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Form of Contract

CONSTRUCTION CONTRACT
<PROJECT>
Contract Package No. XX: <Contract Package Description>

KNOW ALL MEN BY THESE PRESENTS:

This CONTRACT made and entered into by and between:

<EMPLOYER>, a corporation duly organized and existing under and by virtue of laws
with offices at <Address>, duly represented herein by its Senior Vice President, and
hereinafter referred to as the “OWNER”.

- And -

<NAME OF CONTRACTOR>, a corporation duly organized and existing under and by

virtue of Philippine laws, with principal offices at <Address of Contractor>, duly
represented herein by its <Position of Representative>, <Name of Representative>, and
hereinafter referred to as the “CONTRACTOR”.

WITNESSETH, THAT:

WHEREAS, The OWNER needs the services of a competent and responsible contractor to
undertake the construction and completion of CP No. XX: <Description of Contract Package> of the
Proposed <Project> at <Address> (the “PROJECT”) within the OWNER’s time frame;

WHEREAS, the CONTRACTOR, representing that it is a contractor duly licensed to engage in the
contracting business and that it possesses the technical expertise, manpower pool, equipment, resources
and financial capability to provide the professional services and materials required to undertake and
complete the Project in accordance with the plans specifications and timetable of the OWNER.

WHEREAS, the OWNER, on the representations made by the CONTRACTOR, agreed to award
the contract and engage the services of the CONTRACTOR for CP No. XX: <Description of Contract
Package> of the Proposed <Project> at <Address> and the CONTRACTOR accepted the engagement
pursuant to the terms and conditions herein contained;

NOW THEREFORE, for and in consideration of the above premises, and the covenants
hereinafter stipulated, the parties hereto agree as follows:

Article 1

SCOPE OF WORK

1.1 The CONTRACTOR shall undertake the construction of the PROJECT for the OWNER in accordance
with the Plans, Technical Specifications, General Conditions, and other Contract Documents
listed in Article 2. Such scope of work is herein referred to as the "WORKS”.

1.2 The CONTRACTOR shall provide and furnish all the necessary labor, supervision and management,
tools, supplies, materials, equipment and plant, as well as power and other required utilities, and

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perform all acts and things necessary to carry out and complete the WORKS within the timetable
and to the satisfaction of the OWNER, ready for service and turn-over to the OWNER, all in strict
compliance with the foregoing hereof, and to the terms and conditions of this CONTRACT. In
addition to the foregoing, CONTRACTOR shall carry out the Project in good and workmanlike
manner, use only new and good quality materials that meet the specifications approved by the
OWNER, employ sound and accepted construction methods, and engage only such skilled, semi-
skilled and unskilled labor as are necessary.

1.3 The CONTRACTOR shall likewise be responsible for the following:

1.3.1 <Refer to Detailed Scope of Work enumerated under a separate section of the Bid
Documents>
1.3.2 GUARANTEED MAXIMUM QUANTITIES (GMQ). The CONTRACTOR shall confirm
the guaranteed maximum quantities for the Owner Supplied Materials necessary for the
completion of the Project. Additional quantities above the GMQ shall be supplied by the
CONTRACTOR at no additional cost to the OWNER. Excess in the GMQ should be
returned to the Owner.

1.4 The CONTRACTOR shall, at its own expense, also secure and be responsible for the following:

1.4.1 All permits from the appropriate Government authorities necessary to carry out
and complete the Project.
1.4.2 All certificates of inspection or testing that may be required by authorities having
jurisdiction over the Project.
1.4.3 Testing of materials to be used for the Project. The results of the tests shall be
made available to the OWNER upon the latter’s request.

1.5 The CONTRACTOR shall not change, modify or alter the final plans and specifications of the
Project approved by the OWNER without the prior written consent and permission of the OWNER.
Tolerance by OWNER of such changes or modifications shall not constitute or be deemed as
OWNER’s approval.

1.6 The CONTRACTOR shall employ sufficient number of competent workmen and at all times
maintain an adequate supply of tools, materials and equipment to carry out the various phases of
the work in accordance with the agreed program, subject to any modification mutually agreed
upon in writing by both parties.

1.7 The CONTRACTOR shall diligently supervise the Project until its completion and shall assign full-
time Project Engineers and an independent Quality Control Group who will be at all times present
at the project site during all the working shifts to ensure proper work and schedule
implementation. The Project Engineers will be the CONTRACTOR’s authorized representatives
for the Project and the OWNER and/or his authorized representative reserve the right to seek
their replacement should it determine that their retention shall be detrimental to the progress of
the Project.

1.8 The OWNER may order changes in the scope of work consisting of additions, deletions, or
modifications, as well as the options to purchase and supply materials therefore, in which case the
Contract Price and, if warranted, the Construction Period shall be accordingly adjusted upon
mutual agreement of the parties. All such changes, however, must be authorized in writing by the
OWNER.

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1.9 The GENERAL CONTRACTOR’s Work shall be expanded to include the supervision and control
of the Nominated Sub-Contractor’s work under its Specialty Construction Contract.

1.10 Responsibilities

The GENERAL CONTRACTOR shall be fully responsible to the Owner for the Nominated Sub-
Contractor’s correct, quality, and timely performance and completion of its work, in accordance
with the Contract and Contract Documents, especially the Specifications, Plans and Drawings, the
Milestone Dates based on the Integrated Bar Chart/S-Curve, the Nominated Sub-Contractor’s
Contract Documents, and the Owner’s instructions, all of which the General Contractor is deemed
to have accepted, in such a way as of such works were rendered by the General Contractor itself.

