Omnibus Guidelines Governing the Award and Administration of Renewable Energy Contracts and the Registration of Renewable Energy Developers

October 1, 2019

DOE DEPARTMENT CIRCULAR NO. DC2019-10-0013

OMNIBUS GUIDELINES GOVERNING THE AWARD AND ADMINISTRATION OF RENEWABLE ENERGY CONTRACTS AND THE REGISTRATION OF RENEWABLE ENERGY DEVELOPERS

WHEREAS, pursuant to Section 2, Article XII, of the 1987 Philippine Constitution, all forces of potential energy and other natural resources within the Philippine territory belong to the State and their exploration, development and utilization shall be under the full control of the State;

WHEREAS, under Section 2 of Republic Act (RA) No. 7638, as amended, otherwise known as the "Department of Energy Act of 1992," the Department of Energy (DOE) is mandated to prepare, integrate, coordinate, supervise and control all plans, programs, projects and activities of the Government relative to energy exploration, development, utilization, distribution and conservation, among others;

WHEREAS, Section 5 (b) of the same Act empowers the DOE to develop and update the existing Philippine energy program which shall provide for an integrated and comprehensive exploration, development, utilization, distribution and conservation of energy resources, with preferential bias for environment-friendly, indigenous, and low-cost sources of energy, and which program shall include a policy direction towards the privatization of government agencies related to energy, deregulation of the power and energy industry and reduction of dependency on oil-fired plants;

WHEREAS, Section 2 of RA No. 9136, otherwise known as the "Electric Power Industry Reform Act of 2001" or "EPIRA," declares that it is the policy of the State to, among others, (i) ensure and accelerate the total electrification of the country; (ii) enhance the inflow of private capital and broaden the ownership base of the power generation, transmission and distribution sectors; (iii) assure socially and environmentally compatible energy sources and infrastructure; and (iv) promote the utilization of indigenous and new and renewable energy resources in power generation in order to reduce dependence on imported energy;

WHEREAS, Joint Administrative Order (JAO) No. 2008-1, Series of 2008, otherwise known as the "Guidelines Governing the Biofuel Feedstocks Production, and Biofuels and Biofuel Blends Production, Distribution and Sale," provides for the accreditation of biofuel producers, among others, under RA No. 9367, otherwise known as the "Biofuels Act of 2006"; HTcADC

WHEREAS, Section 2 of RA No. 9513, otherwise known as the "Renewable Energy Actof 2008" or "RE Act," directs the State to encourage and accelerate the exploration, development and utilization of renewable energy (RE) resources such as, but not limited to, biomass, solar, wind, hydropower, geothermal, and ocean energy sources, and including hybrid systems;

WHEREAS, Section 19 (c), Rule 6 of Department Circular No. DC2009-05-0008 which prescribes the Implementing Rules and Regulations (IRR) of the RE Act, requires the DOE to issue a regulatory framework containing the guidelines that shall govern the transparent and competitive system of awarding Renewable Energy Service/Operating Contracts from Pre-Development to Development onto Commercial Operations stage, or the awarding of direct operating contracts to specific RE technologies, among others;

WHEREAS, under Section 2 of RA No. 11032, otherwise known as the "Ease of Doing Business and Efficient GovernmentService Delivery Act of 2018", it is the duty of the State to, among others, promote integrity, accountability, proper management of public affairs and public property, aimed at efficient turnaround of the delivery of government services and the prevention of graft and corruption in government;

WHEREAS, in Section 2 of RA No. 11234, otherwise known as the "Energy Virtual One-Stop Shop Act" or "EVOSS," the State is likewise commanded to, among others, ensure transparency and accountability in the process of approving power generation, transmission, or distribution projects, and deliver efficient and effective service to the public.

WHEREAS, in pursuing the efficient and transparent exploration, development and utilization of RE resources, the DOE promulgated various policies and guidelines in the awarding of RE Contracts and issuance of Certificates of Registration to RE Developers, with the view to increase the development and utilization of RE to contribute in the attainment of energy supply security in the country, to wit:

(a) DC2009-07-0011 dated 12 July 2009;

(b) DO2013-08-0011 dated 20 July 2013;

(c) DO2013-10-0018 dated 09 October 2013;

(d) DO2013-12-0020 dated 02 December 2013;

(e) DO2013-12-0023 dated 27 December 2013;

(f) DO2014-06-0010 dated 09 June 2014;

(g) DO2014-10-0018 dated 14 October 2014;

(h) DO2016-09-0011 dated 05 September 2016;

(i) DO2016-06-0010 dated 24 June 2016;

(j) DO2017-04-0005 dated 07 April 2017;

(k) DO2018-03-0003 dated 16 March 2018;

(l) DO2019-01-0003 dated 11 January 2019; and

(m) DO2019-07-0018 dated 30 July 2019.

WHEREAS, recent developments necessitate the harmonization and enhancement of the existing guidelines and procedures governing the transparent and competitive system of awarding RE Contracts and the registration of RE Projects;

NOW, THEREFORE, in consideration of the foregoing premises, the DOE hereby issues the following revised guidelines and procedures governing the awarding of RE Contracts, and the registration and management of RE Projects:

CHAPTER I

General Provisions

SECTION 1. Title. — This Circular shall be known as the "Omnibus Guidelines Governing the Award and Administration of Renewable Energy Contracts and the Registration of Renewable Energy Developers."

SECTION 2. Coverage. — This Circular shall prescribe the guidelines and procedures on:

2.1. The pre-application, application, and award of RE Contracts;

2.2. The conversion of existing service contracts to RE Contracts for the exploration, development or utilization of RE resources with the DOE, subject to Section 39, Rule 13, of the IRR of the RE Act;

2.3. The issuance by the DOE of Certificates of Registration (COR) for RE Developers of projects with or without RE Contracts; and

2.4. The administration of RE Contracts.

SECTION 3. Definition of Terms. — As used in this Circular and in other issuance of the DOE, the following terms shall be understood to mean, as follows:

3.1. "Biomass Energy Operating Contract" or "BEOC" shall refer to the RE Contract issued for the development and operation of RE Projects utilizing biomass as RE Resource.

3.2. "Blocking System" shall refer to the subdivision of the Philippines, for purposes of RE Applications for wind, geothermal and ocean resources, into RE meridional blocks (RE blocks) of 30 seconds of latitude and 30 seconds of longitude using Philippine Reference System of 1992 (PRS'92) as the standard reference system. One (1) RE block shall have approximate area of eighty-one (81) hectares. Each block shall have a unique number designated by the DOE. aScITE

3.3. "Certificate of Confirmation of Commercially" or "COCOC" shall refer to the Certificate duly signed by the DOE Secretary confirming the Declaration of Commerciality by the RE Developer and shall serve as a notice to proceed for the construction of the RE Project or the installation of the RE Facilities. The date of issuance of the COCOC shall be considered as the commencement date of the Development Stage of the RE Project.

3.4. "Commercial Operations" shall refer to the phase commencing at the operation of the RE Project, following its successful testing and commissioning, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DOE and other relevant regulatory bodies.

3.5. "Commercial Quantities" shall mean quantities of energy to be produced from the RE Resources using commercially available technology to develop the RE Systems which have a reasonable chance of being sufficient and technically compliant to support the Commercial Operations of the project.

3.6. "Contract Area" shall refer to the total area, which is the subject of the RE Contract as detailed and outlined in the map with its technical description, and where the RE Developer has the exclusive right to explore, develop and utilize the RE Resources.

3.7. "Declaration of Commerciality" or "DOC" shall refer to a written declaration made by the RE Developer to the DOE, stating that the RE Resource is of Commercial Quantities.

3.8. "Direct Application" shall refer to the mode of RE Application whereby the RE Applicant identifies a Contract Area it wishes to explore or develop. The identified Contract Area must first be certified by the DOE to be free and open for exploration or development.

3.9. "Energy Application Management System" or "EAMS" shall refer to an intranet-based system utilizing radio frequency identification (RFID) technology to uniquely identify an application and monitor its real-time location.

3.10. "Financial Closing" shall refer to such milestone in the Pre-Development or Development Stage of the RE Project when the RE Developer has secured a written commitment from the financier/s to provide its full funding requirements through equity and/or commercial borrowings, or other financing schemes.

3.11. "Financial Qualifications" shall refer to the criteria and procedures set out by the DOE to establish the financial capability of the RE Developer to implement the RE Project.

3.12. "Geothermal Service Contract" or "GSC" shall refer to the RE Contract issued for the exploration, development and/or utilization of geothermal resources as RE Resource for the operation of RE Projects.

3.13. "Hydropower Service Contract" or "HSC" shall refer to the RE Contract for the exploration, development and/or utilization of hydropower resources as RE Resource for the operation of RE Projects.

3.14. "Letter of Intent" or "LOI" shall refer to the written notice or document submitted by a Person to the DOE, indicating interest in the exploration, development, utilization and commercialization of RE Resource.

3.15. "Ocean Energy Service Contract" or "OESC" shall refer to the RE Contract for the exploration, development and/or utilization of ocean resources for the operation of RE Projects.

3.16. "Pre-Determined Area" or "PDA" shall refer to area/s with RE Resource potential through sufficient available technical data as may be determined by the REMB, and approved by the DOE Secretary for its inclusion in the Open and Competitive Selection Process (OCSP).

3.17. "Person" shall refer to a natural or juridical person, as the case may be.

3.18. "Production Area" shall refer to that portion of the Contract Area identified in metes and bounds by the RE Developer and approved by the DOE, where RE Resources are utilized to produce electricity in Commercial Quantities.

3.19. "RE Applicant" shall refer to any Person, subject to the limitations provided in Section 4.2 hereof, who applies for the assessment, exploration, harnessing, development, utilization or commercialization of RE Resources.

3.20. "RE Application" shall refer to the set of documents submitted by RE Applicants pertaining to their legal, technical and financial qualifications to enter into an RE Contract with the government, by either OCSP or Direct Application, in accordance with the requirements under this Circular. For this purpose, the RE Application shall be comprised of one (1) electronic copy and four (4) printed copies, where one (1) set of the printed copy shall be in the original.

3.21. "RE Contract" or "Financial and Technical Assistance Agreement (FTAA)" refers to the service agreement between the Government, through the DOE or the President, respectively, and an RE Developer over an appropriate period as determined by the DOE which grants to the RE Developer the exclusive right to explore, develop, or utilize the RE Resource within a particular area. HEITAD

3.22. "RE Developer" shall refer to an individual or juridical entity created, registered and/or authorized to operate in the Philippines in accordance with existing Philippine laws, and engaged in the exploration, development and/or utilization of RE Resources, and actual operation of RE Project. It shall include existing entities engaged in the exploration, development and/or utilization of RE Resources, or the generation of electricity from RE Resources, or both.

3.23. "RE Operating Contract" shall refer to the service agreement between the DOE and RE Developer for the development and/or utilization of biomass, solar and other RE Resources which, due to their inherent technical characteristics, need not go through Pre-Development Stage.

3.24. "RE Project" shall refer to the power generation and related facilities utilizing RE Resources under a particular RE Contract or Certificate of Registration issued by the DOE pursuant to the RE Act.

3.25. "RE Project for Non-Commercial Operations" shall refer to an RE Project which is intended for demonstration purposes of any new or modified RE technologies, and those that are covered by Official Development Assistance (ODA) grants, and all other programs and projects which are not designed and operated for profit.

3.26. "RE Project for Own-Use" shall refer to an RE Project located within the premises of or in an area contiguous to an End-User's premises, and operated solely for the supply of a portion or all of the electricity requirements of such End-User. For this purpose, an "End-User" shall refer to any person or entity requiring the supply and delivery of electricity generated by the RE Project dedicated for its own consumption, which facility is installed either by the End-User or through a third-party provider.

3.27. "RE Resource" shall refer to energy resources that do not have an upper limit on the total quantity to be used. Such resources are renewable on a regular basis, and whose renewal rate is relatively rapid to consider availability over an indefinite period of time. These include, but are not limited to, biomass, solar, wind, geothermal, ocean energy, and hydropower, conforming with internationally accepted norms and standards on dams, and other emerging RE technologies.

3.28. "RE Service Contract" shall refer to a service agreement between the Philippine Government, through the President or the DOE Secretary, and RE Developer, covering an appropriate period as stated therein, in which the RE Developer shall have the exclusive right to explore, develop and utilize geothermal, hydropower, wind, ocean and other RE Resources within a particular area.

3.29. "Renewable Energy Management Bureau" or "REMB" refers to the unit of the DOE created under Section 32 of the RE Act, with the primary function includes, among others, implementing policies, plans, and programs related to the accelerated development, transformation, utilization, and commercialization of RE Resources and technologies.

3.30. "Solar Energy Operating Contract" or "SEOC" shall refer to the RE Contract issued for the development and operation of RE Projects utilizing solar energy as RE Resource.

3.31. "Wind Energy Service Contract" or "WESC" shall refer to the RE Contract issued for the exploration, development and/or utilization of wind energy as RE Resource for the operation of RE Projects.

3.32. "Work Program" refers to the plans and programs and other related activities formulated for the performance of the work obligations under the RE Contract by the RE Developer, along with the corresponding budgetary estimate, submitted to the DOE for approval.

CHAPTER II

RE Service and Operating Contracts

SECTION4. RE Contract — Modes of Award and Qualifications. —

4.1. Modes of Awarding RE Contract. — RE Contracts shall be awarded through (a) an Open and Competitive Selection Process or (b) Direct Application.

4.1.1. The Open and Competitive Selection Process (OCSP) shall be adopted for the selection and award of RE Service Contracts for Pre-Determined Areas (PDAs) covering any type of resource for commercial purposes. This shall be governed by Chapter IV below.

4.1.2. Direct Application shall be available for the selection and award of:

(a) RE Operating Contracts;

(b) RE Service Contracts covering PDAs, following a failed OCSP pursuant to Section 13.7 and the procedures in Chapter V below; and

(c) RE Service Contract in an area identified by a RE Applicant and verified with or confirmed by the DOE-Information Technology and Management Services (ITMS) as available for exploration, development and/or utilization of the proposed RE Resource. ATICcS

4.1.3. RE Projects for Own-Use and/or RE Projects for Non-Commercial Purposes shall not require the issuance of RE Contracts but shall comply with the registration requirements provided under Chapter IX of this Circular.

4.2. Who May Apply. — Any Person, local or foreign, may apply for RE Contracts, subject to the limits provided in this Circular.

4.2.1. The RE Applicant must be a Filipino or, if a corporation, must be a Filipino corporation duly registered with the Securities and Exchange Commission (SEC), with at least sixty percent (60%) of its capitalization duly owned and controlled by Filipinos, unless the application is for biomass development and/or uses waste-to-energy technology, in which case, the 60% Filipino capitalization requirement shall not apply. This provision shall retroact to all RE Applications for biomass resource development and utilization that are being evaluated prior to the effectivity of this Circular.

4.2.2. For the large-scale exploration, development and utilization of geothermal resources, defined under Section 4 (s) of the RE Act as a mineral resource, the Government through the President may enter into agreements with foreign-owned corporations involving technical or financial assistance pursuant to Article XII, Section 2 of the Philippine Constitution.

4.2.3. In case the RE Applicant is a joint venture or a consortium, the partners of the joint venture or members of the consortium shall organize themselves as a corporation registered under the Corporation Code of the Philippines and shall comply with the nationality requirements as provided for in the preceding paragraph.

4.3. Stages of an RE Operating Contract. — An RE Operating Contract shall cover only the Development/Commercial Stage, which involves the development, construction and installation and commercial operation of the RE Project, including the achievement of Financial Closing.

4.4. Stages of an RE Service Contract. — An RE Service Contract shall cover two (2) stages of the RE Project, namely:

4.4.1. Pre-Development Stage. — Involves the conduct of preliminary assessment and feasibility study up to Financial Closing and Declaration of Commerciality (DOC) of the RE Project, including the identification of the proposed Production Area; and

4.4.2. Development/Commercial Stage. — Involves the development, construction and commercial operation of the RE Project, production and utilization of RE Resources.

4.5. Transition from Pre-Development Stage to Development/Commercial Stage. — The RE Service Contract shall transition from the Pre-Development Stage to Development/Commercial Stage only after issuance by the DOE of a Certificate of Confirmation of Commerciality (COCOC). The process of the issuance of a COCOC is provided in Section 29 hereof.

SECTION 5. RE Contract Area. — Upon transition from the Pre-Development to Development Stage of the RE Service Contract, the Contract Area shall be amended to cover the Production Area only. In the case of RE Operating Contracts, the Contract Area is equivalent to the Production Area.

SECTION 6. Conversion of Existing Service Contract. — For existing RE Projects that have been operating prior to the effectivity of the RE Act pursuant to contracts issued under the relevant preceding laws and those that have been issued RE Contracts after the RE Act but prior to this Circular, the contract holder may elect to convert its service contract or agreement by applying for an RE Contract under this Circular. However, the period of the RE Contract to be issued in relation thereto shall be the balance of the contract term remaining under the existing and valid service/operating contract or agreement. The requirements and procedures for conversion to RE Contract templates in Annexes A to F is provided in Section 30 hereof.

CHAPTER III

Types of RE Contract Per Resource

SECTION 7. Biomass Energy Resource. — The development of biomass resources shall be covered by a Biomass Energy Operating Contract (BEOC) following the prescribed template (Annex A). The RE Developer shall be given a period of five (5) years from the date of effectivity of the BEOC to achieve Commercial Operations of the RE Project. The BEOC shall have a term of twenty-five (25) years from the date of its effectivity and may be renewed for the same period, subject to terms and conditions provided therein.

In the case of biofuel producers, their accreditation shall be governed by the procedures under JAO No. 2008-1, Series of 2008 pursuant to RA No. 9367. At their option, the accredited biofuel producers may register with the DOE as RE Developers to avail of incentives under the RE Act.

SECTION 8. Geothermal Energy Resource. — The development of geothermal resources shall be covered by a Geothermal Service Contract (GSC) following the prescribed template (Annex B). TIADCc

8.1. The RE Developer shall be given a period of seven (7) years from the date of effectivity of the GSC to determine the existence of geothermal resources in Commercial Quantities.

8.2. The GSC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall commence upon the issuance of the COCOC by the DOE prior to the expiration of the Pre-Development Stage, and shall continue for the remainder of the twenty-five (25)-year period of the GSC term in accordance with the timeline set in the approved Work Program. The GSC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein.

SECTION 9. Solar Energy Resource. — The development of solar energy resources shall be covered by a Solar Energy Operating Contract (SEOC) following the prescribed template (Annex C).

9 1. The Work Program depends on the type of development, whether the RE Project is mounted, roof-top, or floating.

9.2. The RE Developer shall be given a period of five (5) years from the date of effectivity of the SEOC to achieve Commercial Operations of the RE Project. The SEOC shall have a term of twenty-five (25) years from the date of its effectivity and may be renewed for the same period, subject to terms and conditions provided therein.

SECTION 10. Hydropower Resource. — The development of hydropower resources shall be covered by a Hydropower Service Contract (HSC) following the prescribed template (Annex D).

10.1. The RE Developer shall be given a period of five (5) years from the date of effectivity of the HSC to determine the existence of hydropower resource in Commercial Quantities.

10.2. The HSC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall commence upon the issuance of the COCOC prior to the expiration of the Pre-Development Stage, and shall continue for the remainder of the twenty-five (25)-year period of the HSC term in accordance with the timeline set in the approved Work Program. The HSC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein.

SECTION 11. Ocean Energy Resource. — The development of ocean energy resources shall be covered by Ocean Energy Service Contract (OESC) following the prescribed template (Annex E).

11.1. The Work Program depends on the type of development, whether the RE Project is tidal stream/tidal current, tidal range, wave, ocean thermal or salinity gradient.

11.2. The RE Developer shall be given a period of seven (7) years from the date of effectivity of the OESC to determine the existence of ocean energy resource in Commercial Quantities.

11.3. The OESC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall commence upon the issuance of the COCOC prior to the expiration of the Pre-Development Stage, and shall subsist for the remainder of the twenty-five (25)-year period of the OESC term in accordance with the timeline set in the approved Work Program. The OESC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein.

SECTION 12. Wind Energy Resource. — The development of wind energy resources shall be covered by Wind Energy Service Contract (WESC) following the prescribed template (Annex F).

12.1 The RE Developer shall be given a period of five (5) years from the date of effectivity of the WESC to determine the existence of wind energy resource in Commercial Quantities.

12.2. The WESC shall have a term of twenty-five (25) years, which shall include the Pre-Development Stage, from the date of its effectivity. The Development/Commercial Stage shall subsist for the remainder of the twenty-five (25)-year period of the WESC term in accordance with the timeline set in the approved Work Program. The WESC may be renewed for another twenty-five (25) years, subject to terms and conditions provided therein.

CHAPTER IV

Procedure for RE Contracts under Open and Competitive Selection Process

SECTION 13. Open and Competitive Selection Process (OCSP). — Interested parties may apply for RE Contracts for PDAs offered by the DOE during a prescribed period (Annex G).

13.1. Selection of PDAs. — Within six (6) calendar months following the effectivity of this Circular and every year thereafter, the REMB shall identify and submit a list of PDAs for RE Application, with the respective location maps and technical descriptions thereof, to the DOE Secretary, through its Supervising Assistant Secretary and Undersecretary, for approval. AIDSTE

13.2. Launch and Publication. — PDAs approved by the DOE Secretary shall be scheduled for launch and shall be publicly announced by the DOE for submission of RE Applications. PDAs for offer shall be published for at least once (1) a week for two (2) consecutive weeks in at least two (2) newspapers of general circulation and shall likewise be posted at the DOE website.

13.3. Data Packages and Promotional Activities. — The REMB shall arrange for the availability of data packages for the approved PDAs that can be purchased by interested parties in support of their applications. The REMB shall conduct promotional activities to promote the OCSP and the corresponding data packages so as to ensure maximum participation and awareness of prospective investors and stakeholders.

13.4. RE Contract Application. — Applications may be submitted a day after the publication date until the last day of submission which shall be sixty (60) calendar days from the date of first publication in accordance with the following requirements:

13.4.1.  The RE Applicant shall submit to the DOE a Letter of Intent (LOI) following the prescribed format (Annex H) together with the RE Application in accordance with prescribed Checklist of Requirements (Annex I);

 Each RE Application shall cover only one PDA as published.

13.4.2.  The RE Application must be in both paper and electronic (flash drive in Portable Data Format) copies, which shall use Times New Roman in 12-point font size, and employ single line spacing. Figures and maps shall be printed and submitted in a document that is not smaller than A3 size. For legibility, figures and maps shall be submitted at a larger scale (1:10,000) as appendices;

13.4.3.  An application fee shall be paid by each RE Applicant, along with the submission of RE Application. All payments may be made in cash, manager/company cheque, payable to "Department of Energy" or by wire/bank transfer. All wire/bank transfers should be net of all applicable bank and financial charges.

13.5. Opening and Evaluation of RE Applications. — The DOE shall open the applications at exactly 1300H, on the last day of the submission of RE Applications.

13.6. Evaluation, Selection and Award. — The evaluation and selection of RE Applications and award of RE Contract shall be conducted following the criteria and procedures set hereunder:

13.6.1.  Applications with incomplete documents based on the Checklist of Requirements shall be automatically disqualified during the opening of RE Applications. No additional documents shall be accepted after the deadline for submission of RE Applications.

13.6.2.  RE Applicants shall be duly informed by the REMB Supervising Assistant Secretary whether their application passed the completeness check and shall be subjected to further legal, technical and financial evaluations. Applicants who were disqualified for submitting incomplete documents shall likewise be informed by the REMB Supervising Assistant Secretary of the fact of their disqualification and the reasons therefor.

13.6.3.  RE Applications which passed the completeness check shall be evaluated based on the following criteria:

 

Legal Qualification	Pass/Fail
Work Program	40%
Technical Qualification	20%
Financial Qualification	40%

 

The guidelines and procedures, including the qualification criteria per scoring item, of every OCSP shall be determined at the beginning of every OCSP round.

13.6.4.  The highest ranked RE Application that meets the legal, technical, and financial requirements shall be selected.

13.6.5.  After a complete review and evaluation of the legal, technical, and financial qualifications of the RE Applications, the REMB Director, through its Supervising Assistant Secretary and Undersecretary, shall transmit to the DOE Secretary a written endorsement of the selected RE Application.

13.6.6.  Based on the written endorsement of the REMB, the DOE Secretary may approve the application and issuance of the corresponding RE Contract. AaCTcI

13.7. An OCSP, with respect to any or all PDAs included therein, shall be declared a failure when any of the following circumstances exists:

13.7.1.  No RE Application was received by the DOE;

13.7.2.  No RE Application passed the legal requirements; or

13.7.3.  When one or more RE Applications passed the legal requirements but after the evaluation of technical and financial proposals, none of such RE Applications were able to meet either the technical or financial requirements.

In any of the foregoing cases, the PDA shall be opened for Direct Applications. To initiate the change of mode of awarding RE Contract from OCSP to Direct Application for the relevant areas, the DOE shall include in the announcement of the result of the OCSP the area/s which shall be open for Direct Application, indicating thereat when the new application process shall commence.

CHAPTER V

Procedure for RE Contracts under Direct Application

SECTION 14. Coverage. — Direct Application shall be observed in processing RE Applications for: (a) RE Resources located in PDAs which the DOE shall declare as available under this mode pursuant to Section 13.7 hereof, and (b) RE Resources in areas other than those included in the PDAs, subject to the procedures provided herein.

PART 1

Pre-Application Process

SECTION 15. Submission of Letter of Intent. — All interested participants shall prepare an LOI to develop a certain area, in accordance with the mapping requirements (Annex J), addressed to the REMB Director, which shall be submitted through the DOE-Records Management Division (RMD). The submission of the LOI shall not be considered as a filing of an RE Application and shall not commence the application process.

Upon receipt of the LOI, the RMD shall attach a radio-frequency identification (RFID) tag thereon, encode the document under Energy Application Monitoring System (EAMS) and toward the document to the REMB Assistant Director.

SECTION 16. Orientation of Interested Participants. — The orientation is intended to inform the interested participants about the RE Application requirements, and to guide them through the process of evaluating and awarding of the RE Contracts and the registration of an RE Project.

16.1. Within three (3) working days from receipt of the LOI, the concerned REMB Division, through its Assistant Director, shall issue an acknowledgment letter addressed to the interested participant and encode the document in EAMS.

16.2. All interested participants shall be informed of the schedule of orientation or briefing on the RE Application requirements and processes.

16.3. Should any interested participant consider the orientation or briefing as unnecessary or dispensable, they may waive such option in writing either in its LOI or in response to the notice of the schedule of orientation provided in the preceding paragraph.

SECTION 17. Area Verification. — The area verification process shall determine whether any of the conditions under Section 23 of this Circular apply to the area identified by the interested participant.

17.1. The concerned technical division of the REMB, through its Assistant Director, shall endorse the LOI and its attachments to the ITMS within two (2) working days from its receipt of the same. For solar and biomass development, the concerned REMB Division shall also endorse to the DOE-Legal Services (LS) the sworn affidavit of undertaking. Said affidavit is an undertaking executed by the interested participant to submit a proof of ownership or possessory rights over real property covered by the proposed project area/site located in private lands; or proof of application to acquire possessory rights over areas considered as public lands. Such proof of land rights shall be submitted as part of the application requirements found in Annex I.

17.2. Within five (5) working days from receipt of the LOI, the ITMS and LS shall complete the area verification, encode in the EAMS the memorandum on the result of the area verification, and provide the concerned REMB Division with the verification report.

17.3. Within two (2) working days from its receipt of the results of the area verification, the concerned REMB Division shall notify the interested participant in writing that it may proceed with the filing of RE Application. The letter to the interested participant shall be encoded under the EAMS.

17.4. If the proposed area is found to be partially occupied by another RE Developer developing the same type of RE Resource being applied for, the interested participant has the option to proceed with filing an RE Application over the re-validated area (net of the area occupied by another RE Developer).

PART 2

Filing and Evaluation of RE Applications

SECTION 18. Receipt of RE Applications. — Following the area verification step, the interested participant may proceed to submit its RE Application by complying with the procedures and requirements as follows: EcTCAD

18.1. Prior to its submission of the RE Application to the RMD, the RE Applicant shall proceed to the concerned REMB Division who shall determine whether the RE Application is complete based on the Checklist of Requirements. The determination shall be made in the presence of the RE Applicant or its duly authorized representative. No RE Application shall be received and no order of payment shall be issued unless the RE Applicant has submitted all the documentary requirements enumerated under the Checklist of Requirements.

18.2. After payment of the application and processing fees, the RE Application shall be submitted to the RMD, together with a photocopy of the official receipt of the said fees. Thereafter, the RMD shall attach a RFID tag thereon, encode the document under EAMS and forward the document to the REMB Assistant Director. The RE Application shall follow the format prescribed in Section 13.4.2 hereof. Each printed copy shall be enclosed in separate folders designated for the legal, technical, and financial documents. At this point, the RE Application is deemed filed and any amendment thereof by the RE Applicant shall no longer be allowed.

SECTION 19. Evaluation of RE Applications. —

19.1. The RMD shall, within one (1) working day from receipt of RE Application, forward the same to the concerned REMB Division. The concerned REMB Division shall record the date of filing of the RE Application and within the same day of receipt from the RMD, distribute one (1) copy of the RE Application each to the LS for legal evaluation, and the DOE-Financial Services (FS) for financial evaluation.

19.2. The concerned divisions of the REMB, LS, and FS shall evaluate the RE Application simultaneously. The evaluations shall be completed within five (5) working days from the date of their receipt of the same.

19.2.1.  If the RE Application passes the legal, technical, and financial evaluations, the evaluation documents shall be collated and endorsed by the REMB Director to its Supervising Assistant Secretary and Undersecretary. To this end, the concerned REMB Division shall assist the REMB Assistant Director by preparing, within three (3) working days from its receipt of the evaluation documents, a memorandum endorsing the RE Application for the concurrence of the LS, the draft RE Contract, and the corresponding Certificate of Registration (COR), as necessary. The endorsement must include the original copy of the results of legal, technical and financial evaluations along with all their attachments, and the project area map and its technical descriptions.

19.2.2.  In case the RE Application does not pass any of the legal, technical, or financial evaluations, the concerned REMB Division shall, within three (3) working days from receipt of all the evaluations, prepare a letter to be signed by REMB Director requiring the RE Applicant to submit documents in support of its application within a period of ten (10) working days from receipt of such notice.

(a) Failure of the RE Applicant to submit supplementary documents within the prescribed period shall be deemed an abandonment of the RE Application. Thereafter, a notice to the RE Applicant shall be prepared by the REMB, signed by its Assistant Secretary, stating that the RE Application is deemed to have been abandoned by the RE Applicant.

(b) In case the RE Applicant submits supplementary documents within the prescribed period above, the REMB shall immediately forward such documents to the concerned units of the DOE upon its receipt of the same. Thereafter, the concerned units of the DOE shall re-evaluate the RE Application and submit the result within two (2) working days from receipt thereof. The REMB Assistant Director shall collate the results and follow the procedure outlined in Section 19.2.1 above if the RE Application passed the legal, technical, and financial requirements.

(c) Should the RE Application still fail to pass any of the subsequent legal, technical or financial evaluations, the REMB Assistant Director shall recommend the disqualification of the RE Application to the supervising Assistant Secretary who shall then issue a formal notice to the RE Applicant stating the basis of the disqualification. Upon receipt of the RE Applicant of the letter of disqualification, the REMB shall prepare a memorandum to the ITMS to immediately re-open the area for RE Applications by posting such information on the DOE website.

19.3. It shall be the duty of the concerned DOE unit to encode all documents and activities in the EAMS during the evaluation process.

CHAPTER VI

Award of RE Contracts

SECTION 20. Approval and Signing of the RE Contract. — The following procedure shall govern the awarding of RE Contracts and the registration of RE Developers: HSAcaE

20.1. Notification of Award. — The DOE shall notify the selected (under the OCSP) or qualified (under Direct Application) RE Applicant of the award and the schedule of the signing of the RE Contract, Provided, That any RE Contract in the nature of a financial or technical assistance agreement shall be approved and executed by the President of the Philippines, upon the recommendation by the DOE Secretary, in accordance with Article XII, Section 2 of the Philippine Constitution.

20.2. Signing of the RE Contract. — The signing of the RE Contract shall be divided into two stages, namely: a) pre-signing by the RE Applicant; and b) signing of the DOE Secretary.

20.2.1.  The REMB Supervising Assistant Secretary shall review the recommendation and endorse the same to the REMB Supervising Undersecretary within two (2) working days from receipt thereof. The Undersecretary shall act on the endorsement within two (2) working days from receipt of the documents. Within one (1) working day from the concurrence of the Undersecretary of the REMB's recommendation, the REMB Director shall require the RE Applicant to pre-sign the original copies of the RE Contract following the prescribed template.

20.2.2.  Within one (1) working day from the date of pre-signing, the REMB Director shall prepare a memorandum to the DOE Secretary, coursed through its Supervising Assistant Secretary and Undersecretary, endorsing the award of the RE Contract. The endorsement shall include the pre-signed RE Contract with the corresponding Certificate of Registration (COR), and all the relevant attachments.

20.2.3.  The REMB Director shall forward the pre-signed RE Contract, along with the endorsement and all its attachments, to the LS for its concurrence. Within three (3) working days from receipt of the documents, the LS shall review the pre-signed RE Contract and all the other documents and revert the same to REMB for further processing.

20.2.4.  Upon receipt of the LS concurrence of the pre-signed RE Contract and its accompanying documents, the REMB shall endorse the same to its Supervising Assistant Secretary.

20.2.5.  The REMB Supervising Assistant Secretary shall review the pre-signed RE Contract and its accompanying documents and endorse the same to the REMB Supervising Undersecretary. Likewise, the REMB Supervising Undersecretary shall review the pre-signed RE Contract and its accompanying documents and endorse the same to the DOE Secretary. This process shall take three (3) working days to complete.

20.2.6.  The Office of the DOE Secretary shall receive the pre-signed RE Contract and all its attachments, the endorsement of the REMB, and the concurrence of the LS thereto. The DOE Secretary shall act on the documents within seven (7) working days from receipt thereof.

20.3. Payment of Signing Fee. — The REMB Director shall send a written notice to the RE Applicant within one (1) working day from the DOE Secretary's signing of the RE Contract to pay the signing fee and post the performance bond, within the relevant period, covering the first Contract Year. Said notice shall likewise contain an order of payment for the signing fee which shall be paid directly to the Treasury.

The RE Developer shall submit proof of payment of the signing fee within fifteen (15) calendar days from receipt of notice. Failure of the RE Developer to do so shall be deemed as an abandonment of the RE Application and shall cause the revocation of the COR and the RE Contract. Further, non-posting of the performance bond within thirty (30) calendar days from receipt of notice shall cause the RE Contract to be deemed void.

20.4. Delivery of the Signed RE Contract. — The notarized copy of the RE Contract and the COR shall be furnished to the RE Applicant upon submission by the latter of a copy of the official receipt of payment of the corresponding signing fee to the DOE. A copy of the original RE Contract and a photocopy of the COR shall be provided to the concerned REMB Division and the RMD.

20.5. Duty to Maintain Records. — The concerned REMB Division shall maintain a record of all LOIs received in the EAMS, and pending RE Applications and signed RE Contracts in the Energy Virtual One-Stop Shop (EVOSS) System.

20.6. The ITMS shall make the area available to other applicants only when: a) the RE Applicant failed to qualify; or b) withdraws or abandons its LOI or RE Application, as the case may be, and only after due notice is given to the concerned interested participant/RE Applicant of such information by the REMB Supervising Assistant Secretary, copy furnishing the ITMS with the said notice. Once an area is declared to be available, subsequent RE Applications covering the same may be allowed, and only on a first-come, first-served basis. HESIcT

CHAPTER VII

Technical Guidelines

SECTION 21. Configuration of RE Contract Area. — The configuration of the proposed Contract Area shall depend on the type of resource being applied for which shall be as follows:

21.1. For solar and biomass resources, the area shall be in one (1) parcel polygon. The interested participant shall specify the type of system of the RE Project, whether it is ground-mounted, roof-mounted or floating solar and submit the technical requirements based on the chosen system.

21.2. For hydropower resources, the applied area shall indicate the geographic coordinates of the proposed location of weir, with elevation, and the powerhouse.

21.3. For wind, geothermal and ocean resources, the applied area shall either be polygonal or in blocks following the Blocking System or a combination of both.

SECTION 22. Proof of Access to Proposed/Applied Area. — The RE Applicant for solar and biomass development shall submit proof of ownership or possessory rights over real property/ies covered by the proposed project area/site located in private lands: Provided, That in the case of public lands, proof of application to acquire possessory rights ever the real property/ies covered by the proposed area shall suffice.

SECTION 23. Area Verification Results. — The ITMS shall provide the concerned REMB Division with the verification report which may indicate that the proposed Contract Area is:

23.1. Covered by an existing PDA under the OCSP, RE Contract or pending RE Application for the development of the same RE Resource in the LOI or RE Application, or other energy resource assessment activities as submitted by the concerned DOE unit and verified by the ITMS;

23.2. Within or overlaps the area of an existing energy service or operating contract such as Petroleum SC, COC, SSMP or RESC, other than the RE resource or technology being applied for;

23.3. Within or overlaps the area of an existing energy service or operating contract application such as Petroleum SC, COC, SSMP or RESC, other than the RE resource or technology being applied for;

23.4. Within the protected areas under RA No. 11038 or the Expanded National Integrated Protected Areas System Act of 2018, ancestral domains with Certificate of Ancestral Domain Title or Claim, areas with Tenurial Instruments from other government agencies, and other areas covered by significant geospatial data that will be identified as necessary in the evaluation of the RE application based on available data on file at the ITMS and the National Mapping Resource Information Authority's Philippine Geoportal Project website;

23.5. Covered by the LOI of the same or other energy resource; or

23.6. Open for RE Applications.

SECTION 24. Multiple Resources in an Area. — In instances of area overlap found under Sections 23.2 to 23.3 above, the interested participant may still pursue the RE Application subject to the provisions herein below set forth.

24.1. Acknowledgment of Prior Right of Applicants, Registered Developers, and/or Energy Contractors. — The interested participant may still apply for an RE Contract over an area with multiple resources by first submitting a notarized acknowledgment and undertaking that it recognizes and shall continue to recognize the existence of the prior rights of the existing applicants and/or developers thereon.

24.2. Notice to Applicants, Registered Developers, and/or Energy Contractors Holding Prior Rights. — In giving notice to interested participants, applicants, registered developers, and/or energy contractors holding prior rights to a certain area, the following process shall be observed:

24.2.1.  The REMB shall inform both the interested participant, and applicant or contractor/developer of the overlap where the latter shall be given five (5) working days from receipt of notice to file any objections, stating therein justifiable reasons therefor.

24.2.2.  If no objection is filed by the applicant, energy contractor/developer within the prescribed period, the interested participant shall be given three (3) working days from receipt of such notice to file an RE Application.

24.2.3. If an objection is filed, the DOE Secretary, upon recommendation of concerned DOE bureaus, shall resolve the matter within ten (10) working days from receipt thereof, taking into account the most beneficial use of the resources.

CHAPTER VIII

Administration of RE Contracts

SECTION 25. Posting of a Performance Bond. — The RE Developer shall post a bond or any other guarantee of sufficient amount, but not less than the minimum expenditures commitment for the first Contract Year, which shall be a condition precedent for the effectivity of the RE Contract. A valid and subsisting performance bond is required to be maintained annually until the pre-construction phase of the RE Project. caITAC

SECTION 26. Updating of RE Projects Data to the EVOSS and DOE Website. — The following shall govern the posting and updating of RE Contracts awarded and pending RE Applications on the DOE website.

26.1. The REMB-Technical Service Management Division (TSMD), in coordination with the relevant REMB Divisions, shall collate and update the list of RE Contracts awarded and RE Applications filed and under evaluation on a quarterly basis. Upon full operation of the EVOSS, updating of data shall be in accordance with the periods provided in the system.

26.2 All concerned DOE units shall provide updates to the EVOSS and DOE websites.

26.3. All RE Developers shall be required to register with the EVOSS for regular updating of their respective RE Projects.

SECTION 27. Amendment of RE Contracts. —

27.1 Amendment to RE Contracts, When Required. — RE Contracts shall be amended only: (a) when making changes to the RE Contract Area; or (b) under the circumstances enumerated in Section 27.4 hereof.

No amendment to the RE Contract is required when the RE Project transitions from the Pre-Development to the Development Stage. However, the relinquishment of a portion of the Contract Area after identifying the Production Area pursuant to Section 5 above shall result in the issuance of new annex to the RE Contract, indicating the revised Contract Area, with corresponding map and technical description.

27.2. Amendments to the RE Contract Area. — The RE Developer shall submit a request in writing addressed to the REMB Director, with the letter attention given to the concerned REMB Division, and shall comply with the following:

27.2.1.  Technical description of proposed amendment to the Contract Area indicates the technical specifications and other mapping requirement for the purpose of area verification;

27.2.2.  The proposed amendment shall cover an area contiguous to the existing Contract Area and, upon verification by the ITMS pursuant to the process in Section 23, is available and open for RE Resource exploration, development and/or utilization;

27.2.3.  The amendment of the Contract Area is justified and reasonable, which may be proven by: (a) the results of the resource assessment, duly verified by the concerned REMB unit; (b) proof of land rights; (c) proof that the RE Developer is not in default of its technical and financial obligations under the RE Contract; and (d) other relevant facts and/or documents; and

27.2.4.  The Work Program with respect to the amended Contract Area is acceptable.

Holders of RE Contracts with provisions on milestone periods shall be allowed to apply for Contract Area amendments during the milestone period, Provided, That all approved milestone activities under the RE Contract have already been accomplished.

27.3. All other RE Contracts entered into by the DOE which used the templates for RE Contracts prior to this Circular, shall be allowed to apply for Contract Area amendments at any time prior to sixty (60) calendar days before the expiration of the Pre-Development Stage.

27.3.1.  In case the DOC states that the viability of the project is subject to a Contract Area amendment, such amendment may be allowed upon issuance of the COCOC.

27.3.2.  The following templates for amendments of Contract Area under existing RE Contracts are hereby adopted as follows:

(a) RE Contracts issued in compliance with this Circular, shall adopt the template for the amendment of Contract Area attached hereto as Annex K; and

(b) All other RE Contracts issued prior to or in accordance with Department Order (DO) No. DO2013-08-0011, entitled "Adopting Policies in Relation to the Processing of Renewable Energy Service Contracts and Mandating the Adoption of the Revised Templates for Renewable Energy Service Contracts" shall adopt the revised RE Contract templates attached hereto as Annexes A to F.

27.4. Other Amendments. — RE Contracts shall also be amended in any of the following instances:

27.4.1.  Increase or decrease in the installed capacity of the RE Project;

27.4.2.  Change of type of feedstock for biomass operations;

27.4.3.  Change of location of project site (for biomass and hydro sources only). ICHDca

27.5. Only a revised COR shall be issued in case of the following changes:

27.5.1.  Company name of the RE Developer; and/or

27.5.2.  Assignment of RE Contract in accordance with the terms thereof, to an entity that has the same legal, technical and financial qualifications as the assignor/RE Developer.

The amendments under this Section shall require the surrender of the original COR prior to ealuation of the request, Provided, That in the case of an amendment solely for the change of the company name, the request shall be directly endorsed to the DOE Secretary after legal evaluation.

