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An Evaluation of the Proposed
Sanitary Landfil
PRELIMINARIES 1. Generally. The title of this study is “AN EVALUATION ON THE PROPOSED DAVAO CITY SANITARY LANDFILL PROJECT”. This study is undertaken in partial fulfillment of the requirements in the subject of ENVIRONMENTAL LAW under the Law Curriculum of the Ateneo de Davao University, College of Law, with Atty. Ramon Edison Batacan as Professor and Atty. Hildegardo Iñigo as Dean. 2. Proponents. The proponents of this study are Second Year Law Students of the Ateneo de Davao University, College of Law and members in good standing of GREEN JURIS, an organization existing in said law school the objective of which is environmental advocacy. These proponents are: Charmalou Aldevera, Juan Carlos Angeles, Jess Zachael Espejo, Jheanifair Lam, Effie Molina, Lyza Marie Monfort, Lew Wesley Nuere and Lielanie Yangyang. 3. Objectives. The objectives of this study are the following:
4. Limitations. This study is focused only on the proposed site located in Tibungco, Davao City. The other prospective sites were no longer evaluated since according to the City Planning Office, those sites are no longer to be considered. The study also gives more emphasis on the legal aspect of the landfill project. Taken into consideration were the Memorandum of Understanding between the City government and Canadian firm who are parties to the future project as well as the proposed contract. As to the time, this study is limited to developments in the project
as of April 19, 2000.
Chapter I
5. Solid Waste Disposal Solid waste disposal means the disposal of normally solid or semisolid materials resulting from human and animal activities that are useless, unwanted, or hazardous. It is the process of getting rid of the waste materials that people generate. People produce gaseous waste, such as carbon monoxide from cars; liquid waste, such as sewage; and solid waste. The many kinds of solid waste include paper and plastic products, bottles and cans, food scraps, and junked automobiles. Solid waste is also called refuse or garbage. If not disposed of properly, it looks unsightly, smells foul, and creates health problems by attracting rats, insects and other animals that spread disease. Solid waste from homes, offices, and stores is called municipal solid waste. Generally, communities use three chief methods in order to dispose of municipal solid waste. They are, (1) incineration, and (2) recycling and waste reduction and (3) land disposal. Incineration is the process of burning waste products. Many large cities use incinerators because they do not have suitable areas nearby for land disposal sites. Older municipal incinerators often lack adequate air pollution control devices. Burning in many of these incineration plants releases gases and solid particles that may harm human health, damage property, and kill plants. In the Philippines, with the passage of the Clean Air Act, the use of incinerators is now prohibited. Recycling is the process of reusing materials instead of throwing them away. Commonly recycled materials include metals, glass, and paper. Waste reduction is the process of producing less waste. For example, people can reduce waste by using handkerchiefs instead of disposable tissues. Land disposal involves hauling garbage to an area owned by a community or a private firm. Such areas range from unsanitary open dumps to properly operated sanitary landfills. Open dumps are a poor method of waste disposal because they cause environmental problems. For example, they can ruin an area's appearance and provide a home for animals that spread disease. In addition, rain water drains through refuse and can carry harmful substances to nearby streams and to water used for drinking. Unregulated dumps where waste is burned in the open can cause smoke and foul-smelling air. This method of land disposal of municipal waste had been the prevalent method used in the Philippines. However, due to this method’s adverse effects, authorities are now exploring new modes of waste disposal. The other method of land disposal of municipal waste is the sanitary landfill, which is the subject matter of this paper. 6. Sanitary Landfill; Definition. The sanitary landfill provides a way of safely disposing of solid waste in a controlled manner. The landfill site is lined with an impermeable material such as clay or plastic, and soil is used to surround and contain the waste materials. Municipal solid waste and, at times, certain industrial and agricultural wastes are spread in layers and compacted by heavy bulldozers to reduce their volume. At least once every 24 hours, a layer of soil of a minimum 15 cm (6 in) in thickness is spread on top of the compacted waste and is itself compacted before more waste is added. When the waste-soil mound reaches a certain height, it is covered with a layer of soil at least 60 cm (2 ft) thick, which is then revegetated. The water table under the site must be at least 2 m (6 ft) deep and the site not subject to flooding. Soils vary greatly in their ability to contain and renovate the ordinary decomposition products of solid waste, so only a small proportion of potential sites are suitable for use as sanitary landfills. The decomposition of organic wastes generates biogas, a mixture of methane and carbon dioxide. This by-product is also an inexpensive source of energy. In fact, a number of U.S. landfill sites are currently equipped to collect the gas, which is used to generate electricity. However, the heterogeneous nature of the materials in landfills causes uneven settlement of the mound, and ordinarily a closed landfill cannot be used as a building site. It may be reclaimed however, for recreational use. Sanitary landfill is the cheapest satisfactory means of disposal, but only if suitable land is within economic range of the source of the wastes; typically, collection and transportation account for 75 percent of the total cost of solid waste management. However, recycling and waste reduction must also be employed together with the landfill to further reduce the costs involved. These help lessen the amount of refuse that is buried in landfills, thereby increasing the lifespan of the same.
AN ILLUSTRATION OF A BASIC SANITARY LANDFILL SYSTEM
7. Kinds of Sanitary Landfills. There are three basic types of sanitary landfills, classified according to the method of landfilling used, namely, the trench method, the area method and the ramp method. Trench Method. A trench is first excavated, its base and sides being properly lined. Waste is then spread and compacted in an excavation. The cover material used comes from the excavated soil. This method is best suited for flat or gently sloping land where the groundwater table is deep below the surface. It is called for when the soil is highly cohesive, easy to excavate, and is suitable for cover. Places where glacial till or clay soil abound are ideal for trenching, because the walls between the a series of trenches can be thin and nearly vertical, and trenches can be spaced very closely. Weather and the length of time, the trench is to remain open affects soil suitability and these factors, should be considered in forming the slope of the trench. If the trenches are aligned perpendicularly to the prevailing wind, the amount of the wind blown litter will be greatly reduced. Drainage can be a problem. To solve this, the bottom of the trench should be slightly sloped for drainage and provision should be made for surface water to run of at the low end of the trench. The trench can be as deep as soil and groundwater conditions will safely allow, and it should be at least twice as wide as any heavy equipment that will be working in it. Small trenches usually measure 8 to 10 ft. deep and are 2 to 3 times as wide as the machine excavating them. Larger ones may be 30 to 40 ft. deep, 60 to 80 ft. wide and 200 to 300 ft. in length. These are suitable for sites receiving 300 to 500 U.S. tons per day. It is set in order to avoid truck traffic congestion. Trenches are excavated at a rate geared to land filling demands. The immediate availability of cover without the need for expensive specialized equipment to haul it from long distances is a major advantage of the trench method. If the landfill is to be brought above ground level, nearby cover material is an advantage. The trench has some disadvantages, however, if more cover materials are excavated than can be used immediately, it will have to be stock-piled and moved again, entailing additional expenses. There are three ways to trench. One way is to excavate the entire trench and window cover material along the sides until it is needed; A second way is to excavate as far as to provide a single day’s working space and dirt cover. This is called the Progressive Trench. It will require handling the cover material once a day. The third way is to excavate a second trench in segments parallel to the first one and use the excavated material as cover for the first trench. Care is taken to leave at least 2 feet separating the 2 trenches. This method may also allow for handling the cover material only once. Area Method. In this method, the waste is spread and compacted on the natural surface of the ground, and cover material is spread and compacted over it. This method is best-suited for flat or gently sloping landsites where no natural slopes exist. It can be adopted, however, to ravines, valleys, quarries, abandoned strip mines or other land depressions. It should be noted that disposing of waste in a ravines site requires the construction of diversion ditches for surface run-off water before any waste is received. Waste is pushed into layers, compacted and adequately covered. Then during succeeding days, incoming waste is dumped at the toe of the preceding day’s waste and pushed up the face, compacted, and covered at the end of each working day. A machine such as a bulldozer or landfill compactor spreads and compacts the material. Soil for daily cover is hauled in from other location. Ramp Method. The ramp method is a combination/variation of the area and trenching techniques. Waste is spread and compacted on an existing slope. Cover material is excavated directly in front of the working face and then spread over the waste and compacted. The excavated area thus becomes a part of the cell to be worked the following day. Like the progressive trench method, some operators consider the ramp method ideal because they do not have to haul in cover material which translates to additional costs for the use of expensive handling equipment. They may only need to handle the cover once and do have to prepare the land in advance. They consider this an excellent way to start a landfill with a minimum equipment. However, if more than one lift is required, cover will have to be hauled to the working face and expenses will have to be incurred. The depth of the water table is a factor to consider. This is not as critical as with the trench method that normally requires deeper excavation. 8. Other Considerations on Landfilling Methods. The trench and area methods may have to be used at the same site to adjust to site conditions. For example, in a site with a thick soil zone over much of it and only a shallow soil layer over the remaining portion, the trench method should be used in the thick soil zone. The extra soil material obtained can then be used in carrying out the area method over the rest of the site. The settling or subsidence of the mass buried in a landfill must be taken into account when final capping is done, otherwise ponding is bound to occur. Consideration must be given to completing the landfill by phases,
so that portions of it can be used as parks and playgrounds while other
parts are still accepting solid waste.
