CONSTRUCTION AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This Agreement executed by and entered into by and between:
MGL CONSTRUCTION & DEVELOPMENT CORP., a
domestic entity duly organized under and by virtue of the
laws of the Philippines, with office and postal address at
Daan Sarile, Cabanatuan City, herein represented by its
President, MANUEL G. LACSAMANA, SR. hereinafter called
the CONTRACTOR;
-ANDWILLIAM A FELARCA, single/married, of legal age, Filipino
and resident of ___________________________________________,
and JANELOR ACOSTA, single/married, of legal age, Filipino
and
resident
of
______________________________________________________,
hereinafter collectively referred
to
as
the
SUBCONTRACTOR;
WITNESSETH:
WHEREAS, the CONTRACTOR, by virtue of applicable resolutions,
memoranda and appointments from the proponents namely National
Housing Authority (NHA), Central Luzon State University (CLSU)
and CLSU Employees Housing Cooperative (CEHC), was appointed
CONTRACTOR of the more or less twenty (20) hectare, 980-unit housing
project exclusively for the employees of CLSU, located at CLSU Compound,
Science City of Muoz (hereinafter referred to as the Project);
WHEREAS, the CONTRACTOR solicited the services of several masshousing sub-contractors to implement the construction of the housing
component of the Project;
WHEREAS, the SUB-CONTRACTOR is a housing contractor and
offered to undertake and defray the expenses for the construction of
FOUR HUNDRED (400) HOUSING UNITS on the Project in accordance
with
the
app roved
plans
and
specifi cations
and
the
CONTRACTOR accepted the off er of the SUB-CONTRACTOR ;
WHEREAS, payments for the cost of construction of the subject
housing units and other relative expenses as herein provided shall be paid
in full upon release of the loan availed by the buyers of the accomplished
housing units which is more or less, within thirty (30) from the date of
completion and acceptance;
WHEREAS, the parties herein, in their desire to formulate an ideal
set-up in order to sustain the feasibility and continuity of this undertaking
has entered into an Agreement to clearly define its roles and
responsibilities and the definite procedures and guidelines of this
transaction;

Page 1 of 11

NOW, THEREFORE, for and in consideration of the premises and

mutual covenants herein contained, the parties do hereby bind
themselves and agree on the following:

ARTICLE I
CONTRACT DOCUMENTS
The following documents shall constitute integral parts of this
Agreement, as fully as if the contents of the said documents are
reproduced, incorporated and set forth herein and shall govern and control
in full force and effect the right and obligation of the parties, except as the
otherwise modified by terms and conditions by this Agreement, or by
mutual agreement in writing by both parties, to wit:
1.1Bill of Quantities and Detailed Price Analysis;
1.2Technical Specifications, Plans and Drawing;
1.3Project Organization Chart;
ARTICLE II
SUB-CONTRACTORS SCOPE OF WORK
2.1

The SUB-CONTRACTOR agrees to commence, perform and complete

the work called for and defined in this Agreement at its cost and
expense and to fully and faithfully furnish all materials, tools, labor,
supplies equipment, temporary field facilities for its personnel and
other incidentals necessary for the completion of the PROJECT in
accordance with conditions and specifications hereto provided;

ARTICLE III
TERMS OF PROCEDURE AND MANNER OF PAYMENT
3.1

All parties herein shall observe the following procedure and manner
of payment, in toto:
3.1.1 The CONTRACTOR will process the beneficiaries who are
approved by CEHC and pre-qualified to acquire a housing
loan by the Pag-IBIG or other financial institutions;
3.1.2 Loan documents will be prepared, collated and pre-approved;
3.1.3 Upon determination of the certainty of the eligibility of the
Buyer, a Notice To Proceed for the construction of the subject
unit shall be submitted to the SUB-CONTRACTOR,
3.1.4 Construction proper will ensue as per herein guidelines;
3.1.5 Upon completion of the loan processing, Loan Approval and
Letter of Guarantee will be released by the financing
institution;
3.1.6 Compliance on the conditions of Letter of Guarantee such as
transfer and registration Transfer of Certificate of Title in the
name of the Buyer, annotation of Mortgage and other relative
procedures;
3.1.7 Take-out and release of check payments;

