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1. GRANTS OF RIGHTS - The FIRST PARTY, as the sole local authority embodying the powers, responsibilities, and laws duly promulgated by the Republic of the Philippines, shall hereby grant to the SECOND PARTY the SOLE AND EXCLUSIVE RIGHT AND DISCRETION to:
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i. operate, manage, occupy, repair, decommission, refurbish, and maintain any existing waterworks currently under management of the FIRST PARTY;
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ii. design, construct, commission, and maintain a new and complete waterworks system in the municipality of Guiguinto, and to conduct certain procedures such as but not limited to well drilling, pipe laying, construction of storage tanks, pump houses, and any other waterworks facilities or works necessary to render reliable and adequate water service to the said area;
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iii. thenceforth absolutely own and manage the waterworks facility;
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iv. render reliable and adequate water service to the said area in conformance to duly approved standards and regulations of the Local Water Utilities Administration (LWUA)
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v. bill and collect payment from the serviced customers for all services rendered;
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vi. utilize all water resources within the territorial jurisdiction of the Municipality of Guiguinto Bulacan, such as but not limited to catchments areas, watersheds, springs, wells and reservoirs.
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2. FREEDOM OF OPERATIONS - The FIRST PARTY Shall Grant The SECOND PARTY With The Full Power And Exclusive Authority To Deal With Its Customers In The Conduct Of Its Business, Subject To The Supervision Of The FIRST PARTY And The LWUA, As Provided For Under P.D. 198.
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3. SERVICE AREA – The FIRST PARTY shall waive its right to service water and to conduct certain procedures, such as, but not limited to well drilling, pipe laying and water pump operation, to supply water to the whole Municipality of Guiguinto, Bulacan. Moreover, the FIRST PARTY shall hereby allow the SECOND PARTY to construct and operate an institutionalized waterworks system to service water to the whole Municipality of Guiguinto Bulacan.
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Furthermore, the FIRST PARTY, by all means possible, shall help and assist the SECOND PARTY in securing all right of way and easements within the Service Area relating to the waterworks facilities and/or access to such facilities so that the SECOND PARTY may perform its obligations under this Agreement.
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4. PERIOD – The period of Agreement is THIRTY-FIVE (35) YEARS, the Commencement date of which shall be the day all the followings acts are fulfilled:
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a. Signing of this Agreement by both parties.
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b. Ratification of this Agreement by the Sangguniang Bayan of Guiguinto Bulacan; and
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c. Confimation of this Agreement by the LWUA.
The parties however, by mutual agreement may extend this period to another THIRTY-FIVE (35) YEARS, upon expiration of the initial period subject to such terms and conditions that may agreed upon by the parties.
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5. EXPIRATION/TERMINATION AND RENEWAL – Upon the expiration or termination of this Agreement, the SECOND PARTY shall turnover to the FIRST PARTY;
i. all assets such as but not limited to buildings, machinery and equipment which normally suffer from depreciation shall be turned over without other liens or encumbrances and without any payment thereof.
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ii. Any property such as but not limited to equipment like pipelines which is donated by a government agency to the SECOND PARTY during the term of this Agreement shall likewise be turned over without other liens or encumbrances and without any payment thereof.
iii. Any land acquired by the SECOND PARTY during the PERIOD of this Agreement shall be turned over upon payment of their acquisition value as declared of their respective deed of sale; and
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6. SERVICE AREA RENT (SAR) – On the Commencement Date, the SECOND PARTY shall pay the FIRST PARTY the amount of ELEVEN MILLION FIVE HUNDRED THOUSAND PESOS (P11, 500,000.00). Philippine currency by assuming the obligations of the Municipality of Guiguinto , Bulacan with the Land Bank of the Philippines, in the amount of TEN MILLION PESOS (P10,000,000.00) which amount was used for the establishment and construction of the existing waterworks and to pay the obligations of the FIRST PARTY with various contractors in the amount of ONE MILLION FIVE HUNDRED THOUSAND PESOS (P1,500.000.00)
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Out of this amount P11, 5000.000.00, the amount of FIVE MILLION FIVE HUNDRED THOUSAND PESOS (P5, 500.000.00) shall be considered as advance fees which shall be credited to the SAR to be paid by the SECOND PARTY to the FIRST PARTY herein provided.
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After a period of THREE (3) YEARS from the Commencement Date , the SECOND PARTY shall pay the FIRST PARTY a SAR of TWENTY FIVE CENTAVOS (PhP0.25) in Philippine Currency per Cubic meter of water sold and paid for. This SAR shall have an escalation clause of FIVE PERCENT (5%) per Annum effective on the 4th Year after the Commencement Date.