27.6. Evaluation of Requests for RE Contract Amendment. — All requests for RE Contract amendment shall be submitted to the REMB, through RMD, and shall be processed as follows:

27.6.1.  Upon receipt of the request, the RMD shall attach a RFID tag thereon, encode the request under the EAMS and forward the same to the REMB Director.

27.6.2.  Within one (1) working day from receipt of the request for RE Contract amendment, the REMB Director shall forward the documents to the concerned REMB Division for evaluation.

27.6.3.  The concerned REMB Division shall evaluate the request within five (5) working days. In case the evaluation of the concerned REMB Division shows: a) that there are additional costs to be incurred that should warrant another financial evaluation; b) if there are any legal concerns on the RE project; or c) if there is a need of re-plotting of Contract Area, it shall endorse the request to FS, LS and/or ITMS which shall evaluate the request within five (5) working days from receipt of such endorsement.

27.6.4.  Within two (2) working days from completion of the evaluation, the concerned REMB Division, through the REMB Director, shall provide the REMB Supervising Assistant Secretary and Undersecretary its recommendation on the request and the complete basis thereof.

27.6.5.  The REMB Supervising Assistant Secretary and Undersecretary shall, within three (3) working days from receipt of such recommendation, issue a memorandum that shall contain the highlights of the evaluation and a recommendation to the DOE Secretary for approval.

27.7. Revision of the Work Program. — Subject to terms and conditions stipulated in the RE Contract, the RE Developer may request for revision of its Work Program with justification on such revision and shall be processed in accordance with the following:

27.7.1.  Upon receipt of the request, the RMD shall attach a RFID tag thereon, encode the request under the EAMS and forward the same to the REMB Director.

27.7.2.  Within one (1) working day from receipt of the request for the revision of Work Program, the REMB Director shall forward the documents to the concerned REMB Division for evaluation.

27.7.3.  The concerned REMB Division shall evaluate the request within five (5) working days. In case the evaluation of the concerned REMB Division shows: a) that there are additional costs to be incurred that should require another financial evaluation, or b) if there are new legal issues brought about by such revision, it shall endorse the request to the FS and/or LS which shall evaluate the request within five (5) working days from receipt of such endorsement.

27.7.4.  Within two (2) working days from completion of the evaluation, the concerned REMB Division, through the REMB Director, shall provide the REMB Supervising Assistant Secretary its recommendation on the request and the complete basis thereof.

27.7.5.  The REMB Supervising Assistant Secretary shall, within three (3) working days from receipt of a memorandum containing the highlights of the evaluation and a recommendation, endorse the same to the REMB Supervising Undersecretary for approval.

27.8. The concerned REMB Division shall immediately provide to the TSMD, ITMS, and DOE-Investment Promotion Office (IPO) the status of RE Contract/COR for timely update of database.

SECTION 28. Assignment of RE Contracts. —

28.1. All assignments of RE Contracts shall be subject to prior written approval of the Department.

28.2. The RE Developer may assign part or all of its rights and/or obligations under the RE Contract to its Affiliate or any third party, subject to Section 28.1, and in accordance with the following:

28.2.1.  The RE Developer shall submit to the Department copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and

28.2.2.  In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations. TCAScE

28.3. An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during: a) the entire period of the Pre-Development Stage of the RE Service Contract; or b) the entire term of the RE Operating Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

SECTION 29. Procedures for the Transition from Pre-Development to Development Stage. —

29.1. The RE Developer shall submit to the concerned REMB Division the DOC with documentary requirements specified in Annex L of this Circular prior to the expiration of the Pre-Development Stage. The concerned REMB Division shall determine the completeness of the submission.

29.2. Once the submission is deemed complete, the RE Developer shall submit the DOC to the RMD and the latter shall encode the submission in the EAMS and EVOSS.

29.3. Failure by the RE Developer to submit its DOC within the Pre-Development Stage shall be a cause for the termination of its RE Contract. The acknowledgment of receipt of the DOC by the DOE shall suspend the period for the Pre-Development Stage.

29.4. Within twenty (20) working days from receipt of the DOC, the DOE shall either:

29.4.1.  Issue the COCOC, if the results of the evaluation of the DOC are satisfactory, which shall likewise be considered the transition of the RE Contract from Pre-Development Stage to Development/Commercial Stage; or

29.4.2.  Issue a written notice to the RE Developer indicating that it has the remainder of the Pre-Development Stage to correct any deficiencies and/or satisfy the requirements for issuance of the COCOC, if the results of the evaluation of the DOC are unsatisfactory. Said written notice shall be signed by the REMB Director.

29.5. The failure of the RE Developer to correct any deficiencies or otherwise satisfy the requirements for issuance of the COCOC before the expiration of its Pre-Development Stage shall be a cause for the termination of its RE Contract.

SECTION30. Conversion to the New RE Contract Template. — Holders of contracts/agreements prior to the effectivity of this Circular may apply for conversion to the new RE Contract templates provided in Annexes A to F hereof, and are subject to the conditions and procedures hereinbelow provided.

30.1. Requirements for Conversion to New RE Contract Template. — Contractors/RE Developers may apply for conversion to the new RE Contract templates subject to the following conditions:

30.1.1.  Contractors/RE Developers must be fully compliant with the terms of the approved Work Program/Work Plan and the material terms and conditions of the contract/agreement for the past six (6) months prior to the date of filing its application for conversion. For RE Developers with RE Contracts executed less than six (6) months from date of application for conversion, the evaluation of their compliance of the commitments under the approved Work Program and of the material terms and conditions of the RE Contract shall be the basis of their performance.

30.1.2.  Submission of a letter of application for conversion with the following documentary requirements:

(a) Work Program covering the first five (5) years of the remaining term of the old contract/agreement, reckoned from the date of its execution.

(b) Revised Contract Area following the mapping requirements provided in Annex J hereof. In the case of biomass and solar development, the revised Contract Area is its Production Area only. Any remaining portion of the original Contract Area shall be deemed relinquished.

30.1.3.  The conversion of RE Contracts awarded under the RE Act but prior to the effectivity of this Circular shall be limited to those covering RE projects which are under pre-commissioning/commercial operation phase.

30.2. Procedures for Application. — Applications for conversion to the new RE Contract template shall be processed based on the following procedures:

30.2.1.  The application letter shall be addressed to the REMB Director and filed with the RMD, along with all the other documentary requirements. cTDaEH

30.2.2.  Within one (1) working day from receipt of the application documents, the RMD shall transmit the application to the REMB Director. Any incomplete documentary requirements in the application for RE Contract conversion may be rectified by the applicant within five (5) working days from receipt of such notice. Upon receipt of supplemental documents or clarification, the application shall be processed following the procedures in Section 30.2.

30.2.3.  The concerned REMB Division shall evaluate the application based on performance of the contractor/RE Developer of its contractual obligations under the old contract/agreement and its application documents within ten (10) working days from receipt thereof.

30.2.4.  The REMB shall then endorse the mapping requirements to the ITMS who shall produce/print the map of the Production Area within five (5) working days from receipt of the endorsement.

30.2.5.  Qualified applications shall be endorsed by the REMB to its Supervising Undersecretary, through its Supervising Assistant Secretary, for concurrence. The REMB Supervising Undersecretary shall act on the applications so endorsed within three (3) working days from receipt thereof.

30.2.6.  Upon the concurrence of the Undersecretary, the REMB shall notify the RE Developer of such fact and require the pre-signing of the RE Contract.

30.2.7.  Within one (1) working day from the RE Contract pre-signing, the REMB shall endorse the pre-signed RE Contract along with the evaluation results to the DOE Secretary for approval, through the REMB Supervising Undersecretary and Assistant Secretary. The DOE Secretary shall act on the documents within five (5) working days from receipt thereof.

30.2.8.  Upon signing of the RE Contract by the DOE Secretary, the REMB shall notify the RE Developer to pick up its copy of the RE Contract.

SECTION31. Termination of RE Contracts. — The DOE shall have the power to terminate RE Contracts, after due notice to the RE Developer.

31.1. Evaluation Process for RE Contract Termination. — The concerned REMB Division shall recommend the termination of the RE Contract within the following timelines:

31.1.1.  Five (5) working days from the lapse of the Pre-Development Stage of the RE Contract where the RE Developer failed to submit its DOC;

31.1.2.  Three (3) working days from the voluntary relinquishment of the RE Developer of the RE Contract;

31.1.3.  Prior to the pre-construction phase of the RE Contract, upon the discovery that the RE Developer failed to maintain the required performance bond; or

31.1.4.  At any stage of the RE Contract, upon findings of any of the grounds for RE Contract termination as stipulated therein.

The failure of the DOE to adhere to the periods provided above shall not be construed as a waiver of its power to evaluate and recommend the termination of RE Contracts at a later time.

31.2. With respect to Sections 31.1.1 and 31.1.4 above, the concerned REMB Division shall prepare a letter, signed by the REMB Director, requiring the RE Developer to explain in writing why its RE Contract should not be terminated. The RE Developer shall be given a non-extendible period of thirty (30) calendar days to submit its explanation, which shall be accompanied by supporting documents.

No later than twenty working (20) days from its receipt of the RE Developer's written explanation, the concerned REMB Division shall submit its findings and recommendation to the REMB Director.

31.3. Within three (3) working days from receipt of the findings and/or recommendation, the REMB Director shall act upon the same and recommend a course of action to the DOE Secretary through its Supervising Assistant Secretary and Undersecretary.

31.4. In case the DOE Secretary/approves the REMB Director's recommendation, the RE Developer shall be notified in writing of the termination of its RE Contract. The concerned REMB Division shall inform the TSMD, ITMS, and IPO of such fact.

31.5. Subject to the conditions under Section 31 hereof, areas covered by terminated RE Contracts shall be declared by the DOE open for development, specifying the mode of awarding of the RE Contract; which, if the area is determined as a PDA, RE Contract applications shall be through OCSP as provided herein. Otherwise, the area shall be available to all interested parties for RE resource development under Direct Application, and only on a first-come first-served basis. cSaATC

SECTION32. Request for Reconsideration. — An RE Developer whose RE Contract was terminated may request for the reconsideration of the same. The request shall be made in writing, addressed to the REMB Director, and filed within ten (10) working days from the RE Developer's receipt of the notice of termination. The REMB Director shall evaluate the merits of the request for reconsideration and endorse such recommendations to the DOE Secretary, through the REMB Supervising Assistant Secretary and Undersecretary, following the process provided under Section 31 hereof.

CHAPTER IX

Registration of RE Projects for Own-Use and/or Non-Commercial Operations

PART 1

General Provisions

SECTION33. Certificate of Registration. — A Certificate of Registration is the proof of registration of the RE Developer with the DOE and is required to avail of the incentives under the RE Act. A RE Contract is required for the issuance of a COR except for RE Projects for Own-Use and/or Non-Commercial Operations.

PART 2

Procedures for Registration

SECTION34. Issuance of Certificate of Registration for RE Projects for Own-Use and/or for Non-Commercial Operations. — The COR shall be issued to the RE Developer only upon its complete submission of the requirements herein below provided, and only after the evaluation of the same by the REMB which shall recommend its approval to the DOE Secretary.

SECTION35. Documentary Requirements. — Any proponent intending to install, construct, and operate an RE Project under this Chapter shall strictly comply with the following:

35.1. Technical Requirements. —

35.1.1.  Application letter addressed to the REMB Director;

35.1.2.  Project description detailing the technical design, financing structure, the target commissioning date, location of the Project and the RE Resource to be used; and

35.1.3.  Proof of ownership of proposed project site.

35.2. Legal Requirements. — The same legal requirements in Checklist of Requirements in Annex I of this Circular shall be submitted.

To ensure the completeness of the application documents, the REMB may provide a venue to serve as the pre-filing conference/meeting/orientation among the concerned DOE units and the proponent, prior to submission of formal application to the RMD.

SECTION36. Pre-Qualification, Filing, and Processing of Application for Registration. —

36.1. Pre-Qualification Process. — The concerned REMB Division shall determine, on a pass or fail basis, whether the requirements for registration have been fully complied with and the proponent has submitted all the documents prescribed under Section 35 hereof. Thereafter, the concerned REMB Division shall issue an order of payment for application and processing fees.

No order of payment shall be issued unless all the documentary requirements have been complied with and submitted by the proponent.

36.2. Payment of Application and Processing Fees. — After determining the completeness of documents, the proponent shall be advised to pay the prescribed application fee for each application. No application shall be accepted without the payment of the application and processing fees.

36.3. Receipt of the Application. — The Application shall consist of three (3) sets of documentary requirements for registration found in Section 34 hereof and shall be submitted to the REMB, through the RMD. Thereafter, the RMD shall attach an RFID tag thereon and encode the application in the EAMS.

36.4. Processing Period. — The application shall be processed within twenty (20) working days from the receipt of the complete documents and the payment of the application and processing fees.

SECTION 37. Evaluation and Process for Issuance of COR. —

37.1. Qualification Evaluation. — After receipt of the Application and payment of fees, the Application is deemed filed and submitted for legal and technical evaluations:

37.1.1.  The LS shall complete its review and evaluation within three (3) working days from receipt of the endorsement of the Application by the concerned REMD Division.

37.1.2.  The concerned REMB Division shall complete its technical evaluation within three (3) working days from receipt of the registration documents from the REMB Director.

In case additional documents are required to support the legal qualifications of the Application, the LS shall immediately notify the concerned REMB Division of the documents required.

The concerned REMB Division has two (2) working days from its receipt of the notice of the LS, to notify the Applicant of the additional documents required for the evaluation of its Application. Thereafter, the Applicant shall be given five (5) days to submit the documents required.

If the Application is deemed legally and technically qualified, the Application shall be submitted for final processing by the concerned REMB Division for the issuance of a COR. cHDAIS

37.2. Request for Reconsideration. — In case any Application is deemed not legally, technically or financially qualified, the REMB Assistant Secretary shall, within two (2) working days from receipt of the full evaluation result from the concerned REMB Division, issue a written notice to the Applicant of the decision on its Application. The notice to the Applicant shall indicate the basis of or reasons for the disqualification.

The Applicant, however, may request for reconsideration in writing, addressed to the REMB Supervising Undersecretary, within ten (10) working days from receipt of notice of disqualification.

The REMB Supervising Undersecretary shall resolve the request for reconsideration within five (5) working days from receipt of the same.

SECTION38. Validity of the Registration. — The COR shall have an initial validity period of five (5) years, renewable for the same period until the end-of-project life is reached or a maximum of twenty-five (25) years.

SECTION39. Terms and Conditions of the Registration. — Any RE Developer and its Project shall be issued a COR (Annex M) which shall contain the terms and conditions thereof.

CHAPTER X

Transitory Provisions

SECTION40. Evaluation of Pending Applications. — RE Applications filed prior to the effectivity of this Circular shall be governed by the existing guidelines at the time of the filing of the applications. The ITMS shall report to the REMB all areas covered by pending RE Applications and RE Contracts within fifteen (15) working days from the date of this Circular. REMB shall use this information to commence the process of identifying PDAs for preparation of the OCSP. RE Applicants that have passed the legal, technical and financial requirements under the existing guidelines prior to the effectivity of this Circular shall be given an option to choose which RE Contract template to adopt: Provided, however, that should there be any new application requirements for RE Contract covering development of a particular type of RE resource, the applicant must satisfy first such requirement/s.

SECTION41. Re-filing of the Application for RE Contract and Certificate of Registration. — Pending applications for RE Contract or issuance of CORs may be re-applied, at the option of the RE Applicant, within (30) working days from effectivity of this Circular without need of new or re-payment of the application fees. Failure of the applicants to re-file its application within the said period shall be construed as its decision to: (a) submit to the ongoing evaluation of its RE Application under the prior rules or guidelines, and (b) comply with the results of such evaluation of its pending RE Application.

CHAPTER XI

Final Provisions

SECTION42. Extension of Timelines. — Subject to the provisions of RA No. 11032, the respective timelines provided under Chapter VIII of this Circular may be extended for the same period prior to the lapse of the subject period, Provided, That the DOE shall notify the affected party in writing of the reason for the extension and shall provide the final date of release of the matter requested.

Only one extension is allowed and shall, in no case, exceed sixty (60) calendar days.

For this purpose, the Citizen's Charter of the REMB shall be amended to reflect the timelines herein provided.

SECTION43. Information, Education and Communication Activities. — Pursuant to Section 31, Rule 10 of the IRR of the RE Act, the DOE, together with National Renewable Energy Board, shall develop and implement a comprehensive information, education and communication activities that are designed to increase the public awareness and appreciation of this Circular and the RE industry in general.

SECTION44. RE Resources under New Emerging Technologies. — For other RE Resources which are developed through emerging RE technologies and are not enumerated in Chapter III of this Circular, the REMB shall develop a regulatory framework for the exploration, development, utilization and commercialization of such RE Resources utilizing such emerging technologies. In the absence of such regulatory framework, the procedures governing a particular RE Resource that is most analogous to the emerging technology shall be adopted.

SECTION 45. Regulatory Support. — The Energy Regulatory Commission shall provide the necessary regulations to support achieve a harmonized and effective implementation of this Circular.

SECTION 46. Separability Clause. — If for any reason, any provision of this Circular is declared unconstitutional or invalid by a court of competent jurisdiction, the other parts or provisions not affected thereby shall remain in full force and effect.

SECTION 47. Repealing Clause. — The provisions of other circulars, orders, issuances, rules and regulations, which are inconsistent with the provisions of this Circular are hereby repealed, amended, superseded or modified accordingly.

SECTION48. Effectivity. — This Circular shall take into effect fifteen (15) days following its publication in at least two (2) newspapers of general circulation. Copies of this Circular shall be filed with the University of the Philippines Law Center — Office of the National Administrative Register. ISHCcT

Issued on October 1, 2019, at Energy Center, Rizal Drive, Bonifacio Global City, Taguig City.

(SGD.) ALFONSO G. CUSI

Secretary

ANNEX A

Project Site

Biomass Energy Operating Contract

This BIOMASS ENERGY OPERATING CONTRACT (this "RE Contract"), made and entered into this ________________ (Date of Execution) in Bonifacio Global City, Taguig City by and between:

The REPUBLIC OF THE PHILIPPINES, hereinafter referred to as the "GOVERNMENT," through the "Department of Energy," hereinafter referred to as the "DEPARTMENT," a government agency established pursuant to Republic Act No. 7638, as amended, with principal office address at the Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, represented herein by its Secretary, Name;

-and-

COMPANY NAME, hereinafter referred to as the "RE DEVELOPER," a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office address at Company Address represented herein by its Designation, Name.

Each of the DEPARTMENT and the RE DEVELOPER is referred to as a "Party," and collectively as the "Parties." In the implementation of this RE Contract, the GOVERNMENT shall act through and be represented by the DEPARTMENT.

WITNESSETH:

WHEREAS, all forces of potential energy in public and/or private lands, within the Philippine territory, belong to the State and their exploration, development and utilization are governed by Section 2, Article XII of the 1987 Constitution;

WHEREAS, under Republic Act No. 7638, as amended otherwise known as the Department of Energy Act of 1992, the DEPARTMENT shall establish and administer programs for the exploration, development and utilization of energy resources, including Biomass Resources;

WHEREAS, Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (the "Act"), declares as a policy of the State to accelerate the exploration and development of renewable energy (RE) resources including, among others, biomass, to achieve energy self-reliance through the adoption of sustainable energy development strategies;

WHEREAS, Section 5 of the Act declares that the DEPARTMENT shall be the lead agency mandated to implement its provisions;

WHEREAS, Section 19, Rule 6, paragraph C of the Rules and Regulations Implementing the Act (the "IRR") provides that the biomass sector shall be covered by an RE Operating Contract ("RE Contract") wherein the biomass developer commits to develop, construct, install, commission and operate an RE generating facility subject to the terms and conditions specified therein;

WHEREAS, the RE DEVELOPER intends to engage in the development and utilization of biomass within the Project Site and agrees to be subject to the laws and decrees of the GOVERNMENT and other rules and regulations of the DEPARTMENT in the implementation of this RE Contract;

WHEREAS, the RE DEVELOPER has been determined by the DEPARTMENT to be legally, technically, and financially qualified to enter into this RE Contract;

NOW, THEREFORE, for and in consideration of the terms and conditions set forth herein, the Parties hereby stipulate and agree as follows:

SECTION I. SCOPE. —

1.1 This RE Contract is entered into pursuant to the Act, with the services, technology and financing to be furnished by the RE DEVELOPER for the operation of a Biomass Energy System, in an economically viable manner and in accordance with this RE Contract.

1.2 The provisions of this RE Contract shall govern the development, construction, installation, commissioning and operation of a Biomass Energy System located in Brgy., Municipality, Province that will generate electrical power from Biomass System using _______________ feedstock.

1.3 The RE DEVELOPER may pursue any Additional Investment or New Investment within the Project Site and shall be solely responsible for providing the necessary services, technology, equipment and financing therefor. In case of New Investment, the Parties shall enter into a new Renewable Energy (RE) Operating Contract at the option of the RE DEVELOPER, subject to approval of the DEPARTMENT.

1.4 The RE DEVELOPER shall assume all the technical and financial risks under this RE Contract without any guarantee from the GOVERNMENT and shall not be entitled to reimbursement for any expense incurred in connection with this RE Contract.

SECTION II. DEFINITION OF TERMS. —

2.1 The words and terms under this RE Contract, unless otherwise specified in the Act and its IRR or in relevant laws and regulations, shall have the meaning in accordance with the following definitions: CAacTH

a) "Additional Investment" refers to investments relating to improvements, modernization, rehabilitation, or expansion duly registered with the DEPARTMENT, subject to the conditions to be determined by the DEPARTMENT, such as, but not limited to the following:

i. Identification of and investment in sequential phases/stages of production, or undertaking scheduled modernization and/or rehabilitation of the Biomass Energy System; and

ii. Improvements to the Biomass Energy System such as reduced production/operational costs, increased production, improved operational efficiency, and better reliability of the Project.

b) "Affiliate" refers to any person or group of persons, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the RE DEVELOPER. As used herein, "control" shall mean the power to direct or cause the direction of the management's policies of a person by contract, agency or otherwise;

c) "Biomass Energy Operations" shall include Biomass Resource development, production and utilization, including the construction, installation, operation and maintenance of Biomass Energy Systems;

d) "Biomass Energy Systems" refers to energy systems which use biomass resources to produce heat, steam, mechanical power or electricity through either thermochemical, biochemical or physio-chemical processes, or through such other technologies which shall comply with prescribed environmental standards;

e) "Biomass Resource" shall have the same meaning as ascribed to in the Act;

f) "Certificate of Registration" refers to that certification issued to the RE DEVELOPER upon the Effective Date of this RE Contract or upon approval of New Investment, to serve as the basis for its entitlement to the incentives provided under the Act;

g) "Commercial Operation" shall refer to the phase commencing at the operation of the RE Project, following the successful testing and commissioning of the RE Project, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DEPARTMENT and other relevant regulatory bodies;

h) "Contract Year" refers to a period of twelve (12) consecutive calendar months counted from the Effective Date of this RE Contract and thereafter, from the anniversary of such Effective Date;

i) "Corporate Income Tax" refers to the tax imposed upon net taxable income under the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337 and the Act. Upon the lapse of period of the Income Tax Holiday (ITH) under the Act, the RE DEVELOPER shall be subject to a Corporate Income Tax rate of ten percent (10%);

j) "Effective Date" refers to the date of the execution of this RE Contract subject to the payment of the signing fee and the posting of the performance bond covering the first Contract Year as provided hereunder;

k) "Expatriate Expert" refers to a foreign national engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Biomass Energy Operations, who shall exercise his technical profession, as allowed under existing laws;

l) "Expiration" refers to the lapse of the term of this RE Contract provided in Section III (Term) hereof;

m) "Filipino Employee" refers to any citizen of the Republic of the Philippines engaged by the RE DEVELOPER and/or its Subcontractor/s for its Biomass Power Operations under this RE Contract, and such engagement is characterized as establishing an employer-employee relationship between such citizen and RE DEVELOPER;

n) "Force Majeure" refers to the extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable;

o) "Generation Facility" refers to a facility for the production of electricity and/or thermal energy such as, but not limited to steam and hot water;

p) "Host LGU" refers to the LGU where the Biomass Energy Resources and/or Generation Facility is located;

q) "Local Government Units/LGU" refers to the territorial and political subdivisions of the State which organization and function are fully described under the Local Government Code of 1991;

r) "New Investment" refers to investments relating to discovery, exploration, development and/or utilization of new RE resources or the development of new Generation Facilities within the Project Site distinct from the originally registered operations having separate books of accounts;

s) "Project" refers to the RE DEVELOPER's Biomass Energy Systems, within the Project Site, which may be implemented in one or more phases;

t) "Project Site" refers to the area where the Biomass Energy Systems is located as described in Annex "A";

u) "RE Contract" refers to this Biomass Energy Operating Contract, as may be amended or extended by the Parties and shall have the same meaning as provided under the Act;

v) "Subcontractor" refers to any person or entity contracted by the RE DEVELOPER to provide goods or services for the purpose of this RE Contract, subject to the provisions of existing laws;

w) "Termination" refers to the right of the Parties to cancel this RE Contract pursuant to Section X (Suspension and Termination) hereof; and IAETDc

x) "Work Program" refers to all types of plans and programs and related activities formulated for the performance of the work obligations by the RE DEVELOPER, along with the corresponding budgetary estimate, submitted to the DEPARTMENT under this RE Contract, attached hereto as Annex "B" and shall thereafter be updated on a regular basis.

SECTION III. TERM. —

3.1 From the Effective Date, the term of this RE Contract shall be twenty-five (25) years.

3.2 At the option of the RE DEVELOPER, the term of this RE Contract may be extended for another twenty-five (25) years, subject to the approval of the DEPARTMENT. The RE DEVELOPER shall request the DEPARTMENT, in writing and not later than one (1) year prior to the expiration of the initial term, for an extension of the term. The extension of the term of this RE Contract shall be governed by such terms and conditions to be mutually agreed upon by the Parties.

SECTION IV. WORK PROGRAM. —

4.1 The RE DEVELOPER shall carry out the Work Program, details of which are particularly described in Annex "B".

4.2 During the implementation of the Work Program, the RE DEVELOPER shall submit for evaluation and approval by the DEPARTMENT any revisions thereto at least one (1) month prior to the end of each Contract Year; Provided, however, That revision shall not be allowed within the first two (2) Contract Years; Provided, further, That the RE DEVELOPER shall be allowed to subsequently revise its Work Program only if it has substantially complied with all its material financial and technical activities under the Work Program for the immediate preceding Contract Year and such revision shall be allowed only once per Contract Year.

4.3 Not later than two (2) months prior to the end of the first five (5) years of the RE Contract, the RE DEVELOPER shall submit a Work Program for the next five (5) years and shall do so every next five (5) years thereafter. The Work Program or any revisions thereof shall require the approval of the DEPARTMENT.

4.4 In the event of failure of the RE DEVELOPER to comply with its commitments under the Work Program, the DEPARTMENT shall call the performance bond posted by the RE DEVELOPER. This is without prejudice to the right of the DEPARTMENT to terminate the RE Contract.

SECTION V. RIGHTS AND OBLIGATIONS. —

5.1 RE DEVELOPER shall have the following rights:

a. To be granted fiscal and non-fiscal incentives and privileges under the Act, the IRR and all other existing laws that are not otherwise modified or repealed by the Act;

b. To receive assistance from the DEPARTMENT in endorsing the Projects to the other agencies of the National Government, LGUs, Board of Investments (BOI) and other entities, for the acquisition of permits, licenses and clearances and availment of applicable fiscal and non-fiscal incentives;

c. Have at all times the right of ingress to and egress from the Project Site to and from facilities wherever located;

d. Acquire rights-of-way and similar rights on, over, under, across and through the Project Site or properties adjacent to the Project Site, which constitute or is reasonably expected to constitute the Project Site as the RE DEVELOPER may reasonably deem necessary.

The DEPARTMENT shall, upon request by the RE DEVELOPER as may be reasonable given the attendant circumstances, assist the RE DEVELOPER in securing such rights. For such purpose, the DEPARTMENT shall and does hereby appoint the RE DEVELOPER as its attorney-in-fact and does hereby give and grant to the RE DEVELOPER full authority to act for and on its behalf in the negotiation and conclusion of agreements and payments for such rights. All obligations, payments and expenses arising from or incidental to the acquisition of such rights shall be for the account of the RE DEVELOPER so as to enable the RE DEVELOPER to have ingress into and egress from the Project Site and to perform all Biomass Energy Operations in accordance with this RE Contract and in consideration of which, entitlement to such rights shall be held in trust in favor of the RE DEVELOPER.

e. Engage the services of Expatriate Experts who shall exercise their technical professions solely for the Biomass Energy Systems: Provided That, Filipino Employees shall be given preference to positions for which they have adequate training and experience required by the RE DEVELOPER; and Provided, further, That if the employment or connection of such Expatriate Experts with the RE DEVELOPER ceases, applicable laws and regulations shall apply to them and their immediate family;

5.2 The RE DEVELOPER shall have the following obligations:

a) Within the period of the first five (5)-year Work Program, the RE DEVELOPER shall develop, construct, install, commission and operate the Biomass Energy System in the Project Site;

b) Secure necessary permits, licenses, endorsements, agreements and clearances from all relevant government and private entities for the Project;

c) Comply with all its work and financial commitments in carrying out its obligations under this RE Contract and provide all necessary services, technology and financing in connection therewith;

d) Pay the taxes due to the GOVERNMENT, as may be applicable;

e) Maintain complete and accurate accounting, financial and technical records of its Biomass Energy Systems, subject to Sections VII (Data and Reports Submission) and VIII (Confidentiality); DcHSEa

f) Submit technical and financial reports in accordance with the format prescribed by the DEPARTMENT within the period prescribed as described in Section VII (Data and Reports Submission);

g) Allow officials and representatives authorized by the DEPARTMENT access to the Project Site, and to the accounts, books and records directly relating to the Biomass Energy Operations during reasonable hours and without causing disruption to the RE DEVELOPER's operation. The RE DEVELOPER shall provide such reasonable facilities and assistance as may be practicable to ensure the success of the inspection;

h) Give priority in employment to qualified personnel in the Host LGUs and give preference to Filipinos in all types of employment for which they are qualified;

i) At the start of every Contract Year, post a performance bond or any other guarantee of sufficient amount but not less than the annual budgetary estimate for the corresponding Contract Year in favor of the DEPARTMENT from a list of DEPARTMENT-accredited insurance or surety companies. The posting of performance bond shall be conditioned upon the faithful performance by the RE DEVELOPER of any or all of the commitments and obligations under the Work Program until the commencement of the construction of the Generation Facility.

 Upon the commencement of the construction of the Generation Facility, the RE DEVELOPER shall notify the DEPARTMENT of such fact and the latter shall verify the same. Thereafter, the obligation to post the bond shall cease;

j) Be subject to the provisions of laws of general application;

k) Be responsible for procurement of installation, equipment and supplies, and for entering into subcontracts related to the Biomass Energy Operations;

l) Comply with the provisions of Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations", as may be amended, and in so doing, (1) exert its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (2) ensure the safety and health of its operating personnel;

m) Give preference to Philippine companies/agencies entering into subcontracts on goods or services that are required in the Biomass Energy Operations but are not carried out by the RE DEVELOPER: Provided, That the goods and services are competitive as to cost, quality and availability, and the services are available in the Philippines;

n) Be responsible in the proper handling of data, samples, information, reports, and other documents;

o) Maintain all meters and measuring equipment in good order and allow access to these to inspectors authorized by the DEPARTMENT;

p) Organize the Information, Education and Communication (IEC) Campaign on benefits to the Host LGUs pursuant to Section 18 of the DEPARTMENT's Department Circular No. DC2009-07-0011; and

q) Comply with all rules, regulations and guidelines issued by the DEPARTMENT and other government agencies that are applicable hereto.

5.3 Upon the Effective Date of this RE Contract or upon the approval of the RE DEVELOPER's New Investment, the DEPARTMENT shall issue a Certificate of Registration to the RE DEVELOPER, to enable it to avail of the fiscal and non-fiscal incentives and privileges as stated under the Act and its IRR. The registration shall be valid and effective for the entire term and effectivity of this RE Contract.

SECTION VI. REPRESENTATION AND WARRANTIES. —

Acknowledging that the GOVERNMENT, through the DEPARTMENT, has entered into this RE Contract in reliance upon the representations and warranties in this Section, the RE DEVELOPER represents and warrants as follows:

6.1 It is a corporation or entity duly formed, established, validly existing and in good standing under the laws of the Philippines with full power to own its property; to carry on its business as it is now being conducted; and to execute, deliver and perform its obligations under this RE Contract, and the entering into and performance of this RE Contract by the RE DEVELOPER does not conflict with the articles of incorporation, by-laws, and other constitutive documents of the RE DEVELOPER and has been duly authorized by all necessary corporate and legal action on the part of the RE DEVELOPER;

6.2 The individual signing this RE Contract on behalf of the RE DEVELOPER is duly authorized to sign as of the Effective Date;

6.3 There is no litigation, arbitration or administrative proceeding is pending or, to the best knowledge of the RE DEVELOPER, threatened against the RE DEVELOPER or its properties the adverse determination of which would adversely affect the ability of the RE DEVELOPER to perform or comply with any of its obligations under this RE Contract;

6.4 The RE DEVELOPER:

a) Has not been declared in default in respect of any of its financial commitments or obligations based on their reports duly validated by the DEPARTMENT;

b) Is not otherwise in default of any kind in respect of any financial commitment or obligation or in respect of any agreement, undertaking or instrument as a party thereof by which it, or any of its assets or properties, may be bound; and

c) Is not aware of a fact that by the service of notice and/or lapse of time would constitute a default in any or both of sub-paragraphs (a) and (b) above.

6.5 No written material information given by the RE DEVELOPER to the DEPARTMENT under this RE Contract contains any misstatement of fact as of the Effective Date or omits to state a fact that is materially adverse to the interests of the DEPARTMENT; and SCaITA

6.6 The ownership of the RE DEVELOPER's capital stock complies with applicable laws and regulations.

SECTION VII. DATA AND REPORTS. —

7.1 All data and reports, except for proprietary techniques used in developing such technical data and reports, must be submitted by the RE DEVELOPER to the DEPARTMENT in accordance with the format approved by the DEPARTMENT.

7.2 The technical data and reports to be submitted by the RE DEVELOPER shall include, but not be limited to, the following:

a) Annual Progress Report — shall be submitted not later than two (2) months after the end of each Contract Year and shall contain the summary of accomplishments under the approved Work Program, direct or indirect jobs generated, summary of fiscal incentives availed in Philippine Peso and status of construction with relevant comments and recommendation on any technical findings, among others;

b) Procurement Plan — shall be submitted not later than one (1) month from the approval of the Work Program and shall be designed according to the approved Work Program, containing an itemized list of equipment, materials, and supplies to be procured with corresponding estimated costs;

c) Monthly Generation Report — shall be submitted within fifteen (15) days from the end of each calendar month and shall include source and volume of feedstock purchased and used, price of feedstock and total electricity generated, used and exported to the grid;

d) General Information Sheet — shall be submitted annually within thirty (30) calendar days from date of actual annual stockholders' or members' meeting;

e) Audited Financial Statement — shall be submitted annually within ninety (90) calendar days from date of actual annual stockholders' or members' meeting; and

f) Reports in accordance with the Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations" as may be amended.

SECTION VIII. CONFIDENTIALITY. —

8.1 All documents, information, data and reports produced or generated during the Biomass Energy Operations under this RE Contract shall be kept strictly confidential over the term of this RE Contract or any extension thereof: Provided, That proprietary information shall be kept strictly confidential at all times subject to lawful acquisitions of such information under existing laws and regulations.

8.2 Without the written consent of the other Party, no Party shall use or disclose the confidential information to any third party and/or to any Affiliate not directly connected with the implementation of this RE Contract except the third parties and Affiliates in Section 8.5, and no Party shall otherwise transfer, present, sell or publish it in any way within the confidentiality periods.

8.3 The DEPARTMENT may use such confidential information belonging to the RE DEVELOPER for the DEPARTMENT's resource mapping, data gathering, policy making and for government planning purposes.

8.4 Upon the Expiration or Termination of this RE Contract, the DEPARTMENT may provide third parties with the data and reports submitted by the RE DEVELOPER pursuant to this Section.

8.5 Contrary stipulations notwithstanding, the RE DEVELOPER may furnish the information to the following third parties, subsidiaries, and Affiliates, such as, but not limited to:

a) Banks or other credit institutions from which finance is sought by the RE DEVELOPER;

b) Third parties, subsidiaries and Affiliates that provide services for the Biomass Energy Operations, including Subcontractors and other service contractors;

c) Prospective assignee/s to whom rights and obligations under this RE Contract are intended to be assigned;

d) Prospective investor/s or entities with whom the RE DEVELOPER intends to enter into joint venture or other similar agreements for the Project;

e) Governments and stock/commodity exchanges in accordance with the laws, regulations, or rules of the relevant country or stock/commodity exchange; and

f) Government authorities, entities and judicial courts if required by law, regulation, directive, or order to disclose.

8.6 The information shall be revealed to those persons allowed under this RE Contract only if and to the extent necessary and desirable for the purpose intended. Each Party shall ensure that each such person to whom information is disclosed is informed of the confidential nature of the information and the purpose for which it may be used and that each such person is bound by this Section.

8.7 The RE DEVELOPER and its Affiliates or the DEPARTMENT, its officers, employees, consultants and other duly authorized representatives shall not make any public statement or announcement of any information produced, generated or acquired in the course of the Biomass Energy Operations, without prior written consent of the other Party.

SECTION IX. PERFORMANCE BOND AND SIGNING FEE. —

9.1 The RE DEVELOPER shall pay the signing fee in the amount of ____________ Pesos (PhP___________) and post the performance bond covering the first Contract Year within fifteen (15) and thirty (30) days, respectively, from its receipt of notice.

9.2 Failure of the RE DEVELOPER to comply with Section 9.1 hereof shall render the COR and RE Contract to be void ab initio. aTHCSE

9.3 The initial amount of the bond or other guarantee as specified in Sub-section 5.2 (i) shall not be less than the annual financial commitment/budgetary estimate for the first Contract Year based on the Work Program.

9.4 The amount of performance bond or other guarantee may be adjusted, subject to the following conditions:

a. In the event that the RE DEVELOPER has fully expended its budgetary estimate under the Work Program as applicable but has not fully performed its work obligations, the amount of bond or other guarantee shall be equal to the succeeding Contract Year's budgetary estimate under the revised Work Program; and

b. Such other conditions or circumstances as would reasonably warrant the modification of the amount of the performance bond or other guarantee.

9.5 If the RE DEVELOPER, through its own fault, fails to observe or perform its work obligations under the Work Program, the DEPARTMENT, upon prior written notice, may proceed against the bond or other guarantee; Provided That, should the work obligations under the Work Program be fulfilled, and through the efficiency of the RE DEVELOPER, the corresponding actual expenditures thereon are lower than the estimated expenditures stated in the Work Program, the same shall be considered as full compliance of the work obligations.

9.6 The DEPARTMENT shall release the performance bond or other guarantee not later than twenty (20) working days from the date of confirmation by the DEPARTMENT on the start of the construction of the Generation Facility.

(Note: The amount for signature fee/bonus shall be PhP5.00/kW for a Biomass Project with installed capacity of 1MW and below, and PhP50,000.00 if above 1MW)

SECTION X. SUSPENSION AND TERMINATION. —

10.1 Subject to Sections 10.3 and 10.4 below, this RE Contract shall be automatically terminated without prejudice on the part of the DEPARTMENT to proceed against any outstanding liability of the RE DEVELOPER on its obligations upon Expiration of this RE Contract and any extension thereof.

10.2 The DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the approved Work Program and the material terms and conditions of this RE Contract;

b) Violation of the Renewable Portfolio Standards Rules, as defined in the Act and its IRR, and relevant Department Circulars;

c) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

d) Tampering, falsifying or plagiarizing of technical design, feasibility study, generation and operation reports;

e) Non-payment of the financial obligations agreed upon under this RE Contract; and

f) Non-posting of performance bond or other guarantee within the period/s provided under Section IX (Performance Bond).

10.3 In case the default of the RE DEVELOPER on account of any of the foregoing grounds is attributable to Force Majeure, the obligation of the RE DEVELOPER may be suspended for a period of one (1) year or until the Force Majeure event ceases to exist whichever comes earlier subject to the following conditions:

a) The RE DEVELOPER shall file a notice of Force Majeure to the DEPARTMENT within fifteen (15) calendar days from its existence;

b) After due validation which shall be made within twenty (20) working days from receipt of such notice, the DEPARTMENT shall issue an approval of suspension of contractual obligation/s affected by Force Majeure;

c) The RE DEVELOPER shall continue to post the performance bond, if necessary, observe administrative requirements and comply with reportorial obligations on its work commitments not affected by Force Majeure;

d) Once the Force Majeure had ceased, the RE DEVELOPER shall notify the DEPARTMENT within five (5) calendar days from cessation together with the revised Work Program covering the remaining contract term;

e) Any failure or delay on the part of either Party in the performance of its obligations or duties hereunder shall be excused to the extent attributable to Force Majeure;

f) If the Biomass Energy Operations are curtailed or prevented by such causes, then the time for enjoying the rights and carrying out the obligations thereby affected, and all rights and obligations hereunder shall be extended for a period equal to the period of delay, curtailment or prevention: Provided, however, That the suspension of obligation shall in no way extend the term of the contract. Provided, further, That if operations are delayed, curtailed or prevented by Force Majeure for a continuous period of twelve (12) months, this RE Contract may thereafter be terminated, at the option of the RE DEVELOPER, at anytime that the Force Majeure condition still exists, subject to confirmation of the DEPARTMENT; and

g) The Party whose ability to perform its obligations is so affected shall notify the other Party thereof in writing stating the cause and such affected Party shall do all reasonably within its power to remove such cause.

10.4 Notwithstanding the foregoing, the RE Contract shall be terminated without prejudice to the RE DEVELOPER's obligations which survive the termination of this RE Contract. cAaDHT

SECTION XI. DISPUTES AND ARBITRATION. —

11.1 Any dispute, controversy or claim arising out of or relating to this RE Contract, except Section 10.2 (a) hereof shall be settled amicably within a period of sixty (60) days after receipt by one Party of a notice from the other Party of the existence of the dispute.

11.2 If the dispute cannot be settled amicably within the sixty (60)-day period, the Parties shall, with respect to disputes arising out of or in connection with Section IV (Work Program) hereof, refer the dispute to an independent expert for resolution in the manner provided below; Provided, That any Party, in its sole discretion, may require the dispute be referred to arbitration under Section 11.3 hereof.

11.3 The following shall govern the rules of referral to an independent expert:

a) After the sixty (60)-day period in Section 11.1 has passed, any Party may give notice to the other Party of its intention to refer the dispute to an expert in accordance with the provisions of this RE Contract;

b) The respondent shall, within twenty-one (21) days after receipt of the notice of intention to refer, serve on the applicant a notice of its intention to defend;

c) If within fourteen (14) days after the applicant's receipt of the respondent's notice of intention to defend, the Parties have agreed on an expert and on the terms under which the dispute shall be referred, the dispute shall be so referred. In the event that within such fourteen (14)-day period, the Parties are unable to agree upon an expert to be appointed hereunder or upon the terms of such expert's reference or both, then either Party may request the International Chamber of Commerce (ICC) International Centre for Expertise to appoint an expert, and the matters to be determined by such expert shall be those set out in the notice of intention to refer and the notice of intention to defend;

d) Unless the Parties agree otherwise, any expert proceedings under this Section shall be required to follow the ICC Rules for Expertise in force as of Effective Date;

e) The language of the expert proceedings and the expert's determinations shall be in English;

f) The Parties hereby agree to be bound by, to perform this RE Contract in accordance with, and to implement, as the case may be, the determination of the expert. Failure by one Party to so act shall constitute a breach of this RE Contract and shall be submitted to arbitration in accordance with Section 11.3 as the sole means of enforcing the determination; and

g) Each Party shall bear the costs and expenses of all lawyers, advisors, witnesses and employees retained by it in connection with the expert proceedings; Provided, however, that in circumstances where the expert determines that a matter referred to them was not subject to a bona fide dispute, the costs and expenses incurred by the prevailing Party and the expert in connection with such matter shall be paid by the non-prevailing Party.

