. AFFIDAVIT-COMPLAINT WE, FROILAN T. GRUEZO, legal age, Filipino, and with residence at A. Luna St., Brgy.

San Francisco, Majayjay, Laguna, and PILIPINAS PARA SA PINOY (PPP), a non-stock non-profit organization duly organized and existing under Philippine laws and with principal place of business at 640 Morales Avenue, Brgy. Gen. Paulino Santos, Koronadal City and with members in the Municipality of Majayjay, Laguna, hereto represented by its Secretary General, Atty. Paterno L. Esmaquel, also of legal age and with office address at Unit 1706 17th Floor, Prestige Tower, F. Ortigas Jr. Rd., Ortigas Center, Pasig City, after having been sworn in accordance with law, do hereby depose and state that:
1.

The complainant Froilan T. Gruezo is a concerned citizen

and resident of Majayjay, Laguna (Majayjay for short), while PPP has members in Majayjay who will be directly affected by the manifestly and grossly disadvantageous water contracts subject matter of the instant criminal complaint. It is part of the advocacies of PPP to promote good governance, transparency and accountability in our Government as well as in our public officers/employees. The PPP is duly represented hereto by its Secretary General, Atty. Paterno L.

Esmaquel, who is likewise from Majayjay, Laguna. A copy each of the original and amended Articles of Incorporation of PPP and the necessary Secretarys Certificate are hereto attached as Annexes A, B and C, respectively.
2.

The complainants are formally charging the persons

enumerated below with three (3) counts of violation of Sec. 3 (g) of Republic Act No. 3019, as amended, otherwise known as the AntiGraft and Corrupt-Practices, in that they have conspired and confederated with one another to enter into and/or authorize the execution of the three (3) water contracts subject matter of this criminal complaint, which contracts are manifestly and grossly

disadvantageous to Majayjay and the persons charged herein and their respective addresses are indicated below, to wit:
a.

Teofilo B. Guera (public respondent Guera for short),

of legal age, Filipino, with residence at A. Luna St., Brgy. San Francisco, Majayjay, Laguna and office address at the Office of the Municipal Mayor, Majayjay, Laguna;
b.

Ana Linda C. Rosas (public respondent Rosas for short), of

legal age, Filipino, with residence at Brgy. P. Origuel, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan, Majayjay, Laguna;

c.

Lauro C. Mentilla, of legal age, Filipino, with residence

at Brgy. Suba, Majayjay, Laguna and the office address at Office of the Sangguniang Bayan, Majayjay, Laguna;
d.

Mauro C. Aragon, of legal age, Filipino, with residence

at Brgy. P. Origuel, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan, Majayjay, Laguna;
e.

Juancho M. Andaya, of legal age, Filipino, with

residence at Brgy. Oobi, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan, Majayjay, Laguna;
f.

Antonio S. Zornosa, Jr., of legal age, Filipino, with

residence at Brgy. San Miguel, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan, Majayjay, Laguna;
g.

Mario O. Mercolisa, Jr., of legal age, Filipino, with

residence at Brgy. San Francisco, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan, Majayjay, Laguna;
h.

Jovanie Ann G. Esquillo, of legal age, Filipino, with

residence at Brgy. San Francisco, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan, Majayjay, Laguna;
i.

Bernardo de Villa, of legal age, Filipino, with residence

at Brgy. Villa Nogales, Majayjay, Laguna and office address at the Office of the Sangguniang Bayan,

Majayjay, Laguna; and

j. Arcadio B. Gapangada, of legal age, Filipino and with address at 47 Fifth St, Medex Subd., San Francisco, San Pablo City.
3.

At the time material to this complaint and up to this date,

the following respondents are duly elected public officials (hereinafter collectively referred to as respondents public officers for short) of Majayjay and their positions are as follows: Name Teofilo B. Guera Ana Linda C. Rosas Lauro C. Mentilla Mauro C. Aragon Juancho M. Andaya Antonio S. Zornosa, Jr. Mario O. Mercolisa, Jr. Jovanie Ann G. Esquillo Bernardo de Villa Position Municipal Mayor Vice-Mayor/Sangguniang Bayan Member Sangguniang Bayan Member Sangguniang Bayan Member Sangguniang Bayan Member Sangguniang Bayan Member Sangguniang Bayan Member Sangguniang Bayan Member Sangguniang Bayan/ ABC President

4.

Public respondent Rosas, Lauro C. Mentilla, Mauro C.

Aragon, Juancho M. Andaya, Antonio S. Zornosa, Jr., Mario O. Mercolisa, Jr., Jovanie Ann G. Esquillo and Bernando de Villa are herein collectively referred to as respondents members of the Sangguniang Bayan. On the other hand, respondent Arcadio B. Gapangada (private respondent Gapangada for short) is the President of Israel Builders and Development Corporation (IBDC), a corporation duly organized and existing under Philippine laws and

with principal address at 47 Fifth St, Medex Subd., San Francisco, San Pablo City. IBDC is the designated private contractor of the

manifestly and grossly disadvantageous CONTRACT FOR THE SUPPLY OF BULK WATER DATED AUGUST 1, 2011 between Majayjay and IBDC (hereinafter referred to as BULK WATER CONTRACT) subject matter of this complaint. As President of IBDC, private respondent Gapangada is the officer of IBDC who signed the BULK WATER CONTRACT for IBDC and is the one responsible for the execution and implementation of the BULK WATER

CONTRACT subject matter of the instant criminal complaint.

5.

Majayjay is situated at the foot of the mystical Mt.

Banahaw. It is blessed with abundant sources of fresh potable water coming from various springs flowing to various rivers which naturally flow and drain to Laguna Lake. To better appreciate the gravity of the offense committed by the respondents, we deem it wise to give a brief back ground on the history of Majayjay Water System. 5.1 As provided in the 1933 case decided by the Supreme Court entitled The Municipality of Majayjay, plaintiff-appellee vs. Tomas Dizon, et.al., defendants-appellants, GR No. L-3538, February 9, 1933, the water system of Majayjay was constructed in or before August 1920. The Majayjay

Waterworks System (MWS for short) was named Guevarra Waterworks System in honor of the late stateman Hon. Pedro Guevarra, the then Senator for the Fourth Senatorial District and the author of Act No. 2773, the law which authorized the issuance of the bonds that were used for the construction of MWS. 5.2 From 1920s up to the present time, the main source of water of MWS for distribution to the

inhabitants/people of Majayjay is the Sinabak Spring located at Brgy. Malinao, Majayjay, Laguna. In other words, for almost 100 years now, Majayjay has been extracting and drawing water from Sinabak Spring which is being distributed to its

inhabitants/people thru the MWS. 5.3 Through the years and due to old age, the MWS was already repaired and rehabilitated for several times and the water coming from Sinabak Spring was and is being augmented by water coming from other water sources of Majayjay. But up to this time, Majayjay still principally relies upon MWS for the

distribution of potable water to its inhabitants/ people. 5.4 For the households covered by the MWS, the present water rate in Majayjay is P33.00 per house with supply of water for three (3) hours a day, more or less, at the estimated volume of 1,000 liters or one (1) cubic meter per day or thirty (30) cubic meters per month. Stated differently, for a price of P33.00 per house, the inhabitants/people of

