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Republic of the Philippines )

Legazpi City )

MEMORANDUM OF AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

HEIRS OF MANUEL T. SIA, INC., a domestic corporation duly

organized in accordance with the laws of the Republic of the Philippines,
with principal business address at F. Imperial Street, Legazpi City, and
herein represented in this instrument by EMMANUEL H. SIA and now
herein referred to as the FIRST PARTY; and

BICOL SAFETY ENTERPRISES, with business address address at

Zone 5, Gabon, Polangui, Albay and herein represented by its General
Manager REX T. PEREZ and now herein referred to as the SECOND
PARTY;

WITNESSETH:

Whereas, the FIRST PARTY is the owner of that building located at

F. Imperial Street, Legazpi City and which is popularly known of being
occupied by the Dreams Inn & Cafe;

Whereas, the SECOND PARTY is engage in the business of

providing Fire Extinguisher, Fire Alarm System, Nurse Call System,
CCTV System, Sprinkler System, PABX, Paging System, Hydrant System,
Plumbing and Mechanical services.

Whereas, the FIRST PARTY desires that the building above-

mentioned be installed and equipped with the following:

1. Automatic Fire Sprinkler System ( AFSS )

including Cistern Tank
2. Smoke Detection System (FDAS)

Whereas, the SECOND PARTY is willing and able to provide and

install the above-mentioned services and equipments.

WHEREFORE, for and in consideration of the foregoing, the parties

hereby agree and covenant, as follows:

A. GENERAL PROVISIONS

1. The SECOND PARTY shall cause the preparation of the

proposed plan or design for the said (1) Automatic Fire
Sprinkler System (AFSS) including Cistern Tank therefor;
and (2) as well as the Fire Detection Equipment System
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( FDAS). It shall also cause the preparation of the proposed

plan for the Smoke Detection System. The approval of the
said plan shall be at no cost on the part of the FIRST
PARTY and to the exclusive burden of the SECOND
PARTY. This responsibility shall include preparation,
documentation, manpower, utility of personnel until the
FINAL approval by the Bureau of Fire and the Office of the
City Engineer, Legazpi City. Any and all expenses relative
to the preparation of the said plan including but not
limited to the signing and sealing by the requisite
engineers or professionals shall be at the cost of the
SECOND PARTY

2. By way of reference, the herein attached proposed plans as

Annex “A”, “B” and “C” with their respective sub-markings,
shall be submitted to the Bureau of Fire and Office of the
City Engineer of Legazpi City and upon its approval shall
be considered as the master plan for implementation.

3. The FIRST PAR TY hereby warrants that the duly

APPROVED PLAN by the Office of the City Engineer and
the Bureau of Fire confor ms to the appropriate
requirements and standards prescribed by the Fire Code of
the Philippines and other Rules and Regulations including
Global Standard and Regulations relating to Fire Safety.
No deviation shall be introduced by the SECOND PARTY
shall be made except upon prior written approval of the
FIRST PARTY.

B. DURATION OF WORK

1. Because time is of the essence, the duration of work herein

shall be for a limited period of NOT MORE THAN SIXTY (60)
DAYS which shall commence within three (3) days from receipt
of the approved plan from the Office of the City Engineer of
Legazpi City and the Bureau of Fire Protection of Legazpi City.

1.a. For purposes of computing the

sixty (60) days, actual working days shall be
from Monday to Saturday only, excluding
Sunday, except in exceptional circumstances
wherein there is a need to render overtime works
to timely complete the works required within the
period stipulated. In this case, the FIRST PARTY
shall not be liable for overtime pay, premium
pay, holiday and all other additional pay or
incentives as the same is the sole and exclusive
responsibility of the SECOND PARTY;

1.b. Bearing in mind the nature of the

business operation of the establishment, the
actual works to rendered shall be between 8:00
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o’clock in the morning until 5:00 o’clock in the

afternoon only so as not to unduly disturb the
other occupants of the building. Except in cases
of extreme urgency and in order to timely
comply with the period of sixty (60) days herein
provided, no overtime work shall be rendered
beyond 5:00 o’clock in the afternoon. However, if
and when required by way of exception, the
FIRST PARTY shall not be liable for any overtime
pay, premium pay, night shift differentials and
other incentives or other additional pay to the
laborers as they same will be the sole and
exclusive responsibility of the SECOND PARTY;

2. Except for causes caused by force majeure, by court injunctions

and order of the City Engineer, the Fire Marshall, the period of
construction shall be uninterrupted within the period of sixty
(60) days. Should the SECOND PARTY fail to timely finish and
turn over the project within the said sixty (60) days, the
SECOND PARTY shall be deemed to have incurred delay and he
shall be liable to the FIRST PARTY in the amount of TWO
THOUSAND PESOS ( P 2,000.00 ) for EACH DAY OF DELAY.
Works to be rendered which by its nature must be finished in
one (1) hour shall be considered as one (1) day for the purpose
of this section. The penalty of P 2,000.00 per day however shall
not apply if the cause is attributable to the FIRST PARTY.