Chapter II
9. Cost and Operational Life. The proposed sanitary landfill project in Davao City is a 35.7 million U.S. dollar or 1.42 billion peso investment by CELDEX, a Canadian Firm taking into account both investment and operating costs. The project is designed to provide feasible solutions to address the city’s present and future solid waste management problems. As envisaged, the sanitary landfill will have an operational life span of 25 years. The total capacity of disposed and covered waste during the 25 years of operation is estimated at 9 million metric tons at an average of 1000 tons of solid waste disposed per day. 10. Processes and Technologies. The sanitary landfill as defined by CELDEX involves the application of advance technologies and operational systems and procedures in solid waste disposal, which are already common in cities in highly developed countries. As mentioned earlier, the proposed Davao City Sanitary Landfill will be the first of its kind in the Philippines. The operation involves the weighing of solid waste collected by the garbage truck at the weighing bridge at the entrance of the site. Following verification of the quality of wastes, the loads of acceptable wastes are forwarded for sorting in a reception area. Unacceptable wastes are immediately forwarded to the landfill. Recyclable materials are stored in separate covered containers and placed in a container yard. Non-recyclable wastes are stored definitely in landfill sections, which are termed as “cells”. The stored waste materials are covered by an environmentally suitable material (earth, sand and gravel) and are compacted on a daily basis. The technologies and operational procedures to be applied in the sanitary landfill project must follow and conform to environmentally accepted practices in accordance with international criteria that include the following: (1) Geomembranes should be used to prevent leachate and waste from
contaminating the ground and underground water;
11. SITE ANALYSIS The feasibility study conducted by CELDEX took into account the closure of the old Ma-a dumpsite located along the Diversion Road and considered the new dumpsite at New Carmen as inappropriate based on international standards in solid waste disposal in accordance with the concept of a sanitary landfill. Said feasibility study proposed alternative site selection based on location criteria used by the Department of Environment and Natural Resources (DENR). Also, the study considered that, in order to increase the technical and economic feasibility of the waste disposal project, the search for a site offering more advantages and possibilities was essential. Site assessment and preliminary studies were conducted to establish
a selection ranking of five (5) suitable locations namely: Tibungco, Sta.
Cruz, Bunawan I, Bunawan II, and Lasang. The feasibility study identified
Tibungco as the most satisfactory site using the following criteria:
1. LOCATION Service Area. The total area of the Sanitary Landfill Project is 35 hectares more or less thus the area could accommodate the garbage disposal for the next 25 years in the city. Distance from collection area. The distance of Tibungco site from the city proper is more or less 17 kilometers. However, the site is 2.5 kilometers from the intersection coming from the National Highway. Accessibility. The site is accessible from the National Highway. The road pavement from the National Highway to the site is concrete. The site is also accessible from Buhangin passing the Acacia road and the Communal Road that could exit in Buhangin. Presence of Utility. Electric power is readily available because the site is near electric lines from Davao Light and Power Company (DLPC) wherein the main network provides a 69-kilowatt transformer. Human Settlement. In the site, there are around 26 houses and a total of 21 households reside within the area. There are also three subdivisions near the site namely, the San Jose Village, Kabayan Village and Marieta Village. 2. TOPOGRAPHY The selected site is situated in a flat land with a slope of less than 3-4 percent. The land elevation is more or less 60 meters above sea level. The general slope has an inclination to the east of 2% towards the sea. 3. GROUND WATER LEVEL The ground water level lies more than 55 meters deep, in the site per information obtained from a well driller in the sector. The ground water running along the National Highway is near the surface. The static level of the wells there is 2.25 meters. These wells are located more than 1.5 kilometer east of the selected site and run-off water flow east bound. The hydraulic gradient is weak and amounts to 0.008, an indication that ground water run-off speed is slow. According to Davao City Water District (DCWD) officers there are no wells supplying private or public water works in the sector, including the site and its immediate surroundings. There is a creek near the site but is dry most of the time. 4. SOIL CHARACTERISTICS The limestone of the Samal Reef formation constitutes the sector of Tibungco. The soil is an extremely porous, poorly compacted and fossiliferous limestone. On the surface, the weathering process has altered the texture of limestone. It has contributed to the formation of clayey soil consisting on the surface of 0.4 meter dark brown soil with roots. A layer of red clay is under the horizon and reaches a depth of 1.7 meters or more. From the comments gathered from local residents this layer maybe 3 meters deep. 5. WIND DIRECTION The site is located at an elevation of 60 meters above the sea level. This relief is flat and allows Northern and Southern winds to freely sweep the sector. The wind blows on low to medium intensity and affect mostly the treetops since the surroundings of this site are essentially wooded. In general, the wind blows away from the villages near the site. 6. VEGETATION COVER The trees present within the site are mostly coconut trees. However, their numbers depleted because many of the coconut trees were cut down and utilized as coconut lumber. Part of the site is being utilized as grazing ground for small numbers of animals. Less than 20% of the land surface is being used for corn cultivation or for growing of vegetables. 7. ZONING The Tibungco territory has been allocated to industrial use
per Comprehensive Zoning Plan of Davao City.
8. RAIN FALL
9. LAND AREA The total area of the Tibungco site is 35 hectares more or less and
owned by 17 individuals.
CHAPTER III
12. Political Climate. The political impact that shall greatly affect the project will be the negative reaction of the households. This will be with regards to the garbage fee or tipping fee to be charged to every household for the recovery of the BOT operations investments. However, this political impact could be resolved through proper information campaign to the city’s population. 13. Social Obligation. The people, especially those residing near the project site, may have negative reactions and reservations about the project. According to Engr. Tess Tagorda of the DENR, this is a natural reaction because of the “not-in-my-backyard mentality.” Nobody would want to have garbage in his backyard because it is an eyesore and if left unattended, is unsanitary. To remedy this, the CELDEX management must continuously undertake the information campaign relative to the landfill project features that is very much different from the open dumpsite system of garbage disposal. 14. Health and Sanitation. With respect to health, CELDEX management is very much willing to observe the proper precaution relative to the health and sanitary welfare of the population within the sector that will be affected by the project. 15. Dislocation. There will be 21 households that will be directly affected by the
project. These are the very people living within the site.