Page 2 of 11

3.1.8 Payments or partitioning of take-out release will be

apportioned in the following order:
3.1.8.1 Payment for the value of lot;
3.1.8.2 Payment for the construction of housing unit in
favor of the SUB-CONTRACTOR;
3.1.8.3 Any excess shall be paid in favor of the
CONTRACTOR for the payment of the land
development and other relative operational
expenses;
ARTICLE IV
MANNER OF EXECUTION
4.1The SUB-CONTRACTOR shall assign on a full time basis a qualified
project Supervisor who shall act as his representative to supervise
and administer the operations as well as coordinate with the
CONTRACTOR or their representatives in order to ensure the effective
implementation of the works covered in this Agreement;
4.2The SUB-CONTRACTOR shall be responsible for maintaining the
general cleanliness, order, security, safety and sanitation at the
project with respect to the items of work covered by this Agreement
including removal of surplus materials and construction debris
throughout the duration of the contract period.
4.3The CONTRACTOR shall have the right to impose on-site rules and
regulations, primarily for the physical security of the project as well
as for the personnel discipline together with the corresponding
sanctions, including the right to disallow entry of employees and
workers who have violated the same. The SUB-CONTRACTOR hereby
binds itself to comply with the said rules and regulation, and
undertakes to ensure that all its employees and workers shall likewise
comply with the said on-site rules and regulations, any expense to
be incurred in complying with the same shall be for the account of the
SUB-CONTRACTOR;
4.4The SUB-CONTRACTOR shall assume sole and full responsibility for all
materials, equipment and other facilities until the final completion
and acceptance of the works by the CONTRACTOR.
ARTICLE V
WORK CONDITIONS
5.1

The SUB-CONTRACTOR hereby certifies that prior to the signing of

this Agreement, they have inspected and familiarized with the
conditions of the project site as they may be relevant to the
performance of their commitments and responsibilities herein
provided;

5.2

The SUB-CONTRACTOR agrees to perform its obligations hereunder in

the most efficient and competent manner, use its skill and good
judgment, always act in good faith, and carry on the execution of this
Agreement in the most sound, expeditious manner consistent with
the intentions of the CONTRACTOR;

Page 3 of 11

ARTICLE VI
PROJECT COST
6.1

For and in consideration of the full, satisfactory and faithful

performance by the SUB-CONTRACTOR of all its undertaking defined
in and provided for under this Agreement and the Contract
Documents, the CONTRACTOR agrees to pay the SUB-CONTRACTOR
the fixed amount of EIGHT THOUSAND (P8,000.00) PESOS per
square meter of floor area of basic unit and ELEVEN THOUSAND
FIVE HUNDRED (P11,500.00) PESOS per square meter of floor
area of unit expansion, for the construction and accomplishment of
more or less Four Hundred (400) housing units of the Project;

6.2

Additional zocallo walls, if any, in excess of the standard height of

60cms from floor line to footing, shall be charged at cost plus Ten
(10)%) Percent profit margin;

6.3

Except as herein provided, it is clearly understood, expressly and

mutually agreed upon by the parties hereto, that the stipulated
contract price hereof shall not be subject to any upward adjustment
during the term of the Notice To Proceed for cause or causes or
reason whatsoever. However, the same shall be subject for review
every ninety (90) days and adjustments can be applied only on
units that has not been issued the corresponding Notices to
Proceed;
ARTICLE VII
COMPLETION TIME

7.1

The SUB-CONTRACTOR agrees and obligates itself to undertake and

complete the works as herein provided within Forty Five (45)
working days for basic unit and another Forty Five (45) working days
for any expansion thereof, upon receipt of the pertinent Notices to
Proceed. The said notice shall reckon five (5) days after receipt
thereof and shall be in conformity with the Program of Work as
herein provided and its corresponding accomplishments;

7.2

It is expressly agreed that whenever the SUB-CONTRACTOR fails to

complete the work contracted for within the Contract Time plus any
time extension duly granted to the SUB-CONTRACTOR, the
CONTRACTOR may order the SUB-CONTRACTOR to prepare a catchup schedule. If such catch-up schedule is not provided or the same
is not complied with, the CONTRACTOR may terminate this present
contract without the need for a court order.

7.3

In case of termination, the CONTRACTOR shall have the right to

take-over the construction/completion of the uncompleted
construction or completion of the work, by itself or by contracting
with a sub-SUB-CONTRACTOR, and the SUB-CONTRACTOR shall
immediately relinquish to the CONTRACTOR or to such SUBCONTRACTOR appointed by the CONTRACTOR with the right to
proceed in the construction/completion of work. Likewise, the SUBCONTRACTOR hereby acknowledges the right of the CONTRACTOR
or its duly authorized representative to oust the SUB-CONTRACTOR

Page 4 of 11

or any other person working under his authority as well as his

equipment from the construction site.
The SUB-CONTRACTOR shall have the right to receive compensation
to the extent of his completion of the work as jointly determined by
the CONTRACTOR and SUB-CONTRACTOR.