11.4 If the dispute cannot be settled within sixty (60) days by mutual discussions as contemplated in Section 11.1, and referral to an expert is neither prescribed nor elected by the Parties with respect to any technical dispute, upon written demand of either Party, the dispute shall finally be settled by an arbitral tribunal (the "Tribunal") governed by and conducted in accordance with the ICC Rules of Arbitration (the "Rules") in force as of Effective Date (or such Rules as may be in force at the time such arbitration is commenced), as follows:

a) The RE DEVELOPER will nominate one (1) arbitrator and the DEPARTMENT will nominate one (1) arbitrator within thirty (30) days from the date of a request by either Party to initiate arbitration. The two Party-nominated arbitrators will then jointly nominate a third arbitrator within thirty (30) days from the date of the appointment of the second arbitrator, to act as Chairman of the Tribunal. Arbitrators not nominated within the time limits set forth in the preceding sentence shall be appointed by the ICC Court of International Arbitration;

b) Unless otherwise agreed by the Parties, the venue of the arbitration shall be in Metro Manila, Philippines;

c) The language of the arbitration and award shall be in English;

d) The Tribunal shall not be authorized to impose, and either Party shall not be authorized to seek from any judicial authority, any requirement that the Party posts security for the costs of the other Party; and

e) The decision of the Tribunal shall be final and binding upon the Parties. Judgment upon the award rendered may be entered into any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

11.5 The right to arbitrate disputes under this RE Contract shall survive the Expiration or Termination of this RE Contract.

SECTION XII. EMPLOYMENT, TRAINING AND DEVELOPMENT PROGRAMS. —

12.1 The RE DEVELOPER agrees to give preference in employment to qualified Filipino Employees who are residents of the Host LGUs and will undertake the development and training of Filipino Employees for labor and staff positions, including administrative, technical, and executive management positions. In the course of its operations, the RE DEVELOPER shall maintain as much as possible, an equal percentage men and women employees and accord them equal access to development and training programs. In no case shall an employee be denied employment and access to such development and training programs on the basis of sex and/or gender.

12.2 The RE DEVELOPER shall provide annual assistance for training programs, conference, seminars and other similar activities for the DEPARTMENT's personnel in the amount of _________ Pesos (PhP________) per Contract Year and shall be accumulated for the succeeding Contract Years if not availed of in a given Contract Year. The RE DEVELOPER shall pay the unutilized amount of the training commitment prior to the Expiration or Termination of this RE Contract. HCaDIS

12.3 The RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of __________ Pesos (PhP________).

12.4 The RE DEVELOPER shall undertake corporate social responsibility projects in Host LGU with focus in education and training of qualified and deserving beneficiaries, as determined by the RE DEVELOPER.

(Note: The funds for training program and development assistance under the BEOC shall have the same amount of PhP50,000.00 each for Biomass Project with installed capacity above 1MW. Projects from 1MW and below shall be exempt from these financial obligations.)

SECTION XIII. MISCELLANEOUS PROVISIONS. —

13.1 NOTICES

Any notice required or given by either Party to the other Party shall be (i) in writing and delivered personally or sent by registered or certified mail, commercial courier service to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number designated in writing by such party and (iii) by electronic mail, to the electronic mail address designated in writing by such party or such other electronic mail address as may be later designated in writing by such party.

Any notice or other communication so transmitted shall be deemed to have been given: (a) on the day of delivery if delivered personally; (b) one (1) business day after delivery to a commercial courier service; (c) five (5) days after mailing if sent by registered mail, return receipt requested, postage prepaid; or (d) when sent by electronic mail or facsimile, using the email address and facsimile number herein below provided if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day. All such notices shall be addressed:

To the DEPARTMENT:

The Secretary

To the RE DEVELOPER:

Designation

Any Party may substitute or change such address with prior written notice thereof to the other Party.

13.2 GOVERNING LAW

The laws of the Republic of the Philippines shall apply to this RE Contract.

13.3 ASSIGNMENT

a) The RE DEVELOPER may assign this RE Contract to a third party subject to the prior written approval of the DEPARTMENT. This RE Contract shall not be assigned to any third party, unless such third party is qualified in accordance with the Act and its IRR.

b) The RE DEVELOPER may assign or transfer part or all of its rights and/or obligations under this RE Contract to its Affiliate upon compliance with the following provisions:

i. The RE DEVELOPER shall submit to the DEPARTMENT copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and

ii. In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations.

c) The RE DEVELOPER may authorize its subsidiaries, branches or regional corporations to implement this RE Contract, but the RE DEVELOPER shall remain responsible for the performance of this RE Contract.

d) No assignment shall be granted if the RE DEVELOPER is in default of its Work Program or any of its obligations under the RE Contract and other RE agreements with the DEPARTMENT.

e) An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during the entire term of the RE Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

13.4 AMENDMENTS

The RE Contract shall not be amended or modified in any respect except by the mutual consent in writing of the Parties.

13.5 SEPARABILITY CLAUSE

Should any provision of this RE Contract or the application thereof to any situation or circumstance be declared null and void and/or invalid or unenforceable, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain valid and enforceable to the fullest extent. In the event of such partial invalidity or unenforceability, the Parties shall seek in good faith to agree on replacing the invalid or unenforceable provisions with a provision that in effect will most nearly and fairly approximate the effect of the invalid or unenforceable provision through the issuance of appropriate supplemental contract/s or agreement/s.

IN WITNESS WHEREOF, the Parties have caused this RE Contract to be executed by their respective representatives at the place and on the date above written. AHCETa

 

DEPARTMENT OF ENERGY	COMPANY NAME
By:	By:
___________________________NAMESecretary	___________________________PRINCIPAL SIGNATORYDesignation

WITNESSES

___________________________NAMEDirector IV, REMB

___________________________NAME OF WITNESSDesignation

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Manila, this personally ________________________, appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
DOE SECRETARY	-	-

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This RE Contract consisting of nineteen (19) pages, including the page on which the acknowledgment is written, is signed on each and every page thereof by the Parties and his instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Manila, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This RE Contract consisting of nineteen (19) pages, including the page on which the acknowledgment is written, is signed on each and every page thereof by the Parties and his instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ANNEX B

Accounting Procedure

Geothermal Service Contract

This GEOTHERMAL SERVICE CONTRACT ("RE Contract"), made and entered into this DATE OF EXECUTION in Bonifacio Global City, Taguig City by and between:

The REPUBLIC OF THE PHILIPPINES, hereinafter referred to as "GOVERNMENT," through the "Department of Energy," hereinafter referred to as the "DEPARTMENT," a government agency established pursuant to Republic Act No. 7638, as amended, with principal office address at the Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, represented herein by its Secretary, Name;

-and-

COMPANY NAME hereinafter referred to as the "RE DEVELOPER," a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office address at Company Address, represented herein by its Designation, Name. ScHADI

Each of the DEPARTMENT and the RE DEVELOPER is referred to as a "Party," and collectively as the "Parties." In the implementation of this RE Contract, the GOVERNMENT shall act through and be represented by the DEPARTMENT.

WITNESSETH:

WHEREAS, all forces of potential energy in public and/or private lands, within the Philippine territory, belong to the State and their exploration, development and utilization are governed by Section 2, Article XII of the 1987 Constitution;

WHEREAS, under Republic Act No. 7638, as amended, otherwise known as the Department of Energy Act of 1992, the DEPARTMENT shall establish and administer programs for the exploration, development and utilization of energy resources, including Geothermal Resources;

WHEREAS, under Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (the "Act"), the exclusive right to explore and develop a particular renewable energy area shall be through a Renewable Energy Service/Operating Contract ("RE Contract");

WHEREAS, pursuant to the Act, the RE DEVELOPER has agreed to enter into this RE Contract with the DEPARTMENT covering the Contract Area for the Project with the corresponding rights and obligations stipulated herein;

WHEREAS, the RE DEVELOPER has been determined by the DEPARTMENT to be legally, technically, and financially qualified to enter into this RE Contract;

NOW, THEREFORE, for and in consideration of the terms and conditions set forth herein, the Parties hereby stipulate and agree as follows:

SECTION I. SCOPE. —

1.1 This RE Contract is entered into with the services, technology and financing to be furnished by the RE DEVELOPER for its conduct of Geothermal Operations, in an economically viable manner.

1.2 This RE Contract shall cover the Contract Area only as provided under Section V (Contract Area) hereof.

1.3 The RE DEVELOPER is hereby appointed and constituted by the DEPARTMENT as the Party having the exclusive right to explore, develop, and utilize the Geothermal Resources within the Contract Area defined herein.

1.4 The RE DEVELOPER may pursue any Additional Investment or New Investment within the Contract Area and shall be solely responsible for providing the necessary services, technology, equipment and financing therefor. In case of New Investment, the Parties shall enter into a new RE Contract at the option of the RE DEVELOPER, subject to approval of the DEPARTMENT.

1.5 The RE DEVELOPER shall assume all the technical and financial risks under this RE Contract without any guarantee from the GOVERNMENT and shall not be entitled to reimbursement for any expense incurred in connection with this RE Contract.

SECTION II. DEFINITION OF TERMS. —

2.1 The words and terms under this RE Contract, unless otherwise specified in the Act and its IRR or in relevant laws and regulations, shall have the meaning in accordance with the following definitions:

a) "Abandonment and Termination Plan" refers to the plan prepared by the RE DEVELOPER submitted not later than three (3) months from Effective Date in the case of Pre-Development Stage and five (5) years from confirmation of the Declaration of Commerciality and approved by the Department of Environment and Natural Resources (DENR) and the DEPARTMENT for the decommissioning, abandonment and surface restoration or rehabilitation of the Contract Area, and such abandonment work plan may be amended, supplemented or modified by the Parties from time to time;

b) "Accounting Procedures" refers to the set of procedures, guidelines, and arrangement between the Parties, and any amendments thereto, to govern the applicable treatment of expenses, costs, and income, set forth in Annex "B", which forms an integral part of this RE Contract;

c) "Additional Investment" refers to investments relating to improvements, modernization, rehabilitation, or expansion duly registered with the DEPARTMENT, subject to the conditions to be determined by the DEPARTMENT, such as, but not limited to, the following:

i. Identification of and investment in sequential phases/stages of production, or undertaking scheduled modernization or rehabilitation of the Geothermal Systems; and

ii. Improvements to the Geothermal Systems such as reduced production/operational costs, increased production, improved operational efficiency, and better reliability of the Project;

d) "Affiliate" refers to any person or group of persons, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the RE DEVELOPER. As used herein, "control" shall mean the power to direct or cause the direction of the management's policies of a person by contract, agency or otherwise;

e) "Certificate of Confirmation of Commerciality" or "COCOC" shall refer to the Certificate duly signed by the DOE Secretary confirming the Declaration of Commerciality by the RE Developer and shall serve as a notice to proceed for the construction of the RE Project or the installation of the RE Facilities. The date of issuance of the COCOC shall be considered as the commencement date of the Development Stage of the RE Project;

f) "Certificate of Registration" refers to that certification issued to the RE DEVELOPER upon the Effective Date of this RE Contract or upon approval of New Investment, to serve as the basis for its entitlement to the incentives provided under the Act; aICcHA

g) "Commercial Operation" shall refer to the phase commencing at the operation of the RE Project, following the successful testing and commissioning of the RE Project, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DEPARTMENT and other relevant regulatory bodies;

h) "Commercial Quantities" shall mean quantities of electricity to be generated from the Geothermal Resources using commercially available technology to develop the Geothermal Systems through proof of recoverable heat based on drilled wells that the depth and the thermal, permeability and fluid properties of the geothermal energy source have been shown to be suitable for recovering heat at rates which have a reasonable chance of being sufficient to support the commerciality of the project;

i) "Contract Area" refers to an area where the RE DEVELOPER is given the exclusive right to explore and develop RE resources and which is more particularly described in a map with its technical description attached herein as Annex "A" and made an integral part of this RE Contract;

j) "Contract Year" refers to a period of twelve (12) consecutive calendar months counted from the Effective Date of this RE Contract and thereafter, from the anniversary of such Effective Date;

k) "Corporate Income Tax" refers to the tax imposed upon net taxable income under the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337 and the Act. Upon the lapse of the period of the Income Tax Holiday (ITH) under the Act, the RE DEVELOPER shall be subject to a Corporate Income Tax rate of ten percent (10%);

l) "Cost of Goods Sold" refers to all business expenses directly incurred in the exploration, development and utilization of the Geothermal Resources in order to produce and sell electricity and transmit the same to its intended location and use, which expenses are particularly described in Annex "B" hereof;

m) "Declaration of Commerciality" refers to a written declaration by the RE DEVELOPER stating that the electricity to be generated from the Geothermal Resources is of Commercial Quantities;

n) "Development Stage" refers to the development, production, or utilization of RE resources, including the construction and installation of relevant facilities up to the operation thereof;

o) "Effective Date" refers to the date of the execution of this RE Contract subject to the payment of the signing fee and the posting of the performance bond covering the first Contract Year as provided hereunder;

p) "Expatriate Expert" refers to a foreign national engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Geothermal Operations, who shall exercise his technical profession, as allowed under existing laws;

q) "Expiration" refers to either the lapse of the term of this RE Contract as provided in Section III (Term) hereof or the surrender, abandonment, or waiver of the RE DEVELOPER of the entire Contract Area to the DEPARTMENT;

r) "Filipino Employee" refers to any citizen of the Republic of the Philippines employed and/or engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Geothermal Operations under this RE Contract, and such engagement is characterized as establishing an employer-employee relationship between such citizen and RE DEVELOPER;

s) "Force Majeure" refers to extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable;

t) "Generation Facility" refers to a facility for the production of electricity and/or thermal energy such as, but not limited to, steam, hot or cold water;

u) "Geothermal Energy" shall be the energy produced through: (1) natural recharge, where the water is replenished by rainfall and the heat is continuously produced inside the earth; and/or (2) enhanced recharge, where hot water used in the geothermal process is re-injected into the ground to produce more steam as well as to provide additional recharge to the convection system;

v) "Geothermal Operations" shall include Geothermal Energy exploration, development, production, and utilization, including the construction, installation, operation and maintenance of Geothermal Systems to convert Geothermal Energy to electrical power and the transmission of such electrical power and/or other non-electrical uses;

w) "Geothermal Resources" refer to resources in the form of: (i) all products of geothermal processes, embracing indigenous steam, hot water and hot brines; (ii) steam and other gases, hot water and hot brines resulting from water, gas, or other fluids artificially introduced into geothermal formations; (iii) heat or associated energy found in geothermal formations; and (iv) any by-product derived from them, that is converted into useful electrical or mechanical energy and governed by the terms of this RE Contract;

x) "Geothermal Systems" refer to the machines or other related equipment that convert Geothermal Resources into useful electrical or mechanical energy; includes, but is not limited to electrical connection and transmission grids, overhead and underground electrical transmission and communications lines, electric transformers and conditioning equipment, energy storage facilities, telecommunications equipment, power generation facilities to be operated in conjunction with metering equipment, control buildings, maintenance yards, access facilities and related facilities and equipment deemed by RE DEVELOPER to be necessary or convenient for the production of electricity from Geothermal Resources and its delivery; EHaASD

y) "Government Share" refers to the amount due the national government and LGUs from the exploration, development and utilization of the Geothermal Resources computed in accordance with the Act and its Implementing Rules and Regulations (IRR), and described in Section XI (Government Share) hereof;

z) "Gross Income" refers to income derived from the RE DEVELOPER's Geothermal Operations equivalent to the gross sales of Geothermal Energy less sales returns, discounts and allowance, and Cost of Goods Sold, which is more particularly described in the Accounting Procedures attached as Annex "B" hereof;

aa) "Host LGU" refers to the LGU where the Geothermal Energy Resources and/or Generation Facility is located;

bb) "Local Government Units/LGU" refers to the territorial and political subdivisions of the State which organization and function are fully described under the Local Government Code of 1991;

cc) "New Investment" refers to investments relating to discovery, exploration, development and/or utilization of new RE resources or the development of new Generation Facilities within the Contract Area distinct from the originally registered operations having separate books of accounts;

dd) "Pre-Development Stage" refers to the preliminary assessment and feasibility study up to the financial closing of the Project and specifically covers the term provided in Section 3.1 of this RE Contract;

ee) "Production Area" refers to that portion of the Contract Area designated by the RE DEVELOPER where Geothermal Resources are utilized to produce electricity in Commercial Quantities;

ff) "Project" refers to the RE DEVELOPER's Geothermal Systems within the Contract Area, which may be implemented in one or more phases;

gg) "Subcontractor" refers to any person or entity contracted by the RE DEVELOPER to provide goods or services for the purpose of this RE Contract, subject to the provisions of existing laws;

hh) "Termination" refers to the right of the Parties to cancel this RE Contract pursuant to Section XIV (Suspension and Termination) hereof; and

ii) "Work Program" refers to all types of plans and programs and related activities formulated for the performance of the work obligations by the RE DEVELOPER, along with the corresponding budgetary estimate, submitted to the DEPARTMENT under this RE Contract as Annex "C" and shall thereafter be updated on a regular basis.

SECTION III. TERM. —

3.1 Pre-Development Stage. The Pre-Development Stage of this RE Contract shall be for a period of seven (7) years from the Effective Date: Provided, That the RE DEVELOPER shall submit a Declaration of Commerciality duly confirmed by the DEPARTMENT at any time during the Pre-Development Stage otherwise, the term of this RE Contract shall automatically expire.

3.2 Development Stage. Upon submission of the Declaration of Commerciality by the RE DEVELOPER, as confirmed by the DEPARTMENT through the issuance of a Certificate of Confirmation of Commerciality, this RE CONTRACT shall remain in force for the balance of a period of twenty-five (25) years from Effective Date: Provided, That at the option of the RE DEVELOPER, by written notice to the DEPARTMENT not later than one (1) year prior to the expiration of the initial twenty-five (25)-year period and so long as the RE DEVELOPER is not in default of any material obligations under this RE Contract, the DEPARTMENT may approve the extension of this RE Contract for another twenty-five (25) years, subject to the terms and conditions to be mutually agreed upon by the Parties.

SECTION IV. CONTRACT STAGE TRANSITION. —

4.1 Declaration of Commerciality. Upon its determination that the Geothermal Resource can generate power in Commercial Quantities, the RE DEVELOPER shall submit the Declaration of Commerciality, along with supporting documents, within the Pre-Development stage.

4.2 Certificate of Confirmation of Commerciality. The DEPARTMENT shall act on RE DEVELOPER's Declaration of Commerciality within twenty (20) working days from receipt thereof provided the submission is made within the Pre-Development Stage as provided in Section 4.1. Within the 20-working day period, the DEPARTMENT shall either: a) issue the Certificate of Confirmation of Commerciality or b) deny the Declaration of Commerciality.

4.3 Should the DEPARTMENT find the Declaration of Commerciality without sufficient basis, the RE DEVELOPER shall be given a one-time chance of thirty (30) calendar days from receipt of the result of evaluation to rectify its submission. Otherwise, the request of issuance of Certificate of Confirmation of Commerciality shall be denied.

SECTION V. CONTRACT AREA. —

5.1 The Contract Area refers to the area as described in Annex "A" hereof, which the RE DEVELOPER has exclusive right to explore, develop and utilize the Geothermal Resources in accordance with this RE Contract.

5.2 The RE DEVELOPER may, upon submission of written notice to the DEPARTMENT, surrender or waive the entire Contract Area or any portion thereof without prejudice to any other outstanding liability or costs. In case the RE DEVELOPER completely ceases its operations, the provisions under its Abandonment and Termination Plan shall apply consistent with its Environmental Compliance Certificate (ECC).

5.3 During Pre-Development Stage, the RE DEVELOPER shall delineate its Production Area which shall be the final Contract Area during the Development Stage of the Project and shall form part of its Declaration of Commerciality.

5.4 Any areas outside the proposed Production Area shall be deemed surrendered or waived on the date of Declaration of Commerciality. DaIAcC

SECTION VI. WORK PROGRAM. —

6.1 The RE DEVELOPER shall carry out its existing work according to good industry practices.

6.2 During the Pre-Development Stage, the RE DEVELOPER shall conduct a full Geothermal Resources assessment.

6.3 Attached to this RE Contract is a Work Program, details of which are particularly described in Annex "C" hereof.

6.4 The RE DEVELOPER shall submit to the DEPARTMENT a Work Program for the first five (5) years which shall form part of its Declaration of Commerciality and its corresponding budget thereof.

6.5 Not later than two (2) months prior to the end of the Work Program, the RE DEVELOPER shall submit a Work Program for the next five (5) years and shall do so every five (5) years thereafter. The Work Program or any revisions thereof shall require the approval of the DEPARTMENT.

6.6 During the implementation of the Project, the RE DEVELOPER shall submit for evaluation and approval by the DEPARTMENT, a request for any revisions to the Work Program upon determination of such revision. The DEPARTMENT shall act on the request for revision and thereafter, the RE DEVELOPER may proceed to implement the activity without violating the provisions on the Work Program: Provided, That revision shall not be allowed within the first two (2) Contract Years. Provided, further, That the RE DEVELOPER shall be allowed to subsequently revise its Work Program only if it has substantially complied with all its material financial and technical activities under the Work Program for the immediate preceding Contract Year and such revision shall be allowed only once per Contract Year.

6.7 In the event of failure of the RE DEVELOPER to comply with its commitments under the Work Program, the DEPARTMENT shall call the performance bond posted by the RE DEVELOPER. This is without prejudice to the right of the DEPARTMENT to terminate the RE Contract.

SECTION VII. RIGHTS AND OBLIGATIONS. —

7.1 The RE DEVELOPER shall have the following rights:

a) To be granted fiscal and non-fiscal incentives and privileges under the Act and its IRR, and all other existing laws that are not otherwise modified or repealed by the Act;

b) To receive assistance from the DEPARTMENT:

i. During the Pre-Development Stage, in securing access to lands and/or offshore areas where Geothermal Resources shall be harnessed; and

ii. In endorsing the Project to the other agencies of the National Government, LGUs, Board of Investments (BOI) and other entities for the acquisition of permits, licenses and clearances and availment of applicable fiscal and non-fiscal incentives;

c) Have at all times the right of ingress to and egress from the Contract Area to and from facilities wherever located;

d) Acquire rights-of-way and similar rights on, over, under, across and through the Contract Area or properties adjacent to the Contract Area, which constitute or is reasonably expected to constitute the Contract Area as the RE DEVELOPER may reasonably deem necessary.

The DEPARTMENT shall, upon request by the RE DEVELOPER as may be reasonable given the attendant circumstances, assist the RE DEVELOPER in securing such rights. For such purpose, the DEPARTMENT shall and does hereby appoint the RE DEVELOPER as its attorney-in-fact and does hereby give and grant to the RE DEVELOPER full authority to act for and on its behalf in the negotiation and conclusion of agreements and payments for such rights. All obligations, payments and expenses arising from or incidental to the acquisition of such rights shall be for the account of the RE DEVELOPER so as to enable the RE DEVELOPER to have ingress into and egress from the Contract Area and to perform all Geothermal Operations in accordance with this RE Contract and in consideration of which, entitlement to such rights shall be held in trust in favor of the RE DEVELOPER.

The DEPARTMENT undertakes to provide further assistance to the RE DEVELOPER, including the exercise of the power of eminent domain if necessary, to secure such necessary or proper rights at such cost for the account of the RE DEVELOPER, if the RE DEVELOPER is unable to secure such rights at commercially reasonable costs through negotiations or if the same is the most expedient course of action to support the timely execution of Geothermal Operations;

e) Allow, in accordance with the existing laws, to engage the services of Expatriate Experts who shall exercise their technical professions solely for the Geothermal Operations: Provided, That, Filipino Employees shall be given preference to positions for which they have adequate training and experience required by the RE DEVELOPER: and Provided, further, That if the employment or connection of such Expatriate Expert with the RE DEVELOPER ceases, applicable laws and regulations shall apply to them and their immediate family;

f) Have a free and unimpeded use of Geothermal Resources within the Contract Area in view of the Geothermal Operations, Additional Investments and New Investments in regard of which, the DEPARTMENT shall ensure that rights, privileges and other authorizations it may grant to third parties will not defeat or impair such use; and TAacHE

g) Be informed by the DEPARTMENT, if at any time the latter becomes aware of any intended exploration, extraction or use of energy resources other than Geothermal Resources on the Contract Area, within thirty (30) days from the date it becomes aware of such intended exploration, extraction or other use.

7.2 The RE DEVELOPER shall have the following obligations:

a) During the Pre-Development Stage, upon determination of Geothermal Resource of Commercial Quantities, the RE DEVELOPER shall submit to the DEPARTMENT its Declaration of Commerciality;

b) Secure and be subject to any necessary permits, licenses, endorsements, agreements and clearances from all relevant government and private entities for the Project;

c) Perform exploration, assessment, field verification, harnessing, piloting and other activities in accordance with the Work Program and provide technology and financing in connection with the Pre-Development Stage;

d) Perform the required Geothermal Operations and provide services, technology and financing in connection therewith;

e) Maintain complete and accurate accounting, financial and technical records of its Geothermal Operations, subject to Section X (Data and Reports) and XII (Confidentiality), and in accordance with the Accounting Procedures as provided under Annex "B" hereof;

f) Allow officials and representatives authorized by the DEPARTMENT access to the Contract Area, and to the accounts, books and records directly relating to the Geothermal Operations during reasonable hours and without causing disruption. The RE DEVELOPER shall provide such reasonable facilities and assistance as may be practicable to ensure the success of the inspection;

g) Give priority in employment to qualified personnel in the Host LGU subject to Section XVI (Employment, Training and Development Programs);

h) At the start of every Contract Year, post a performance bond or any other guarantee of sufficient amount but not less than the annual budgetary estimate for the corresponding Contract Year in favor of the DEPARTMENT from a list of DEPARTMENT-accredited insurance or surety companies. The posting of performance bond shall be conditioned upon the faithful performance by the RE DEVELOPER of any or all of the commitments and obligations under the Work Program until the commencement of the construction of the Generation Facility.

Upon the commencement of the construction of the Generation Facility, the RE DEVELOPER shall notify the DEPARTMENT of such fact and the latter shall verify the same. Thereafter, the obligation to post the bond shall cease;

i) Be subject to the provisions of laws of general application;

j) Develop, operate and maintain the Contract Area in accordance with accepted industry practices to enable maximum economic production of the Geothermal Resources;

k) Be responsible for procurement of installation, equipment and supplies, and for entering into subcontracts related to the Geothermal Operations;

l) Comply with the provisions of Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations", as may be amended, and in so doing, (1) exert its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (2) ensure the safety and health of its operating personnel;

m) Give preference to Philippine companies/agencies entering into subcontracts on goods or services that are required in the Geothermal Operations but are not carried out by the RE DEVELOPER: Provided, That the goods or services are competitive as to cost, quality and availability;

n) Be responsible in the proper handling of data, samples, information, reports and other documents;

o) Maintain all meters and measuring equipment in good order and allow access to inspectors authorized by the DEPARTMENT;

p) Pay the Government Share in accordance with the computation in the Act's IRR and taxes as may be applicable;

q) Organize Information, Education and Communication (IEC) Campaign on benefits to the Host LGUs; and

r) Comply with all rules, regulations and guidelines issued by the DEPARTMENT and other government agencies that are applicable hereto.

7.3 Upon the Effective Date of this RE Contract or upon the approval of the RE DEVELOPER's New Investment, the DEPARTMENT shall issue a Certificate of Registration to the RE DEVELOPER, to enable it to avail of the fiscal and non-fiscal incentives and privileges as stated under the Act and its IRR. The registration shall be valid and effective for the entire term and effectivity of this RE Contract.

SECTION VIII. REPRESENTATIONS AND WARRANTIES. —

Acknowledging that the GOVERNMENT, through the DEPARTMENT, has entered into this RE Contract in reliance upon the representations and warranties in this Section, the RE DEVELOPER represents and warrants as follows:

8.1 It is a corporation or entity duly formed, established, validly existing and in good standing under the laws of the Philippines with full power to own its property; to carry on its business as it is now being conducted; and to execute, deliver and perform its obligations under this RE Contract, and the entering into and performance of this RE Contract by the RE DEVELOPER does not conflict with the articles of incorporation, by-laws and other constitutive documents of the RE DEVELOPER and has been duly authorized by all necessary corporate and legal action on the part of the RE DEVELOPER; HDICSa

8.2 There is no litigation, arbitration or administrative proceeding pending or, to the best knowledge of the RE DEVELOPER, threatened against the RE DEVELOPER or its properties the adverse determination of which would adversely affect the ability of the RE DEVELOPER to perform or comply with any of its material obligations under this RE Contract;

8.3 The RE DEVELOPER:

a) Has not been declared in default in respect to any of its material financial commitments or obligations based on their reports duly validated by the DEPARTMENT;

b) Is not otherwise in default of any kind in respect of any financial commitment or obligation or in respect of any agreement, undertaking or instrument as a party thereof by which it or any of its assets or properties may be bound; and

c) Is not aware of a fact that by the service of notice and/or lapse of time would constitute a default in any or both of sub-paragraphs (a) and (b) above.

8.4 No written material information given by the RE DEVELOPER to the DEPARTMENT under this RE Contract contains any misstatement of fact as of the Effective Date or omits to state a fact that is materially adverse to the interests of the DEPARTMENT; and

8.5 The ownership of the RE DEVELOPER's capital stock complies with applicable laws and regulations.

SECTION IX. ASSETS AND EQUIPMENT. —

9.1 The RE DEVELOPER shall acquire and maintain for the Project and for its Geothermal Operations and, such assets as are reasonably estimated to be required in carrying out the exploration, assessment, harnessing, piloting and other studies for the Geothermal Resources in the Contract Area; and the development, utilization and commercialization of Geothermal Resources therein, including the construction, installation, operation and maintenance of the Geothermal Systems.

9.2 All materials, equipment, plants and other installations that are erected or placed on the Contract Area by the RE DEVELOPER and are owned by the RE DEVELOPER shall remain the property of the RE DEVELOPER up to one (1) year from the Expiration or Termination of this RE Contract: Provided, That upon the written request of the RE DEVELOPER, the DEPARTMENT shall approve an additional non-extendible period of one (1) year within which to remove such assets in the Contract Area. Thereafter, the ownership of any remaining materials, equipment, plants, and other installations shall be vested in the Government.

9.3 The RE DEVELOPER shall be responsible for the removal and the disposal of all materials, equipment and facilities from the Contract Area in accordance with the ECC and the provisions of the Abandonment and Termination Plan as provided under Section II hereof.

9.4 The ownership of all data, records, accounts, samples and other technical data produced or generated in the course of the Geothermal Operations that are confidential, proprietary in nature or otherwise not generally available to the public shall remain with the DEPARTMENT and RE DEVELOPER and shall be kept confidential in accordance with Section XII (Confidentiality) hereof.

SECTION X. DATA AND REPORTS. —

10.1 All data and reports, except for proprietary techniques used in developing such technical data and reports, must be submitted by the RE DEVELOPER in accordance with the format approved by the DEPARTMENT.

10.2 The technical data and reports to be submitted to the DEPARTMENT shall include, but not limited to, the following:

a) Annual Progress Report — shall be submitted not later than two (2)-month after the end of each Contract Year and shall contain the summary of accomplishments under the approved Work Program, direct or indirect jobs generated, summary of fiscal incentives availed in Philippine Peso and status of construction with relevant comments and recommendation on any technical findings, among others;

b) Procurement Plan — shall be submitted not later than one (1) month from the approval of the Work Program and shall be designed according to the approved Work Program, containing an itemized list of equipment, materials, and supplies to be procured with corresponding estimated costs;

c) Monthly Generation Report — shall be submitted within fifteen (15) days from the end of each calendar month and shall include reservoir report and total electricity generated, used and exported to the grid;

d) General Information Sheet — shall be submitted annually within thirty (30) calendar days from date of actual annual stockholders' or members' meeting;

e) Audited Financial Statement — shall be submitted annually within ninety (90) calendar days from date of actual annual stockholders' or members' meeting; and

f) Reports in accordance with the Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended.

g) Resource assessment reports shall be submitted within sixty (60) days from the completion of such activities. This includes reports generated from reconnaissance surveys, detailed Geoscientific surveys (geology, geochemistry and geophysics), exploratory drilling and integrated resource assessment report which contains the synthesized results from the Geoscientific surveys with or without drilling data.

SECTION XI. GOVERNMENT SHARE. —

11.1 The Government Share shall be equal to one and a half percent (1.5%) of the Gross Income from the sale of electricity generated from Geothermal Operations in accordance with the Accounting Procedures as prescribed under Annex "B" hereof. IDaEHC

11.2 The RE DEVELOPER shall within sixty (60) days following the end of each quarter of a Calendar or Fiscal Year remit to the DEPARTMENT the Government Share: Provided, That any unremitted amount shall carry an interest of ten percent (10%) per annum reckoned from the day immediately following the end of each quarter of a Calendar or Fiscal Year, as may be applicable.

SECTION XII. CONFIDENTIALITY. —

12.1 All documents, information, data and reports produced or generated during the Geothermal Operations under this RE Contract shall be kept strictly confidential over the term of this RE Contract or any extension thereof: Provided, That proprietary information shall be kept strictly confidential at all times subject to lawful acquisitions of such information under existing laws and regulations.

12.2 Without the written consent of the other Party, no Party shall use or disclose the confidential information to any third party and/or to any Affiliate not directly connected with the implementation of this RE Contract except the third parties and Affiliates in Section 12.5, and no Party shall otherwise transfer, present, sell or publish it in any way within the confidentiality periods.

12.3 The DEPARTMENT may use such confidential information belonging to the RE DEVELOPER for the DEPARTMENT's resource mapping, data gathering, policy making and for government planning purposes.

12.4 Upon the Expiration or Termination of this RE Contract, the DEPARTMENT may provide third parties with the data and reports submitted by the RE DEVELOPER pursuant to this Section.

12.5 Contrary stipulations notwithstanding, the RE DEVELOPER may furnish the information to the following third parties, subsidiaries and Affiliates, such as, but not limited to:

a) Banks or other credit institutions from which finance is sought by the RE DEVELOPER;

b) Third parties, subsidiaries and Affiliates that provide services for the Geothermal Operations, including Subcontractors and other service contractors;

c) Prospective assignee/s to whom rights and obligations under this RE Contract are intended to be assigned;

d) Prospective investor/s or entities with whom the RE DEVELOPER intends to enter into joint venture or other similar agreements for the Project;

e) Governments and stock/commodity exchanges in accordance with the laws, regulations, or rules of the relevant country or stock/commodity exchange; and

f) Government authorities, entities and judicial courts if required by law, regulation, directive, or order, to disclose.

12.6 The information shall be revealed to those persons allowed under this RE Contract only if and to the extent necessary and desirable for the purpose intended. Each Party shall ensure that such person to whom information is disclosed is informed of the confidential nature of the information and the purpose for which it may be used and that each such person is bound by this Section.

12.7 The RE DEVELOPER and its Affiliates or the DEPARTMENT, its officers, employees, consultants and other duly authorized representatives shall not make any public statement or announcement of any information produced, generated or acquired in the course of the Geothermal Operations, without prior written consent of the other Party.

SECTION XIII. PERFORMANCE BOND AND SIGNING FEE. —

13.1 The RE DEVELOPER shall pay the signing fee in the amount of ________ Pesos (PhP_________) and post the performance bond covering the first Contract Year within fifteen (15) and thirty (30) days, respectively, from its receipt of notice.

13.2 Failure of the RE DEVELOPER to comply with Section 13.1 hereof shall render the COR and RE Contract to be void ab initio.

13.3 The initial amount of the bond or other guarantee as specified in Sub-section 7.2 (h) shall not be less than the annual financial commitment/budgetary estimate for the first Contract Year based on the Work Program.

13.4 The amount of performance bond or other guarantee may be adjusted, subject to the following conditions:

a) In the event of surrender by the RE DEVELOPER of a portion of the Contract Area covered by this RE Contract, the performance bond or other guarantee shall be reduced proportionately in accordance with the Work Program;

b) In the event that the RE DEVELOPER has fully expended its budgetary estimate under the Work Program but has not fully performed its work obligations, the amount of bond or other guarantee shall be equal to the succeeding Contract Year's budgetary estimate under the revised Work Program; and

c) Such other conditions or circumstances as would reasonably warrant the modification of the amount of the performance bond or other guarantee.

13.5 If the RE DEVELOPER, through its own fault, fails to observe or perform its work obligations under the Work Program, the DEPARTMENT, upon prior written notice, may proceed against the performance bond or other guarantee: Provided, That, should the work obligations under the Work Program be fulfilled, and through the efficiency of the RE DEVELOPER, the corresponding actual expenditures thereon are lower than the estimated expenditures stated in the Work Program, the same shall be considered as full compliance of the work obligations.

13.6 The DEPARTMENT shall release the performance bond or other guarantee not later than twenty (20) working days from the date of confirmation by the DEPARTMENT on the start of the construction of the Generation Facility. DTCSHA

(Note: The amount for signing fee/bonus shall be based on the total Contract Area at the rate of PhP100.00/has.)

SECTION XIV. SUSPENSION AND TERMINATION. —

14.1 In case of the Pre-Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the Work Program and the material terms and conditions of this RE Contract;

b) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

c) Tampering, falsifying or plagiarizing of technical design and feasibility study reports;

d) Non-payment of the financial obligations agreed upon under this RE Contract; and,

e) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond).

14.2 In case of the Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the approved Work Program and the material terms and conditions of this RE Contract;

b) Violation of the Renewable Portfolio Standards Rules, as defined in the Act and its IRR, and relevant Department Circulars;

c) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

d) Tampering, falsifying or plagiarizing of technical design, feasibility study generation and operation reports;

e) Non-remittance of Government Share as determined by the Compliance Division-Financial Services of the DEPARTMENT;

f) Non-payment of the financial obligations agreed upon under this RE Contract; and

g) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond).

14.3 In case the default of the RE DEVELOPER on account of any of the foregoing grounds is attributable to Force Majeure, the obligation of the RE DEVELOPER may be suspended for a period of one (1) year or until the Force Majeure event ceases to exist whichever comes earlier subject to the following conditions:

a) The RE DEVELOPER shall file a notice of Force Majeure to the DEPARTMENT within fifteen (15) calendar days from its existence;

b) After due validation which shall be made within twenty (20) working days from receipt of such notice, the DEPARTMENT shall issue an approval of suspension of contractual obligation/s affected by Force Majeure;

c) The RE DEVELOPER shall continue to post the performance bond, if necessary, observe administrative requirements and comply with reportorial obligations on its work commitments not affected by Force Majeure;

d) Once the Force Majeure had ceased, the RE DEVELOPER shall notify the DEPARTMENT within five (5) calendar days from cessation together with the revised Work Program covering the remaining contract term.

e) Any failure or delay on the part of either Party in the performance of its obligations or duties hereunder shall be excused to the extent attributable to Force Majeure.

f) If the Geothermal Operations are curtailed or prevented by such causes, then the time for enjoying the rights and carrying out the obligations thereby affected, and all rights and obligations hereunder shall be extended for a period equal to the period of delay, curtailment or prevention: Provided, however, That the suspension of obligation shall in no way extend the term of the contract. Provided, further, That if operations are delayed, curtailed or prevented by Force Majeure for a continuous period of twelve (12) months, this RE Contract may thereafter be terminated, at the option of the RE DEVELOPER, at anytime that the Force Majeure condition still exists, subject to confirmation of the DEPARTMENT; and

g) The Party whose ability to perform its obligations is so affected shall notify the other Party thereof in writing stating the cause and such affected Party shall do all reasonably within its power to remove such cause.

14.4 Notwithstanding the foregoing, this RE Contract shall be terminated without prejudice to the RE DEVELOPER's obligation which survive the termination of this RE Contract.

SECTION XV. DISPUTES AND ARBITRATION. —

15.1 Any dispute, controversy or claim arising out of or relating to this RE Contract, except Section 14.1 (a) hereof, shall be settled amicably within a period of sixty (60) days after receipt by one Party of a notice from the other Party of the existence of the dispute.

15.2 If the dispute cannot be settled amicably within the sixty (60)-day period, the Parties shall, with respect to disputes arising out of or in connection with Sections V (Contract Area), VI (Work Program and Estimated Expenditures) and XI (Government Share) hereof, refer the dispute to an independent expert for resolution in the manner provided below; Provided that any Party, in its sole discretion, may require the dispute be referred to arbitration under Section 15.4 hereof.

15.3 The following shall govern the rules of referral: CScTED

a) After the sixty (60)-day period in Section 15.1 has passed, any Party may give notice to the other Party of its intention to refer the dispute to an expert in accordance with the provisions of this RE Contract;

b) The respondent shall, within twenty-one (21) days after receipt of the notice of intention to refer, serve the applicant a notice of its intention to defend;

c) If within fourteen (14) days after the applicant's receipt of the respondent's notice of intention to defend, the Parties have agreed on an expert and on the terms under which the dispute shall be referred to the independent expert mentioned in Section 15.2 hereof. In the event that within such fourteen (14)-day period, the Parties are unable to agree upon an expert to be appointed hereunder or upon the terms of such expert's reference or both, then either Party may request the International Chamber of Commerce (ICC) International Centre for Expertise to appoint an expert, and the matters to be determined by such expert shall be those set out in the notice of intention to refer and the notice of intention to defend;

d) Unless the Parties agree otherwise, any expert proceedings under this Section shall be required to follow the ICC Rules for Expertise in force as of Effective Date;

e) The language of the expert proceedings and the expert's determinations shall be in English;

f) The Parties hereby agree to be bound by, to perform this RE Contract in accordance with, and to implement, as the case may be, the determination of the expert. Failure by one Party to act shall constitute a breach of this RE Contract and shall be submitted to arbitration in accordance with Section 15.4 as the sole means of enforcing the determination; and

g) Each Party shall bear the costs and expenses of all lawyers, advisors, witnesses and employees retained by it in connection with the expert proceedings: Provided, however, That in circumstances where the expert determines that a matter referred to them was not subject to a bona fide dispute, the costs and expenses incurred by the prevailing Party and the expert in connection with such matter shall be paid by the non-prevailing Party.