Article 2

CONTRACT DOCUMENTS

2.1 The following, collectively referred to as the “Contract Documents”, shall be considered as integral
parts of this Contract, to wit:

2.1.1 This Construction Contract

2.1.2 General Conditions of Contract
2.1.3 Engineering Design Plans, Drawings and Specifications
2.1.4 Bidding Guidelines, Bid Bulletins, Post-Bid Bulletins and Owner’s instructions
issued during Bidding
2.1.5 Notice to Proceed dated <Date of NTP> issued by the OWNER
2.1.6 Approved Master Construction Schedule (PERT-CPM / S-Curve)
2.1.7 CONTRACTOR’s Final Proposal dated <Date of Final Proposal> (Lump Sum
Proposal)
2.1.8 CONTRACTOR’s Bill of Quantities dated <Date of Final BOQ submission based
on negotiated amount>
2.1.9 Surety Bond
2.1.10 Guarantee Bond
2.1.11 Performance Bond
2.1.12 Approved Project Organizational Chart
2.1.13 Approved Manpower and Equipment Utilization Schedule
2.1.14 Material Compliance Form

2.2 The foregoing Contract Documents shall be interpreted and constructed together so as to give
harmonious effect between them and are arranged in the order of descending preference. In case
of ambiguities or discrepancies, however, the same shall be explained, interpreted or resolved by
the OWNER and shall thereupon issue to the appropriate instructions to the CONTRACTOR.

2.3 The parties hereto may execute such other documents relating to the Works after the execution of
this Contract and such documents, when signed by the authorized representatives of the parties,
shall also form part of the Contract Documents.

2.4 The Contract Documents contain the entire agreement and understanding between the OWNER
and CONTRACTOR as to the subject matter hereof, and the same supersedes all prior
agreements, commitments, representations, writing, and discussions between them. All other
documents relating to the subject matter executed by the parties prior to this Construction

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Contract but not forming part of the Contract Documents enumerated in Section 2.1 are deemed
waived and/or abandoned.

Article 3

CONTRACT PRICE

3.1 For and in consideration of the faithful and satisfactory accomplishment of the Works and all the
obligations specified in this Contract, the OWNER agrees to pay the CONTRACTOR the Contract
Price in the amount of <Contract Amount>, the manner of payment of which shall be in
accordance with Article 4.

3.2 This Contract Price shall be inclusive of the 12% Value Added Tax, expanded/creditable
withholding tax, contractor’s tax, and all other miscellaneous fees, charges or taxes, whether
national or local. In this regard, the OWNER shall deduct all taxes due from the CONTRACTOR
under the Contract as withholding tax agent and remit the same to the proper Government
Agency. Comment [admin1]:

3.3 Except as expressly provided in Article 6 for change orders and Article 7 for labor costs
adjustments, the Contract Price shall not be subject to any escalation due to fluctuations in the
prices of materials and equipment. All other costs and expenses over and above the agreed
Contract Price shall be for and the sole account of the CONTRACTOR.

Article 4

MANNER OF PAYMENT

4.1 The OWNER shall pay the CONTRACTOR a downpayment in the amount of PESOS: ______ &
00/100 (PhP 0.00) inclusive of VAT, upon the submission by the CONTRACTOR of the Surety
Bond, and Notice to Proceed/Letter of Award hereof and provided that this downpayment shall be
subject to re-coupment by the OWNER by way of deductions from the CONTRACTOR’s monthly
progress billings, until fully liquidated.

4.2 The balance of the Contract Price shall be paid to the CONTRACTOR through progress billings
based on percentage of accomplishment of the Work satisfactorily completed by the
CONTRACTOR through a Summary of Accomplishment prepared by the Project Manager and
accepted by the OWNER, following the foregoing procedure:

4.2.1 The billing for the actual deliveries shall be submitted to the OWNER through the
Project Manager for verification, accompanied by:

a. A summary of accomplishment prepared by the CONTRACTOR and certified by the

Project Manager for approval of the OWNER

b. Key plans and photographs of the accomplishment

c. A certification prepared by the CONTRACTOR that all wages of workers falling due
within the billing period as well as all materials and equipment installed or utilized
for the accomplishment period have been fully paid and settled

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d. Copies of test results demonstrating that the items accomplished have passed the
requirements of the plans and specifications.

e. Monthly Report inclusive of all progress information and data required by the
Project / Project Manager

4.2.2 Billings for materials shall be limited to those permanently installed in place, to the
exclusion of off-site fabrication works and materials.

4.2.3 Billings shall be deemed correct and accepted unless the OWNER, after
verification, serves to the CONTRACTOR a written objection or exception to the billing
within ten (10) calendar days from the date of actual receipt thereof and sets out the
grounds therefore.

4.2.4 Billings not disputed shall be paid by the OWNER within forty five (45) calendar
days from actual receipt of the billing and the required supporting documents. Contested
billings, on the other hand, shall be paid by the OWNER within the forty five (45) calendar
days from its resolution and/or settlement, provided that contested billings should be
resolved not later than fifteen (15) days from receipt of the objection, otherwise, the
CONTRACTOR may avail of its rights under Article 11 herein.

4.2.5 The OWNER shall deduct from the progress billing payments the appropriate
taxes to be withheld from the CONTRACTOR, as well as the re-coupment of the
downpayment until fully liquidated.

4.2.6 The OWNER shall likewise retain an amount equivalent to TEN PERCENT (10%)
from each progress billing payments. This retention shall serve as security for the
CONTRACTOR to repair and rectify defects and damages on the Works arising from or
due to faulty workmanship and/or defective contractor-supplied materials occurring or
discovered before final acceptance and payment of the last billing. The retention, shall be
released to the CONTRACTOR upon submission of Guarantee Bonds and Certificate of
Final Acceptance.

4.3 The foregoing provisions notwithstanding, the OWNER shall have the right to withhold any
payment being claimed by the CONTRACTOR in case of non-compliance or defective or irregular
compliance with any of the CONTRACTOR’s obligation under the Contract Documents; provided
that the OWNER may withhold only such amount pertaining to the contested portion of the Works
and only when the CONTRACTOR fails to rectify the such portion of the Work within five (5) days
from receipt of written notice from the OWNER; provided further that the parties hereto shall
endeavor to resolve the dispute within a period of fifteen (15) days from the time of withholding.
The OWNER shall release the amounts withheld after the CONTRACTOR shall have rectified
such defects and other obligations to the satisfaction of the OWNER or upon the resolution of the
dispute. While the OWNER is withholding a payment due to the CONTRACTOR pursuant to this
provision, any suspension of work on the part of the CONTRACTOR shall be deemed a material
breach of the Contract.

