SUBCONTRACT AGREEMENT

KNOW ALL MEN BY THIS PRESENTS:

This Subcontract Agreement, hereinafter referred to as “Subcontract” is

made and executed by and between:

________, hereinafter referred to as “Contractor” duly organized and existing

under the laws of the Republic of the Philippines, with principal office at
____________, represented in this act by its
________________________________

-and-

____________________, hereinafter referred to as Subcontractor, a duly organized

and existing under the laws of the Republic of the Philippines, with principal office at
____________________________________represented in this act by its President,
_________________________.

The Contractor and Subcontractor are hereinafter referred to collectively

as “Parties” and individually as “Party”.

WITNESSETH THAT:

WHEREAS, the Contractor has entered into a Main Contract with _______________
___________________ hereinafter referred to as “Client” for the General
Construction of hereinafter referred to as “Client” for the General Construction of
____________________________________ hereinafter referred to as “Project”,
located at ____________________________________, hereinafter referred to
as “Site”;

WHEREAS, the Subcontractor has offered to supply all materials, labor, tools
& equipment, consumables, technical supervision & everything necessary for the
satisfactory execution and completion of ___________________and the remedying
of any defect(s) therein, hereinafter referred to as “Subcontract Works” for
the Project which Subcontract Works shall be strictly in accordance with this
Subcontract and all the documents forming integral parts of this Subcontract,
collectively hereinafter referred to as “Subcontract Documents”;

WHEREAS, the Contractor has accepted the aforesaid offer of Subcontractor;

NOW, THEREFORE, for and in consideration of the foregoing premises and the
mutual covenants and stipulations hereinafter set forth, the Parties have agreed as
follows:

SECTION I
SUBCONTRACT DOCUMENTS

1.1 The Subcontract Documents which form integral parts of this Subcontract are as
follows:
1.1.1. This Subcontract Agreement;

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 1.1.2 Purchase Order No. _________________
attached hereto as Annex “B”
1.1.3 Approved Plans & Drawings and Specifications attached hereto as Annex
“C”, “D”, and “E” respectively;
1.1.4 Approved Material Compliance and Approved Procurement Schedule
attached hereto as Annex “F” and Annex “G respectively”;
1.1.5 Approved Manpower Loading Schedule attached hereto as Annex “H”;
1.1.6 Approved Work Schedule attached hereto as Annex “I”
1.1.7 Approved Bill of Quantities with its corresponding unit prices attached hereto
as Annex “J”
1.1.8 Subcontractor’s Work package (SWP) and Scope Matrix as Annex “K” and "L”

1.2 The Subcontract Documents are to be taken as mutually explanatory of one

another and are made integral parts hereof. What is noted in one although not shown
in the others shall be considered contained in all.

1.3 If an ambiguity, discrepancy, or deficiency is found in the documents, the

Subcontractor shall immediately advise the Contractor thereof who shall
issue any necessary clarification or instruction. Such ambiguity/discrepancy/
deficiency are, but not limited, to the following:

1.3.1 Any defect or insufficiency in design (in case the design is supplied by the
Contractor) provided always that where the insufficiency in design ought

to have been discovered by an experienced contractor exercising due skill

and care, no reimbursement shall be made for any additional costs incurred
by the Subcontractor resulting therefrom.

1.3.2 Discrepancy between the drawings and other document(s)

SECTION II
MAIN CONTRACT

2.1 The Subcontractor having had reasonable opportunity of inspecting the agreement
between the Client and the Contractor (hereinafter referred to as the “Main
Contract”) covering the Subcontract Works other than details of
the Contractor’s prices and financial arrangements thereunder shall be deemed to
have full knowledge of the provision thereof.

2.2 Save where the provisions of this Subcontract otherwise require, the
Subcontractor shall, to the full satisfaction of the Contractor and strictly
in
accordance with the Subcontract Documents, timely execute and complete
the
Subcontract Works (and remedy any defects therein) and in such a manner
that
Subcontractor’s act or omission shall not constitute, cause, or contribute to a
breach by the Contractor of any of latter’s obligation under the Main
Contract,
and the Subcontractor shall, save as aforesaid, assume and perform all the
obligations and liabilities of the Contractor under the Main Contract in
relation
to the Subcontract Works.