15.4 If the dispute cannot be settled within sixty (60) days by mutual discussions as contemplated in Section 15.1 hereof, and referral to an expert is neither prescribed nor elected by the Parties with respect to any technical dispute upon written demand of either Party, the dispute shall finally be settled by an arbitral tribunal (the "Tribunal") governed by and conducted in accordance with the ICC Rules of Arbitration (the "Rules") in force as of Effective Date (or such Rules as may be in force at the time such arbitration is commenced), as follows:

a) The RE DEVELOPER will nominate one (1) arbitrator and the DEPARTMENT will nominate one (1) arbitrator within thirty (30) days from the date of a request by either Party to initiate arbitration. The two Party-nominated arbitrators will then jointly nominate a third arbitrator within thirty (30) days from the date of the appointment of the second arbitrator, to act as Chairman of the Tribunal. Arbitrators not nominated within the time limits set forth in the preceding sentence shall be appointed by the ICC Court of International Arbitration;

b) Unless otherwise agreed by the Parties, the venue of the arbitration shall be in Metro Manila, Philippines;

c) The language of the arbitration and award shall be in English;

d) The Tribunal shall not be authorized to impose, and either Party shall not be authorized to seek from any judicial authority, any requirement that the Party posts security for the costs of either Party; and

e) The decision of the Tribunal shall be final and binding upon the Parties. Judgment upon the award rendered may be entered into any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

15.5 The right to arbitrate disputes under this RE Contract shall survive the Expiration or Termination of this RE Contract.

SECTION XVI. EMPLOYMENT, TRAINING AND DEVELOPMENT PROGRAMS. —

16.1 The RE DEVELOPER agrees to give preference in employment to qualified Filipino Employees who are residents of Host LGUs and will undertake the development and training of Filipino Employees for labor and staff positions, including administrative, technical and executive management positions. In the course of its operations, the RE DEVELOPER shall maintain as much as possible, an equal percentage men and women employees and accord them equal access to development and training programs. In no case shall an employee be denied employment and access to such development and training programs on the basis of sex and/or gender.

16.2 During the Pre-Development Stage, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of Two Hundred Thousand Pesos (PhP200,000.00). Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of __________ Pesos (PhP__________).

16.3 During the Pre-Development Stage, the RE DEVELOPER shall provide assistance for training programs, conferences, seminars and other similar activities for the DEPARTMENT's personnel in the amount of ___________ Thousand Pesos (PhP__________) per Contract Year. Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide assistance for training programs, conference seminars and other similar activities for the DEPARTMENT's personnel in the amount of _________ Pesos (PhP__________) per Contract Year. This assistance shall be accumulated for the succeeding Contract Years if not availed of in a given Contract Year. The RE DEVELOPER shall pay the unutilized amount of the training commitment prior to the Expiration or Termination of this RE Contract. cDCEIA

16.4 The RE DEVELOPER shall undertake corporate social responsibility projects in Host LGUs focused on education and training of qualified and deserving beneficiaries, as determined by the RE DEVELOPER.

(Note: The funds for training program and development assistance shall be computed based on the total Contract Area at the rate of PhP100.00/has. during Pre-Development Stage. During Development Stage, the funds shall be at a fixed amount of PhP500,000.00 each except that Geothermal Projects with installed capacity of 1MW and below shall be exempt from these financial obligations.)

SECTION XVII. MISCELLANEOUS PROVISIONS. —

17.1 NOTICES

Any notice required or given by either Party to the other Party shall be (i) in writing and delivered personally or sent by registered or certified mail, commercial courier service to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number designated in writing by such party and (iii) by electronic mail, to the electronic mail address designated in writing by such party or such other electronic mail address as may be later designated in writing by such party.

Any notice or other communication so transmitted shall be deemed to have been given: (a) on the day of delivery if delivered personally; (b) one (1) business day after delivery to a commercial courier service; (c) five (5) days after mailing if sent by registered mail, return receipt requested, postage prepaid; or (d) when sent by electronic mail or facsimile, using the email address and facsimile number herein below provided if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day. All such notices shall be addressed:

To the DEPARTMENT:

The Secretary

Office Address

Email Address

Telephone/Fax Numbers

To the RE DEVELOPER:

Designation

Company Name

Office Address

Email Address

Telephone/Fax Numbers

Any Party may substitute or change such address with prior written notice thereof to the other Party.

17.2 GOVERNING LAW

The laws of the Republic of the Philippines shall apply to this RE Contract.

17.3 ASSIGNMENT

a) The RE DEVELOPER may assign this RE Contract to a third party subject to the prior written approval of the DEPARTMENT. This RE Contract shall not be assigned to any third party, unless such third party is qualified in accordance with the Act and its IRR.

b) The RE DEVELOPER may assign or transfer part or all of its rights and/or obligations under this RE Contract to its Affiliate upon compliance with the following provisions:

i. The RE DEVELOPER shall submit to the DEPARTMENT copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and

ii. In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations.

c) The RE DEVELOPER may authorize its subsidiaries, branches or regional corporations to implement this RE Contract, but the RE DEVELOPER shall remain responsible for the performance of this RE Contract.

d) During the Pre-Development Stage, this RE Contract shall not be assigned except where the assignee is a subsidiary, branch or regional corporation of the RE DEVELOPER created for the special purpose of handling the project covered by the RE Contract.

e) No assignment shall be granted if the RE DEVELOPER is in default of its Work Program or any of its material obligations under the RE Contract and other RE agreements with the DEPARTMENT.

f) An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during the entire period covering the Pre-Development Stage and pre-commissioning phase of the RE Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

17.4 AMENDMENTS

The RE Contract shall not be amended or modified in any respect except by the mutual consent in writing of the Parties.

17.5 BOOKS OF ACCOUNTS AND AUDITS

a) The RE DEVELOPER shall be responsible for keeping complete books and accounts, in Philippine currency denominations, reflecting all transactions in connection with this RE Contract in accordance with the Annex "B" hereof. DHESca

b) The DEPARTMENT shall have the right to inspect the RE DEVELOPER's books and accounts directly relating to this RE Contract for any Calendar or Fiscal Year thirty-six (36) months following the end of each Calendar or Fiscal Year. Any such audit shall be completed within twenty-four (24) months from its commencement. Any exceptions must be made to the RE DEVELOPER in writing within ninety (90) calendar days following the completion of such audit. If the DEPARTMENT fails to give such written exception within such time, then the RE DEVELOPER's books of accounts and statements for such Calendar or Fiscal Year shall be established as correct and final for all purpose.

c) The DEPARTMENT, upon at least fifteen (15) days advance written notice to the RE DEVELOPER, is entitled to access, during reasonable hours without affecting Geothermal Operations, all books of accounts and records and may inspect such sites and facilities as necessary.

d) If the DEPARTMENT notifies the RE DEVELOPER of an exception to the RE DEVELOPER's books of accounts within the period specified in Sub-section 17.6 (b), the RE DEVELOPER shall within ninety (90) days from receipt of written exception from the DEPARTMENT, question its validity, otherwise, the same shall become final and binding on the RE DEVELOPER. If the Parties are not able to agree on the exceptions or adjustments after ninety (90) days from the date of receipt of the RE DEVELOPER's response to the DEPARTMENT's exception report, the Parties shall resolve the dispute in accordance with Section XV (Disputes and Arbitration) hereof.

17.6 SEPARABILITY CLAUSE

Should any provision of this RE Contract or the application thereof to any situation or circumstance be declared null and void and/or invalid or unenforceable, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain valid and enforceable to the fullest extent. In the event of such partial invalidity or unenforceability, the Parties shall seek in good faith to agree on replacing the invalid or unenforceable provisions with a provision that in effect will most nearly and fairly approximate the effect of the invalid or unenforceable provision through the issuance of appropriate supplemental contract/s or agreement/s.

IN WITNESS WHEREOF, the Parties have caused this RE Contract to be executed by their respective representatives at the place and on the date above written.

 

DEPARTMENT OF ENERGY	COMPANY NAME
By:	By:
___________________________NAMESecretary	___________________________PRINCIPAL SIGNATORYDesignation

WITNESSES

___________________________NAMEDirector IV, REMB

___________________________NAME OF WITNESSDesignation

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Taguig, this _______________, personally appeared:

 

Name Competent Evidence of Identity Date and Place of Issuance DOE SECRETARY

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This RE Contract consisting of twenty-five (25) pages, including the page on which this acknowledgment is written, is signed on each and every page thereof by the Parties and their instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Taguig, this __________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the corporation herein represented.

This RE Contract consisting of twenty-five (25) pages, including the page on which this acknowledgment is written, is signed on each and every page thereof by the Parties and their instrumental witnesses and sealed with my notarial seal. TEHIaD

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ANNEX C

Work Program

Solar Energy Operating Contract

This SOLAR ENERGY OPERATING CONTRACT (this "RE Contract"), made and entered into this DATE OF EXECUTION in Bonifacio Global City, Taguig City by and between:

The REPUBLIC OF THE PHILIPPINES, hereinafter referred to as "GOVERNMENT," through the "Department of Energy," hereinafter referred to as the "DEPARTMENT," a government agency established pursuant to Republic Act No. 7638, as amended, with principal office address at the Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, represented herein by its Secretary, Name;

-and-

COMPANY NAME hereinafter referred to as the "RE DEVELOPER," a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office address at Company Address represented herein by its Designation, Name;

Each of the DEPARTMENT and the RE DEVELOPER is referred to as a "Party," and collectively as the "Parties." In the implementation of this RE Contract, the GOVERNMENT shall act through and be represented by the DEPARTMENT.

WITNESSETH:

WHEREAS, all forces of potential energy in public and/or private lands, within the Philippine territory, belong to the State and their exploration, development and utilization are governed by Section 2, Article XII of the 1987 Constitution;

WHEREAS, under Republic Act No. 7638, as amended, otherwise known as the Department of Energy Act of 1992, the DEPARTMENT shall establish and administer programs for the exploration, development and utilization of energy resources, including Solar Energy Resources;

WHEREAS, under Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (the "Act"), the exclusive right to explore and develop a particular renewable energy area shall be through a Renewable Energy Service/Operating Contract ("RE Contract");

WHEREAS, Section 5 of the Act declares that the DEPARTMENT shall be the lead agency mandated to implement its provisions;

WHEREAS, pursuant to the Act, the RE DEVELOPER has agreed to enter into this RE Contract with the DEPARTMENT covering the Contract Area for the Project with the corresponding rights and obligations stipulated herein;

WHEREAS, the RE DEVELOPER intends to engage in the development and utilization of solar energy resource within the Contract Area and agrees to be subject to the laws and decrees of the GOVERNMENT and other rules and regulations of the DEPARTMENT in the implementation of this RE Contract;

WHEREAS, the RE DEVELOPER has been determined by the DEPARTMENT to be legally, technically, and financially qualified to enter into this RE Contract;

NOW, THEREFORE, for and in consideration of the terms and conditions set forth herein, the Parties hereby stipulate and agree as follows:

SECTION I. SCOPE. —

1.1 This RE Contract is entered into, with the services, technology and financing to be furnished by the RE DEVELOPER for its conduct of Solar Energy Operations, in an economically viable manner and in accordance with this RE Contract.

1.2 The provisions of this RE Contract shall govern the development, construction, installation, commissioning and operation of a Solar Energy System located in Municipality, Province that will generate electrical power from Solar Energy System.

1.3 This RE Contract shall cover the Contract Area only as provided under Section IV (Contract Area) hereof.

1.4 The RE DEVELOPER is hereby appointed and constituted by the DEPARTMENT as the Party having the exclusive right to develop and utilize the Solar Energy Resources within the Contract Area defined herein.

1.5 The RE DEVELOPER may pursue any Additional Investment or New Investment within the Contract Area and shall be solely responsible for providing the necessary services, technology, equipment and financing therefor. In case of New Investment, the Parties shall enter into a new RE Contract at the option of the RE DEVELOPER, subject to approval of the DEPARTMENT. DETACa

1.6 The RE DEVELOPER shall assume all the technical and financial risks under this RE Contract without any guarantee from the GOVERNMENT and shall not be entitled to reimbursement for any expense incurred in connection with this RE Contract.

SECTION II. DEFINITION OF TERMS. —

2.1 The words and terms under this RE Contract, unless otherwise specified in the Act and its IRR or in relevant laws and regulations, shall have the meaning in accordance with the following definitions:

a) "Abandonment and Termination Plan" refers to the plan prepared by the RE DEVELOPER submitted within five (5) years from Effective Date and approved by the Department of Environment and Natural Resources (DENR) and the DEPARTMENT for the decommissioning, abandonment and surface restoration or rehabilitation of the Contract Area, and such abandonment work plan may be amended, supplemented or modified by the Parties from time to time;

b) "Accounting Procedures" refers to the set of procedures, guidelines, and arrangement between the Parties, and any amendments thereto, to govern the applicable treatment of expenses, costs, and income, set forth in Annex "B" hereof, which forms an integral part of this RE Contract;

c) "Additional Investment" refers to investments relating to improvements, modernization, rehabilitation, or expansion duly registered with the DEPARTMENT, subject to the conditions to be determined by the DEPARTMENT, such as, but not limited to, the following:

i. Identification of and investment in sequential phases/stages of production, or undertaking scheduled modernization and/or rehabilitation of the Solar Energy Systems; and

ii. Improvements to the Solar Energy Systems such as reduced production/operational costs, increased production, improved operational efficiency, and better reliability of the Project;

d) "Affiliate" refers to any person or group of persons, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the RE DEVELOPER. As used herein, "control" shall mean the power to direct or cause the direction of the management's policies of a person by contract, agency or otherwise;

e) "Certificate of Registration" refers to that certification issued to the RE DEVELOPER upon the Effective Date of this RE Contract or upon approval of New Investment, to serve as the basis for its entitlement to the incentives provided under the Act;

f) "Commercial Operation" refers to the phase commencing at the operation of the RE Project, following the successful testing and commissioning of the RE Project, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DEPARTMENT and other relevant regulatory bodies;

g) "Contract Area" refers to an area where the RE DEVELOPER is given the exclusive right to explore and develop RE resources and which is more particularly described in a map with its technical description attached herein as Annex "A" and made an integral part of this RE Contract;

h) "Contract Year" refers to a period of twelve (12) consecutive calendar months counted from the Effective Date of this RE Contract and thereafter, from the anniversary of such Effective Date.

i) "Corporate Income Tax" refers to the tax imposed upon net taxable income under the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337 and the Act. Upon the lapse of the Income Tax Holiday (ITH) under the Act, the RE DEVELOPER shall be subject to a Corporate Income Tax rate of ten percent (10%);

j) "Cost of Goods Sold" refers to all business expenses directly incurred in the exploration, development and utilization of the Solar Energy Resources in order to produce and sell electricity and transmit the same to its intended location and use, which expenses are particularly described in Annex "B" hereof;

k) "Effective Date" refers to the date of the execution of this RE Contract subject to the payment of the signing fee and the posting of the performance bond covering the first Contract Year as provided hereunder;

l) "Expatriate Expert" refers to a foreign national engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Solar Energy Operations, who shall exercise his technical profession, as allowed under existing laws;

m) "Expiration" refers to either the lapse of the term of this RE Contract as provided in Section III (Term) hereof or the surrender, abandonment or waiver of the RE DEVELOPER of the entire Contract Area including the abandonment thereof to the DEPARTMENT;

n) "Filipino Employee" refers to any citizen of the Republic of the Philippines engaged by the RE DEVELOPER and/or its Subcontractor/s for its Solar Energy Operations under this RE Contract, and such engagement is characterized as establishing an employer-employee relationship between such citizen and RE DEVELOPER;

o) "Force Majeure" refers to extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable;

p) "Generation Facility" refers to a facility for the production of electricity and/or thermal energy, such as, but not limited to, steam, hot or cold water; TaDCEc

q) "Government Share" refers to the amount due the national government and LGUs from the exploration, development and utilization of the Solar Energy Resources computed in accordance with the Act and its Implementing Rules and Regulations (IRR), and described in Section XI (Government Share) hereof;

r) "Gross Income" refers to income derived from the RE DEVELOPER's Solar Energy Operations equivalent to the gross sales of Solar Energy less sales returns, discounts and allowance, and Cost of Goods Sold, which is more particularly described in the Accounting Procedures attached as Annex "B";

s) "Host LGU" refers to the LGU where the Solar Energy Resources and/or Generation Facility is located;

t) "Local Government Units/LGU" refers to the territorial and political subdivisions of the State which organization and function are fully described under the Local Government Code of 1991;

u) "New Investment" refers to investments relating to discovery, exploration, development and/or utilization of new RE resources or the development of new Generation Facilities within the Contract Area distinct from the originally registered operations having separate books of accounts;

v) "Production Area" refers to that portion of the Contract Area designated by the RE DEVELOPER whore Solar Energy Resources are utilized to produce electricity;

w) "Project" refers to the RE DEVELOPER's Solar Energy Systems within the Contract Area, which may be implemented in one or more phases;

x) "RE Contract" refers to this Solar Energy Operating Contract, as may be amended or extended by the Parties and shall have the same meaning as provided under the Act;

y) "Solar Energy" refers to the energy that can be derived from solar radiation that can be converted into useful thermal or electrical energy;

z) "Solar Energy Operations" shall include Solar Energy exploration, development, production, and utilization, including the construction, installation, operation and maintenance of Solar Energy Systems to convert Solar Energy to electrical power and the transmission of such electrical power and/or other non-electrical uses;

aa) "Solar Energy Resources" refers to the solar resources found within the Contract Area to be technically feasible for the development of Solar Energy projects;

bb) "Solar Energy Systems" refers to the energy systems that convert solar energy into thermal or electrical energy;

cc) "Subcontractor" refers to any person or entity contracted by the RE DEVELOPER to provide goods or services for the purpose of this RE Contract, subject to the provisions of existing laws;

dd) "Termination" refers to the right of the Parties to cancel this RE Contract pursuant to Section XIII (Suspension and Termination) hereof; and

ee) "Work Program" refers to all types of plans and programs and related activities formulated for the performance of the work obligations by the RE DEVELOPER, along with the corresponding budgetary estimate, submitted to the DEPARTMENT under this RE Contract, attached hereto as Annex "C" and shall thereafter be updated on a regular basis.

SECTION III. TERM. —

3.1 From the Effective Date, the term of this RE Contract shall be twenty-five (25) years.

3.2 At the option of the RE DEVELOPER, the term of this RE Contract may be extended for another twenty-five (25) years, subject to the approval of the DEPARTMENT. The RE DEVELOPER shall request the DEPARTMENT, in writing and not later than one (1) year prior to the expiration of the initial term, for an extension of the term. The extension of the term of this RE Contract shall be governed by such terms and conditions to be mutually agreed upon by the Parties.

SECTION IV. CONTRACT AREA. —

4.1 The Contract Area refers to the areas as described in Annex "A" hereof, which the RE DEVELOPER has exclusive right to explore, develop and utilize the Solar Energy Resources in accordance with this RE Contract.

4.2 The RE DEVELOPER may, upon submission of written notice to the DEPARTMENT, surrender or waive the entire Contract Area or any portion thereof without prejudice to any other outstanding liability or costs. In case the RE DEVELOPER completely ceases its operations, the provisions under its Abandonment and Termination Plan shall apply consistent with its Environmental Compliance Certificate (ECC).

SECTION V. WORK PROGRAM. —

5.1 The RE DEVELOPER shall carry out its existing work according to good industry practices.

5.2 Attached to this RE Contract is a Work Program, details of which are particularly described in Annex "C" hereof.

5.3 Not later than two (2) months prior to the end of the first five (5) years Work Program, the RE DEVELOPER shall submit a Work Program for the next five (5) years and shall do so every next five (5) years thereafter. The Work Program or any revisions thereof shall require the approval of the DEPARTMENT. cDEHIC

5.4 During the implementation of the Work Program, the RE DEVELOPER shall submit for evaluation and approval by the DEPARTMENT, a request for any revisions to the Work Program upon determination of such revision. The DEPARTMENT shall act on the request for revision and thereafter, the RE DEVELOPER may proceed to implement the activity without violating the provisions on the Work Program: Provided, That revision shall not be allowed within the first two (2) Contract Years. Provided, further, That the RE DEVELOPER shall be allowed to subsequently revise its Work Program only if it has substantially complied with all its material financial and technical activities under the Work Program for the immediate preceding Contract Year and such revision shall be allowed only once per Contract Year.

5.5 In the event of failure of the RE DEVELOPER to comply with its commitments under the Work Program, the DEPARTMENT shall call the performance bond posted by the RE DEVELOPER. This is without prejudice to the right of the DEPARTMENT to terminate the RE Contract.

SECTION VI. RIGHTS AND OBLIGATIONS. —

6.1 The RE DEVELOPER shall have the following rights:

a) To be granted fiscal and non-fiscal incentives and privileges under the Act, the IRR and all other existing laws that are not otherwise modified or repealed by the Act;

b) To receive assistance from the DEPARTMENT in endorsing the Project to the other agencies of the National Government, LGUs, Board of Investments (BOI) and other entities for the acquisition of permits, licenses and clearances and availment of applicable fiscal and non-fiscal incentives;

c) Have at all times the right of ingress to and egress from the Contract Area to and from facilities wherever located;

d) Acquire rights-of-way and similar rights on, over, under, across and through the Contract Area or properties adjacent to the Contract Area, which constitute or is reasonably expected to constitute the Contract Area as the RE DEVELOPER may reasonably deem necessary.

The DEPARTMENT shall, upon request by the RE DEVELOPER as may be reasonable given the attendant circumstances, assist the RE DEVELOPER in securing such rights. For such purpose, the DEPARTMENT shall and does hereby appoint the RE DEVELOPER as its attorney-in-fact and does hereby give and grant to the RE DEVELOPER full authority to act for and on its behalf in the negotiation and conclusion of agreements and payments for such rights. All obligations, payments and expenses arising from or incidental to the acquisition of such rights shall be for the account of the RE DEVELOPER so as to enable the RE DEVELOPER to have ingress into and egress from the Contract Area and to perform all Solar Energy Operations in accordance with this RE Contract and in consideration of which, entitlement to such rights shall be held in trust in favor of the RE DEVELOPER.

The DEPARTMENT undertakes to provide further assistance to the RE DEVELOPER, including the exercise of the power of eminent domain if necessary, to secure such necessary or proper rights at such cost for the account of the RE DEVELOPER, if the RE DEVELOPER is unable to secure such rights at commercially reasonable costs through negotiations or if the same is the most expedient course of action to support the timely execution of Solar Energy Operations;

e) Allow, in accordance with the existing laws, to engage the services Expatriate Experts who shall exercise their technical professions solely for the Solar Energy Operations: Provided, That, Filipino Employees shall be given preference to positions for which they have adequate training and experience required by the RE DEVELOPER, and Provided, further, That if the employment or connection of such Expatriate Experts with the RE DEVELOPER ceases, applicable laws and regulations shall apply to them and their immediate family;

f) Have a free and unimpeded use of Solar Resources within the Contract Area in view of the Solar Operations, Additional Investments and New Investments in regard of which, the DEPARTMENT shall ensure that rights, privileges and other authorizations it may grant to third parties will not defeat or impair such use; and

g) Be informed by the DEPARTMENT, if at any time the latter becomes aware of any intended exploration, extraction or use of energy resources other than Solar Resources on the Contract Area, within thirty (30) days from the date it becomes aware of such intended exploration, extraction or other use.

6.2 The RE DEVELOPER shall have the following obligations:

a) Within the period of the first five (5)-year Work Program, the RE DEVELOPER shall develop, construct, install, commission and operate the Solar Energy System in the Project Site.

b) Secure and be subject to any necessary permits, licenses, endorsements, agreements and clearances from all relevant government and private entities for the Project;

c) Comply with all its work and financial commitments in carrying out its obligations under this RE Contract and provide all necessary services, technology and financing in connection therewith;

d) Perform the required Solar Energy Operations and provide services, technology, and financing in connection therewith;

e) Maintain complete and accurate accounting, financial and technical records of its Solar Energy Operations, subject to Sections IX (Data and Reports) and XI (Confidentiality), and in accordance with the Accounting Procedures as provided under Annex "B" hereof;

f) Allow officials and representatives authorized by the DEPARTMENT access to the Contract Area, and to the accounts, books and records directly relating to the Solar Energy Operations during reasonable hours and without causing disruption. The RE DEVELOPER shall provide such reasonable facilities and assistance as may be practicable to ensure the success of the inspection;

g) Give priority in employment to qualified personnel in the Host LGU subject to Section XV (Employment, Training and Development Programs) hereof; ISCDEA

h) At the start of every Contract Year, post a performance bond or any other guarantee of sufficient amount but not less than the annual budgetary estimate for the corresponding Contract Year in favor of the DEPARTMENT from a list of DEPARTMENT-accredited insurance or surety companies. The posting of performance bond shall be conditioned upon the faithful performance by the RE DEVELOPER of any or all of the commitments and obligations under the Work Program until the commencement of the construction of the Generation Facility;

Upon the commencement of the construction of the Generation Facility, the RE DEVELOPER shall notify the DEPARTMENT of such fact and the latter shall verify the same. Thereafter, the obligation to post the bond shall cease;

i) After availing of the ITH, be subject to Corporate Income Tax: Provided, That New or Additional Investment shall be eligible for ITH;

j) Be subject to the provisions of law of general application;

k) Develop, operate and maintain the Contract Area in accordance with accepted industry practices to enable maximum economic production of the Solar Energy Resources;

l) Be responsible for procurement of installation, equipment and supplies, and for entering into subcontracts related to the Solar Energy Operations;

m) Comply with the provisions of Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended, and in so doing, (1) exert its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (2) ensure the safety and health of its operating personnel;

n) Give preference to Philippine companies/agencies entering into subcontracts on goods or services that are required in the Solar Energy Operations but are not carried out by the RE DEVELOPER; Provided, That the goods or services are competitive as to cost, quality and availability;

o) Be responsible in the proper handling of data, samples, information, reports and other documents;

p) Maintain all meters and measuring equipment in good order and allow access to inspectors authorized by the DEPARTMENT;

q) Pay the Government Share in accordance with the computation in the Act's IRR and taxes as may be applicable;

r) Organize Information, Education and Communication (IEC) Campaign on benefits to the Host LGUs; and

s) Comply with all rules, regulations, and guidelines issued by the DEPARTMENT and other government agencies that are applicable hereto.

6.3 Upon the Effective Date of this RE Contract or upon the approval of the RE DEVELOPER's New Investment, the DEPARTMENT shall issue a Certificate of Registration to the RE DEVELOPER, to enable it to avail of the fiscal and non-fiscal incentives and privileges as stated under the Act and its IRR. The registration shall be valid and effective for the entire term and effectivity of this RE Contract.

SECTION VII. REPRESENTATIONS AND WARRANTIES. —

Acknowledging that the GOVERNMENT, through the DEPARTMENT, has entered into this RE Contract in reliance upon the representations and warranties in this Section, the RE DEVELOPER represents and warrants as follows:

7.1 It is a corporation or entity duly formed, established, validly existing and in good standing under the laws of the Philippines with full power to own its property; to carry on its business as it is now being conducted; and to execute, deliver and perform its obligations under this RE Contract, and the entering into and performance of this RE Contract by the RE DEVELOPER does not conflict with the articles of incorporation, by-laws and other constitutive documents of the RE DEVELOPER and has been duly authorized by all necessary corporate and legal action on the part of the RE DEVELOPER;

7.2 There is no litigation, arbitration or administrative proceeding pending or, to the best knowledge of the RE DEVELOPER, threatened against the RE DEVELOPER or its properties the adverse determination of which would adversely affect the ability of the RE DEVELOPER to perform or comply with any of its material obligations under this RE Contract;

7.3 The RE DEVELOPER:

a) Has not been declared in default in respect of any of its material financial commitments or obligations based on their reports duly validated by the DEPARTMENT;

b) Is not otherwise in default of any kind in respect of any financial commitment or obligation or in respect of any agreement, undertaking or instrument as a party thereof by which it or any of its assets or properties may be bound; and

c) Is not aware of a fact that by the service of notice and/or lapse of time would constitute a default in any or both of sub-paragraphs (a) and (b) above;

7.4 No written material information given by the RE DEVELOPER to the DEPARTMENT under this RE Contract contains any misstatement of fact as of the Effective Date or omits to state a fact that is materially adverse to the interests of the DEPARTMENT; and

7.5 The ownership of the RE DEVELOPER's capital stock complies with applicable laws and regulations. EDCTIa

SECTION VIII. ASSETS AND EQUIPMENT. —

8.1 The RE DEVELOPER shall acquire and maintain for the Project and for its Solar Energy Operations and, such assets as are reasonably estimated to be required in carrying out the exploration, assessment, harnessing, piloting and other studies for the Solar Energy Resources in the Contract Area; and the development, utilization and commercialization of Solar Energy Systems therein, including the construction, installation, operation and maintenance of the Solar Energy Systems.

8.2 All materials, equipment, plants and other installations that are erected or placed on the Contract Area by the RE DEVELOPER and are owned by the RE DEVELOPER shall remain the property of the RE DEVELOPER up to one (1) year from the Expiration or Termination of this RE Contract: Provided, That upon the written request of the RE DEVELOPER, the DEPARTMENT shall approve an additional non-extendible period of one (1) year within which to remove such assets in the Contract Area. Thereafter, the ownership of any remaining materials, equipment, plants, and other installations shall be vested in the Government.

8.3 The RE DEVELOPER shall be responsible for the removal and the disposal of all materials, equipment and facilities from the Contract Area in accordance with the ECC and the provisions of the Abandonment and Termination Plan as provided under Section II hereof;

8.4 The ownership of all data, records, accounts, samples and other technical data produced or generated in the course of the Solar Energy Operations that are confidential, proprietary in nature or otherwise not generally available to the public shall remain with the DEPARTMENT and RE DEVELOPER and shall be kept confidential in accordance with Section XI (Confidentiality) hereof.

SECTION IX. DATA AND REPORTS. —

9.1 All data and reports, except for proprietary techniques used in developing such data and reports, must be submitted by the RE DEVELOPER in accordance with the format approved by the DEPARTMENT.

9.2 The data and reports to be submitted to the DEPARTMENT shall include, but not limited to, the following:

a) Annual Progress Report — shall be submitted not later than two (2) months prior to the end of each Contract Year and shall contain the summary of accomplishments under the approved Work Program, direct or indirect jobs generated, summary of fiscal incentives availed in Philippine Peso and status of construction with relevant comments and recommendation on any technical findings, among others;

b) Procurement Plan — shall be submitted not later than one (1) month from the approval of the Work Program and shall be designed according to the approved Work Program, containing an itemized list of equipment, materials, and supplies to be procured with corresponding estimated costs;

c) Monthly Generation Report — shall be submitted within fifteen (15) days from the end of each calendar month and shall include total electricity generated, used and exported to the grid; and

d) General Information Sheet — shall be submitted annually within thirty (30) calendar days from date of actual annual stockholders' or members' meeting;

e) Audited Financial Statement — shall be submitted annually within one hundred twenty (120) calendar days after the end of the fiscal year, as indicated in the Financial Statements; and

f) Reports in accordance with the Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended.

SECTION X. GOVERNMENT SHARE. —

10.1 The Government Share shall be equal to one percent (1%) of the Gross Income from the sale of electricity generated from Solar Energy Operations in accordance with the Accounting Procedures as prescribed under Annex "B" hereof.

10.2 The RE DEVELOPER shall within sixty (60) days following the end of each quarter of a Calendar or Fiscal Year remit to the DEPARTMENT the Government Share: Provided, That any unremitted amount shall carry an interest of ten percent (10%) per annum reckoned from the day immediately following the end of each quarter of a Calendar or Fiscal Year, as may be applicable.

SECTION XI. CONFIDENTIALITY. —

11.1 All documents, information, data and reports produced or generated during the Solar Energy Operations under this RE Contract shall be kept strictly confidential over the term of this RE Contract or any extension thereof: Provided, That proprietary information shall be kept strictly confidential at all times subject to lawful acquisitions of such information under existing laws and regulations.

11.2 Without the written consent of the other Party, no Party shall use or disclose the confidential information to any third party and/or to any Affiliate not directly connected with the implementation of this RE Contract except the third parties and Affiliates in Section 11.5, and no Party shall otherwise transfer, present, sell or publish it in any way within the confidentiality periods.

11.3 The DEPARTMENT may use such confidential information belonging to the RE DEVELOPER for the DEPARTMENT's resource mapping, data gathering, policy making and for government planning purposes.

11.4 Upon the Expiration or Termination of this RE Contract, the DEPARTMENT may provide third parties with the data and reports submitted by the RE DEVELOPER pursuant to this Section.

11.5 Contrary stipulations notwithstanding, the RE DEVELOPER may furnish the information to the following third parties, subsidiaries and Affiliates, such as, but not limited to:

a) Banks or other credit institutions from which finance is sought by the RE DEVELOPER;

b) Third parties, subsidiaries and Affiliates that provide services for the Solar Energy Operations, including Subcontractors and other service contractors; ADCIca

c) Prospective assignee/s to whom rights and obligations under this RE Contract are intended to be assigned;

d) Prospective investor/s or entities with whom the RE DEVELOPER intends to enter into joint venture or other similar agreements for the Project;

e) Governments and stock/commodity exchanges in accordance with the laws, regulations, or rules of the relevant country or stock/commodity exchange; and

f) Government authorities, entities and judicial courts if required by law, regulation, directive, or order, to disclose.

11.6 The information shall be revealed to those persons allowed under this RE Contract only if and to the extent necessary and desirable for the purpose intended. Each Party shall ensure that such person to whom information is disclosed is informed of the confidential nature of the information and the purpose for which it may be used and that each such person is bound by this Section.

11.7 The RE DEVELOPER and its Affiliates or the DEPARTMENT, its officers, employees, consultants and other duly authorized representatives shall not make any public statement or announcement of any information produced, generated or acquired in the course of the Solar Energy Operations, without prior written consent of the other Party.

SECTION XII. PERFORMANCE BOND AND SIGNING FEE. —

12.1 The RE DEVELOPER shall pay the signing fee in the amount of __________ Pesos (PhP________) and post the performance bond covering the first Contract Year within fifteen (15) and thirty (30) days, respectively, from its receipt of notice.

12.2 Failure of the RE DEVELOPER to comply with Section 12.1 hereof shall render the COR and RE Contract to be void ab initio.

12.3 The initial amount of the bond or other guarantee as specified in Sub-section 6.2 (f) shall not be less than the annual financial commitment/budgetary estimate for the first Contract Year based on the Work Program.

12.4 The amount of performance bond or other guarantee may be adjusted, subject to the following conditions:

a) In the event of surrender by the RE DEVELOPER of a portion of the Contract Area covered by this RE Contract, the performance bond or other guarantee shall be reduced proportionately in accordance with the Work Program;

b) In the event that the RE DEVELOPER has fully expended its budgetary estimate under the Work Program as applicable but has not fully performed its work obligations, the amount of bond or other guarantee shall be equal to the succeeding Contract Year's budgetary estimate under the revised Work Program; and

c) Such other conditions or circumstances as would reasonably warrant the modification of the amount of the performance bond or other guarantee.

12.5 If the RE DEVELOPER, through its own fault, fails to observe or perform its work obligations under the Work Program, the DEPARTMENT, upon prior written notice, may proceed against the performance bond or other guarantee. Provided, That, should the work obligations under the Work Program be fulfilled, and through the efficiency of the RE DEVELOPER, the corresponding actual expenditures thereon are lower than the estimated expenditures stated in the Work Program, the same shall be considered as full compliance of the work obligations.

12.6 The DEPARTMENT shall release the performance bond or other guarantee not later than twenty (20) working days from the date of confirmation by the DEPARTMENT of the start of the start of the construction of the Generation Facility.

(Note: The amount for signature fee/bonus shall be based on the proposed installed capacity of the Project at the rate of PhP5.00/kW).

SECTION XIII. SUSPENSION AND TERMINATION. —

13.1 The DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the Work Program and the material terms and conditions of this RE Contract;

b) Violation of the Renewable Portfolio Standards Rules, as defined in the Act and its IRR, and relevant Department Circulars;

c) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

d) Tampering, falsifying or plagiarizing of technical design and feasibility study reports;

e) Non-payment of the financial obligations agreed upon under this RE Contract; and

f) Non-posting of performance bond or other guarantee within the period/s provided under Section XII (Performance Bond) hereof;

13.2 In case the default of the RE DEVELOPER on account of any of the foregoing grounds is attributable to Force Majeure, the obligation of the RE DEVELOPER may be suspended for a period of one (1) year or until the Force Majeure event ceases to exist whichever comes earlier subject to the following conditions:

a) The RE DEVELOPER shall file a notice of Force Majeure to the DEPARTMENT within fifteen (15) calendar days from its existence;

b) After due validation which shall be made within twenty (20) working days from receipt of such notice, the DEPARTMENT shall issue an approval of suspension of contractual obligation/s affected by Force Majeure;

c) The RE DEVELOPER shall continue to post the performance bond, if necessary, observe administrative requirements and comply with reportorial obligations on its work commitments not affected by Force Majeure; ACTIHa

d) Once the Force Majeure had ceased, the RE DEVELOPER shall notify the DEPARTMENT within five (5) calendar days from cessation together with the revised Work Program covering the remaining contract term;

e) Any failure or delay on the part of either Party in the performance of its obligations or duties hereunder shall be excused to the extent attributable to Force Majeure;

f) If the Solar Energy Operations are curtailed or prevented by such causes, then the time for enjoying the rights and carrying out the obligations thereby affected, and all rights and obligations hereunder shall be extended for a period equal to the period of delay, curtailment or prevention: Provided, however, That the suspension of obligation shall in no way extend the term of the contract. Provided, further, That if operations are delayed, curtailed or prevented by Force Majeure for a continuous period of twelve (12) months, this RE Contract may thereafter be terminated, at the option of the RE DEVELOPER, at anytime that the Force Majeure condition still exists, subject to confirmation of the DEPARTMENT; and

g) The Party whose ability to perform its obligations is so affected shall notify the other Party thereof in writing stating the cause and such affected Party shall do all reasonably within its power to remove such cause.

13.3 Notwithstanding the foregoing, this RE Contract shall be terminated without prejudice to the RE DEVELOPER's obligation which survive the termination of this RE Contract.

SECTION XIV. DISPUTES AND ARBITRATION. —

14.1 Any dispute, controversy or claim arising out of or relating to this RE Contract, except Section 13.1 (a) hereof, shall be settled amicably within a period of sixty (60) days after receipt by one Party of a notice from the other Party of the existence of the dispute.

14.2 If the dispute cannot be settled amicably within the sixty (60)-day period, the Parties shall, with respect to disputes arising out of or in connection with Sections IV (Contract Area), V (Work Program and Estimated Expenditures) and X (Government Share) hereof, refer the dispute to an independent expert for resolution in the manner provided below; Provided that any Party, in its sole discretion, may require the dispute be referred to arbitration under Section 14.4 hereof.

14.3 The following shall govern the rules of referral:

a) After the sixty (60)-day period in Section 14.1 has passed, any Party may give notice to the other Party of its intention to refer the dispute to an expert in accordance with the provisions of this RE Contract:

b) The respondent shall, within twenty-one (21) days after receipt of the notice of intention to refer, serve the applicant a notice of its intention to defend;

c) If within fourteen (14) days after the applicant's receipt of the respondent's notice of intention to defend, the Parties have agreed on an expert and on the terms under which the dispute shall be referred to the independent expert mentioned in Section 14.2 hereof. In the event that within such fourteen (14)-day period, the Parties are unable to agree upon an expert to be appointed hereunder or upon the terms of such expert's reference or both, then either Party may request the International Chamber of Commerce (ICC) International Centre for Expertise to appoint an expert, and the matters to be determined by such expert shall be those set out in the notice of intention to refer and the notice of intention to defend;

d) Unless the Parties agree otherwise, any expert proceedings under this Section shall be required to follow the ICC Rules for Expertise in force as of Effective Date;

e) The language of the expert proceedings and the expert's determinations shall be in English;

f) The Parties hereby agree to be bound by, to perform this RE Contract in accordance with, and to implement, as the case may be, the determination of the expert. Failure by one Party to act shall constitute a breach of this RE Contract and shall be submitted to arbitration in accordance with Section 14.4 as the sole means of enforcing the determination; and

g) Each Party shall bear the costs and expenses of all lawyers, advisors, witnesses and employees retained by it in connection with the expert proceedings: Provided, however, That in circumstances where the expert determines that a matter referred to him was not subject to a bona fide dispute, the costs and expenses incurred by the prevailing Party and the expert in connection with such matter shall be paid by the non-prevailing Party.

14.4 If the dispute cannot be settled within sixty (60) days by mutual discussions as contemplated in Section 14.1 hereof, and referral to an expert is neither prescribed nor elected by the Parties with respect to any technical dispute upon written demand of either Party, the dispute shall finally be settled by an arbitral tribunal (the "Tribunal") governed by and conducted in accordance with the ICC Rules of Arbitration (the "Rules") in force as of Effective Date (or such Rules as may be in force at the time such arbitration is commenced), as follows:

a) The RE DEVELOPER will nominate one (1) arbitrator and the DEPARTMENT will nominate one (1) arbitrator within thirty (30) days from the date of a request by either Party to initiate arbitration. The two Party-nominated arbitrators will then jointly nominate a third arbitrator within thirty (30) days from the date of the appointment of the second arbitrator, to act as Chairman of the Tribunal. Arbitrators not nominated within the time limits set forth in the preceding sentence shall be appointed by the ICC Court of International Arbitration;

b) Unless otherwise agreed by the Parties, the venue of the arbitration shall be in Metro Manila, Philippines;

c) The language of the arbitration and award shall be in English; HCSAIa

d) The Tribunal shall not be authorized to impose, and either Party shall not be authorized to seek from any judicial authority, any requirement that the Party posts security for the costs of either Party; and

e) The decision of the Tribunal shall be final and binding upon the Parties. Judgment upon the award rendered may be entered into any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

14.5 The right to arbitrate disputes under this RE Contract shall survive the Expiration or Termination of this RE Contract.

SECTION XV. EMPLOYMENT, TRAINING AND DEVELOPMENT PROGRAMS. —

15.1 The RE DEVELOPER agrees to give preference in employment to qualified Filipino Employees who are residents of the Host LGUs and will undertake the development and training of Filipino Employees for labor and staff positions, including administrative, technical and executive management positions. In the course of its operations, the RE DEVELOPER shall maintain as much as possible, an equal percentage men and women employees and accord them equal access to development and training programs. In no case shall an employee be denied employment and access to such development and training programs on the basis of sex and/or gender.

15.2 The RE DEVELOPER shall provide annual assistance for training programs, conference, seminars and other similar activities for the DEPARTMENT's personnel in the amount of ___________ Pesos (PhP___________) per Contract Year and shall be accumulated for the succeeding Contract Years if not availed of in a given Contract Year. The RE DEVELOPER shall pay the unutilized amount of the training commitment prior to the Expiration or Termination of this RE Contract.

15.3 The RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of ___________ Pesos (PhP___________).

15.4 The RE DEVELOPER shall undertake corporate social responsibility projects in Host LGU with focus in education and training of qualified and deserving beneficiaries, as determined by the RE DEVELOPER.

(Note: The funds for training program and development assistance shall be computed based on the proposed installed capacity of the Solar Project at the rate of PhP5.00/kW. Projects with installed capacity of 5MW and below shall be exempt from these financial obligations.)

SECTION XVI. MISCELLANEOUS PROVISIONS. —

16.1 NOTICES

Any notice required or given by either Party to the other Party shall be (i) in writing and delivered personally or sent by registered or certified mail, commercial courier service to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number designated in writing by such party and (iii) by electronic mail, to the electronic mail address designated in writing by such party or such other electronic mail address as may be later designated in writing by such party.

Any notice or other communication so transmitted shall be deemed to have been given: (a) on the day of delivery if delivered personally; (b) one (1) business day after delivery to a commercial courier service; (c) five (5) days after mailing if sent by registered mail, return receipt requested, postage prepaid; or (d) when sent by electronic mail or facsimile, using the email address and facsimile number herein below provided if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day. All such notices shall be addressed:

To the DEPARTMENT:

The Secretary

Department of Energy

Office Address

Email Address

Telephone/Fax Numbers

To the RE DEVELOPER:

Designation

Company Name

Office Address

Email Address

Telephone/Fax Numbers

Any Party may substitute or change such address with prior written notice thereof to the other Party.