Majayjay covered by MWS are receiving/ drawing water from MWS at the rate of more than 10 cubic meters and up to 30 cubic meters of water per month, more or less. 5.5 It was under the foregoing background that respondents have actively conspired and

confederated with one another to execute and implement the manifestly and grossly

disadvantageous three (3) water contracts subject matter of this criminal complaint under the pretext that the purpose of the same is to rehabilitate and improve the MWS to deliver better water service to the people of Majayjay, when in truth and in fact is

that the purpose of it is to exploit the abundant water sources of Majayjay in favor of a private contractor which does not have the required financial capacity and technical expertise to construct and operate a water work system/facility for a mind boggling contracts term of 100 years, inclusive of the 50 years automatic extension, at the revenue sharing agreement of 90% in favor of the private contractor and 10% in favor of Majayjay. This is the essence of the instant criminal accusation against respondents for entering into a contract or transaction manifestly and grossly disadvantageous to Majayjay which is punishable under Section 3 (g) of Republic Act No. 3019, as amended, whether or not the public officer profited or will profit thereby.
6.

Under date August 1, 2011, the Municipal Government of

Majayjay, Laguna, thru public respondent Guera, entered into the said CONTRACT FOR THE SUPPLY OF BULK WATER dated August 1, 2011 with IBDC represented by its President, private respondent Gapangada. A photocopy of the certified true copy of the said BULK WATER CONTRACT is hereto attached as Annex D.

7.

As provided in its WHEREAS CLAUSES, the purpose

of the BULK WATER CONTRACT is supposedly to improve and expand the water supply system of Majayjay in order to meet the growing demand and that due to its current manpower, engineering technical limitations, Majayjay needs to establish partnership with a private entity to undertake the rehabilitation of its existing water supply system and the development of its bulk water supply facilities. However, notwithstanding this supposed avowed purpose of the BULK WATER CONTRACT, a close examination of the very title of the contract CONTRACT FOR THE SUPPLY OF BULK WATER- and the body thereof will show that the real purpose of the BULK WATER CONTRACT is the exploitation and extraction of the abundant water resources of Majayjay for sale as bulk water by IBDC to the inhabitants/people of Majayjay and the neighboring towns of Majayjay. The BULK WATER CONTRACT failed to provide even a single provision/undertaking on how IBDC will rehabilitate and improve the MWS, except for the installation of water meters which, of course, is necessary in the sale of bulk of water.
8.

Stated differently, the BULK WATER CONTRACT

principally deals with the extraction of water from the abundant water sources of Majayjay for sale and distribution as bulk water

10

to Majayjay and its neighboring towns1. This clearly shows that the BULK WATER CONTRACT was executed on the pretext or guise that its purpose is to rehabilitate and improve the MWS when in truth and in fact is that its real purpose is to exploit the abundant water resources of Majayjay in favor of a private contractor which does not have the required financial capacity and technical expertise to construct and operate a water work system/facility for a mind boggling contracts terms of 100 years, inclusive of the 50 years automatic extension, at the revenue sharing agreement of 90% in favor of the private contractor and 10% in favor of Majayjay.
9.

The BULK WATER CONTRACT is manifestly and

grossly disadvantageous to Majayjay as shown from the facts that: 9.1 The term of the BULK WATER CONTRACT is fifty (50) years plus an automatic extension of fifty (50) years or for a total period of 100 years.2 This term of the contract virtually lock up for 100 years in favor of IBDC the right to extract and enjoy the water resources of Majayjay to the great

disadvantage and prejudice of Majayjay and its inhabitants.

1 2

Section 7 (a), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2011. Section 4, Article II, Contract for the Supply of Bulk Water dated August 1, 2011.

11

9.2

The

sharing

arrangement

in

the

revenue

generated from the sale of bulk water is in the proportion of ninety percent (90%) in favor of IBDC and ten percent (10%) in favor of Majayjay3. This revenue sharing arrangement is not only disadvantageous to Majayjay but the same is unconscionable especially considering the

respondents have likewise agreed for the allowable 25%4 rate of return in favor of IBDC. These 10% share of Majayjay and the agreed 25% allowable rate of return to IBDC are obviously greatly disadvantageous to Majayjay. 9.3 The agreed 25% allowable rate of return is unreasonable and unconscionable. It is also contrary to the long established ruling of the Supreme Court that the reasonable rate of return for company engaged in public utility business is only 12%.5 9.4 The said 10% share of Majayjay is disadvantageous and unconscionable because this ten percent (10%) share of Majayjay is still subject to deduction6 on
3 4

Section 22, Article XIV of the Contract for the Supply of Bulk Water dated August 1, 2011. Section 16 paragraph 5, Article XI of the Contract for the Supply of Bulk Water dated August 1, 2011. 5 Meralco vs. Public Service Commission, 18 SCRA 651; and Republic vs. Meralco, 391 SCRA 700, 709 6 Section 7 (b), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2011.

12

the difference between the P30.00 charged for every household of concessionaire of Majayjay and the total of actual production, distribution and other operating and maintenance costs plus the 25% agreed rate in return. 9.5 In other words, the 10% share of Majayjay from the proceeds of the sale of bulk water is subject to various deductions but the ninety percent (90%) share of IBDC is not subject to any deduction, except for the 2% intended for tree planting which shall equally be borne by IBDC and Majayjay. Stated otherwise, after charging the said deductions from the 10% share of Majayjay, it is most likely that nothing would be left to Majayjay. Better yet, Majayjay will be holding nothing but empty bag. 9.6 The BULK WATER CONTRACT does not specifically provide for the COST of the project. The obligation of IBDC under the BULK WATER CONTRACT is explicitly provided under Section 6 of Article IV but there is not even a single provision [or even words] under said Section 6 on the amount of capital/investment to be infused and spent by

13

IBDC for the project. Neither is there any other provision in the BULK WATER CONTRACT explicitly providing for the amount of

capital/investment to be infused and spent by IBDC for the project. 9.7 Stated differently, the lion share [if not almost all the proceeds] of the sale of bulk water shall go to IBDC but the BULK WATER CONTRACT is completely silent on the amount of

capital/investment to be infused and spent by IBDC for the project. The BULK WATER CONTRACT explicitly provides that IBDC shall get ninety percent (90%) of the proceeds of the sale of bulk water but it does not have even a single provision on how much capital/investment that IBDC will infuse and spend for the project. Simply put, IBDC does not have any specific undertaking under the BULK WATER CONTRACT for the amount of capital/investment that it will infuse and spend for the completion of the project.

