CONTRACT FOR THE SHIP REPAIR FOR PPA-PMO BATANGAS

This Contract made and entered into this _05 JAN 2024_ in the City _Batangas_, Philippines, by and
between:

PHILIPPINE PORTS AUTHORITY, PMO-BATANGAS a government instrumentality

created under Presidential Decree No. 857, as amended, with principal office at PPA
New Administration Building, Diversion Rd., Calicanto, Batangas City, represented
herein by its Port Manager, JOSELITO O. SINOCRUZ, and hereinafter referred to as
“Ship Owner”.

- and –

PHILSEA SHIPBUILDING & REPAIRS INC. a corporation duly registered with the
Securities and Exchange Commission in accordance with Philippine laws, with office
address at 1 Apacible St., Brgy Suba, Danao City, Cebu represented herein by its
President, DANIE A. PAGSI and hereinafter referred to as the “Shipyard”.

WITNESSETH

WHEREAS, the Ship Owner is the owner of a certain patrol boat, identified as DF-316 and hereinafter
referred to as the “Ship”, and desires to have said patrol boat undergo necessary repairs and
maintenance;

WHEREAS, the Shipyard, possessing the requisite skills and expertise in ship repair, is willing to
undertake the repair services as detailed in this agreement;

WHEREAS, both parties have engaged in good-faith discussions to define the scope of the repair work,
agree on terms, and establish expectations;

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the
parties agree as follows:

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1. Scope of Work
1.1. Vessel Details

Name of Ship: DF-316

IMO No.: 9809XXX
Flag: Philippines [PH]
Name of Registered Owner: PPA PMO Batangas
Whether under demise charter: ☑ No
☐ Yes, Name of charterer:
Period of charter:
Whether registered: ☐No☐Yes
If the Ship is under demise charter, a copy of the demise charter and a certificate of demise
charter (if applicable) shall be provided by the Ship Owner as ANNEX 1 to this Contract.

1.2. Performance of Works

1.2.1. Before or upon the execution of this Contract, the Ship Owner shall furnish the Shipyard with
specifications for the work (including alterations or modifications subsequently made by the
Parties, hereinafter collectively referred to as the “Works”) and the key drawings (including but
not limited to the docking plan, general arrangement, capacity plan and mid-ship section) and
necessary technical data for the Works, and the Shipyard shall perform the Works in accordance
with the provisions of this Contract and the usual work standards prevailing in the ship repair
industry.

1.2.2. If any alteration or modification of the Works is requested by either Party, the requesting Party
shall promptly notify the other Party in writing and the Parties shall mutually decide whether
such alteration or modification should be included into the Works. If any alteration or
modification of the Works is agreed by the Parties, the Contract Price as defined in Clause 2 and
the Working Period as defined in Clause 3 for the Works shall be adjusted accordingly.

1.2.3. If the alteration or modification of the Works is necessary or indispensable to the performance
of the Works, the Ship Owner shall not unreasonably withhold its consent to such alteration or
modification as requested by the Shipyard. If the Ship Owner fails to give its consent to the
alteration or modification of the Works within five (5) days of its receipt of the notification of the
same from the Shipyard, the Shipyard is entitled to suspend the Works and extend the Working
Period accordingly and any extra expenses and losses incurred therefrom shall be paid by the
Ship Owner.

1.2.4. During the Working Period and with the Shipyard’s prior written consent, the Ship Owner is
entitled to appoint qualified repair service providers other than the Shipyard (including but not
limited to the Ship Owner itself, the master or the crew) to carry out any other relevant works to
the Ship provided that such works are beyond the Shipyard’s capacity, but the Ship Owner shall
advise the specific scope of such works to the Shipyard, remain responsible for all of such works.
If such works interfere with or delay the progress of the Works, the Shipyard is entitled to extend
the Working Period accordingly. The Shipyard is entitled to, before the commencement of the
aforementioned works, refuse the service providers appointed by the Ship Owner with

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 reasonable causes. If the Working Period is delayed due to the Shipyard’s unreasonable refusals,
the Shipyard is not entitled to extend the Working Period.

1.2.5.During performance of the works by the Ship Owner’s appointed service providers
mentioned in 1.2.4 above, the Shipyard is entitled to charge reasonable management fees
against such service providers before the commencement of relevant works. If the service
providers fail to pay such management fees, the Shipyard is entitled to refuse such service
providers to undertake relevant works and is entitled to extend the Working Period
accordingly if the Working Period is therefore delayed.