16.2 GOVERNING LAW

The laws of the Republic of the Philippines shall apply to this RE Contract.

16.3 ASSIGNMENT

a) The RE DEVELOPER may assign this RE Contract to a third party subject to the prior written approval of the DEPARTMENT. This RE Contract shall not be assigned to any third party, unless such third party is qualified in accordance with the Act and its IRR.

b) The RE DEVELOPER may assign or transfer part or all of its rights and/or obligations under this RE Contract to its Affiliate upon compliance with the following provisions:

i. The RE DEVELOPER shall submit to the DEPARTMENT copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and CaSAcH

ii. In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations.

c) The RE DEVELOPER may authorize its subsidiaries, branches or regional corporations to implement this RE Contract, but the RE DEVELOPER shall remain responsible for the performance of this RE Contract.

d) During the Pre-Development Stage, this RE Contract shall not be assigned except where the assignee is a subsidiary, branch or regional corporation of the RE DEVELOPER created for the special purpose of handling the project covered by the RE Contract.

e) No assignment shall be granted if the RE Developer is in default of its Work Program or any of its material obligations under the RE Contract and other RE agreement with the DEPARTMENT.

f) An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during the entire term of the RE Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

16.4 AMENDMENTS

The RE Contract shall not be amended or modified in any respect except by the mutual consent in writing of the Parties.

16.5 BOOKS OF ACCOUNTS AND AUDITS

a) The RE DEVELOPER shall be responsible for keeping complete books and accounts, in Philippine currency denominations, reflecting all transactions in connection with this RE Contract in accordance with the Annex "B" hereof.

b) The DEPARTMENT shall have the right to inspect the RE DEVELOPER's books and accounts directly relating to this RE Contract for any Calendar or Fiscal Year thirty-six (36) months following the end of each Calendar or Fiscal Year. Any such audit shall be completed within twenty-four (24) months after its commencement. Any exceptions must be made to the RE DEVELOPER in writing within ninety (90) calendar days following the completion of such audit. If the DEPARTMENT fails to give such written exception within such time, then the RE DEVELOPER'Ss books of accounts and statements for such Calendar or Fiscal Year shall be established as correct and final for all purpose.

c) The DEPARTMENT, upon at least fifteen (15) days advance written notice to the RE DEVELOPER, is entitled to access, during reasonable hours without affecting Solar Energy Operations, all books of accounts and records and may inspect such sites and facilities as necessary.

d) If the DEPARTMENT notifies the RE DEVELOPER of an exception to the RE DEVELOPER's books of accounts within the period specified in Sub-section 16.6 (b), the RE DEVELOPER shall within ninety (90) days from receipt of written exception from the DEPARTMENT, question its validity, otherwise, the same shall become final and binding on the RE DEVELOPER. If the Parties are not able to agree on the exceptions or adjustments after ninety (90) days from the date of receipt of the RE DEVELOPER's response to the DEPARTMENT's exception report, the Parties shall resolve the dispute in accordance with Section XIV (Disputes and Arbitration) hereof.

16.6 SEPARABILITY CLAUSE

Should any provision of this RE Contract or the application thereof to any situation or circumstance be declared null and void and/or invalid or unenforceable, such invalidity or enforceability shall not affect the remaining provisions hereof which shall remain valid and enforceable to the fullest extent. In the event of such partial invalidity or unenforceability, the Parties shall seek in good faith to agree on replacing the invalid or unenforceable provisions with a provision that in effect will most nearly and fairly approximate the effect of the invalid or enforceable provision through the issuance of appropriate supplemental contract/s or agreement/s.

IN WITNESS WHEREOF, the Parties have caused this RE Contract to be executed by their respective representatives at the place in the date above written.

 

DEPARTMENT OF ENERGY	COMPANY NAME
By:	By:
___________________________NAMESecretary	___________________________PRINCIPAL SIGNATORYDesignation

WITNESSES

___________________________NAMEREMB Director

___________________________NAMEDesignation

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Taguig, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
DOE SECRETARY

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented. IaHDcT

This RE Contract consisting of twenty-two (22) pages, including the page on which this acknowledgment is written, is signed on each and every page thereof by the Party and his instrumental witness and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Taguig, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the corporation herein represented.

This RE Contract consisting of twenty-two (22) pages, including the page on which this acknowledgment is written, is signed on each and every page thereof by the Party and her instrumental witness and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ANNEX D

Hydropower Service Contract

This HYDROPOWERSERVICE CONTRACT (this "RE Contract"), made and entered into this DATE OF EXECUTION in Bonifacio Global City, Taguig City by and between:

The REPUBLIC OF THE PHILIPPINES, hereinafter referred to as "GOVERNMENT," through the "Department of Energy," hereinafter referred to as the "DEPARTMENT," a government agency established pursuant to Republic Act No. 7638, as amended, with principal office address at the Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, represented herein by its Secretary, Name;

-and-

COMPANY NAME, hereinafter referred to as the "RE DEVELOPER," a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office address at Company Address, represented herein by its Designation, Name.

Each of the DEPARTMENT and the RE DEVELOPER is referred to as a "Party," and collectively as the "Parties." In the implementation of this RE Contract, the GOVERNMENT shall act through and be represented by the DEPARTMENT.

WITNESSETH:

WHEREAS, all forces of potential energy in public and/or private lands, within the Philippine territory, belong to the State and their exploration, development and utilization are governed by Section 2, Article XII of the 1987 Constitution;

WHEREAS, under Republic Act No. 7638, as amended, otherwise known as the Department of Energy Act of 1992, the DEPARTMENT shall establish and administer programs for the exploration, development and utilization of energy resources, including Hydropower Resources;

WHEREAS, under Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (the "Act"), the exclusive right to explore and develop a particular renewable energy area shall be through a Renewable Energy Service/Operating Contract ("RE Contract");

WHEREAS, pursuant to the Act, the RE DEVELOPER has agreed to enter into this RE Contract with the DEPARTMENT covering the Contract Area for the Project with the corresponding rights and obligations stipulated herein;

WHEREAS, the RE DEVELOPER has been determined by the DEPARTMENT to be legally, technically, and financially qualified to enter into this RE Contract;

NOW, THEREFORE, for and in consideration of the terms and conditions set forth herein, the Parties hereby stipulate and agree as follows: DEIHAa

SECTION I. SCOPE. —

1.1 This RE Contract is entered into, with the services, technology and financing to be furnished by the RE DEVELOPER for its conduct of Hydropower Operations, in an economically viable manner.

1.2 This RE Contract shall cover the Contract Area only as provided under Section V (Contract Area) hereof.

1.3 The RE DEVELOPER is hereby appointed and constituted by the DEPARTMENT as the Party having the exclusive right to explore, develop, and utilize the Hydropower Resources within the Contract Area as defined herein.

1.4 The RE DEVELOPER may pursue any Additional Investment or New Investment within the Contract Area and shall be solely responsible for providing the necessary services, technology, equipment and financing therefor. In case of New Investment, the Parties shall enter into a new RE Contract at the option of the RE DEVELOPER, subject to approval of the DEPARTMENT.

1.5 The RE DEVELOPER shall assume all the technical and financial risks under this RE Contract without any guarantee from the GOVERNMENT and shall not be entitled to reimbursement for any expense incurred in connection with this RE Contract.

SECTION II. DEFINITION OF TERMS. —

2.1 The words and terms under this RE Contract, unless otherwise specified in the Act and its IRR or in relevant laws and regulations, shall have the meaning in accordance with the following definitions:

a) "Abandonment and Termination Plan" refers to the plan prepared by the RE DEVELOPER submitted not later than three (3) months from Effective Date in the case of Pre-Development Stage and five (5) years from confirmation of the Declaration of Commerciality and approved by the Department of Environment and Natural Resources (DENR) and the DEPARTMENT for the decommissioning, abandonment and surface restoration or rehabilitation of the Contract Area, and such abandonment work plan may be amended, supplemented or modified by the Parties from time to time;

b) "Accounting Procedures" refers to the set of procedures, guidelines, and arrangement between the Parties, and any amendments thereto, to govern the applicable treatment of expenses, costs, and income, set forth in Annex "B", which forms an integral part of this RE Contract;

c) "Additional Investment" refers to investments relating to improvements, modernization, rehabilitation, or expansion duly registered with the DEPARTMENT, subject to the conditions to be determined by the DEPARTMENT, such as, but not limited to, the following:

i. Identification of and investment in sequential phases/stages of production, or undertaking scheduled modernization or rehabilitation of the Hydropower Systems; and

ii. Improvements to the Hydropower Systems such as reduced production/operational costs, increased production, improved operational efficiency, and better reliability of the Project;

d) "Affiliate" refers to any person or group of persons, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the RE DEVELOPER. As used herein, "control" shall mean the power to direct or cause the direction of the management's policies of a person by contract, agency or otherwise;

e) "Certificate of Confirmation of Commerciality" or "COCOC" shall refer to the certificate duly signed by the DOE Secretary confirming the Declaration of Commerciality by the RE DEVELOPER and shall serve as notice to proceed for the construction of the RE Project or the installation of the RE Facilities. The date of issuance of the COCOC shall be considered as the commencement date of the Development Stage of the RE Project;

f) "Certificate of Registration" refers to that certification issued to the RE DEVELOPER upon the Effective Date of this RE Contract or upon approval of New Investment, to serve as the basis for its entitlement to the incentives provided under the Act;

g) "Commercial Operation" shall refer to the phase commencing at the operation of the RE Project, following the successful testing and commissioning of the RE Project, and confirming its readiness to inject power to the grid to sell or supply its produced energy, as duly confirmed by the DEPARTMENT and other relevant regulatory bodies;

h) "Commercial Quantities" shall mean quantities of electricity to be generated using commercially viable technology to develop the Hydropower Resources providing, or capable of providing, revenue from sales of electricity that exceed or would exceed the RE DEVELOPER's Cost of Goods Sold by a margin sufficient to cause a reasonably prudent person employing standard industry practices as to hydropower resources and using commercially available technology to develop the Hydropower Systems;

i) "Contract Area" refers to an area where the RE Developer is given the exclusive right to explore and develop RE resources and which is more particularly described in a map with its technical description attached herein as Annex "A" and made an integral part of this RE Contract;

j) "Contract Year" refers to a period of twelve (12) consecutive calendar months counted from the Effective Date of this RE Contract and thereafter, from the anniversary of such Effective Date; DcHSEa

k) "Corporate Income Tax" refers to the tax imposed upon net taxable income under the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337 and the Act. Upon the lapse of the period of the Income Tax Holliday (ITH) under the Act, the RE DEVELOPER shall be subject to a Corporate Income Tax rate of ten percent (10%);

l) "Cost of Goods Sold" refers to all business expenses directly incurred in the exploration, development, and utilization of the Hydropower Resources in order to produce and sell electricity and transmit the same to its intended location and use, which expenses are particularly described in Annex "B" hereof;

m) "Declaration of Commerciality" refers to a written declaration by the RE DEVELOPER stating that the electricity to be generated from the Hydropower Resources is of Commercial Quantities;

n) "Development Stage" refers to the development, production, or utilization of RE resources, including the construction and installation of relevant facilities up to the operation thereof;

o) "Effective Date" refers to the date of the execution of this RE Contract subject to the payment of the signing fee and the posting of the performance bond covering the first Contract Year as provided hereunder;

p) "Expatriate Expert" refers to a foreign national engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Hydropower Operations, who shall exercise his technical profession, as allowed under existing laws;

q) "Expiration" refers to either the lapse of the term of this RE Contract as provided in Section III (Term) hereof or the surrender, abandonment, or waiver of the RE DEVELOPER of the entire Contract Area to the DEPARTMENT;

r) "Filipino Employee" refers to any citizen of the Republic of the Philippines employed and/or engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Hydropower Operations under this RE Contract and such engagement is characterized as establishing an employer-employee relationship between such citizen and RE DEVELOPER;

s) "Force Majeure" refers to extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable;

t) "Generation Facility" refers to a facility for the production of electricity;

u) "Government Share" refers to the amount due the national government and LGUs from the exploration, development and utilization of the Hydropower Resources computed in accordance with the Act and its Implementing Rules and Regulations (IRR), and described in Section XI (Government Share) hereof;

v) "Gross Income" refers to income derived from the RE DEVELOPER's Hydropower Operations equivalent to the gross sales of Hydropower less sales returns, discounts and allowance, and Cost of Goods Sold, which is more particularly described in the Accounting Procedures attached as Annex "B" hereof;

w) "Host LGU" refers to the LGU where the Hydropower Resources and/or Generation Facility is located;

x) "Hydroelectric Power" or "Hydropower" shall be the energy produced from generators driven by turbines that convert the potential energy of falling or fast-flowing water into mechanical energy;

y) "Hydropower Operations" shall include Hydropower exploration, development, production, and utilization, including the construction, installation, operation and maintenance of Hydropower Systems to convert Hydropower to electrical power and the transmission of such electrical power and/or other non-electrical uses;

z) "Hydropower Resources" refer to the water resources found within the Contract Area to be technically feasible for the development of Hydropower projects, which include rivers, lakes, waterfalls, irrigation canals, springs, ponds, and other water bodies;

aa) "Hydropower Systems" refer to the machines or other related equipment that convert Hydropower into useful electrical or mechanical energy; includes, but is not limited to, Hydro Turbine Generators (HTGs), electrical connection and transmission grids, overhead and underground electrical transmission and communications lines, electric transformers and conditioning equipment, energy storage facilities, telecommunications equipment, power generation facilities to be operated in conjunction with HTG installations, climatological and measurement equipment, control facilities, maintenance yards, access facilities, intake, spillways, dams, and related facilities and equipment deemed by the RE DEVELOPER to be necessary or convenient for the production and delivery of electricity from Hydropower;

bb) "Local Government Unit/LGU" refers to the territorial and political subdivisions of the State which organization and function are fully described under the Local Government Code of 1991;

cc) "New Investment" refers to investments relating to discovery, exploration, development and/or utilization of new RE resources or the development of new Generation Facilities within the Contract Area distinct from the originally registered operations having separate books of accounts;

dd) "Pre-Development Stage" refers to the preliminary assessment and feasibility study up to the financial closing of the Project and specifically covers the term provided in Section 3.1 of this RE Contract;

ee) "Production Area" refers to that portion of the Contract Area designated by the RE DEVELOPER where Hydropower Resources are utilized to produce electricity in Commercial Quantities;

ff) "Project" refers to the RE DEVELOPER's Hydropower Systems within the Contract Area, which may be implemented in one or more phases; CTHaSD

gg) "Subcontractor" refers to any person or entity contracted by the RE DEVELOPER to provide goods or services for the purpose of this RE Contract, subject to the provisions of existing laws;

hh) "Termination" refers to the right of the Parties to cancel this RE Contract pursuant to Section XIV (Suspension and Termination) hereof;

ii) "Watershed Area" refers to an area of land drained by a river and its tributaries and enclosed by drainage divide or mountain ridges that separates it from adjacent watershed or drainage basins, where the proposed weir/dam and Generation Facility of the Project are located and gets its water for electricity generation; and

jj) "Work Program" refers to all types of plans and programs and related activities formulated for the performance of the work obligations by the RE DEVELOPER, along with the corresponding budgetary estimate, submitted to the DEPARTMENT under this RE Contract as Annex "C" and shall thereafter be updated on a regular basis.

SECTION III. TERM. —

3.1 Pre-Development Stage. The Pre-Development Stage of this RE Contract shall be for a period of five (5) years from the Effective Date: Provided, That the RE DEVELOPER shall submit a Declaration of Commerciality duly confirmed by the DEPARTMENT at any time during the Pre-Development Stage otherwise, the term of this RE Contract shall automatically expire.

3.2 Development Stage. Upon submission of the Declaration of Commerciality by the RE DEVELOPER, as confirmed by the DEPARTMENT through the issuance of a Certificate of Confirmation of Commerciality, this RE CONTRACT shall remain in force for the balance of a period of twenty-five (25) years from Effective Date: Provided, That at the option of the RE DEVELOPER, by written notice to the DEPARTMENT not later than one (1) year prior to the expiration of the initial twenty-five (25)-year period and so long as the RE DEVELOPER is not in default of any material obligations under this RE Contract, the DEPARTMENT may approve the extension of this RE Contract for another twenty-five (25) years, subject to the terms and conditions to be mutually agreed upon by the Parties.

SECTION IV. CONTRACT STAGE TRANSITION. —

4.1 Declaration of Commerciality. Upon its determination that the Hydropower Resource can generate power in Commercial Quantities, the RE DEVELOPER shall submit the Declaration of Commerciality, along with supporting documents, within the Pre-Development stage.

4.2 Certificate of Confirmation of Commerciality. The DEPARTMENT shall act on RE DEVELOPER's Declaration of Commerciality within twenty (20) working days from receipt thereof provided the submission is made within the Pre-Development Stage as provided in Section 4.1. Within the 20-working day period, the DEPARTMENT shall either: a) issue the Certificate of Confirmation of Commerciality or b) deny the Declaration of Commerciality.

4.3 Should the DEPARTMENT find the Declaration of Commerciality without sufficient basis, the RE DEVELOPER shall be given a one-time chance of thirty (30) calendar days from receipt of the result of evaluation to rectify its submission. Otherwise, the request of issuance of Certificate of Confirmation of Commerciality shall be denied.

SECTION V. CONTRACT AREA. —

5.1 The Contract Area refers to the area as described in Annex "A" hereof, which the RE DEVELOPER has exclusive right to explore, develop and utilize the Hydropower Resources in accordance with this RE Contract.

5.2 The RE DEVELOPER may, upon submission of written notice to the DEPARTMENT, surrender or waive the entire Contract Area or any portion thereof without prejudice to any other outstanding liability or costs. In case the RE DEVELOPER completely ceases its operations, the provisions under its Abandonment and Termination Plan shall apply consistent with its Environmental Compliance Certificate (ECC).

5.3 During Pre-Development Stage, the RE DEVELOPER shall delineate its Production Area by identifying the final location of the diversion point and the Generating Facility which shall be the final Contract Area during the Development Stage of the Project and shall form part of its Declaration of Commerciality.

5.4 Any areas outside the proposed Production Area shall be deemed surrendered or waived on the date of Declaration of Commerciality.

SECTION VI. WORK PROGRAM. —

6.1 The RE DEVELOPER shall carry out its existing work according to good industry practices.

6.2 During the Pre-Development Stage, the RE DEVELOPER shall conduct a full Hydropower Resources assessment.

6.3 Attached to this RE Contract is a Work Program, details of which are particularly described in Annex "C" hereof.

6.4 The RE DEVELOPER shall submit to the DEPARTMENT a Work Program for the first five (5) years from its Declaration of Commerciality and its corresponding budget thereof.

6.5 Not later than two (2) months prior to the end of the Work Program, the RE DEVELOPER shall submit a Work Program for the next five (5) years and shall do so every five (5) years thereafter. The Work Program or any revisions thereof shall require the approval of the DEPARTMENT. TacSAE

6.6 During the implementation of the Project, the RE DEVELOPER shall submit for evaluation and approval by the DEPARTMENT, a request for any revisions to the Work Program upon determination of such revision. The DEPARTMENT shall act on the request for revision and thereafter, the RE DEVELOPER may proceed to implement the activity without violating the provisions on the Work Program: Provided, that revision shall not be allowed within the first two (2) Contract Years. Provided, further, That the RE DEVELOPER shall be allowed to subsequently revise its Work Program only if it has substantially complied with all its material financial and technical activities under the Work Program for the immediate preceding Contract Year and such revision shall be allowed only once per Contract Year.

6.7 In the event of failure of the RE DEVELOPER to comply with its commitments under the Work Program, the DEPARTMENT shall call the performance bond posted by the RE DEVELOPER. This is without prejudice to the right of the DEPARTMENT to terminate the RE Contract.

SECTION VII. RIGHTS AND OBLIGATIONS. —

7.1 The RE DEVELOPER shall have the following rights:

a) To be granted fiscal and non-fiscal incentives and privileges under the Act and its IRR, and all other existing laws that are not otherwise modified or repealed by the Act;

b) To receive assistance from the DEPARTMENT:

i. During the Pre-Development Stage, in securing access to lands and other areas where Hydropower Resources shall be harnessed; and

ii. In endorsing the Project to the other agencies of the National Government, LGUs, Board of Investments (BOI) and other entities for the acquisition of permits, licenses and clearances and availment of applicable fiscal and non-fiscal incentives.

c) Have at all times the right of ingress to and egress from the Contract Area to and from facilities wherever located;

d) Acquire rights-of-way and similar rights on, over, under, across and through the Contract Area or properties adjacent to the Contract Area, which constitute or is reasonably expected to constitute the Contract Area as the RE DEVELOPER may reasonably deem necessary.

The DEPARTMENT shall, upon request by the RE DEVELOPER as may be reasonable given the attendant circumstances, assist the RE DEVELOPER in securing such rights. For such purpose, the DEPARTMENT shall and does hereby appoint the RE DEVELOPER as its attorney-in-fact and does hereby give and grant to the RE DEVELOPER full authority to act for and on its behalf in the negotiation and conclusion of agreements and payments for such rights. All obligations, payments and expenses arising from or incidental to the acquisition of such rights shall be for the account of the RE DEVELOPER so as to enable the RE DEVELOPER to have ingress into and egress from the Contract Area and to perform all Hydropower Operations in accordance with this RE Contract and in consideration of which, entitlement to such rights shall be held in trust in favor of the RE DEVELOPER.

The DEPARTMENT undertakes to provide further assistance to the RE DEVELOPER, including the exercise of the power of eminent domain if necessary, to secure such necessary or proper rights at such cost for the account of the RE DEVELOPER, if the RE DEVELOPER is unable to secure such rights at commercially reasonable costs through negotiations or if the same is the most expedient course of action to support the timely execution of Hydropower Operations;

e) Allow, in accordance with the existing laws, to engage the services of Expatriate Experts who shall exercise their technical professions solely for the Hydropower Operations: Provided, That, Filipino Employees shall be given preference to positions for which they have adequate training and experience required by the RE DEVELOPER: and Provided, further, That if the employment or connection of such Expatriate Expert with the RE DEVELOPER ceases, applicable laws and regulations shall apply to him and his immediate family;

f) Have a free and unimpeded use of Hydropower Resources within the Contract Area in view of the Hydropower Operations, Additional Investments and New Investments in regard of which, the DEPARTMENT shall ensure that rights, privileges and other authorizations it may grant to third parties will not defeat or impair such use; and

g) Be informed by the DEPARTMENT, if at any time the latter becomes aware of any intended exploration, extraction or use of energy resources other than Hydropower Resources on the Contract Area, within thirty (30) days from the date it becomes aware of such intended exploration, extraction or other use.

7.2 The RE DEVELOPER shall have the following obligations:

a) During the Pre-Development Stage, upon determination of Hydropower Resource of Commercial Quantities, the RE DEVELOPER shall submit to the DEPARTMENT its Declaration of Commerciality

b) Secure and be subject to any necessary permits, licenses, endorsements, agreements and clearances from all relevant government and private entities for the Project;

c) Perform exploration, assessment, field verification, harnessing, piloting and other activities in accordance with the Work Program and provide technology and financing in connection with the Pre-Development Stage;

d) Perform the required Hydropower Operations and provide services, technology and financing in connection therewith;

e) Maintain complete and accurate accounting, financial and technical records of its Hydropower Operations, subject to Sections X (Data and Reports) and XII (Confidentiality), and in accordance with the Accounting Procedures as provided under Annex "B" hereof;

f) Allow officials and representatives authorized by the DEPARTMENT access to the Contract Area, and to the accounts, books and records directly relating to the Hydropower Operations during reasonable hours and without causing disruption. The RE DEVELOPER shall provide such reasonable facilities and assistance as may be practicable to ensure the success of the inspection; SDHacT

g) Give priority in employment to qualified personnel in the Host LGU subject to Section XVI (Employment, Training and Development Programs);

h) At the start of every Contract Year thereafter, post a performance bond or any other guarantee of sufficient amount but not less than the annual budgetary estimate for the corresponding Contract Year in favor of the DEPARTMENT from a list of DEPARTMENT-accredited insurance or surety companies. The posting of performance bond shall be conditioned upon the faithful performance by the RE DEVELOPER of any or all of the commitments and obligations under the Work Program until the commencement of the construction of the Generation Facility.

Upon the commencement of the construction of the Generation Facility, the RE DEVELOPER shall notify the DEPARTMENT of such fact and the latter shall verify the same. Thereafter, the obligation to post the bond shall cease;

i) Be subject to the provisions of laws of general application;

j) Develop, operate, and maintain the Contract Area in accordance with accepted industry practices to enable maximum economic production of the Hydropower Resources;

k) Be responsible for procurement of installation, equipment and supplies, and for entering into subcontracts related to the Hydropower Operations;

l) Comply with the provisions of Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended, and in so doing, (1) exert its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (2) ensure the safety and health of its operating personnel;

m) Give preference to Philippine companies/agencies entering into subcontracts on goods or services that are required in the Hydropower Operations but are not carried out by the RE DEVELOPER: Provided, That the goods or services are competitive as to cost, quality and availability;

n) Be responsible in the proper handling of data, samples, information, reports, and other documents;

o) Maintain all meters and measuring equipment in good order and allow access to inspectors authorized by the DEPARTMENT;

p) Pay the Government Share in accordance with the computation in the Act's IRR and taxes as may be applicable;

q) Organize Information, Education and Communication (IEC) Campaign on benefits to the Host LGUs; and

r) Comply with all rules, regulations, and guidelines issued by the DEPARTMENT and other government agencies that are applicable hereto.

7.3 Upon the Effective Date of this RE Contract or upon the approval of the RE DEVELOPER's New Investment, the DEPARTMENT shall issue a Certificate of Registration to the RE DEVELOPER, to enable it to avail of the fiscal and non-fiscal incentives and privileges as stated under the Act and its IRR. The registration shall be valid and effective for the entire term and effectivity of this RE Contract.

SECTION VIII. REPRESENTATIONS AND WARRANTIES. —

Acknowledging that the GOVERNMENT, through the DEPARTMENT, has entered into this RE Contract in reliance upon the representations and warranties in this Section, the RE DEVELOPER represents and warrants as follows:

8.1 It is a corporation or entity duly formed, established, validly existing and in good standing under the laws of the Philippines with full power to own its property; to carry on its business as it is now being conducted; and to execute, deliver and perform its obligations under this RE Contract, and the entering into and performance of this RE Contract by the RE DEVELOPER does not conflict with the articles of incorporation, by-laws and other constitutive documents of the RE DEVELOPER and has been duly authorized by all necessary corporate and legal action on the part of the RE DEVELOPER;

8.2 There is no litigation, arbitration, or administrative proceeding pending or, to the best knowledge of the RE DEVELOPER, threatened against the RE DEVELOPER or its properties the adverse determination of which would adversely affect the ability of the RE DEVELOPER to perform or comply with any of its material obligations under this RE Contract;

8.3 The RE DEVELOPER:

a) Has not been declared in default in respect to any of its material financial commitments or obligations based on their reports duly validated by the DEPARTMENT;

b) Is not otherwise in default of any kind in respect of any financial commitment or obligation or in respect of any agreement, undertaking or instrument as a party thereof by which it or any of its assets or properties may be bound; and

c) Is not aware of a fact that by the service of notice and/or lapse of time would constitute a default in any or both of sub-paragraphs (a) and (b) above.

8.4 No written material information given by the RE DEVELOPER to the DEPARTMENT under this RE Contract contains any misstatement of fact as of the Effective Date or omits to state a fact that is materially adverse to the interests of the DEPARTMENT; and

8.5 The ownership of the RE DEVELOPER's capital stock complies with applicable laws and regulations. ACETID

SECTION IX. ASSETS AND EQUIPMENT. —

9.1 The RE DEVELOPER shall acquire and maintain for the Project and for its Hydropower Operations and, such assets as are reasonably estimated to be required in carrying out the exploration, assessment, harnessing, piloting and other studies for the Hydropower Resources in the Contract Area; and the development, utilization and commercialization of Hydropower Resources therein, including the construction, installation, operation and maintenance of the Hydropower Systems.

9.2 All materials, equipment, plants and other installations that are erected or placed on the Contract Area by the RE DEVELOPER and are owned by the RE DEVELOPER shall remain the property of the RE DEVELOPER up to one (1) year from the Expiration or Termination of this RE Contract: Provided, That upon the written request of the RE DEVELOPER, the DEPARTMENT shall approve an additional non-extendible period of one (1) year within which to remove such assets in the Contract Area. Thereafter, the ownership of any remaining materials, equipment, plants, and other installations shall be vested in the Government.

9.3 The RE DEVELOPER shall be responsible for the removal and the disposal of all materials, equipment and facilities from the Contract Area in accordance with the ECC and the provisions of the Abandonment and Termination Plan as provided under Section II hereof.

9.4 The ownership of all data, records, accounts, samples and other technical data produced or generated in the course of the Hydropower Operations that are confidential, proprietary in nature or otherwise not generally available to the public shall remain with the DEPARTMENT and RE DEVELOPER and shall be kept confidential in accordance with Section XII (Confidentiality) hereof.

SECTION X. DATA AND REPORTS. —

10.1 Alt data and reports, except for proprietary techniques used in developing such technical data and reports, must be submitted by the RE DEVELOPER in accordance with the format approved by the DEPARTMENT.

10.2 The technical data and reports to be submitted to the DEPARTMENT shall include, but not limited to, the following:

a) Annual Progress Report — shall be submitted not later than two (2) months prior to the end of each Contract Year and shall contain the summary of accomplishments under the approved Work Program, direct or indirect jobs generated, summary of fiscal incentives availed in Philippine Peso and status of construction with relevant comments and recommendation on any technical findings, among others;

b) Procurement Plan — shall be submitted not later than one (1) month from the approval of the Work Program and shall be designed according to the approved Work Program, containing an itemized list of equipment, materials, and supplies to be procured with corresponding estimated costs;

c) Monthly Report — shall be submitted within fifteen (15) days from the end of each calendar month and shall include reservoir report and total electricity generated, used and exported to the grid;

d) General Information Sheet — shall be submitted annually within thirty (30) calendar days from date of actual annual stockholders' or members' meeting;

e) Audited Financial Statement — shall be submitted annually within ninety (90) calendar days from date of actual annual stockholders' or members' meeting; and

f) Reports in accordance with the Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended.

SECTION XI. GOVERNMENT SHARE. —

11.1 The Government Share shall be equal to one percent (1%) of the Gross Income from the sale of electricity generated from Hydropower Operations in accordance with the Accounting Procedures as prescribed under Annex "B" hereof.

11.2 The RE DEVELOPER shall within sixty (60) days following the end of each quarter of a Calendar or Fiscal Year remit to the DEPARTMENT the Government Share: Provided, That any unremitted amount shall carry an interest of ten percent (10%) per annum reckoned from the day immediately following the end of each quarter of a Calendar or Fiscal Year, as may be applicable.

SECTION XII. CONFIDENTIALITY. —

12.1 All documents, information, data and reports produced or generated during the Hydropower Operations under this RE Contract shall be kept strictly confidential over the term of this RE Contract or any extension thereof: Provided, That proprietary information shall be kept strictly confidential at all times subject to lawful acquisitions of such information under existing laws and regulations.

12.2 Without the written consent of the other Party, no Party shall use or disclose the confidential information to any third party and/or to any Affiliate not directly connected with the implementation of this RE Contract except the third parties and Affiliates in Section 12.5, and no Party shall otherwise transfer, present, sell or publish it in any way within the confidentiality periods.

12.3 The DEPARTMENT may use such confidential information belonging to the RE DEVELOPER for the DEPARTMENT's resource mapping, data gathering, policy making and for government planning purposes.

12.4 Upon the Expiration or Termination of this RE Contract, the DEPARTMENT may provide third parties with the data and reports submitted by the RE DEVELOPER pursuant to this Section: Provided, That the same are not proprietary in nature.

12.5 Contrary stipulations notwithstanding, the RE DEVELOPER may furnish the information to the following third parties, subsidiaries and Affiliates, such as, but not limited to:

a) Banks or other credit institutions from which finance is sought by the RE DEVELOPER; SDHCac

b) Third parties, subsidiaries and Affiliates that provide services for the Hydropower Operations, including Subcontractors and other service contractors;

c) Prospective assignee/s to whom rights and obligations under this RE Contract are intended to be assigned;

d) Prospective investor/s or entities with whom the RE DEVELOPER intends to enter into joint venture or other similar agreements for the Project;

e) Governments and stock/commodity exchanges in accordance with the laws, regulations, or rules of the relevant country or stock/commodity exchange; and

f) Government authorities, entities and judicial courts if required by law, regulation, directive, or order, to disclose.

12.6 The information shall be revealed to those persons allowed under this RE Contract only if and to the extent necessary and desirable for the purpose intended. Each Party shall ensure that each such person to whom information is disclosed is informed of the confidential nature of the information and the purpose for which it may be used and that each such person is bound by this Section.

12.7 The RE DEVELOPER and its Affiliates or the DEPARTMENT, its officers, employees, consultants and other duly authorized representatives shall not make any public statement or announcement of any information produced, generated or acquired in the course of the Hydropower Operations, without prior written consent of the other Party.

SECTION XIII. PERFORMANCE BOND AND SIGNING FEE. —

13.1 The RE DEVELOPER shall pay the signing fee in the amount of ______________ Pesos (PhP___________) and post the performance bond covering the first Contract Year within fifteen (15) and thirty (30) days, respectively, from its receipt of notice.

13.2 Failure of the RE DEVELOPER to comply with Section 13.1 hereof shall render the COR and RE Contract to be void ab initio.

13.3 The initial amount of the bond or other guarantee as specified in Sub-section 7.2 (h) shall not be less than the annual financial commitment/budgetary estimate for the first Contract Year based on the Work Program.

13.4 The amount of performance bond or other guarantee may be adjusted, subject to the following conditions:

a) In the event of surrender by the RE DEVELOPER of a portion of the Contract Area covered by this RE Contract, the performance bond or other guarantee shall be reduced proportionately in accordance with the Work Program;

b) In the event that the RE DEVELOPER has fully expended its budgetary estimate under the Work Program but has not fully performed its work obligations, the amount of bond or other guarantee shall be equal to the succeeding Contract Year's budgetary estimate under the revised Work Program; and

c) Such other conditions or circumstances as would reasonably warrant the modification of the amount of the performance bond or other guarantee.

13.5 If the RE DEVELOPER, through its own fault, fails to observe or perform its work obligations under the Work Program, the DEPARTMENT, upon prior written notice, may proceed against the performance bond or other guarantee: Provided, That should the work obligations under the Work Program be fulfilled, and through the efficiency of the RE DEVELOPER, the corresponding actual expenditures thereon are lower than the estimated expenditures stated in the Work Program, the same shall be considered as full compliance of the work obligations.

13.6 The DEPARTMENT shall release the performance bond or other guarantee not later than twenty (20) working days from the date of confirmation by the DEPARTMENT on the start of the construction of the Generation Facility.

(Note: The amount of signing fee/bonus shall be based on the proposed installed capacity of the Hydropower Project at the rate of PhP5.00/kW.)

SECTION XIV. SUSPENSION AND TERMINATION. —

14.1 In case of the Pre-Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the Work Program and the material terms and conditions of this RE Contract;

b) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

c) Tampering, falsifying or plagiarizing of technical design and feasibility study reports;

d) Non-payment of the financial obligations agreed upon under this RE Contract; and

e) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond).

14.2 In case of the Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the approved Work Program and the material terms and conditions of this RE Contract;

b) Violation of the Renewable Portfolio Standards Rules, as defined in the Act and its IRR, and relevant Department Circulars;

c) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

d) Tampering, falsifying or plagiarizing of technical design, feasibility study generation and operation reports; SETAcC

e) Non-remittance of Government Share as determined by the Compliance Division — Financial Services of the DEPARTMENT;

f) Non-payment of the financial obligations agreed upon under this RE Contract;

g) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond).

14.3 In case the default of the RE DEVELOPER on account of any of the foregoing grounds is attributable to Force Majeure, the obligation of the RE DEVELOPER may be suspended for a period of one (1) year or until the Force Majeure event ceases to exist whichever comes earlier subject to the following conditions:

a) The RE DEVELOPER shall file a notice of Force Majeure to the DEPARTMENT within fifteen (15) calendar days from its existence;

b) After due validation which shall be made within twenty (20) days from receipt of such notice, the DEPARTMENT shall issue an approval of suspension of contractual obligation/s affected by Force Majeure;

c) The RE DEVELOPER shall continue to post the performance bond, if necessary, observe administrative requirements and comply with reportorial obligations on its work commitments not affected by Force Majeure;

d) Once the Force Majeure had ceased, the RE DEVELOPER shall notify the DEPARTMENT within five (5) days from cessation together with the revised Work Program covering the remaining contract term;

e) Any failure or delay on the part of either Party in the performance of its obligations or duties hereunder shall be excused to the extent attributable to Force Majeure;

f) If the Hydropower Operations are curtailed or prevented by such causes, then the time for enjoying the rights and carrying out the obligations thereby affected, and all rights and obligations hereunder shall be extended for a period equal to the period of delay, curtailment or prevention: Provided, however, That the suspension of obligation shall in no way extend the term of the contract. Provided, further, That if operations are delayed, curtailed or prevented by Force Majeure for a continuous period of twelve (12) months, this RE Contract may thereafter be terminated, at the option of the RE DEVELOPER, at anytime that the Force Majeure condition still exists, subject to confirmation of the DEPARTMENT;

g) The Party whose ability to perform its obligations is so affected shall notify the other Party thereof in writing stating the cause and such affected Party shall do all reasonably within its power to remove such cause.

14.4 Notwithstanding the foregoing, this RE Contract shall be terminated without prejudice to the RE DEVELOPER's obligation which survive the termination of this RE Contract.

SECTION XV. DISPUTES AND ARBITRATION. —

15.1 Any dispute, controversy or claim arising out of or relating to this RE Contract, except Section 14.1.a hereof, shall be settled amicably within a period of sixty (60) days after receipt by one Party of a notice from the other Party of the existence of the dispute.

15.2 If the dispute cannot be settled amicably within the sixty (60)-day period, the Parties shall, with respect to disputes arising out of or in connection with Sections V (Contract Area), VI (Work Program), and XI (Government Share), refer the dispute to an independent expert for resolution in the manner provided below: Provided, That any Party, in its sole discretion, may require that the dispute be referred to arbitration under Section 15.4 hereof.

15.3 The following shall govern the rules of referral:

a) After the sixty (60)-day period in Section 15.1 has passed, any Party may give notice to the other Party of its intention to refer the dispute to an expert in accordance with the provisions of this RE Contract;

b) The respondent shall, within twenty-one (21) days from receipt of the notice of intention to refer, serve the applicant a notice of intention to defend;

c) If within fourteen (14) days after the applicant's receipt of the respondent's notice of intention to defend, the Parties have agreed on an expert and on the terms under which the dispute shall be referred to the independent expert mentioned in Section 15.2 hereof. In the event that within such fourteen (14)-day period, the Parties are unable to agree upon an expert to be appointed hereunder or upon the terms of such expert's reference or both, then either Party may request the International Chamber of Commerce (ICC) International Centre for Expertise to appoint an expert, and the matters to be determined by such expert shall be those set out in the notice of intention to refer and the notice of intention to defend;

d) Unless the Parties agree otherwise, any expert proceedings under this Section shall be required to follow the ICC Rules for Expertise in force as of Effective Date;

e) The language of the expert proceedings and the expert's determinations shall be in English;

f) The Parties hereby agree to be bound by, to perform this RE Contract in accordance with, and to implement, as the case may be, the determination of the expert. Failure by one Party to act shall constitute a breach of this RE Contract and shall be submitted to arbitration in accordance with Section 15.4 as the sole means of enforcing the determination; and

g) Each Party shall bear the costs and expenses of all lawyers, advisors, witnesses and employees retained by it in connection with the expert proceedings: Provided, however, That in circumstances where the expert determines that a matter referred to him was not subject to a bona fide dispute, the costs and expenses incurred by the prevailing Party and the expert in connection with such matter shall be paid by the non-prevailing Party. ITCcAD

15.4 If the dispute cannot be settled within sixty (60) days by mutual discussions as contemplated in Section 15.1 hereof, and referral to an expert is neither prescribed nor elected by the Parties with respect to any technical dispute upon written demand of either Party, the dispute shall finally be settled by an arbitral tribunal (the "Tribunal") governed by and conducted in accordance with the ICC Rules of Arbitration (the "Rules") in force as of Effective Date (or such Rules as may be in force at the time such arbitration is commenced), as follows:

a) The RE DEVELOPER will nominate one (1) arbitrator and the DEPARTMENT will nominate one (1) arbitrator within thirty (30) days from the date of a request by either Party to initiate arbitration. The two Party-nominated arbitrators will then jointly nominate a third arbitrator within thirty (30) days from the date of the appointment of the second arbitrator, to act as Chairman of the Tribunal. Arbitrators not nominated within the time limits set forth in the preceding sentence shall be appointed by the ICC Court of International Arbitration;

b) Unless otherwise agreed by the Parties, the venue of the arbitration shall be in Metro Manila, Philippines;

c) The language of the arbitration and award shall be in English;

d) The Tribunal shall not be authorized to impose, and either Party shall not be authorized to seek from any judicial authority, any requirement that the Party posts security for the costs of either Party; and

e) The decision of the Tribunal shall be final and binding upon the Parties. Judgment upon the award rendered may be entered into any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

15.5 The right to arbitrate disputes under this RE Contract shall survive the Expiration or Termination of this RE Contract.

SECTION XVI. EMPLOYMENT, TRAINING AND DEVELOPMENT PROGRAMS. —

16.1 The RE DEVELOPER agrees to give preference in employment to qualified Filipino Employees who are residents of Host LGUs and will undertake the development and training of Filipino Employees for labor and staff positions, including administrative, technical and executive management positions. In the course of its operations, the RE DEVELOPER shall maintain as much as possible, an equal percentage men and women employees and accord them equal access to development and training programs. In no case shall an employee be denied employment and access to such development and training programs on the basis of sex and/or gender.

16.2 During the Pre-Development Stage, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of ___________ Pesos (PhP___________). Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of Pesos (PhP___________).

16.3 During the Pre-Development Stage, the RE DEVELOPER shall provide assistance for training programs, conferences, seminars and other similar activities for the DEPARTMENT's personnel in the amount of ___________ Pesos (PhP___________) per Contract Year. Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide assistance for training programs, conference seminars and other similar activities for the DEPARTMENT's personnel in the amount of ___________ Pesos (PhP___________) per Contract Year. This assistance shall be accumulated for the succeeding Contract Years if not availed of in a given Contract Year. The RE DEVELOPER shall pay the unutilized amount of the training commitment prior to the Expiration or Termination of this RE Contract.

16.4 The RE DEVELOPER shall undertake corporate social responsibility projects in Host LGUs focused on education and training of qualified and deserving beneficiaries, as determined by the RE DEVELOPER.

(Note: The funds for training program and development assistance shall be computed based on the proposed installed capacity of the Hydropower Project at the rate of PhP5.00/kW. Projects with installed capacity of 1MW and below shall be exempt from these financial obligations.)