14

9.8

IBDC does not have financial capacity to undertake and complete the project contemplated under the BULK WATER CONTRACT.

9.9

The fact that IBDC does not have the financial capacity to undertake and complete the project is indisputably shown from Section 5 of Article III of the BULK WATER CONTRACT, where it is expressly provided that the required funding for the costs of the bulk water arrangement shall be arranged or sourced by IBDC and its joint venture partners. IBDC shall submit to Majayjay a Memorandum of Agreement between IBDC and its joint venture partners authorizing IBDC to invest funds in the Majayjay Water project. By virtue of this provision, it cannot be denied that IBDC does not have the financial capacity to undertake and complete the project.

9.10 It is not legally sufficient for IBDC to have joint venture partners that will authorize IBDC to invest funds for the project. IBDC on its own must have the necessary financial capacity to undertake and complete the project. It is undeniably manifestly

15

and grossly disadvantageous to Majayjay for respondents public officers to enter into or authorize the execution of the BULK WATER CONTRACT with IBDC which does not have the required financial capacity to undertake and complete the project. 9.11 The fact that IBDC does not have financial capacity and technical expertise to undertake and complete the project contemplated under the BULK WATER CONTRACT is further shown from the Articles of Incorporation and the Balance Sheet of the Financial Statement of IBDC for the years 2009 and 2010 submitted by IBDC to the Securities and Exchange Commission (SEC). A copy each of the original and amended Articles of Incorporation and its Financial Statement for the year 2009-2010 submitted to SEC are hereto attached as Annexes E, F and G, respectively. 9.12 As provided in its original and amended Articles of Incorporation, IBDC is not a water utility company or company engaged in water business but a company engaged in realty business. The primary

16

and

secondary

purposes

of

the

Articles

of

Incorporation of IBDC do not show and indicate of any authority for IBDC to engage in waterworks and/or in the operation, management, maintenance and rehabilitation of waterworks and water

facilities. However, notwithstanding the absence of authority and power of IBDC to enter into the business of waterworks and/or in the construction, installation, operation and management of water facilities, still public respondents entered into and/or authorize the execution of the BULK WATER CONTRACT, thereby indubitably showing that respondents have confederated and conspired with one another to enter into contract and transaction manifestly Majayjay. 9.13 The undisputed fact that IBDC does not have financial capacity to undertake and complete the project is likewise specifically shown from its Balance Sheet (Annex F hereof) attached to IBDCs Financial Statement for the years 2009 to 2010, where it is explicitly provided that the and grossly disadvantageous to

17

authorize

capitalization

of

IBDC

is

only

P10,000,000.00 but the Cash on Hand and in Bank for 2009 was only P445,567.89, while for 2010 its Cash on Hand and in Bank was only P450,721.35. This clearly shows that, at the time material to the execution of the Water Contract, IBDC does not have the financial capacity to undertake the PROJECT. 9.14 More importantly, it is undisputably shown from the Contractors License of IBDC that IBDC does not have the financial capacity, legal qualification and technical requirements to undertake and complete the project contemplated under the BULK WATER CONTRACT. 9.15 One of the documents submitted by IBDC to show its supposed qualification to undertake the project was its Contractors License which has validity up to June 30, 2011 where it is clearly provided that IBDC as alleged contractor for Water Supply falls within the category of SMALL B. A copy of the Contractors License of IBDC is hereto attached as Annex H.

18

9.16 In the Certification dated May 17, 2012 issued by Philippine Constructors Accreditation Board

(PCAB) (copy of which is hereto attached as Annex I), IBDCs category as alleged contractor for Water Supply remains in the category of SMALL B. In other words, from the time material to the execution of BULK WATER CONTRACT and up to this date, the category of IBDC as alleged contractor for Water Supply falls under the category of SMALL B. 9.17 Under Circular No. 001, Series of 2009, issued by PCAB (copy of which is hereto attached as Annex J), it is specifically provided therein that the allowable range of contract cost for contractor falling under the category of SMALL B is only from P10,000,000.00 to P15,000,000.00. By virtue of this Circular No. 001, Series of 2009 of PCAB, it is quite clear that IBDC does not have the required financial capacity and technical requirements to undertake the project which has a reported/alleged cost of P430,000,000.00 to P600,000,000.00.

19

9.18 Despite the fact that IBDC does not have the financial capacity and technical requirements to undertake the project, still respondents entered into and/or authorized the execution of the BULK WATER CONTRACT which is clear evidence that respondents have conspired and confederated with one another to enter into a contract or transaction manifestly Majayjay. 9.19 Again, as provided under Section 16, Article XI of the BULK WATER CONTRACT, the stipulated allowable rate of return to investment of IBDC is 25%. This agreed rate of return of 25% is outrageous and unconscionable because the standard rate return for utility company is not more than 12%. What makes this agreed return of 25% revolting and unconscionable is the fact that, as repeatedly mentioned above, the BULK WATER CONTRACT does not have even a single provision on how much capital or investment that IBDC will infuse and spend for the project. It is obviously manifestly and grossly disadvantageous to Majayjay and grossly disadvantageous to

20

for public respondents to agree for the allowable 25% rate of return for IBDC when the contract does not specifically provide for the amount of capital and investment to be infused and spent for the project by IBDC. 9.20 The BULK WATER CONTRACT grants sole and exclusive authority to IBDC to extract water from Mangulila, Patak-Patak, Sinabak Spring, Gundala Springs and the surface water of Dalitiwan River7. On top of it, the Water Contract granted IBDC the right to extract water from all water sources of Majayjay under the principle of right of first refusal8. In other words, by virtue of the Water Contract, IBDC has the sole and absolute control over all water resources of Majayjay, Laguna for the next 100 years or until 2111. 9.21 Stated differently, on account of the Water Contract, Majayjay and its residents/inhabitants would be deprived of the rights to use and enjoy all water sources of Majayjay for the next 100 years or until

7 8

Section 6 (f), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2011. Section 7 (g), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2011.

