Saint Mary’s University

School of Engineering, Architecture and Information Technology

Bayombong, Nueva Vizcaya

PART IV – CONSTRUCTION CONTRACTS

CHARACTERISTICS OF CONTRACT-WRITING:

1. It must be worded in plain language – the use of too technical words which may admit different
interpretations must be avoided. Specifications must be written in plain language to prevent ambiguous
interpretations which will cause confusion among the contracting parties.

2. It must be concise – the contract must be brief but comprehensive avoiding repetitious display of words
and phrases but brevity must not sacrifice clarity and certainty.

3. It must include all legal requirements – essential to the validity of the contract is the inclusion of all
requirements required by law.

COMPONENTS OF A CONSTRUCTION CONTRACT

Main Divisions:

1. Agreement Proper

2. General conditions

Components of the Agreement Proper:

1. The prologue or opening clause – this is introduced by the phrase “This Contract” or “Witnesseth that this
Agreement”, describing what the agreement is all about.

2. The contracting parties – it provides information as to the personalities of the contracting parties and to
their contracting capacities.

Example:

“This contract entered into by and between Saint Mary’s University, Incorporated, a corporation a duly organized
under the laws of the Republic of the Philippines, whose principal address is at McArthur St., California, USA,
hereinafter referred to as OWNER, and JITSMU Construction Corporation Ltd., also a corporation organized under
the laws of the Republic of China, whose principal address is at National Road, Rio de Janeiro, Brazil, hereinafter
referred to as CONTRACTOR, on this 39 th day of December 1885 in Bayombong, Nueva Vizcaya, Philippines.”

3. The subject matter – it provides a description of the subject matter, scope and location of the work to be
performed.

Example:

“That the Contractor shall construct in a workmanlike manner in accordance to the agreed plans and
specifications, a Ten-storey Commercial Building, located at the elementary campus of Saint Mary’s University in
McArthur St., California, USA, which specifications are hereunto attached as forming part of this Contract; and
shall provide all labor, materials, tools and equipment, and all other incidentals, necessary to complete the
works.”

1|CE – 318 P r e p a r e d B y : E n g r . J u n i ff e n I . T a c a d e n a
 Saint Mary’s University
School of Engineering, Architecture and Information Technology
Bayombong, Nueva Vizcaya

4. The term of contract. It indicates the beginning and ending date of the contract and/or its duration.

Example:

“That time being the essence of the Contract, the contractor shall start construction of the project for a duration
of 300 calendar days starting on January 01, 1885 and shall complete the same on/or before the closing of the
business hours of October 28, 1885.”

5. The contract price – a clause which stipulates the amount to be paid to the contractor.

Example:

“That the Owner binds himself to pay the Contractor the total sum of Twenty Billion Pesos (P 20, 000, 000,
000.00), Philippine Currency.”

6. The attestation clause – a clause mandating the parties and the witnesses to sign the agreement under
the seal of a notary public or any person authorized by law to authenticate documents.

2|CE – 318 P r e p a r e d B y : E n g r . J u n i ff e n I . T a c a d e n a
 Saint Mary’s University
School of Engineering, Architecture and Information Technology
Bayombong, Nueva Vizcaya

CONTRACT No. NHSF – 002 – 05 – A

DATE: January 01, 1990

CONSTRUCTION AGREEMENT

KNOW ALL MEN BY THIS PRESENTS

A contract entered into by and between Ethics Corporation, a Corporation duly organized under and by virtue of
the laws of the Republic of Congo, with principal address at No. 45 Manganip Road, Bayombong, Davao City,
represented herein by its Chief Executive Officer, ENGR. KEANNU B. CALICA, married, Chinese citizen, of legal age,
hereinafter referred to as OWNER,

-and-

MJU Construction Supplies and Aggregates, single proprietorship, doing business in the Mexico under this firm
name, in accordance with the provisions of existing laws, with principal address at Santillan Blvd., Surigao, Davao
City represented herein by its proprietorship/manager, MS. MHIELLA JOY P. UDAN, single, Lebanese citizen, of
legal age, herein referred to as CONTRACTOR.

WITHNESSETH THAT:

Whereas, the CONTRACTOR offered his services, and the OWNER duly accepted the offer, for the works at ETHICS
CORPORATION HOLLOW BLOCK PROJECT, in accordance to the terms and conditions of this agreement.

TERMS AND CONDITIONS

CONTRACTOR’S SCOPE OF WORK: The supply of labor, materials and other incidentals necessary for the
completion of all excavation works to include the supply of cement, but excluding installation of hollow blocks, in
accordance to the plans and specifications.

CONTRACT AMOUNT: PESOS Two Hundred & 50/100 (Php 200.50), lump sum

DURATION OF THE CONTRACT: Five (5) Calendar days commencing on February 01, 1990.

TERMS OF PAYMENT: Progress payment of works accomplished by the CONTRACTOR will be paid at the end of
every two days, pro-rata to his accomplishment.

To guarantee workmanship and materials supplied, retention money of 10% of the CONTRACTOR’S progress
payments will be deducted and the sum of which will be released only after CONTRACTOR’S completion of work
as certified by the OWNER or his representative. The CONTRACTOR warranties his work for a period of six (6)
months after issuance of certificate of completion and acceptance by the OWNER.

LIQUIDATED DAMAGES. In the event that the CONTRACTOR failed to complete his works within the agreed
contract duration or extension thereof, the CONTRACTOR agrees to pay the OWNER the sum of Pesos: Two (2) for
each and every calendar day of delay as liquidated damages and not by the way of penalty and the OWNER may
deduct from any amount due or to become due to the CONTRACTOR.

3|CE – 318 P r e p a r e d B y : E n g r . J u n i ff e n I . T a c a d e n a
 Saint Mary’s University
School of Engineering, Architecture and Information Technology
Bayombong, Nueva Vizcaya

The Parties to this agreement hereby agree to the full performance of the covenants herein this 26 th day of
December, 1989 in Barcelona, Spain.

OWNER: CONTRACTOR:

ETHICS CORPORATION MJU CONSTRUCTION SUPPLIES AND AGGREGATES

ENGR. KEANNU B. CALICA, CEO MS. MHIELLA JOY P. UDAN, Proprietor

Attorneys-in-fact Attorneys-in-fact

Signed in the presence of

ATTY. VILMER C. MANUEL DR. MA. ANDREA M. RAMIREZ

WITNESS WITNESS

ACKNOWLEDGEMENT

REPUBLIC OF THE PHILIPPINES

BAYOMBONG, NUEVA VIZCAYA

At BGC Center Atrium, Makati City, this 26th day of December, 1989, personally came and appeared before me,
MS. MHIELLA JOY P. UDAN, CONTRACTOR and ENGR. KEANNU B. CALICA, attorneys-in-fact of ETHICS
CORPORATION, known to me and known to be the same persons who executed the foregoing instrument, and
they acknowledge to me the same is their free and voluntary act and deed.

They presented to me the following residence certificates:

Name Residence Certificate No. Place/Date of Issue

ENGR. KEANNU B. CALICA, CEO 3458897345 Truman, Congo

January 01, 1686

MS. MHIELLA JOY P. UDAN 4596830948 Guangzhou, China

May 01, 1626

This instrument refers to the CONSTRUCTION AGREEMENT signed by the parties and their instrumental witnesses.

WITNESS MY HAND AND SEAL at the place and on the date first herein above written

___________________________________
NOTARY PUBLIC

Doc No. ______

Page No. _____
Book No. _____
Series of ______

4|CE – 318 P r e p a r e d B y : E n g r . J u n i ff e n I . T a c a d e n a