SECTION XVII. MISCELLANEOUS PROVISIONS. —

17.1 NOTICES

Any notice required or given by either Party to the other Party shall be (i) in writing and delivered personally or sent by registered or certified mail, commercial courier service to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number designated in writing by such party and (iii) by electronic mail, to the electronic mail address designated in writing by such party or such other electronic mail address as may be later designated in writing by such party.

Any notice or other communication so transmitted shall be deemed to have been given: (a) on the day of delivery if delivered personally; (b) one (1) business day after delivery to a commercial courier service; (c) five (5) days after mailing if sent by registered mail, return receipt requested, postage prepaid; or (d) when sent by electronic mail or facsimile, using the email address and facsimile number herein below provided if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day. All such notices shall be addressed: aHECST

To the DEPARTMENT:

The Secretary

Department of Energy

Office Address

Email Address

Telephone/Fax Numbers

To the RE DEVELOPER:

Designation

Company Name

Office Address

Email Address

Telephone/Fax Numbers

Any Party may substitute or change such address with prior written notice thereof to the other Party.

17.2 GOVERNING LAW

The laws of the Republic of the Philippines shall apply to this RE Contract.

17.3 ASSIGNMENT

a) The RE DEVELOPER may assign this RE Contract to a third party subject to the prior written approval of the DEPARTMENT. This RE Contract shall not be assigned to any third party, unless such third party is qualified in accordance with the Act and its IRR.

b) The RE DEVELOPER may assign or transfer part or all of its rights and/or obligations under this RE Contract to its Affiliate upon compliance with the following provisions:

i. The RE DEVELOPER shall submit to the DEPARTMENT copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and

ii. In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations.

c) The RE DEVELOPER may authorize its subsidiaries, branches or regional corporations to implement this RE Contract, but the RE DEVELOPER shall remain responsible for the performance of this RE Contract.

d) During the Pre-Development Stage, this RE Contract shall not be assigned except where the assignee is a subsidiary, branch or regional corporation of the RE DEVELOPER created for the special purpose of handling the project covered by the RE Contract.

e) No assignment shall be granted if the RE DEVELOPER is in default of its Work Program or any of its material obligations under the RE Contract and other RE agreements with the DEPARTMENT.

f) An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during the entire period covering the Pre-Development Stage and pre-commissioning phase of the RE Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

17.4 AMENDMENTS

The RE Contract shall not be amended or modified in any respect except by the mutual consent in writing of the Parties.

17.5 BOOKS OF ACCOUNTS AND AUDITS

a) The RE DEVELOPER shall be responsible for keeping complete books and accounts, in Philippine currency denominations, reflecting all transactions in connection with this RE Contract in accordance with the Annex "B" hereof.

b) The DEPARTMENT shall have the right to inspect the RE DEVELOPER's books and accounts directly relating to this RE Contract for any Calendar or Fiscal Year thirty-six (36) months following the end of each Calendar or Fiscal Year. Any such audit shall be completed within twenty-four (24) months from its commencement. Any exceptions must be made to the RE DEVELOPER in writing within ninety (90) calendar days following the completion of such audit. If the DEPARTMENT fails to give such written exception within such time, then the RE DEVELOPER's books of accounts and statements for such Calendar or Fiscal Year shall be established as correct and final for all purpose.

c) The DEPARTMENT, upon at least fifteen (15) days advance written notice to the RE DEVELOPER, is entitled to access, during reasonable hours without affecting Hydropower Operations, all books of accounts and records and may inspect such sites and facilities as necessary.

d) If the DEPARTMENT notifies the RE DEVELOPER of an exception to the RE DEVELOPER's books of accounts within the period specified in Sub-section 17.6 (b), the RE DEVELOPER shall within ninety (90) days from receipt of written exception from the DEPARTMENT, question its validity, otherwise, the same shall become final and binding on the RE DEVELOPER. If the Parties are not able to agree on the exceptions or adjustments after ninety (90) days from the date of receipt of the RE DEVELOPER's response to the DEPARTMENT's exception report, the Parties shall resolve the dispute in accordance with Section XV (Disputes and Arbitration) hereof.

17.6 SEPARABILITY CLAUSE

Should any provision of this RE Contract or the application thereof to any situation or circumstance be declared null and void and/or invalid or unenforceable, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain valid and enforceable to the fullest extent. In the event of such partial invalidity or unenforceability, the Parties shall seek in good faith to agree on replacing the invalid or unenforceable provisions with a provision that in effect will most nearly and fairly approximate the effect of the invalid or unenforceable provision through the issuance of appropriate supplemental contract/s or agreement/s.

IN WITNESS WHEREOF, the Parties have caused this RE Contract to be executed by their respective representatives at the place on the date above written. EHACcT

 

DEPARTMENT OF ENERGY	COMPANY NAME
By:	By:
___________________________NAMESecretary	___________________________PRINCIPAL SIGNATORYDesignation

WITNESSES

___________________________NAMEDirector IV, REMB

___________________________NAME OF WITNESSDesignation

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Taguig, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
DOE SECRETARY

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This RE Contract consisting of twenty-five (25) pages, including the page on which this acknowledgment is written, is signed on each and every page thereof by the Parties and their instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Taguig, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same person described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his free and voluntary act and deed as well as the free and voluntary act and deed of the corporation herein represented.

This RE Contract consisting of twenty-five (25) pages, including the page on which this acknowledgment is written, is signed on each and every page thereof by the Parties and their instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ANNEX E

Ocean Energy Service Contract

This OCEAN ENERGY SERVICE CONTRACT (this "RE Contract"), made and entered into this DATE OF EXECUTION in Fort Bonifacio, Taguig City by and between:

The REPUBLIC OF THE PHILIPPINES, hereinafter referred to as "GOVERNMENT," through the "Department of Energy," hereinafter referred to as the "DEPARTMENT," a government agency established pursuant to Republic Act No. 7638, as amended, with principal office address at the Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, represented herein by its Secretary, Name;

-and-

COMPANY NAME, hereinafter referred to as the "RE DEVELOPER," a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office address at Location, represented herein by its Designation, Name.

Each of the DEPARTMENT and the RE DEVELOPER is referred to as a "Party," and collectively as the "Parties." In the implementation of this RE Contract, the GOVERNMENT shall act through and be represented by the DEPARTMENT. EacHCD

WITNESSETH:

WHEREAS, all forces of potential energy in public and/or private lands, within the Philippine territory, belong to the State and their exploration, development and utilization are governed by Section 2, Article XII of the 1987 Constitution;

WHEREAS, under Republic Act No. 7638, as amended, otherwise known as the Department of Energy Act of 1992, the DEPARTMENT shall establish and administer programs for the exploration, development and utilization of energy resources, including Ocean Power Resources;

WHEREAS, under Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (the "Act"), the exclusive right to explore and develop a particular renewable energy area under the said Act shall be through a Renewable Energy Service Contract;

WHEREAS, pursuant to the Act, the RE DEVELOPER has agreed to enter into this RE Contract with the DEPARTMENT covering the Contract Area for the Project with the corresponding rights and obligations stipulated hereof;

WHEREAS, the RE DEVELOPER has been determined by the DEPARTMENT to be legally, technically, and financially qualified to enter into this RE Contract.

NOW, THEREFORE, for and in consideration of the terms and conditions set forth herein, the Parties hereby stipulate and agree as follows:

SECTION I. SCOPE. —

1.1 This RE Contract is entered into, with the services, technology and financing to be furnished by the RE DEVELOPER for its conduct of Ocean Power Operations, in an economically viable manner.

1.2 This RE Contract cover the Contract Area only as provided under Section V (Contract Area) hereof.

1.3 The RE DEVELOPER is hereby appointed and constituted by the DEPARTMENT as the Party having the exclusive right to explore, develop, and utilize the Ocean Power Resources within the Contract Area defined hereof.

1.4 The RE DEVELOPER may pursue any Additional Investment or New Investment within the Contract Area and shall be solely responsible for providing the necessary services, technology, equipment and financing therefor. In case of New Investment, the Parties shall enter into a new RE Contract at the option of the RE DEVELOPER, subject to approval of the DEPARTMENT.

1.5 The RE DEVELOPER shall assume all the technical and financial risks under this RE Contract without any guarantee from the GOVERNMENT and shall not be entitled to reimbursement for any expense incurred in connection with this RE Contract.

SECTION II. DEFINITION OF TERMS. —

2.1 The words and terms under this RE Contract, unless otherwise specified in the Act and its IRR, shall have the meaning in accordance with the following definitions:

a) "Abandonment and Termination Plan" refers to the plan prepared by the RE DEVELOPER submitted within three (3) months from Effective Date in the case of Pre-Development Stage and five (5) years from confirmation of the Declaration of Commerciality and approved by the Department of Environment and Natural Resources (DENR) and the DEPARTMENT for the decommissioning, abandonment and surface restoration or rehabilitation of the Contract Area, and such abandonment work plan may be amended, supplemented or modified by the Parties from time to time;

b) "Accounting Procedures" refers to the set of procedures, guidelines, and arrangement between the Parties, and any amendments thereto, to govern the applicable treatment of expenses, costs, and income, set forth in Annex "B", which forms an integral part of this RE Contract;

c) "Additional Investment" refers to investments relating to improvements, modernization, rehabilitation, or expansion duly registered with the DEPARTMENT, subject to the conditions to be determined by the DEPARTMENT, such as but not limited to the following:

i. Identification of and investment in sequential phases/stages of production, or undertaking scheduled modernization and/or rehabilitation of the Ocean Power Systems; and

ii. Improvements to the Ocean Power Systems such as reduced production/operational costs, increased production, improved operational efficiency, and better reliability of the Project;

d) "Affiliate" refers to any person or group of persons, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the RE DEVELOPER. As used herein, "control" shall mean the power to direct, or cause the direction of, the management policies of a person by contract, agency, or otherwise;

e) "Certificate of Confirmation of Commerciality" or "COCOC" shall refer to the Certificate duly signed by the DOE Secretary confirming the Declaration of Commerciality by the RE Developer and shall serve as a notice to proceed for the construction of the RE Project or the installation of the RE Facilities. The date of issuance of the COCOC shall be considered as the commencement date of the Development Stage of the RE Project;

f) "Certificate of Registration" refers to that certification issued to the RE DEVELOPER upon the Effective Date of this RE Contract and upon approval of New Investment, to serve as the basis for its entitlement to the incentives provided under the Act;

g) "Commercial Operation" shall refer to the phase commencing at the operation of the RE Project, following the successful testing and commissioning of the RE Project, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DEPARTMENT and other relevant regulatory bodies;

h) "Commercial Quantities" refers to quantities of electricity to be generated from the Ocean Power Resources, providing, or capable of providing, revenue from sales of electricity that exceed or would exceed the RE DEVELOPER's Cost of Goods Sold by a margin sufficient to cause a reasonably prudent person employing standard industry practices as to Ocean Power resources and using commercially available technology to develop the Ocean Power Systems; cIECaS

i) "Contract Area" refers to an area where the RE DEVELOPER is given the exclusive right to explore and develop RE resources and which is more particularly described in a map with its technical description attached herein as Annex "A" and made an integral part of this RE Contract;

j) "Contract Year" refers to a period of twelve (12) consecutive calendar months counted from the Effective Date of this RE Contract and thereafter, from the anniversary of such Effective Date;

k) "Corporate Income Tax" refers to the tax imposed upon net taxable income under the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9937 and the Act. Upon lapse of the period of the Income Tax Holiday (ITH) under the Act, the RE DEVELOPER shall be subject to a Corporate Income Tax rate of ten percent (10%);

l) "Cost of Goods Sold" refers to all business expenses directly incurred in the exploration, development, and utilization of the Ocean Power Resources in order to produce and sell electricity and transmit the same to its intended location and use, which expenses are particularly described in Annex "B" hereof;

m) "Declaration of Commerciality" refers to a written declaration by the RE DEVELOPER stating that the electricity to be generated from the Ocean Power Resources is of Commercial Quantities;

n) "Development Stage" refers to the development, production, or utilization of RE resources, including the construction and installation of relevant facilities up to the operation phase thereof;

o) "Effective Date" refers to the date of the execution of this RE Contract subject to the payment of the signing fee and the posting of the performance bond covering the first Contract Year as provided hereunder;

p) "Expatriate Expert" refers to a foreign national engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Ocean Power Operations, who shall exercise his technical profession, as allowed under existing laws;

q) "Expiration" refers to either the lapse of the term of this RE Contract provided in Section III (Term) hereof or the surrender, abandonment or waiver of the RE DEVELOPER of the entire Contract Area to the DEPARTMENT;

r) "Filipino Employee" refers to any citizen of the Republic of the Philippines employed and/or engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Ocean Power Operations under this RE Contract, and such engagement is characterized as establishing an employer-employee relationship between such citizen and RE DEVELOPER;

s) "Force Majeure" refers to extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable;

t) "Generation Facility" refers to a facility for the production of electricity;

u) "Government Share" refers to the amount due the national government and LGUs from the exploration, development and utilization of the Ocean Power Resources computed in accordance with the Act and its Implementing Rules and Regulations (IRR), and described in Section XI (Government Share) hereof;

v) "Gross Income" refers to income derived from the RE DEVELOPER's Ocean Power Operations equivalent to the gross sales of Ocean Power less sales returns, discounts and allowance, and Cost of Goods Sold, which is more particularly described in the Accounting Procedures attached as Annex "B";

w) "Host LGU" refers to the LGU where the Ocean Power Resources and/or Generation Facility is located;

x) "Local Government Units/LGU" refers to the territorial and political subdivisions of the State which organization and function are fully described under the Local Government Code of 1991;

y) "New Investment" refers to investments relating to discovery, exploration, development and/or utilization of new RE resources or the development of new Generation Facilities within the Contract Area distinct from the originally registered operations having separate books of accounts;

z) "Ocean Power" refers to the energy that can be derived from Ocean Power Resources that is converted into useful electrical or mechanical energy;

aa) "Ocean Power Operations" shall include Ocean Power exploration, development, production, and utilization, including the construction, installation, operation and maintenance of Ocean Power Systems to convert Ocean Power to electrical power and the transmission of such electrical power and/or other non-electrical uses;

bb) "Ocean Power Resources" refers to the water resources found with the Contract Area to be technically feasible for the development of Ocean Power projects;

cc) "Ocean Power Systems" refers to the machines or other related equipment that convert Ocean Power into useful electrical or mechanical energy; includes, but is not limited to, Water Turbine Generators (WTGs), electrical collection and transmission grids, overhead and underground electrical transmission and communications lines, electric transformers and conditioning equipment, energy storage facilities, telecommunications equipment, power generation facilities to be operated in conjunction with WTG installations, meteorological towers and water current measurement equipment, control buildings, maintenance yards, access facilities, and related facilities and equipment deemed by the RE DEVELOPER to be necessary or convenient for the production and delivery of electricity from Ocean Power;

dd) "Pre-Development Stage" refers to the preliminary assessment and feasibility study up to the financial closing of the Project and specifically covers the term provided in Section 3.1 of this RE Contract; SAHITC

ee) "Production Area" refers to that portion of the Contract Area designated by the RE DEVELOPER where Ocean Power Resources are utilized to produce electricity in Commercial Quantities;

ff) "Project" refers to the RE DEVELOPER's Ocean Power Systems within the Contract Area, which may be implemented in one or more phases;

gg) "RE Contract" refers to this Ocean Power Service Contract, as may be amended or extended by the Parties and shall have the same meaning as provided under the Act;

hh) "Sub-contractor" refers to any person or entity contracted by the RE DEVELOPER to provide goods or services for the purpose of this RE Contract, subject to the provisions of existing laws;

ii) "Termination" refers to the right of the Parties to cancel this RE Contract pursuant to Section XIV (Suspension and Termination) hereof; and

jj) "Work Program" refers to all types of plans and programs and related activities formulated for the performance of the work obligations by the RE DEVELOPER during the Pre-Development Stage, along with the corresponding budgetary estimate, submitted to the DEPARTMENT under this RE Contract as Annex "C" and shall thereafter updated on a regular basis.

SECTION III. TERM. —

3.1 Pre-Development Stage. The Pre-Development Stage of this RE Contract shall be a non-extendible period of seven (7) years from the Effective Date: Provided, That the RE DEVELOPER shall submit a Declaration of Commerciality within the Pre-Development Stage, otherwise, the term of this RE Contract shall automatically expire.

3.2 Development Stage. Upon submission of the Declaration of Commerciality, as confirmed by the DEPARTMENT through the issuance of a Certificate of Confirmation of Commerciality, this RE CONTRACT shall remain in force for the balance of a period of twenty-five (25) years from the Effective Date: Provided, That at the option of the RE DEVELOPER, by written notice to the DEPARTMENT not later than one (1) year prior to the expiration of the initial twenty-five (25)-year period and so long as the RE DEVELOPER is not in default of any material obligations under this RE Contract, the DEPARTMENT may approve the extension of this RE Contract for another twenty-five (25) years, subject to the terms and conditions to be mutually agreed upon by the Parties.

SECTION IV. CONTRACT STAGE TRANSITION. —

4.1 Declaration of Commerciality. — Upon its determination that the Ocean Energy Resource can generate power in Commercial Quantities, the RE DEVELOPER shall submit the Declaration of Commerciality along with supporting documents which shall be made within the Pre-Development stage.

4.2 Certificate of Confirmation of Commerciality. — The DEPARTMENT shall act on RE DEVELOPER's Declaration of Commerciality within twenty (20) working days from receipt thereof provided the submission is made within the Pre-Development Stage as provided in Section 4.1. Within the 20-working day period, the DEPARTMENT shall either: a) issue the Certificate of Confirmation of Commerciality or b) deny the Declaration of Commerciality.

4.3 Should the DEPARTMENT find the Declaration of Commerciality without sufficient basis, the RE DEVELOPER shall be given a one-time chance of thirty (30) calendar days from receipt of the result of evaluation to rectify its submission. Otherwise, the request of issuance of Certificate of Confirmation of Commerciality shall be denied.

SECTION V. CONTRACT AREA. —

5.1 The Contract Area refers to the area as described in Annex "A" hereof reserved by the DEPARTMENT for the RE DEVELOPER over which the RE DEVELOPER has exclusive right to explore, develop and utilize the Ocean Power Resources in accordance with this RE Contract.

The RE DEVELOPER may, upon submission of written notice to the DEPARTMENT, surrender or waive the entire Contract Area or any portion thereof without prejudice to any other outstanding liability or costs. In case the RE DEVELOPER completely ceases its operations, the provisions under its Abandonment and Termination Plan shall apply consistent with its Environmental Compliance Certificate (ECC).

5.2. During Pre-Development Stage, the RE DEVELOPER shall delineate its Production Area which shall be the final Contract Area during the Development Stage of the Project and shall form part of its Declaration of Commerciality.

5.3. Any areas outside the proposed Production Area shall be deemed surrendered or waived on the date of Declaration of Commerciality.

SECTION VI. WORK PROGRAM. —

6.1 The RE DEVELOPER shall carry out its existing work according to good industry practices.

6.2 During the Pre-Development Stage, the RE DEVELOPER shall conduct preliminary Ocean Power Resources data gathering activities and, if warranted by the results of such Ocean Power Resources data gathering, conduct a full Ocean Power Resources assessment.

6.3 Attached to this RE Contract is a Work Program, details of which are particularly described in Annex "C" hereof.

6.4 The RE DEVELOPER shall submit to the DEPARTMENT a Work Program for the first five (5) years which shall form part of its Declaration of Commerciality and its corresponding budget thereof. TAcSaC

6.5 Not later than two (2) months prior to the end of the first five (5) years from the RE DEVELOPER's Declaration of Commerciality, the RE DEVELOPER shall submit a Work Program for the next five (5) years and shall do so every five (5) years thereafter. The Work Program or any revisions thereof shall require the approval of the DEPARTMENT.

6.6 During the implementation of the Project, the RE DEVELOPER shall submit for evaluation and approval by the DEPARTMENT, a request for any revisions to the Work Program upon determination of such revision. The DEPARTMENT shall act on the request for revision and thereafter, the RE DEVELOPER may proceed to implement the activity without violating the provisions on the Work Program: Provided, that revision shall not be allowed within the first two (2) Contract Years. Provided, further, That the RE DEVELOPER shall be allowed to subsequently revise its Work Program only if it has substantially complied with all its material financial and technical activities under the Work Program for the immediate preceding Contract Year and such revision shall be allowed only once per Contract Year.

6.7 In the event of failure of the RE DEVELOPER to comply with its commitments under the Work Program, the DEPARTMENT shall call the performance bond posted by the RE DEVELOPER. This is without prejudice to the right of the DEPARTMENT to terminate the RE Contract.

SECTION VII. RIGHTS AND OBLIGATIONS. —

7.1 The RE DEVELOPER shall have the following rights:

a) To be granted fiscal and non-fiscal incentives and privileges under the Act, the IRR, and all other existing laws that are not otherwise modified or repealed by the Act;

b) To receive assistance from the DEPARTMENT:

i. During the Pre-Development Stage, in securing access to lands and/or offshore areas where Ocean Power Resources shall be harnessed; and

ii. In endorsing the Project to the other agencies of the National Government, LGUs, Board of Investments (BOI) and other entities for the acquisition of permits, licenses and clearances and availment of applicable fiscal and non-fiscal incentives.

c) Have at all times the right of ingress to and egress from the Contract Area to and from facilities wherever located;

d) Acquire rights-of-way and similar rights on, over, under, across and through the Contract Area or properties adjacent to the Contract Area, which constitute or is reasonably expected to constitute the Contract Area as the RE DEVELOPER may reasonably deem necessary.

The DEPARTMENT shall, upon request by the RE DEVELOPER as may be reasonable given the attendant circumstances, assist the RE DEVELOPER in securing such rights. For such purpose, the DEPARTMENT shall and does hereby appoint the RE DEVELOPER as its attorney-in-fact and does hereby give and grant to the RE DEVELOPER full authority to act for and on its behalf in the negotiation and conclusion of agreements and payments for such rights. All obligations, payments and expenses arising from or incidental to the acquisition of such rights shall be for the account of the RE DEVELOPER so as to enable the RE DEVELOPER to have ingress into and egress from the Contract Area and to perform all Ocean Power Operations in accordance with this RE Contract and in consideration of which, entitlement to such rights shall be held in trust in favor of the RE DEVELOPER.

The DEPARTMENT undertakes to provide further assistance to the RE DEVELOPER, including the exercise of the power of eminent domain if necessary, to secure such necessary or proper rights at such cost for the account of the RE DEVELOPER, if the RE DEVELOPER is unable to secure such rights at commercially reasonable costs through negotiations or if the same is the most expedient course of action to support the timely execution of Ocean Power Operations;

e) Allow, in accordance with existing laws, to engage the services of Expatriate Experts who shall exercise their technical professions solely for the Ocean Power Operations: Provided That, Filipino Employees shall be given preference to positions for which they have adequate training and experience required by the RE DEVELOPER; and Provided further, that if the employment or connection of such Expatriate Experts with the RE DEVELOPER ceases, applicable laws and regulations shall apply to him and his immediate family;

f) Have free and unimpeded use of Ocean Power Resources within the Contract Area in view of the Ocean Power Operations, Additional Investments and New Investments; in regard of which, the DEPARTMENT shall ensure that rights, privileges and other authorizations it may grant to third parties will not defeat or impair such use; and

g) Be informed by the DEPARTMENT, if at any time the latter becomes aware of any intended exploration, extraction, or use of energy resources other than Ocean Power Resources on the Contract Area and adjacent areas thereof, within thirty (30) days from the date it becomes so aware of such intended exploration, extraction, or other use.

7.2 The RE DEVELOPER shall have the following obligations:

a) During the Pre-Development Stage, upon determination of Geothermal Resource of Commercial Quantities, the RE DEVELOPER shall submit to the DEPARTMENT its Declaration of Commerciality;

b) Secure and be subject to any necessary permits, licenses, endorsements, agreements and clearances from all relevant government and private entities for the Project;

c) Perform exploration, assessment, field verification, harnessing, piloting and other activities in accordance with the Work Program and provide technology and financing in connection with the Pre-Development Stage;

d) Perform the required Ocean Power Operations and provide services, technology, and financing in connection therewith; LexLib

e) Maintain complete and accurate accounting, financial and technical records of its Ocean Power Operations, subject to Sections IX (Technical Data and Reports Submission) and XI (Confidentiality), and in accordance with the Accounting Procedures;

f) Allow officials and representatives authorized by the DEPARTMENT access to the Contract Area and to accounts, books and records directly relating to the Ocean Power Operations during reasonable hours and without causing disruption. The RE DEVELOPER shall provide such reasonable facilities and assistance as may be practicable to ensure the success of the inspection;

g) Give priority in employment to qualified personnel in the Host LGU subject to Section XV (Employment, Training and Development Programs);

h) At the start of every Contract Year, post a performance bond or any other guarantee of sufficient amount but not less than the annual budgetary estimate for the corresponding Contract Year in favor of the DEPARTMENT from a list of DEPARTMENT-accredited insurance or surety companies. The posting of performance bond shall be conditioned upon the faithful performance by the RE DEVELOPER of any or all of the commitments and obligations under the Work Program until the commencement of the construction of the Generation Facility.

Upon the commencement of the construction of the Generation Facility, the RE DEVELOPER shall notify the DEPARTMENT of such fact and the latter shall verify the same. Thereafter, the obligation to post the bond shall cease;

i) Be subject to the provisions of laws of general application;

j) Develop, operate, and maintain the Contract Area in accordance with accepted industry practices to enable maximum economic production of the Ocean Power Resources;

k) Be responsible for procurement of installation, equipment and supplies, and for entering into subcontracts related to the Ocean Power Operations;

l) Comply with the provisions of Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended, and in so doing, (1) exert its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (2) ensure the safety and health of its operating personnel;

m) Give preference to Philippine companies/agencies entering into subcontracts on goods or services that are required in the Ocean Power Operations but are not carried out by the RE DEVELOPER: Provided, That the goods or services are competitive as to cost, quality and availability;

n) Be responsible in the proper handling of data, samples, information, reports, and other documents;

o) Maintain all meters and measuring equipment in good order and allow access to these as well as to the exploration sites to inspectors authorized by the DEPARTMENT;

p) Pay the Government Share in accordance with the computation in the Act's IRR and taxes as may be applicable;

q) Organize Information, Education and Communication (IEC) Campaign on benefits to the Host LGUs; and

r) Comply with all rules, regulations, and guidelines issued by the DEPARTMENT and other government agencies that are applicable hereto.

7.3 Upon the Effective Date of this RE Contract or upon the approval of the RE DEVELOPER's New Investment, the DEPARTMENT shall issue a Certificate of Registration to the RE DEVELOPER, to enable it to avail of the fiscal and non-fiscal incentives and privileges as stated under the Act and its IRR. The registration shall be valid and effective for the entire term and effectivity of this RE Contract.

SECTION VIII. REPRESENTATIONS AND WARRANTIES. —

Acknowledging that the GOVERNMENT, through the DEPARTMENT, has entered into this RE Contract in reliance upon the representations and warranties in this Section, the RE DEVELOPER represents and warrants as follows:

8.1 It is a corporation or entity duly formed, established, validly existing and in good standing under the laws of the Philippines with full power to own its property; to carry on its business as it is now being conducted; and to execute, deliver and perform its obligations under this RE Contract, and the entering into and performance of this RE Contract by the RE DEVELOPER does not conflict with the articles of incorporation, by-laws and other constitutive documents of the RE DEVELOPER and has been duly authorized by all necessary corporate and legal action on the part of the RE DEVELOPER;

8.2 The individual signing this RE Contract on behalf of the RE DEVELOPER is duly authorized to sign as of the Effective Date;

8.3 There is no litigation, arbitration, or administrative proceeding pending or, to the best knowledge of the RE DEVELOPER, threatened against the RE DEVELOPER or its properties the adverse determination of which would adversely affect the ability of the RE DEVELOPER to perform or comply with any of its material obligations under this RE Contract;

8.4 The RE DEVELOPER:

a) Has not been declared in default in respect of any of its material financial commitments or obligations based on their reports duly validated by the DEPARTMENT;

b) Is not otherwise in default of any kind in respect of any financial commitment or obligation or in respect of any agreement, undertaking or instrument to which it is a party by which it or any of its assets or properties may be bound; and

c) Is not aware of a fact that by the service of notice and/or lapse of time would constitute a default in sub-paragraphs (a) to (b) above. CIETDc

8.5 No written material information given by the RE DEVELOPER to the DEPARTMENT under this RE Contract contains any misstatement of fact as of the Effective Date or omits to state a fact that is materially adverse to the interests of the DEPARTMENT; and

8.6 The ownership of the RE DEVELOPER's capital stock complies with applicable laws and regulations.

SECTION IX. ASSETS AND EQUIPMENT. —

9.1 The RE DEVELOPER shall acquire and maintain for the Project and for its Ocean Power Operations such assets as are reasonably estimated to be required in carrying out the exploration, assessment, harnessing, piloting and other studies for the Ocean Power Resources in the Contract Area; and the development, utilization, and commercialization of Ocean Power Resources therein, including the construction, installation, operation and maintenance of the Ocean Power Systems.

9.2 All materials, equipment, plants and other installations that are erected or placed on the Contract Area by the RE DEVELOPER and are owned by the RE DEVELOPER shall remain the property of the RE DEVELOPER up to one (1) year from the Expiration or Termination of this RE Contract: Provided, That upon the written request of the RE DEVELOPER, the DEPARTMENT shall approve an additional non-extendible period of one (1) year within which to remove such assets in the Contract Area. Thereafter, the ownership of any remaining materials, equipment, plants, and other installations shall be vested in the Government.

9.3 The RE DEVELOPER shall be responsible for the removal and the disposal of all materials, equipment, and facilities from the Contract Area in accordance with the ECC and the provisions of the Abandonment and Termination Plan as provided under Section II hereof.

9.4 The ownership of all data, records, accounts, samples and other technical data produced or generated in the course of the Ocean Power Operations that are confidential, propriety, or otherwise not generally available to the public shall remain with the DEPARTMENT and RE DEVELOPER and shall be kept confidential in accordance with Section XI (Confidentiality) hereof.

SECTION X. DATA AND REPORTS. —

10.1 All data and reports, except for proprietary techniques used in developing such technical data and reports, must be submitted by the RE DEVELOPER in accordance with the format approved by the DEPARTMENT.

10.2 The technical data and reports to be submitted by the RE DEVELOPER shall include, but not limited to, the following:

a) Annual Progress Report — shall be submitted not later than two (2) months prior to the end of each Contract Year and shall contain the summary of accomplishments under the approved Work Program, direct or indirect jobs generated, summary of fiscal incentives availed in Philippine Peso and status of construction with relevant comments and recommendation on any technical findings, among others;

b) Procurement Plan shall be submitted not later than one (1) month from the approval of the Work Program and shall be designed according to the approved Work Program, containing an itemized list of equipment, materials, and supplies to be procured with corresponding estimated costs;

c) Monthly Generation Report — shall be submitted within fifteen (15) days from the end of each calendar month;

d) General Information Sheet — shall be submitted annually within thirty (30) calendar days from date of actual annual stockholders' or members' meeting;

e) Audited Financial Statement — shall be submitted annually within ninety (90) calendar days from date of actual annual stockholders' or members' meeting; and

f) Reports in accordance with the Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended.

SECTION XI. GOVERNMENT SHARE. —

11.1 The Government Share shall be equal to one percent (1%) of the Gross Income from the sale of electricity generated from Hydropower Operations in accordance with the Accounting Procedures as prescribed under Annex "B" hereof.

11.2 The RE DEVELOPER shall within sixty (60) days following the end of each quarter of a Calendar or Fiscal Year remit to the DEPARTMENT the Government Share: Provided, That any unremitted amount shall carry an interest of ten percent (10%) per annum reckoned from the day immediately following the end of each quarter of a Calendar or Fiscal Year, as may be applicable.

SECTION XII. CONFIDENTIALITY. —

12.1 All documents, information, data and reports produced or generated during the Ocean Power Operations under this RE Contract shall be kept strictly confidential over the term of this RE Contract or any extension thereof: Provided, That proprietary information shall be kept strictly confidential at all times subject to lawful acquisitions of such information under existing laws and regulations.

12.2 Without the written consent of the other Party, no Party shall use or disclose the confidential information to any third party and/or to any Affiliate not directly connected with the implementation of this RE Contract except the third parties and Affiliates in Section 12.5, and no Party shall otherwise transfer, present, sell or publish it in any way within the confidentiality periods.

12.3 The DEPARTMENT may use such confidential information belonging to the RE DEVELOPER for the DEPARTMENT's resource mapping, data gathering, policy making and for government planning purposes. HSCcTD

12.4 Upon the Expiration or Termination of this RE Contract, the DEPARTMENT may provide third parties with the data and reports submitted by the RE DEVELOPER pursuant to this Section.

12.5 Contrary stipulations notwithstanding, the RE DEVELOPER may furnish the information to the following third parties, subsidiaries and Affiliates, such as, but not limited to:

a) Banks or other credit institutions from which finance is sought by the RE DEVELOPER;

b) Third parties, subsidiaries and Affiliates that provide services for the Ocean Power Operations, including Subcontractors and other service contractors;

c) Prospective assignee/s to whom rights and obligations under this RE Contract are intended to be assigned;

d) Prospective investor/s or entities with whom the RE DEVELOPER intends to enter into joint venture or other similar agreements for the Project;

e) Governments and stock/commodity exchanges in accordance with the laws, regulations, or rules of the relevant country or stock/commodity exchange; and

f) Government authorities, entities and judicial courts if required by law, regulation, directive, or order to disclose.

12.6 The information shall be revealed to those persons allowed under this RE Contract only if and to the extent necessary and desirable for the purpose intended. Each Party shall ensure that such person to whom information is disclosed is informed of the confidential nature of the information and the purpose for which it may be used and that each such person is bound by this Section.

12.7 The RE DEVELOPER and its Affiliates or the DEPARTMENT, its officers, employees, consultants and other duly authorized representatives shall not make any public statement or announcement of any information produced, generated, or acquired in the course of the Ocean Power Operations, without prior written consent of the other Party.

SECTION XIII. PERFORMANCE BOND AND SIGNING FEE. —

13.1 The RE DEVELOPER shall pay the signing fee in the amount of _________ Pesos (PhP_________) and post the performance bond covering the first Contract Year within fifteen (15) and thirty (30) days, respectively, from its receipt of notice.

13.2 Failure of the RE DEVELOPER to comply with Section 13.1 hereof shall render the COR and RE Contract to be void ab initio.

13.3 The initial amount of the bond or other guarantee as specified in Sub-section 7.2 (g) shall not be less than the annual financial commitment/budgetary estimate for the first Contract Year based on the Work Program.

13.4 The amount of performance bond or other guarantee may be adjusted, subject to the following conditions:

a) In the event of surrender by the RE DEVELOPER of a portion of the Contract Area covered by this RE Contract, the performance bond or other guarantee shall be reduced proportionately in accordance with the Work Program;

b) In the event that the RE DEVELOPER has fully expended its budgetary estimate under the Work Program or Work Plan but has not fully performed its work obligations, the amount of bond or other guarantee shall be equal to the succeeding Contract Year's budgetary estimate under the revised Work Program; and

c) Such other conditions or circumstances as would reasonably warrant the modification of the amount of the performance bond or other guarantee.

13.5 If the RE DEVELOPER, through its own fault, fails to observe or perform its work obligations under the Work Program, the DEPARTMENT, upon prior written notice, may proceed against the performance bond or other guarantee: Provided That, should the work obligations under the Work Program be fulfilled, and through the efficiency of the RE DEVELOPER, the corresponding actual expenditures thereon are lower than the estimated expenditures stated in the Work Program, the same shall be considered as full compliance of the work obligations.

13.6 The DEPARTMENT shall release the performance bond or other guarantee not later than twenty (20) working days from the date of confirmation by the DEPARTMENT on the start of the construction of the Generation Facility.

(Note: The amount for signing fee/bonus shall be based on the total Contract Area at the rate of PhP100.00/has.)

SECTION XIV. SUSPENSION AND TERMINATION. —

14.1 In case of the Pre-Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the Work Program and the material terms and conditions of this RE Contract;

b) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

c) Non-observance of environmental regulations imposed by the DENR during the conduct of feasibility study;

d) Tampering, falsifying or plagiarizing of technical design and feasibility study reports;

e) Non-payment of the financial obligations agreed upon under this RE Contract; and

f) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond). cSTHAC

14.2 In case of the Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the material terms and conditions of this RE Contract;

b) Violation of the Renewable Portfolio Standards Rules, as defined in the Act and relevant Department Circulars;

c) Non-compliance with the approved Work Plan and any other material obligations herein;

d) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

e) Non-observance of environmental regulations imposed by the DENR during construction and operation;

f) Tampering, falsifying or plagiarizing of technical design, feasibility study generation and operation reports;

g) Non-remittance of Government Share as determined by the Compliance Division — Financial Services of the DEPARTMENT;

h) Non-payment of the financial obligations agreed upon under this RE Contract;

i) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond).

j) Failure to comply with material reportorial obligations under this RE Contract; and

k) Any representation or warranty made by the RE DEVELOPER under Section VIII (Representations and Warranties) which shall prove to have been incorrect in any material respect when made.

14.3 In case the default of the RE DEVELOPER on account of any of the foregoing grounds is attributable to Force Majeure, the obligation of the RE DEVELOPER may be suspended for a period of one (1) year or until the Force Majeure event ceases to exist whichever comes earlier subject to the following conditions:

a) The RE DEVELOPER shall file a notice of Force Majeure to the DEPARTMENT within fifteen (15) calendar days from its existence;

b) After due validation which shall be made within twenty (20) working days from receipt of such notice, the DEPARTMENT shall issue an approval of suspension of contractual obligation/s affected by Force Majeure;

c) The RE DEVELOPER shall continue to post the performance bond, if necessary, observe administrative requirements and comply with reportorial obligations on its work commitments not affected by Force Majeure;

d) Once the Force Majeure had ceased, the RE DEVELOPER shall notify the DEPARTMENT within five (5) calendar days from cessation together with the revised Work Program covering the remaining contract term;

e) Any failure or delay on the part of either Party in the performance of its obligations or duties hereunder shall be excused to the extent attributable to Force Majeure;

f) If the Geothermal Operations are curtailed or prevented by such causes, then the time for enjoying the rights and carrying out the obligations thereby affected, and all rights and obligations hereunder shall be extended for a period equal to the period of delay, curtailment or prevention: Provided, however, That the suspension of obligation shall in no way extend the term of the contract. Provided, further, That if operations are delayed, curtailed or prevented by Force Majeure for a continuous period of twelve (12) months, this RE Contract may thereafter be terminated, at the option of the RE DEVELOPER, at anytime that the Force Majeure condition still exists, subject to confirmation of the DEPARTMENT; and

g) The Party whose ability to perform its obligations is so affected shall notify the other Party thereof in writing stating the cause and such affected Party shall do all reasonably within its power to remove such cause.

14.4 Notwithstanding the foregoing, this RE Contract shall be terminated without prejudice to the RE Developer's obligation which survive the termination of this RE Contract.

SECTION XV. DISPUTES AND ARBITRATION. —

15.1 Any dispute, controversy, or claim arising out of or relating to this RE Contract except Section 14.1.a hereof, shall be settled amicably within a period of sixty (60) days after receipt by one Party of a notice from the other Party of the existence of the dispute.

15.2 If the dispute cannot be settled amicably within the sixty (60)-day period, the Parties shall, with respect to disputes arising out of or in connection with Sections V (Contract Area), VI (Work Program and Estimated Expenditures), and XI (Government Share) refer the dispute to an independent expert for resolution in the manner provided below; Provided, That any Party, in its sole discretion, may require that the dispute be referred to arbitration under Section 15.4 hereof.

15.3 The following shall govern the rules of referral:

a) After the sixty (60)-day period in Section 15.1 has passed, any Party may give notice to the other Party of its intention to refer the dispute to an expert in accordance with the provisions of this RE Contract;

b) The respondent shall, within twenty-one (21) days after receipt of the notice of intention to refer, serve on the applicant a notice of its intention to defend; AcSCaI

c) If within fourteen (14) days after the applicant's receipt of the respondent's notice of intention to defend, the Parties have agreed on an expert and on the terms under which the dispute shall be referred to the independent expert mentioned in Section 15.2 hereof. In the event that within such fourteen (14)-day period, the Parties are unable to agree upon an expert to be appointed hereunder or upon the terms of such expert's reference or both, then either Party may request the International Chamber of Commerce (ICC) International Centre for Expertise to appoint an expert, and the matters to be determined by such expert shall be those set out in the notice of intention to refer and the notice of intention to defend;

d) Unless the Parties agree otherwise, any expert proceedings under this Section shall be required to follow the ICC Rules for Expertise in force as of Effective Date;

e) The language of the expert proceedings and the expert's determinations shall be in English;

f) The Parties hereby agree to be bound by, to perform this RE Contract in accordance with, and to implement, as the case may be, the determination of the expert. Failure by one Party to so act shall constitute a breach of this RE Contract and shall be submitted to arbitration in accordance with Section 15.4 as the sole means of enforcing the determination; and

g) Each Party shall bear the costs and expenses of all lawyers, advisors, witnesses and employees retained by it in connection with the expert proceedings: Provided,however, That in circumstances where the expert determines that a matter referred to him was not subject to a bona fide dispute, the costs and expenses incurred by the prevailing Party and the expert in connection with such matter shall be paid by the non-prevailing Party.

15.4 If the dispute cannot be settled within sixty (60) days by mutual discussions as contemplated in Section 15.1, and referral to an expert is neither prescribed nor elected by the Parties with respect to any technical dispute, the dispute shall finally be settled by an arbitral tribunal (the "Tribunal") governed by and conducted in accordance with the ICC Rules of Arbitration (the "Rules") in force as of Effective Date (or such Rules as may be in force at the time such arbitration is commenced), as follows:

a) The RE DEVELOPER will nominate one (1) arbitrator and the DEPARTMENT will nominate one (1) arbitrator within thirty (30) days from the date of a request by either Party to initiate arbitration. The two Party-nominated arbitrators will then jointly nominate a third arbitrator within thirty (30) days of the date of the appointment of the second arbitrator, to act as Chairman of the Tribunal. Arbitrators not nominated within the time limits set forth in the preceding sentence shall be appointed by the ICC Court of International Arbitration;

b) Unless otherwise agreed by the Parties, the venue of the arbitration shall be in Metro Manila, Philippines;

c) The language of the arbitration and award shall be in English;

d) The Tribunal shall not be authorized to impose, and either Party shall not be authorized to seek from any judicial authority, any requirement that the other post security for the costs of either Party;

e) The decision of the Tribunal shall be final and binding upon the Parties. Judgment upon the award rendered may be entered into any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

15.5 The right to arbitrate disputes under this RE Contract shall survive the Expiration or Termination of this RE Contract.

SECTION XVI. EMPLOYMENT, TRAINING AND DEVELOPMENT PROGRAMS. —

16.1 The RE DEVELOPER agrees to give preference in employment to qualified Filipino Employees who are residents of Host LGUs and will undertake the development and training of Filipino Employees for labor and staff positions, including administrative, technical, and executive management positions. In the course of its operations, the RE DEVELOPER shall maintain as much as possible, an equal percentage men and women employees and accord them equal access to development and training programs. In no case shall an employee be denied employment and access to such development and training programs on the basis of sex and/or gender.

16.2 During the Pre-Development Stage, the RE DEVELOPER shall, upon request of the DEPARTMENT shall provide development assistance in kind in the amount of (PhP____________). Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER, upon request of the DEPARTMENT shall provide development assistance in kind in the amount of (PhP____________).