21

2111 in favor of IBDC without need of public bidding. 9.22 IBDC was granted the right to extract water from all water sources of Majayjay without payment of any compensation/consideration for the grant of such water right. 9.23 Under the BULK WATER CONTRACT, IBDC was granted the exclusive right to extract water from all water sources of Majayjay for 100 years or beyond its corporate life. A corporation has a corporate life of fifty (50) years only. IBDC was incorporated and registered with the Securities and Exchange Commission (SEC) on May 20, 1993 or its corporate life is only until 2043. So, when it was granted by the Municipality of Majayjay, Laguna of such water rights, the remaining corporate life of IBDC was only thirty two (32) years but the term given to IBDC to exercise such water right was for 100 years, inclusive of the 50 years automatic extension, or until 2111. In other words, for the next 100 years or until 2111, or long after the expiration of its corporate life, IBDC shall and will

22

continue to enjoy the exclusive right to extract all water sources of Majayjay. This situation is undeniably manifestly and grossly disadvantageous to Majayjay. 9.24 The BULK WATER CONTRACT will deprive the inhabitants/people of Majayjay of affordable water service/benefits that they have been enjoying for several years now. As mentioned above, the households covered by MWS are paying a water rate of P33.00 per house at the estimated volume of supply of water of 30 cubic meters per month. 9.25 Under the BULK WATER CONTRACT, every household will pay a water rate of P30.00 per 10 cubic meters of water per month. The excess in 10 cubic meters per month shall now be chargeable, albeit the contract provides that water

concessionaires of Majayjay shall be provided subsidy from the 10% share of Majayjay from the sale of bulk water. But as would be pointed out below, the said 10% share of Majayjay is a public fund and thus the same cannot be used for private

23

purposes or for payment of the water bills of private individuals. 9.26 Accordingly, the people of Majayjay will ultimately bear the burden of paying the water rates in excess of 10 cubic meters per month. In other words, the BULK WATER CONTRACT will deprive the people of Majayjay of the existing water right that they are enjoying for several years now which is to pay P33.00 per household per month at the estimated volume of water of 30 cubic meters per month. 9.27 Most importantly, IBDC did not post the required performance security to guarantee the faithful performance by IBDC of its obligation under the BULK WATER CONTRACT. As provided in Republic Act No. 9184, the performance security should be posted prior to the signing of the contract.9 A close examination of the BULK WATER CONTRACT will show that the same is completely bereft and silent on the posting by IBDC of the performance security required under Section
9

Section 39, Republic Act No. 9184

24

39 of Republic Act No. 9184. The performance security shall be in an amount equal to percentage of the contract price in accordance with the following schedule: a. Cash, cashier's/manager's clerk, bank draft/guarantee confirmed by a Universal or Commercial bank Goods and Consulting Services (5% of the ABC), Infrastructure Projects (10%).

b.

Irrevocable Letter of Credit issued by a Universal or Commercial Bank; Provided, however, that it shall be confirmed or authenticated by Universal or Commercial Bank if issued by foreign bank - Goods and Consulting Services (5%), Infrastructure Projects (10%).

c.

Surety bond callable upon demand issued by surety or insurance company duly certified by the Insurance Commission as authorized to issue such security (30% of the ABC).

d.

Any combination of the foregoing. (Proportionate to share of form with respect to total amount of security.10

10

Section 39.2, Republic Act No. 9184

25

9.28 Without the performance security, there is no guarantee that IBDC shall faithfully comply with its obligations under BULK WATER CONTRACT which is manifestly and grossly

disadvantageous to Majayjay especially considering that IBDC has lock up for 100 years the right to extract all the water sources of Majayjay at the revenue sharing arrangement of 90% in favor of IBDC and 10% in favor of Majayjay.
10.

The BULK WATER CONTRACT is manifestly and

grossly disadvantageous to Majayjay as it was entered into and executed in open and gross violation of the laws, including but not limited to Republic Act No. 6957, as amended, by Republic Act No. 7718, otherwise known as the Built-Operate and Transfer Law (BOT Law for short), and Republic Act No. 9184, otherwise known as the Procurement Reform Act, and the Local Government Code of 1991. In other words, by openly and grossly violating the BOT Law and the Procurement Reform Act, public respondents have effectively disregarded and set aside the measures or safeguards provided by law to protect Majayjay from onerous and

disadvantageous contract. 10.1 As provided in its body, the BULK WATER CONTRACT was supposedly entered into and executed pursuant to the Public-Private

26

Partnership program of the President of the Republic of the Philippines, His Excellency President Benigno Simeon C. Aquino III. 10.2 Sad to say, however, this Public-Private Partnership program of the national government was merely used by respondents as convenient excuse to do away with the strict requirements of the law on the bidding and award of infrastructure projects such as the project contemplated under the BULK WATER CONTRACT. 10.3 The BULK WATER CONTRACT is supposed to be undertaken and entered into by Majayjay pursuant to the Public-Private Partnership program of the national government but upon verification from the Public-Private Partnership Center of the Philippines (PPP Center for short), we discovered that the PPP Center has no involvement in the processing of the project; that it has not participated in the preparation of bid documents, drafting of the contract and in the selection of IBDC as the winning private proponent; and that is has not received any copy of the contract with

27

IBDC and other project related documents, as shown in the copy of the letter dated May 16, 2012 of PPP Center hereto attached as Annex K. 10.4 The BULK WATER CONTRACT states that Majayjay treated the Formal Proposal of IBDC as unsolicited proposal in accordance with the issued GUIDELINES on Joint Venture (JVs) pursuant to Section 8 (Joint Venture Agreements) of

Executive Order (EO) No. 423 dated April 30, 2005. But a closer look of the BULK WATER CONTRACT will show that the same was entered into pursuant to BOT Law as it involved an unsolicited proposal from IBDC involving

important and priority project of Majayjay. 10.5 The provisions of the BOT Law were never complied with in the execution of the BULK WATER CONTRACT. It appears from the

BULK WATER CONTRACT that the project contemplated therein is an important and priority project of Majayjay but there was no publication

28

and approval of the same as required under Section 4 of the R.A. No. 7718. 10.6 The project contemplated under the BULK WATER CONTRACT did not undergo the required publication of the project in national newspaper of general circulation once every six (6) months. Neither is there any record showing that the project was submitted for confirmation to the Municipal Development Council or to the Provincial Development Council or the Regional Development Council, as the case may be, or the project was submitted to the National Economic Development Authority (NEDA) for its approval. 10.7 In the first place, the project could not have been submitted for confirmation by Municipal

Development Council or by the Provincial Development Council or by the Regional

Development Council or the approval by NEDA because the BULK WATER CONTRACT does not state the COST of the PROJECT. There is a complete absence of PROJECT COST in the BULK WATER CONTRACT. Thus, it is quite

29

clear that the BULK WATER CONTRACT was made in gross violation of Section 4 of R. A. No. 7718 which renders it manifestly and grossly disadvantageous to Majayjay. 10.8 Moreover, the public bidding of unsolicited proposal is provided under Sections 5 and 6 of R.A. No. 7718 which further require for the publication of the unsolicited proposal for three (3) consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals and no other proposal is received for a period of sixty (60) working days. Thereafter and upon approval of the projects, the head of the infrastructure agency or local government unit concerned shall forthwith cause to be published, once every week for three (3) consecutive weeks, in at least two (2) newspapers of general circulation and in at least one (1) local newspaper which is circulated in the region, province, city or municipality in which the project is to be constructed, a notice inviting all prospective infrastructure or development project

