CONSTRUCTION AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Construction Agreement executed and entered into this 6th day of June 2011 by and
between:
PHILIPPINE ESTATES CORPORATION, a corporation duly
organized and existing under the laws of the Republic of the
Philippines, with principal office address at 27 th Floor, Wynsum
Corporate Plaza, No. 22 Emerald Avenue, Ortigas Center, Pasig
City, represented herein by its President and CEO, Mr. Kenneth
T. Gatchalian, hereinafter referred to as the OWNER;
- and SKALA Architectural and Interior Design Services, a company
duly organized and existing under the laws of the Republic of the
Philippines, with principal address at Blk 28, Reina Elena St. cor.
Ascencion Ave., Lagro, Novaliches, Quezon City, represented
herein by its Principal Architect, Arch. Charina Amanada B.
Javier, hereinafter referred to as the CONTRACTOR.
WITNESSETH:
WHEREAS, the OWNER desires to undertake the Renovation of Unit 3503 and 3504,
35 Floor One Corporate Center , Julias Vargas Ave. cor. Meralco Ave. , located at Ortigas,
Pasig City (hereinafter, the Project);
th

WHEREAS, the CONTRACTOR has admitted, represented and warranted to the

OWNER that it is competent, capable, qualified and duly licensed to undertake the completion of
the unit, as referred to and covered by the Contractors revised bid proposal dated May 28, 2011,
in accordance with the plans and specifications, which are hereinafter made as an integral part of
this Agreement;
WHEREAS, on the basis of the foregoing, the OWNER has accepted the offer of the
CONTRACTOR to undertake the construction of the Project.
NOW, THEREFORE, for and in consideration of the foregoing premises, the parties to
this Construction Agreement mutually agree, stipulate and covenant as follows:

ARTICLE I SCOPE OF WORK

The CONTRACTOR shall undertake the completion/ Renovation of Unit 3503 and
3504, 35th Floor One Corporate Center , Julias Vargas Ave. cor. Meralco Ave. (described in
the first WHEREAS clause) based on the conditions set by the OWNER as covered by the
Letter of Award/ Notice to Proceed dated May 28, 2011, and other documents forming part of
this agreement. The CONTRACTOR shall furnish and supply all the necessary materials, labor,
supervision, equipment and tools, and shall accordingly perform everything necessary for the
successful and full completion of the Project.

ARTICLE II CONTRACT PRICE

The OWNER shall pay the CONTRACTOR upon the full, faithful and complete
performance of the works called for under this Agreement a total amount of ONE MILLION
FIVE HUNDRED THOUSAND PESOS and 00/100 only (Php 1,500,000.00).
The Contract Price shall not be subject to adjustment except due to work addition or
alteration, ordered in writing by the OWNER, and in compliance with the provisions of Article
IV of this Construction Agreement.
ARTICLE III TERMS OF PAYMENT
The downpayment shall be equivalent to Twenty Percent (30%) of the total contract
price or FOUR HUNDRED FIFTY THOUSAND PESOS and 00/100 only (Php 450,000.00),
which shall be paid to the CONTRACTOR only after submission of the documents stated in the
Letter of Award/Notice to Proceed dated May 28, 2011. The balance of the Contract shall be paid
through progress billing. Payment shall be made by the OWNER to the CONTRACTOR within
thirty (30) working days after receipt of the approved Construction Managers certificate of
payment.
Ten Percent (10%) of the payment shall be retained by the OWNER until the full
completion of the contract.
The full amount of retention shall be released by the OWNER to the CONTRACTOR,
Thirty (30) days after the completion of work and submission by the contractor of the following:
a) Contractors Sworn Statement showing that all taxes due from the
CONTRACTOR, and all obligations on materials used and labor employed in
connection with this contract have been duly paid.
b) Guarantee Bond equivalent to Ten Percent (10%) of the Contract Price
covering a period of one year after final completion to answer for faulty
and/or defective materials or workmanship as stated in Article VIII.
c) Punch list report showing completion of all rectification works.
d) Three (3) Original, signed and sealed sets of prints of As-Built drawings.
e) Building plans provided by owner during construction to be returned.
f) Submission of building and occupancy permits.
ARTICLE IV - ADJUSTMENT OF CONTRACT PRICE
4.1

The OWNER, as represented by a duly authorized officer/manager, may order at any time,
in writing, additional work or alterations. All such work shall be evidenced by a Change
Order duly signed by the OWNER and shall be executed under the same conditions hereof
and of the Contract Documents. All Change Orders shall indicate the completion date of
the works covered thereby. No Change Order shall be valid and binding to the OWNER
without the signature of its duly authorized representative.

4.2

All extra or additional works done by order of the OWNER shall be valued at the rates and
prices set out by both parties for such works.