These families will be dislocated and there might be other families from
the adjacent village that shall leave their present area of residence because
they do not want to be affected by whatever impact that might be caused
by the sanitary landfill operation.
CHAPTER IV
A. ECONOMIC ASPECT 16. Land Values. The land values of the areas shall depreciate because of the different impacts of the landfill project. 17. Economic Rate of Return. The economic impact of the project will be the employment opportunities that will be open in the project operation. 18. Employment Opportunities. The project itself will be needing employees to supplement the different technical staff as well as workers on the site. This will surely supplement income of villagers near the landfill site. 18. Cost Benefits. Because of employment to be generated by the operator of the landfill project income of villagers will surely be augmented. B. FINANCIAL ASPECT 19. Development Costs. The total development cost of the project is estimated at $35,722,441.00 or P1.42 billion. 20. Cost Recovery. The project development cost shall be recovered from the residential and commercial sectors through tipping fees or garbage fee. The evaluation of the financial aspects in the feasibility study considered the investment and operating costs of the project in so far as these costs have significant impact on the financial capacity of the City to meet the cost of solid waste disposal at the sanitary landfill as proposed by CELDEX. More importantly, the evaluation considered the financial mode/mechanism presented by CELDEX in its proposal on garbage fee collection strategy. Among the essential aspects in the feasibility study, the proposed garbage fee collection scheme is the most critical because of its inherent political, social, and economic implications, which directly affect not only the City Government, but also the City’s residents who will be served by the sanitary landfill project. 21. Proposed Garbage Fee. The following table provides for the amount of garbage or tipping
fee to be paid by the different sectors in Davao City:
SCHEDULE OF PROPOSED MONTHLY GARBAGE FEES (COMMERCIAL/INDUSTRIAL)
SCHEDULE OF PROPOSED MONTHLY GARBAGE FEES (RESIDENTIAL)
22. Garbage Collection Fee Strategy; Analysis. Since the City Government will have to pay CELDEX for its garbage disposal services, it is important that CELDEX be assured of the City Government’s ability to pay the sanitary landfill tipping fee from a steady source of income. For this purpose, CELDEX proposed a garbage collection fee mechanism to generate revenue not only from commercial/industrial establishments, but also from residential households. According to the CELDEX financial model, collection of garbage fee from residential households will be based on the income class of households. The proposed garbage collection fee structure will constitute an average annual fee of P 452.00 for the residential sector which is about 1.6 times more than the average cost that a typical family spend per year for water bill at an average of P 279.00. 23. Tipping Fees Davao shall guarantee that the quantity of solid waste directed to the site shall never be less than 150,000 tons per year for the first year and growing by 3% per year thereafter. Thus, at least tipping fees or garbage fees equivalent to 150,000 metric tons per year should be paid by the City although such guaranteed tonnage is reached or not. The cost of collecting and hauling of the garbage from the residential and commercial sectors shall be subsidized by the City. According to the City Planning Office, there are two (2) viable ways to facilitate the collection of these tipping fees, to wit: 1. Incorporation with other public utility bills. The collection of the tipping fees may be done through the monthly utility bill collections. Thus, if this scheme is used, Davao City residents would be making their garbage payments together with either their water or electricity bills. Engr. Rolly Feliciano of the City Planning Office commented that to tie up the collection of tipping fees with, for instance, the water bill would not be very advisable. He considered that even if people would no longer be paying their water bills, it is certain that they would still be generating garbage. 2. Barangay collection scheme. Engr. Feliciano proposed that the collection of the tipping fees
be coursed through the barangay officials instead. He observed
that barangay officials are in a better position to assess the economic
status of the residents in the barangay since the proposed garbage fee
for residents would be based on the income group. He adds that barangay
officials, compared with other collecting agencies, are more prompt and
efficient when it comes to collection.
24. Rationale. Garbage was the least of humanity’s concern. There were lots of lands to accommodate them. There were less people who threw them. Technology then was not developed. Thus, most wastes were biodegradable and they did not interfere too much with the earth’s natural processes. But that was the past. Now, mountains of trees have disappeared to sustain mankind. In their place, mountains of waste reign. Solid wastes are not only eye sores, they pose danger to the environment as well. They clogged and contaminate the surface and ground water system. Dumpsites become breeding places of disease carrying insects and sources of harborages and food supply for rats, flies, and other vermin. They pollute the air because of the smoke, dust and odor that they emit. They are fire hazards. Mankind has found various methods of solving these garbage related problems. One method used is landfilling which includes a sanitary landfill. Still this method has not really eliminated the hazards caused by solid waste. There will always be a fear that a landfill would inevitably result in polluting the environment. 25. Effects in General. Based on the result of worldwide surveys reported by the U.S. based Environmental Research Foundation, a high incidence of birth defects is noted in communities situated near garbage dumps or landfills. Expectant mothers are exposed to toxic gases and contaminated waters. Landfills emit methane, mercury, hydrogen sulfide and volatile organic compounds such as xylem and toluene which cannot be monitored or stopped in a landfill system. These cause nervous system disorders, kidney and liver damage and birth defects. The nitrates in drinking water caused by garbage juices can cause cancer and blue baby syndrome. Gases escaping from a landfill will carry along toxic chemicals such as paint thinner, solvents, pesticides and other hazardous volatile organic compounds. According to the World Health Organization, accidental fires in landfills emit dioxins and furans. Along with other pollutants, dioxins and furans have been associated with a number of adverse effects on humans, including immune and enzyme disorders and chloracne. All these are classified as possible human carcinogens. 