30

proponents to participate in a competitive public bidding for the projects so approved. 10.9 It does not appear from the BULK WATER CONTRACT that the supposed unsolicited

proposal of IBDC was published for three (3) consecutive weeks in a newspaper of general circulation. Neither does it appear form the BULK WATER CONTRACT that there is a publication of the notice of public bidding of the project for three (3) consecutive weeks in at least two (2) newspapers of general circulation and one (1) local newspaper which is circulated in the regions, province, city or municipality in which the project is to be constructed. 10.10 As provided in the BULK WATER

CONTRACT, what has been published on June 22, 2011 in Remate is merely the Invitation to Apply for Eligibility and to Submit Comparative Proposal. This Invitation to Apply for Eligibility and to Submit Comparative Proposal is not the required public bidding of the alleged unsolicited proposal of IBDC. Even then, the said publication

31

in Remate would not constitute as sufficient compliance with Section 5 of R.A. No. 7718 because what is required therein is publication for three (3) consecutive weeks in newspaper of general circulation. 10.11 Worse, the period of time provided under Section 5 of R.A. 7718 for the submission of the comparative proposal is for a period of sixty (60) working days but even before the expiration of these sixty (60) working days, public respondent Guera had already executed the BULK WATER CONTRACT with IBDC. The invitation to submit comparative proposal was supposedly published on June 22, 2011 in Remate. Counting the said required period of sixty (60) working days from June 22, 2011, the said sixty (60) working days will expire on September 15, 2011 but the BULK WATER CONTRACT was executed on August 1, 2011 or twenty eight (28) working days before the expiration of the said 60 days period. On this score alone, the BULK WATER CONTRACT has openly and grossly violated the BOT Law.

32

10.12

Further, the alleged publication made on June 22, 2011 in Remate of the questioned unsolicited proposal would also not be a sufficient compliance with the required publication under Section 6 of R.A. No. 7718 because what is required therein is publication of the unsolicited proposal once every week for three (3) consecutive weeks, in at least two (2) newspaper of general circulation and in at least one (1) local newspaper which is circulated in the region, province, city or municipality in which the project is to be constructed. Clearly then, the BULK WATER CONTRACT was executed in flagrant violation of the required publication and public bidding as provided under R. A. No. 7718 which makes the BULK WATER CONTRACT manifestly and grossly disadvantageous to Majayjay.

10.13

Furthermore, not only did the BULK WATER CONTRACT violate Sections 5 and 6 of R.A. No. 7718 but the same has likewise violated Section 8 thereof which provides that the repayment scheme for the project by authorizing the

33

imposition and collection of tolls, fees, rentals, and charges shall be for a fixed term as proposed in the bid and incorporated in the contract but in no case shall this term exceed fifty (50) years. 10.14 Section 8 of R.A. No. 7718 clearly provides that the maximum term of a BOT contract shall not exceed fifty (50) years. But the BULK WATER CONTRACT provides for a mind boggling term of 100 years, inclusive of the 50 years automatic extension. Not only that. The BULK WATER CONTRACT provides for the revenue sharing scheme of ninety percent (90%) in favor of IBDC and ten percent (10%) only in favor of Majayjay but the BULK WATER CONTRACT does not specifically stipulate the COST of PROJECT. Such terms of the contract are obviously grossly disadvantageous and prejudicial to Majayjay. 10.15 The BULK WATER CONTRACT is completely silent on the project cost which is material and essential not only for the approval of the project as mentioned-above but also to determine

34

repayment scheme provided under Section 8 of R.A. No. 7718. Without the project cost, the repayment scheme for the project cannot be determined. Thus, this is another clear violation of the BOT Law which makes the contract grossly disadvantageous and prejudicial to Majayjay. 10.16 It may be argued by the respondents that the BULK WATER CONTRACT is not based upon the BOT Law because the BULK WATER CONTRACT provides that the formal proposal of IBDC was treated as an unsolicited proposal in accordance with the aforestated GUIDELINES. However, the said GUIDELINES for JV pursuant to Section 8 of E.O. No. 423 dated April 30, 2005 will find no application to the BULK WATER CONTRACT because Section 4.0 of E.O. No. 423, sub-paragraph 4.1, explicitly provides that Local Government Units (LGUs) are not covered by these Guidelines. 10.17 On the other hand, Section 12 of E.O. No. 423 dated April 30, 2005 explicitly provides that Procurement contracts of local government

35

units, regardless of the source of funds, shall be subject to the provisions of Republic Act No. 9184 and its Implementing Rules and

Regulations. 10.18 The BULK WATER CONTRACT is, without a doubt, in violation of Republic Act No. 9184 because the said law requires certain procedures on competitive bidding. Republic Act No. 9184 requires preparation of bidding documents

following the standard forms and manuals prescribed by the GPPB,11 pre-procurement

conference,12 advertising of invitation to bid,13 pre-bid conference,14 eligibility requirements of a prospective bidder shall be made under oath,15 submission of Bids shall have technical and financial components,16 all Bids shall be

accompanied by Bid security,17 opening of all the Bids publicly at a specified date, time and place, 18

11 12

Section 17, Republic Act No. 9184. Section 20, Republic Act No. 9184. 13 Section 21, Republic Act No. 9184. 14 Section 22, Republic Act No. 9184. 15 Section 23, Republic Act No. 9184. 16 Section 25, Republic Act No. 9184. 17 Section 27, Republic Act No. 9184. 18 Section 28, Republic Act No. 9184.

36

Bid evaluation,19 post qualification,20 notice of Award,21 and performing security.22 10.19 In awarding the BULK WATER CONTRACT to IBDC, it appears that there is no record of compliance with the foregoing requirements of Republic Act No. 9184. The BULK WATER

CONTRACT is neither a negotiated procurement as it does not fall to any of the thirteen (13) types of a negotiated procurement applicable in specific and distinct situation enumerated under the Revised Implementing Rules and Regulation of Republic Act No. 9184. Thus, for having been awarded to IBDC in gross violation of Republic Act No. 9184, the BULK WATER CONTRACT is obviously manifestly and grossly

disadvantageous to Majayjay. 10.20 The provision of the BULK WATER CONTRACT is contrary to Local Government Code of 1991 and/or the BULK WATER CONTRACT
19

authorizes

or

abets

the

Article IX, Republic Act No. 9184. Article X, Republic Act No. 9184. 21 Section 37, Republic Act No. 9184. 22 Section 39, Republic Act No. 9184.
20