4.3

Any value of change orders agreed upon shall be considered as part of the Contract but
shall be invoiced separately as change orders.
2

ARTICLE V - TIME OF COMPLETION

0
The CONTRACTOR shall complete the Construction of the Project, within one hundred
twenty calendar days (45cds). Day one shall be on August 3, 2011.
1
2
Should the work be delayed through any fault or omission on the part of the OWNER, the
CONTRACTOR shall be granted time extension and shall be equitably compensated for the time
and/or cost impact resulting from such delays.
ARTICLE VI FAILURE TO COMPLETE WORK
For failure to complete and finish the Project within the period specified in Article VI, plus
extension granted if any, the CONTRACTOR shall pay the OWNER liquidated damages
equivalent to One-Tenth of One Percent (0.1%) of the Total Contract Price per calendar day of
delay (including Sundays and Holidays), until the work is completed by the CONTRACTOR or
a third party. The CONTRACTOR hereby authorizes the OWNER to deduct the equivalent
amount of the liquidated damages from any amount/s still due and owing to the former
ARTICLE VII BONDS AND INSURANCES
PERFORMANCE BOND:
Upon signing of this Contract, the CONTRACTOR shall secure at its own expense and
deliver to the OWNER a Performance and Liability Bond in the form of a Surety Bond posted by
a licensed domestic or reputable bonding company, acceptable to the OWNER, equivalent to
Fifteen Percent (15%) of the total contract price or TWO HUNDRED EIGHTY NINE
THOUSAND FIVE HUNDRED SEVENTY FIVE PESOS and 00/100 Only (Php
289,575.00). Such Bond shall answer for the liability of the CONTRACTOR for delays and
shall extend its guarantee to include contract changes that may be made during the progress of
the construction works. Such bond shall further guarantee payment of both labor and materials
under this Contract. The coverage of the Performance Bond shall be valid until the final
acceptance of the project by the OWNER.
ADVANCE PAYMENT BOND:
Prior to receipt of the down payment and prior to the performance of the CONTRACTOR
of his work under this Contract, the CONTRACTOR shall deliver to the OWNER an advance
payment bond equivalent to Twenty Percent (20%) of the Contract Amount or equivalent to
THREE HUNDRED EIGHTY SIX THOUSAND ONE HUNDRED PESOS and 00/100
ONLY (Php 386,100.00) posted by a licensed bonding company acceptable to the OWNER.
The validity of the advance payment bond shall be until the final acceptance of the project by the
OWNER
ALL- RISK INSURANCE:
The Contractor shall secure at its own expense within twenty (20) calendar days after the
signing of this Construction Agreement, a Contractors All Risk Insurance to be issued by a
licensed bonding company acceptable to the OWNER in the amount equivalent to its total
contract price. The Contractors All-risk Insurance shall cover the total construction period and
the specified beneficiaries shall be the OWNER and the CONTRACTOR according to their
interests.
GUARANTEE BOND:

The CONTRACTOR shall, upon OWNERs final acceptance of the works and prior to
issuance of final payment, obtain at its own expense a Guarantee Bond equivalent to Ten Percent
(10%) of the total contract price including all awarded additional amount to answer for faulty
and/or defective materials or workmanship for a period of one (1) year starting from the date of
final acceptance of the work.
The OWNER shall release the Performance Bond upon the submission by the
CONTRACTOR of the Guarantee Bond.
ARTICLE VIII WARRANTIES & RESPONSIBILITIES OF THE CONTRACTOR
0
In case of any defect in workmanship or materials which may become apparent in the
course of the construction, the CONTRACTOR, upon the request of the OWNER, shall at its
own expense, tear down and replace such portion of the work done and/or materials installed
that, as in the OWNERs reasonable opinion, are unsound or defective, or not in accordance with
plans and specifications, without prejudice to the provisions of sub-paragraph 11.4 of article
XI. However, the CONTRACTOR shall not be responsible for inherent defects of materials
supplied by the OWNER.
1
The CONTRACTOR hereby warrants that all the materials which it shall furnish and
supply under this Agreement are new, free from defects and shall fully comply in every respect
with the specifications, approved samples and other requirements of the contract plans and other
related contract documents. The CONTRACTOR shall make no substitution for materials
required to be furnished by it under this Agreement unless written approval is first obtained from
the OWNER.
2
3
The CONTRACTOR shall guarantee and maintain the stability of the CONTRACTORs
works, equipment and materials furnished under this Agreement, keep the same in good repair
and condition for a period of twelve (12) months after issuance of final acceptance of the work
by the OWNER. Defects appearing during this period or any damages resulting from such
defects shall be corrected without expense to the OWNER. If the CONTRACTOR fails to correct
or repair the defects within fifteen (15) days from receipt of written notice thereof from the
OWNER, the OWNER may have the work or repair done by another CONTRACTOR at the
expense of the CONTRACTOR, or alternatively confiscate the Guarantee Bond to answer for the
cost of the correction or repair.
4
The CONTRACTOR shall at all times furnish and maintain sufficient supply of tools,
materials, equipment and skilled and/or unskilled workmen at the jobsite. The CONTRACTOR
shall diligently supervise the construction until completion and it shall have on full-time, a
competent and licensed construction engineer who shall act as Project Supervisor. In addition,
the CONTRACTOR shall also employ competent foremen on full-time duty to supervise the
workmen under this Agreement. The OWNER reserve all the right to reject on reasonable
grounds any person employed by the CONTRACTOR in the construction work and the omission
of the OWNER to exercise such right shall not, in any way, relieve the CONTRACTOR from its
responsibility to fulfill its undertakings.
5
The CONTRACTOR shall coordinate with contractors of other trades who are also
working for the OWNER.
6
The CONTRACTOR shall be responsible for the storage and safekeeping of materials
supplied and duly turned-over to it by the OWNER. Any damages, losses, and pilferages of
these materials shall be for the account of the CONTRACTOR.
7
The CONTRACTOR shall hold the OWNER free and harmless against any claim for
losses, damages or injuries of whatever kind and nature that may be filed or claimed against the
OWNER, by any third person, firm or entity arising out of or in connection with the construction
undertaken by the CONTRACTOR under this Agreement.
4