26. Leachate. Once solid waste is buried in a landfill, the action of water causes many physical, chemical and biochemical reactions take place. Leachate or garbage juice is not produced until a sizeable portion of the buried waste becomes saturated with water coming from the outside. Thus it is important that a study of the site’s, hydrology, climate, surface runoff characteristics, evaporation-transpiration patterns, and the location and movement of ground water be studied. When waste decomposes with the action of water, the resulting liquid, known as leachate, percolates downward. As it does so, it absorbs more chemical compounds and microorganisms naturally present in putrefying materials. The chemicals and microorganisms contained in leachate are potentially harmful. They can befoul the environment and endanger life. Even under controlled condition, such as is present in a well-planned and well-run sanitary landfill, leachate may percolate or penetrate through the natural ground and contaminate underground fresh water supplies. For this reason, there are some places more preferable to others for landfilling purposes. These are areas where the danger posed by leachate to underground water is minimal, and its control can be effected through natural means. For example, in arid areas where there is little ambient water, the production of leachate will be minimal. Similarly, in places where the underground water is not fit for consumption or practical use, any leachate that reaches it will not make any difference. The ground has a natural way of neutralizing chemicals and organisms contained in leachate. It does this by attenuation or gradually weakening the severity or amount of contamination carried by the leachate as it percolates down the soil. Any combination of the following six processes will attenuate leachate. First, leachate is diluted by the admixture of water in the soil. Second, the soil may adsorb the pollutant, keeping it in place by making it stick in extremely thin layers of molecules to the surfaces of solid or liquid particles in the soil. Third, temperature and naturally occurring chemicals in the soil may cause the pollutants to precipitate or congeal and separate from the leachate solution. Fourth, the soil serves to filter suspended particles from the leachate as it passes through. Fifth, because of electrical charges contained in each particle of soil, ion exchanges occur resulting in the removal or separation of minerals and other substances dissolved in the leachate. Finally, leachate is attenuated by dispersion, being spread out over a wide surface area. A locality’s pedology, hydrology, hydrogeology, and climatology, determines not only its suitability as a landfill site. Landfill design considerations also hinge on these factors which determine whether the formation of leachate will produce a water pollution problem. 27. Gases. Different gases are also produced because organic matter buried in the landfill will eventually decompose through the action of anaerobic or microorganisms - bacteria that flourish in the absence of air. Some of these gases are relatively harmless, but some are quite dangerous. Hydrogen sulfide is a flammable, poisonous gas which can easily be detected because of its odor which is suggestive of rotten eggs. Similarly, methane is a highly flammable hydrocarbon. However, it is all the more dangerous because being colorless as well as odorless, it is difficult to detect. The production of flammable gases must be controlled, otherwise large quantities accumulate and lead to an explosion. During peak periods of anaerobic decomposition, the landfill gas reaches methane concentrations of about 50%. Methane must be flared instead of just vented into the atmosphere. This is because methane has a green house effect potential about 200 times that of carbon dioxide. 28. Environmental and Human Habitat Considerations. In view of the aforementioned, the following are the environmental and human habitat considerations in selecting a landfill site: 1. The landfill should not infringe upon any part of a 10-year ground water recharge area for existing or pending water supply development. 2. No private or public drinking, irrigation or livestock water supply wells should be within 500 meters downgrade of the landfill boundaries unless alternative water supply sources are readily and economically available and the owners gave written consent to the potential risk of abandoning their wells. 3. No environmentally significant wet lands of important bio-diversity or reproductive value are present within the potential area of the landfill development. 4. No known rare or endangered species breed in the area, nor should the landfill abut into a protected wildlife preserve. 5. No significant protected forests are within 500 meters of the landfill. 6. The site should not be subject to high winds, otherwise the problem of dust and wind blown litter becomes unmanageable. 7. No major water, gas, electrical power or communication transmission infrastructures should cross the landfill unless these will have no effect on operations or rerouting is economically feasible. 8. No underlying limestone, carbonate, fissured or other porous rock formations exist more than 1.5 meters in thickness, especially above ground water - bearing strata. These kind of rock formations will conduct, rather than block the movement of leachate and gas. 9. No underlying underground mines are present which can be adversely affected by surface activities of landfilling, unless the owners give explicit consent. 10. No residential development exist within 250 meters from the boundaries of the landfill. 11. The operation of landfilling should not be visible from within a one kilometer radius. If neighboring residents live within this radius, landscaping, a buffer of trees and protective berms should be incorporated into the landfill design. 12. No perennial stream should be present within 300 meters downgrade of the landfill, unless diversion, culverting, or channeling is economically and environmentally feasible to protect the stream from contamination. 13. No significant seismic risk should exist in the area which could cause damage to drains, treatment ponds and other civil works, or which may require costly engineering measures. 14. No fault lines or significantly fractured geologic structures within 500 meters from the landfill exists that would allow unpredictable movements of gas and leachate. 15. A landfill is absolutely not allowed within a 3-km. radius of an airport servicing turbojet aircraft or 1.6 km. of an airport servicing piston driven aircraft. Beyond this prohibited area, the permission of the aviation authority has to be sought if the landfill falls within a radius of 8 km. 16. A landfill should never be sited within a floodplain subject to 10-year floods and, if within areas subject to a 100-year flood must be amenable to an economic design which would eliminate the potential for washout by means of protective impervious dikes and liners. 17. Avoid siting a landfill within one kilometer of culturally or socio-politically sensitive places such as memorial sites, churches, schools, etc., because public acceptance is highly unlikely. For the same reason, garbage-carrying vehicles on their way to the landfill should avoid the use of roads that will pass by these places. 18. Make sure that legal aspects had been satisfied and that the
landfill conforms to local zoning rules.
CHAPTER VI
29. Legal Justification. The Local Government Code of 1991 otherwise known as Republic Act 7160 devolved the responsibility for the provision of basic services, such as but not limited to general hygiene and sanitation, beautification and solid waste management to local government units. By virtue of Presidential Decree 1152 or the Philippine Environmental Policy, Presidential Decree 984 or the Pollution Control Law and Administrative Order No. 90, there is a need to improve the present practices of municipal solid wastes to make them environmentally sound. In consideration of the above premises, the Department of Environment and Natural Resources adopted and promulgated DENR Administrative Order (AO) No. 98-49 which provided for the technical guidelines for municipal solid waste disposal. Section 7 of DENR AO No. 98-49 Paragraph 1 provides that “All highly urbanized cities are required to convert/upgrade all the their open dumps to controlled dumps within three (3) years from the promulgation of this Order or not later than December 2001; from controlled dumps to sanitary landfill level I no later than December 2008; and from sanitary landfill level I to sanitary landfill level II by December 2009.” A Memorandum of Understanding (MOU) between the City of Davao
and CELDEX Environmental Technologies of Canada was entered into in 1997.
The MOU is an official document requesting technical assistance from CELDEX
to evaluate the current situation of solid waste in Davao and to provide
feasible solutions to address the City’s solid waste management problems.
The MOU was indorsed by then City Mayor Rodrigo R. Duterte to the then
City Council which issued Resolution No. 13267 and Ordinance No. 5119 in
November 1997 authorizing the City Mayor to sign the MOU.
