12 March 2018

Mario S, Pacaldo
BAC Chair
Island Garden City of Samal
Davao del Norte

Greetings.

We have received your letter dated March 6, 2018 denying our

Motion for Reconsideration on the following grounds to wit:

1. Failure to comply the required volume in some items under the

Bill of Quantities (BOQ).

2. The Total Calculated Bid Price when computed based in the

required volume is P155,793,638.50 which is beyond the
Approved Budget for the Contract of P149,999,997.12.

3. The Request for Reconsideration was submitted beyond the

prescribed period of three (3) calendar days upon receipt of
written notice.

This letter is made then to ask before your good office to again fully
reconsider our basis and relevant parameters for the issues involved
raised in our request for Reconsideration dated February 28, 2018.

Anent to the first ground, again and we reiterate the IRR OF R.A. NO.
6957, “AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION,
OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS BY
THE PRIVATE SECTOR AND FOR OTHER PURPOSES”, AS AMENDED BY
R.A. NO. 7718 which states therein that under the Build-transfer-and-
operate (BTO) scheme the contractual arrangement made by
Agency/LGU which contracts out the Construction of an
infrastructure facility to a private entity, the Contractor builds the
facility on a turnkey basis, assuming cost overruns, delays, and
specified performance risks.

In this light, we would like to bring to your attention that while it is

conceivable to express prices in a turnkey contract in the form of unit
prices or by cost reimbursement such arrangements seem to be rare.
Such can only be considered as partial prices then serve for the
valuation of variations and possibly also for progress payments. It must
be stressed that it is hardly possible to fix progress payments by
reference to measurement of quantities. It cannot be ignored that

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the performance guarantees undertaken by the contractor are
based only on certain assumptions with respect to the quality of raw
materials used and the operating conditions.

Therefore, as this falls on a more Turnkey Basis rather than the

Traditional one or in a mixture of both, we humbly urged your office
in support of the same provision of RA 7718 (The BOT Law) of Sec. 8.3.
Right to Reject All Bids which states that The Agency/LGU concerned
reserves the right to reject any or all bids, waive any minor defects
therein and accept the offer most advantageous to the government.

Considering that failure of our bid to yield the required volume under
the Bill of Quantities could be given a relax interpretation or to be
taken as minor defects which can be waived to match with the Turn
key basis approach considering that we do not or do attempt in any
manner to make the offer disadvantageous to the government.
Besides we are liable to our bid price and/or amount quoted on our
bid.

Anent to the second ground, which states that the Total Calculated
Bid Price when computed based in the required volume is
P155,793,638.50 which is beyond the Approved Budget for the
Contract of P149,999,997.12.

Again, we insist that the Bill of Quantities herein can only be faulty
because the Approved Budget Contract in itself is very deficient.
Under Sec. 1.3 of the IRR of the Build and Transfer Law (BT) which states
that the Project Proponent undertakes the financing and
Construction of a given infrastructure or development facility and
after its completion turns it over to the Agency or LGU concerned,
which shall pay the Project Proponent on an agreed schedule its total
investment expended on the project, plus a Reasonable Rate of
Return thereon.

In view hereof, a Project Proponent shall be entitled to, as

determined by the Approving Body taking into account, among
others, the prevailing cost of capital (equity and borrowings). It can
be taken that the ROI would then include the investment even not
express would be considered as a way of negotiated contract in
view of the Mode of Payment which is Turn Key basis. Therefore, in
light of the foregoing, consider the excess money of our financial
proposal to include the ROI.

Anent to the third ground, that the Request for Reconsideration was
submitted beyond the prescribed period of three (3) calendar days
upon receipt of written notice. We hope that stringent application of

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the rules should be disregarded in the interest of fairness under
justifiable causes and circumstances like in our case.

Your letter dated February 20, 2018 was delivered to us thru a courier
on February 23, 2018 which falls on a Friday.

The timing of the service of Notice of Disqualification dated February

20, 2018 is highly suspect. To the mind of the undersigned, it was a
deliberate act of the BAC Chair to serve the same on the last working
day (Friday) so as to deprive the undersigned the opportunity to
seasonably submit an intelligent Motion for Reconsideration. An act
which amounts to violation of RA No. 3019, Section 3E which provides
among others;

Section 3. Corrupt practices of public officers. In

addition to acts or omissions of public officers
already penalized by existing law, the following shall
constitute corrupt practices of any public officer and
are hereby declared to be unlawful:

Sec 3(e) Causing any undue injury to any party,

including the Government, or giving any private
party any unwarranted benefits, advantage or
preference in the discharge of his official
administrative or judicial functions through manifest
partiality, evident bad faith or gross inexcusable
negligence. This provision shall apply to officers and
employees of offices or government corporations
charged with the grant of licenses or permits or other
concessions.

So it leaves us only one working day to make the letter to make it to

the deadline set on February 26, 2018. Thus impels us to request for an
extension of two (2) calendar days which we herein complied and
was received in your office within the requested extension time of
February 28, 2018.

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We are looking forward to getting your input on the matters brought
to your attention. We are hoping for a favorable response on our end.
Thanks for your extreme helpful attention to this matter.

Very truly Yours,

Remegio G. Salanatin

Cc: 1) Office of the Mayor

2) Office of the Vice-Mayor
3) Office of the City Council

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