37

commission of the crime of malversation of public funds. 10.21 The BULK WATER CONTRACT provides in Section 7 (b) of its Article IV that the price of water for the first ten (10) cubic meters charged against the concessionaires of Majayjay shall not exceed P30.00 and that the difference between P30.00 and the total of the actual production, distribution and the other operating and

maintenance costs plus the agreed rate of return shall be subsidized by the 10% share of Majayjay from the bulk water sales. From this provision of the BULK WATER CONTRACT, it is quite clear that the said 10% share of Majayjay shall be used to subsidize the water concessionaires of Majayjay or to pay the obligations of private individuals. 10.22 The 10% share of Majayjay from the proceeds of the sale of bulk water is a public fund and thus the same cannot be used without appropriations ordinance or law. Section 305 (a and b), Chapter I, Title Five of the Local Government Code provides

38

that No money shall be paid out of the local treasury except in pursuance of an

appropriations ordinance or law and that Local government funds and monies shall be spent solely for public purposes. 10.23 The Local Government Code further mandates that No public money or property shall be appropriated or applied for religious or private purposes.23 Thus, the said 10% share of Majayjay cannot be used to subsidize the water

concessionaires of Majayjay or to pay the water bills of private individuals. If only the respondents have any intention to protect the interest of Majayjay, respondents should have stipulated in the BULK WATER CONTRACT that the subsidy to water concessionaires of Majayjay should be chargeable against the 90% share of IBDC from the proceeds of the sale of bulk water. But it appears that respondents have no concern at all for the interest of Majayjay as they have conspired and confederated with one another to charge the
23

Section 335, Chapter 4, Title Five of the Local Government Code.

39

said subsidy to the meager 10% share of Majayjay. 10.24 By allowing and authorizing the stipulation in the BULK WATER CONTRACT that the 10% share of Majayjay shall be used to subsidize the water concessionaires of Majayjay, respondents have in effect allowed and authorized the use of public funds without appropriations ordinance or law and for private purposes and the same constitutes plain and simple crime of malversation of public funds. Simply put, by authorizing the use of public funds without appropriations ordinance or law and for private purposes, respondents have in effect authorized or abetted the commission of the crime of malversation of public funds. 10.25 It is manifestly and grossly disadvantageous and prejudicial to Majayjay for respondents to allow and authorize under the BULK WATER CONTRACT the use of public funds [10% share of Majayjay] without appropriations ordinance or law and for private purposes.

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11.

Not satisfied in entering into and executing the BULK CONTRACT which is manifestly and grossly

WATER

disadvantageous to Majayjay, the respondents have conspired and confederated with one another to execute two (2) Water Supply Contracts with the obvious purpose of realizing and consummating the sale of bulk water contemplated under the BULK WATER CONTRACT. These two (2) Water Contracts will clearly show the fraudulent schemes employed by respondents to unduly exploit the water resources of Majayjay in favor of IBDC and to the great prejudice and disadvantage of Majayjay.
12.

After the execution of the BULK WATER CONTRACT

or on December 30, 2011, public respondent Guera for and in behalf of Majayjay executed a Water Supply Contract (Water ContractLumban for short) with the Municipality of Lumban, Laguna, where Majayjay is the WATER SUPPLIER and the Municipality of Lumban is the WATER BUYER. A copy of the Water Contract-Lumban is hereto attached as Annex L.
13.

On the same date, December 30, 2011, public respondent

Guera for and in behalf of Majayjay executed another Water Supply Contract (Water Contract-Sta. Cruz for short) with the Municipality of Sta. Cruz, Laguna, where again Majayjay is the WATER

SUPPLIER and the Municipality of Sta. Cruz is the WATER

41

BUYER. A copy of the Water Contract-Sta. Cruz is hereto attached as Annex M.

14.

The Water Contract-Lumban and Water Contract-Sta.

Cruz (hereinafter collectively called Water Contracts) both contained the same terms and conditions where Majayjay is the Water Supplier. The only difference between the Water Contract-Lumban and Water Contract-Sta. Cruz is on the volume of bulk water to be supplied by Majayjay and the price of it. The volume of water to be supplied to the Municipality of Lumban is at least 5,000 cubic meters per day at the price of P11.00 per cubic meter, while the volume of water to be supplied to the Municipality of Sta. Cruz is at least 14,000 cubic meters per day at the price of P10.00 per cubic meter.
15.

As mentioned above, the designated Water Supplier under

the Water Contracts is Majayjay and not IBDC. IBDC is not a party to the Water Contracts and/or IBDC did not assume any obligation under the said Water Contracts. In other words, IBDC is completely free of any obligation to Lumban and Sta. Cruz.
16.

As such Water Supplier, Majayjay assumed all the

obligations and responsibilities for the supply of bulk water to Lumban and Sta. Cruz, including but not limited to the payment of penalties in the event of default or delay and the posting of the required performance security such as the (i) cash bond equivalent to

42

5% of the total contract price, (ii) bank guarantee equivalent to 10% of the total annual contract price and (iii) surety bond equivalent to 30% total annual contract price. The purpose of this cash bond, bank guarantee and surety bond is to guarantee the faithful performance by Majayjay of its obligations under the Water Contracts. Under the Water Contracts, the performance security that Majayjay will post for Lumban and Sta. Cruz are as follows: 16.1 As provided in Section 2 of Article IV of the Water Contract-Lumban24, Majayjay will post for Lumban the performance security equal to the annual contract price. Under the contract, Majayjay shall supply potable water to Lumban at the volume of at least 5,000 cubic meters per day or 150,000 cubic meters per month or 1,825,000 cubic meters for 365 days or one (1) year at the price of P11.00 per cubic meter. 16.2 At the price of P11.00 per cubic meter, the total annual contract price of 1,825,000 cubic meters of water per year is P20,075,000.00. Thus, Majayjay will have to post performance security in favor of Lumban as follows: (i) cash bond of 5% equivalent
24

Annex L hereof

43

to the sum of P1,003,750.00, (ii) bank guarantee of 10% equivalent to the sum of P2,007,500.00 and (iii) surety bond of 30% equivalent to the sum of P6,022,500.00. Simply put, Majayjay will have to post performance security in favor of Lumban in the total sum of P9,033,750.00. 16.3 On the other hand, for Sta. Cruz, Majayjay will have to post performance security equal to the annual contract price of P5,110,000 cubic meters of water per annum at the price of P10.00 per cubic meter. Under the Water Contract-Sta. Cruz 25, Majayjay is obligated to supply potable water to Sta. Cruz at the price of P10.00 per cubic meter and at the rate of at least 14,000 cubic meters per day or 420,000 cubic meters per month or 5,110,000 cubic meters per 365 days or per annum. 16.4 At the volume of 5,110,000 cubic meters per annum at the price of P10.00 per cubic meter, the total annual contract price of the contract of Majayjay with Sta. Cruz for the supply of potable water is P51,100,000.00. Thus, Majayjay will have to post
25