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The CONTRACTOR shall be responsible for maintaining the general cleanliness and
sanitation of the site including clearing and removal of debris during the entire contract period.
9
The CONTRACTOR shall at all times provide and maintain an air-conditioned temporary
office with water, light, telephone lines, toilet facilities and good conditioned office furniture
(such as tables, chairs, desks, plan rack, whiteboards) for the use of the staff/representatives of
both OWNER and CONTRACTOR.
10
All provisions with respect to warranties contained in Article X are cumulative and not
alternative, and are in addition to such warranties as may be provided by law or contained in the
other provisions of this Agreement.
11
The CONTRACTOR shall provide qualified personnel to ensure the quality of materials,
workmanship & equipment of a particular item of work.
12
The CONTRACTOR shall submit for approval by the OWNER a Safety, Security &
Sanitation plan to be implemented at the jobsite through its Safety Officer. The plan shall be
implemented during the entire duration of the Construction period.
13
The CONTRACTOR shall provide temporary power supply, to be used for the entire
duration of contracted works. Deposits and cost of metering including monthly electric billings
shall be paid by the CONTRACTOR.
14
Temporary water supply and facilities shall be provided by the CONTRACTOR and cost
of water consumption for the entire period of construction shall be shouldered by the
CONTRACTOR.
ARTICLE IX INSPECTION
The CONTRACTOR shall provide promptly all needed inspection and test which are
necessary in the course of the work and shall be carried out safely and immediately. All
inspections and tests shall be performed in such a manner so as not to delay the prosecution of
the work.

ARTICLE X COMPLETION, FINAL ACCEPTANCE

AND PAYMENT OF THE OUTSTANDING BALANCE
10.1

If the work done by the CONTRACTOR is fully completed and in accordance with this
Agreement, the OWNER shall within Thirty (30) days issue a written certificate of
acceptance thereof and the balance found to be due the CONTRACTOR shall become
payable, subject only to the claims under Article VII,and IX,.

10.2

After completion of the works, clean-up and demobilization of the CONTRACTOR, a

working crew consisting of at least: (a) Project Engineer or Supervisor; (b) Finishing
Carpenter; (c) Finishing Mason; and (d) other trades as may be necessary; with an
adequate stock of materials, tools and equipment, shall be made available by the
CONTRACTOR at the project site until the final acceptance of the OWNER.

10.3

Before issuance of the certificate of acceptance, the CONTRACTOR shall submit

evidence satisfactory to the OWNER that all payrolls, materials, bills and other
indebtedness relating to the work have been paid. Any claim by any party arising from
this agreement will be sufficient reason for the OWNER to withhold any payment due the
CONTRACTOR for such amount of the claim.

IN WITNESS WHEREOF, the parties hereto have hereunto affixed their signatures to
this Agreement on this
______ day of _____________________, 2011, at
__________________________ Metro Manila, Philippines.

PHILIPPINE ESTATES CORPORATION

SKALA Architectural and Interior

Design Services
Contractor

Owner
By:

By:

KENNETH T. GATCHALIAN
President & C.E.O.

ARCH. CHARINA B. JAVIER

Principal Architect

SIGNED IN THE PRESENCE OF:

___________________________

__________________________

AC KN OWLED GMENT
REPUBLIC OF THE PHILIPPINES )
) S. S.
BEFORE ME, a Notary Public for and in the _________________ on this ______ day of
__________________, 2008, personally appeared the following:
Name
Kenneth T. Gatchalian
Arch. Charina B. Javier

Res. Cert. No.

Date & Place of Issue

16752346
01-04-08/ Valenzuela
___________
_______________________

Known to me and to me known to be the same persons who executed the foregoing
instrument and they acknowledged to me that the same is their free and voluntary act and deed of
the companies they represent.
I FURTHER CERTIFY that this instrument consists of seven (7) pages duly signed by the
parties and their instrument witnesses on the left hand margin of every page and sealed with my
notarial seal.
WITNESS MY HAND AND SEAL on the date and place first above written.

Doc. No. ________

NOTARY PUBLIC

Page No. ________

Book No. _______
Series of 2011.