30. The Local Government Code. Republic Act No. 7160, otherwise known as the Local Government Code of 1991, was enacted under the basic objective of transforming local government units (LGUs) into self-reliant communities and active partners in the attainment of national goals through a more responsive and accountable local government structure instituted through a system of decentralization or devolution. Among the functions devolved upon LGUs is the provision of basic services and facilities. The disposal of municipal waste is one of these basic services. By direct mandate of the Local Government Code, LGUs like the City of Davao is given both the power and responsibility to provide solutions for local garbage problems. Sections 16 and 17 of Chapter 2 of the said Code, which are reproduced below, are instructive. Hence: Section 16. General Welfare. Every local government unit shall exercise the powers expressly granted, those necessarily implied therefrom, as well as powers necessary, appropriate, or incidental for its efficient and effective governance, and those which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support, among other things, the preservation and enrichment of culture, promote health and safety, enhance the right of the people to a balanced ecology, encourage and support the development of appropriate and self-reliant scientific and technological capabilities, improve public morals, enhance economic prosperity and social justice, promote full employment among their residents, maintain peace and order, and preserve the comfort and convenience of their inhabitants. (Underscoring supplied) Section 17. Basic Services and Facilities. (a) Local government units shall endeavor to be self-reliant and shall continue exercising the powers and discharging the duties and functions currently vested upon them. They shall also discharge the functions and responsibilities of national agencies and offices devolved to them pursuant to this code. Local government units shall likewise exercise such other powers and discharge such other functions and responsibilities as are necessary, appropriate, or incidental to efficient and effective provision of the basic services and facilities enumerated herein. (b) Such basic services and facilities including, but are not
limited to, the following:
With these provisions, the collection and disposal of municipal waste is seen as a basic service to be provided by LGUs and they are empowered under the General Welfare Clause to enact such ordinances to effectuate this devolved objective. 31. Build-Operate-and-Transfer Republic Act No. 6957, as amended by Republic Act No. 7718, entitled ”AN ACT AUTHORIZING THE FINANCING, CONSTRUCTION, OPERATION AND MAINTENANCE OF INFRASTRUCTURE PROJECTS BY THE PRIVATE SECTOR, AND FOR OTHER PURPOSES” governs the proposed sanitary landfill project. As defined under the law, Build–Operate–and-Transfer is “a contractual arrangement whereby the project proponent undertakes the construction, including financing, of a given infrastructure facility, and the operation and maintenance thereof. The project proponent operates the facility over the fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to recover its investment, and operating and maintenance expenses in the project. The project proponent transfers the facility to the government agency or local government unit concerned at the end of the fixed term which shall not exceed fifty (50) years: Provided, that in case of an infrastructure or development facility whose operation requires a public utility franchise, the proponent must be Filipino or, if a corporation, must be duly registered with the Securities and Exchange Commission and owned up to at least sixty percent (60%) by Filipinos.” Although there are other schemes available under the aforementioned Act (i.e. Build-Operate-and-Transfer, Build-and-Transfer, Build-Own-and-Operate, Build-Lease-and-Transfer, Builld-Transfer-and-Operate, etc.), the BOT arrangement was mutually selected by the parties, CELDEX and the City of Davao, as manifested by the following: 1. Memorandum of Agreement The second whereas clause states: “Whereas, Davao City is promoting private sector participation in the treatment of waste water and the management of solid waste for the City of Davao and is therefore interested to consider unsolicited proposal for the development of a waste water treatment plant and solid waste management system on a BOT basis.” (Underscoring supplied) 2. Resolution No. 13267 It is a “xxx resolution authorizing the City Mayor to negotiate with the corporate officials of the above-mentioned corporation with respect to its unsolicited proposal to undertake the implementation of the said project under the Build–Operate–and-Transfer (BOT) Scheme which is one of the requisites in undertaking projects under the BOT Law xxx.” (Underscoring supplied) 32. Comparative Procedure; BOT Law and Celdex Proposal RA 6957, as amended by RA 7718, provides the following procedures and requirements for BOT proposals: (1) The original proponent submits an unsolicited proposal. The following are the requisites for an unsolicited proposal to be accepted by the LGU (Section 4-A): a. The project involves a new concept or technology and/or is not
part of the list of priority projects;
(2) The project proponent will be required to undertake a feasibility study. (3) The unsolicited proposal shall be submitted to the Investment Coordination Committee (ICC) of National Economic and Development Authority (NEDA) by the BOT proponent upon the official endorsement by the Head of the LGU concerned since it costs above Two Hundred Million Pesos (P200,000,000.00). (4) Upon approval by the ICC of NEDA, the LGU shall invite by publication for 3 consecutive weeks, in a newspaper of general circulation, comparative or competitive proposals. (5) If within 60 days from completion of publication no other proposal is received, the LGU may accept the consolidated proposal (6) In the event that another project proponent submits a price proposal lower than that submitted by the original proponent, the latter shall have the right to match said price proposal submitted within 30 working days. (7) Should the original proponent fail to match the lower price proposal submitted within the specified period, the contract shall be awarded to the tenderer of the lowest price. On the other hand, if the original proponent matches the submitted lowest price within 30 days, he shall immediately be awarded the project. (8) If within 60 days from completion of publication no other proposal is received, the LGU may accept the consolidated proposal The above diagram summarizes the procedure. On the other hand, this was the procedure undertaken by the parties with respect to the proposed sanitary landfill: (1) A memorandum of agreement was entered into between SMI and the City of Davao. (2) Within 60 days from the approval of the MOA, the proponent SMI shall be able to request financial assistance from the CIDA. If SMI fails to do so, the City will be free to request the assistance of any treatment and solid waste management project. (3) Upon approval of the financial assistance, SMI shall conduct a study within a 12-month period. (4) After the lapse of the 12-month period, SMI has 90 days priority to submit unsolicited proposal and Davao City will not entertain any other proposal. (5) If within the 90-day period SMI is unable to submit the unsolicited proposal, the City will be free to consider other proposals or to use the feasibility study conducted by SMI as a reference for public bidding purpose. (6) If SMI is able to submit the unsolicited proposal, the unsolicited proposal shall be submitted by it to the ICC of NEDA with the indorsement by the LGU head. (7) After approval by the NEDA. Competitive proposals will be invited. At this stage, the BOT law shall begin to operate. As of the present, the unsolicited proposal is still pending approval with the NEDA. 33. Comment on the Comparative Procedure The procedure so far undertaken by CELDEX is in conformity with the procedures required under the BOT Law. However, it could be seen from the diagram that prior to the unsolicited proposal, a Memorandum of Agreement was entered into between CELDEX through SMI and the City of Davao. The BOT Law states that unsolicited proposals shall require no government guarantee, subsidy, or equity. Prior to the submission of the unsolicited proposal CELDEX, through SMI, was given a 90-day priority within which to submit an unsolicited proposal. It seems that CELDEX was given an edge over any other prospective proponents. Section 11.3, Rule 11 of R.A. 6957 provides that the presence of government support, other than direct government guarantees, subsidy or equity, shall not, as may be determined by the ICC, necessarily disqualify a proposal from being treated and accepted as an unsolicited proposal. In view of the aforementioned rule, the MOA is legal because it cannot be considered as direct government guarantee, subsidy or equity but at most, only as government support. Moreover, the BOT Law’s application to the project will only begin from the evaluation stage of the unsolicited proposal. The BOT law relative to unsolicited proposals does not apply to procedures undertaken before the evaluation stage of such proposal. 34. Analysis on the Provisions of the Proposed Contract The Canadian proponent, CELDEX, after complying with the requirements of the BOT Law, submitted to the City a draft contract (See Appendix C). Such contract was prepared by CELDEX pursuant to Sec. 4.4 of Rule 4 of the Implementing Rules of the BOT Law, to wit: Sec. 4.4. Draft Contract – The draft contract should clearly define the basic and legal relationship between, and the rights and responsibilities of, the parties involved. Where applicable, stipulation providing for the following matters, among others, shall be included: bonds; guaranties; insurance; liquidated damages; taxes and duties; schedule and amounts of milestone bonding; prices indices to be used; governing laws; force majeure; the effect of changes in circumstances which may be brought about by, among others, the enactment of new laws or regulations or the change in existing government policies which will materially affect the financial viability of the project; contract termination; and the manner and procedures for the resolution of disputes including arbitration procedures. While it is conceded that the draft contract submitted by CELDEX was sufficiently comprehensive to include such details which were contemplated by said provision of law, there are some provisions which may be objectionable, vague or controversial. The succeeding discussion lays down some comments and suggestions relative to the contract. a. Whereas Clauses of the Draft Contract Whereas Clause No. 1 Whereas, Davao City is responsible for the integrated management of solid waste on its territory in conformity with national public health and environmental standards; as well as the development of all infrastructure necessary to meet this objectives; COMMENTS: Section 16 of the Local Government Code of 1991 states that “Every local government unit shall exercise the powers xxx which are essential to the promotion of the general welfare. Within their respective territorial jurisdictions, local government units shall ensure and support xxx the right of the people to a balanced ecology, xxx and preserve the comfort and convenience of their inhabitants.” The aforequoted clause reflects the duty of local government units (LGUs) as laid down in the general welfare clause of the Local Government Code through which they exercise police power. Hence, the first whereas clause affirms this devolved governmental objective. Whereas Clause No. 2 Whereas, Davao City is promoting private sector participation in the management of solid waste for the City of Davao and is therefore interested in considering unsolicited proposals for the development of the same on a Build-Operate- transfer (BOT) basis. COMMENTS: Section 302 of the Local Government Code in relation to Republic Act No. 6957 as amended by Republic Act No. 7718 authorizes the financing, construction, operation and maintenance of infrastructure projects by the private sector. One scheme provided by the latter law is the Build-Operate-and-Transfer arrangement. Section 2(b) thereof provides the requisites, to wit: 1. The project proponent undertakes the construction, including financing, of a given infrastructure facility, and the operation and maintenance thereof. 2. The project proponent operates the facility over the fixed term during which it is allowed to charge facility users appropriate tolls, fees, rentals, and charges not exceeding those proposed in its bid or as negotiated and incorporated in the contract to enable the project proponent to recover its investment, and operating and maintenance expenses in the project. 3. The project proponent transfers the facility to the government agency or local government unit concerned at the end of a fixed term which shall not exceed fifty (50) years. 4. In case of an infrastructure or development facility whose operation requires a public utility franchise, the proponent must be a Filipino or, if a corporation, must be registered with the Securities and Exchange Commission and owned up to at least sixty percent (60%) by Filipinos. The proposed sanitary landfill project is therefore governed by the BOT Law. As laid down in the said law, the City of Davao is allowed to contract with a private firm to undertake the construction, operation and maintenance of the project until such time that the latter’s investment shall have been fully recovered, and the project be eventually turned over to the City. Moreover, Davao seeks the participation of the private sector, not only as proponent but as the ones who will ultimately shoulder the cost of solid waste management through the proposed garbage fee. Therefore, private sector participation shall be two-fold namely : 1. Through the proponent, which is a private firm, under the BOT basis; and 2. Through the residential and commercial sectors, who will be charged
garbage fees.
