AUDIT COMMITTEE CHARTER

1. Introduction
   This document sets out the roles, responsibilities, and authority of Ayala Corporation’s Audit Committee; including the rules of procedures that shall guide the function of the Committee, as approved by the Board of Directors.
   The Committee shall review the charter at least annually and obtain the approval of the full Board of Directors for any revisions thereto or for any case where external bodies may suggest a change. Suggestions by such external bodies, however, are subject to the approval of the Committee.
   
   
2. Statement of Policy
   It is the policy of Ayala Corporation to constitute and maintain an Audit Committee which shall provide assistance to the Board of Directors in fulfilling their oversight responsibility to the shareholders relating to:
   
   
   • the Company’s financial statements and the financial reporting process,
   • the systems of internal and financial reporting controls,
   • the internal audit activity,
   • the annual independent audit of the Company’s financial statements, and
   • compliance with legal and regulatory matters.
   
   To fulfill this responsibility, the Committee shall maintain free and open communication with the Company’s independent auditors, the internal auditors and the management of the Company.
   In discharging its oversight role, the Audit Committee is empowered to investigate any matter brought to its attention, with full access to all records, books of accounts, facilities and personnel of the Company and the power to retain outside counsel or other experts for this purpose.
   
   
3. Perspective
   In response to the call for stronger corporate governance practices and to comply with the requirements of the Code of Corporate Governance issued by the Philippine Securities and Exchange Commission (SEC) in April 2002, the Board of Directors approved the establishment of a Manual of Corporate Governance for Ayala Corporation. The Manual was filed with the SEC on August 27, 2002 and shall be effective on January 01, 2003.
   
   Corporate Governance is the system through which the shareholders, creditors and other stakeholders of a Corporation are assured that Management enhances the value of the organization.
   
   
   • The Board of Directors is responsible to the shareholders in ensuring that value is created and sustained. Audit Committee Charter v.1
   • Management is responsible to the Board in the day-to-day operations of the organization. This includes:
     • Operating an effective risk management process
     • Maintaining a strong system of internal controls
     • Preparing financial statements that reliably capture the results of the Company’s operations and its financial condition
   • The Audit Committee assists the Board of Directors fulfill its responsibility for oversight of the organization’s corporate governance processes.
   
   This entails an understanding of the risks, control and financial reporting issues inherent to the organization.
   
   To carry out its responsibilities, the Committee relies on the expertise and knowledge of Management, the Internal Auditors and Independent Auditors,
   
   
   • The Independent Auditors are responsible to the Audit Committee in helping ensure the integrity of the financial statements.
   • The Internal Auditors help the Committee identify the risks, control and financial reporting issues through the continuous review of the effectiveness of the organization’s risk management, controls and corporate governance processes.

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