CONSTRUCTION AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This CONTRACT OF WORK (the “Contract”) is entered into by and between:

URDANETA SACRED HEART HOSPITAL address at 15 Mcarthur, Urdaneta City,

2428 Pangasinan and herein referred to as the OWNER;
AND
KHATIB CONSTRUCTION with office address at 117 SLU-SVP Housing Cooperative,
Bakakeng Old Site, Baguio City, Philippines, represented in this act by its Proprietor, ENGR.
BERNARD G. BANTA, hereinafter referred to as the CONTRACTOR.

WITNESSETH
WHEREAS, the OWNER desires to engage the services of a competent and qualified
CONTRACTOR who will undertake and perform the construction works of “ URDANETA
SACRED HEART HOSPITAL RENOVATION PHASE 2 “ which is located at Urdaneta City,
Pangasinan, hereinafter referred to as the PROJECT;

WHEREAS, the OWNER has engaged the services of the CONTRACTOR to prepare
architectural, structural and other allied engineering plans and specification essential to the
PROJECT;

WHEREAS, the CONTRACTOR has represented himself able, competent and

qualified to undertake the aforesaid PROJECT with the plans and specifications duly
conducted, prepared and caused to be approved by the CONTRACTOR in accordance to
pertinent laws, ordinances and regulations;

NOW THEREFORE, in consideration of the aforementioned premises, the PARTIES

hereto agree and bind themselves to the following:

1. CONTRACT DOCUMENTS: Duly approved (a) plans, (b) drawings, (c) technical
specifications, (d) other related documents that will arise from the faithful
compliance/performance of the PROJECT shall form an integral part of this
AGREEMENT
2. SCOPE OF WORK: That the CONTACTOR, for and in consideration of the
payment to be made by the OWNER to the former of the sum of money hereinafter
 specified willfully and faithfully perform the following works in accordance with the
approved plans and specifications, to wit:
a. Construction of “Urdaneta Sacred Heart Hospital Renovation Phase 2“ which
composes of the following:
a.1 Total Building Area…____ sq.m

3. MANNER OF PERFORMANCE: The CONTRACTOR accepts the relationship of

trust and confidence established between the PARTIES and the former will furnish
his best skill and judgment in furthering the interest of the OWNER. He agrees to
furnish efficient business administration and superintendence and to use his best
efforts to furnish at all times an adequate supply of workmen and materials to
perform the works in the best way and in the most expeditious and economical
manner consistent with the interest for the OWNER.

4. INSPECTION OF WORKS: The OWNER or his duly authorized representative shall

have the right to inspect the construction works from time to time to determine whether they
conform to approved plans and specifications or whether the works are suitable for their
stipulated use.

5. GENERAL CONTRACTOR’S RESPONSIBILITIES

5.1 CLAIMS: The CONTRACTOR shall be liable, and shall indemnify the OWNER, for
any and all claims arising out of the CONTRACTOR’S negligent and willful execution or
performance of the works under this CONTARCT, where such execution and performance
gives rise to penalties and fine or any remedial action due to violation or non-observance of
ordinances, laws and regulations relative to safety, pollution, hazards, nuisance and other
environmental issues;
5.2 INJURY OR DAMAGE: The CONTRACTOR shall be liable and hereby assumes
full responsibility for and shall hold the OWNER free and harmless from any and all claims
arising out of or in connection with any injury or damage that may be sustained by any person
or property in connection with the performance of the works contracted for under this
AGREEMENT;
5.3 CHANGE OR ALTERATION of CONTRACT WORKS OR DOCUMENTS: In
support of the proper execution of the project and cost control purposes, the CONTRACTOR
shall make no change or alteration of the contracted works or documents without any prior
written CHANGE ORDER directive as duly approved by the OWNER;
5.4 HOUSEKEEPING: The CONTRACTOR shall at all times keep the entire and
immediate premises clean and free of dust, rubbish and debris and other similar objects.
Furthermore, CONTRACTOR shall not store or keep within the premises flammabl5e,
obnoxious or hazardous and other similar materials;
5.5 OWNER’S EQUIPMENT and MATERIALS: The CONTRACTOR shall make sure
that the equipment and materials of the OWNER are adequately covered and protected
against rain and the elements to prevent their damage. Work shall be done in such manner
that the OWNER’s property is not exposed to the elements unnecessarily.
5.6 ENVIRONMENTAL and SAFETY REQUIREMENTS: The CONTRACTOR shall
be responsible for compliance with the environmental and safety requirement related and
during the performance of the works. The CONTRACTOR shall ensure that its employees
observe and abide by said regulations.
5.7 TOOLS, EQUIPMENTS, TEMPORARY FACILITIES and UTILITIES: The
CONTRACTOR shall see to it that all construction tools, equipment, and temporary facilities
are in safe and good condition, capable of performing the function for which they were
intended.