4.4 The payment of the progress billings and the release of the amounts retained by the OWNER to
the CONTRACTOR shall not be construed as admission by the OWNER that the CONTRACTOR
has satisfactorily performed the Works in accordance with the Contract Documents, or that such
Works are free from defects of any kind, hidden or otherwise.

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4.5 The GENERAL CONTRACTOR shall have the duty to fairly and promptly review, process and
prepare an independent evaluated accomplishment report and process within five (5) days from
receipt of all billings of the Nominated Sub-Contractor for completed and accepted Work, and to
then forward these billings to the Owner. The Owner will retain the rights and duty to directly pay
the Nominated Sub-Contractor. However, if a Nominated Sub-Contractor files a written complaint
with the Owner, copy furnished the General Contractor, for the delay or understatement of the
Nominated Sub-Contractor’s billings caused by the General Contractor, then the Owner may, if it
finds the written complaint to be valid, pay the Nominated Sub-Contractor regardless of the
General Contractor’s action on the billing and furnish the General Contractor a copy of the
payment document.

Article 5

CONTRACT PERIOD

5.1 The CONTRACTOR shall complete the Works required under this Contract on or before
<Completion Date> or <Contract Duration> calendar months reckoned from <commencement
date>.

5.1.1 Milestone Dates

The GENERAL CONTRACTOR shall strictly enforce the Milestone Dates based on
Integrated Bar Chart/S-Curve, and shall not grant any extension thereof without the prior
written consent of the Owner; provided, that the General Contractor may require the
Nominated Sub-Contractor to commence its work earlier according to an abbreviated
schedule at no additional cost to the General Contractor and the Owner; and provided,
that the General Contractor shall always inform the Owner of any representations made
by the Nominated Sub-Contractor as to the cause of any delays in the progress or
completion of its work.

5.2 It is understood that time is an essential consideration of this Contract and that, in the event that
CONTRACTOR fails to complete and deliver the Works within the Contract Period, unless the
delay or non-completion is due to justifiable reasons allowed under this Contract, the
CONTRACTOR agrees to pay the OWNER liquidated damage equivalent to one tenth of one
percent (1/10 of 1%) of the Contract Price for each and every calendar day of delay (Sundays and
legal holidays included) until Works are finally completed and delivered in accordance with the
specifications of this Contract; provided that the total liquidated damages shall not exceed ten
percent (10%) of the total Contract Price. The OWNER may deduct such liquidated damages
from any amount due or to become due to the CONTRACTOR under this Contract.

5.3 The Contract Period may be extended by the OWNER in favor of the CONTRACTOR in case of
the following justifiable causes of delay of the Project.

5.3.1 Force majeure or events attributable to natural or human causes or phenomena

beyond the control of the CONTRACTOR which make it impossible for the
CONTRACTOR to carry out in whole or in part its obligations under this CONTRACT;

5.3.2 Exceptional adverse climatic conditions;

5.3.3 Any alterations affecting the critical path in the Work approved and ordered by the
OWNER;

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5.3.4 Site inaccessibility not attributable to the fault or negligence of the

CONTRACTOR;

5.3.5 Any act or omission of the OWNER, including the issuance of a hold-order or
suspension of work;

5.3.6 Any other event not attributable to the act, fault or negligence of the
CONTRACTOR which make it impossible for the CONTRACTOR to carry out its
obligations under this Contract.

5.4 In the event that the CONTRACTOR encounters any of the justifiable causes or reasons for delay
as allowed herein, the CONTRACTOR shall submit to the OWNER within ten (10) calendar days
after encountering such cause or causes a written request for an extension of the Contract Period,
indicating therein the specific reason for the delay and the extension period requested.

5.5 The foregoing provisions notwithstanding, no extension of the Contract Period shall be granted in
the following instances:

5.5.1 Ordinary unfavorable weather conditions or monsoon rains;

5.5.2 Non-availability of laborers, supervisors, equipment or materials , including

power, water and other utilities, that are supposed to be furnished or supplied by the
CONTRACTOR;

5.5.3 Labor problems, including strikes, slowdowns, pickets, or lock-outs, involving the
CONTRACTOR’s employees, workers or personnel or those of its Sub-Contractors,
agent, or supplier;

5.5.4 Disputes of the CONTRACTORS with its materials men and suppliers.

5.6 The OWNER shall have the exclusive option of granting a request for extension and determining
the extension period to be allowed in favor of the CONTRACTOR to compensate for the lost time,
which option shall not be unreasonably withheld or delayed.

5.7 The foregoing provisions notwithstanding, no extension of the Contract Period, even if granted or
allowed by the OWNER, shall be valid unless and until the CONTRACTOR causes or secures the
corresponding extensions of the bonds and insurances required under this Contract in favor of the
OWNER; provided that in case of extensions by reason of delays caused by the OWNER, the
OWNER shall bear the cost of the insurance premium for the extension. For this purpose, the
CONTRACTOR shall be obliged to notify its bondsmen and insurers of all extensions of the
Contract Period and show proof that the bondsmen and insurers agreed to remain bound to the
OWNER during the extension period(s) under the same terms and conditions as in the original
period. The OWNER shall not be obliged to grant an extension, even the circumstances falls
under any of the justifiable causes allowed in this Contract, if the extension should result in the
invalidation or impairment of any of the existing bonds and insurances required under this
Contract, unless the CONTRACTOR could provide a substitute guaranty for the OWNER.