C. WARRANTIES AND RESPONSIBILITIES

1. The SECOND PARTY hereby warrant that the Proposed Plan

drawn and prepared by its respective Engineers and Architect,
fully and completely conform to the standards as prescribed
under the Fire Code of the Philippines and the National
Building Code of the Philippines as well as all other rules and
relations appurtenant thereto. No deviation thereto shall be
implemented without prior approval from the SECOND PARTY.
In case there is a need to revise the Proposed Plan after its
approval and/or to draw a new or “As-Built Plan” the same shall
be for the sole account of the SECOND PARTY;

2. The SECOND PARTY shall use its own or rented facilities &
equipments at its own cost. It shall also employ its own
laborers, helpers, assistants and other work force as much as
are necessary to timely and efficiently complete the work herein
required.

3. The SECOND PARTY shall be solely responsible and to the

exclusion of the FIRST PARTY, for any and all payments,
claims, award or judgment due to the laborers, helpers,
assistance and such other work force as a result of the work to
be done or actually done by reason or as an incident of this
agreement.

4. The SECOND PARTY hereby warrants that the materials to be

used are brand new and of industry standard and are of good
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quality. Should any of the materials are found to be

substandard, fake, imitations, used or second hands, that the
FIRST PARTY shall have the right that they be replaced at the
expense of the SECOND without liability on the part of the
FIRST PARTY. All materials shall be covered by a warranty
against defects for a period of one (1) year from date installation
and which much be replaced by no less inferior product without
demand. No repair of defective materials shall be allowed but
must be replaced at all time.

5. The SECOND PARTY hereby WARRANTS that the works and

results to be done are in accordance with the practice and
industry standards of engineering and in compliance with the
appropriate and existing rules and regulations.

6. It is hereby mutually agreed that there is NO “employee-

employer” relationship that is created between the FIRST
PARTY and the SECOND PARTY and to his workforce, and that
the relationship of the parties herein is on a very limited period
and purpose as above-described under PARAGRAPHS _ & _. It
is the sole and exclusive responsibility of the SECOND PARTY
to pay the wages, salary, benefits and other renumeration to its
own workforce and to the exclusion of the FIRST PARTY;

7. The SECOND PARTY shall be solely liable for whatever damages

and liabilities that may be incurred by or to its own employees
and worker or consultant to the exclusion of the FIRST PARTY;

8. The scope of work herein shall be implemented without

creating any undue damages to any of the portion of the
building and if any damage are created in the building or of the
hotel guests or employees due to the negligence of the SECOND
PARTY or its workforce, the same shall be repaired or the cost
of which shall be borne by the SECOND PARTY;

D. SCHEDULE OF WORKS, FEES AND COMPENSATION

1. At least three (3) days before the actual commencement of work

herein involved, the SECOND PARTY shall deliver the materials
within the premises designated by the FIRST PARTY. It is the
principal liability of the SECOND PARTY to ensure the safety of
the materials involved and that the FIRST PARTY shall be free
from whatever liability in cases of its loss or damage.

2. Upon execution of this Contract, the SECOND PARTY shall

bring actual sample materials of all the items herein to be used
and that the SECOND PARTY warrants that the samples so
approved as herein mentioned, shall exactly be the same to be
used in the implementation of the project/work herein involved.
There shall be no replacement or substitution of brand unless
so authorized by the FIRST PARTY. The FIRST PARTY may
appoint such persons to inspect the materials to be used if they
conform to the specifications as mentioned in the proposal and
of the actual samples presented by the SECOND PARTY.
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3. There shall be a detailed daily schedule of work that shall be

provided by the SECOND PARTY within three (3) days from
execution hereof. Such daily schedule shall specifically identify
the particular work to be done on a particular date and
indicating therein the projected percentage of completion
involved. This shall also be the basis for the determination of
progress billing as hereunder provided.

4. The FIRST PARTY shall cause to pay the SECOND PARTY the
total amount of P Two Million Two Hundred Nineteen Thousand
One Hundred Seven Pesos and Fifteen Centavos ( P
2,219,107.15 ) broken sown as follows:

2.1. Automatic Fire Sprinkler Systems = P 1,489,103.75

2.2. Fire Protection Equipment (FDAS) = P 350,000.00;
2.3. Cistern Tank = P 380,003.40

5. The amount of P 2,219,107.15 shall be paid as follows:

3.1. TWENTY PERCENT (20) %) of P

2,219,107.15 or in the amount of P
443,821.43 as downpayment or
mobilization fund upon execution of
this Memorandum of Agreement;

3.2. The remaining balance shall be paid

on a progress billing for each
completed work of 20% of the total
project in accordance with the
schedule of work herein provided.

