GENERAL CONSTRUCTION AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Agreement made and entered into on this _____________________ by and between:
SM DEVELOPMENT CORPORATION, a corporation duly organized and existing
under and by virtue of Philippine laws with offices at 15 th Floor, Two E-Com Center, J.W.
Diokno Boulevard corner Harbor Drive, Mall of Asia Complex, Pasay City, Metro Manila
and duly represented herein by its SENIOR VICE PRESIDENT, LEE MENG KONG,
VP-PROJECT DIRECTOR, GRACE M. STA. ANA, , and VICE-PRESIDENT, JOEL
T. ONG hereinafter referred to as OWNER;
- and _________________________________________________________., a corporation
duly organized and existing under and by virtue of Philippine laws, with principal offices
at the ______________________________________________________, represented
herein by its President, __________________________, with the same above address
duly authorized for the purpose as per Board of Directors Resolution dated
______________ copy of which is attached and made an integral part hereof as Annex A
and hereinafter referred to as the CONTRACTOR.
(Each a Party, and together, Parties in this Agreement)
WITNESSETH, THAT:
WHEREAS, the OWNER desires to engage the services of the CONTRACTOR to undertake
the _____________ WORKS (Work) of _____________ RESIDENCES located at
________________________________________ City hereinafter referred to as the PROJECT.
WHEREAS,
the
CONTRACTOR
has
proposed
to
undertake
the
_____________________________ of the PROJECT in accordance with the Plans, Specifications and
other Contract Documents prepared by the Architect and Consultants (ARCHITECT), and has warranted
that it is duly licensed, competent and qualified both technically and financially to undertake and to
ensure the proper execution and completion of the Work;

WHEREAS, relying on the above-mentioned representation and warranties made by the

GENERAL CONTRACTOR, the OWNER has accepted the offer of the GENERAL CONTRACTOR
to undertake the Work.
NOW THEREFORE, for and in consideration of the above premises, and the mutual covenants
and stipulations hereinafter set forth, the parties hereto mutually agree, stipulate and covenant as follows:

ARTICLE 1 SCOPE OF WORKS

1.1

The GENERAL CONTRACTOR shall construct the PROJECT (described in the first WHEREAS
clause) based on the work items covered by the Contract Documents.

1.2

The GENERAL CONTRACTOR shall provide, furnish, supply, install, perform all labor,
materials, tools, plant, equipment and other services necessary to successfully execute and complete the
Work.

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1.3

The GENERAL CONTRACTOR shall perform other works such as but not limited to:
1.3.1

Secure and pay for all necessary permits, licenses, clearances and certificates required for
the Works and assists in the payment of fees using funds provided by the OWNER.

1.3.2

Maintain the safety, cleanliness and sanitation of the project site including removing and
disposing of all construction debris during the entire duration of the PROJECT.

1.3.3

Perform all testings as called for in the Plans, Specifications and Contract Documents.

1.3.4

Maintain competent and licensed Geodetic Engineers with the latest surveying equipment
to establish reference elevations, gridlines and property line and perform other surveying
services as maybe required by the OWNER.

1.3.5

Construction of weather-tight field offices complete with office furniture and equipment.

1.3.6

Provide sufficient site security on a 24-hour basis during the entire duration of the project.

1.4

The GENERAL CONTRACTOR shall be responsible for the on-time provision of all items referred to
in the Plans, Specifications and Contract Documents including the timely ordering and delivery of all
materials and to ensure that performance of the PROJECT is in accordance with the Contract
Documents.

1.5

The PROJECT shall be under the joint supervision of the ARCHITECT and the CONSTRUCTION
PROJECT MANAGER and both shall certify to the work hereby agreed to be done.

ARTICLE 2 - CONTRACT DOCUMENTS

2.1

The Contract Documents which are hereto incorporated and made an integral part hereof, and
which are duly signed by the OWNER and the GENERAL CONTRACTOR shall consist of but
not limited to the following:

2.1.1

Construction plans prepared by ______________ and its consultants listed in Annex B.

2.1.2

Technical specifications prepared by ___________ and its consultants attached as Annex C.

2.1.3

Original proposal of ________________________ dated ______________ attached as Annex D.

2.1.4

Revised proposal of ________________________ dated _________________ attached as Annex E.

2.1.5

Letter of Award dated __________________ attached as Annex F.

2.1.6

Notice-to-Proceed dated ________________ attached as Annex G.

2.2

All other subsequent agreements and documents which hereafter may be mutually agreed upon
between the OWNER and the GENERAL CONTRACTOR and duly signed by the parties
whether prepared before or after signing of the foregoing documents shall likewise form part of
the Contract Documents.

2.3

The GENERAL CONTRACTOR shall make no change or alteration in the plans and
specifications without prior written approval of the OWNER. A mere act of tolerance shall not
constitute approval.

2.4

It is mutually understood that the Contract Documents shall be complementary with each other
and what is called for or prescribed by one shall be considered as if called for or prescribed by all.
In case of any discrepancy between or of any defective description, errors, omissions or
ambiguity in any of the Contract Documents, the GENERAL CONTRACTOR shall, within
fifteen (15) days from discovery of such discrepancy, defects, errors, omissions or ambiguity,
whether or not requiring any adjustment in time or cost of the PROJECT, submit the matter in
writing to the OWNER through its CONSTRUCTION PROJECT MANAGER. The
OWNER shall within (15) days from receipt of such written notice, make a determination that is

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binding upon the GENERAL CONTRACTOR and the latter shall accordingly proceed with the
work strictly in accordance with such determination without prejudice to the provisions of Article
23 hereunder.
2.5

The OWNER shall have the right to furnish the GENERAL CONTRACTOR during the
progress of the PROJECT additional drawings, instructions and documents as it may deem
necessary for the proper and adequate execution of the PROJECT. All such documents,
instructions and drawings furnished and all written corrective determination made pursuant to the
foregoing paragraphs, shall form integral parts of the Contract Documents under this
AGREEMENT.

2.6

Any and all deficiencies in the provision or otherwise connected with or related to the PROJECT
but expressly covered by the provisions of this AGREEMENT shall be supplied by the Contract
Documents.

2.7

The ownership of the Contract Documents shall remain with the OWNER.

ARTICLE 3 CONSTRUCTION PROJECT MANAGER

3.1

The OWNER has engaged the services of _________________ to act as its CONSTRUCTION
PROJECT MANAGER and is the authorized representative of the OWNER and/or the
ARCHITECT at the job site and shall be responsible for the proper execution and
implementation of the PROJECT.

ARTICLE 4 MANNER OF PAYMENT

4.1

The OWNER shall pay the CONTRACTOR in consideration for

the faithful satisfactory performance and accomplishment of all the obligations specified in the
Contract Documents that the CONTRACTOR agreed to undertake, perform and accomplish
under the AGREEMENT, the lump sum CONTRACT PRICE of PESOS:
__________________________________ & 00/100 ((Php _________) Philippine Currency,
inclusive of any and all taxes and Value Added Tax (VAT).

4.2

The down payment shall be equivalent to _______ percent (___%) of

the CONTRACT PRICE less cost of cement and reinforcing bars or the amount of PESOS:
_______________________________ & 40/100 (Php _____________) Philippine Currency as
stated in Annex H, and shall be paid by the OWNER upon compliance by the GENERAL
CONTRACTOR with the conditions stated in this AGREEMENT. This down payment shall be
liquidated from every subsequent progress payment to be made by the OWNER to the
GENERAL CONTRACTOR by deducting from such progress payment a portion of the down
payment proportional to the actual evaluated and certified percentage of work accomplishment
such that when the work is fully completed the down payment shall have been fully liquidated.
Subsequent payments shall be paid through progress billings submitted by the GENERAL
CONTRACTOR in accordance with this AGREEMENT and shall be subject to ten percent
(10%) contract retention.