5.8 If at any time during the Contract Period, the CONTRACTOR incurs a slippage of THIRTY (30)
CALENDAR DAYS in the Construction Schedule, the OWNER may require the CONTRACTOR to
submit within seven (7) calendar days from demand a confirmed catch-up schedule, including the
list of resources required therefore to remedy the delay/slippage incurred over a period of thirty

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(30) calendar days. The purpose of this Section is merely to enable the CONTRACTOR to
complete the Works within the original Contract Period and not to grant an extension therefore.
Should the 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 course of action:

5.8.1 Immediately upon notice to the CONTRACTOR, take-over and complete the
Works either by itself or through another Contractor. In such case, the temporary
facilities, materials, equipment, tools and resources of the CONTRACTOR on site shall
be at the disposition of the OWNER until the Works unfinished by the CONTRACTOR are
completed. The difference between the cost reasonably incurred and substantiated by the
OWNER to complete the Works and the Contract Price balance shall be for the account
of the CONTRACTOR and shall be changed against whatever billings are still due to the
CONTRACTOR or the Performance Bond; or

5.8.2 Terminate this Contract pursuant to Article 10 hereof.

5.8.3 Imminent Slippage or Delay

In the event that the Nominated Sub-Contractor is, in the reasonable judgment of the
GENERAL CONTRACTOR, in danger of incurring Slippage or Delay with no reasonable
chance of recovery, then the GENERAL CONTRACTOR shall have the right to take over
the Nominated Sub-Contractor’s Specialty Construction Contract upon prior written
consent of the Owner, which consent shall not be unreasonably withheld. In such event,
the provisions of Section 5.8.4 shall apply; provided, all costs for the takeover shall be for
the account of the Nominated Sub-Contractor.

5.8.4 Slippage or Delay Due to Nominated Sub-Contractor

If, due to a cause effectively attributable to the Nominated Sub-Contractor, there shall be,
as determined by the Owner, unjustified Delay in the Completion Schedule of the Work of
thirty (30) calendar days, or unjustified Slippage of more than thirty (30) calendar days
with no reasonable chance of recovery, then, without prejudice to the other remedies
which the Owner may have, the Owner shall be entitled to a Penalty equivalent to the
following:

5.8.4.1 Value of the Nominated Sub-Contractor’s Performance Bond, which the Owner
can collect by drawing on the Nominated Sub-Contractor’s Performance Bond;

5.8.4.2 Value of the Nominated Sub-Contractor’s Retention Amount and Additional

Retention Amount, which the Owner can automatically apply in payment of the
Penalty;

5.8.4.3 Value of the Nominated Sub-Contractor’s unbilled executed work, which the
Owner can automatically apply in payment of the Penalty;

5.8.4.4 Value of the Nominated Sub-Contractor’s materials and equipment on the

Project Site, which the Owner can collect by confiscating the Nominated Sub-
Contractor’s materials and equipment on the Project Site; and

5.8.5 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.

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Article 6

CHANGES

6.1 Change Orders

Without prejudice to the provisions of the Contract, the Owner may, from time to time, without
invalidating the Contract, issue Change Orders regarding Changes in the Work or in the Plans
and Specifications of the Project, in which case the provisions of the Contract and Contract
documents shall apply to all such Changes, with the same effect as if they were embodied in the
original Contract or Plans and Specifications, except that the Completion Period may be extended
by the Owner if said Changes will affect the Critical Path Schedule of the Project. Prior to the
issuance of such Change Orders, the Owner or Owner’s representative may issue Project
Manager’s Instruction when required under the circumstances.

6.2 Pricing of Changes

In case a Change Order is required by the Owner, then the following pricing shall apply with
respect to the Change.

6.2.1 If the items under the Change Order are covered by the Bill of Quantities of the
Contract Documents, the prices in the Bill of Quantities shall apply for both deductive and
additive works.

6.2.2 Otherwise, the following formula shall apply:

Additions. Total cost of additional work shall be based on direct cost of materials, labor
and equipment plus fifteen percent (15%) mark-up to cover overhead, profit and E-Value-
Added Tax (E-VAT). Prices of materials shall be based on prevailing market prices at the
time the change is made by the Owner.

Deletions. Total cost of deleted Work shall be the summation of the direct cost of
materials, labor, and equipment that would have been used for the deleted Work. Prices
of materials, labor, and equipment, as well as provisions for escalation which are deemed
as already incorporated in the bid price, shall be based at the time the bid was submitted
by the Contractor.

Article 7

CONTRACT PRICE ADJUSTMENT

7.1 The labor cost component of the Contract Price is based on the minimum wage set for the
National Capital Region (NCR) as of July 2011. In the event of compulsory increase on the
minimum wage or imposition of a mandatory allowance any time thereafter and during the original
Contract Period or extensions thereof granted pursuant to this Contract, the Contract Price shall
be adjusted based on the following formula:

A x B xC xD
Minimum Wage at the time of Award

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Where A = Labor portion as calculated from the Bid

B = 70% affected by the labor adjustment
C = Balance of Work upon effectivity
- based on Master Construction Schedule, if delayed
- based on actual, if ahead
D = Amount of increase in the minimum wage

7.2 The foregoing provision notwithstanding, no labor adjustment shall be allowed beyond the original
Contract Period if the delay in completion of the Work is by reason of fault or negligence
attributable to the CONTRACTOR.

Article 8

BONDS AND INSURANCE

8.1 The CONTRACTOR shall, not later than fifteen (15) calendar days from the execution of this
Contract and as a condition for the release of the Downpayment and subsequent payments for
progress billings, submit to the OWNER the following bonds and insurances which the
CONTRACTOR shall, at its own expense, procure from a reputable bonding or insurance
company acceptable to the OWNER.

8.1.1 Surety Bond in an amount equivalent to the downpayment of the final contract
amount to guarantee the downpayment released by the OWNER for the execution of the
Works;

8.1.2 Performance Bond in the amount equivalent to twenty five percent (25%) of the
contract amount to guarantee the full and faithful compliance of the CONTRACTOR to the
terms and conditions, provisions, and stipulations of this Contract, including the payment
of liquidated damages authorized under this Contract;

8.1.3 Contractor’s All Risk Insurance (CARI) in the amount equivalent to the contract
amount including Third Party Liability and Liability to Owner’s Employees.

8.1.4 Contractor’s Employees Accident Insurance.

8.2 The foregoing bonds and insurances shall remain in full force and effect during the entire Contract
Period and all extensions thereof until the completion of the Project and the issuance of the
Certificate of Completion and Final Acceptance by the OWNER.