16.3 During the Pre-Development Stage, the RE DEVELOPER shall provide assistance for training programs, conferences, seminars and other similar activities for the DEPARTMENT's personnel in the amount of (PhP____________) per Contract Year. Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide assistance for training programs, conference seminars and other similar activities for the DEPARTMENT's personnel in the amount of (PhP____________) per Contract Year. This assistance shall be accumulated for the succeeding Contract Years if not availed of in a given Contract Year. The RE DEVELOPER shall pay the unutilized amount of the training commitment prior to the Expiration or Termination of this RE Contract.

16.4 The RE DEVELOPER shall undertake corporate social responsibility projects in Host LGUs with focus on education and training of qualified and deserving beneficiaries, as determined by the RE DEVELOPER. SCEHaD

(Note: The funds for training program and development assistance shall be computed based on the total Contract Area at the rate of PhP100.00/has.)

SECTION XVII. MISCELLANEOUS PROVISIONS. —

17.1 NOTICES

Any notice required or given by either Party to the other Party shall be (i) in writing and delivered personally or sent by registered or certified mail, commercial courier service to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number designated in writing by such party and (iii) by electronic mail, to the electronic mail address designated in writing by such party or such other electronic mail address as may be later designated in writing by such party.

Any notice or other communication so transmitted shall be deemed to have been given: (a) on the day of delivery if delivered personally; (b) one (1) business day after delivery to a commercial courier service; (c) five (5) days after mailing if sent by registered mail, return receipt requested, postage prepaid; or (d) when sent by electronic mail or facsimile, using the email address and facsimile number herein below provided if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day. All such notices shall be addressed:

To the DEPARTMENT:

The Secretary

Department of Energy

Office Address

Email Address

Telephone/Fax Numbers

To the RE DEVELOPER:

Designation

Company Name

Office Address

Email Address

Telephone/Fax Numbers

Any Party may substitute or change such address with prior written notice thereof to the other Party.

17.2 GOVERNING LAW

The laws of the Republic of the Philippines shall apply to this RE Contract.

17.3 ASSIGNMENT

a) The RE DEVELOPER may assign this RE Contract to a third party subject to the prior written approval of the DEPARTMENT. This RE Contract shall not be assigned to any third party, unless such third party is qualified in accordance with the Act and its IRR.

b) The RE DEVELOPER may assign or transfer part or all of its rights and/or obligations under this RE Contract to its Affiliate upon compliance with the following provisions:

i. The RE DEVELOPER shall submit to the DEPARTMENT copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and

ii. In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations.

c) The RE DEVELOPER may authorize its subsidiaries, branches or regional corporations to implement this RE Contract, but the RE DEVELOPER shall remain responsible for the performance of this RE Contract.

d) During the Pre-Development Stage, this RE Contract shall not be assigned except where the assignee is a subsidiary, branch or regional corporation of the RE DEVELOPER created for the special purpose of handling the project covered by the RE Contract.

e) No assignment shall be granted if the RE DEVELOPER is in default of its Work Program or any of its material obligations under the RE Contract and other RE agreements with the DEPARTMENT.

f) An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during entire period covering the Pre-Development Stage and pre-commissioning phase of the RE Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

17.4 AMENDMENTS

The RE Contract shall not be amended or modified in any respect except by the mutual consent in writing of the Parties in accordance with existing rules and regulations.

17.5 BOOKS OF ACCOUNTS AND AUDITS

a) The RE DEVELOPER shall be responsible for keeping complete books and accounts, in Philippine currency denominations, reflecting all transactions in connection with this RE Contract in accordance with the Accounting Procedures.

b) The DEPARTMENT shall have the right to inspect the RE DEVELOPER's books and accounts directly relating to this RE Contract for any Calendar or Fiscal Year thirty-six (36) months following the end of each Calendar or Fiscal Year. Any such audit shall be completed within twenty-four (24) months from its commencement. Any exceptions must be made to the RE DEVELOPER in writing within ninety (90) calendar days following the completion of such audit. If the DEPARTMENT fails to give such written exception within such time, then the RE DEVELOPER's books of accounts and statements for such Calendar or Fiscal Year shall be established as correct and final for all purpose.

c) The DEPARTMENT, upon at least fifteen (15) days' advance written notice to the RE DEVELOPER, is entitled to access, during reasonable hours without affecting Ocean Power Operations, all books of accounts and records and may inspect such sites and facilities as necessary. ACcDEa

d) If the DEPARTMENT notifies the RE DEVELOPER of an exception to the RE DEVELOPER's books of accounts within the period specified in Sub-section 16.6 (b), the RE DEVELOPER shall within ninety (90) days from receipt of written exception from the DEPARTMENT, question its validity, otherwise, the same shall become final and binding on the RE DEVELOPER. If the Parties are not able to agree on the exceptions or adjustments after ninety (90) days from the date of receipt of the RE DEVELOPER's response to the DEPARTMENT's exception report, the Parties shall resolve the dispute in accordance with Section XV (Disputes and Arbitration).

17.6 HEALTH, SAFETY, AND ENVIRONMENT PROTECTION

a. In the performance of this RE Contract, the RE DEVELOPER shall: (1) be subject to the laws, rules and regulations on environmental protection, indigenous people rights, health and safety promulgated by the GOVERNMENT; (2) endeavor to make its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (3) secure the safety and health of its operating personnel.

b. When the GOVERNMENT assigns any person to inspect for environmental protection, health and safety compliance of the RE DEVELOPER, the RE DEVELOPER shall provide such reasonable facilities and assistance as are applicable to ensure appropriate inspection by the GOVERNMENT. The RE DEVELOPER shall be given reasonable notice of such inspections.

17.7 SEPARABILITY CLAUSE

Should any provision of this RE Contract or the application thereof to any situation or circumstance be declared null and void and/or invalid or unenforceable, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain valid and enforceable to the fullest extent. In the event of such partial invalidity or unenforceability, the Parties shall seek in good faith to agree on replacing the invalid or unenforceable provisions with a provision that in effect will most nearly and fairly approximate the effect of the invalid or unenforceable provision.

IN WITNESS WHEREOF, the Parties have caused this RE Contract to be executed by their respective representatives at Metro Manila on the date above written.

 

DEPARTMENT OF ENERGY	COMPANY NAME
By:	By:
___________________________NAMESecretary	___________________________PRINCIPAL SIGNATORYDesignation

WITNESSES

___________________________NAMEDirector IV, REMB

___________________________NAMEDesignation

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Manila, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same persons described in the foregoing instrument, who acknowledged before me that his signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This instrument consisting of twenty-six (26) pages, including the page on which the acknowledgment is written, is signed on each and every page thereof by the Parties and their instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Manila, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same persons described in the foregoing instrument, who acknowledged before me that his/her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that he/she executed the instrument as his/her free and voluntary act and deed as well as the free and voluntary act and deed of the corporation herein represented.

This instrument consisting of twenty-six (26) pages, including the page on which the acknowledgment is written, is signed on each and every page thereof by the Parties and their instrumental witnesses and sealed with my notarial seal. EHCcIT

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ANNEX F

Wind Energy Service Contract

This WIND ENERGY SERVICE CONTRACT (this "RE Contract"), made and entered into this DATE OF EXECUTION in Bonifacio Global City, Taguig City by and between:

The REPUBLIC OF THE PHILIPPINES, hereinafter referred to as "GOVERNMENT," through the "Department of Energy," hereinafter referred to as the "DEPARTMENT," a government agency established pursuant to Republic Act No. 7638, as amended, with principal office address at the Energy Center, Rizal Drive, Bonifacio Global City, Taguig City, Metro Manila, represented herein by its Secretary, Name;

-and-

COMPANY NAME, hereinafter referred to as the "RE DEVELOPER," a corporation duly organized and existing under the laws of the Republic of the Philippines, with principal office address at Company Address represented herein by its Designation, Name.

Each of the DEPARTMENT and the RE DEVELOPER is referred to as a "Party," and collectively as the "Parties." In the implementation of this RE Contract, the GOVERNMENT shall act through and be represented by the DEPARTMENT.

WITNESSETH:

WHEREAS, all forces of potential energy in public and/or private lands, within the Philippine territory, belong to the State and their exploration, development and utilization are governed by Section 2, Article XII of the 1987 Constitution;

WHEREAS, under Republic Act No. 7638, as amended, otherwise known as the Department of Energy Act of 1992, the DEPARTMENT shall establish and administer programs for the exploration, development and utilization of energy resources, including Wind Energy Resources;

WHEREAS, under Republic Act No. 9513, otherwise known as the Renewable Energy Act of 2008 (the "Act"), the exclusive right to explore and develop a particular renewable energy area under the said Act shall be through a Renewable Energy Service Contract;

WHEREAS, pursuant to the Act, the RE DEVELOPER has agreed to enter into this RE Contract with the DEPARTMENT covering the Contract Area for the Project with the corresponding rights and obligations stipulated herein;

WHEREAS, the RE DEVELOPER has been determined by the DEPARTMENT to be legally, technically, and financially qualified to enter into this RE Contract;

NOW, THEREFORE, for and in consideration of the terms and conditions set forth herein, the Parties hereby stipulate and agree as follows:

SECTION I. SCOPE. —

1.1. This RE Contract is entered into, with the services, technology and financing to be furnished by the RE DEVELOPER for its conduct of Wind Energy Operations, in an economically viable manner.

1.2. This RE Contract shall cover the Contract Area only as provided under Section V (Contract Area) hereof.

1.3. The RE DEVELOPER is hereby appointed and constituted by the DEPARTMENT as the Party having the exclusive right to explore, develop, and utilize the Wind Energy Resources within the Contract Area as defined herein.

1.4. The RE DEVELOPER may pursue any Additional Investment or New Investment within the Contract Area and shall be solely responsible for providing the necessary services, technology, equipment and financing therefor. In case of New Investment, the Parties shall enter into a new RE Contract at the option of the RE DEVELOPER, subject to approval of the DEPARTMENT.

1.5. The RE DEVELOPER shall assume all the technical and financial risks under this RE Contract without any guarantee from the GOVERNMENT and shall not be entitled to reimbursement for any expense incurred in connection with this RE Contract.

SECTION II. DEFINITION OF TERMS. —

2.1 The words and terms under this RE Contract, unless otherwise specified in the Act and its IRR or in relevant laws and regulations, shall have the meaning in accordance with the following definitions: CADacT

a) "Abandonment and Termination Plan" refers to the plan prepared by the RE DEVELOPER submitted within three (3) months from Effective Date in the case of Pre-Development Stage and five (5) years from confirmation of the Declaration of Commerciality and approved by the Department of Environment and Natural Resources (DENR) and the DEPARTMENT for the decommissioning, abandonment and surface restoration or rehabilitation of the Contract Area, and such abandonment work plan may be amended, supplemented or modified by the Parties from time to time;

b) "Accounting Procedures" refers to the set of procedures, guidelines, and arrangement between the Parties, and any amendments thereto, to govern the applicable treatment of expenses, costs, and income, set forth in Annex "B" hereof, which forms an integral part of this RE Contract;

c) "Additional Investment" refers to investments relating to improvements, modernization, rehabilitation, or expansion duly registered with the DEPARTMENT, subject to the conditions to be determined by the DEPARTMENT, such as, but not limited to, the following:

i. Identification of and investment in sequential phases/stages of production, or undertaking scheduled modernization or rehabilitation of the Wind Energy Systems; and

ii. Improvements to the Wind Energy Systems such as reduced production/operational costs, increased production, improved operational efficiency, and better reliability of the Project.

d) "Affiliate" refers to any person or group or persons, directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, the RE DEVELOPER. As used herein, "control" shall mean the power to direct or cause the direction of the management's policies of a person by contract, agency, or otherwise;

e) "Certificate of Confirmation of Commerciality" or "COCOC" shall refer to the Certificate duly signed by the DOE Secretary confirming the Declaration of Commerciality by the RE Developer and shall serve as a notice to proceed for the construction of the RE Project or the installation of the RE Facilities. The date of issuance of the COCOC shall be considered as the commencement date of the Development Stage of the RE Project;

f) "Certificate of Registration" refers to that certification issued to the RE DEVELOPER upon the Effective Date of this RE Contract or upon approval of New Investment, to serve as the basis for its entitlement to the incentives provided under the Act;

g) "Commercial Operation" shall refer to the phase commencing at the operation of the RE Project, following the successful testing and commissioning of the RE Project, and confirming its readiness to inject power into the grid to sell or supply its produced energy, as duly confirmed by the DEPARTMENT and other relevant regulatory bodies;

h) "Commercial Quantities" shall mean quantities of electricity to be generated using commercially available technology to develop the Wind Energy Systems through proof of moderate to high wind speed, wind direction, wind density from the Wind Energy Resources which have a reasonable chance of being sufficient and technically compliant to operate and support the Commercial Operation of the project;

i) "Contract Area" refers to an area where the RE DEVELOPER is given the exclusive right to explore and develop the Wind Energy Resources and which is more particularly described in a map with its technical description attached herein as Annex "A" and made an integral part of this RE Contract.

j) "Contract Year" refers to a period of twelve (12) consecutive calendar months counted from the Effective Date of this RE Contract and thereafter, from the anniversary of such Effective Date;

k) "Corporate Income Tax" refers to the tax imposed upon net taxable income under the National Internal Revenue Code (NIRC) of 1997, as amended by Republic Act No. 9337 and the Act. Upon the lapse of the period of the Income Tax Holiday (ITH) under the Act, the RE DEVELOPER shall be subject to a Corporate Income Tax rate of ten percent (10%);

l) "Cost of Goods Sold" refers to all business expenses directly incurred in the exploration, development and utilization of the Wind Energy Resources in order to produce and sell electricity and transmit the same to its intended location and use, which expenses are particularly described in Annex "B" hereof;

m) "Declaration of Commerciality" refers to a written declaration by the RE DEVELOPER stating that the electricity to be generated from the Wind Energy Resources is of Commercial Quantities;

n) "Development Stage" refers to the development, production, or utilization of RE resources, including the construction and installation of relevant facilities up to the operation phase thereof;

o) "Effective Date" refers to the date of the execution of this RE Contract subject to the payment of the signing fee and the posting of the performance bond covering the first Contract Year as provided hereunder;

p) "Expatriate Expert" refers to a foreign national engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Wind Energy Operations, who shall exercise his technical profession, as allowed under existing laws;

q) "Expiration" refers to either the lapse of the term of this RE Contract as provided in Section III (Term) hereof or the surrender, abandonment, or waiver of the RE DEVELOPER of the entire Contract Area to the DEPARTMENT;

r) "Filipino Employee" refers to any citizen of the Republic of the Philippines employed and/or engaged by the RE DEVELOPER and/or its Subcontractor/s involved in the Wind Energy Operations under this RE Contract, and such engagement is characterized as establishing an employer-employee relationship between such citizen and RE DEVELOPER; cSEaTH

s) "Force Majeure" refers to extraordinary events not foreseeable or avoidable, events that could not be foreseen, or which, though foreseen, are inevitable;

t) "Generation Facility" refers to a facility for the production of electricity;

u) "Government Share" refers to the amount due the national government and LGUs from the exploration, development and utilization of the Wind Energy Resources computed in accordance with the Act and its Implementing Rules and Regulations (IRR), and described in Section XI (Government Share) hereof;

v) "Gross Income" refers to income derived from the RE DEVELOPER's Wind Energy Operations equivalent to the gross sales of Wind Energy less sales returns, discounts and allowance, and Cost of Goods Sold, which is more particularly described in the Accounting Procedures attached as Annex "B";

w) "Host LGU" refers to the LGU where the Wind Energy Resources and/or Generation Facility is located;

x) "Local Government Unit/LGU" refers to the territorial and political subdivisions of the State which organization and function are fully described under the Local Government Code of 1991;

y) "New Investment" refers to investments relating to discovery, exploration, development and/or utilization of new RE resources or the development of new Generation Facilities within the Contract Area distinct from the originally registered operations having separate books of accounts;

z) "Pre-Development Stage" refers to the preliminary assessment and feasibility study up to the financial closing of the Project and specifically covers the term provided in Section 3.1 of this RE Contract;

aa) "Production Area" refers to that portion of the Contract Area designated by the RE DEVELOPER where Wind Energy Resources are utilized to produce electricity in Commercial Quantities;

bb) "Project" refers to the RE DEVELOPER's Wind Energy Systems within the Contract Area, which may be implemented in one or more phases;

cc) "RE Contract" refers to this Wind Energy Service Contract, as may be amended or extended by the Parties and shall have the same meaning as provided under the Act;

dd) "Subcontractor" refers to any person or entity contracted by the RE DEVELOPER to provide goods or services for the purpose of this RE Contract, subject to the provisions of existing laws;

ee) "Termination" refers to the right of the Parties to cancel this RE Contract pursuant to Section XIV (Suspension and Termination) hereof;

ff) "Wind Energy" refers to the energy that can be derived from wind that can be converted into useful electrical or mechanical energy;

gg) "Wind Energy Operations" shall include Wind Energy exploration, development, production, and utilization, including the construction, installation, operation and maintenance of Wind Energy Systems to convert Wind Energy to electrical power and the transmission of such electrical power and/or other non-electrical uses;

hh) "Wind Energy Resources" refers to the wind resources found within the Contract Area to be technically feasible for the development of Wind Energy projects;

ii) "Wind Energy Systems" refers to the energy systems that convert wind energy into electrical or mechanical energy; and

jj) "Work Program" refers to all types of plans and programs and related activities formulated for the performance of the work obligations by the RE DEVELOPER during the Pre-Development Stage, along with the corresponding budgetary estimate, submitted to the DEPARTMENT under this RE Contract as Annex "C" and shall thereafter updated on a regular basis.

SECTION III. TERM. —

3.1 Pre-Development Stage. The Pre-Development Stage of this RE Contract shall be a non-extendible period of five (5) years from the Effective Date: Provided, That the RE DEVELOPER shall submit a Declaration of Commerciality duly confirmed by the DEPARTMENT at any time during the Pre-Development Stage, otherwise, the term of this RE Contract shall automatically expire.

3.2 Development Stage. Upon submission of the Declaration of Commerciality by the RE DEVELOPER, as confirmed by the DEPARTMENT through the issuance of a Certificate of Confirmation of Commerciality, this RE CONTRACT shall remain in force for the balance of a period of twenty-five (25) years from Effective Date: Provided, That at the option of the RE DEVELOPER, by written notice to the DEPARTMENT not later than one (1) year prior to the expiration of the initial twenty-five (25)-year period, and so long as the RE DEVELOPER is not in default of any material obligations under this RE Contract, the DEPARTMENT may approve the extension of this RE Contract for another twenty-five (25) years, subject to the terms and conditions to be mutually agreed upon by the Parties.

SECTION IV. CONTRACT STAGE TRANSITION. —

4.1 Declaration of Commerciality. Upon its determination that the Wind Energy Resource can generate power in Commercial Quantities, the RE DEVELOPER shall submit the Declaration of Commerciality along with supporting documents which shall be made within the Pre-Development stage.

4.2 Certificate of Confirmation of Commerciality. The DEPARTMENT shall act on RE DEVELOPER's Declaration of Commerciality within twenty (20) working days from receipt thereof provided the submission is made within the Pre-Development Stage as provided in Section 4.1. Within the twenty (20)-working day period, the DEPARTMENT shall either: a) issue the Certificate of Confirmation of Commerciality, or b) deny the Declaration of Commerciality, as the case may be. ECTSDa

4.3 Should the DEPARTMENT find the Declaration of Commerciality without sufficient basis, the RE DEVELOPER shall be given a one-time chance of thirty (30) calendar days from receipt of the result of evaluation to rectify its submission. Otherwise, the request of issuance of Certificate of Confirmation of Commerciality shall be denied.

SECTION V. CONTRACT AREA. —

5.1 The Contract Area refers to the areas as described in Annex "A" hereof, which the RE DEVELOPER has exclusive right to explore, develop and utilize the Wind Energy Resources in accordance with this RE Contract.

5.2 The RE DEVELOPER may, upon submission of written notice to the DEPARTMENT, surrender or waive the entire Contract Area or any portion thereof without prejudice to any other outstanding liability or costs. In case the RE DEVELOPER completely ceases its operations, the provisions under its Abandonment and Termination Plan shall apply consistent with its Environmental Compliance Certificate (ECC).

5.3 During Pre-Development Stage, the RE DEVELOPER shall delineate its Production Area which shall be the final Contract Area during the Development Stage of the Project and shall form part of its Declaration of Commerciality.

5.4 Any areas outside the proposed Production Area shall be deemed surrendered or waived on the date of Declaration of Commerciality.

SECTION VI. WORK PROGRAM. —

6.1 The RE DEVELOPER shall carry out its existing work according to good industry practices.

6.2 During the Pre-Development Stage, the RE DEVELOPER shall conduct a full Wind Energy Resources assessment.

6.3 Attached to this RE Contract is a Work Program, details of which are particularly described in Annex "C" hereof.

6.4 The RE DEVELOPER shall submit to the DEPARTMENT a Work Program for the first five (5) years which shall form part of its Declaration of Commerciality and its corresponding budget thereof.

6.5 Not later than two (2) months prior to the end of the first five (5) years from the RE DEVELOPER's Declaration of Commerciality, the RE DEVELOPER shall submit a Work Program for the next five (5) years and shall do so every five (5) years thereafter. The Work Program or any revisions thereof shall require the approval of the DEPARTMENT.

During the implementation of the Project, the RE DEVELOPER shall submit for evaluation and approval by the DEPARTMENT, a request for any revisions to the Work Program, upon determination of such revision. The DEPARTMENT shall act on the request for revision and thereafter, the RE DEVELOPER may proceed to implement the activity without violating the provisions on the Work Program: Provided, That revision shall not be allowed within the first two (2) Contract Years. Provided, further, That the RE DEVELOPER shall be allowed to subsequently revise its Work Program only if it has substantially complied with all its material financial and technical activities under the Work Program for the immediate preceding Contract Year and such revision shall be allowed only once per Contract Year.

6.6 In the event of failure of the RE DEVELOPER to comply with its commitments under the Work Program, the DEPARTMENT shall call the performance bond posted by the RE DEVELOPER. This is without prejudice to the right of the DEPARTMENT to terminate the RE Contract.

SECTION VII. RIGHTS AND OBLIGATIONS. —

7.1 The RE DEVELOPER shall have the following rights:

a) To be granted fiscal and non-fiscal incentives and privileges under the Act and its IRR and all other existing laws that are not otherwise modified or repealed by the Act;

b) To receive assistance from the DEPARTMENT:

i. During the Pre-Development Stage, in securing access to lands and/or offshore areas where Wind Energy Resources shall be harnessed; and

ii. In endorsing the Project to the other agencies of the National Government, LGUs, Board of Investments (BOI) and other entities, for the acquisition of permits, licenses and clearances and availment of applicable fiscal and non-fiscal incentives.

c) Have at all times the right of ingress to and egress from the Contract Area to and from facilities wherever located;

d) Acquire rights-of-way and similar rights on, over, under across and through the Contract Area or properties adjacent to the Contract Area, which constitute or is reasonably expected to constitute the Contract Area as the RE DEVELOPER may reasonably deem necessary.

The DEPARTMENT shall, upon request by the RE DEVELOPER as may be reasonable given the attendant circumstances, assist the RE DEVELOPER in securing such rights. For such purpose, the DEPARTMENT shall and does hereby appoint the RE DEVELOPER as its attorney-in-fact and does hereby give and grant to the RE DEVELOPER full authority to act for and on its behalf in the negotiation and conclusion of agreements and payments for such rights. All obligations, payments and expenses arising from or incidental to the acquisition of such rights shall be for the account of the RE DEVELOPER so as to enable the RE DEVELOPER to have ingress into and egress from the Contract Area and to perform all Wind Energy Operations in accordance with this RE Contract and in consideration of which, entitlement to such rights shall be held in trust in favor of the RE DEVELOPER. DAaIEc

The DEPARTMENT undertakes to provide further assistance to the RE DEVELOPER, including the exercise of the power of eminent domain if necessary, to secure such necessary or proper rights at such cost for the account of the RE DEVELOPER, if the RE DEVELOPER is unable to secure such rights at commercially reasonable costs through negotiations or if the same is the most expedient course of action to support the timely execution of Wind Energy Operations;

e) Allow, in accordance with the existing laws, to engage the services of Expatriate Experts who shall exercise their technical professions solely for the Wind Energy Operations: Provided That, Filipino Employees shall be given preference to positions for which they have adequate training and experience required by the RE DEVELOPER. Provided further, That if the employment or connection of such Expatriate Expert with the RE DEVELOPER ceases, applicable laws and regulations shall apply to him and his immediate family;

f) Have a free and unimpeded use of Wind Energy Resources within the Contract Area in view of the Wind Energy Operations, Additional Investments and New Investments; in regard of which, the DEPARTMENT shall ensure that rights, privileges and other authorizations it may grant to third parties will not defeat or impair such use; and

g) Be informed by the DEPARTMENT, if at any time the latter becomes aware of any intended exploration, extraction or use of energy resources other than Wind Energy Resources on the Contract Area and adjacent areas thereof, within thirty (30) days from the date it becomes aware of such intended exploration, extraction or other use.

7.2 The RE DEVELOPER shall have the following obligations:

a) During the Pre-Development Stage, upon determination of Wind Energy Resource of Commercial Quantities, the RE DEVELOPER shall submit to the DEPARTMENT its Declaration of Commerciality;

b) Secure and be subject to any necessary permits, licenses, endorsements, agreements and clearances from all relevant government and private entities for the Project;

c) Perform exploration, assessment, field verification, harnessing, piloting and other activities in accordance with the Work Program and provide technology and financing in connection with the Pre-Development Stage;

d) Perform the required Wind Energy Operations and provide services, technology, and financing in connection therewith;

e) Maintain complete and accurate accounting, financial and technical records of its Wind Energy Operations, subject to Sections X (Data and Reports) and XII (Confidentiality) hereof, and in accordance with the Accounting Procedures as provided under ANNEX "B" hereof;

f) Allow officials and representatives authorized by the DEPARTMENT access to the Contract Area and to the accounts, books and records directly relating to the Wind Energy Operations during reasonable hours and without causing disruption. The RE DEVELOPER shall provide such reasonable facilities and assistance as maybe practicable to ensure the success of the inspection;

g) Give priority in employment to qualified personnel in the Host LGU subject to Section XVI (Employment, Training and Development Programs) hereof;

h) At the start of every Contract Year, post a performance bond or any other guarantee of sufficient amount but not less than the annual budgetary estimate for the corresponding Contract Year in favor of the DEPARTMENT from a list of DEPARTMENT-accredited insurance or surety companies. The posting of performance bond shall be conditioned upon the faithful performance by the RE DEVELOPER of any or all of the commitments and obligations under the Work Program until the commencement of the construction of the Generation Facility;

Upon the commencement of the construction of the Geothermal Facility, the RE DEVELOPER shall notify the DEPARTMENT of such fact and the latter shall verify the same. Thereafter, the obligation to post the bond shall cease;

i) Be subject to the provisions of laws of general application;

j) Develop, operate and maintain the Contract Area in accordance with accepted industry practices to enable maximum economic production of the Wind Energy Resources;

k) Be responsible for procurement of installation, equipment and supplies, and for entering into subcontracts related to the Wind Energy Operations;

l) Comply with the provisions of Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended, and in so doing, (1) exert its best efforts to prevent pollution and damage to the atmosphere, oceans, rivers, lakes, harbors and land; and (2) ensure the safety and health of its operating personnel;

m) Give preference to Philippine companies/agencies entering into subcontracts on goods or services that are required in the Wind Energy Operations but are not carried out by the RE DEVELOPER; Provided, That the goods or services are competitive as to cost, quality and availability;

n) Be responsible in the proper handling of data, samples, information, reports and other documents;

o) Maintain all meters and measuring equipment in good order and allow access to inspectors authorized by the DEPARTMENT;

p) Pay the Government Share in accordance with the computation in the Act's IRR and taxes as may be applicable;

q) Organize Information, Education and Communication (IEC) Campaign on benefits to the Host LGUs pursuant to Section 18 of the DEPARTMENT's Department Circular No. DC2009-07-0011; and

r) Comply with all rules, regulations, and guidelines issued by the DEPARTMENT and other government agencies that are applicable hereto. IAcTaC

7.3 Upon the Effective Date of this RE Contract or upon the approval of the RE DEVELOPER's New Investment, the DEPARTMENT shall issue a Certificate of Registration to the RE DEVELOPER, to enable it to avail of the fiscal and non-fiscal incentives and privileges as stated under the Act and its IRR. The registration shall be valid and effective for the entire term and effectivity of this RE Contract.

SECTION VIII. REPRESENTATIONS AND WARRANTIES. —

Acknowledging that the GOVERNMENT, through the DEPARTMENT, has entered into this RE Contract in reliance upon the representations and warranties in this Section, the RE DEVELOPER represents and warrants as follows:

8.1 It is a corporation or entity duly formed, established, validly existing and in good standing under the laws of the Philippines with full power to own its property; to carry on its business as it is now being conducted; and to execute, deliver and perform its obligations under this RE Contract, and the entering into and performance of this RE Contract by the RE DEVELOPER does not conflict with the articles of incorporation, by-laws and other constitutive documents of the RE DEVELOPER and has been duly authorized by all necessary corporate and legal action on the part of the RE DEVELOPER;

8.2 There is no litigation, arbitration or administrative proceeding pending or, to the best knowledge of the RE DEVELOPER, threatened against the RE DEVELOPER or its properties the adverse determination of which would adversely affect the ability of the RE DEVELOPER to perform or comply with any of its material obligations under this RE Contract;

8.3 The RE DEVELOPER:

a) Has not been declared in default in respect to any of its material financial commitments or obligations based on their reports duly validated by the DEPARTMENT;

b) Is not otherwise in default of any kind in respect of any financial commitment or obligation or in respect of any agreement, undertaking or instrument as a party thereof by which it or any of its assets or properties may be bound; and

c) Is not aware of a fact that by the service of notice and/or lapse of time would constitute a default in any or both of sub-paragraphs (a) and (b) above.

8.4 No written material information given by the RE DEVELOPER to the DEPARTMENT under this RE Contract contains any misstatement of fact as of the Effective Date or omits to state a fact that is materially adverse to the interests of the DEPARTMENT; and

8.5 The ownership of the RE DEVELOPER's capital stock complies with applicable laws and regulations.

SECTION IX. ASSETS AND EQUIPMENT. —

9.1 The RE DEVELOPER shall acquire and maintain for the Project and for its Wind Energy Operations and such assets as are reasonably estimated to be required in carrying out the exploration, assessment, harnessing, piloting and other studies for the Wind Energy Resources in the Contract Area; and the development, utilization and commercialization of Wind Energy Resources therein, including the construction, installation, operation and maintenance of the Wind Energy Systems.

9.2 All materials, equipment, plants and other installations that are erected or placed on the Contract Area by the RE DEVELOPER and are owned by the RE DEVELOPER shall remain the property of the RE DEVELOPER up to one (1) year from the Expiration or Termination of this RE Contract: Provided, That upon the written request of the RE DEVELOPER, the DEPARTMENT shall approve an additional non-extendible period of one (1) year within which to remove such assets in the Contract Area. Thereafter, the ownership of any remaining materials, equipment, plants, and other installations shall be vested in the Government.

9.3 The RE DEVELOPER shall be responsible for the removal and the disposal of all materials, equipment and facilities from the Contract Area in accordance with the ECC and the provisions of the Abandonment and Termination Plan as provided under Section II hereof.

9.4 The ownership of all data, records, accounts, samples and other technical data produced or generated in the course of the Wind Energy Operations that are confidential, proprietary in nature, or otherwise not generally available to the public shall remain with the DEPARTMENT and RE DEVELOPER and shall be kept confidential in accordance with Section XII (Confidentiality) hereof.

SECTION X. DATA AND REPORTS. —

10.1 All data and reports, except for proprietary techniques used in developing such technical data and reports, must be submitted by the RE DEVELOPER in accordance with the format approved by the DEPARTMENT.

10.2 The data and reports to be submitted to the DEPARTMENT shall include, but not limited to, the following:

a) Annual Progress Report — shall be submitted not later than two (2) months prior to the end of each Contract Year and shall contain the summary of accomplishments under the approved Work Program, direct or indirect jobs generated, summary of fiscal incentives availed in Philippine Peso and status of construction with relevant comments and recommendation on any technical findings, among others;

b) Procurement Plan — shall be submitted not later than one (1) month from the approval of the Work Program and shall be designed according to the approved Work Program, containing an itemized list of equipment, materials, and supplies to be procured with corresponding estimated costs;

c) Monthly Generation Report — shall be submitted within fifteen (15) days from the end of each calendar month and shall include reservoir report and total electricity generated, used and exported to the grid; DTEAHI

d) General Information Sheet and the RE DEVELOPER's management personnel — shall be submitted every July of the calendar year and at any time there are changes in the company structure;

e) Audited Financial Statement — shall be submitted annually within one hundred twenty (120) calendar days after the end of the fiscal year, as indicated in the Financial Statements; and

f) Reports in accordance with the Department Circular No. DC2012-11-0009 entitled "Renewable Energy Safety, Health and Environment Rules and Regulations," as may be amended.

SECTION XI. GOVERNMENT SHARE. —

11.1 The Government Share shall be equal to one percent (1%) of the Gross Income from the sale of electricity generated from Wind Energy Operations in accordance with the Accounting Procedures as prescribed under Annex "B" hereof.

11.2 The RE DEVELOPER shall within sixty (60) days following the end of each quarter of a Calendar or Fiscal Year remit to the DEPARTMENT the Government Share: Provided, That any unremitted amount shall carry an interest of ten percent (10%) per annum reckoned from the day immediately following the end of each quarter of a Calendar or Fiscal Year, as may be applicable.

SECTION XII. CONFIDENTIALITY. —

12.1 All documents, information, data and reports produced or generated during the Wind Energy Operations under this RE Contract shall be kept strictly confidential over the term of this RE Contract or any extension thereof: Provided, That proprietary information shall be kept strictly confidential at all times subject to lawful acquisitions of such information under existing laws and regulations.

12.2 Without the written consent of the other Party, no Party shall use or disclose the confidential information to any third party and/or to any Affiliate not directly connected with the implementation of this RE Contract except the third parties and Affiliates in Section 12.5 hereof, and no Party shall otherwise transfer, present, sell or publish it in any way within the confidentiality periods.

12.3 The DEPARTMENT may use such confidential information belonging to the RE DEVELOPER for the DEPARTMENT's resource mapping, data gathering, policy making and for government planning purposes.

12.4 Upon the Expiration or Termination of this RE Contract, the DEPARTMENT may provide third parties with the data and reports submitted by the RE DEVELOPER pursuant to this Section.

12.5 Contrary stipulations notwithstanding, the RE DEVELOPER may furnish the information to the following third parties, subsidiaries and Affiliates, such as, but not limited to:

a) Banks or other credit institutions from which finance is sought by the RE DEVELOPER;

b) Third parties, subsidiaries and Affiliates that provide services for the Wind Energy Operations, including Subcontractors and other service contractors;

c) Prospective assignee/s to whom rights and obligations under this RE Contract are intended to be assigned;

d) Prospective investor/s or entities with whom the RE DEVELOPER intends to enter into joint venture or other similar agreements for the Project;

e) Governments and stock/commodity exchanges in accordance with the laws, regulations, or rules of the relevant country or stock/commodity exchange; and

f) Government authorities, entities and judicial courts if required by law, regulation, directive, or order to disclose.

12.6 The information shall be revealed to those persons allowed under this RE Contract only if and to the extent necessary and desirable for the purpose intended. Each Party shall ensure that such person to whom information is disclosed is informed of the confidential nature of the information and the purpose for which it may be used and that each such person is bound by this Section.

12.7 The RE DEVELOPER and its Affiliates or the DEPARTMENT, its officers, employees, consultants and other duly authorized representatives shall not make any public statement or announcement of any information produced, generated or acquired in the course of the Wind Energy Operations, without prior written consent of the other Party.

SECTION XIII. PERFORMANCE BOND AND SIGNING FEE. —

13.1 The RE DEVELOPER shall pay the signing fee in the amount of ____________ Pesos (PhP____________) and post the performance bond covering the first Contract Year within fifteen (15) and thirty (30) days, respectively, from its receipt of notice.

13.2 Failure of the RE DEVELOPER to comply with Section 13.1 hereof shall render the COR and RE Contract to be void ab initio.

13.3 The initial amount of the bond or other guarantee as specified in Sub-section 7.2 (h) shall not be less than the annual financial commitment/budgetary estimate for the first Contract Year based on the Work Program.

13.4 The amount of performance bond or other guarantee may be adjusted, subject to the following conditions:

a) In the event of surrender by the RE DEVELOPER of a portion of the Contract Area covered by this RE Contract, the performance bond or other guarantee shall be reduced proportionately in accordance with the Work Program; CTDacA

b) In the event that the RE DEVELOPER has fully expended its budgetary estimate under the Work Program but has not fully performed its work obligations, the amount of bond or other guarantee shall be equal to the succeeding Contract Year's budgetary estimate under the revised Work Program; and

c) Such other conditions or circumstances as would reasonably warrant the modification of the amount of the performance bond or other guarantee.

13.5 If the RE DEVELOPER, through its own fault, fails to observe or perform its work obligations under the Work Program, the DEPARTMENT, upon prior written notice, may proceed against the performance bond or other guarantee, Provided That, should the work obligations under the Work Program be fulfilled, and through the efficiency of the RE DEVELOPER, the corresponding actual expenditures thereon are lower than the estimated expenditures stated in the Work Program, the same shall be considered as full compliance of the work obligations.

13.6 The DEPARTMENT shall release the performance bond or other guarantee not later than twenty (20) working days from the date of confirmation by the DEPARTMENT on the start of the construction of the Geothermal Facility.

(Note: The amount for signing fee/bonus shall be based on the total Contract Area at the rate of PhP100.00/has.)

SECTION XIV. SUSPENSION AND TERMINATION. —

14.1 In case of the Pre-Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the Work Program and the material terms and conditions of this RE Contract;

b) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

c) Tampering, falsifying or plagiarizing of technical design and feasibility study reports;

d) Non-payment of the financial obligations agreed upon under this RE Contract; and,

e) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond) hereof.

14.2 In case of the Development Stage, the DEPARTMENT shall have the power to terminate this RE Contract after due notice to the RE DEVELOPER on any of the following grounds:

a) Non-compliance with the approved Work Program and the material terms and conditions of this RE Contract;

b) Violation of the Renewable Portfolio Standards Rules, as defined in the Act and its IRR and relevant Department Circulars;

c) Non-compliance with the RE technical design standards adopted by the DEPARTMENT;

d) Tampering, falsifying or plagiarizing of technical design, feasibility study generation and operation reports;

e) Non-remittance of Government Share as determined by the Compliance Division — Financial Services of the DEPARTMENT;

f) Non-payment of the financial obligations agreed upon under this RE Contract;

g) Non-posting of performance bond or other guarantee within the period/s provided under Section XIII (Performance Bond) hereof.

14.3 In case the default of the RE DEVELOPER on account of any of the foregoing grounds is attributable to Force Majeure, the obligation of the RE DEVELOPER may be suspended for a period of one (1) year or until the Force Majeure event ceases to exist whichever comes earlier subject to the following conditions:

a) The RE DEVELOPER shall file a notice of Force Majeure to the DEPARTMENT within fifteen (15) calendar days from its existence;

b) After due validation which shall be made within twenty (20) working days from receipt of such notice, the DEPARTMENT shall issue an approval of suspension of contractual obligation/s affected by Force Majeure;

c) The RE DEVELOPER shall continue to post the performance bond, if necessary, observe administrative requirements and comply with reportorial obligations on its work commitments not affected by Force Majeure;

d) Once the Force Majeure had ceased, the RE DEVELOPER shall notify the DEPARTMENT within five (5) calendar days from cessation together with the revised Work Program covering the remaining contract term;

e) Any failure or delay on the part of either Party in the performance of its obligations or duties hereunder shall be excused to the extent attributable to Force Majeure;

f) If the Wind Energy Operations are curtailed or prevented by such causes, then the time for enjoying the rights and carrying out the obligations thereby affected, and all rights and obligations hereunder shall be extended for a period equal to the period of delay, curtailment or prevention: Provided, however, That the suspension of obligation shall in no way extend the term of the RE Contract. Provided, further, That if operations are delayed, curtailed or prevented by Force Majeure for a continuous period of twelve (12) months, this RE Contract may thereafter be terminated, at the option of the RE DEVELOPER, at anytime that the Force Majeure condition still exists, subject to confirmation of the DEPARTMENT; and

g) The Party whose ability to perform its obligations is so affected shall notify the other Party thereof in writing stating the cause and such affected Party shall do all reasonably within its power to remove such cause.

14.4 Notwithstanding the foregoing, this RE Contract shall be terminated without prejudice to the RE DEVELOPER's obligation which survive the termination of this RE Contract. HASDcC

SECTION XV. DISPUTES AND ARBITRATION. —

15.1 Any dispute, controversy or claim arising out of or relating to this RE Contract, except Section 14.1.a hereof shall be settled amicably within a period of sixty (60) days after receipt by one Party of a notice from the other Party of the existence of the dispute;

15.2 If the dispute cannot be settled amicably within the sixty (60)-day period, the Parties shall, with respect to disputes arising out of or in connection with Sections V (Contract Area), VI (Work Program and Estimated Expenditures) and XI (Government Share) hereof, refer the dispute to an independent expert for resolution in the manner provided below; Provided, That any Party, in its sole discretion, may require the dispute be referred to arbitration under Section 15.4 hereof;

15.3 The following shall govern the rules of referral:

a) After the sixty (60)-day period in Section 15.1 hereof has passed, any Party may give notice to the other Party of its intention to refer the dispute to an expert in accordance with the provisions of this RE Contract;

b) The respondent shall, within twenty-one (21) days after receipt of the notice of intention to refer, serve the applicant a notice of its intention to defend;

c) If within fourteen (14) days after the applicant's receipt of the respondent's notice of intention to defend, the Parties have agreed on an expert and on the terms under which the dispute shall be referred to the independent expert mentioned in Section 15.2 hereof. In the event that within such fourteen (14)-day period, the Parties are unable to agree upon an expert to be appointed hereunder or upon the terms of such expert's reference or both, then either Party may request the International Chamber of Commerce (ICC) International Centre for Expertise to appoint an expert, and the matters to be determined by such expert shall be those set out in the notice of intention to refer and the notice of intention to defend;

d) Unless the Parties agree otherwise, any expert proceedings under this Section shall be required to follow the ICC Rules for Expertise in force as of Effective Date;

e) The language of the expert proceedings and the expert's determinations shall be in English;

f) The Parties hereby agree to be bound by, to perform this RE Contract in accordance with, and to implement, as the case may be, the determination of the expert. Failure by one Party to so act shall constitute a breach of this RE Contract and shall be submitted to arbitration in accordance with Section 15.4 as the sole means of enforcing the determination;

g) Each Party shall bear the costs and expenses of all lawyers, advisors, witnesses and employees retained by it in connection with the expert proceedings: Provided, however, That in circumstances where the expert determines that a matter referred to him was not subject to a bona fide dispute, the costs and expenses incurred by the prevailing Party and the expert in connection with such matter shall be paid by the non-prevailing Party.