ARTICLE VIII
EXTENSION OF CONTRACT TIME
8.1

It is expressly agreed that no claim for extension of time period

provided herein may be entertained unless the SUB-CONTRACTOR
has, prior to the expiration of the contract time and within fifteen
(15) calendar days after the circumstances leading to such claim
have arisen, delivered to the CONTRACTOR an appropriate written
notice in order that the CONTRACTOR could have caused of
extension investigated. The CONTRACTOR may grant or deny the
said request, and the said decision of the CONTRACTOR on this
matter shall be final and binding upon the SUB-CONTRACTOR. Any
extension of the Contract Time, which may be granted by the
CONTRACTOR, must be in writing otherwise; the same shall not be
effective for purposes of this present contract;

8.2 Notwithstanding the foregoing, no extension of the period of

completion shall be granted in any of the following instances;
8.2.1 Ordinary unfavorable weather conditions;
8.2.2 Labor problems or dispute; or
8.2.3 When the reason given for the request for the extension has
been considered in the determination of the original contract
item;
ARTICLE IX
ENTIRE CONTRACT
8.1

Provision to the contrary notwithstanding, it is agreed that a Notice

To Proceed for a certain number of units shall be considered as
entire Contract for one whole and complete work and that partial
payments on account by the CONTRACTOR or the use of parts or
equivalent shall not constitute an acceptance of any part of the
work before its entire completion and final acceptance in writing by
the CONTRACTOR.
ARTICLE X
SUB-CONTRACTORS LIABILITY

10.1

The parties, likewise, hereby agree that the employees of the SUBCONTRACTOR are not employees of the CONTRACTOR and shall not
in any way liable and/or responsible for the wages of such

Page 5 of 11

employees, for any personal injury, including death or damages

sustained by or caused or contributed to by any of the employees of
the SUB-CONTRACTOR or his agents or supplier whether or not
occurring during the performance of their duties. The SUBCONTRACTOR agrees and bind itself to indemnify the CONTRACTOR
of whatever injury or damages caused or occasioned or contributed
to by the failure, negligence or conduct of the SUB-CONTRACTOR
and/or its employees, suppliers or consultants arising out or in
connection with or on the occasion of the performance of this
Agreement of the compliance with all existing laws, rules and
regulations and binds itself to save and hold the CONTRACTOR free
and harmless from any and all liability in respect hereof and/or
arising therefrom and/or by reason of this Agreement and its
implementation;
ARTICLE XI
RESPONSIBILITY OF THE CONTRACTOR
11.1

Provide the project site and ensure that the property will have no
legal problems during the implementation of this undertaking;

11.2

Review,
evaluate
and
approve/disapprove
proposals
and
recommendations submitted by the SUB-CONTRACTOR as required
herein;

11.3

Provide all documents related to the project such as resolutions,

proclamations, authorities and agreements of all the proponents,
land title/s, and the likes;

11.4

Monitor the proper assignment of housing units to the intended

beneficiaries and ensure proper implementation of the provisions
herein.

11.5

It shall ensure that the SUB-CONTRACTOR is in peaceful and

undisturbed possession of the project site for the entire duration of
the construction works;
ARTICLE XII
RESPONSIBILITIES OF THE SUB-CONTRACTOR

12.1

The SUB-CONTRACTOR shall assume full responsibility for the entire

contract work indicated on its Notices To Proceed, until its final
acceptance by the CONTRACTOR and shall be held responsible for
any damage or destruction of works except those occasioned by
forced majeure;

12.2

The SUB-CONTRACTOR shall establish, set-up and operate through

its own resources the construction of approved housing units and
shall be responsible for their safety and upkeep;

12.3

Except likewise for force majeure, the SUB-CONTRACTOR shall be

fully responsible for the safety, protection, security and convenience

Page 6 of 11

of its personnel, parties and the public at large, as well as the

works, equipment, installation and the like to be affected by the
construction work;

ARTICLE XIII
RESPONSIBILITIES OF CONTRACTOR
13.1

Represent the entire undertaking with the offices of CLSU, CEHC,

Pag-IBIG and other financing institution to centralize and simplify
the transaction proper. Ensure that the project proponent shall
accept take-out proceeds and issue corresponding receipts, invoices
for this purpose and shall immediately facilitate apportionment of
the said proceeds in the manner provided under Article 3.1.8 of this
Agreement;