Annex M, hereof

44

performance security in favor of Sta. Cruz consisting of (i) cash bond 5% equivalent to the sum of P2,555,000.00, (ii) bank guarantee of 10% equivalent to the sum of P5,110,000.00 and (iii) surety bond of 30% equivalent to the sum of P15,330,000.00. Simply put, Majayjay will have to post performance security in favor of Sta. Cruz in the total sum of P22,995,000.00. 16.5 In resume, Majayjay will have to post performance security in favor of Lumban equivalent to the total sum of P9,033,750.00, while for Sta. Cruz, Majayjay will post performance security equivalent to the total sum of P22,995,000.00 or Majayjay will post performance security in favor of Lumban and Sta. Cruz in the amount equivalent to the grand total of P32,028,750.00. 16.6 Considering IBDC is not the Water Supplier under the Water Contracts but Majayjay, then IBDC was effectively relieved and released from the obligation to post performance security in favor or Lumban and Sta. Cruz in the amount equivalent to the total

45

sum of P9,033,750.00 and the total sum of P22,995,000.00, respectively. 16.7 As the Water Supplier for Lumban and Sta. Cruz, Majayjay will solely bear the obligation of posting the aforestated performance security in favor of Lumban and Sta. Cruz but the share of Majayjay from the sale of bulk water to Lumban and Sta. Cruz is only 10% subject to the deductions mentioned above as the 90% of the proceeds of the sale shall go to IBDC. Worse, IBDC will have control in the management of the proceeds of the sale of the bulk water as the respondents have conspired and confederated with one another to give IBDC the right to collect the payments for the sale of the bulk water from the buyers. 16.8 Clearly then, it cannot be denied that such terms of the BULK WATER CONTRACT and the Water Contracts are not only manifestly and grossly disadvantageous to Majayjay but they are obviously unconscionable. It is the work of a devil minds with no other evident intention but greed for money.

46

17.

Under the BULK WATER CONTRACT, it is expressly

provided that IBDC shall have the sole right and authority to supply bulk water to Majayjay and the neighboring towns26, including but not limited to Lumban and Sta. Cruz. Since the right and authority to supply bulk water under the BULK WATER CONTRACT belongs to IBDC, then it is only proper that IBDC should be the one to act as the Water Supplier to Lumban and Sta. Cruz but obviously it was not done so as to enable IBDC to evade any and all obligations arising under the Water Contracts for the supply of bulk water to Lumban and Sta. Cruz.
18.

In other words, respondents have conspired and

confederated with one another to allow and authorize the passing to Majayjay of all the obligations and responsibilities under the Water Contracts. Stated otherwise, respondents have conspired and confederated with one another to release, discharge and free IBDC from the enormous responsibilities and obligations as such Water Supplier of bulk water by allowing and authorizing Majayjay to act as the Water Supplier to Lumban and Sta. Cruz. Under this scheme, IBDC was totally released and discharged from any and all responsibilities and obligations to Lumban and Sta. Cruz which is greatly prejudicial and disadvantageous to Majayjay especially
26

Section 7 (a), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2012.

47

considering only 10% of the incomes generated from the sale of bulk water will go to Majayjay while the 90% thereof will go to IBDC.
19.

However, although IBDC is not the one acting as Water

Supplier to Lumban and Sta. Cruz, respondents have again conspired and confederated with one another to see to it that IBDC shall have the sole control and authority to collect the revenues to be generated from the sale of bulk water to Lumban and Sta. Cruz. This scheme was made possible by respondents when they conspired and confederated with one another to grant authority to IBDC in the form of Memorandum of Agreement to collect the water payment from bulk water buyers including but not limited to Lumban and Sta. Cruz.
20.

As provided in Section 9 (b), Article V of the BULK

WATER CONTRACT, Majayjay warrants that it will issue authorization to IBDC in the form of Memorandum of Agreement between Majayjay and IBDC, relative to the collection of water payments from bulk water buyers. Thus, by virtue of this authority to collect payment from bulk water buyers, IBDC shall and will be able to control the collection of revenues to be generated from sale of bulk water and thus assures itself that it will be able to realize and receive the stipulated sharing arrangement in the sale of bulk water in the proportion of 90% in favor of IBDC and 10% in favor of Majayjay.

48

21.

It is not only disadvantageous but it is totally

unconscionable for respondents to allow Majayjay to assume all the obligations and responsibilities for the sale of bulk water to Lumban and Sta. Cruz but at the same time allowed and authorized IBDC to control the collection of water payments for the sale of bulk water so as to assure IBDC that it will be able to realize and receive its 90% share from the proceeds of the sale of bulk water. Only men and women who have no conscience can allow such kind of situation/arrangement to happen.
22.

In the Water Contracts, Majayjay agreed for the posting

of the required performance security such as the afore-described cash bond, bank guarantee and surety bond to guarantee the faithful performance of its obligations under the contracts but in the BULK WATER CONTRACT respondents have authorized the execution of the BULK WATER CONTRACT even though IBDC did not post the required performance security such as the cash bond, bank guarantee and surety bond to guarantee the faithful performance by IBDC of its obligations under the BULK WATER CONTRACT. This non-posting by IBDC of the required cash bond, bank guarantee and surety bond is the best evidence that respondents have conspired and confederated with one another to enter into contract or transaction manifestly and grossly disadvantageous to Majayjay.

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23.

The execution of the Water Contracts indubitably shows

the deliberate, willful and malicious intention of the respondents to conspire and confederate with one another for the purpose of entering into a contract or transaction manifestly and grossly disadvantageous to Majayjay with the ultimate objective of giving undue favor to IBDC.
24.

Under date April 25, 2012, we have sent, thru counsel, to

public respondent Guera a letter informing him that the BULK WATER CONTRACT is null and void for being contrary to laws, public policy and morals and thus demanded from him to refrain and desist from implementing the BULK WATER CONTRACT, which letter was received by public respondent Guera on April 26, 2012. A copy of the said letter dated April 25, 2012 is hereto attached as Annex N.
25.

Under date April 27, 2012, we sent, thru counsel, a letter

to respondent members of Sangguniang Bayan informing them that the BULK WATER CONTRACT is void and inexistent from the beginning and thus demanded from them to pass a resolution authorizing the stoppage of the implementation of the BULK WATER CONTRACT, including the Water Contracts. We pointed out in the same letter that any inaction/omission on the matter by respondent members of Sangguniang Bayan shall be construed as a

50

tacit or implied approval by them of the execution and implementation of the BULK WATER CONTRACT, including the Water Contracts. A copy of the said letter dated April 27, 2012 is hereto attached as Annex O.
26.