1.2.6. The Shipyard is entitled to appoint sub-contractors to perform all or any part of the Works,
provided that the Shipyard shall remain responsible for all of such sub-contractors’
performances. The Ship Owner is entitled to, before the commencement of the aforementioned
works, refuse the sub-contractors appointed by the Shipyard with reasonable causes. If the
Working Period is delayed due to the Ship Owner’s unreasonable refusals, the Shipyard is entitled
to extend the Working Period accordingly.

2. Payment
2.1. Payment Terms
2.1.1.The estimated Contract Price is Eleven Million Three Hundred Thousand Philippine Pesos
(11, 300, 000 PHP). The final price for this Contract shall be determined by the bill(s) of
account or the Final Contract Price Agreement signed by both Parties.

2.1.2. Upon the Ship Owner’s execution of the Works Completion List, the Shipyard shall timely
issue bill of account or bills of account in instalments to the Ship Owner. The Ship Owner
shall confirm and sign the bill(s) of account within fifteen (15) calendar days of receipt of
the same or sign Final Contract Price Agreement (see Annex 3, and the Final Contract Price
Agreement shall be deemed as a part of this Contract) with the Shipyard.

2.1.3. Unless otherwise expressly agreed in writing by the Parties, the Ship Owner shall pay the
full amount of the Contract Price in Philippine Pesos or any other currency acceptable to
the Shipyard without set-off, deduction and not subject to foreign exchange control. All
taxes and bank charges etc. related to the Contract Price shall be borne by the Ship Owner.

2.1.4. The Parties agree that the Ship Owner shall pay One Million One Hundred Thirty Thousand
Philippine Pesos (1, 130, 000 PHP) within fifteen (15) calendar days of the execution of this
Contract as deposit for the Works. In the event that the Ship Owner fails to pay the deposit,
the Shipyard is entitled to suspend the Works, and to terminate this Contract and lodge
claims against the Ship Owner for losses sustained thereby.

2.2. Installments:
2.2.1. The Shipyard is entitled to request the Ship Owner to pay the estimated Contract Price in
three (3) installments before completion of the Works, provided that Parties agree
alterations or modifications in the Works and such alterations or modifications are

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 considered to be material to the Works by the Shipyard. In the event that the Ship Owner
fails to pay the installments as per the Shipyard’s request, the Shipyard may suspend such
alterations or modifications until the Ship Owner’s payment of the installments and the
Ship Owner shall be responsible for the Shipyards’ losses sustained thereby. In the event
that the Ship Owner fails to pay the deposit, the Shipyard is entitled to suspend the Works,
and to terminate this Contract and lodge claims against the Ship Owner for losses sustained
thereby.

2.2.2. Advance Payment:

The Ship Owner agrees to make an advance payment of 10% of the total contract price
upon the execution of this agreement.

2.2.3. Progress Payments:

Subsequent payments shall be made in three (3) installments where each installment is
20% of the Contract Price, each corresponding to specific milestones as detailed in the
project schedule provided in Exhibit A.

2.2.4. Final Payment:

The remaining balance shall be paid upon the completion and acceptance of the ship repair
services, as outlined in Clause 1.

2.3. Payment Milestones:

2.3.1. The progress payments shall be tied to specific milestones, such as the completion of hull
repairs, mechanical systems inspections, electrical systems repairs, painting, safety
equipment inspections, and any other relevant stages of the ship repair process.

2.3.2. The Ship Owner shall be notified of the completion of each milestone, triggering the
corresponding progress payment.

2.4. Invoice Submission:

2.4.1. The Shipyard shall submit detailed invoices for each payment installment, including a
breakdown of costs related to completed milestones.

2.4.2. Invoices shall be submitted three (3) days after the completion of each milestone.

2.5. Currency and Method of Payment:

2.5.1. All payments shall be made in Philippine Peso (PHP) unless otherwise agreed upon in
writing.

2.5.2. Payment shall be made by bank deposit unless both parties agree to a different method of
payment. Details for electronic funds transfer or other payment methods shall be provided
by the Shipyard.

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2.6. Late Payments:
2.6.1. In the event of late payments, the Shipyard may charge interest at a rate of 1.5% per month
of the contract price, calculated from the due date until the date of actual payment.

2.7. Withholding Payments:

2.7.1. The Ship Owner reserves the right to withhold payments in the case of unsatisfactory work
or if the Shipyard fails to meet the agreed-upon milestones.