8.3 In case the OWNER grants the CONTRACTOR an extension of the contract period, the coverage
of the Payment and Performance Bonds shall likewise be extended and the premium and other
charges that may be due in connection with the extension of the bonds and insurance shall also
be for the account of the CONTRACTOR. In this regard, the OWNER may withhold from any
payment due to the CONTRACTOR the amount equivalent to the value of the additional bonds
and insurances required until the same shall have been posted.

8.4 In case of delay in the completion of the Works, the OWNER shall require the CONTRACTOR to
secure the extension of the Payment and Performance by such period the OWNER deems
adequate to complete the Project and the issuance of the Certificate of Completion and Final
Acceptance. OWNER may withhold from any payment due to the CONTRACTOR the amount

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equivalent to the value of the additional bonds and insurances required until the same shall have
been posted. The foregoing notwithstanding, if the extension of the period was due to delay in the
Works caused by the OWNER, the premium for the extensions of the bonds and insurance shall
be for the account of the OWNER.

8.5 The aforementioned bonds shall extend to include contract changes that may be made during the
progress of the construction work and the Performance Bond shall be increased by
supplementary bonds equivalent to Twenty Five percent (25%) of the cost of any additional or
extra work authorized by the OWNER.

8.6 In the event of the rescission or termination of this Contract for breach thereof due to the fault of
the CONTRACTOR, the OWNER may immediately proceed against the Surety and/or
Performance Bonds for any and all claims against the CONTRACTOR.

Article 9

WARRANTIES AND REPRESENTATIONS OF THE CONTRACTOR

9.1 The CONTRACTOR represents that it had and shall maintain throughout the period of this
Contract, adequate capitalization, financial capability, technical know-how and manpower to
undertake and complete the Works.

9.2 The CONTRACTOR warrants that it shall obtain all permits, clearances, and approvals from the
proper authorities in accordance with its undertaking or as required by the OWNERS.

9.3 The CONTRACTOR shall provide everything necessary or appropriate towards the proper
deliveries and completion of the Project according to the true intent and meaning of the drawings,
plans and specifications and other Contract Documents taken together, whether the same may or
may not be particularly shown on the drawings or described in the specifications; provided that,
the same is reasonably inferred there from. If the CONTRACTOR finds any discrepancy in the
drawings and specifications, the CONTRACTOR shall immediately refer the same to the OWNER
who shall finally decide the matter. It is understood that the CONTRACTOR anticipated such
discrepancies in the plans, specifications and the actual conditions during the bidding and before
the awarding of the services contemplated herein.

9.4 The CONTRACTOR hereby recognizes the position of trust and confidence reposed on it by the
OWNERS under this Contract and agrees to furnish its best skill and judgment to cooperate with
the OWNER’S authorized representatives in furthering efficient business administration and
superintendence in the performance of this construction and to secure the execution of this
Contract in the soundest way, in the most expeditious and economical manner, consistent with the
interest of the OWNER.

9.5 The CONTRACTOR hereby warrants and guarantees that all the materials and machineries it will
supply this Contract are new, first class, free from defects, in good working order and shall fully
comply in every respect with the specifications, approved samples and other requirements of the
Contract Documents. All materials and workmanship shall be of the respective kinds describe in
the specifications, and the CONTRACTOR shall, upon the request of the OWNER, provide
brochures and supporting documents to prove that the quality of the materials are such as
specified. The CONTRACTOR shall not substitute any material that is required to be furnished
under this Contract unless written approval is first obtained from the OWNER.

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9.6 In case of any defect(s) on workmanship or materials which becomes apparent in the course of
the construction and which in the OWNER’S reasonable opinion are unsound or unacceptable,
the CONTRACTOR shall, at its own expense, tear down and replace such portion of the work
done and/or materials delivered or correct such defect(s).

9.7 The CONTRACTOR shall be responsible for all damages to, and for the necessary repair of
private streets, sidewalks, curbs, and pavements, developments by other entities and other
properties, whether public or private occasioned by their use or opening in connection with or as a
consequence of the Works that are attributable to the CONTRACTOR; shall make good the same
to the lawful satisfaction of the proper authorities or party; and hereby holds the OWNER free and
harmless from any such damage or repair.

9.7.1 The CONTRACTOR shall put up and maintain adequate protection of all its works from damages
and shall protect the property and equipment which may be found in the site of the Works,
whether owned by, rented or turned over to the OWNER.

Article 10

RIGHTS AND RESPONSIBILITIES OF THE OWNER

10.1 The OWNER shall have the right to supply the CONTRACTOR with additional drawings,
instructions and documents as it may deemed necessary for proper and adequate prosecution of
the Works.

10.2 The OWNER may terminate this Contract without incurring any liability whatsoever to the
CONTRACTOR (aside from payments for Works accomplished) by giving fifteen (15) days notice
in writing to the CONTRACTOR upon any of the following grounds:

10.2.1 The CONTRACTOR, without just cause, violated any of the conditions of this
Contract or any Contract Documents, or any of its warranties under this Contract and fails
to cure such violation within a period of five (5) days from written demand of the OWNER.

10.2.2 The CONTRACTOR abandons the Project without any just cause or assigns the
execution of the Works or any portion thereof to other parties without the prior written
consent of the OWNER;.

10.2.3 The CONTRACTOR fails or refuses, without just cause , to continue works on the
Project by reason of any disagreement with the OWNER;.

10.2.4 The CONTRACTOR fails to execute the Project in good faith, or in accordance
with the plans and specifications;

10.2.5 The CONTRACTOR fails to recover its sixty (60) calendar days slippage in the
Construction Schedule despite a thirty-day catch-up schedule and it becomes apparent
that it will not be able to complete the Project within the period stipulated;

10.2.6 The CONTRACTOR files a petition for suspension of payment or for insolvency,
or is placed under receivership, or goes to involuntary liquidation, or enters into an
arrangement or assigns its assets or this Contract in favor of its creditor;

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10.2.7 The CONTRACTOR fails, despite demand of the OWNER or its representative,
to replace and/or provide qualified superintendents, competent workmen, or appropriate
material acceptable to the OWNER.