6. RELATIONSHIP OF THE PARTIES

6.1 The PARTIES hereby acknowledge and confirm that the CONTRACTOR is an
independent CONTRACTOR; possesses the experience, knowledge, expertise, as well as
sufficient capital, manpower and equipment necessary to perform the works. The OWNER
does not and shall not have any authority to supervise the CONTRACTOR, its employees,
agents, or representatives, and the works shall be accomplished under the exclusive
supervision and control of the CONTRACTOR.
6.2 The CONTRACTOR shall solely be responsible for any claim by or damages to
its workers or third parties of whatever nature in connection with or resulting from the
performance or non-performance of its obligation in this CONTRACT and shall therefore
relieve the OWNER of any such claims and damages.

7. LABOR
7.1 SELECTION, ENGAGEMENT and DISCHARGE of EMPLOYEES: The
CONTRACTOR shall have the sole right to select, engage and discharge its employees and
otherwise direct and control their services. The determination of the wages, salaries and other
compensation of employees and agents of the CONTRACTOR shall be under the control of
the CONTRACTOR. The CONTRACTOR shall file all necessary returns and reports as may
be required under applicable laws, rules and regulations.
7.2 RULES and REGULATIONS: The CONTRACTOR including its personnel and
employees, shall comply with the OWNER’S rules and regulations including those that may
be issued by the OWNER from time to time without limitation to those pertaining to safety,
quality and environmental compliance, maintain discipline over employees, agents, and
representatives hired in performing the obligations under this AGREEMENT.
7.3 NO EMPLOYER-EMPLOYEE RELATIONSHIP: There shall be no employer-
employee relationship between the CONTRACTOR and the OWNER and its personnel and
employees. As such, the CONTRACTOR’S employees and personnel shall in no case be
considered as employees of the OWNER and vice versa;
7.4 DISCIPLINARY MEASURES: The CONTRACTOR shall maintain an efficient and
effective implementation of disciplinary measures upon its personnel and employees and shall
require them to report promptly at designated hours. The OWNER shall have the right to report
to the CONTRACTOR any untoward act, negligence, misconduct or mal/mis/nonfeasance of
said personnel and employees and the CONTRACTOR alone shall have the right to discipline
them, However, the OWNER may request the imposition of disciplinary action by the
CONTRACTOR on the said erring personnel and employees or to request the CONTRACTOR
to replace said personnel and employees.
7.5 FAILURE to COMPLY: If the OWNER has reason to believe that the
CONTRACTOR has failed to comply with the foregoing undertakings, the OWNER may then
notify the CONTRACTOR accordingly, and if the latter should refuse or fail to comply within 5
days from receipt of such notice from the OWNER, the latter shall have the right to terminate
this Contract, without prejudice to any claim that either party may have against each other
under this Contact.
7.6 DOLE LEGISLATION: The CONTRACTOR shall abide by and comply with all
laws, rules and regulations of the Department of Labor and Employment (DOLE), including,
among others, the payment of minimum wage to all its workers, and shall carry compensation
insurance against any claim or liability which may arise under the provision of such laws, rules
and regulations.
7.7 SAFETY and ENVIRONMENTAL LAWS: The CONTRACTOR shall be
responsible for the strict observance by its workers of the safety and environmental laws and
legislations relevant to the execution of the Contract. It shall conduct the works with due regard
to safety against accidents to its workers and other people and properties in the premises.