Whereas, Davao and SM Group International (SM) have agreed, pursuant to the Memorandum, to collaborate on the realization of a feasibility study to evaluate the viability of establishing a privately-owned and operated waste water treatment plant and solid waste management system for the City of Davao; COMMENTS: The word “collaborate” should be changed. The realization of a feasibility
study under the BOT Law is the sole responsibility of the project proponent.
The City’s participation in this aspect is limited only to the evaluation
of the feasibility study . The ICC Guidelines for the Review of Projects
Proposed to be Financed Under the Various Private Sector Investment Schemes,
Section 1.1.2, provides that for unsolicited proposals, the project proponent
will be required to undertake a feasibility study. Acceptance by the agency
or Local Government unit concerned of the proposal does not diminish this
responsibility, neither does it transfer any part of this responsibility
to the agency or Local Government unit.
Whereas Clause No.7: Whereas, SM, by virtue of a Partnership Agreement, and with the consent of Davao, has given CELDEX the opportunity to present a solid waste management proposal to Davao on their behalf. COMMENTS: The parties to the Memorandum of Agreement are the City of Davao and the SM Group International. The relationship between CELDEX and SM Group International should be clearly defined. The authority of CELDEX under the Partnership Agreement must be explained or shown. b. Article I – The Project Section 3. The project will be executed
by a local Filipino company incorporated with the Securities and Exchange
Commission in close coordination with Davao City’s Administrator’s Office,
Davao City’s Public Works Department and Davao City’s Sanitation Department.
COMMENTS: There is an ambiguity whether the Project Company which is a local Filipino Company is one already existing or not. Section 11, Article 12 of the 1987 Constitution states that “ no franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens, nor shall such franchise, certificate or authorization be exclusive in character or for a longer period than fifty years. Neither shall any such franchise or right be granted except under the condition that it shall be subject to amendment, alteration, or repeal by the Congress when the common good so requires. The State shall encourage equity participation in public utilities by the general public. The participation of foreign investors in the governing body of any public utility, enterprise shall be limited to their proportionate share in its capital, and all executive and managing officers of such corporation or associations must be citizens of the Philippines. A public utility under the Constitution and the Public service Law is one organized for hire or compensation to serve the public. As its name indicates, the term public utility implies a public use and service to the public, and indeed, the principal determinative characteristic of a public utility is that of service to, or readiness to serve, an indefinite public or portion of the public as such, which has a legal right to demand and receive its services or commodities. There must be a dedication or holding out, either express or implied, of produce or services to the public as a class. A sanitary landfill fits the description of a public utility. The authority of CELDEX to undertake the project itself or to allow a facility operator to operate the same is based on the assumption that the proposed sanitary landfill project is not a public utility. In the case of Tatad vs. Garcia, Jr., the prohibition in the Constitution is against foreigners and foreign corporations being given a franchise to operate a public utility but they may own the facilities. The proposed sanitary landfill is strictly speaking a public utility. Assuming a franchise is required for its operation, it could not legally undertake its operation under the BOT scheme. It could only build and own the facilities. The Project Company mentioned in the contract must be the one to undertake the operation of the project. Furthermore, if the project would need a franchise for its operation, then CELDEX’ share in the Project Company as its founding shareholder should not exceed forty per centum. The participation of CELDEX in the governing body of the Project Company shall be limited to its proportionate share in its capital, and all executive and managing officers of such corporation or associations must be citizens of the Philippines. However, although a sanitary landfill is technically a public utility,
there is yet no law requiring a franchise for its operation. Therefore,
even without a Filipino local Project Company, CELDEX might itself undertake
the operation of the project under the BOT scheme.
c. Article III – Obligations of CELDEX Section 1. It shall construct the facility in strict compliance with the requirements of the plans and specifications and according to sound engineering practices. COMMENTS: This is consistent with Section 11 of R.A. 7718 which provides that “every infrastructure project undertaken under the provisions of this Act shall be in accordance with the plans, specifications, standards, and cost approved by the concerned government agency and shall be under the supervision of the said agency or local government unit in the case of local projects.” Section 2. It shall insure at its expense the facility from a reputable and accredited insurance company with both Davao and CELDEX as co-insured. COMMENTS: The duration of the contract of insurance must be specified. It should be made clear whether or not such contract only covers the period during which CELDEX still owns the facilities or even after transfer of its ownership to the City of Davao. Section 3. It shall provide its own funds, materials, plant and equipment necessary for the expeditious implementation of the Project. COMMENTS: This provision shall be understood to mean that the expenses for repairs of the plants and equipment of CELDEX shall be shouldered exclusively by it without adding the same to the contract cost. Section 5. To guarantee the faithful execution of the facility in
accordance with the terms and conditions of this Agreement, CELDEX shall
post a Construction Performance Bond in the amount of _________.
In the execution of the Performance Bond, the following conditions
shall be complied with :
COMMENTS: This is consistent with the provisions of Section 302 (c-3) of the Local Government Code which states that “ any contractor who shall undertake the prosecution of any project under this Section shall post the required bond to protect the interest of the province, city, or municipality, in such amounts as may be fixed by the Sanggunian concerned and the provincial, city, or municipal engineer shall not, as the case may be, allow any contractor to initiate the prosecution of projects under this Section unless such contractor presents proof or evidence that he has posted the required bond.” Section 8. It shall keep Davao informed of work progress at the Site.
A Project Supervision Committee shall be formed to that end including representatives
from both Davao and CELDEX. The Project Supervision Committee is expected
to meet on a monthly basis or as may be agreed to by the parties.