4.3

The CONTRACT PRICE stipulated above shall be fixed for the

entire duration of the AGREEMENT and shall not be altered or adjusted due to fluctuations in
the prices of materials and equipment or for any cause or reason whatsoever, including, but not
limited to possible adjustments in labor cost due to mandatory wage hike promulgated by the
National Government. Furthermore it is understood that the CONTRACT PRICE shall include
profits, any and all direct and indirect expenses and all contingent costs, overhead costs,
expenses, allowances, taxes, duties, insurances and risks, equipment commitment, delivery
expenses, survey and inspection costs, as well as inflation, foreign currency rate exchanges, and
all other costs or expenses for the execution of this AGREEMENT and for the timely,
satisfactory and complete delivery and performance of all obligations herein and acceptance of
the works in the PROJECT.

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4.4

Upon execution of this AGREEMENT and as a condition for the

release and payment by the OWNER of the down payment and all subsequent progress billings,
the GENERAL CONTRACTOR shall submit to the OWNER the following:
4.4.1

DOWN PAYMENT BOND, equivalent to ______ percent (_____%) of the

CONTRACT PRICE conditioned upon the return to the OWNER of the down
payment in the event the GENERAL CONTRACTOR fails or refuses, for any
reason whatsoever, to commence work on the PROJECT within five (5) days from
receipt by the CONTRACTOR of the down payment.

4.4.2

PERFORMANCE BOND, equivalent to _____________ percent (_____%) of the

CONTRACT PRICE conditioned upon the payment to the OWNER of liquidated
damages and all amounts due to the OWNER under the law or this AGREEMENT,
in the event the GENERAL CONTRACTOR fails or refuses, for any reason
whatsoever, to proceed and complete the PROJECT in accordance with this
AGREEMENT and to guarantee the GENERAL CONTRACTOR's faithful, strict
and satisfactory compliance with all its obligations stated herein.

4.4.3

All bonds and insurance coverage to be provided by the GENERAL

CONTRACTOR and required in this clause or elsewhere in this AGREEMENT
shall be in the form of surety approved and accepted by the OWNER, callable on
demand and secured from BANCO DE ORO INSURANCE BROKERS, INC. or
such other insurance or bonding company acceptable to the OWNER. Further, such
bonds and insurances shall remain in full force and effect during the entire contract
period or its extension/s, if any, unless otherwise specified herein. Finally, premiums
and all costs to secure and obtain such bonds and insurances shall be for the account
of the GENERAL CONTRACTOR.

4.5

The CONTRACTOR shall submit to the OWNER and the

CONSTRUCTION PROJECT MANAGER monthly billings based on actual accomplishment
of the various works of the PROJECT. The CONSTRUCTION PROJECT MANAGER shall
process, certify to the correctness of, and make appropriate recommendations as to said billings
within seven (7) working days from receipt thereof and the OWNER shall pay the GENERAL
CONTRACTOR within thirty (30) working days upon receipt of said billings from the
CONSTRUCTION PROJECT MANAGER together with the latters appropriate
recommendation. Final payment shall be made in accordance with Article 21 of this
AGREEMENT.

4.6

Progress payments are subject to retentions of ten percent (10%) and

such retentions shall be based on the total amount due the GENERAL CONTRACTOR prior to
any deductions from every progress payments.

4.7 Prior to the release of the down payment the GENERAL CONTRACTOR shall submit the
following documents:
4.7.1
4.7.2
4.7.3
4.7.4
4.7.5
4.7.6
4.7.7
4.8

PERT-CPM Construction Schedule

Bar Chart
Manpower Schedule
Equipment Utilization Schedule
Project Organization
Comprehensive All-risk Insurance Policy
Letter of Authority to receive Owner-Supplied Materials (OSM).

The amount retained by the OWNER from the progress payments shall be released by the
OWNER to the GENERAL CONTRACTOR within sixty (60) working days after the issuance
of the Certificate of Final Inspection and Acceptance by the CONSTRUCTION PROJECT
MANAGER, concurred to by the ARCHITECT and confirmed by the OWNER. Together with
the Certificate of Final Inspection and Acceptance, the GENERAL CONTRACTOR shall
submit to the OWNER following:
4.9.1

GENERAL CONTRACTORs notarized affidavit that all taxes and obligations from the
GENERAL CONTRACTORs use of materials, plant, equipment and labor in
fulfillment of this AGREEMENT have been duly paid.

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4.9.2

Guarantee Bond to answer for faulty and/or defective materials or workmanship as stated
in Article 12 of this AGREEMENT.

4.10 The OWNER, however, reserves the right to withhold payment in case the OWNER has any
claim against the GENERAL CONTRACTOR under or by virtue of this AGREEMENT in the
amount equivalent to the OWNERs claim, without prejudice to bringing the dispute between the
parties arising from the exercise by the OWNER of its rights under this Article to arbitration
under Article 23 of this AGREEMENT.
4.11 All billings shall be supported by key plans of accomplishment claimed, photographs, summary
of test results, and other supporting documents as may be required by the OWNER or
PROJECT CONSTRUCTION MANAGER.
4.12 No certificate given or payment made under this AGREEMENT, except the Certificate of Final
Inspection and Acceptance (CFIA) or final payment, shall be conclusive evidence of the
performance by the GENERAL CONTRACTOR of its covenants and obligations under this
AGREEMENT, either wholly or in part, and no payment shall be construed to be an acceptance
of defective work or improper materials.
4.13 Under no circumstance shall the GENERAL CONTRACTOR be entitled to payment of extra
work or change of work without the prior written order of the OWNER or the
CONSTRUCTION PROJECT MANAGER to perform such work. Any work done without
such written order shall be for the sole account of the GENERAL CONTRACTOR.
4.14 Any payment due and payable and/or may be due to the GENERAL CONTRACTOR may be
offset against liquidated damages payable to the OWNER under this AGREEMENT.

ARTICLE 5 OWNER SUPPLIED/FURNISHED MATERIALS

5.1

5.2

For purposes of the completion of the PROJECT as contained in this AGREEMENT, it is

understood that all the materials will be supplied by the GENERAL CONTRACTOR. In this
regard, the CONTRACTOR, except for Owner-Supplied Materials, hereby expressly warrants
and represents that the materials to be used in the completion of the PROJECT shall be of
sufficient quantity and the quality and soundness thereof are fit for the purposes for which they
will be utilized, as stated in the Article 2 - Contract Documents.

It is understood however, that the above provision in Article 5.1 is without prejudice to the right of the
OWNER to opt or decide to supply any materials for the PROJECT. In such case, the cost of the
materials supplied by the OWNER shall be deducted from the amounts due and payable to the
GENERAL CONTRACTOR, provided that the basis for the cost of the OWNER supplied materials
shall be that which is stated in the Contract Documents provided in Article 2.

ARTICLE 6 ADJUSTMENT OF CONTRACT PRICE

6.1

The OWNER or the ARCHITECT with the written consent and approval of the OWNER, may,
without invalidating this AGREEMENT or the Contract Documents, order at anytime in writing,
additional work or alterations by correcting, altering or deducting from the work to be undertaken
or being undertaken by the GENERAL CONTRACTOR. All such work shall be evidenced by
Change Orders signed by the OWNER. The aforesaid work shall be executed under the
conditions hereof and the Contract Document.

6.2 No claims for additions or deductions to the CONTRACT PRICE herein stipulated by reason of
extra work or alteration shall be valid unless ordered in writing by the OWNER. The value of any
extra work or alterations shall be separately agreed upon by the OWNER and the GENERAL
CONTRACTOR in writing.
6.3 Any value of change orders approved shall be considered as part of the AGREEMENT to be billed
separately by the GENERAL CONTRACTOR.

