These measures have cause
disruptions to businesses and economic activities.
However, the overall impact of COVID-19 in 2022 has been muted due to the resiliency of the Philippine
Economy. The group is continuing its daily operations and is gearing towards normalcy.
I. Legal cases
As of December 31, 2022, the Group has the following legal cases:
On July 5, 2002, the Parent Company received a decision from the Court of Tax Appeals (CTA) denying the
Parent Company’s Petition for Review and ordering the payment of ₱83.8 million for withholding tax
assessments for the taxable years 1989 to 1991. The Parent Company filed a Motion for Reconsideration on
July 31, 2002 but this was subsequently denied by the CTA. A Petition for Review was filed with the CTA on
November 8, 2002, which was also denied by the CTA. The Parent Company then appealed the decision of
On July 9, 2004, the Parent Company received the CA resolution denying the Motion for Reconsideration. On
July 22, 2004, the Parent Company filed with the CA a Motion for Extension of time to file an appeal to the
Supreme Court (SC). On August 20, 2004, the Parent Company filed said appeal. On October 20, 2004, the
Parent Company received the resolution of the SC denying its Petition for Review for lack of reversible error.
The Parent Company filed a Motion for Reconsideration. On January 10, 2005, the SC issued an Order stating
that it found no ground to sustain the Parent Company’s appeal and dismissed the Parent Company’s petition
with finality.
On April 26, 2006, the Parent Company filed a Petition for Review before the CTA en banc. On March 7,
2007, the CTA en banc dismissed the Petition for lack of merit. The CTA en banc affirmed the CTA’s decision
granting the Motion for Issuance of Writ of Execution filed by the Commissioner of Internal Revenue.
As of December 31, 2022, the Parent Company has not received any order of Execution relative to this case.
Accordingly, the related obligation is not currently determinable.
b. Metro Alliance and Philippine Estate Corporation vs. Philippine Trust Company, et al., Civil Case SCA#TG-
05-2519, RTC Tagaytay City Branch 18
On September 14, 2005, the Parent Company (MAHEC) and Philippine Estate Corporation (PHES) filed a
Civil Action for Declaratory Relief, Accounting, Reformation of Contracts, and Annulment in Decrease in
Interest rates, Service Charge, Penalties and Notice of Sheriffs Sale, plus Damages with prayer for the Issuance
of a Temporary Restraining Order and/or Writ of Preliminary Injunction. The case stemmed from imminent
extra-judicial foreclosure of four (4) mortgaged Tagaytay lots covered by Transfer Certificate of Title (TCT)
Nos. T-355222, T-35523, T-35524 and T-35552 subject to the Real Estate Mortgage executed by MAHEC
and PHES securing ₱280 million loan last December 2003.
On October 6, 2005, the Regional Trial Court (RTC) of Tagaytay City issued and granted the Writ of
Preliminary Injunction (first injunction). The preliminary injunction issued by the RTC stopping the
foreclosure was nullified by both Court of Appeals and Supreme Court, after which Philtrust proceeded to
foreclose, and acquired those properties for only ₱165.8 million. When MAHEC and PHES failed to redeem,
Philtrust consolidated title and Tagaytay registry issued new TCTs cancelling PHES’ TCT. On October 10,
2011, MAHEC filed Notice Lis Pendens vs. four (4) new TCTs of Philtrust.
The case is now back to Tagaytay RTC for trial hearings under new acting Judge Jaime Santiago. MAHEC
and PHES already presented witnesses. Next trial hearing was set on April 12, 2016 for presentation of
plaintiff’s last witness for explanation of why the checks issued in 2004 in favor of Philtrust Bank intended to
settle the loan were all dishonored and were returned unpaid.
The Parent Company was able to get the formal trial started and on-going. The Parent Company’s most
important move was the presentation of a very competent real estate appraiser, realtor, Cesar Santos, who was
able to successfully defend in court his ₱811.6 million valuation of the foreclosed Tagaytay properties. Trial
hearings are on-going, and it is now defendant Bank’s turn to adduce evidence. Plaintiffs have closed their
evidence presentation wherein all offered evidence were admitted, over the objections of defendant Bank. At
the last hearing held on December 6, 2016, defendant Bank’s star witness was subjected to Plaintiff’s cross
examination wherein they obtained many damaging admissions against the Bank. Plaintiff’s counsels’ cross-
examination resumed at trial hearing last April 25, 2017.