3. Schedule

3.1 The Ship shall be delivered by the Ship Owner to the Shipyard's designated safe water or work
site (hereinafter referred to as “Repair Site) on _05_ (D) _May_ (M) _2024_ (Y) between the
Parties, and shall be safely afloat, gas free, free of cargo, slops or sludge, excessive ballast water
and of any substances which are dangerous or harmful to health (hereafter referred to as
“Delivery”). After inspections, the Shipyard will take delivery of the Ship from the Ship Owner
and commence the Works. All expenses and risks related to dockage, towage, pilotage and
mooring etc. prior to Delivery shall be borne by the Ship Owner.

3.2 The estimated working period, including the period in dry-dock, shall be One Hundred (120)
calendar days (without guarantee, and hereinafter referred to as the “Working Period”), and
shall be counted from 0800 hours (local time of the Shipyard) on the next day of Delivery or the
day when the Ship Owner has provided the complete set of key drawings and necessary
technical data for the Works (whichever is later). If the Shipyard has commenced the Works,
and the Ship Owner delayed in providing the key drawings and necessary technical data, the
Shipyard is entitled to extend the Working Period accordingly.

3.3 Conditional upon the Ship Owner’s performance of its contractual obligations, the Shipyard shall
timely redeliver the Ship to the Ship Owner at the Repair Site or other agreed locations
(hereinafter referred to as “Redelivery”). If the location of Redelivery is a place other than the
Repair Site agreed between the Parties, the Ship Owner shall bear the expenses and risks in
moving the Ship to such location.

3.4 As per the Ship Owner’s requests, the Shipyard shall keep the Ship Owner informed of progress
of the Works and the expected date of Redelivery.

3.5 In case of any change of the Ship's Delivery or Redelivery time, either Party requesting such
change shall obtain the prior consent of the other Party.

3.6 The Shipyard is entitled to terminate the Contract if the Ship Owner fails to deliver the Ship as
agreed in 3.1 above without prior written consent of the Shipyard. The Shipyard’s termination
of this Contract shall not prejudice its claims against the Ship Owner for its losses suffered
thereby.

3.7 If, at the date of Redelivery, the Ship Owner fails to take delivery of the Ship, the Shipyard is
entitled to charge against the Ship Owner at the rate of 0.8% per day, and such expenses shall
be deemed as a part of the Contract Price. If the Shipyard could provide evidence which

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 indicates that its actual losses exceed the aforementioned expenses, such losses shall be borne
by the Ship Owner.

4. Changes
4.1 Any changes to the scope of work must be agreed upon in writing by both parties. Changes may
result in adjustments to the contract price and schedule.

4.2 In the event of Force Majeure, which refers to events that are unpredictable, and the
occurrence and consequence of the same could not be overcome or avoided at the time of the
conclusion of this Contract, such as fire, flood, typhoon, earthquakes, extreme weather, orders
of the government etc., the Shipyard shall notify the Ship Owner within ten (10) calendar days
of the occurrence of the same in writing, and shall also notify the Ship Owner within fifteen (15)
calendar days after such Force Majeure event ends in writing. The Shipyard is entitled to extend
the Working Period accordingly, and its expenses in avoiding or reducing the impacts of Force
Majeure events on the Works shall be borne by the Shipyard.

4.3 If the Working Period is delayed by other reasons attributable to the Ship Owner, the Shipyard
is entitled to extend the Working Period accordingly.

5. Acceptance Criteria:

5.1 The Ship Owner reserves the right to inspect the completed ship repair work and must provide
written acceptance before the final payment is due.

5.2 Any defects or deficiencies identified during the acceptance inspection shall be rectified by the
Shipyard at no additional cost to the Ship Owner.

5.3 Supervision and Confirmation of Works

5.3.1 Before or upon the execution of this Contract, the Ship Owner shall furnish the Shipyard with
specifications for the work (including alterations or modifications subsequently made by the
Parties, hereinafter collectively referred to as the “Works”) and the key drawings (including but
not limited to the docking plan, general arrangement, capacity plan and mid-ship section) and
necessary technical data for the Works, and the Shipyard shall perform the Works in
accordance with the provisions of this Contract and the usual work standards prevailing in the
ship repair industry.