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6.4 In the event the OWNER opts or decides to supply any materials (such as but not limited to, tiles,
cement, reinforcing bars, aluminum works and cabinets) the cost thereof shall be based on the agreed
itemized cost breakdown.
ARTICLE 7 CONTRACT TIME/COMPLETION DATE/TIME EXTENSION
7.1

The GENERAL CONTRACTOR shall complete the works called for under this
AGREEMENT within Four (4) calendar months or One Hundred Twenty (120) calendar days
reckoned after seven (7) days from confirmation of Notice to Proceed (Annex G).

7.2

The CONTRACTOR may ask for an extension of the period for completion by a request to the
OWNER through the CONSTRUCTION PROJECT MANAGER due to any of the following
causes or reasons:
7.2.1
7.2.2
7.2.3
7.2.4
7.2.5

Force Majeure or unforeseen or unforeseeable events and circumstances.

Causes or events that are beyond the control and without the fault or negligence of the
GENERAL CONTRACTOR.
Any act or omission of the OWNER or any other person employed or contracted by the
OWNER in the project.
Delays in the delivery of materials furnished by the OWNER or its suppliers, excluding
materials and items supplied by the GENERAL CONTRACTOR and its subcontractors.
Any appreciable addition or alteration in the work ordered by the OWNER or the
ARCHITECT.

7.3

The request for extension shall be filed and submitted in writing within fifteen (15) working days
from the occurrence of one or more of the events mentioned above. The OWNER shall, within
fifteen (15) working days from receipt of such written request, with due regard to the facts and
circumstances and of the merits or lack of merits of the request, grant or deny the request for
extension, as the case may be. The decision of the OWNER on this matter shall be binding upon
the GENERAL CONTACTOR which shall proceed strictly in accordance with such
determination without prejudice to the provisions of Article 23 of this AGREEMENT.

7.4

For the purpose of Article 7 of this AGREEMENT, the term force majeure means:
7.4.1
7.4.2
7.4.3

7.4.4

7.5

Notwithstanding the foregoing, no extension of the period for completion of the work shall be
granted in any of the following instances:
7.5.1
7.5.2
7.5.3
7.5.4

7.6

war and other hostilities, (whether war be declared or not), invasion, act of foreign
enemies, mobilization, requisition or embargo;
rebellion, revolution, insurrection, terrorist act, military or usurped power or civil war
occurring in the area of Pasay City, Metro Manila, Philippines;
earthquakes, violent typhoons or other natural disasters of overwhelming proportions
even an experienced GENERAL CONTRACTOR could not have foreseen and taken
protection against. Storm signal no. 3 or above raised by PAGASA shall be considered
force majeure;
thermal or nuclear explosion either at the premises of the GENERAL CONTRACTOR
or sub-contractor or at the site unless caused by the negligence of the GENERAL
CONTRACTOR or sub-contractor.

ordinary unfavorable weather conditions;

non-availability of equipment or materials to be furnished by the GENERAL
CONTRACTOR;
labor problem or dispute involving the GENERAL CONTRACTORS employees,
workers, or personnel or those of its sub-contractors, agents, or suppliers; and
when the reason given for the request for extension has already been considered in the
determination of the original completion.

If at any time during the AGREEMENT, the GENERAL CONTRACTOR incurs a

delay/slippage of fifteen percent (15%) in the construction schedule, the OWNER may require
the GENERAL CONTRACTOR to submit within seven (7) working days from demand a

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confirmed catch-up schedule, including the list or resources required to remedy the delay/slippage
incurred over a period of thirty (30) calendar days. The purpose of this clause is merely to enable
the GENERAL CONTRACTOR to complete the PROJECT within the original Contract
Period and not to grant an extension therefore. Should the GENERAL CONTRACTOR, despite
the catch-up schedule, fail to remedy/overcome the slippage within the catch-up period, the
OWNER may take any or all the following courses of action:
7.6.1

Immediately upon notice to the GENERAL CONTRACTOR, take-over and complete

the works either by itself or through another contractor(s). In such case, the temporary
facilities, materials, equipment, tools and resources of the GENERAL CONTRACTOR
on the site shall be at the disposition of the OWNER until the Works unfinished by the
GENERAL CONTRACTOR are completed. The difference between the cost
reasonably incurred and substantiated by the OWNER to complete the Works and all the
CONTRACT PRICE balance shall be for the account of the GENERAL
CONTRACTOR and shall be charged against whatever billing are still due to the
GENERAL CONTRACTOR or the Performance Bond;

7.6.2

Terminate this AGREEMENT pursuant to Article 24 hereof; and

7.6.3

The exercise by the OWNER of either of the above options is without prejudice to other
legal remedies allowed under this Contract and existing laws, including the right to
demand for Liquidated Damages.

ARTICLE 8 FAILURE TO COMPLETE THE WORKS

8.1 Time is of the essence in this AGREEMENT. Should the GENERAL CONTRACTOR fail to
complete the PROJECT within the period herein stipulated or within the period of extension
granted by the OWNER, the CONSTRUCTION PROJECT MANAGERS shall certify in
writing that the work could reasonably have been completed within the period specified herein or
within the extended time, and the CONTRACTOR shall:
8.1.1

Pay the OWNER the sum of one tenth (1/10) of one percent (1%) of the stipulated
CONTRACT PRICE as penalty for each calendar day of delay, including Sundays and
Holidays but not to exceed ten (10%) of the CONTRACT PRICE; Provided that, the
payment of penalty shall not in any manner relieve the GENERAL CONTRACTOR
from its obligations and responsibilities under this AGREEMENT; and

8.1.2

Allow the OWNER and/or another contractor of OWNERS choice to take over and
accomplish and finish the PROJECT as provided for in Article 13 of this
AGREEMENT.

8.2

However, in no case shall the total liquidated damages exceed ten

percent (10%) of the CONTRACT PRICE, provided the GENERAL CONTRACTOR has
substantially completed the work. There is substantial completion when the GENERAL
CONTRACTOR completes 98% of the work, provided that the remaining work and the
performance of work necessary to complete the work shall not prevent the normal use of the
completed portion. Liquidated damages shall be applied for the remaining works proportionate to
the remaining balance of work beyond 98% substantial completion.

8.3

It is further agreed and understood that the right of the OWNER to

collect or to receive penalty charges and liquidated damages as compensation for delay in the
circumstances herein stated, is in recognition by the parties of the expense and inconvenience
likely to be incurred from any need to prove the loss and damage that will be suffered by the
OWNER in the event of any such delay on the part of the GENERAL CONTRACTOR. The
collection and/or payment of such sums as penalty charges or liquidated damages shall be without
prejudice to its rights and remedies against the GENERAL CONTRACTOR provided elsewhere
in this AGREEMENT or to which the OWNER may be entitled in law or equity.

8.4

To give full force and effect to the foregoing, the GENERAL

CONTRACTOR hereby, without the necessity of any further act and deed, has authorized the
OWNER to deduct any amount that may be due under Clause 8.1 above, from any and all

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moneys or amounts due or which will become due to the GENERAL CONTRACTOR by virtue
of this AGREEMENT and/or to collect such amounts from the performance bond filed by the
GENERAL CONTRACTOR in accordance with this AGREEMENT.
8.5

Upon the completion of the PROJECT, the GENERAL

CONTRACTOR shall immediately thereafter remove all surplus materials, waste and rubbish
from the premises, unless prevented by any unavoidable cause or causes in which case the
OWNER shall give the GENERAL CONTRACTOR a reasonable period within which to do so.
Excess owner-supplied materials such as rebars, cement and tiles, including scrap materials shall
be returned to the OWNER. The GENERAL CONTRACTOR shall indemnify the OWNER
for any damages or losses incurred by the latter by reason of the failure of the GENERAL
CONTRACTOR to remove such rubbish and materials.