3.3. There shall be a RETENTION

AMOUNT in favor of the FIRST
PARTY in the amount equivalent to
TEN PERCENT (10%) or in the
amount of P 221,910.715 which
shall be deducted in accordance with
the schedule of payment above
stated. This retention amount shall
kept by the FIRST PARTY during the
entire duration of the One Year
Warranty Period and which shall
serve as a guarantee for whatever
defects and damages which are
thereby not addressed to or repaired
by the SECOND PARTY. If no such
claim against warranty is made, the
said Retention Amount shall be
returned to the SECOND PARTY
after the warranty period and
without interest.

6. The schedule of works shall be understood to be commenced

and implemented in the following:
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PHASE % FROM UP TO DESCRIPTION PERSON ACCOMPLISHMENT

DATE DATE OF JOB RESPONSIBLE

1 20%

2 40%

3 60%

4 80%

5 100%

7. The contract price herein shall not be affected by inflation or

deflation of Philippine Currency.

E. SECURITIES & RETENTION

1. In order to ensure faithful and timely compliance by the

SECOND PARTY of the provisions of this Memorandum of
Agreement especially on the heading on WARRANTIES AND
RESPONSIBILITIES, he is hereby expressly and absolutely
required to post and execute a Performance or Surety Bond in
favor of the FIRST PARTY in the amount equivalent to 50% of
the amount of P 1,109,553.58. The bond shall be effective for a
period of one (1) year from date execution.

F. LEGAL RESPONSIBILITY

1. The SECOND PARTY shall have the sole responsibility in

applying, processing and procuring the necessary government
permits, plan approvals and such other documentations in
order to give full effect to the Memorandum of Agreement herein
involved. Any and all fees payable to the government and other
agencies or office be it private or public, including but not
limited to permit and licenses fee, taxes, handling fees, service,
inspection fees and the like shall be for the sole account of the
SECOND PARTY only and to the exclusion of the FIRST PARTY;

2. If for any reason, the SECOND PARTY is unable to complete the

scope of work herein provided through no fault of the FIRST
PARTY, the remaining work to be done shall be done by a third
party the amount of which shall be borne or reimbursed by the
SECOND PARTY including forfeiture of the Retention Amount.
3. Should any party herein commit a violation of any of the
provisions herein provided, shall be liable by way of liquidated
damages in the amount P 2,000,000.00 over and above such
other kind of damages that may be proved by the aggrieved
party.

G. MONITORING OF WORKS
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1. The SECOND PAR TY shall have the sole and exclusive

responsibility of ensuring strict compliance and implementation
of the approved plan and their compliance with the appropriate
laws and rules and regulations.

2. The FIRST PARTY however, may engage the services of a THIRD

PARTY ENGINEER or ARCHITECT to as ACT as an inspector or
auditor to ensure that the technical plan is strictly implemented
and complying with the appropriate laws and regulations. The
compensation of this shall be for the account of the FIRST
PARTY;

3. In case there is an issue or question as to the interpretation of

the technical plan or as to how the same shall be executed, the
same shall be settled in the following manner:

3.1. The concerned engineer, such as the Mechanical

Engineer, Electrical Engineer and Civil Engineer
who signed the approved plan as presented to
the FIRST PARTY, shall have the principal
responsibility of interpreting the question or
issue on the implementation of such plan.

3.2. Should the inspector of the FIRST PARTY has a

question as to the interpretation and
implementation of the approved plan , the same
must be done in writing addressed to the
SECOND PARTY copy furnished the FIRST
PARTY;

3.3. Pending determination of the issue on

interpretation and implementation, no actual
work must be done and they should be decided
within the same day the letter was received by
the SECOND PARTY;

3.4. In case the SECOND PARTY and the FIRST

PAR TY’s Inspector cannot agr ee on the
interpretation and manner of implementation,
the matter must be brought within the same day
to the FIRST PARTY or her duly authorized
representative other than the inspector. It must
be done in writing and must be decided on by
the within the same day and the decision must
be in writing also.

3.5. In case the PARTIES herein cannot arrive at a

decision, the matter must first be referred to the
City Engineer’s Office or Bureau of Fire Marshall
for recommendation by the said office. In no case
however, that issue and resolution on the conflict
be implemented without the concurrence of the
Legal Counsel of the FIRST PARTY, which must
be in writing also.
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3.6. No oral or verbal confirmations may be allowed.

However, writings may include text, messages,
notes, memorandum, letters, fax, emails and
other tangible materials. Telephone
conversations shall not be deemed sufficient.

H. SUITS AND VENUE

1. Should a legal controversy shall arise by reason hereof, the

parties hereby agree that suits shall be instituted within the
territorial jurisdiction of Legazpi City and the exclusion of all
other venue.

2. Prior to institution of legal suits, the parties are mandated as a

matter of prior recourse, to amicably settle their disputes by
exhausting amicable settlements, disputes resolutions or by
mediation.

3. If for any person, the parties herein will need to institute suit to
protect its right, the loosing party shall pay the winning party
the amount of P 2,000,000.00 as liquidated damages as above-
mentioned and the amount of P 100,000.00 as Attorney’s Fees.
This is without prejudice to reimbursement of such other
damages and litigation expenses incurred thereby.