COMMENTS: The phrase “as may be agreed to by the parties” is dangerous. The project supervision committee may decide not to meet at all. This would give their respective representatives an excuse for laxity which may be detrimental to the project. In lieu thereof, there must be set a minimum period within which the project supervision committee shall meet i.e. at least once a month. Section 9. To the extent of its insurance coverage, as provided for herein, CELDEX shall be responsible for all damages to any property belonging to Davao, private properties or property of the government, except to the extent that such damages arise from the negligence of Davao. Section 10. To the extent of its insurance coverage, as provided for herein, CELDEX shall be responsible for the death and/or injury to personnel of Davao that may arise in connection with the execution of the Agreement, unless held harmless by law. COMMENTS (Sections 9& 10): These sections are inconsistent with the law. Article 2207 of the Civil Code says that if the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. Second, contracting parties cannot stipulate the extent of their liabilities to parties not privy to the contract. Otherwise, it could be construed as limiting Davao’s or any other person’s right , including the National Government, of recourse to our courts. Section 11. CELDEX shall provide legal services to Davao against
any and all actions, claims, liabilities and suits, for losses and damages
to properties of other contractors, if any, and/or third parties arising
from the execution of the Agreement.
COMMENTS: Notwithstanding this provision, the preference of Davao shall still prevail. Davao still retains its right to choose its counsel to represent it in a suit and in all actions that may arise from the execution of the project. Section 12. CELDEX shall be responsible for its employees’ strict observance of the laws of the Republic of the Philippines relevant to the execution of the Agreement. CELDEX shall execute the Agreement with due regard to safety against accidents to its employees and to the employees of Davao at the work site, and shall provide such machinery, guards, safe walkways and such other safety devices as may be needed for the prevention of accidents. CELDEX shall be responsible for the payment of all indemnities,
including hospital and medical expenses, arising out of any labor accidents
which may occur in the course of the project execution and for which CELDEX
may be responsible under P.D. 442 as amended by the Labor Code.
COMMENTS: This is ambiguous. Presidential Decree 442 was not amended by the Labor Code because P.D. 442 is itself the Labor Code. This provision shall be read together with Articles 2176 and 2180 of the New Civil Code. Article 2176 provides that “ whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.” Article 2180 provides that ” the obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible.” Section 13. If in the execution of the Project, it is necessary to
interrupt or obstruct the natural flow of rivers or stream within the work
site, the drainage of the surface, or the flow of artificial drains, CELDEX
shall provide adequate measures to prevent damage to both public and private
properties. CELDEX shall be liable for all damages that may occur, except
to the extent that such damage arises from the contributory act or negligence
of Davao, in which case it shall be shouldered proportionately between
CELDEX and Davao.
COMMENTS: In the application of this section, the following provisions in the Civil Code relative to the use of waters must be taken into consideration: Article 507. The owner of a piece of land on which a spring or brook rises, be it continuous or intermittent, may use its waters while they run through the same, but after the waters leave the land they shall become public, and their use shall be governed by the special Law of Waters of August 3,1866, and by the Irrigation Law. Article 508. The private ownership of the beds of rain waters does not give a right to make works or constructions which may change their course to the damage of third persons, or whose destruction, by the force of floods, may cause such damage. Article 509. No one may enter private property to search waters or make use of them without permission from the owners, except as provided by the Mining Law. Article 510. The ownership which the proprietor of a piece of land has over the waters rising thereon does not prejudice the rights which the owners of lower estates may have legally acquired to the use thereof. Article 511. Every owner of a piece of land has the right to construct within his property, reservoirs for rain waters, provided he causes no damage to the public or to third persons. Section 15; To the extent of its insurance coverage, as provided
for herein, CELDEX shall assume full responsibility for the costs arising
from any adverse environmental effects or other damages that may
result from its negligence in the construction and operation of the
Complex.
COMMENTS: The right to a healthful and balanced ecology is the right of every citizen. In fact, there is an intergenerational responsibility to protect nature for the succeeding generations. Davao cannot validly agree in behalf of its citizens to limit their right to a healthful and balanced ecology only to the extent of the offenders’ insurance coverage in case of violation. Furthermore, the above provision in the contract seems to be inconsistent with Article 2207 of the Civil Code which provides as follows: Article 2207. If the plaintiff’s property has been insured and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrongdoer or the person who has violated the contract. If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury. (Underscoring supplied) Hence, if Article 2207 is followed, and if Davao City is later on aggrieved by any circumstance relative to the construction, operation, and management of the landfill, it may claim more than what is supposed to be limited by the foregoing contractual provision. Section 18: Liability. CELDEX’s responsibility under the AGREEMENT
shall be limited, in all cases, to the insurance proceeds, security bond
proceeds and other such instruments carried by CELDEX and specifically
identified herein.
COMMENTS: Article 2207 of the Civil Code again lends application to Section
18. It is worth repeating that said article allows the recovery
of deficiencies in so far as the insurance indemnity proceeds are
concerned. It is a basic statutory principle that
law is superior than contracts. Hence, any conflict in language
or applicability must be resolved in favor of the statutory
mandate.
d. Article 4. Obligations of Davao Section 1. DAVAO shall provide right-of-way for the designated site
in Tibungco over the twenty-five year term of the Project and satisfy the
infrastructure requirements of the Project .
COMMENTS: Under the Implementing Rules of RA 7718 the LGU concerned may provide any form of direct or indirect support associated with the establishment of an infrastructure development facility such as the provision of access infrastructure, right –of- way, and any partial financing of the project. Section 2. Davao shall maintain CELDEX in the peaceful and
undisturbed possession of the Project site over the twenty-five year term
of the Project.
COMMENTS: Section 12.17 (b) of the IRR of RA 6957 as amended by RA 7718 provides that if the project proponent refuses or fails to perform any of the provisions of the approved contract with such diligence as will ensure the project’s completion, operation and maintenance in accordance with the prescribed technical and performance standards, otherwise fails to satisfy any of the contract provisions including compliance with the prescribed/agreed milestone activities, or commits any substantial breach of the approved contract, the LGU shall notify the project proponent in writing of the same and if not corrected within the time specified, the LGU concerned may rescind the contract. In such an event, the LGU concerned may either: i. Take over the facility and assume all attendant liabilities thereof; or ii. Allow the project proponent lenders/creditor/banks to assign the project to another. In case the default occurred during the project construction stage,
the LGU concerned shall likewise forfeit the performance security of the
erring project proponent.
Section 4. Davao and its communes guarantee a regular supply of solid waste to the Tibungco site consisting of the totality of the solid waste generated on their territory which shall not be less than the guaranteed tonnage. Davao shall grant CELDEX exclusivity over all domestic, industrial, commercial, municipal and construction waste for a period of twenty-five years commencing on the date of commissioning renewable thereafter for an additional twenty-five year term subject to written agreement between parties. It shall indemnify CELDEX against any territorial changes,
LGU restructuring changes in solid waste management policy and any future
Sangguniang Ordinances that may impede the said exclusivity or restrict,
re-direct, or reduce in any way the volume of solid waste directed to CELDEX
over the term of the Project.
COMMENTS: The creation, merger or division is a legislative prerogative. A City may be created, divided, merged abolished or its boundaries substantially altered by law enacted by Congress, or in case of a barangay located within its territorial jurisdiction, by an ordinance passed by the Sanggunian. This right cannot be restricted by a contract. There should be no indemnity as long as the government tonnage is reached or its equivalent is paid. Otherwise, there could be double indemnity. Section 5. Davao shall exempt CELDEX from any and all forms
of taxes under its jurisdiction, including but not limited to sales taxes,
property taxes and business taxes.