13.2 Facilitate in the most efficient manner possible in order to expedite

the completion, processing and approval of loan documents of
buyers or owners of units subject for construction;
13.3

Supervise
and
execute
works
which
shall
include
monitoring/ensuring
compliance
to
the
approved
plans,
specifications and schedule of
construction activities being
undertaken by the SUB-CONTRACTOR;

13.4

Provide area necessary for the establishment of SUBCONTRACTORs bankhouses at the vicinity of the Project site
through coordination with the CLSU administration;

ARTICLE XIV
INSPECTION OF CONTRACT WORKSTATION
14.1 The proponents, CONTRACTOR and SUB-CONTRACTOR or their
representatives shall make inspection of the contract work while
such contract work is in progress to ascertain that the completed
works comply in all respect, with the standards and requirements set
forth by the Contract and the concerned financing institution.
Notwithstanding such inspection, the SUB-CONTRACTOR shall be
held responsible for the acceptability of the finished works. The SUBCONTRACTOR shall promptly replace all materials and correct all
works determined by the said financing institution as failing to meet
the said requirements, at the SUB-CONTRACTORS own expense;
ARTICLE XV
ASSIGNMENT AND SUBCONTRACT
15.1

The SUB-CONTRACTOR shall not without written approval of the

CONTRACTOR, assign, transfer, pledge, sub-contract, or make any
other disposition of interest in this Agreement or any part hereof.

Page 7 of 11

Such approval, when requested by the SUB-CONTRACTOR, shall not

be unreasonably withheld by the CONTRACTOR. Should the
CONTRACTOR give its written approval, such consent shall not
relieve the SUB-CONTRACTOR of its responsibilities under this
Agreement. The SUB-CONTRACTOR shall ensure that the terms and
conditions of the sub-contract agreement shall comply and conform
to the terms and conditions of this Agreement. The SUBCONTRACTOR shall be responsible for the observance of the terms
and conditions of the Agreement;
15.2

If any of the works subcontracted is not prosecuted faithfully, the

CONTRACTOR or their representatives shall have the right to
recommend the replacement or removal of the SUB-CONTRACTOR
upon written request thereof, provided, that any failure to make
such request shall not relieve the SUB-CONTRACTOR of its
obligations under the Agreement. The CONTRACTOR shall not be
responsible for the delays or costs incurred by the SUBCONTRACTOR;
ARTICLE XVII
CHANGE IN WORK

17.1

The CONTRACTOR may at any time prior to completion of the

PROJECT, by a written variation order, make changes in the
schedule and the work required under this Agreement. If any such
changes cause an increase or decrease in the work or the time
required for the performance of this Agreement, an adjustment shall
be made in the Contract Price or Completion Date as follows:
17.1.1Increase/Decrease in the Work-The unit cost contained in the
original price or adjusted original contract price for like work
as indicated in ANNEX __ shall be used in determining the
cost of additive/deductive work. If the contract does not
contain any rate applicable to the additional or extra work,
then the current lowest canvassed cost of material and labor
plus a fixed marked-up of fifteen percent (15%) plus
applicable Value Added Tax shall be used.
17.1.2Completion Date- Extension/Reduction in Completion time for
any increase/decrease in the work shall be made upon
mutual agreement of the parties.
17.1.3Net Effect of Variation Order If the net effect (summation of
all change orders (additive and deductive) will reduce the
total original contract cost upon completion of the PROJECT,
then ten percent (10%) of the net deductive cost will be
added as part of SUB-CONTRACTORs overhead, provided that
the net deductive cost shall not exceed twenty five (25%) of
the original contract amount, no further contribution to SUBCONTRACTORS overhead shall be made.

17.2

A separate Supplemental Agreement may be entered into if a single

additive Variation Order exceeds twenty-five (25%) of the Original
Contract Price;

Page 8 of 11

17.3

All change orders/variations not covered by the above provisions

shall be dealt with by the parties in accordance with the applicable
provisions of PD 1594 on change orders.
ARTICLE XVIII
GUARANTEE OF THE CONTRACTOR

18.1

The CONTRACTOR guarantees that the TCT subject of any Notices To

Proceed is free from lien and encumbrances. In the event of failure
of the CONTRACTOR to effect the release of the loan proceeds
attendant to the constructed unit/s within ninety (90) calendar days
from the date of completion and acceptance, that is without the
fault of the SUB-CONTRACTOR, the SUB-CONTRACTOR shall have at
its option to declare as lien over the said TCT the cost of
construction due to the SUB-CONTRACTOR;
ARTICLE XVIX
AGREEMENT MODIFICATION