ARTICLE 9 - TAXES, DUTIES AND FEES

9.1

All taxes, including E-VAT, duties and fees of whatever nature

connected with, or related to this AGREEMENT and which may be due and payable, or for
withholding, on tools, equipment, labor, materials, plants, supplies, and other facilities necessary
for the performance and accomplishment of the PROJECT, shall be the sole responsibility and
for the exclusive account of the GENERAL CONTRACTOR, except taxes due on OWNERsupplied materials which shall be for the account of the OWNER. The OWNER shall be
entitled to withhold from the payment to the GENERAL CONTRACTOR any amount it is
required to withhold by law or by any governmental authority.

9.2

The GENERAL CONTRACTOR hereby holds the OWNER free

and harmless form all such taxes, duties, and fees including the fines, penalties and other charges
accruing by reason of their non-payment.

9.3

The GENERAL CONTRACTOR shall pay and shall ensure that

any authorized sub-contractor shall pay all income, corporate revenue or similar taxes howsoever
described, and all penalties and interest thereon assessed on the income, profits and gains
accruing to the GENERAL CONTRACTOR or any sub-contractor from the operation of this
AGREEMENT. The GENERAL CONTRACTOR shall be responsible to indemnify, defend
and hold harmless the OWNER against any claims whatsoever arising in connection with
liability of the GENERAL CONTRACTOR or any sub-contractor for any such taxes, penalties
and interest. Furthermore, the GENERAL CONTRACTOR shall be responsible to indemnify,
defend and hold harmless the OWNER against any claims whatsoever arising in connection with
all taxes assessed or levied against or on accounts of wages, salaries, benefits, or deemed benefits
paid to the GENERAL CONTRACTORs personnel or personnel connected with its subcontractor or any other person employed in connection with the performance of this
AGREEMENT.

9.4 The GENERAL CONTRACTOR shall give all necessary notices and obtain the necessary
permits, clearances or approval from the proper authority in respect to the WORKS except such
the building permits, ECC, other permits, clearances or approvals in connection with or related
to the importation of OWNER supplied materials (if any).

ARTICLE 10 RESPONSIBILITIES OF THE GENERAL CONTRACTOR

10.1 The GENERAL CONTRACTOR shall furnish and provide for its account all the necessary
materials, and supplies, labor, tools, equipment, plant, supervision, attendance to nominated subcontractors (if any) and other facilities as may be needed in the satisfactory performance and
accomplishment of the PROJECT without delay and in accordance with and as directed by the
Contract Documents. All materials and workmanship shall be of the respective kinds described in
the specifications, and the GENERAL CONTRACTOR shall, upon the request of the
ARCHITECT or the CONSTRUCTION PROJECT MANAGER, furnish him with brochures
and supporting documents to prove that the materials are such as specified.

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10.2 The GENERAL CONTRACTOR shall ensure and hereby warrants at all times that it shall
exercise the skill, care and diligence in the performance of the work as should be exercised by a
fully qualified, competent and first class GENERAL CONTRACTOR, fully skilled and
experienced in carrying out of work similar in scope and extent of the PROJECT. The
GENERAL CONTRACTOR warrants that it is fully experienced in the construction of major
project of a similar scope, complexity, size and technical sophistication as the PROJECT and
that it possesses the high level of skill and expertise commensurate with that experience which it
will make available to the OWNER. In so doing, the OWNER is relying upon the skill,
judgment and expertise of the GENERAL CONTRACTOR in the performance of the WORKS
and the coordination and planning thereof. Without prejudice to the generality of the foregoing
the GENERAL CONTRACTOR warrants that:
10.2.1 The personnel to be employed or engaged by the GENERAL CONTRACTOR shall be
sufficient in number, skill and expertise to carry out the various phases of work diligently
and efficiently in order to complete the works in accordance with the agreed work
program (CPM Network and/or Bar Chart Schedule), subject to any exceptions which
may be mutually agreed upon in writing; and
10.2.2 It is adequately and properly financed to meet all the financial obligations which it may
be required to assume under this AGREEMENT.
10.3 The GENERAL CONTRACTOR shall during the term of this AGREEMENT coordinate with
the work of other tradesmen or contractors of the other construction works and shall be directly
responsible for the work of all men under its control and supervision to ensure the expeditious
and satisfactory completion of the Works for the PROJECT.
10.4 The GENERAL CONTRACTOR agrees that it has satisfied itself as to the nature and scope of
work, including but not limited to the management, supervision, engineering and procurement
services, the obtaining of permits, licenses, consents and authorizations and all other necessary
services, personnel, labor, equipment, facilities, materials and supplies required for the
performance of all the works to complete the PROJECT.
10.5 The GENERAL CONTRACTOR hereby recognizes the position of trust and confidence
reposed on it by this AGREEMENT and agrees to furnish its best skill and judgment and to
cooperate with the CONSTRUCTION PROJECT MANAGER or with any of the OWNERS
authorized representatives in furthering efficient business administration and superintendence in
the performance of this construction to have adequate supply of qualified and skilled workmen
and sufficient materials at all times, and to ensure the execution of this AGREEMENT in the
soundest way and in the most expeditious and economical way consistent with the interest of the
OWNER.
10.6 It is mutually understood that the GENERAL CONTRACTOR is not an employee of the
OWNER but is an independent contractor. Neither shall the employees, workers, laborers,
agents or the subcontractor (as may be allowed in accordance with Article 18 of this
AGREEMENT) of the GENERAL CONTRACTOR be deemed employees of the OWNER.
Hence, the OWNER shall not in any way be liable or responsible for any and all claims for or
personal injuries or damages to third persons or their property, caused by any such employee,
worker, laborer, agent or sub-contractor, nor for any claims for or personal injuries or damages to
their property suffered by them in the performance of their duties. The GENERAL
CONTRACTOR shall, at all times, be directly responsible and liable for the enforcement of, and
compliance with all existing laws, rules and regulations particularly in respect of any and all
claims brought by its personnel for the enforcement of the provisions of the Labor Code of the
Philippines and other pertinent labor and social legislations. The GENERAL CONTRACTOR
hereby holds the OWNER free and harmless from all such claims and liabilities thereto.
10.7 The GENERAL CONTRACTOR agrees and binds itself to indemnify and hold the OWNER
free and harmless against any and all losses, costs, damages and expenses arising out of any claim
or cause of action in respect of any injury, sickness, disease or death of any person or loss of or
damage to any property suffered by reason of the failure, negligence, delay or conduct on the part
of the GENERAL CONTRACTOR and/or its employees in the performance of its obligations
hereunder arising out of or in connection with the performance of this AGREEMENT and shall,
at its own cost defend the OWNER in any proceedings involving the same where such injury,

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sickness, disease, death, loss or damage is caused or contributed to by the fault or negligence of
the GENERAL CONTRACTOR and/or its employees.
10.8 The GENERAL CONTRACTOR shall perform all works in the manner specified in this
AGREEMENT and in accordance with the best principles, accepted practices and standards
prevailing in the construction and contracting industry.
10.9 The GENERAL CONTRACTOR shall take all adequate and necessary measures to protect the
PROJECT, the OWNERS property, the personnel of the OWNER and of the OWNERS other
contractors and agents at the site and, at the same time, take all measures to avoid or reduce to a
minimum any inconvenience to owners/occupiers of land, and the general public at or adjacent to
the site when performing the Works for the PROJECT.
10.10The GENERAL CONTRACTOR undertakes that it is fully aware of and has familiarized itself
with all access, operational and other requirements, restrictions and charges as may be imposed
by any governmental authority or agency concerned relative to and/or affecting the performance
of its Works to complete the PROJECT.
10.11The GENERAL CONTRACTOR shall ascertain the exact position of all services, cables,
pipes, equipment and other items present on, in or under the job site and shall indemnify the
OWNER against all costs, expenses and claims arising out of any loss, disconnection, disruption,
destruction or other interference with such items resulting from the works undertaken by it.