Damages sought are ₱1,000,000 as and by way of exemplary damages and ₱500,000 as and by way of
attorney’s fees, litigation expenses and cost of suit.
On February 21, 2019, the defense presented its second witness, Mr. Godofredo Gonzales, an appraiser of
Philippine Trust Company. However, the cross-examination of the witness was reset to June 27, 2019.
c. MAHEC, POLYMAX & WELLEX vs. Phil. Veterans Bank., et al., Civil Case #08-555 now SC GR. No. 240495
and 240513, RTC Makati Branch 145
The case is an injunction suit with damages filed on July 23, 2008 in RTC-Makati to nullify the foreclosure of
Pasig lot securing a ₱350 million loan obtained by MAHEC, Polymax and Wellex. Initially, Temporary
Restraining Order (TRO) and preliminary injunction was issued, but afterwards, it was lifted, enabling
Philippine Veterans Bank (PVB) to foreclose. In successive certiorari cases that plaintiffs filed, both Court of
Appeals (CA) and Supreme Court (SC) upheld PVB. Worse yet, due to major lapse of the plaintiff’s original
counsels, lis pendens on foreclosed Pasig lot was cancelled, and in March 2012, PVB sold the lots to Zen Sen
Realty Development Corporation who got new Transfer Certificate of Title (TCT). The above case was
consolidated with other case of affiliated company with the same RTC. In 2013, Parent Company’s legal
counsel brought Zen Sen Realty Development. Corporation. as defendant also and prayed that the PVB sale
to it be nullified. In October 2014, Parent Company’s legal counsel dropped Zen Sen Realty as an unnecessary
defendant, after which DECISION was rendered vs. PVB on January 9, 2015, declaring the ₱550M loan (total
loan of MAHEC, Polymax, Wellex and other affiliated companies) as fully paid, and even over-paid;
discharging all the mortgages, and voiding the 2012 sale made to Zen Sen. PVB was ordered to refund to
plaintiffs the ₱3.25 million overpayment. PVB filed a motion for reconsideration which was denied. PVB filed
Notice of Appeal to Court of Appeal on May 8, 2015, which the Parent Company’s legal counsel questioned
as defective, but the RTC ruled against the company in its May 12, 2015 Order.
Upon appeal thereof by both parties, the Court of Appeals rendered its Decision dated June 29, 2017, partly
granting PVB’s appeal, and declared that: (a) the legal interest of 12% per annum be applied to the principal
amounts; and (b) that MAHEC, et al. remain liable to pay PVB the amount of ₱69.7 million as of November
2006. MAHEC, et al. filed their “Motion for Reconsideration” dated July 31, 2017. The Court of Appeals
rendered its Amended Decision dated February 28, 2018, stating that the outstanding obligation of MAHEC,
at al., if any, shall earn interest at 6% per annum from July 1, 2013 onwards, pursuant to Central Bank Circular
No. 799. The Court of Appeals denied PVB’s Motion for Reconsideration thereof in its Resolution dated July
2, 2018.
On August 24, 2018, MAHEC, et.al filed with the Supreme Court its “Petition for Review on Certiorari” dated
August 22, 2018. This was consolidated with PVB’s “Petition for Review” dated August 24, 2018, which was
previously raffled to the Supreme Court’s Third Division.
In G.R. No. 240495, Parent Company received a copy of PVB’s ‘Comment/Opposition” dated October 30,
2019. On December 4, 2019, MAHEC, et al. filed “Motion to Admit Reply” with attached Reply, both dated
November 28, 2019.
In G.R. No. 240513, MAHEC, et al. already “Comment (On the Petition for Review dated August 24, 2018)”
dated August 30, 2019.
On February 23, 2021, the case was set for the presentation of plaintiffs’ evidence. However, the case was
rescheduled on June 22, 2021 due to lack of return card of the notice of the hearing sent to defendant’s counsel.