10.3 In the event of termination of this CONTRACT by reason of default on the part of the
CONTRACTOR pursuant to the above Section 10.2, the OWNER may takeover and complete the
WORKS and/or arrange for any other contractors to do so. The CONTRACTOR shall then
remove its equipment and temporary works from the PROJECT site within 30 days from its
receipt of the notice of termination or as soon as practicable from receipt of such notice. Upon the
notice of termination, the OWNER may withhold any amount owing to the CONTRACTOR at the
time of termination for services already rendered and/or materials delivered and taken over by the
OWNER and until the extra costs of completion of the unfinished works and/or remedying of any
defects in the CONTRACTOR’S work as reasonable incurred and substantiated by the OWNER,
and any liquidated damages for delay which have accrued prior to termination have been
established as due against the CONTRACTOR. After recovering any such ascertained cost and
damages, the OWNER shall release and pay the CONTRACTOR whatever balance from the
amount withheld by the OWNER which was then due CONTRACTOR at the time of termination.

10.4 The OWNER shall exercise the right to approve the materials and workmanship of the
CONTRACTOR and require the latter that only materials conforming to the specifications and
equipment complying with the required standards of quality as detailed in the specifications be
used in the Project and reject those which do not conform thereof or which are defective. Toward
this end, the CONTRACTOR is obliged to furnish for approval by the OWNERS, samples of
materials for examination and testing.

10.5 The OWNER shall have the right to inspect the work being done by the CONTRACTOR to ensure
that the same is being done properly in accordance with the prescribed plans and specifications.
Work that will be covered before it is done should be first presented to the OWNER for inspection
and work covered without such presentation and inspection may be ordered uncovered at the
CONTRACTOR’S expense. Work found not to have been done correctly shall be condemned and
ordered re-done. Even if work had passed inspection, but before final acceptance, if the OWNER
suspects that the work was done not in accordance with the plans and specifications, it may be
removed or even torn down and the CONTRACTOR shall be obliged to comply with this order. If
the inspection would later show that the works was not correctly done, the CONTRACTOR shall
shoulder the cost of removal and reconstruction; if the inspection, however, should show that the
work was properly done, the CONTRACTOR shall be paid the actual direct cost incurred for such
inspection, removal and reconstruction, plus 15% mark-up and, if appropriate, the
CONTRACTOR shall be granted an extension of the Contract Period.

10.6 The OWNER is entitled to be indemnified by the CONTRACTOR for any and all losses, claims,
demands, suits, actions, recoveries, and judgment of every nature and description brought or
recovered against the OWNER to the extent that they arise from the execution of the Works by
the Contractor or by reason of any act or omission of the CONTRACTOR, its agents or
employees.

10.7 The OWNER may suspend or discontinue the execution of the Project by reason of problems
encountered whatever may be its cause. In such a case, the CONTRACTOR shall be entitled to
due compensation for Work accomplished to the satisfaction of the OWNER up to the time this
Contract is rescinded, terminated or cancelled. Upon payment of the due compensation to the
CONTRACTOR, the parties hereto shall be mutually released of all further obligations under this
Contract.

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10.8 Should the suspension subsist for a continuous period of 60 days, CONTRACTOR may terminate
this Contract. In case of termination of this Contract under this Section, either at the instance of
OWNER or CONTRACTOR, OWNER shall pay CONTRACTOR within 30 days from the effective
date of termination the following:

10.8.1 amounts due CONTRACTOR for work accomplished up to the time this Contract
is terminated;

10.8.2 cost of plant, and materials ordered for the Works which have been delivered to
CONTRACTOR, or of which CONTRACTOR is liable to accept delivery and this
plant/materials shall become the property of OWNER when paid for by OWNER;

10.8.3 any other cost or liability which in the circumstances was reasonably incurred by
CONTRACTOR in the expectation of completing the Works;

10.8.4 demobilization costs.

Article 11

RIGHTS OF THE CONTRACTOR

11.1 CONTRACTOR may have the right to suspend work on the Project or terminate this Contract by
giving fifteen (15) days notice in writing to the OWNER upon the following reasons:

11.1.1 Work on the Project has to be stopped in compliance with the order of lawful
authority, except on instances where the CONTRACTOR failed to comply with any
national or local law, ordinance, rule or regulation in relation to its execution of the Works
or which under this Contract is its obligation to comply;

11.1.2 The OWNER fails to perform its obligations under this CONTRACT through no
faults of the CONTRACTOR, including but not limited to non-payment of progress billing
for a period exceeding forty five (45) days from the end of the period allowed the OWNER
for payment of duly validated billings;

11.1.3 OWNER assigns this Contract or any of its obligation herein without the prior
written consent of the CONTRACTOR;

11.1.4 OWNER becomes bankrupt or insolvent, goes into liquidation, has a receiving or
administration order made against it, compounds with its creditors, or carries on business
under a receiver, trustee or manager for the benefit of its creditors, or if any act is done or
event occurs which under the law has a similar effect to any of these acts or events.

11.2 Upon the resumption of the work after a valid suspension pursuant to the above Section 11.1, the
CONTRACTOR shall be entitled to an extension of the Contract Period and reimbursement of
costs it incurred in the adjustment of the period of coverage of the Bonds and Insurances required
under this Contract without prejudice to the entitlement of CONTRACTOR to be paid any sums
due for services rendered prior to suspension and all the costs incurred by CONTRACTOR during
and as a result of the suspension.

11.3 In the event of termination pursuant to above Section 11.1, the OWNER shall pay CONTRACTOR
in accordance with Section 9.7 herein plus the amount of any loss of profit or other loss or

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damage sustained by CONTRACTOR as a result of termination, and OWNER shall return to

CONTRACTOR all the latter’s bonds and insurance.