ARTICLE 11 RESPONSIBLITIES OF THE OWNER

11.1

The OWNER shall be represented in the implementation of this AGREEMENT by the

CONSTRUCTION PROJECT MANAGER who shall have the authority at the job site to
execute or implement the orders or instructions which may be given from time to time by the
OWNER and/or the ARCHITECT.

11.2

The OWNER and/or its representative(s) may, at any time during the progress of the work, by
written instruction, cause alterations in the original plans and specifications to be made by way of
addition, deletion or otherwise deviation there from; and said work shall be executed by the
GENERAL CONTRACTOR under the direction of the
ARCHITECT and the
CONSTRUCTION PROJECT MANAGERS and as approved by the OWNER, in the same
manner as if the same had been included in the original plans and specification subject to the
terms and conditions stipulated in Article 4.12 hereof.

ARTICLE 12 CONTRACTORS GUARANTEE TO WORK

12.1

12.1

The GENERAL CONTRACTOR guarantees its work against qualitative defects in materials,
poor workmanship and the like for a period of one (1) year reckoned from the day of final
acceptance of the PROJECT by the OWNER. In case any defect, failure, and poor workmanship
of any part or parts of the PROJECT is discovered during said period, the GENERAL
CONTRACTOR shall be bound to make good such defect, failure or poor workmanship,
without any cost or expense to the OWNER. In any case, during the same period, the
GENERAL CONTRACTOR shall hold the OWNER free and harmless from any and all
liability or damages that may be incurred as a result of any breach of GENERAL
CONTRACTORS guarantee of work. It is hereby understood that these stipulations shall not in
any manner affect the rights and liabilities of the parties under Article 1723 and such other
applicable provisions of the New Civil Code of the Philippines, or under any other existing laws,
rules and regulations.
The GENERAL CONTRACTOR shall furnish the OWNER a guarantee bond issued by
BDO Insurance Brokers Inc. in the sum equivalent to ten percent (10%) of the CONTRACT
PRICE, effective for a period of one (1) year from the date of final acceptance by the OWNER
of the PROJECT, subject to the condition, but not limiting the GENERAL CONTRACTORS
liability, that any defect or flaw which may arise during the said one year period shall be repaired
by the GENERAL CONTRACTOR promptly upon demand by the OWNER.

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12.2

The GENERAL CONTRACTOR shall be responsible for any and all damages to, and for the
necessary repair of public streets, sidewalks, curbs and paving and other properties, whether
public or private, occasioned by their use or opening in connection with or as a consequence of
the PROJECT. It shall make good the same to the lawful satisfaction of the proper authority or
party; and hereby holds the OWNER free and harmless from liability for any such damage or
repair.

ARTICLE 13 OPTION TO COMPLETE PROJECT/TAKE OVER

13.1

If, at any time during the progress of the PROJECT, the GENERAL CONTRACTOR
should fail, refuse, or neglect to supply and provide the required tools, materials, supplies,
equipment, facilities and labor-workmen in accordance with the work schedule, or should
abandon or fail to continue with the construction of the PROJECT or to complete the same; or
when in the judgment of the OWNER the GENERAL CONTRACTOR has been unreasonably
delayed or is no longer capable of continuing or completing the PROJECT on time; or if this
AGREEMENT or any part thereof is being sub-contracted or assigned without the previous
written consent of the OWNER; or if the GENERAL CONTRACTOR is willfully violating
any of the conditions, covenants, agreements or technical requirements of the PROJECT, the
OWNER shall have the option to take over the PROJECT and complete the same.

13.2

In the event the OWNER opts to take over the PROJECT, the OWNER may take over and
continue the PROJECT, and all contracts entered into by the GENERAL CONTRACTOR in
the pursuit of their obligations under the contract which the OWNER may want to assume are
hereby considered or deemed assigned to the OWNER. For this purpose, the GENERAL
CONTRACTOR agrees and obligates itself and undertakes to incorporate with and/or relative to
the performance of their obligations a provision of its assignability/assumption upon the option of
the OWNER. The OWNER may also engage the services of another third party contractor. All
expenses incurred by the OWNER shall be charged to the GENERAL CONTRACTOR, and
any additional cost incurred in finishing the PROJECT in excess of the contract price shall be at
the expense and for the account of the GENERAL CONTRACTOR. The right of the OWNER
to take over the PROJECT shall be without prejudice to its other rights provided elsewhere in
this AGREEMENT to proceed against the GENERAL CONTRACTOR or to which it may be
entitled in law or equity.

ARTICLE 14 CONTRACTORS PERFORMANCE BOND

14.1

Upon the signing of this AGREEMENT or within ten (10) calendar days there from, the
CONTRACTOR shall, at its expense, furnish the OWNER a Performance Bond equivalent to
twenty percent (20%) of the CONTRACT PRICE, in the form of a Surety Bond, callable on
demand, obtained from Banco de Oro Insurance Brokers, Inc., conditioned that the GENERAL
CONTRACTOR shall truly and faithfully perform this AGREEMENT and all the obligations,
terms and conditions thereof on its part required to be performed. Said Performance Bond shall
also answer for the penalty as provided in Article 10.5; or for any liability that may be suffered by
the OWNER resulting from the violation by the GENERAL CONTRACTOR of the Labor
Code and all other labor and social legislations. In case the OWNER grants the GENERAL
CONTRACTOR an extension of contract time as mentioned in Article 7 above, the effectivity of
the Performance Bond shall be renewed by the GENERAL CONTRACTOR upon the
expiration of the same but the amount thereof shall be reduced proportionately to an amount to be
mutually agreed upon by both parties.

14.2

The GENERAL CONTRACTOR shall also provide the OWNER with updated certificates
on the renewal anniversary of all policies required hereunder. Failure to provide such a
Certificate may be taken by the OWNER to indicate that the GENERAL CONTRACTOR has
failed to meet its obligations to provide the required insurance coverage under this
AGREEMENT.

14.3

The premiums and other charges that may be due in connection with the renewal or extension
shall be for the account and expense of the GENERAL CONTRACTOR. In the event of the

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rescission or termination of this AGREEMENT for breach thereof, the OWNER may
immediately proceed against the bond for any or all claims against the GENERAL
CONTRACTOR. The bond shall remain and continue to remain in full force and effect until the
aforementioned obligations as to the complete and faithful compliance of the AGREEMENT,
penalty, damages, and cost of labor and materials shall have been fully satisfied, discharged,
settled and paid by the GENERAL CONTRACTOR and the bond released by the OWNER.
14.4

14.5

Any changes in this AGREEMENT (whether such changes increases or decrease the amount
thereof) or any change in time or payment to the GENERAL CONTRACTOR or any changes,
extensions, alterations, modifications or innovations mutually agreed upon in writing, shall in no
way annul, release or effect the liability of the GENERAL CONTRACTOR and the surety or
sureties on the bonds given by the GENERAL CONTRACTOR.
Any alterations, modifications or changes in this AGREEMENT or Contract Documents must
have the knowledge or consent of the company issuing the surety and/or performance bond.
Otherwise, the foregoing shall not be binding to the said company.

ARTICLE 15 CONTRACTORS ALL-RISK INSURANCE

15.1

The GENERAL CONTRACTOR shall at all times during the progress of the work and until
completion of the PROJECT covered by this AGREEMENT, for its account, arrange for
Contractors All-Risk Insurance that shall protect it and the OWNER including the
CONSTRUCTION PROJECT MANAGERS from any and all claims arising under the Labor
Code of the Philippines and other pertinent labor and social legislations and from any other
claims for injury to persons including death and damages to property which may arise in the
course of operations by the GENERAL CONTRACTOR or by any other trades or anyone
directly or indirectly employed by the GENERAL CONTRACTOR, and also, as will protect the
OWNER against any physical loss of property or properties. The GENERAL CONTRACTOR
shall also obtain other types of insurance required by the government including the Social
Security Systems requirements.