By way of compliance to our letter dated April 27, 2012,

Councilor Victorio Z. Ronabio (Coun. Ronabio for short), a member of Sangguniang Bayan of Majayjay, filed a resolution in the Sangguniang Bayan of Majayjay entitled Resolusyon Ng

Sangguniangg Bayan Para Ipatigil Ang Pagpapatupad Ng Contract For The Supply Of Bulk Water Na May Petsa August 1, 2011 (copy of which is enclosed hereto as Annex P), Sa Pagitan Ng Bayan Majayjay, Laguna At Israel Builders Development Corp. (IBDC). In this Resolution, Coun. Ronabio had advocated and pushed for the stoppage not only of the BULK WATER CONTRACT but also for the stoppage of the Water Contracts.
27.

By way of support to the aforestated Resolution of Coun.

Ronabio, Councilor Godofredo A. Estupigan (Coun. Estupigan for short) and Sangguniang Kabataan (SK) President Victor M. GruezoIII, both members of the Sangguniang Bayan of Majayjay, filed a separate letter both dated June 4, 2012 addressed to the Vice Mayor (Analinda C. Rosas) of Majayjay expressing their full support to the said Resolution of Coun. Ronabio for the stoppage of the

51

implementation of the BULK WATER CONTRACT and the Water Contracts. Copies of the said letters both dated June 4, 2012 of Coun. Estupigan and SK Pres. Victor Gruezo III are hereto attached as Annexes Q and R, respectively.
28.

The Sangguniang Bayan held a session on June 4, 2012

and Coun. Ronabio and Coun. Estupigan and the SK Pres. Victor Gruezo III strongly pushed for the immediate passage and approval of the aforesaid Resolution for the stoppage of the implementation of the BULK WATER CONTRACT but respondents members of

Sangguniang Bayan stalled and prevented the passage of the said resolution by deferring its submission for deliberation.
29.

On June 8, 2012, Coun. Ronabio and Coun. Estupigan

and the SK Pres. Victor Gruezo III submitted a letter dated June 7, 2012 to Coun. Lauro Mentilla, Acting Presiding Officer of Sangguniang Bayan of Majayjay, with copy furnished to the other respondents members of the Sangguniang Bayan, requesting to put into calendar of the Sangguniang Bayan for immediate deliberation the aforestated Resolution for the stoppage of the implementation of the BULK WATER CONTRACT and Water Contracts but still respondent members of the Sangguniang Bayan did not take any action on the said Resolution. A copy of the said letter dated June 7,

52

2012 jointly signed by Coun. Ronabio and Coun. Estupigan and the SK Pres. Victor Gruezo III is hereto attached as Annex S.
30.

In failing and refusing to act on the said Resolution for

the stoppage of the implementation of the BULK WATER CONTRACT and Water Contracts, respondent members of

Sangguniang Bayan have obviously authorized (explicitly or impliedly) the execution and implementation of BULK WATER CONTRACT and Water Contracts and that they have conspired and confederated with public respondent Guera and private respondent Gapangada for the execution and implementation of the BULK WATER CONTRACT and Water Contracts.
31.

Public

respondent

Guera

and

private

respondent

Gapangada have conspired and confederated with one another to execute the BULK WATER CONTRACT as they are now implementing the BULK WATER CONTRACT, as shown in the photographs of excavation being made in and around Majayjay hereto attached as Annexes T, T-1, T-2, T-3, T-4 and T-5, respectively.
32.

Had the respondents did not conspire and confederate

with one another to authorize its execution, the BULK WATER CONTRACT and the Water Contracts cannot and shall not be entered into and executed by Majayjay.

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33.

Public respondent Guera and respondent members of the

Sangguniang Bayan committed unlawful acts and gross misconduct amounting to betrayal of public interest when they entered into and/or authorized the execution and implementation of the BULK WATER CONTRACT and the Water Contracts despite due notice to them that the said three (3) water contracts are manifestly and grossly prejudicial to Majayjay.
34.

Private respondent Gapangada deliberately, willfully and

maliciously agree for the execution by Majayjay of the Water Contracts with Majayjay as the Water Supplier as he knew that IBDC shall be released and discharged from any and all responsibilities in the contract for the supply of bulk water to Sta. Cruz and Lumban. In fact, during the session of the Sangguniang Bayan of Majayjay held on February 20, 2012, private respondent Gapangada had strongly pushed for the passage and approval by respondent members of the Sangguniang Bayan of the Resolution ratifying and authorizing the execution by Majayjay of the BULK WATER CONTRACT and the Water Contracts. 35. As the signatory for IBDC in the BULK WATER

CONTRACT, private respondent Gapangada knows very well that under the BULK WATER CONTRACT, IBDC has the sole right and authority to supply bulk water to Majayjay and the neighboring towns

54

such as Lumban and Sta. Cruz but still he pushed for the passage and approval of the Resolution authorizing Majayjay as the Water Supplier under the WATER CONTRACTS so as to release, discharge and free IBDC from any and all obligations arising from the contract for the supply of bulk water to Lumban and Sta. Cruz.
36.

Private respondent Gapangada acted in bad faith and with

badge of fraud in pushing for the passage and approval by the Sangguniang Bayan of the Resolution authorizing Majayjay to act as Water Supplier to Lumban and Sta. Cruz under the Water Contracts as he very well knows that it is not Majayjay but IBDC has the sole right and authority to render the BULK WATER CONTRACT to supply bulk water to Majayjay and the neighboring towns such as Lumban and Sta. Cruz.
37.

Unless suspended and/or removed from office, public

respondent Guera and respondent members of the Sangguniang Bayan shall and will continue to implement the BULK WATER CONTRACT and the Water Contracts to the great disadvantage and prejudice of Majayjay.
38.

There is urgent need to place the respondents public

officers under preventive suspension pending adjudication of the instant complaint to prevent them from continuously implementing the anomalous and unlawful BULK WATER CONTRACT and Water

55

Contracts and/or to protect the people of Majayjay from the onerous effects of the said contracts.
39.

The continuous failure and omission of respondents to

stop the implementation of the BULK WATER CONTRACT and the Water Contracts, despite due notice to them that they are void and inexistent from the beginning because it is contrary to law, morals and public policy, is an indubitable proof that respondents have conspired and confederated with one another to execute the BULK WATER CONTRACT, Water Contract-Lumban, Water Contract-Sta. Cruz, or the three (3) water contracts which are all manifestly and grossly prejudicial to Majayjay.
40.

This affidavit is being executed to attest the veracity of

the foregoing statements and to charge the above named respondents with three (3) counts for violation of Sec. 3 (g) of the R.A. 3019, as amended, otherwise known as the Anti-Graft and Corrupt Practices Act, and to also charge administratively respondents public officers for dismissal from the service on the ground of the commissions of unlawful acts, gross misconduct and gross violation of the laws amounting to betrayal of public trust and for the preventive suspension of respondents public officers pending adjudication of the instant complaint.

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