On April 18, 2022, MAHEC et al received the Supreme Court’s Notice of Judgment dated April 4, 2022 with
attached Decision dated September 15, 2021, rendered in the case which they filed to restrain PVB from
foreclosing on the Pasig property. Thereafter, PVB filed its undated Motion for Reconsideration on May 5,
2022.
In its Resolution dated August 15, 2022, the Supreme Court denied PVB’s Motion for Reconsideration, and
issued the Entry of Judgment dated August 15, 2022 on October 13, 2022, stating that the Decision became
final and executory on August 15, 2022. Thus MAHEC, et al filed their Motion for Issuance of a Writ of
Partial Execution dated October 24, 2022, praying that the trial court issue a writ of partial execution.
During the hearing at the trial court on January 18, 2023. MAHEC, et al. advised the court of the Register of
Deeds’ failure to cancel the title issued to Zen Sen Realty Development Corporation due to nullification of the
foreclosure. The court suggested that MAHEC, et. al. file a motion for clarification with the Supreme Court.
Due to MAHEC, et. al. loss of faith that the trial court would be able to duly execute the Supreme Court’s
Decision, it filed its Omnibus Motion for (A) Inhibition of the Honorable Presiding Judge; and (B)
Reconsideration of the order on February 1, 2023. The trial court granted the prayer of MAHEC, et. al.
d. MAHEC, POLYMAX, Renato B. Magadia (Metro Group/plaintiffs) vs NPC International Limited, et al. (NPC
Group/defendants) Civil Case No. R-PSG 19-02106, RTC Pasig City Branch 159 and related cases
On August 1, 2019, MAHEC together with co-plaintiffs, Polymax Worldwide Limited (Polymax) and Renato
B. Magadia instituted a civil case in the Regional Trial Court (RTC) of Pasig City – Branch 159 against NPC
International Limited (NPCI), NPC Alliance Corporation (NCPA), et. al. docketed as Civil Case No. R-PSG
19-02106CV for mismanagement and damages, restitution of 80% equity in NPCA, deletion from the
accounting books and financial statements of NPCA the accounts due to Parent Company and trade payables
due to NPCI and PGPCI as reflected in the audited financial statements of NPCA, reimbursement of total
accumulated losses as reflected in 2018 audited financial statements of NPCA as well as reimbursement of
opportunity losses in the amount of Php100 million.
After failure of settlement in both Mediation and Judicial Dispute Resolution proceedings, the case is now
set for pre-trial. Parties are awaiting the Honorable Court to set the hearing dates.
Subsequently, NPCI filed a countersuit with the Permanent Court of Arbitration at the Hague. This counter
suit prays for payment by the MAHEC and Polymax of costs and damages that the NPCI has incurred for the
preservation of the Bataan polyethylene plant from 2018 to the date of the award. MAHEC and Polymax
questioned the jurisdiction of the Permanent Court of Arbitration. Nonetheless, the arbitral court refused to
bifurcate the issue on jurisdiction but proceeded with the arbitration proceedings. As a matter of courtesy, but
without prejudice to its position that they are not subject to the jurisdiction of the Honorable Tribunal,
MAHEC and Polymax submitted all its Replies on the arguments presented by NPCI. This case is now
awaiting resolution by the Honorable Tribunal.
Corollary to this case, a pending Petition for Review on Certiorari under Rule 45 of the Revised Rules of
Court has been filed by MAHEC et. al. with the Supreme Court to nullify and set aside the Resolution dated
July 28, 2021 and Resolution dated June 3, 2022 of the Court of Appeals (CA) former Twelfth Division in
the case of CA-GR SP. No. 166958. The parties are currently awaiting Court’s Resolution.
e. There are also other pending minor legal cases against the Parent Company. Based on the facts of these cases,
management believes that its positions have legal merits and the resolution thereof will not materially affect
the Parent Company’s financial position and result of operations.
The Group’s cash flow statements for the years ended December 31, 2021, 2020, and 2019 were adjusted to
correct the presentation of non-cash additions on the Right-of-use asset account in the “Acquisition of
property and equipment” under Investing Activities, and the payments made on Lease liability in the
“Payment of lease liability” under Financing activities.