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7. BUSINESS TAX – Apart from the aforementioned SAR, the SECOND PARTY shall remit to the government 2% of its billed revenues as payment for Business Tax beginning on the FIRST (1st) YEAR operations.
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8. TARIFFS – On the FIRST (1st) YEAR of operations beginning on the Commencement Date, the SECOND PARTY shall be allowed to bill/invoice and collects payment from its customers for services rendered.
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a. set its meter rates awarding to the prevailing meter rates being implanted by the FIRST PARTY in the existing facilities. The SECOND PARTY has the right to suggest the increase in water rates to the FIRST PARTY should the SECOND PARTY deem it necessary for its operations under this agreement.
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b. require all applicants to sign contract with the SECOND PARTY and to make a meter and consumption deposit of ONE THOUSAND FIVE HUNDRED PESOS (P1,500.00), which is thereafter subject to damage as deemed appropriate by the SECOND PARTY;
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c. Require its costumers to pay a service charge of FOUR HUNDRED TWELVE PESOS AND FIFTY CENTAVOS (Php412.50) and another TWO HUNDRED NINETY FIVE PESOS (Php295.00) for the saddle damp upon connection, which is thereafter subject to change in prices of the material and labor involved, and as deemed appropriate by the SECOND PARTY; and
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d. require its costumers to shoulder all expenses for all materials necessary to top the main time to their meter stand.
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Furthermore, any of the aforementioned sums charged to the customer s exclusive of any value added tax or other tax which might be chargeable in connection with payment of that sum and which, if chargeable will be sated separately and payable by the costumer at the same time as it makes the relevant payment.
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9. EMPLOYEES - The SECOND PARTY shall have the sole and exclusive authority to identify, recruit, interview, and hire all, new labor and professional, supervisory and managerial personnel as required to perform its under this agreement. However, the SECOND PARTY undertakes to hire the present rank and file employees of the FIRST PARTY subject to the existing laws and rules and regulations.
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This employment of the present rank and file employees of the FIRST PARTY by the SECOND PARTY shall not in any manner be considered as a continuation of their employment. All separation pay or any other benefits accruing to the said employee s during the period of their employment With the FIRST PARTY shall be paid by the FIRST PARTY to the employees concerned.
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10. TITLES- the title to the entire waterworks facility assumed (if any) and procured by the SECOND PARTY in the performance of its obligations under this Agreement shall not pass to the FIRST PARTY, and shall remain the absolute property of the SECOND PARTY other than in accordance with Clause 5 (Expiration / Termination and Renewal) hereof.
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11 WARRANTIES -
a. The FIRST PARTY herby represents, warrants and undertakes to the SECOND PARTY that at the date of this Agreement and the Commencement Date.
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i. It is a government and controlled corporation duly organized and existing under the laws the Republic of the Philippines.
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ii. It has full power authority to enter into this Agreement, unless there is a national law, rule or regulation that declares any privilege or matter not within the powers of the FIRST PARTY to grant unto the SECOND PARTY. This Agreement is to subject to ratification/confirmation by the Sangguniang Bayan for its enforceability.
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iii. it has taken all the necessary actions for the authorization of its entry into this Agreement and the performance of its obligation under this Agreement;
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iv. This agreement will be unforceable in accordance with its terms under Philippine laws without any requirements for further action to be taken by any party or any third party, and moreover without prejudice to compliance with other pertiment national laws, rules or regulations or the case may be;
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v. no order, statute, rule, regulation, executive order, injunction, stay, decree or restraining order shall have been granted, entered promulgated or enforced by any court of competent jurisdiction or governmental or regulatory authority or instrumentality having jurisdiction over the matter that restrains, prohibits or declare illegal the consummation of the transactions contemplated hereby, and no action, suit, inquiry or proceeding shall have been instituted or threated by any
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Governmental or regulatory authority or instrumentality having jurisdiction over the matter that seeks to restrain, prohibit or declare illegal the consummation of the transaction contemplated hereby;
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vi. satisfactory documentary evidence that the SECOND PARTY has been registered with the Board of Investment as a pioneer enterprise entitled to the incentives thereof (Incentives of the Company), if applicable.
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b. BOTH PARTIES shall use all reasonable means of obtaining the aforementioned items to satisfy the Conditions Precedent. Further , on any date that a party becomes aware that any of the conditions have been satisfied, it shall promptly give notice thereof to the other party of such accomplishment.