COMMENTS: It should be clarified what taxes are being referred to, whether National or Local tax because jurisdiction of Davao does not exclude National taxes. Section 7. Davao shall cede to CELDEX any and all equipment
currently being used by Davao for solid waste disposal activities including
but not limited to bulldozers, rolling stock, tools and other equipment
used at the New Carmen and Ma-a sites. Transfer of ownership and
possession of these equipment will need to be effected prior to the Project
Launch Date.
COMMENTS: Section 379 of the Local Government Code provides for ceding of properties only if they are unserviceable. Moreover, if ceding would be proper, it should be compensated or deducted from the project cost. Section 9. It shall extend to CELDEX and affiliated companies
such legal and administrative assistance as may be necessary and indispensable
for the expeditious construction of the facility. This shall include
but not be limited to the provision of all local and provincial permits,
custom clearances, licenses, work permits, environmental permits, visas
and other clearances such as maybe required by CELDEX and affiliated companies.
COMMENTS: This provision is too broad. The extent of the legal and administrative assistance must be subject to existing laws. It must also be specified who these affiliated companies are. Section 10. It shall not impair and/or abrogate this
Agreement in any way until after the full recovery of CELDEX’s investment
plus an adequate rate of return thereon as stipulated in the Off-take Agreement.
COMMENTS: This is still subject to section 12.17 Rule 12 of the IRR. The comments in section 2 of this article are applicable in this provision. Section 11. It shall be responsible for the collection of fees
from garbage owners/users and the prompt payment of tipping fees in accordance
with the Off-take Agreement.
COMMENTS: The City’s power to impose and collect fees from garbage owners/users in Davao is based on the following provision of the Local Government Code: Section 129. Power to Create Sources of Revenue- Each Local Government Unit shall exercise its power to create its own sources of revenue and to levy taxes, fees, and charges xxx consistent with the basic policy of local autonomy. Such taxes, fees, and charges shall accrue exclusively to the Local Government Units. However, such power under section 130 of the same law is subject to limitations. Such fees and charges: 1. Must be equitable and based as far as practicable in the taxpayers
ability to pay;
6. Must inure solely to the benefit of, and be subject to disposition by, the LGU levying the fee or charge. Section 13. Davao shall be responsible for the necessary peacekeeping
force to maintain peace and order on the Project site.
COMMENTS: Davao is responsible only for the general peace and order of
the city. CELDEX, as private owner, should be responsible for the
necessary peacekeeping force to maintain peace and order on the project
site.
e. Article 5. Miscellaneous Provisions Section 6. In case of dispute arising under this Agreement, the venue of any action for any cause, matter of thing whatsoever, or the rights, duties and liabilities of the parties hereto, shall be selected by the defending Party, amongst the following options: 1. The proper court in the province/city/municipality of DAVAO concerned;
COMMENTS: The IRR of the BOT Law state that the venue for the resolution of disputes, arbitration or litigation shall be as mutually agreed upon by the parties to the contract. In default thereof, the venue shall be in the Philippines. Under the contract, there is strictly speaking no mutual agreement. It merely signifies an agreement on who will decide and choose the venue among the options not an agreement on where the venue shall be. The defendant might choose a venue impracticable for the plaintiff so as to frustrate the latter’s cause of action. Section 8. Failure of either Party to this Agreement to insist
upon a strict performance of any of the terms, conditions and covenants
hereof, shall not be deemed a relinquishment or waiver of right or remedy
that either Party may have, nor shall it be construed as waiver of any
subsequent breach or default of the terms, conditions or covenants herein
contained, which shall be deemed in full force and effect.
COMMENTS: Waiver is not presumed. The provision with respect to the authorized representatives of either party shall be subject to existing laws. Section 10: CELDEX hereby warrants that it has not given or
promised any gift or consideration to any official of DAVAO in order to
obtain this Agreement, and that the execution of this Agreement shall not
result directly or indirectly in violation of the Anti-Graft and Corrupt
Practices Act.
COMMENTS: It has no force and effect. It is merely self-serving. Contracting parties cannot construe what a violation of the Anti-Graft and Corrupt Practices or any other law, shall be. The law itself defines what acts constitute a violation of it. This stipulation also precludes judicial determination. The court, based on the law and the facts, shall be the one to determine whether or not a violation has been committed. Section 11. In the event that as a result of any laws or regulations of the Republic of the Philippines, or any agency or other body under the control of the Government coming into effect after approval of this Agreement or as a result of any such laws or regulations ( including any official interpretation thereof which CELDEX has relied upon in entering into this Agreement ) in force at the date hereof being amended, modified, or repealed, DAVAO shall compensate CELDEX by an increase in Tipping Fees or any other means as may be deemed acceptable by CELDEX such that the interest of CELDEX in the premise and/or CELDEX’s financial return ( net of tax or other imposition, including, without limitation any withholding or remittance tax on payment of dividends ) on its investments shall not be impaired, prejudiced or otherwise adversely affected. This provision shall cover but not be limited to revocation
of Pioneer Status adverse changes in fiscal laws, changes in environmental
laws, and all other such measures which may negatively impact CELDEX’s
financial return.
COMMENTS: Laws passed in the exercise of police power can impair the obligation of contracts. Hence, the exercise of police power is superior to contracts. This is an inherent power of the state. The City of Davao as one of the political subdivisions of the Republic of the Philippines also shares this inherent power. This section can be construed as a limitation or restriction to the exercise of the police power. Being such, this provision is invalid. g. Article VI. Force Majeure Exceptions. Notwithstanding the above, DAVAO
shall not be entitled to claim for itself force majeure in respect of any
force majeure mentioned in the above subparagraph (b); and shall
not be relieved of its obligations to CELDEX as provided to this Agreement
by the occurrence of any force majeure mentioned in the above subparagraph
whether affecting DAVAO or CELDEX.
COMMENTS: This is consistent with Article 1174 of the New Civil Code. The said article provides that no person shall be responsible for those events which could not be foreseen or which though foreseen were inevitable, unless it is otherwise declared by stipulation. h. Article VII. Transfer Section 1. Prior to the turn-over of the facility or six (6)
months prior thereto, CELDEX shall conduct a training to certain key personnel
of DAVAO in relation to the operation of the facility. On the
transfer date, the corresponding transfer document shall be executed, embodying
such stipulations, terms/conditions, more specifically holding DAVAO- transferee
harmless form any lien or encumbrance created/incurred by CELDEX before
and during the construction and operating periods. CELDEX shall deliver
to DAVAO on such date on transfer any operating manuals, design drawings
and other information as may reasonably be required by DAVAO to enable
it to take over the efficient and profitable operation of the facility.
COMMENTS: This is oppressive. Prior to the transfer, CELDEX is still the owner of such equipments. Following the doctrine of res perit domino, CELDEX as owner should bear the loss. Section 3. After the date of transfer, CELDEX shall not be
liable whatsoever to DAVAO in respect of the facility.
COMMENTS: As vendor, CELDEX is responsible to the City for any hidden faults
or defects in the facilities, even though he was not aware thereof.
The stipulation exempting CELDEX from liability shall not apply if it was
aware of the hidden defects or faults in the facilities. (Article
1566 NCC).
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Lielanie Yangyang
Jess Zachael Espejo
Effie Molina
Lyza Mae Monfort
Lew Wesley Nuere
Jhennifaire Lam
Charmalou Aldevera
Juan Carlos Angeles