15.2

Within seven (7) calendar days from the start of work, the GENERAL CONTRACTOR shall
issue certificates of insurance required attaching herewith a copy of the insurance policies and
submit the same to the OWNER through the CONSTRUCTION PROJECT MANAGERS.
Certificates of such insurance or insurance policies shall be subject to the OWNERS approval
for adequacy of protection and acceptability of the insurers. The GENERAL CONTRACTOR
shall, on request by the OWNER, produce all receipts in payments of all insurance premiums.
Further, the GENERAL CONTRACTOR shall procure and furnish the OWNER additional
insurance in case the insurance previously submitted is found to be inadequate or insufficient.

ARTICLE 16 CONTRACTORS LIABILITY

16.1

The GENERAL CONTRACTOR shall be responsible for, and shall indemnify and hold the
OWNER free and harmless from, any and all losses, costs, expenses and damages arising out of
or in connection with any claim or cause of action in respect of any injury, sickness, disease,
death or accident which may happen to any person or persons or any loss of or any damages to
property on account of the prosecution of the works or performance of the obligations covered by
this AGREEMENT. In this connection, the GENERAL CONTRACTOR shall provide all the
necessary safeguards, warning signs and all safety precautions for all workers and third parties
during the progress of the work.

ARTICLE 17 COMPLIANCE WITH LAWS, ORDINANCE,

RULES AND REGULATIONS
17.1

The GENERAL CONTRACTOR shall comply with all the laws, ordinances, and rules and
regulations of both the national and local government which have been passed or may have been
amended, revised or passed before the completion of the PROJECT, applicable and/or binding

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upon the parties hereto, the works covered by this AGREEMENT, or the persons engaged in the
performance and accomplishment of the work covered by this AGREEMENT, and shall be
responsible for all damages either to the OWNER or to third parties or to the government,
national or local, for the non-observance of such laws, ordinances and rules and regulations.
17.2

The GENERAL CONTRACTOR shall comply with all construction regulations and sanitation
rules imposed by appropriate agencies, whether public or private having jurisdiction over the
PROJECT. The GENERAL CONTRACTOR shall bear all fines imposed on them or on their
sub-contractors for any violations committed in the execution of their AGREEMENT.

ARTICLE 18 SUB-CONTRACTING OF THE WORK / ASSIGNMENT

18.1

The GENERAL CONTRACTOR shall not assign, sublet or sub-contract any portion of the
Works for PROJECT covered by this agreement except upon prior written approval of the
OWNER. Any such assignment, sub-lease or sub-contracting shall be subject to the pertinent
provisions of this AGREEMENT. Should the OWNER find any Subcontractor that it has not
approved, the CONTRACTOR shall replace immediately the said Subcontractor upon written
notice to the OWNER. Failure of the CONTRACTOR to abide with this directive of the
OWNER shall be a ground for the termination of this Agreement by the OWNER.

ARTICLE 19 REPRESENTATION AND WARRANTIES

19.1

The GENERAL CONTRACTOR shall be responsible for the quality of materials, used in the
construction of the PROJECT. The GENERAL CONTRACTOR further warrants that all
materials and other facilities incorporated into the work and turned-over to the OWNER upon the
completion of the PROJECT shall be brand new and free from any defect as specified by the
ARCHITECT. The GENERAL CONTRACTOR shall not incorporate thereon or use or
recommend the use of any material or substance that is hazardous to health.

19.2

The GENERAL CONTRACTOR warrants that it is a competent, qualified and experienced

contractor, equipped, organized, insured and financed to perform the works and complete the
PROJECT in an efficient and professional manner and meeting all of the requirements of this
AGREEMENT.

19.3

The GENERAL CONTRACTOR shall put up and maintain adequate protection of all its work
from damages and shall protect the property and equipment whether owned or rented by the
OWNER, as well as all materials furnished and delivered to it by the OWNER from damage,
injury or loss arising in connection with this contract until final acceptance of the PROJECT by
the OWNER.

19.4

The GENERAL CONTRACTOR represents and warrants to the OWNER that:

19.4.1 It is a company duly organized, validly existing and is current on all payments to
maintain such existence under the laws of the Republic of the Philippines.
19.4.2 It has all necessary power and authority to carry on its business as presently conducted
and to enter into and perform its obligations under this AGREEMENT to which it is a
party and each of the executions, delivery and performance by it of this AGREEMENT
has been duly authorized by all necessary actions on its part, does not require any
approval from any trustee, lessor or holder of any indebtedness or other obligation of it.
19.4.3 It is financially solvent, able to pay its debts as they mature, possessed of sufficient
working capital to complete its obligations under the AGREEMENT.
19.4.4 There is no action, suit or proceeding, at law or in equity, or official investigation before
or by any government authority, arbitration tribunal or other body pending or, to the best
of its knowledge, threatened against or affecting it or any of its properties, rights or
assets, which could reasonably be expected to result in a material adverse effect on its
validity or enforceability of the AGREEMENT.

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19.5

The GENERAL CONTRACTOR represents that it shall maintain throughout the period of this
AGREEMENT, including any extensions thereof, the adequate capitalization, financial
capability, technical know-how and manpower to undertake and complete the Works for the
PROJECT.

19.6

The GENERAL CONTRACTOR warrants that, on or before the date of completion of the
work, it shall have obtained any and all permits, clearances and approvals from the proper
authorities in accordance with its undertaking.

19.7

The GENERAL CONTRACTOR shall perform the work necessary to complete the PROJECT
and give all notices and comply with all other obligations under this AGREEMENT and the
Contract Documents promptly and with due diligence.

19.8

The GENERAL CONTRACTOR shall commence, perform and complete the PROJECT in an
expeditious and diligent manner in accordance with this AGREEMENT and the Contract
Documents including any amendments thereto.

19.9

The GENERAL CONTRACTOR shall, as a competent, qualified contractor experienced in the

design, engineering, procurement, construction of the PROJECT, use its reasonable endeavors to
adjust or schedule its performance of the PROJECT so as to avoid or minimize the effect of any
delay.
ARTICLE 20 SAFETY FACILITIES

20.1

The GENERAL CONTRACTOR shall provide safety facilities for access and inspection by the
OWNER, ARCHITECT, CONSTRUCTION PROJECT MANAGER or their representatives.
The GENERAL CONTRACTOR shall install, erect and properly maintain at all times, as
required by the conditions and progress of work, such barriers, lights, danger signs/other needed
signage and necessary safeguards as will protect workmen and the public.

20.2

The GENERAL CONTRACTOR shall assign a full time Safety Engineer to the job site during
the entire duration of the PROJECT.

20.3

All internal combustion engines and compressors used by the GENERAL CONTRACTOR for
the PROJECT shall be equipped with mufflers to reduce noise to a minimum. Pneumatic tires
shall be used on all equipment where applicable. During the entire construction period, the
GENERAL CONTRACTOR shall effectively control dust and other emissions on the site,
either by chemical treatment watering and sprinkling as necessary to satisfactorily allay the dust
or other emissions at all times.

20.4

The GENERAL CONTRACTOR shall take all necessary precautions for public safety and the
safety of his employees and workmen on the site. The GENERAL CONTRACTOR shall at all
times require his workers to wear hard hats, safety boots and goggles, uniforms (T-shirts) and
identification cards to prevent accidents and for proper identification.