The summary of corrections made to the cash flow statements are as follows:
December 31,
Particulars 2021 2020 2019
Investing activity
Acquisition of property and equipment
Amount per audited FS (32,057,584) (24,626,568) (110,796,639)
Corrections/Adjustments 19,483,532 23,207,814 106,304,776
Financing activity
Payment of lease liability
Amount per audited FS (12,845,390) (6,223,515) 75,085,611
Corrections/Adjustments (19,483,532) (23,207,814) (106,304,776)
SCHEDULE B. Amounts of Receivable from Directors, Officers, Employees Related Parties and
Principal Stockholders (Other Than Related Parties)
Provision for
Balance at Amounts expected Balance at
Name and designation beginning of (collected) credit losses Amounts end of
of debtor period /transferred (ECL) written-off Current Non-current period
Polymax Worldwide
Limited (special purpose
entity) ₱ 347,720,000 2,105,035 (2,105,032) - - 347,720,003 347,720,003
The Wellex Parent
Company, Inc 5,258,409 - - - 5,258,409 - 5,258,409
Metro Combined
Logistics, Inc. 18,934 - 18,934 - 18,934
Others 31,373 - - - 31,373 - 31,373
SCHEDULE C. Amounts of Receivable from and Payable to Related Parties which are Eliminated
during the Consolidation of Financial Statements
Balance at Amounts
Name and designation of beginning of collected/ Amounts Non- Balance at
debtor period Additions consolidated written-off Current current end of period
SAP Business
One 495,894 225,377 (305,009) - - 416,262
Not Applicable
SCHEDULE F. Indebtedness to Related Parties (Long Term Loans from Related Parties)
The Group issued a 5-year promissory note to its affiliate, Philippine Estates Corporation (PHES), with a principal
amount of P263,000,345 including a 2% legal interest for the year 2020 and a 2% interest per annum until the
maturity date of March 15, 2026.
The aforesaid amount pertains to advances made by the affiliate in favor of the Parent Company. In 2022 and
2021, interest incurred amounted to ₱5,260,007.
Not Applicable
II. MAP OF THE RELATIONSHIP OF THE PARENT COMPANY WITHIN THE PARENT
COMPANY FOR THE YEAR ENDED DECEMBER 31, 2021
METRO ALLIANCE
HOLDINGS & EQUITIES
CORP.
(Parent)
*Polymax Worldwide Limited was excluded from the consolidated financial statements since 2007
because the entity is no longer operating as a going concern and is in the process of liquidation.
METRO ALLIANCE HOLDINGS & EQUITIES CORPORATION AND SUBSIDIARES
As of December 31,
Ratio Formula 2022 2021
Interest rate coverage ratio Income before income tax ₱ 18,020,230 ₱ (207,906,506)
Add: Interest expense - -
Total ₱ 18,020,230 ₱ (207,906,506)
Divided by: Interest expense - -
Interest rate coverage ratio N/A N/A
'Ihe managerirent of METRO ALLIANCE HOLDINGS & EQUITIES CORP. is responsible for the preparation
and lair presentatior.r of the linancial statements including the schedules attached tlrerein. for the year ended
December 31,2022, in accordance rvith the prescril-red financial reporling framework indicated therein. and flor such
internal control as management determines is necessary to enabie the preparation of linancial statements that are fiee
fi-om material misstatement, whether due to fraud or error.
In preparing tlie financial statements, rnanagement is responsible for assessing the Company's ability to continue as
a going concern, disclosing. as applicable matters related to going concern basis of accounting unless management
either intends to liquidate the Company or cease operations, or has no realistic alternative but to do so.
The Board of Directors is responsible for overseeing the Company's financial reporting process.
'lhe Board of Directors reviews and approves the llnancial statements including the schedules attached therein, and
subnrits the same to the stockholders or members^
Yaldes, Abad and Company, CPAs, the independent auditor aptrrointed b_v the stockholders, has ar.rdited the
statements of the cornpany in accordance with Philippine Standards on Auditing. and in its report to the
or members, has expressed its opinion on the fairness of presentation upon completion of such audit.
GATCITALIAN
RICHARD I,.