Article 12

COMPLETION AND FINAL ACCEPTANCE

12.1 The OWNER, Project Manager, and the CONTRACTOR shall conduct the joint inspection of the
Project within five (5) days of the request for final inspection, unless the parties hereto mutually
agree on a later date. The parties shall conclude the joint inspection within thirty (30) calendar
days from its commencement unless the parties should mutually decide to extend the same.

12.2 If the Works are found defective, however, the OWNER shall notify the CONTRACTOR of such
defects by issuing an Official Punch List. Upon the correction of the items contained in the Official
Punch List, the CONTRACTOR shall again inform the OWNER of its completion and request for
another joint inspection within five (5) calendar days from receipt of the said notice.

12.3 If the Works are eventually found to be satisfactorily done, the OWNER shall, within fifteen (15)
calendar days from the conclusion of the inspection or re-inspection, issue the Certificate of
Completion and Final Acceptance and release the payment for the last billing of the Contract Price
as well as the balance of the retention, if any, upon the submission of the following:

12.3.1 The CONTRACTOR’S Sworn Affidavit and Undertaking that all taxes, obligations
on materials used and delivered, and wages of labor employed in connection with this
Contract have been fully paid and that the CONTRACTOR shall render the OWNER, its
stockholders, officers, employees, assigns and successors, free and harmless from these
possible claims;

12.3.2 Warranty Bond from a reputable bonding company acceptable to the OWNER,
equivalent to TEN PERCENT (10%) of the total Contract Price including the cost of
additional or extra works, to guaranty the Works for defects in workmanship and
contractor-supplied materials for a period of one (1) year from the date of completion and
acceptance;

12.4 For a period of one (1) year reckoned from the date of final acceptance by the OWNER, the
CONTRACTOR warrants the Works against all defects in workmanship and quality of contractor-
supplied materials, or those not in accordance with this Contract, or arising from the neglect or
failure or the CONTRACTOR to comply with any obligation, expressed or implied , under this
Contract. All defects made known to the CONTRACTOR during this one-year period shall be
immediately repaired or replaced by the CONTRACTOR within fifteen (15) calendar days from
notice or demand. In the event that the CONTRACTOR fails to complete the repair or
replacement work within this fifteen (15) calendar day period from notice or demand, the OWNER
may, at its exclusive option, undertake the remedial/corrective work and the costs therefore shall
be charged against the account of the CONTRACTOR and/or the Warranty Bond.

12.5 Notwithstanding the expiration of the one-year warranty period mentioned above, nothing herein
contained shall be deemed a waiver of any cause of action to proceed against the
CONTRACTOR for purposes of enforcing its obligations and liabilities under Article 1723 of the
New Civil Code.

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Article 13

DISPUTE SETTLEMENT/ARBITRATION

13.1 Should disputes, controversies or differences between the parties arise in connection with this
Contract, the parties shall, as far as practicable, settle the same amicably. Within five (5) days
from written notice (“initial written notice”) from one party that a dispute or controversy needs to be
settled, the parties shall arrange for their respective representatives to meet not later than ten (10)
calendar days from the initial written notice. During said meeting or meetings which the parties
may call, the parties shall, in good faith, endeavor to reach a settlement mutually acceptable to
both the OWNER and the CONTRACTOR. Should the parties fail to settle their dispute/s under
this mode within thirty (30) days or such period as may be agreed by the parties from date of
receipt of initial written notice, the parties may refer to the following section.

13.2 Matters concerning disputes, controversies or differences between the parties arising out of this
Contract which are not be resolved by them to their mutual satisfaction pursuant to the foregoing
section, shall be submitted to a Board of Arbitrators as provided by the arbitration rules of the
Construction Industry Authority of the Philippines and the Construction Industry Arbitration
Commission. Expenses and other fees for arbitration shall be shouldered by the party held liable
therefore by the Board or, in the absence of such determination, equally among the parties. Any
pending issue submitted for arbitration (save any of the grounds provided under Section 11.1 and
11.2 herein by virtue of which CONTRACTOR shall be entitled to suspend work on the Project
and an extension of the Contract Period) shall not be considered as basis for the CONTRACTOR
to suspend work nor shall it be made as basis for extension of time to complete the Works.

Article 14

MISCELLANEOUS PROVISIONS

14.1 The CONTRACTOR shall strictly comply with all the laws, ordinances, policies, guidelines, rules
and regulations now existing or hereafter enacted or promulgated by the Government, including
all its agencies and instrumentalities, whether National or Local arising from its execution of the
Works. All such applicable laws, ordinances, policies, guidelines, rules and regulations shall be
read into and made integral parts of this Contract.

14.2 The failure of any party to this Contract to insist upon a strict performance or compliance of any of
the terms, conditions and covenants hereof shall not be deemed a relinquishment or waiver of any
right or remedy that either party may have, or shall it be construed as a waiver of any subsequent
breach or default of the terms, conditions or covenants herein contained. Unless otherwise
provided herein, no waiver of any right by either party shall be deemed to have been made unless
expressed in writing and signed by both parties.

14.3 The pertinent laws of the Republic of the Philippines shall be applied in interpreting and applying
the terms and conditions of this Contract and those of the Contract Documents.

14.4 The invalidation of any of the terms, conditions, stipulations, covenants, or restrictions, or any part
hereof by a final judgment of a court of competent jurisdiction shall not affect the other provisions
hereof. If necessary for the full implementation of this Contract and the Contract Documents, the
parties shall promptly negotiate in good faith for alternate provisions to replace any provision
which has been declared invalid by a court of competent jurisdiction.

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14.5 This Contract shall become effective upon execution hereof and the same shall be binding upon
the assigns and/or successors-in-interest of both contracting parties.

14.6 Information, documents and other papers relative to this Project obtained or may be obtained by
the Parties shall be kept confidential and shall not be disclosed to any person or entity without the
prior written approval of both the OWNERS and CONTRACTOR.

