.

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.

2

Esmaquel, who is likewise from Majayjay, Laguna. A copy each of

the original and amended Articles of Incorporation of PPP and the

necessary Secretary’s 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 Anti-

Graft 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

3

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,

4

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 Position

Teofilo B. Guera Municipal Mayor

Ana Linda C. Rosas Vice-Mayor/Sangguniang Bayan

Lauro C. Mentilla Member Sangguniang Bayan

Mauro C. Aragon Member Sangguniang Bayan

Juancho M. Andaya Member Sangguniang Bayan

Antonio S. Zornosa, Jr. Member Sangguniang Bayan

Mario O. Mercolisa, Jr. Member Sangguniang Bayan

Jovanie Ann G. Esquillo Member Sangguniang Bayan

Bernardo de Villa 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

5

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.

6

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 1920’s 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.

7

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

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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

contract’s 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.

9

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

10

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

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 contract’s 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

1 Section 7 (a), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2011.2 Section 4, Article II, Contract for the Supply of Bulk Water dated August 1, 2011.

11

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.

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

3 Section 22, Article XIV of the Contract for the Supply of Bulk Water dated August 1, 2011.4 Section 16 paragraph 5, Article XI of the Contract for the Supply of Bulk Water dated August 1, 2011.

12

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

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.

5 Meralco vs. Public Service Commission, 18 SCRA 651; and Republic vs. Meralco, 391 SCRA 700, 7096 Section 7 (b), Article IV of the Contract for the Supply of Bulk Water dated August 1, 2011.

13

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

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

14

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.

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

15

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

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

16

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 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

17

manifestly and grossly disadvantageous to

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

IBDC’s Financial Statement for the years 2009 to

2010, where it is explicitly provided that the

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 Contractor’s License of IBDC that IBDC

does not have the financial capacity, legal

qualification and technical requirements to

undertake and complete the project

18

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 Contractor’s 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

Contractor’s License of IBDC is hereto attached as

Annex “H”.

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”), IBDC’s 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

19

“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.

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 and grossly disadvantageous to

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

20

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

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

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

21

refusal”8. 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

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

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

22

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 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.

23

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

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.

24

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 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

9 Section 39, Republic Act No. 9184

25

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”

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. 10 Section 39.2, Republic Act No. 9184

26

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

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.

27

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

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,

28

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

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

29

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

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

30

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

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)

31

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

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

32

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.

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

33

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

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

34

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

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

35

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

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

36

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 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

11 Section 17, Republic Act No. 9184.12 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. 9184.19 Article IX, Republic Act No. 9184.20 Article X, Republic Act No. 9184.21 Section 37, Republic Act No. 9184.22 Section 39, Republic Act No. 9184.

37

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 authorizes or abets the

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

38

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

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

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

39

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

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

40

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.

11. Not satisfied in entering into and executing the BULK

WATER CONTRACT which is manifestly and grossly

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

41

of Majayjay executed a Water Supply Contract (Water Contract-

Lumban 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

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.

42

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

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

24 Annex “L” hereof

43

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

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. Cruz25, Majayjay is

25 Annex “M”, hereof

44

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

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

45

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

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

46

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.

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

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

47

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

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

48

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.

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

49

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.

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”.

50

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

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

51

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

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,

52

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,

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

53

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.

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

54

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

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.

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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

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

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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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