Corporate Treasurer
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Metro Alliance Holdings and Equities Corporation
Sustainability Reporting
December 31, 2022
Annex A: Reporting Template
(For additional guidance on how to answer the Topics, organizations may refer to Annex B: Topic Guide)
Contextual Information
Company Details
Name of Organization METRO ALLIANCE HOLDINGS AND EQUITIES CORP. (MAH)
Location of Headquarters 35th Flr. One Corporate Center, Dona Julia Vargas, cor Meralco Ave.,
Ortigas Center, Pasig City
Location of Operations PHILIPPINES
Report Boundary: Legal entities (e.g. Metro Combined Logistics Solutions, Inc. (MCLSI), Metro Combined
subsidiaries) included in this report* Cargo Solutions, Inc. (MCCSI), Consumer Products Distribution
Services, Inc (CDPSI), FEZ-EAC Holdings, Inc. (FEZ-EAC), Zuellig
Distributors, Inc (ZDI) and Asia Healthcare, Inc. (AHI)
Business Model, including Primary MAH - Engage in investing, purchasing and acquiring assets of any
Activities, Brands, Products, and kind and description (no operation)
Services MCLSI and MCCSI- Provide contract logistics and supply chain
management services including third party warehousing and
distribution, consultancy and project management, domestic freight
forwarding services, and value- added services
CPDSI - Distribution of Polypropylene (no operation)
FEZ-EAC - Trading and distribution (no operation)
ZDI - Trading and distribution (no operation)
AHI - Trading and pharmacy management (no operation)
Reporting Period For the year ended 2022
Highest Ranking Person responsible Atty. Lamberto Mercado, Jr. – Compliance Officer
for this report
*If you are a holding company, you could have an option whether to report on the holding company only or
include the subsidiaries. However, please consider the principle of materiality when defining your report
boundary.
Materiality Process
Explain how you applied the materiality principle (or the materiality process) in identifying your material
topics.1
Metro Alliance Holdings and Equities Corp and its subsidiaries (jointly referred to as Group), consider the
materiality impact related to economic, environmental and social topics in submitting its Sustainability
Report. The Company and its subsidiaries consider different aspects in evaluating the materiality such as
company policies, laws and regulations of the local government and current issues in the economy.
The Sustainability Accounting Standards Board (SASB) Map that the Company used was referenced in the SEC
Memorandum Circular No. 4, Series of 2019 on the Sustainability Reporting Guidelines for Publicly Listed
Companies.
Per management assessment, the Company identified that the following matters as most likely to affect the
economic, environmental and social impacts of the Company:
1
See GRI 102-46 (2016) for more guidance.
1
ECONOMIC
Economic Performance
Direct Economic Value Generated and Distributed
Disclosure Amount Units
Direct economic value generated (revenue) 334,133,810 PhP
Direct economic value distributed:
a. Operating costs 275,543,990 PhP
b. Employee wages and benefits 15,614,237 PhP
c. Payments to suppliers, other operating costs 23,814,661 Php
d. Dividends given to stockholders and interest payments to loan 0 PhP
providers
e. Taxes given to government 1,361,125 PhP
f. Investments to community (e.g. donations, CSR) 30,000 PhP
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
Only the subsidiary, MCLSI, generates Management, directors and Management and its directors are
income through its logistics and leasing Employees dedicated to provide financial support
out of warehouses. This subsidiary gives to the Group in order to meet its
employment opportunities to people. working capital requirements.
Procurement from local goods and Suppliers and Government The Company relies on its suppliers
services that is essential to the business. and service providers such as banks.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
Availability of goods and services as Service Providers/Suppliers, The Group commits to continuously pay
certain skills and capabilities are required and Government government and suppliers on time to
by the Group. maintain good relationship and avoid
penalties.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
The Group is committed to support its Customers The subsidiary, MCLSI, maintains good
customers by providing good services. relationship with its customers in order
to continuously generate profit.
Procurement Practices
Proportion of spending on local suppliers
Disclosure Quantity Units
Percentage of procurement budget used for significant locations of 100 %
operations that is spent on local suppliers
2
Adopted from the Recommendations of the Task Force on Climate-Related Financial Disclosures. The TCFD Recommendations apply to
non-financial companies and financial-sector organizations, including banks, insurance companies, asset managers and asset owners.