15.4 If the dispute cannot be settled within sixty (60) days by mutual discussions as contemplated in Section 15.1 hereof, and referral to an expert is neither prescribed nor elected by the Parties with respect to any technical dispute, the dispute shall finally be settled by an arbitral tribunal (the "Tribunal") governed by and conducted in accordance with the ICC Rules of Arbitration (the "Rules") in force as of Effective Date (or such Rules as may be in force at the time such arbitration is commenced), as follows:

a) The RE DEVELOPER will nominate one (1) arbitrator and the DEPARTMENT will nominate one (1) arbitrator within thirty (30) days from the date of a request by either Party to initiate arbitration. The two Party-nominated arbitrators will then jointly nominate a third arbitrator within thirty (30) days from the date of the appointment of the second arbitrator, to act as Chairman of the Tribunal. Arbitrators not nominated within the time limits set forth in the preceding sentence shall be appointed by the ICC Court of International Arbitration;

b) Unless otherwise agreed by the Parties, the venue of the arbitration shall be in Metro Manila, Philippines;

c) The language of the arbitration and award shall be in English;

d) The Tribunal shall not be authorized to impose, and either Party shall not be authorized to seek from any judicial authority, any requirement that the Party posts security for the costs of either Party;

e) The decision of the Tribunal shall be final and binding upon the Parties. Judgment upon the award rendered may be entered into any court having jurisdiction, or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be.

15.5 The right to arbitrate disputes under this RE Contract shall survive the Expiration or Termination of this RE Contract.

SECTION XVI. EMPLOYMENT, TRAINING AND DEVELOPMENT PROGRAMS. —

16.1 The RE DEVELOPER agrees to give preference in employment to qualified Filipino Employees who are residents of the Host LGUs and will undertake the development and training of Filipino Employees for labor and staff positions, including administrative, technical and executive management positions. In the course of its operations, the RE DEVELOPER shall maintain as much as possible, an equal percentage men and women employees and accord them equal access to development and training programs. In no case shall an employee be denied employment and access to such development and training programs on the basis of sex and/or gender. CDHcaS

16.2 During the Pre-Development Stage, the RE DEVELOPER shall, upon request of the DEPARTMENT provide development assistance in kind in the amount of (PhP____________). Upon confirmation of the Declaration of Commerciality, the RE DEVELOPER shall, upon request of the DEPARTMENT, provide development assistance in kind in the amount of (PhP____________).

16.3 During the Pre-Development Stage, the RE DEVELOPER shall provide assistance for training programs, conference seminars and other similar activities for the DEPARTMENT's personnel in the amount of (PhP____________) per Contract Year. During the Development Stage, the RE DEVELOPER, upon request of the DEPARTMENT, shall provide assistance for training programs, conference seminars and other similar activities for the DEPARTMENT's personnel in the amount of (PhP____________) per Contract Year. This assistance shall be accumulated for the succeeding Contract Years if not availed of in a given Contract Year. The RE DEVELOPER shall pay the unutilized amount of the training commitment prior to the Expiry or Termination of this RE Contract.

16.4 The RE DEVELOPER shall undertake corporate social responsibility projects in Host LGUs with focus in education and training of qualified and deserving beneficiaries, as determined by the RE DEVELOPER.

(Note: The funds for training program and development assistance shall be computed based on the total Contract Area at the rate of PhP100.00/has. during Pre-Development Stage. During Development Stage, the funds shall be at the rate PhP300.00/has. for training program and PhP600.00/has. for development assistance or both PhP50,000.00 whichever is higher except that projects with installed capacity of 1MW and below shall be exempt from these financial obligations.)

SECTION XVII. MISCELLANEOUS PROVISIONS. —

17.1 NOTICES

Any notice required or given by either Party to the other Party shall be (i) in writing and delivered personally or sent by registered or certified mail, commercial courier service to the address designated in writing, (ii) by facsimile to the number most recently provided to such party or such other address or fax number designated in writing by such party and (iii) by electronic mail, to the electronic mail address designated in writing by such party or such other electronic mail address as may be later designated in writing by such party.

Any notice or other communication so transmitted shall be deemed to have been given: (a) on the day of delivery if delivered personally; (b) one (1) business day after delivery to a commercial courier service; (c) five (5) days after mailing if sent by registered mail, return receipt requested, postage prepaid; or (d) when sent by electronic mail or facsimile, using the email address and facsimile number herein below provided if sent during normal business hours of the recipient, and if not so confirmed, then on the next business day. All such notices shall be addressed:

To the DEPARTMENT:

The Secretary

Department of Energy

Office Address

Email Address

Telephone/Fax Numbers

To the RE DEVELOPER:

Designation

Company Name

Office Address

Email Address

Telephone/Fax Numbers

Any Party may substitute or change such address with prior written notice thereof to the other Party.

17.2 GOVERNING LAW

The laws of the Republic of the Philippines shall apply to this RE Contract.

17.3 ASSIGNMENT

a) The RE DEVELOPER may assign this RE Contract to a third party subject to the prior written approval of the DEPARTMENT. This RE Contract shall not be assigned to any third party, unless such third party is qualified in accordance with the Act and its IRR.

b) The RE DEVELOPER may assign or transfer part or all of its rights and/or obligations under this RE Contract to its Affiliate upon compliance with the following provisions:

i. The RE DEVELOPER shall submit to the DEPARTMENT copies of the written document which unequivocally shows the agreement of the parties thereat to the assignment of the RE Contract; and

ii. In the case of a partial assignment, the RE Developer shall guarantee in writing to the Department the performance of the assigned obligations.

c) The RE DEVELOPER may authorize its subsidiaries, branches or regional corporations to implement this RE Contract, but the RE DEVELOPER shall remain responsible for the performance of this RE Contract.

d) During the Pre-Development Stage, this RE Contract shall not be assigned except where the assignee is a subsidiary, branch or regional corporation of the RE DEVELOPER created for the special purpose of handling the project covered by the RE Contract.

e) No assignment shall be granted if the RE DEVELOPER is in default of its Work Program or any of its material obligations under the RE Contract and other RE agreements with the DEPARTMENT. ATaDHC

f) An assignment of the RE Contract, whether full or partial, to a non-Affiliate, may be allowed only once during the entire period covering the Pre-Development Stage and pre-commissioning phase of the RE Contract. An assignment shall not be allowed to a non-Affiliate during the first two (2) years of the RE Contract from its effectivity.

17.4 AMENDMENTS

The RE Contract shall not be amended or modified in any respect except by the mutual consent in writing of the Parties.

17.5 BOOKS OF ACCOUNTS AND AUDITS

a) The RE DEVELOPER shall be responsible for keeping complete books and accounts, in Philippine currency denominations, reflecting all transactions in connection with this RE Contract in accordance with the Annex "B" hereof.

b) The DEPARTMENT shall have the right to inspect the RE DEVELOPER's books and accounts directly relating to this RE Contract for any Calendar or Fiscal Year thirty-six (36) months following the end of each Calendar or Fiscal Year. Any such audit shall be completed within twenty-four (24) months from its commencement. Any exceptions must be made to the RE DEVELOPER in writing within ninety (90) calendar days following the completion of such audit. If the DEPARTMENT fails to give such written exception within such time, then the RE DEVELOPER's books of accounts and statements for such Calendar or Fiscal Year shall be established as correct and final for all purpose.

c) The DEPARTMENT, upon at least fifteen (15) days advance written notice to the RE DEVELOPER, is entitled to access, during reasonable hours without affecting Wind Energy Operations, all books of accounts and records and may inspect such sites and facilities as necessary.

d) If the DEPARTMENT notifies the RE DEVELOPER of an exception to the RE DEVELOPER's books of accounts within the period specified in Sub-section 17.6 (b), the RE DEVELOPER shall within ninety (90) days from receipt of written exception from the DEPARTMENT, question its validity, otherwise, the same shall become final and binding on the RE DEVELOPER. If the Parties are not able to agree on the exceptions or adjustments after ninety (90) days from the date of receipt of the RE DEVELOPER's response to the DEPARTMENT's exception report, the Parties shall resolve the dispute in accordance with Section XV (Disputes and Arbitration) hereof.

17.6 SEPARABILITY CLAUSE

Should any provision of this RE Contract or the application thereof to any situation or circumstance be declared null and void and/or invalid or unenforceable, such invalidity or unenforceability shall not affect the remaining provisions hereof which shall remain valid and enforceable to the fullest extent. In the event of such partial invalidity or unenforceability, the Parties shall seek in good faith to agree on replacing the invalid or unenforceable provisions with a provision that in effect will most nearly and fairly approximate the effect of the invalid or unenforceable provision through the issuance of appropriate supplemental contract/s or agreement/s.

IN WITNESS WHEREOF, the Parties have caused this RE Contract to be executed by their respective representatives at the place and on the date above written.

 

DEPARTMENT OF ENERGY	COMPANY NAME
By:	By:
___________________________NAMESecretary	___________________________PRINCIPAL SIGNATORYDesignation

WITNESSES

___________________________NAMEDirector IV, REMB

___________________________NAME OF WITNESSDesignation

 

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Manila, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
DOE SECRETARY

 

known to be the same person described in the foregoing instrument, who acknowledged before me that her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that she executed the instrument as her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This RE Contract consisting of twenty-five (25) pages, including the page on which the acknowledgment is written, is signed on each and every page thereof by the Parties and his instrumental witnesses and sealed with my notarial seal. acEHCD

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

CITY OF TAGUIG ) S.S.

Before me, a Notary Public duly authorized in the City of Manila, this ________________________, personally appeared:

 

Name	Competent Evidence of Identity	Date and Place of Issuance
FULL NAME	ID/ID No.	DATE/Place of Issuance

 

known to be the same person described in the foregoing instrument, who acknowledged before me that her signature on the instrument was voluntarily affixed by him/her for the purposes stated therein, and who declared to me that she executed the instrument as her free and voluntary act and deed as well as the free and voluntary act and deed of the government agency herein represented.

This RE Contract consisting of twenty-five (25) pages, including the page on which the acknowledgment is written, is signed on each and every page thereof by the Parties and his instrumental witnesses and sealed with my notarial seal.

WITNESS MY HAND AND SEAL on ________________ at ________________.

NOTARY PUBLIC

Doc. No. _________;

Page No. _________;

Book No. _________;

Series of _________.

ANNEX F

(Attachment to template RE Contracts of GSC, SEOC, HSC, OESC and WESC)

Annex "B"

Accounting Procedures

Attached to and made an integral part of the RE Service Contract (RESC No. ___) (the "RE Contract") between the Republic of the Philippines, acting through the Department of Energy, and ____________________ dated ____________.

ARTICLE I

GENERAL PROVISIONS

1. Definitions

The Accounting Procedures herein provided for is to be followed and observed in the performance of all obligations under the RE Contract. Unless otherwise specified, the terms used herein shall have the same meaning as those defined in the RE Contract consistent with the NIRC and subject to the rules, regulations and policies of the Bureau of Internal Revenue (BIR).

2. Purpose

Generally, the purpose of this Accounting Procedures is to set out principles and procedures of accounting that will enable the DEPARTMENT to effectively monitor the RE DEVELOPER's Gross Income derived from the generation and sale of electricity from RE Resources, and the transmission of the same to its intended location and use for purposes of determining the corresponding Government Share pursuant to the terms of the RE Contract, and compliance by the RE DEVELOPER with its fiscal obligations under the Act consistent with the NIRC, and subject to the rules, regulations and policies of the BIR.

3. Working Language and Units of Account

The RE DEVELOPER shall maintain all accounts, records, books, reports, and statements for the RE Operations in the English language. The amounts shall be recorded in the United States Dollars and/or Philippine Pesos by the RE DEVELOPER in accordance with the International Accounting Standards as adopted in the Philippines.

4. Currency Translation

For the conversion purposes for transactions between United States Dollars and Philippines Pesos or any other currency, the applicable exchange rate shall be the exchange rate as quoted by the Philippine Dealing Systems at the close of business on the last banking day of the same month of disbursement or receipt or if there were such quotations on that day, then such rates on the most recent day in such preceding month during which such quotations or on such basis as may be agreed upon by the parties: Provided, however, That in the event of a significant change in the rate of exchange after the end of the preceding month, then all transactions after such re-evaluation until the end of that month shall be translated at the rates in effect on the day of the transactions.

It is agreed, however, that any adjustments resulting from the exchange of currency required for the use of this RE Operations or from translation above mentioned, shall be charged or credited to the Operating Expenses. The matter of translation rates will be reconsidered if it is determined that the above methods result in inequities.

5. Accounting Records and Statements

All accounting records directly related to the RE Operations shall be established and maintained by the RE DEVELOPER within the Philippines. DHITSc

The RE DEVELOPER shall render to the DEPARTMENT a Statement of All Charges and Credits to the RE Operations, summarized by appropriate classifications indicative of the nature thereof.

Notwithstanding the generality of the foregoing, the RE DEVELOPER shall make regular statements relating to the RE Operations as follows:

a) Expenditure Reports/Investments; and

b) Statement of Revenues and Government Share.

The Operations Return and other financial reports should be accomplished and submitted by the RE Developer to the DEPARTMENT on a per contract basis within sixty (60) days after the end of each quarter of a Calendar Year.

6. Adjustments

Subject to the provisions of Books of Accounts and Audits of the RE Contract, all statements rendered to the DEPARTMENT by the RE DEVELOPER during any Calendar Year shall conclusively be presumed to be true and correct and reasonable, unless within the period provided in said Section, the DEPARTMENT takes written exception thereto and makes claim on the RE DEVELOPER for adjustment. Failure on the part of the DEPARTMENT to make a written claim on the RE DEVELOPER for adjustment within such period shall establish the correctness and reasonableness thereof and preclude the filing of exceptions thereto or making claims for adjustment thereon. All statements rendered to the DEPARTMENT shall be subject to any or such adjustments made by the RE DEVELOPER to assure the correctness and reasonableness of the said statements.

7. Audit and Inspection

The DEPARTMENT shall undertake the conduct of the audit through its own representatives. The RE DEVELOPER shall not be required to incur any cost and expenses as a consequence of any such access: Provided, That the RE DEVELOPER, if requested by the DEPARTMENT, shall provide reasonable assistance and logistical support (including without limitation, suitable office space, equipment, stationery, local area transportation, and other like resources) to the representatives authorized by the DEPARTMENT using its existing resources. The cost of such audit shall be borne by the RE DEVELOPER.

In conducting the audit, the auditors shall be entitled to examine and verify, at reasonable times, all charges and credits relating to the RE DEVELOPER's activities under the RE Contract, and all books of accounts, accounting entries, material records and inventories, vouchers, payrolls, invoices and any other documents, pieces of correspondence, and records considered necessary by the DEPARTMENT to audit and verify the charges and credits. The auditors shall also have the right, in connection with such audit, to visit and inspect, at reasonable times, all sites, plants, facilities, warehouses, and offices of the RE DEVELOPER directly serving the RE Operations, and to physically examine other properties, facilities, and materials inventories used in RE Operations, wherever located, and to question personnel associated with those operations: Provided further, That, the DEPARTMENT shall hold in confidentiality all data and information in relation to the RE DEVELOPER's RE Operations in accordance with the provisions of Confidentiality of the RE Contract.

8. Revision of the Accounting Procedures

By agreement between the Parties, this Accounting Procedures may be revised from time to time, in writing and signed by the Parties, stating the date upon which the amendments shall become effective.

In the event of change in accounting standards, both Parties will immediately recognize and implement such change.

ARTICLE II

CLASSIFICATION AND DEFINITION OF COST AND EXPENDITURES

1. Segregation of Cost

The cost shall be segregated in accordance with the purposes for which such cost and expenditures are made. All cost and expenditures allowable under Article III, relating to RE Operations, shall be classified, defined, and allocated as set out below in this Article. Expenditure records shall be maintained in such a way as to enable proper recording by the RE DEVELOPER. The cost shall cover the whole process of exploration, development, production, and utilization of RE up to point of metering/grid, and actual production and/or operation of RE Systems and/or Generation Facilities of the RE DEVELOPER.

The RE DEVELOPER shall reflect in the Statement of All Charges and Credits accounts classified into: (a) exploration, development and production stage expenditures, (b) Cost of Goods Sold, (c) Tangible Investments and (g) other income. Only those classified under these accounts will be subject to audit and inspection stated in Article I, Section 7 (Audit and Inspection), of this Accounting Procedures.

2. Depreciable/Amortizable Tangible Investments

Tangible Investments

Tangible investments include a Generation Facility, property, and equipment including production, processing, storage, transmission lines, transportation, and other facilities and equipment used directly in the RE Operations (the "Tangible Investment/s"). Cost of an item of Tangible Investments shall include:

i. Cost of construction of the Generation Facility;

ii. Purchase price, including import duties, and non-refundable purchase taxes, after deducting trade discounts and rebates;

iii. Any interest charges, fees, or other consideration paid or suffered in respect of financing the Tangible Investments during the construction operations of the Generation Facility;

iv. Any cost directly attributable to bringing the property in commercial operation or ready to use;

v. Actual restoration cost incurred in accordance with the requirements of the Environment Compliance Certificate (ECC); and

vi. Actual major rehabilitation cost. SEHaTC

3. Pre-Development Stage Expenditures

(Hydropower and Ocean Energy)

Pre-Development Stage expenditures shall include but not be limited to: project development cost, comprehensive feasibility studies (scooping, preliminary or investigation, and economic), permits and endorsements, reconnaissance survey, project approval transmission line, invitation to tender to Preliminary Engineering Design (PED), plant design.

(Geothermal)

Pre-Development Stage expenditures shall include but not be limited to: project development cost, comprehensive feasibility studies (scooping, preliminary or investigation, and economic), permits and endorsements, geological, geochemical and geophysical surveys, drilling of exploratory wells, resource assessment, Grid Impact Study (GIS), Transmission and Connection Agreement, Detailed Engineering Design, plant design.

(Solar and Wind)

Pre-Development Stage expenditures shall include but not be limited to: project development cost, comprehensive feasibility studies (resource assessment preliminary or investigation, and economic), permits and endorsements, geological surveys, resource assessment, Grid Impact Study (GIS), Transmission and Connection Agreement, Detailed Engineering Design, plant design.

4. Development Cost

(Geothermal)

All cost attributable to development cost such as but not limited to resource management, drilling of production and injection wells, steamfield facilities, mechanical, electrical and civil repairs and maintenance, generation, replacement, in-house maintenance activities, overhaul, refurbishment, rehabilitation expenses, expansions, and other cost required for the continuance of the Geothermal Operations.

(Wind)

All cost attributable to development cost such as but not limited to construction of foundation, tower/assembly/erection, mechanical, electrical and civil repairs and mechanical, electrical and civil repairs and maintenance, generation, replacement, in-house maintenance activities, overhaul, refurbishment, rehabilitation expenses, expansions, and other cost required for the continuance of the Wind Operations.

(Solar)

All cost attributable to development cost such as but not limited to construction of foundations, frame assembly and installations, resource management, mechanical, electrical and civil repairs and maintenance, generation, replacement, in-house maintenance activities, overhaul, refurbishment, rehabilitation expenses, expansions, and other cost required for the continuance of the Solar Operations.

(Hydropower and Ocean)

All cost attributable to development cost such as but not limited to mechanical, electrical and civil repairs and maintenance, generation, replacement, in-house maintenance activities, overhaul, refurbishment, rehabilitation expenses, expansions, and other cost required for the continuance of the Hydropower/Ocean Energy Operations.

5. Production Cost

Production cost is generally regarded as those expenditures that are absolutely essential to the production operations. This includes the set of activities, which involves the actual extraction of fluid for commercialization and power generation.

Direct production expenses should be allocated to the functional grouping or classification such as the following:

(Geothermal)

i. Well operations and maintenance;

ii. Land and land rights;

iii. Separation and measurement;

iv. Structures and improvements;

v. Fluid Collection and Re-injection System (Steam Gathering and Waste Disposal);

vi. Cost of installation of steam turbine and generators driven thereby devoted to the production of electricity;

vii. Cost of installed auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric produced and the protection of electric circuits and equipment;

viii. Cost of installed miscellaneous equipment in and about the Generation Facility that is devoted to general station use and is not properly includible in other energy production accounts;

ix. Cost of roads, railroads, bridges, and trestles used primarily as production facilities;

x. Labor and overhead costs; and

xi. Transmission of electricity up to point of metering/grid.

(Solar)

Production cost is generally regarded as those expenditures that are absolutely essential to the production operations. This includes the set of activities, which involves utilization of solar energy or commercialization and power generation.

Direct production expenses should be allocated to the functional grouping or classification such as the following:

i. Power generation costs such as direct labor, plant overhead, plant depreciation and operation and maintenance costs and other charges which are necessary for the generation and transmission of electricity;

ii. Land and land rights; TIESCA

iii. Structures and improvements;

iv. Cost of Solar Energy Systems facilities;

v. Cost of installation of PV frame and arrays thereby devoted to the production of electricity;

vi. Cost of installed auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric produced by Solar Energy Systems and the protection of electric circuits and equipment;

vii. Cost of installed miscellaneous equipment in and about the Generation Facility that is devoted to general station use and is not properly includible in other Solar Energy production accounts; and

viii. Cost of roads, railroads, bridges, and trestles used primarily as production facilities;

ix. Labor and overhead costs; and

x. Transmission of electricity up to point of metering/grid.

(Wind)

Production cost is generally regarded as those expenditures that are absolutely essential to the production operations. This includes the set of activities, which involves utilization of solar energy or commercialization and power generation.

Direct energy generation expenses should be allocated to the functional grouping or classification such as the following:

i. Power generation costs such as direct labor, plant overhead, plant depreciation and operation and maintenance costs and other charges, which are necessary for the generation and transmission of electricity;

ii. Land and land rights;

iii. Structures and improvements;

iv. Cost of Wind Energy Systems facilities;

v. Cost of installed wind turbine generators devoted to the production of electricity by Wind Energy;

vi. Cost of installed auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric produced by Wind Energy and the protection of electric circuits and equipment;

vii. Cost of installed miscellaneous equipment in and about the Wind Energy generating plant which is devoted to general station use and is not properly includible in other Wind Energy production accounts; and

viii. Cost of roads, railroads, bridges, and trestles used primarily as production facilities.

(Hydropower and Ocean)

Production cost is generally regarded as those expenditures that are absolutely essential to the production operations that will include the following:

i. Power generation costs such as cost of water (water fees), direct labor, plant overhead, plant depreciation and operation and maintenance costs and other charges which are necessary for the generation and transmission of electricity;

ii. Land and land rights;

iii. Structures and improvements;

iv. Cost of facilities in place used for impounding, collecting, storage, diversion regulation and delivery of water;

v. Cost of installed water turbines (from connection with penstock of flume to tailrace) and generators driven thereby devoted to the production of electricity by water power;

vi. Cost of installed auxiliary generating apparatus, conversion equipment, and equipment used primarily in connection with the control and switching of electric produced by Hydropower/Ocean Energy and the protection of electric circuits and equipment;

vii. Cost of installed miscellaneous equipment in and about the Generation Facility that is devoted to general station use and is not properly includible in other Hydropower/Ocean Energy production accounts; and

viii. Cost of roads, railroads, bridges, and trestles used primarily as production facilities.

ARTICLE III

GROSS INCOME, COST OF GOODS SOLD, AND EXPENDITURES OF THE RE DEVELOPER

1. Gross Revenues and Other Income

a. Gross Revenues shall be valued in accordance with the RE Contract.

b. Other incidental income from the RE utilization, generation, transmission, and sale of electric power are as follows:

i. Revenue received from third parties for the use of the Generation Facility/ies, the cost of which has been charged to the accounts under the RE Contract. including ancillary, but not purchased power from the Wholesale Electricity Spot Market; and

ii. Other income that is directly attributed to RE Operations, excluding those generally considered gains from activities not involving the RE Resources.

iii. Income received incidental to electricity sales such as but not limited to interest received from late collection of receivables. ICcDaA

2. Expenditures allowable as Cost of Goods Sold

The cost and expenditures declared as Cost of Goods Sold shall be subject to audit as provided herein. The Cost of Goods Sold shall be segregated in accordance with the purposes for which the respective Cost of Goods Sold are made. The Cost of Goods Sold shall include any and all cost and expenditures directly incurred, by the RE DEVELOPER further or in relation to the conduct of its RE Operations pursuant to the RE Contract: Provided, That the Cost of Goods Sold shall include the following:

a) Amortization of Surface rights, lease rights, and easement rights

Surface rights, lease rights, and easement rights shall refer to all direct cost attributed to the acquisition, renewal, or relinquishment of surface rights, lease rights, and easement rights acquired and maintained in force for the RE Operations when paid by the RE DEVELOPER in accordance with the provisions of the RE Contract.

b) Labor Cost — Regular and Contracted

i. Salaries, wages, and benefits of the RE DEVELOPER's technical employees directly assigned to the Contract Area shall include everything constituting gross pay to employees as reflected on the RE DEVELOPER's payroll including, but not limited to, overtime pay, rest day pay, holiday pay, vacation pay, and vacation travel pay, sickness and disability benefits, bonuses, and customary allowances;

ii. The cost of expenditures or contributions made pursuant to obligations imposed by governmental authority on the labor cost or salaries and wages of technical employees directly assigned to the Contract Area;

iii. The cost in relation to training and development of technical employees with functions, directly related to the operations of the Generation Facility/ies;

iv. Personal income and fringe benefit taxes of technical employees directly assigned to the Contract Area when they are paid by the RE DEVELOPER to the Government of the Philippines for the employee, in accordance with the RE DEVELOPER's standard personnel policies;

v. The RE DEVELOPER's cost of established plans for technical employee's group life and accident insurance, health insurance, pension retirement, and thrift and other benefits of like nature for employees directly assigned to the Contract Area; and

vi. For home office-based Technical employees, salaries, wages, and benefits shall be charged as part of Direct Labor Cost based on the percentage of time directly spent in the RE Operations of the Generation Facility/ies.

c) Materials, Equipment, and Supplies

i. General

As far as it is reasonable, practicable, and consistent with efficient and economical operation, only such materials as may be required for use in the reasonably foreseeable future shall be purchased or furnished by the RE DEVELOPER for use in the RE Operations. Materials and equipment held in inventory shall only be charged as Cost of Goods Sold when such materials and equipment are removed from inventory and used in the RE Operations.

ii. Value of materials charged to the account under the RE Contract

Materials, equipment, or supplies purchased by the RE DEVELOPER for use in the RE Operations shall be valued to include invoice price less trade and cash discounts, if any, plus purchase and procurement fees, freight, and forwarding charges between point of supply and point of shipment, freight to port of destination, insurance, taxes, custom duties, consular fees, brokerage fees, other items chargeable against imported material and, where applicable, handling and transportation cost from point of importation to warehouse or operating site, installation cost and in-transit losses not recovered through insurance, and these cost shall not exceed those currently prevailing in normal arm's length transactions in the open market.

Any adjustment received by the RE DEVELOPER from the suppliers or manufacturers or their agents in connection with defective materials shall be adjusted accordingly against the cost of the materials, equipment, and supplies previously charged under the RE Contract.

d) Rental Expenditures

The rental expenditures shall include rent incurred by the RE DEVELOPER relative to the land rental of both private and public lands, building and facilities, RE equipment, machineries, other computer peripherals, transportation vehicles, software programs and licenses, including land rental of both private and public lands adjacent to the Contract Area.

e) Transportation Cost

i. Reasonable transportation and travel expenses of consultants and third parties performing work in relation to the RE Operations, and employees directly assigned to the Contract Area including but not limited to those made for travel and relocation of the Expatriate Employees; and

ii. Reasonable cost of transportation of equipment, materials and supplies, including those directly related cost, such as unloading charges, dock fees and inland and ocean freight charges for such equipment, materials, and supplies directly related to the RE Operations.

f) Services

The actual cost of contract services, services of professional consultants, utilities, and other services, such as engineering, operations, maintenance, and technical advisory services that are directly necessary for or incidental to the RE Operations performed by third parties and Affiliates.

g) Damages and Losses

Damages and losses shall include, in compliance with accounting standards, all cost or expenses necessary to replace or repair damages or losses directly related to RE Operations not recovered from insurance incurred by Force Majeure. The RE DEVELOPER shall furnish the DEPARTMENT with written notice of damages or losses incurred as soon as practicable after report of the same has been received by the RE DEVELOPER. The RE DEVELOPER may be allowed to immediately claim expenses arising from such cost or expenditure prior to actual recovery of insurance proceeds. ADEHTS

h) Communication

i. The cost of leasing, operating, repairing, and maintaining communication systems, including radio and satellite communication facilities directly related to the RE Operations; and

ii. For home office-based Technical employees, the cost of the communication facilities shall be charged based on the percentage of usage of these facilities directly related to the RE Operations.

i) Depreciation of Tangible Investment

The cost of physical assets classified as depreciable in accordance with the International Accounting Standards as adopted in the Philippines as may be applicable to or relevant to the RE industry and as defined in Article II, Section 2 (Depreciable/Amortizable Tangible Investments), incurred and purchased and/or fabricated by the RE DEVELOPER, and used by the RE DEVELOPER in its RE Operations shall include such cost as export broker's fees, purchasing agent's fees, transportation charges, loading and unloading fees, license fees associated with the procurement of materials and equipment, duties and customs fees, in-transit losses not recovered through insurance, and installation cost necessary to put the property ready for use. All Tangible Investment acquired during the Pre-Development Stage or Development/Commercial Stage shall be allocated as part of the Cost of Goods Sold over the estimated useful life of the assets, including the cost of the following:

(Geothermal)

i. Production and injection wells

ii. Well testing equipment

iii. Fluid gathering equipment

iv. Fluid separation equipment

v. Power Plant and civil works

vi. Pipelines

vii. Laboratory equipment

viii. Field survey equipment

ix. Site Office furniture and fixtures/equipment used in direct support of Geothermal Operations

x. Tools and equipment

xi. Automotive equipment

xii. Communication facilities

xiii. Housing facilities used in direct support of Geothermal Operations

xiv. Leasehold improvements with estimated life of over one (1) year

xv. Other capital expenditures classified as tangible investments following generally accepted RE industry accounting principles and practices

(Wind)

i. Wind Turbine generators

ii. Accessory electrical equipment

iii. Miscellaneous Power Plant equipment

iv. Road, railroads and bridges

v. Communication facilities used in direct support of the Wind Energy operations

vi. Energy Storage facilities

vii. Other necessary equipment for the production of electricity from Wind energy classifiable as tangible investments following generally accepted RE industry accounting principles and practices

(Solar)

i. Solar photovoltaic panels, support structures, foundations and appurtenant facilities

ii. Cabling and other electrical equipment

iii. Accessory electrical equipment

iv. Miscellaneous Power Plant equipment

v. Road, railroads and bridges

vi. Communication facilities used in direct support of the Solar Energy operations

vii. Energy Storage facilities

viii. Other necessary equipment for the production of electricity from Solar energy classifiable as tangible investments following generally accepted RE industry accounting principles and practices

(Hydropower)

i. Reservoirs, dams and waterways

ii. Waterwheels, turbines, and generators

iii. Accessory electrical equipment

iv. Miscellaneous equipment for the Generation Facility/ies

v. Road, railroads and bridges

vi. Communication facilities used in direct support of the Hydropower Energy operations

vii. Energy Storage facilities

viii. Other necessary equipment for the production of electricity from Hydropower energy classifiable as tangible investments following generally accepted RE industry accounting principles and practices SHaIDE

(Ocean)

i. Ocean Energy platforms, sluice gates, wicket gates, draft tubes

ii. Bulb hydro/saltwater turbines, generators

iii. Accessory electrical equipment

iv. Miscellaneous equipment for the Generation Facility/ies and onshore fabrication, ocean energy

v. Break Water structures, roads, railroads and bridges

vi. Communication facilities used in direct support of the Ocean Energy operations

vii. Energy Storage facilities

viii. Other necessary equipment for the production of electricity from Ocean energy classifiable as tangible investments following generally accepted RE industry accounting principles and practices

j) Amortization of Leasehold Improvements

Improvements and betterments on leasehold that are directly used in the RE Operations can be capitalized in accordance with the International Accounting Standards as adopted in the Philippines. Such expenditures shall be amortized over its estimated economic life.

k) Amortization of Intangible Investments Software Licenses

Notwithstanding any other provision of this Accounting Procedures software licenses directly related to the RE Operations shall be amortized based on RE Developer's policy or ten (10) years whichever is shorter and, shall form part of the Cost of Goods Sold.

l) Other Plant Overhead directly related to the operations of the Generation Facilities, such as plant insurance, safety expense, freight and handling expense, reforestation and environmental expense, gas and oil, permits, and licenses.

3. Items not considered or allowed as Cost of Goods Sold

The following cost and expenditures shall not be considered or allowed as part of the Cost of Goods Sold for the purpose of the computation of the Government Share:

a) Processing or application fees, bonuses, and other payments made to the DEPARTMENT, such as payments for signature bonus, discovery bonus, production bonus, tax exemption certificates and other DOE-administered funds;

b) Registration/Application fees with other government agencies;

c) Cost attributed to posting of the performance bond or other guarantee required under the RE Contract;

d) Expenditures in respect of any financial transaction to negotiate, float, or otherwise obtain or secure funds;

e) Expenditures incurred in obtaining, furnishing, and maintaining the performance bond and other guarantees required under the RE Contract and any other amounts spent on indemnities with regard to non-fulfillment of contractual obligations;

f) Fines penalties, costs and expenditures incurred as a result of willful misconduct or negligence of the RE DEVELOPER;

g) Cost incurred in the creation of any partnership or joint venture arrangement;

h) Membership and club dues not related to professional organizations;

i) Cost incurred as a result of failure to insure, where insurance is required pursuant to the RE Contract, or where the RE DEVELOPER has under-insured; and

j) Spot market costs and downstream related charges.

4. Other Income

All other income and proceeds received under the RE Contract, including but not limited to the items below, shall be credited to the accounts under the RE Contract, and shall be treated as:

As offset against Cost of Goods Sold:

i. Proceeds from any insurance or claim or judicial awards in connection with the Operations under the RE Contract;

ii. Any adjustment, refunds or other credits received by the RE DEVELOPER from the suppliers or manufacturers or their agents in connection with defective materials, the cost of which was previously charged by the RE Developer to the accounts under the RE Contract;

iii. Cost originally charged to the accounts under the RE Contract for materials subsequently exported from the Philippines but not used in the Operations under the RE Contract. cDCEIA

ANNEX G

Timeline for Awarding of RE Contract under Open and Competitive Selection Process

1. Publication date of Pre-Determine Area (PDAs) (Day 1)

2. Pre-Submission Conference (Day 1 + 20 calendar days)

3. Submission of documents by PDA applicants (Day 1 + 60 calendar days, on or before 1200H to be submitted at the DOE Records Section)

4. Opening of documents and payment of processing fee (Day 1 + 60 calendar days, 1300H, at the DOE-AVR or as specified)

5. Evaluation of documents (Day 61 + 10 working days)

6. Endorsement of results for concurrence of Supervising Assistant Secretary (Day 71 + 2 working days)

7. Concurrence of the Supervising Undersecretary (73 + 3 working days)

8. Secretary's approval of the results (Day 76 + 5 working days)

9. Pre-signing of RE Contract (Day 81 + 3 working days)

10. Referral to Legal Services for concurrence (Day 84 + 3 working days)

11. Referral to Supervising Assistant Secretary (Day 87 + 2 working days)

12. Referral to Supervising Undersecretary (Day 89 + 3 working days)

13. Endorsement with legal concurrence to the Secretary (Day 92 + 7 working days)

14. Signature of the Secretary/Awarding of RE Contract (Day 99)

ANNEX H

Letter of Intent (LOI) Template for RE Contract Application

Director

Subject: Letter of Intent to Apply for (type of RESC)

Dear Director ____________:

We wish to express our intent to apply for RE Contract for the development of (RE resource type) project with an estimate potential capacity of _____ MW.

Our proposed project site is located in ________________________ (town, province) with an area of approximately ______ (sq.m/sq.km) specifically defines as follows:

(Please see Annex K of this Circular on the format of technical descriptions required for Area Clearance)

Enclosed is the notarized Letter of Authority for individual and Board Resolution for corporation (if applicable) for reference.

Thank you.

Very truly yours,

________________________________

Address:

Email address:

Facsimile No.

Mobile No:

ANNEX I

Checklist of Requirements for Renewable Energy (RE) Contract Application

ANNEX I.1

Template Five (5)-Year WP for BEOC

 

ANNEX I.2

Template Seven (7)-Year WP for GSC

 

ANNEX I.3

Template Five (5)-Year WP for SEOC

 

ANNEX I.4

Template Five (5)-Year WP for HSC

 

ANNEX I.5

Template Seven (7)-Year WP for OSC

 

ANNEX I.6

Template Five (5)-Year WP for WESC

 

ANNEX J

Mapping Requirements for RE Contract Application

A. Common Mapping Requirements

1. Certificate of Geographic and Grid Coordinates of the tie point used in the actual land survey of the project site issued by DENR.

2. Photocopy of PRC Card & Professional Tax Receipt of the geodetic engineer.

3. Certified True Copy of Lot Title/Titles (TCT/OCT) from Registry of Deeds-LRA.

4. Vector files of the lot/project area preferably in shapefile, 2011 or lower version of dwg or dxf format.

5. Excel file containing either the PRS'92 geographic coordinates of all corners for blocking (see TD Form.xls) or the Lot Data Computation for non-blocking (see ISD LDC Form.xls). HDICSa

B. Requirements per Type of RE Resource

1. Solar and Biomass Resources

1.1. For applied area/project site covered by the whole titled lot

1.1.1. Survey/Location plan of the lot

1.1.2. Lot Data Computation of the lot

1.1.3. Common Mapping Requirements (see list above)

1.2. For applied area/project site covered by more than two titled lots

1.2.1. Survey/Consolidation plan of the consolidated lots

1.2.2. Lot Data Computation of each lots and the consolidated boundary

1.2.3. Common Mapping Requirements (see list above)

1.3. For applied area/project site within or portion only of titled lot/consolidated lots

1.3.1. All requirements under A or B, depends on the number of lots where the project site is located. The location of the project site and its Technical Description in Bearing-Distance and the equivalent PRS'92 geographic coordinates should also be reflected on A.1/B.1.

1.3.2. Lot Data Computation of the project area boundary

1.3.3. Common Mapping Requirements (see list above)

1.4. For applied area/project site not covered by TCT/OCT/Permit/Award or with no approved land survey (Applied/Project Area within Timberland/Forest Land or Outside Alienable & Disposable land)

1.4.1. Survey/Location plan of the project site

1.4.2. Lot Data Computation of the project site

1.4.3. Certificate of Geographic and Grid Coordinates of the tie point used in the determination of the project site location issued by DENR.

1.4.4. No. 2, 4 & 5 of Common Mapping Requirements (see list above)

1.5. For applied area/project site not covered by TCT/OCT/Permit/Award but with approved land survey (Within A & D; not yet titled properties; covered by cadastral survey)

1.5.1. Certified True Copy of approved survey plan of lot/project site

1.5.2. Survey/Location plan of the lot

1.5.3. Lot Data Computation of the lot

1.5.4. No. 1, 2, 4, & 5 of Common Mapping Requirements (see list above)

2. Wind, Geothermal, Ocean and RE Resource for Offshore Development

2.1. Location/Sketch plan of the applied area/project area showing its boundaries in relation to major environmental features using NAMRIA topographic map, nautical chart/bathymetric map (for ocean only) or any available administrative basemap at least 1:50,000 scale with equivalent PRS'92 geographic coordinates of all boundary corners

2.2. Lot Data Computation of the project area (if not conforming with the RE blocking system)

2.3. No. 2, 4, & 5 of Common Requirements (see list above)

3. Hydropower Resource

3.1. Location plan/map of the project site showing its proposed weir/dam and powerhouse location in relation to major environmental features using NAMRIA 1:50,000 scale topographic map or any available basemap of the same map features and scale. The PRS'92 geographic coordinates and elevation for powerhouse and weir/dam must be referenced to a known benchmark and correspondingly plotted or reflected on the location plan/map.

3.2. No. 2, 4, & 5 of Common Requirements (see list above)

NOTES:

Lot — a parcel of land subject of a land title certificate or subject of DENR approved land survey.

Applied Area/Project Site/Project Area — an area subject to RE Contract Application.

Lot data Computation* — accomplish the ISD LDC form using PTM grid coordinates for area computation. Also, the equivalent PRS'92 geographic coordinates of each corner should be provided. Provide printed and soft copy. (see sample ISD LDC Form)

Survey/Location/Sketch Plan* — shall reflect the boundaries of lot/project site and tabulate its Technical Descriptions in Bearing-Distance & the equivalent PRS'92 geographic coordinates of all boundary corners of plotted lot/project site. (see Sample Maps)

Consolidation Plan* — shall reflect all boundaries of consolidated lots/project site and tabulate Technical Descriptions in Bearing-Distance & the equivalent PRS'92 geographic coordinates of all boundary corners of all plotted lots/project area.

Computation of Area — For project area conforming to the RE blocking system the total area shall be computed as 81 hectares per RE block, otherwise the projected area (PTM-Zone I to V) will be considered.

* — All Lot Data Computations and Survey Plans should be duly prepared, certified, signed and sealed by a licensed Geodetic Engineer.

ANNEX J.1

 

PROJECT NAME:	CAGAYAN WIND POWER PROJECT
COMPANY NAME:	RE CORPORATION
Number of RE blocks:	2 RE Blocks	AREA: 162	HECTARES
Corner	PRS '92 GEOGRAPHIC COORDINATES
LATITUDE	LONGITUDE
DEG	MIN	SEC	DEG	MIN	SEC
1	14	40	0	121	1	30
2	14	40	0	121	2	0
3	14	39	0	121	2	0
4	14	39	0	121	1	30
5
6
7

 

ANNEX J-2

Lot Data Computation/Area Sheet

 

Sample Map A — For Solar Biomass

 

Sample Map B — For Project Area Conforming with RE Blocking System

 

Sample Map C — For Project Area Not Conforming with RE Blocking System

 

Sample Map D — For Hydro

 

ANNEX-K

Template Amendment for Change of Project Location

 

Section I. Amendment

 

Acknowledgement

 

Template Amendment for Change of Installed Capacity

 

Section I. Amendment

 

Acknowledgment

 

ANNEX L

Requirements for the RE Contract Transition from Pre-Development to Development Stage

1. Letter of Declaration of Commerciality indicating the capacity of the project in megawatt (MW) HTCaAD

2. Gantt Chart of the initial 5-Year Work Program following an approved template (Annex A-1)

3. Map of the Production Area in acceptable ITMS format (Annex K)

4. Proof of ownership or possessory rights over the Production Area

5. Feasibility Study covering the following minimum activities:

a. Market Study — must identify assumptions used in a target market/s (e.g., as merchant plant, with Power Purchase Agreement, or in spot market).

b. Technical Study — with the following supporting documentary requirements:

i. Proof or undertaking to secure proof of ownership of or exclusive right to develop the production area and right of way;

ii. Resource Assessment Report with raw and processed data;

iii. Final layout, single line diagram, general specifications and annual energy production (AEP) of the project;

iv. Geotechnical Study Report;

v. System/Distribution Impact Study Report; and

vi. Detailed Engineering Design of the Project, if applicable.

c. Management Study — containing strategies of development and construction of the project including the entities who will be involved as EPC Contractor, Owner's Engineer and O & M Contractor covered by Agreements/Contracts, if applicable.

d. Certified true copy of acquired applicable permits, licenses, agreements, endorsements and clearances.

e. Financial/Economic Study — on the results of analysis and interpretation of the viability of the project under the Base Case scenario (P50 or higher) and sensitivity analysis.

Supporting documents:

i. Financial model/s; and

ii. Proof of Financial Closing.

ANNEX M

Certificate of Registration