8. MATERIALS and EQUIPMENT

8.1 The CONTRACTOR at its own expense shall provide all materials according to
specification necessary to complete the project.
8.2 The risk of loss or damage to any of the works and any materials used in the
construction shall pertain only to the CONTRACTOR, until the works shall have been
completely delivered to the complete satisfaction of the OWNER and accepted in writing by
the OWNER under the terms and conditions of this AGREEMENT.
 9. CONTRACT DURATION
9.1 COMPLETION PERIOD: The CONTRACTOR shall, using its own manpower,
tools, facilities, equipment, machineries, and materials, shall commence the PROJECT within
7 days after the signing and receipt of this CONTRACT by the PARTIES and shall complete
the same in Ten months (10) more or less ending ______________2019. Completion of work
may be earlier but not later than ________________ 2020;
9.2 PHOTOS AND ACCOMPLISHMENT REPORT THE PROJECT: The
CONTRACTOR shall provide the OWNER PHOTOS and ACCOMPLISHMENT REPORT or
any equivalent projected monthly accomplishment summary till its final completion on
September 2016. Such is essential to the OWNER in evaluating the progress of the
PROJECT and in releasing payments based on the payment schedule detailed below;
9.3 NOTICE OF DELAY: The CONTRACTOR shall, within 5 days from its actual
constructive knowledge, notify the OWNER in writing of any occurrence which has caused or
which it anticipates may cause delay or which will affect the performance or accomplishment
of the work through a Request for Time Extension (RTE). If circumstances to warrant, the
completion period shall then be so extended by a period equivalent to that during which the
performance was so prevented, otherwise the CONTRACTOR shall be liable for damages
according to this AGREEMENT.
9.4 LIQUIDATED DAMAGES: The CONTRACTOR hereby expresses covenants and
agrees to pay to the Owner liquidated damages equivalent to the One-Tenth of One Percent
(1/10 of 1%) of the Contract Price per calendar day of delay until completion, delivery and
acceptance of the said Works by the OWNER to a maximum amount not to exceed 10%

10. ALTERATIONS, REVISIONS and CHANGE ORDERS

10.1 The project plans and designs may be revised from time to time by the OWNER
under its own initiative as the works progresses and the CONTRACTOR shall be supplied with
prints of the appropriate design revisions. The CONTRACTOR shall acknowledge receipt of
all such prints immediately and it shall be held responsible for any errors that occur due to the
use of superseded drawings or specifications and shall cause the correction or repair in
accordance with the revision that was provided. Such alterations and revisions shall constitute
a CHANGE ORDER and shall be covered by appropriate CHANGE ORDER DIRECTIVES.
Such CHANGE ORDERS maybe positive, which will entail additional cost to the CONTRACT,
or negative, which will entail a deductive amount to the CONTRACT.

11. CONTRACT PRICE, PAYMENT SCHEDULE, RETENTION AND

ACCOMPLISHMENT VERIFICATION
 11.1 CONTRACT PRICE: Subject to the terms and conditions of this AGREEMENT,
the OWNER shall pay the CONTRACTOR the sum of FIFTY-EIGHT MILLION EIGHT
HUNDRED FORTY EIGHT THOUSAND SIX HUNDRED EIGHTY AND TWELVE CENTAVO
ONLY (Php.58,848,680.12), Philippine Currency, hereinafter referred to as the CONTRACT
PRICE for the contracted works with a twenty percent (20%) advance payment and with
progress billing based on monthly progress reports of the OWNER that the works declared
so completed is found to be satisfactorily completed and accurate in its evaluation without
prejudice to a ten percent(10%) retention.
11.2 For the purpose of simplicity and fixed releases of payment by the OWNER to
CONTRACTOR, the following payment schedule shall be observed:

1 Php
Advance Payment-20 % Upon Signing of Contract 11,769,736.024
2 Php
1st Progress Billing September 2019 4,119,407.6084
3 Php
nd
2 Progress Billing October 2019 4,119,407.6084
4 Php
3rd Progress Billing November 2019 4,119,407.6084
5 Php
4th Progress Billing December 2019 4,119,407.6084
6 Php
5th Progress Billing January 2020 4,119,407.6084
7 Php
6th Progress Billing February 2020 4,119,407.6084
8 Php
th
7 Progress Billing March 2020 4,119,407.6084
9 Php
8th Progress Billing April 2020 4,119,407.6084
10 Php
9th Progress Billing May 2020 4,119,407.6084
11 Php
10th Progress Billing June 2020 4,119,407.6084
12 Php
10% Retention Upon Acceptance 5,884,868.012
GRAND TOTAL Php 58,848,680.12
 11.3 The CONTRACT PRICE specified above does not include any Change Order or
work to be performed by the CONTRACTOR in excess of what is called for in the approved
plans and specifications by the OWNER. Any additional change in the plans and specifications
shall be treated as extra work to be paid for separately and can only be valid and effective if it
be in writing and signed by the OWNER.
11.4 PROGRESS BILLING INSPECTION AND VERIFICATION: Upon receipt of the
CONTRACTOR’S monthly billing request accompanied by the monthly progress status report,
the OWNER shall inspect and verify the accuracy of said CONTRACTOR’s billing.

12. CONFIDENTIALITY
12.1 The CONTRACTOR agrees that it shall, at all times, keep in strict confidence and
shall not disclose to any party any and all information relating to the businesses, operations,
financial transactions, procedures or other practices of the OWNER and those of its parties in
interest which the CONTRACTOR may acquire by reason of this AGREEMENT, except those
that are generally known or available to the public.

13. FORCE MAJEURE

For the avoidance of doubt, force majeure shall include earthquakes, storms, floods,
and other acts of nature and acts of man that could not have been foreseen and resisted and
where no fault or negligence whatsoever can be imputed to the CONTRACTOR or the
OWNER. As such, the CONTRACTOR or the OWNER will not be held liable for damages if it
is unable to fulfill its obligations in this Contract because of force majeure, subject to the
following provisions:
13.1 If the works of the Contract are delayed, curtailed, or prevented by reason of force
majeure, the CONTRACTOR whose schedule of works are so affected shall give a written
notice to the OWNER within seven (7) calendar days from date of occurrence, stating the
cause, and both the CONTRACTOR and the OWNER shall do what is reasonable under the
circumstances to remove such cause and the duration of works will be extended.
13.2 The CONTRACTOR shall repair, restore or reconstruct works or portion of the
works damaged or destroyed by the occurrence of the force majeure before the final
acceptance of the project. Should there be any delay in the completion of works and/or
additional expenses that will increase the contract price, the parties shall agree to an extension
of the period of completion and/or additional cost in accordance with pertinent provisions of
this Agreement. There shall be no implied addition of the contract price as a result of force
majeure.
 14. DISPUTE SETTLEMENT
14.1 If at any time any dispute or difference shall arise between the parties to this
Contract, the Parties shall in good faith exert all efforts to resolve such disputes or difference
reasonably and amicably.
14.2 If the dispute remains unresolved, the Parties hereto agrees to submit the dispute
to arbitration under the rules of the Construction Industry Arbitration Commission of the
Philippines(CIAC) whose arbitral award rendered shall be final and conclusive and judgment
thereon may be entered in any court having jurisdiction for its enforcement.
14.3 Notwithstanding any dispute settlement effort or arbitration, relating to the
Contract, and without prejudice to the eventual outcome thereof, the CONTRACTOR shall at
all times proceed with the performance of the works under this Contract.