2
What is the impact and where does it Which stakeholders Management Approach
occur? What is the organization’s are affected?
involvement in the impact?
Most of the budget of the Group was spent Service Providers, The Group commits to continuously keep a
on local service providers and suppliers. and Suppliers good relationship with the stakeholders by
paying its dues on time.
What are the Risk/s Identified? Which stakeholders Management Approach
are affected?
The present service providers or suppliers Service Providers The Group may open doors to other service
may not be sufficient to meet the standard and Suppliers providers or suppliers that may give good
requirements of the Group. quality of service or supplies.
What are the Opportunity/ies Identified? Which stakeholders Management Approach
are affected?
The opportunity to use a wide range of Service Providers The Group may use other service
local service provider or suppliers. and Suppliers providers/suppliers in the available market.
Anti-corruption
The Company has Anti-Corruption Policies and Procedures.
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
Incidents of Corruption
Disclosure Quantity Units
Number of incidents in which directors were removed or 0 #
disciplined for corruption
Number of incidents in which employees were dismissed or 0 #
disciplined for corruption
Number of incidents when contracts with business partners were 0 #
terminated due to incidents of corruption
3
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
4
ENVIRONMENT
Resource Management
Energy consumption within the organization:
The Group is developing certain metrics and targets to assess and manage environment-related risks and
opportunities at the moment.
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
Because of the pandemic, the group
reduced its consumption of electricity in
both office and warehouse. But given
that, there’s no minimal effect on this
category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
5
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
3
International Union for Conservation of Nature
6
There’s no opportunity/ies identified at
this moment for this category.
GHG
Disclosure Quantity Units
Direct (Scope 1) GHG Emissions 0 Tonnes CO2e
Energy indirect (Scope 2) GHG Emissions 0 Tonnes CO2e
Emissions of ozone-depleting substances (ODS) 0 Tonnes
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The subsidiary, MCLSI has delivery trucks Clients The Group keeps its trucks in running
for its logistic operations. condition.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
Excess engine ignition Clients Truck engines are serviced regularly.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
Air pollutants
Disclosure Quantity Units
NOx 0 kg
SOx 0 kg
Persistent organic pollutants (POPs) 0 kg
Volatile organic compounds (VOCs) 0 kg
Hazardous air pollutants (HAPs) 0 kg
Particulate matter (PM) 0 kg
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
7
Total solid waste generated 0 kg
Reusable 0 kg
Recyclable 0 kg
Composted 0 kg
Incinerated 0 kg
Residuals/Landfilled 0 kg
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
Hazardous Waste
Disclosure Quantity Units
Total weight of hazardous waste generated 0 kg
Total weight of hazardous waste transported 0 kg
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
Effluents
Disclosure Quantity Units
Total volume of water discharges 0 Cubic meters
Percent of wastewater recycled 0 %
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
8
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
Environmental compliance
Non-compliance with Environmental Laws and Regulations
Disclosure Quantity Units
Total amount of monetary fines for non-compliance with 0 PhP
environmental laws and/or regulations
No. of non-monetary sanctions for non-compliance with environmental 0 #
laws and/or regulations
No. of cases resolved through dispute resolution mechanism 0 #
What is the impact and where does it Which stakeholders are Management Approach
occur? What is the organization’s affected?
involvement in the impact?
The Group has no material impact at this
moment under
this category.
What are the Risk/s Identified? Which stakeholders are Management Approach
affected?
There’s no risk/s identified at this
moment for this category.
What are the Opportunity/ies Which stakeholders are Management Approach
Identified? affected?
There’s no opportunity/ies identified at
this moment for this category.