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c. Furthermore, if this Agreement is terminated for failure of the SECOND PARTY to fulfil the Conditions Precedent as stated in paragraphs I, ii, iv, and vi, of this Clause 12, the SECOND PARTY shall indemnify the the FIRST PARTY against all costs, charges and expenses incurred by it in connection or incidental to the negotiation, preparation and termination of this Agreement. If this Agreement is terminated for failure of the FIRST PARTY to fulfil the Conditions Precedent as stated in paragraphs i., ii., iii., and iv., of this Clause 12, then the FIRST PARTY shall indemnify the SECOND PARTY against all cost, charges and expenses incurred by it in connection with the negotiation, preparation and termination of this Agreement.
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13. FORCE MAJEURE (Man Made)/FORTUITOUS (Act of God) EVENTS -
a. A "Force Majeure/Fortuitous” shall mean any event or circumstance or combination of events or circumstances that wholly or partly prevents or unavoidably delays any party in the performance of its obligation under this Agreement, but only if and to the extent that such events and circumstances are not within the reasonable control,
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i. any form of government occurrence that may render any or BOTH PARTIES incapable of fulfilling their obligation in this Agreement; or
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ii. any act of war (whether declared or not), invasion, armed conflict or act of foreign enemy, blockade, riot, terrorism or exercise of military power; or
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iii. any earthquake, flood, fire, hurricane or any other act of God or natural environmental disaster whenever occurring or
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iv. Exercise all reasonable efforts to mitigate or limit damage to the other party to the extent such action will not adversely effect its own interest; and
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v. provide periodic motive to other parties with respect to its action and plans for action and render prompt motive to the other party of the cessation of the event or condition giving rise to it being excused from performance.
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14. EVENTS AND REMEDIES OF DEFAULT -
a. Each of the following shall, to the extent that it is not caused by a default of the FIRST PARTY or any act or omission of any Government Entity or a Force Majeure/Fortuitous Event and is not remedied within the time period permitted (if any), he a SECOND PARTY EVENT OF DEFAULT and shall entitle the FIRST PARTY to issue a NOTICE of Intention to Terminate Immediately:
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i. the SECOND PARTY fails to provide services to a sufficient standard that there is a widespread danger to the health of the public in the serviced area and such failure continues for THIRTY (30) days after written notice from the FIRST PARTY to the SECOND PARTY requesting that such failure be turned; or
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ii. The SECOND PARTY fails to perform or fulfil its obligations and such failure continues for NINETY (90) days after written notice from the FIRST PARTY to the SECOND PARTY requesting that such failure be cured; or
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iii. The SECOND PARTY becomes financially insolvent.
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b. In any event that the FIRST PARTY fails to perform any of its obligations under this Agreement in a material respect and such failure continues for FORTY-FIVE (45) days after written notice from the SECOND PARTY to the FIRST PARTY requesting that such failure be remedied, and if that such non-performance is not caused by a default of the SECOND PARTY of a Force Majeure/Fortuitous Events, a FIRST PARTY EVENT OF DEFAULT shall be declared and shall thus entitle the SECOND PARTY to issue a Notice of Intention to Terminate Immediately
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c. If a Force Majeure/Fortuitous Event occurs either:
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d. For a period exceeding ONE HUNDRED EIGHTY (180) calendar day period has expired.
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ii. For an aggregate of more than ONE HUNDRED EIGHTY (180) calendar days over any period of THREE HUNDRED SIXTY (360) calendar days.
then the SECOND PARTY may terminate this Agreement by issuing a Termination Notice at any time after the ONE HUNDRED EIGHTY (180) calendar day period has expired.
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15. CONSEQUENCES OF DEFAULT – If any Event of default occurs, and due notice of intent to terminate has been issued to the defaulting party, BOTH PARTIES shall cease to perform their obligation herein stated in this Agreement. Thereafter, BOTH PARTIES shall agree on the following terms:
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a. Should the Event of Default occur before the SECOND PARTY has completely recovered its investment, the FIRST PARTY shall:
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i. allow the SECOND PARTY to operate the water with due assistance and approval, until such time it would have completely recovered its investment , as well as repay all loans incurred in the conduct of business; or
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ii. Procure all the assets of the waterworks system from the SECOND PARTY based on terms mutually agreed upon by BOTH PARTIES, and insofar as the latter shall be able to recover its investment, and repay all loans incurred in the conduct business.
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b. If the investment of the SECOND PARTY would have been completely recovered at any time on or within the occurrence of the event of Default, BOTH PARTIES shall follow the conditions stated in Clause 5 (Expiration/Termination and Renewal) in the turnover of the waterworks facilities.
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