ARTICLE 21 CERTIFICATE OF FINAL INSPECTION AND ACCEPTANCE

.1

Upon receipt of the written notice from the GENERAL CONTRACTOR that he has completed
the PROJECT in accordance with the AGREEMENT and is ready for final inspection and
acceptance, the CONSTRUCTION PROJECT MANAGER shall notify the OWNER and the
ARCHITECT, and the latter shall send their respective representative(s) to promptly make,
together with the CONSTRUCTION PROJECT MANAGER, such inspection. When both the
OWNERS and ARCHITECT'S representatives and the CONTRUCTION PROJECT
MANAGER determine that the said PROJECT is acceptable under the terms of this
AGREEMENT and that this AGREEMENT has been fully performed, they shall promptly
issue a Certificate of Final Inspection and Acceptance duly signed by them, stating that the
PROJECT provided for in this AGREEMENT has been completed. The OWNER,
ARCHITECT and the CONSTRUCTION PROJECT MANAGER, if the work warrants
acceptance, shall append their signatures to the certificate. Subject to the guarantee bond required

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under Article 12, the entire balance found to be due to the GENERAL CONTRACTOR and
noted in said Certificate of Final Inspection and Acceptance shall be paid by the OWNER within
sixty (60) working days from receipt of said Certificate of Final Inspection and Acceptance, the
GENERAL CONTRACTOR shall submit to the OWNER through the CONSTRUCTION
PROJECT MANAGER the following:
21.1.1 Three (3) sets of bounded blue print As-Built Plans.
21.1.2 One (1) set reproducible As-Built Plans.
21.1.3 One (1) CD containing the electronic file of As-Built Plans.
21.1.4 A sworn affidavit stating that all wages and salaries of its staff and employees and all
indebtedness connected with the WORKS (including but not limited to claims of or
credits to suppliers, sub-contractors and other creditors of the GENERAL
CONTRACTOR) have been fully settled; provided that in any case of any unpaid claim
or credit, the quit claim or credit, the quit-claim or release and waiver duly executed by
the concerned suppliers, sub-contractors or creditors in favor of the OWNER.
21.1.5 The guarantee bond required under Article 12.
21.1.6 Certificates of Inspections, clearances and permits from local governing agencies on all
installations requiring such certifications.
21.1.7 Warranty Certificates of Suppliers and Operation and Maintenance Manuals.
21.1.8 List/Names of immediate materials, stock no., type, supplier name and contact nos.
Where said material used in construction can readily be purchase for operation.
21.1.9 Keying Schedule.

ARTICLE 22 INTERPRETATION OF THIS AGREEMENT

22.1

.2

In interpreting and construing the provisions of this AGREEMENT and in determining the
intention of the parties hereto, resort shall be made to the Contract Documents. In line herewith,
this AGREEMENT and the Contract Documents shall be interpreted and construed together so
as to give harmonious effect to their respective provisions; Provided that, in the event of
irreconcilable conflict between the provisions of this AGREEMENT and those of the Contract
Documents, the provisions of this AGREEMENT shall prevail.
If any one or more provisions of this AGREEMENT is held by a court of competent jurisdiction
to be invalid or unenforceable, the remainder of the AGREEMENT shall not be affected but this
AGREEMENT shall be construed in a manner which, as nearly as possible, reflects the original
intent of the parties. Every part of the AGREEMENT shall be severable and separately valid
and enforceable.

ARTICLE 23 ARBITRATION CLAUSE

23.1
Should there be any dispute, controversy or difference between the parties arising out of this
AGREEMENT that may not be resolved by them to their mutual satisfaction despite earnest
efforts, then the matter shall be submitted to the Construction Industry Arbitration Commission
(CIAC) for arbitration under the Rules of Procedure Governing Construction Arbitration as
promulgated pursuant to Executive Order No. 1008 (the Construction Industry Arbitration Law).
23.2
An Arbitration Committee, composed of three (3) members shall be formed as follows: One
(1) member shall be chosen by the OWNER and one (1) member shall be chosen by the
GENERAL CONTRACTOR. These two (2) members, in turn, shall select a third member
acceptable to both of them. Either party may initiate the arbitration process by serving upon the
other party a written demand for arbitration in accordance with this AGREEMENT within

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fifteen (15) calendar days from the occurrence of any dispute, difference or controversy. The
demand shall set forth the nature of the controversy the amount involved, if any, the relief sought,
and the name of the arbitrator appointed by the party making the demand; and shall require the
other party on whom the demand is served to name its arbitrator. The arbitrators so named and
appointed by the parties must agree upon the third arbitrator within ten (10) days from notice of
appointment. The decision of the Arbitration Committee shall be final and binding upon the
OWNER and the GENERAL CONTRACTOR. Matters not otherwise provided for shall be
governed by the provisions of the Arbitration Law (Republic Act 876). The cost of arbitration
shall be borne jointly by both GENERAL CONTRACTOR and OWNER on 50-50 basis.
23.3
In case of litigation respecting the composition, proceedings or award of the Arbitration
Committee, venue shall be limited exclusively and solely in the proper court of Pasay City, Metro
Manila. In such case, the prevailing party shall be entitled to collect from the other a sum
equivalent to ten percent (10%) of the total amount due, as and for attorneys fees.

ARTICLE 24 TERMINATION CLAUSE

24.1

The OWNER may terminate or rescind this AGREEMENT, in whole or in part and consequently
refuse to allow the GENERAL CONTRACTOR to proceed with the works of the PROJECT in
the following occurrence/s:
24.1.1 If after giving due notice to the GENERAL CONTRACTOR to remedy such
occurrence or occurrences and the GENERAL CONTRACTOR refuses, or is unable to,
or fails to take steps satisfactorily to the OWNER to remedy such occurrence or
occurrences within forty-eight (48) hours after receipt of such notice the OWNER but
without prejudice to the claims of either party in respect of any breach prior to
termination; or
24.1.2 The GENERAL CONTRACTOR becomes insolvent, adjudged to be bankrupt or makes
or attempts to make any composition or scheme of arrangements with its creditors or any
of them or, being a company or corporation, passes a resolution for winding up, or an
order is made by a court of competent jurisdiction that the GENERAL CONTRACTOR
shall be wound up (other than voluntary winding up for the purposes of amalgamation or
reconstruction) or court of competent jurisdiction shall make an administration order in
respect of the GENERAL CONTRACTOR or a receiver or manager is appointed by
court of competent jurisdiction or the GENERAL CONTRACTORS creditors or any
of them or the GENERAL CONTRACTOR shall become subject to any of the
circumstances which entitle court of competent jurisdiction or any creditor to appoint a
receiver or manager, or which entitle court of competent jurisdiction to make a winding
up order or administration order in respect of the GENERAL CONTRACTOR; or
24.1.3 The GENERAL CONTRACTOR purports to assign or transfer this AGREEMENT for
any right or interest therein without the prior written consent of the OWNER; or
24.1.4 The GENERAL CONTRACTOR fails to comply with any pertinent law, ordinance,
rule and regulations; or
24.1.5 The GENERAL CONTRACTOR abandons the PROJECT; or
24.1.6 There is a delay of at least fifteen percent (15%) in the work schedule of the Works for
the PROJECT at any point in time.