15. CONTRACT TERMINATION

15.1The OWNER may terminate this Contract upon the occurrence of any of the
following:
15.1.1 The CONTRACTOR repeatedly fails to supply, based on the construction
schedule, the required number of workers or the required materials or equipment;
15.1.2 The CONTRACTOR repeatedly fails to make, without just cause, prompt
payments of labor, materials, equipment supplied for the works and which failure significantly
delays the completion of the works under the Contract;
15.1.3 In the foregoing cases, the OWNER may, after giving the CONTRACTOR ten
(10) days prior notice, terminate this Contract and take possession of the Works and all the
materials, tools, construction equipment, and machinery required and obtained for the works
and found on site, for which the OWNER had paid the CONTRACTOR, OWNER may
thereafter complete the works, at CONTRACTOR’s cost, as OWNER may deem expedient.
15.2 Upon termination of this Contract due to any cause provided herein:
15.2.1 The CONTRACTOR shall send to OWNER a final billing statement indicating
the billed amount corresponding to the portions of the works already performed;
15.2.2 OWNER shall make payment to the CONTRACTOR all unpaid amounts within
the period of payment provided under this Contract, up to and including the termination date;
15.2.3 In case the termination was at the instance of the OWNER, the CONTRACTOR
shall immediately vacate the project site, and deliver all materials, goods, equipment,
temporary works, or documents to the OWNER and comply with any reasonable instructions
included in the Notice of Termination. The OWNER shall be entitled to use the
CONTRACTOR’s equipment and temporary works to complete the works by itself or by third
parties.
 15.2.4 Unless otherwise expressly provided herein, the termination of this Contract in
the instances contained herein shall become effective thirty (30) days from receipt.
15.2.5 Termination of this Contract with or without cause shall not release any Party
from any liability which at the time of termination has already accrued to the other Party or
which thereafter may accrue in respect of any act or omission prior to such termination;

16. MISCELLANEOUS PROVISIONS

16.1 COMPLETE AGREEMENT: This Contract is the complete and exclusive
statement of the Agreement between the Parties hereto and supersedes all proposals or prior
agreements, oral or written, and all other communications between the Parties relating to the
subject matter of this Contract.
16.2 JOINTLY DRAFTED: Both Parties acknowledge and agree that they have fully
read and understood the contents of this Contract and that the same shall be considered to
have been jointly drafted.
16.3 BINDING EFFECT: This Contract shall be binding upon and inure to the benefit
of the Parties, their successors-in-interest and permitted assigns.
16.4 SEPARABILITY CLAUSE: In case any one or more of the provisions contained
in this Contract shall be held invalid, illegal, or unenforceable in any respect, the validity,
legality, and enforceability of the remaining provisions contained herein shall not in any way
be affectedor impaired thereby.
16.5 AMENDMENTS: This Contract may not be modified, amended, added, to, or
otherwise varied except by a document in writing signed by both Parties.
16.6 WAIVER and MODIFICATION: No waiver of any breach of these provisions will
be effective unless such waiver is in writing and signed by the Party against whom such waiver
is claimed. No waiver of any breach shall be deemed to be a waiver of any other or subsequent
breach.
16.7 STRICT COMPLIANCE: In the absence of express provision to the contrary,
failure or omission by a Party to this Contract at any time to enforce or require strict or timely
compliance with any provision of this Contract or any related document shall not impair the
ability of that Party to exercise the rights and remedies it otherwise has in respect to a breach
of any such provision.
16.8 NON-WAIVER: Failure of either Party to exercise a remedy or to insist in one or
more instances with regard to the performance of any of the provisions of this Contract shall
not be construed as abandonment or cancellation or waiver of such covenant. No waiver by
either Party shall be deemed to have been made unless expressed in writing and signed by
the waiving Party.
 16.9 NON-ASSIGNMENT: A Party shall not assign or transfer this Contract or any of
the rights or obligations granted herein without the prior written consent of the other Party, and
any purported assignment made without obtaining aid written consent shall be null and void.
16.10 CHOICE OF VENUE: In case of any dispute, controversy, or disagreement
between the Parties hereto arising from or in relation to this Contract, the same shall be settled
and/or litigated in the proper courts of the City of Baguio, to the exclusion of other courts.
16.11 ATTORNEY’s Fees: Should a Party be compelled to seek judicial relief against
the other Party, the prevailing Party shall be entitled to attorney’s fees, at least 20% of the
amount due, in addition to the cost of suit, expenses of litigation, and damages awarded by
the court.
16.12 GOVERNING LAW: This Contract shall be governed, construed and interpreted
in accordance with the laws of the Republic of the Philippines.

IN WITNESS WHEREOF, the Parties hereto have caused this instrument to be signed
this_____ day of _______________________, 2019 at ____________ Philippines.

BY: BY:

Mr. Amadeo Victor E. Perez V Engr. Bernard G. Banta

CEO, USHH KHATIB CONST. PROPRIETOR

Ms. Nida M. Perez

COO, USHH

Mrs. Maria Teresa Socorro P. Naguiat

BOD, USHH

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