19.1

No modification, alteration or waiver of any provision contained

shall be binding on the parties hereto unless evidenced by written
agreement signed and approved by the parties or their
representatives.
ARTICLE XX
INDIVISIBILITY OF OBLIGATION

20.1

It is intent of this Agreement that all the documents, annexes and

addenda forming part hereof, shall be read together and that each
every provision or stipulation hereof is given full force, effect and
applicability. However, in the event that one or more provisions or
stipulations herein be declared null and void by the courts, or
otherwise rendered ineffective, the remaining provisions and
stipulations shall not be affected thereby;
ARTICLE XXI
REMEDY AND RELIEF

21.1

In case any dispute or controversy will arise in connection with

performance of the obligations and/or the interpretation of the
provisions of this present Agreement, the parties agree to settle
these disputes through arbitration with the Construction Industry
Arbitration Commission.
ARTICLE XXII
OTHER COVENANTS

6.4

The CONTRACTOR guarantees that the housing unit/s that are

subject of Notices To Proceed are located in an area where the land
development are qualified for loan take-out upon the completion of
the unit/s. In the event that the SUB-CONTRACTOR opt to construct
in areas with incomplete or unscheduled land development, the
SUB-CONTRACTOR may assume completion of the unfinished
development and the same shall be charged at cost plus Twelve
(12%) Percent profit margin;

Page 9 of 11

22.1

It is expressly agreed and understood that in case of conflict

between this Agreement and the provision of the documents
incorporated as forming part hereof, the former shall be controlling;

22.2

It should also be clearly understood that any payment or failure of

the CONTRACTOR to demand compliance with any of the terms and
conditions of this Agreement or any act of liberality on the part of
the CONTRACTOR shall not be construed or considered as a waiver
on the part of the CONTRACTOR for the enforcement of this
Agreement, nor shall it relieve the SUB-CONTRACTOR of any of its
obligations provided thereunder;

22.3

Under no circumstances shall the CONTRACTOR be held liable for

payment of any extra work or extra cost of work of change
undertaken without the prior written consent of the CONTRACTOR,
whose decision shall be followed;

22.4

The SUB-CONTRACTOR shall provide and do everything necessary to

perform its obligations under this Agreement according to the true
intent and meaning of the Contract documents taken together,
whether the same may or may not be shown or described
particularly in the drawing, plans, and specifications provided that
the same shall not be inferred therefrom.
Should the SUBCONTRACTOR find discrepancy in the drawings, plans, and
specifications it shall immediately refer the same to the
CONTRACTOR, whose decision shall be followed;

22.5

The SUB-CONTRACTOR hereby undertakes and commits itself to the

extent possible and practicable to hire directly some of its labor
requirement from the locality in which the PROJECT SITE is situated.
Likewise, to the extent possible and practicable, the SUBCONTRACTOR hereby undertakes and commits itself to purchase the
necessary materials for the works from local suppliers, provided,
however, the quality and price are acceptable.

This Agreement shall take effect upon signing on the date first indicated
above and shall continue to be effective until all obligations herein set
forth have been complied with both parties.
IN WITNESS WHEREOF, the parties have hereunto affixed their
signature, here at ___________________, this ______________ day of
________________,
MG LACSAMANA REALTY
& DEVELOPMENT , CORP.
CONTRACTOR
MANUEL LAC SAMANA
ACOSTA
President
CONTRACTOR

WILLIAM A. FELARCA
SUB-CONTRACTOR

Page 10 of 11

JANELOR R.
SUB-

SIGNED IN THE PRESENCE OF:

_____________________________

_______________________________

ACKNOWLEDGEMENT
BEFORE
ME,
a
Notary
Public,
this
_____
_________________2016, personally appeared the following:
Name
Manuel Lacsamana
William Felarca
Janelor Acosta
_____________________

Res. Cert. No.

__________
__________

day

of

Date/Place Issued
____________________
____________________
__________

Who are the same persons who executed the foregoing instrument and
acknowledged to me that the same are their free and voluntary acts and
deeds.
The foregoing instrument refers to the Construction Agreement and
consisting of ten (10) pages, including this page on which this
acknowledgement is written, duly signed by the Parties and their
instrumental witnesses on each and every page hereof, and sealed with
my notarial seal.
WITNESS MY HAND AND OFFICIAL SEAL.

Doc. No.___________;
Page No.___________;
Book No.__________;
Series of 2016

__________________________
Notary Public

Page 11 of 11