24.2

Upon termination by the OWNER pursuant to Clause 24.1:

24.2.1 The GENERAL CONTRACTOR shall cease performance of the terminated work, but
shall perform such other/work or services or work not terminated as the OWNER may
direct for the purpose of protecting or storing any work in the course or performance.
24.2.2 The OWNER may complete or may engage third parties to complete the PROJECT and
for this purpose the GENERAL CONTRACTOR shall:

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24.3

24.2.2.1

Permit or procure permission for the OWNER or third parties acting on behalf
of the OWNER to enter the jobsite to remove and/or complete the work;

24.2.2.2

Provide all facilities and assistance reasonably requested by the OWNER; and

24.2.2.3

All sums of money that may be due to accruing from the OWNER to the
GENERAL CONTRACTOR shall cease to be due or to accrue and the
OWNER shall not be liable to pay to the GENERAL CONTRACTOR any
further monies on account of this AGREEMENT until the final cost and
expense of removing and/or completion of the PROJECT (including the
making good or rectification of any defects) has been ascertained by the
OWNER. If such amount when added to the monies paid to the GENERAL
CONTRACTOR before the date of termination exceeds the total amount
which would have been payable to the GENERAL CONTRACTOR had the
AGREEMENT not been terminated, the OWNER, at its sole discretion and
option, may deduct the difference from unpaid balance or payment due to the
GENERAL CONTRACTOR or recover it by other means as a debt due from
the GENERAL CONTRACTOR.

If the OWNER terminates the AGREEMENT in accordance with Article 24.1, the GENERAL
CONTRACTOR shall comply with all instructions of the OWNER including but not limited to
those in respect of:
24.3.1 The cancellation or assignment of outstanding commitments or contracts;
24.3.2 The performance of any work required for the completion, protection and storage of the
work performed;
24.3.3 The protection and/or removal of the copies of the Plans, Contract Documents and the
materials found in the PROJECT as directed by the OWNER;
24.3.4 The execution of all documents and all such other actions as may be required in order to
vest in the OWNER all rights, set-offs and benefits held by the GENERAL
CONTRACTOR under or in connection with the performance of the work on the
PROJECT;
24.3.5 The assignment to the OWNER of any pending sub-contracts as the OWNER may
request; and
24.3.6 Any other matter arising out of this AGREEMENT which the OWNER decides is
necessary or expedient.

24.5 If the OWNER terminates the AGREEMENT based on the grounds other than those provided
for under Article 24.1, the OWNER shall pay the GENERAL CONTRACTOR by way of full
and final statement for all work satisfactorily performed prior to the date of termination (in so far
as such amounts or items have not been covered by payments made prior to termination) the
portion of the Contract Price representing the value of such work together with the amount of any
costs, expenses and losses which have been properly and reasonably incurred by the GENERAL
CONTRACTOR directly and unavoidably on account of such termination and in respect of
which the GENERAL CONTRACTOR shall have provided full and proper substantiation to the
satisfaction of the OWNER provided that the OWNER shall not be liable to the
CONTRACTOR for the remaining portion of the CONTRACT PRICE over and above the
value of the work satisfactorily performed by the GENERAL CONTRACTOR.
24.6 Any substantial breach or violation by any party (Defaulting Party) of its obligations and
covenants under this AGREEMENT other than those listed herein shall entitle the other party
(Offended Party) to rescind or cancel this AGREEMENT, without the necessity of judicial
action, by giving the Defaulting Party thirty (30) days prior written notice to that effect. In
addition, the Defaulting Party shall be liable to the Offended Party to pay any and all actual
damages incurred by the latter as a result of such breach or violation, unless other provisions
provide for specific penalty or liquidated damages, in which case such penalty or damages will
apply.

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24.7 The termination of this AGREEMENT shall be without prejudice to any rights of either the
OWNER or the GENERAL CONTRACTOR which may have accrued prior to such
termination.
ARTICLE 25 LIENS AND CLAIMS
25.1
The GENERAL CONTRACTOR shall protect and hold all property of the OWNER free
from all liens, charges and other encumbrances.
25.2
Upon receipt of a notice from the OWNER, the GENERAL CONTRACTOR shall
discharge or cause to be discharged all liens, charges or other encumbrances attaching to or upon
any materials, tools, equipment or other items provided by the GENERAL CONTRACTOR for
use for or in connection with the performance of the PROJECT which in the opinion of the
OWNER may adversely affect the performance by the GENERAL CONTRACTOR of its
obligations under this AGREEMENT.
25.3
The OWNER may discharge any lien, charge or other encumbrances and may deduct from
payment due to the GENERAL CONTRACTOR or recover by other means as a debt due from
the GENERAL CONTRACTOR all costs and expenses reasonably incurred in so doing.

ARTICLE 26 - MISCELLANEOUS
26.1 The GENERAL CONTRACTOR hereby holds the OWNER free and harmless from any and
all claims for damages or liabilities which may be brought by any third person whomsoever by
reason of this AGREEMENT including its implementation, or the non-observance of any rule,
law, statute, ordinance, regulation or covenant herein contained.
26.2 Any notice, demand, request, or other communication under this AGREEMENT shall be in
writing and shall be deemed to have been duly given or made (a) if made by hand delivery, when
delivered, (b) if sent by ordinary mail, seven (7) calendar days after being deposited in the mails
or by registered mail, upon actual receipt thereof as stated in the registry card, postage prepaid,
and (c) if sent by facsimile to a facsimile receiver at the proper number of a party hereto as
specified below, when receipt is acknowledged, addressed as follows:
If to OWNER:

LEE MENG KONG

and
GRACE EVANGELINE M. STA ANA
SM Development Corporation
15TH
Floor Two E-com Center
J.W. Diokno Blvd. corner Harbor Drive
Mall of Asia Complex, Pasay City
FAX: 857-0207 Local 1152

If to CONTRACTOR:

________________________________________
_________________________________________
_______________________________________
_______________________________________
FAX : _______________________

26.3 Any payment or failure of the OWNER to enforce its rights and privileges under this
AGREEMENT shall not be construed as a waiver or renunciation of such rights and privileges.
26.4 No payment, failure or neglect on the part of the OWNER to exercise or enforce any of its rights,
privileges or remedy and no single or partial exercise thereof shall preclude any further or other
exercise of such right or remedy it may have under this AGREEMENT.

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26.5 Save where the AGREEMENT expressly provides to the contrary, every right and remedy
provided in the AGREEMENT for the benefit or in favor of the OWNER are cumulative and
shall not exclude any other right or remedy provided in the AGREEMENT or by law or equity.
26.6 The OWNER undertakes to extend to the GENERAL CONTRACTOR such assistance as the
parties may agree upon from time to time in the event that domestic or foreign letters of credit
need to be obtained by the GENERAL CONTRACTOR in the procurement of its materials and
supplies for the WORKS.
26.7 This AGREEMENT is binding upon the parties and their respective successors-in interest.
IN WITNESS WHEREOF, the parties hereto, have hereunto affixed their signatures to this
AGREEMENT on this ___________ day of _____________ at _______________ Philippines.
SM DEVELOPMENTCORP.
By:

___________________________________
________________________________
By:

LEE MENG KONG

Sr. Vice-President

________________________
_______________

GRACE EVANGELINE M. STA ANA

Vice President

JOEL T. ONG
Vice President

SIGNED IN THE PRESENCE OF:

_________________________

_________________________

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ACKNOWLEDGMENT

REPUBLIC OF THE PHILIPPINES )

______________________________) S.S.
BEFORE ME, this ____day of _____________at ___________________ Philippines, personally
appeared:
Name
Lee Meng Kong
Joel T. Ong
Grace Evangeline M. Sta Ana

Identification
Document/Number (CEI)

Date/Place Issued

TIN : 000-601-470
TIN : 110-207-354
TIN : 160-302-816

_____________________
_____________________
_____________________
Known to me and known to be the same persons who executed the foregoing instrument and
acknowledged to me that the same is of their free and voluntary act and deed and of the entities herein
represented.
It is further certified that the foregoing instrument refers to a Construction Agreement consisting of
twenty (20) pages including this page on which the acknowledgement is written with all pages duly
signed by the Parties herein and their instrumental witnesses at the proper places and duly impressed with
my notarial seal.
WITNESS MY HAND AND SEAL

NOTARY PUBLIC

Doc. No. ____

Page No. ____
Book No. ____
Series of 2014
______

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