9
SOCIAL
Employee Management
Employee Hiring and Benefits
Employee data
Disclosure Quantity Units
Total number of employees4
a. Number of female employees 165 #
b. Number of male employees 286 #
Attrition rate5 27.20% rate
Ratio of lowest paid employee against minimum wage 0 ratio
Employee benefits
List of Benefits Y/N % of female employees % of male employees
who availed for the year who availed for the year
SSS Y 100% 100%
PhilHealth Y 100% 100%
Pag-ibig Y 100% 100%
Parental leaves Y 0.02% 0.01%
Vacation leaves Y 92% 94%
Sick leaves Y 90% 87%
Medical benefits (aside from PhilHealth)) Y 74% 66%
Housing assistance (aside from Pag-ibig) N 0 0
Retirement fund (aside from SSS) Y 0 0
Further education support N 0 0
Company stock options N 0 0
Telecommuting N 0 0
Flexible-working Hours Y 1% 2%
(Others)
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The Group ensures that the above benefits are fully complies All government required wages and benefits
with for the motivation and efficiency of the employees. are strictly complied with by the Group.
What are the Risk/s Identified? Management Approach
Employees become inefficient if the Group will not complied Non-compliance by the Group to the
with the benefits. mandated law may result in inefficiencies of
work and penalties by the government.
What are the Opportunity/ies Identified? Management Approach
Giving these benefits would result to work-life balance, Employee satisfaction does not only lead to
motivation and quality of work of employees employee retention but also increased in
production of employees.
4
Employees are individuals who are in an employment relationship with the organization, according to national law or its application (GRI Standards
2016 Glossary)
5
Attrition are = (no. of new hires – no. of turnover)/(average of total no. of employees of previous year and total no. of employees of current year)
10
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
This improves the overall competence of the employees These are external trainings provided by the
including the skills necessary for their jobs. Group like government seminars.
What are the Risk/s Identified? Management Approach
Continuous training of employees maybe risky as this may lead The Group ensure that competent employees
to increase in attrition rate. will have a thorough performance evaluation
and feedback, where promotion and increase
remuneration are considered for the
employees.
What are the Opportunity/ies Identified? Management Approach
Standard trainings will continuously improve the employee’s job This will allow the Group to be competitive
and will contribute a quality result for the Group. within the industry.
Labor-Management Relations
Disclosure Quantity Units
% of employees covered with Collective Bargaining Agreements 0 %
Number of consultations conducted with employees concerning 40 #
employee-related policies
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The Company has no material impact at this moment under
this category.
What are the Risk/s Identified? Management Approach
There’s no risk/s identified at this moment for this category.
What are the Opportunity/ies Identified? Management Approach
There’s no opportunity/ies identified at this moment for this
category.
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The Company has no material impact at this moment under
this category.
What are the Risk/s Identified? Management Approach
There’s no risk/s identified at this moment for this category.
What are the Opportunity/ies Identified? Management Approach
There’s no opportunity/ies identified at this moment for this
category.
11
Safe Man-Hours 62,736,672 (overall) Man-hours
No. of work-related injuries 0 #
No. of work-related fatalities 0 #
No. of work related ill-health 0 #
No. of safety drills 2 #
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
This impact is on the health and safety of employees due to The Group ensures that there should be
ongoing delivery operations. proper dispatch and truck maintenance.
What are the Risk/s Identified? Management Approach
The risk is seen when there’s vehicle accidents. The Group ensures that trucks are properly
insured.
What are the Opportunity/ies Identified? Management Approach
Having a safe workplace and guidelines may avoid unfortunate As an added security, employees is given
incidents within the Company. health benefits.
Do you have policies that explicitly disallows violations of labor laws and human rights (e.g. harassment,
bullying) in the workplace?
Topic Y/N If Yes, cite reference in the company policy
Forced labor Y Policy on Safety – MCLSI Personnel Handbook
Child labor Y Policy on Safety – MCLSI Personnel Handbook
Human Rights Y Policy on Safety, Data Privacy Policy, Anti-Sexual
Harassment and Code of discipline
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The impact is in the welfare of the employees. The Group The Group Policy sets in the Employee
provide safety nest to ensure that employees are protected. Handbook provides in detail what are the
rights of the employees whilst employed by
the Company.
What are the Risk/s Identified? Management Approach
The risk is the possibility of aired grievances and lawsuits of Management provides for a process to ensure
employees. that rights of employees are protected.
What are the Opportunity/ies Identified? Management Approach
If the policies are faithfully followed, a harmonious work Consultation with legal counsel is always done
environment can be achieved. before performing any activities that will
affect employee welfare.