14.7 The CONTRACTOR shall not assign, sublet or sub-contract any portion of the works for the
Project covered by this Contract except upon prior written approval by the OWNER. Any such
assignment, sub-lease or subcontracting shall be subject to the pertinent provisions of this
Contract. Violation of this provision shall constitute a material breach of this Contract. The written
approval of the OWNER to the sub-letting or subcontracting, however, shall not relieve the
CONTRACTOR from any of its responsibilities and obligations under this Contract and the
Contract Documents. Consent to any subcontracting shall not be credited until after the
CONTRACTOR has submitted proof of satisfactory to the OWNER that the sub-contractor has
ample insurance to cover the works. The CONTRACTOR shall hold the OWNER free and
harmless from any and all damages and expenses arising from the sub-contracting and/or
assignment contemplated hereunder.

14.8 The CONTRACTOR hereby warrants and undertakes that it has complied and will comply with
any and all the relevant labor laws, policies, guidelines, rules and regulations including the
mandatory employee benefits coverage and the safety provision required under relevant
occupation hazard laws.

14.9 Workmen employed and/or contracted by the CONTRACTOR to undertake the Works
contemplated herein shall be the employees and exclusive responsibility of the CONTRACTOR.
The CONTRACTOR hereby holds the OWNER free and harmless from any and all liability which
may be incurred as result of the employer-employee relationship of the CONTRACTOR and its
workmen. The CONTRACTOR shall be liable for any claim or damage resulting from accidents,
injuries, sickness, or death that its employees may suffer while performing their duties.

Article 15

CONFIDENTIALITY

15.1 Confidential Information

15.1.1 Confidential Information shall mean any information including but not limited to
CAD-based data, design concepts, details and specifications drawings, manufacture and
engineering designs, technical data and know-how including but not limited to that which
related to research, products, techniques, designs, purchasing, accounting, assembly
drawings, flow charts, engineering, marketing, merchandising and/or any customer
information, which are disclosed by a party or on its behalf before or after the date hereto,
to the other party, either directly or indirectly, in writing, orally or by visual inspection.
Confidential Information shall specifically include materials and information regardless of
whether it is in human or machine-readable form.

15.1.2 Notwithstanding the foregoing, information, technical data and know-how which
are or become generally known to the public or a party by means other than resulting
from said party’s breach under this Contract or which is or was otherwise available to,

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known or developed by, said party, shall not be deemed confidential information of the
parties to this Contract.

15.1.3 The CONTRACTOR acknowledges that certain confidential drawings, designs,

concepts, components, details and specifications, as well as other business or technical
information, proprietary to the OWNER, (the Documents) have been or will be disclosed
to the CONTRACTOR pursuant to the terms of this Contract.

15.2 Non-Disclosure of Confidential Information

15.2.1 The CONTRACTOR agrees not to use or allow others the use of the Confidential
Information for its own or for any other purpose except in connection with the
performance of its obligations under this Contract. The CONTRACTOR further agrees
that it will not disclose or allow others to disclose Confidential Information to any other
persons except those which are defined in this Contract, and agree to take and protect
the secrecy of and to avoid disclosure or use of the Confidential Information in order to
prevent it from falling into public domain or into possession of persons not bound to
maintain the confidentiality of the Confidential Information. The CONTRACTOR shall
promptly advice the OWNER in writing of any misappropriation or misuse by any person
of such Confidential Information, which may come to its attention.

15.2.2 The OWNER is aware that the CONTRACTOR may need to obtain information
from other parties in order to properly perform its obligations under this Contract. Should
such a need exist, the CONTRACTOR may submit Documents only if it conveys and
ensure the confidential and propriety nature of the Documents to other parties, and
obtains a signed non-disclosure agreement therefrom. The CONTRACTOR shall
indemnify and hold the OWNER free and harmless from any claims, liabilities or suits
which arise from infringement of propriety rights or breach of confidentiality relating to the
Documents, which have been submitted to other parties by the CONTRACTOR.

15.2.3 The CONTRACTOR shall be fully responsible for all acts and omissions relating
to breach of confidentiality or propriety rights by its employees, subcontractors, agents or
other parties to whom they have provided copies of the Documents. Nothing in this
Contract shall be construed to create any contractual relationship between the OWNER
and any third party.

15.2.4 Any material or document which have been furnished to either party will be
promptly returned to the OWNER, accompanied by all copies of such documentation
made by the party, after the termination of this Contract. The CONTRACTOR agrees not
to distribute this information on any electronic medium (such as faxes, voices mails, or
electronic mail systems).

15.3 The OWNER is hereby granted the right to enjoin, judicially or extra-judicially, the use or
communication of such information by the CONTRACTOR or its employees, agents or other
parties without the prior written consent of the OWNER.

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IN WITNESS WHEREOF, the parties hereto have hereunto caused their respective authorized
representatives to affix their signatures on this ____ day of _____________ 20__ in ____________ City.

Owner

By:

Senior Vice President

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<NAME OF CONTRACTOR>
Contractor

By:
<NAME OF CONTRACTOR’S AUTHORIZED SIGNATORY FOR THE CONTRACT>
<Position of the Signatory>

SIGNED IN THE PRESENCE OF :

_________________________ _________________________

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ACKNOWLEDGEMENT

REPUBLIC OF THE PHILIPPINES )

_______ CITY _________________) S.S.

BEFORE ME, this ____day of _____________________ at ____________________ Philippines,

personally appeared:

Name Com Tax No. Date/Place Issued

<CTC Number> <Date and Place of Issuance of CTC>

<CTC Number> <Date and Place of Issuance of CTC>

<NAME OF CONTRACTOR> <CTC Number> <Date and Place of Issuance of CTC>

<NAME OF SIGNATORY> <CTC Number> <Date and Place of Issuance of CTC>

Known to me and known to be the same person who executed this Contract and who acknowledged that
the same is their free and voluntary act and authorized by the parties they respectively represent.

This document refers to a Construction Contract consisting of _______ (__) pages, including the page on
which this Acknowledgement is written, and signed by the parties and their respective witnesses at the
end hereof on the margin of all the other pages.

WITNESS MY HAND AND SEAL this ____day of ____________________ 20__ at _______________,

Philippines.

NOTARY PUBLIC

Doc. No. __________

Page No. __________
Book No. __________
Series of __________

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