5.3.2 Unless the authority of the superintendent(s) is expressly restricted by the Ship Owner, the
Ship Owner’s superintendent(s) shall be entitled to deal with all matters under this
Contract, including but not limited to the approval of plans, drawings, calculations,
documents, giving instructions to the alterations or modifications in the Works, confirming
the progress of the Works, executing the Works Completion List, the bill(s) of account and
Final Contract Price Agreement on behalf of the Ship Owner.

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 5.3.3 If the Ship Owner’s superintendent(s) fail(s) to perform duties properly, including but not
limited to willful or unreasonable delays in giving relevant approvals, instructions,
confirmations or opinions, the Shipyard is entitled to request the Ship Owner to replace its
superintendent(s) immediately. If such replacement has adverse effects on the progress of
the Works, the Shipyard is entitled to extend the Working Period accordingly.

5.3.4 The superintendent(s) shall confirm the completion of the Works by way of executing the
Works Completion List prepared by the Shipyard before Redelivery; the Shipyard may also
prepare the Works Completion List for particular Works for the Ship Owner’s execution
during the course of the Working Period. If the superintendent(s) fail(s) to confirm and
execute the Works Completion List within One Hundred Twenty (120) working days upon
its receipt of the same, and also fail(s) to raise any written objections, it shall be deemed
that the Ship Owner has confirmed and accepted the Works Completion List. If the
superintendent(s) raise(s) written objections against the Works Completion List, the
Parties shall negotiate or jointly appoint a third-party surveyor or survey organization
(hereinafter referred to as “Surveyor”) to decide on the disputed items in the Works
Completion List. The Surveyor’s decision shall be binding upon the Parties. If, according to
the Surveyor’s decision, the Ship Owner’s objection does not stand, the Ship Owner shall
bear the Shipyard’s losses suffered thereof and also the Surveyor’s costs; if the Ship
Owner’s objection stands, the Shipyard shall make adjustments to the Works, re-submit
the Works Completion List, and shall also bear the Surveyor’s costs.

5.3.5 The Ship Owner, its superintendent(s), crew, or employee(s) shall be cooperative and are
obliged to provide assistances in the completion of Works. If the Works could not be
completed due to non-cooperation of the parties, the Shipyard may demand the Ship
Owner to perform its obligations within a reasonable period and is entitled to extend the
Working Period; accordingly, if the Ship Owner fails to fulfill its obligations within such a
period, the Shipyard is entitled to terminate this Contract and claim damages.

6. Warranties
6.1 The Shipyard warrants that the Work will be performed in a good and workmanlike manner.

6.2 The Shipyard shall take quality warranty responsibility for the defects of its furnished
equipment, parts or materials or its workmanship. For fixed parts, the quality warranty period
is twelve (12) months from Redelivery; for moveable parts, the quality warranty period is twelve
months from Redelivery. The Ship Owner shall serve the Shipyard with a written notice within
fifteen (15) days of occurrence of the aforementioned defects and shall describe such defects
with supporting documents to prove that such defects were completely caused by the
Shipyard’s negligence. In the event that the Ship Owner fails to serve the aforementioned
written claim notice within the aforesaid period, it shall be deemed that the Ship Owner has
unconditionally and completely waived its claims.

6.3 Upon receipt of the claim notice in 6.2 above, the Shipyard is entitled to investigate the causes
of such defects through its authorized representatives, and the Ship Owner shall provide
necessary assistance. If the Shipyard confirms that such defects were caused by the Shipyard’s
negligence, it shall undertake, free of charge, to repair or replace such materials or rectify such
defective workmanship at its Repair Site. If it is not practicable or cost effective for the Ship

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 Owner to bring the Ship to the Shipyard’s Repair Site, the Ship Owner may cause the necessary
repairs or replacement to be made elsewhere subject to the Shipyard’s prior written consent
and the Shipyard shall, subject to all the foregoing conditions and upon the Ship Owner’s
written request, reimburse a sum equivalent to the cost of making repairs or replacement at
such other places, but the aforementioned sum shall not exceed (the Parties may choose one
of below) □ [1] times of the Contract Price; □ [1.5] times of the price for the same repairs or
replacement at Philippine leading shipyards; □ [2] times of the price for the same repairs or
replacement at shipyards in Philippines, Singapore or South East areas.