12
Environmental performance Y
Forced labor Y
Child labor Y
Human rights Y
Bribery and corruption Y
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The impact is on the service providers/suppliers’ quality and All services and purchases by the Group are
efficient services required by the Group carefully evaluated and approved by officers.
What are the Risk/s Identified? Management Approach
There’s no risk/s identified at this moment for this category.
What are the Opportunity/ies Identified? Management Approach
There’s no opportunity/ies identified at this moment for this
category.
For operations that are affecting IPs, indicate the total number of Free and Prior Informed Consent (FPIC)
undergoing consultations and Certification Preconditions (CPs) secured and still operational and provide a copy
or link to the certificates if available: ______-_______
Customer Management
Customer Satisfaction
Disclosure Score Did a third party conduct the
customer satisfaction study
(Y/N)?
Customer satisfaction - N
13
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The impact is on the customer’s satisfaction that the Group The management ensure that they employed
delivers. skilled workers so that they deliver its service
to its lessee’s in a satisfactory manner and
less customer complaints.
What are the Risk/s Identified? Management Approach
Poor service may lead to customer’s complaints and may The Group is open in any complaints from
terminate contracts customers. This will also help improve its
service to its customers.
What are the Opportunity/ies Identified? Management Approach
Satisfaction of customers may increase sales to the Group The Group continuously improve its good
through renewal of contracts. relationship with its customer.
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The impact is on the health and safety of employees due to The Group ensures that there should be
ongoing delivery operations proper dispatch and truck maintenance.
Health and safety of the customers are always considered by The Group ascertains its compliance with
the Group safety parameters mandated by the
government by planning and designing all
deliverables within the set standards of the
applicable rules and regulations, especially
under ECQ and GCQ.
What are the Risk/s Identified? Management Approach
The risk is seen when there’s vehicle accidents. The Group ensures that truck are properly
insured.
What are the Opportunity/ies Identified? Management Approach
Having a safe workplace and guidelines may avoid unfortunate As an added security, employees is given
incidents within the Company. health benefits.
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The Group has no material impact at this moment under
this category.
What are the Risk/s Identified? Management Approach
14
There’s no risk/s identified at this moment for this category.
What are the Opportunity/ies Identified? Management Approach
There’s no opportunity/ies identified at this moment for this
category.
Customer privacy
Disclosure Quantity Units
No. of substantiated complaints on customer privacy* 0 #
No. of complaints addressed 0 #
No. of customers, users and account holders whose 0 #
information is used for secondary purposes
*Substantiated complaints include complaints from customers that went through the organization’s formal
communication channels and grievance mechanisms as well as complaints that were lodged to and acted upon
by government agencies.
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
This impacts is on the confidentiality of customers information. Management follows a set of strict procedures
that safeguards the information provided by
customers.
What are the Risk/s Identified? Management Approach
The risk is the customer information might get leaked. Management has provided both manual and
technological safety nets to protect customer
information from getting leaked.
What are the Opportunity/ies Identified? Management Approach
There’s no opportunity/ies identified at this moment for this
category.
Data Security
The Company has already implemented the Data Privacy Act of 2012.
What is the impact and where does it occur? What is the Management Approach
organization’s involvement in the impact?
The proper implementation of the Data Privacy Act of 2012 All information of any stakeholders are
has been put into measures. confidentially kept by the company. Any
disclosures that the Company may make, will
only be done within the Data Privacy Act.
What are the Risk/s Identified? Management Approach
There’s no risk/s identified at this moment for this category.
What are the Opportunity/ies Identified? Management Approach
There’s no opportunity/ies identified at this moment for this
category.
15
UN SUSTAINABLE DEVELOPMENT GOALS
Product or Service Contribution to UN SDGs
Key products and services and its contribution to sustainable development.
Key Products and Societal Value / Potential Negative Management Approach
Services Contribution to UN SDGs Impact of Contribution to Negative Impact
Logistics and Leasing Contributes decent work Lack of available job Management can assess
of warehouses and economic growth opportunities offered to procedures and existing
the vulnerable sectors. policies to find more
opportunities to provide
for the vulnerable sector.
* None/Not Applicable is not an acceptable answer. For holding companies, the services and products of its
subsidiaries may be disclosed.
16