6.4 The Shipyard’s liability for guarantee repair is limited to 6.2 and 6.3 above, and the Shipyard
shall in no event be liable for any other losses, damages or expenses, whether direct or indirect,
including but not limited to salvage, towage, dockage, wharfage, any other non-routine service
fees charged by the shipyard who actually carried out the guarantee repair, port dues, any
other expenses for inspection and supervision, consumables, insurance and transportation etc.,
or for any loss in the operation of the Ship and/or for any loss of time and profits due to repairs,
which were caused by any fault or defect. The Shipyard shall have no liability against any fine
or penalty imposed on the Ship Owner and the Shipyard shall have no liability against any third
party having an interest in the ownership, operation of the Ship or the ownership of cargo on-
board etc. for any liability against any latent or worsening damages

7. Indemnification
7.1 Each party agrees to indemnify and hold harmless the other party from any claims arising out
of the performance of this Contract.

7.2 The Shipyard shall not be responsible for any loss of or damage to or in connection with the
Ship or her part(s), cargo aboard or any other properties of the Ship Owner and/or its
employees, unless such loss or damage is directly caused by willful misconduct or gross
negligence of the Shipyard or its employee(s) or sub-contractor(s) in conducting the Works, the
employment activities, or authorized activities.

7.3 In the event that the Works involves manufacture or renewal of machinery, equipment, fittings
or their parts in accordance with drawings, specifications, models or other data/information
supplied by the Ship Owner, the Ship Owner shall solely be responsible for infringement of trade
mark, patent or similar rights of any third party, and shall hold the Shipyard harmless of and
indemnify the Shipyard against any claim by the third party in respect of such infringement. The
Shipyard shall have the right to suspend the manufacture and renewal and to lodge claims
against the Ship Owner for the losses and damages sustained thereby.

8. Notice
8.1 Any and all notices and communications in connection with this Contract shall be addressed
as follows:

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 For the Ship Owner: Address: PPA Corporate Bldg. Bonifacio Drive, South
Harbor, Port Area, Manila 1018, Philippines
Attn.: Port Manager – Mr. JOSELITO O. SINOCRUZ
Contact No.: (043) 722-XXXX
Fax No.: (+63) 2 8123 XXXX
Email Address: josinocruz@ppa.com.ph

For the Shipyard: Address: 1 Apacible St., Brgy Suba, Danao City, Cebu

Attn.: Project Manager - Engr. SHERYL P. JIMENO

Contact No.: 0908 946 XXXX

Fax No.: (+63) 2 8123 XXXX
Email Address: sheryl@philsea.com.ph

8.2 Any change of one Party’s address shall be communicated in writing by the Party to the other
Party and in the event of failure of such notice of change, communications addressed to the
Party’s last known address shall be deemed sufficient.

8.3 “In writing” or “written” in this Contract shall mean any method of legible communication. A
notice may be given in any effective means including but not limited to cable, telex, facsimile,
email, registered or recorded mail, commercial courier or by personal service etc.

8.4 Any and all notices and communications to the Ship Owner’s superintendent(s) and the master
shall be seen as served to the Ship Owner.

9. Governing Law

9.1 This Contract shall be governed by and construed in accordance with the laws of the Philippines.

10.Dispute Resolution

10.1 Any dispute arising from or in connection with this Contract shall be submitted to Maritime
Industry Authority (MARINA) for arbitration which shall be conducted in accordance with
MARINA’s arbitration rules in effect at the time of applying for arbitration, and judgment upon
the award rendered by the arbitrator(s) may be entered in any court having jurisdiction thereof.
The arbitral award is final and binding upon both parties.

IN WITNESS WHEREOF, the Parties have caused their respective authorized representative to
execute this Contract on the date first written above.

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Ship Owner’s Representative(s):

Signed by

Mr. JOSELITO O. SINOCRUZ

Port Manager
For and on behalf of
PHILIPPINE PORTS AUTHORITY, PMO-BATANGAS

Company seal:

Date: 05 JANUARY 2024

Capt. SANAA Q. PUMASA

Ship Master
For and on behalf of
PHILIPPINE PORTS AUTHORITY, PMO-BATANGAS

Ship seal or master seal:

Date: 05 JANUARY 2024

Shipyard’s Representative(s)：

Engr. DANIE A. PAGSI

President
For and on behalf of
PHILSEA SHIPBUILDING & REPAIRS INC.

Shipyard seal:

Date: 05 JANUARY 2024

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 Submitted by:
DANIELLE ANSHERYL J. PAGSANGHAN
BSNAME – 4A

Submitted to:
Engr. JUREM P. LARAZI

NA 11
CONTRACTS AND SPECIFICATIONS

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