Nothing herein contained shall be construed as creating any privity of contract

between the Subcontractor and the Client.

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2.3 The Subcontractor hereby acknowledges that any breach by it of this
Subcontract may result in the Contractor committing breach(es) of and
becoming
liable in damages under the Main Contract and other contract(s) executed by
Contractor in connection with the Main Works and may occasion
Contractor’s
sustaining further damages, losses and/or expenses which damages, losses and/or
expenses are hereby agreed to be within the contemplation of the Parties as being
probable results of any such breach by the Subcontractor. The Contractor
may,
without prejudice to any other right or other method of recovery including
proceeding against the Performance Bond/Performance Guarantee herein, deduct
the amount of such damages, losses and expenses from any monies due or which
may become due to the Subcontractor under this Subcontract, or shall
become a
debt payable to the Contractor by the Subcontractor and may be set off from
and
against any other contracts and transactions entered into by the Subcontractor
with
the Contractor or with any of its subsidiaries or affiliates.

SECTION III
SCOPE OF SUBCONTRACT WORKS

3.1 The Subcontractor hereby agrees and binds itself to execute the Subcontract
Works for the Project which consist of Supply of all materials,
labor, tools, equipment, consumables, technical
supervision and other incidental items necessary to
complete the _____ and complete the Subcontract Works including the
remedying of any defect(s) therein at Subcontractor’s expense all of which to
be performed by the Subcontractor in a workmanlike manner and to the full
satisfaction of the Contractor and in strictly in accordance with the
Subcontract
Documents and the highest standards and practices in the industry. Any other
work(s) not specifically stated in the Subcontract Documents but necessary
for
the execution and completion of the Subcontract Works and the remedying
of
any defect(s) therein shall be carried out by the Subcontractor.

SECTION IV
MANPOWER, MATERIALS, EQUIPMENT, SITE WORKS AND FACILITIES

4..1 The Subcontractor shall provide, assign, and supervise sufficient number of
workers/personnel for the Subcontract Works and in accordance with the
Subcontract Documents, and warrants that all such workers/ personnel
are qualified and experienced in their assigned tasks.

4.2 The Subcontractor shall well and faithfully perform the Subcontract Works and
ensure that all its employees shall devote their best efforts and energy to the
performance of their assigned tasks. The Subcontractor shall replace any of its
employees who shall perform any act, which may be prejudicial to the interest of
the Contractor, or who shall be found guilty of negligence in the performance of
their assigned tasks.

4.3 In the event the employees of Subcontractor shall stage a strike against it which
may eventually affect the Subcontract Works, the Contractor may
forthwith cancel this Subcontract. The Subcontractor shall be liable for
losses/damages sustained by the Contractor resulting therefrom.

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4.4 The Subcontractor represents and warrants that it has the materials, machineries
and equipment, tools and other facilities necessary for the performance of the
Subcontract Works. The Subcontractor warrants that all materials supplied
shall
be of the respective type and kind as described in the Subcontract
Documents.
The Subcontractor shall, upon request, furnish the Contractor with vouchers,

invoices or other documents to prove that the materials supplied are in accordance
with the highest standards prescribed in the Subcontract Documents.

4.5 The Contractor shall permit the Subcontractor for the sole purpose of executing
the Subcontract Works herein use of its facilities such as scaffolding being
utilized by the Contractor in its Main Works, but the Contractor shall not
be
bound to retain, maintain or provide any of facilities for the Subcontractor’s use

or continued use longer than is necessary for the continued use of the Contractor.
Any such permission to use shall not mean a warranty as to the fitness, condition,
or suitability of its facilities, nor shall it impose upon the Contractor any obligation
or liability with respect to the use thereof by the Subcontractor.

4.6 The Subcontractor shall indemnify the Contractor against any damage or loss
whatsoever arising from the misuse by the Subcontractor, its agents or
employees, of any equipment or facilities provided for use by the Contractor.

4.7 All operations necessary for the execution of the Subcontract Works shall be
carried out in order not to interfere unnecessarily or improperly with public
convenience or access to the use and occupation of public or private roads and
footpaths or of properties of any other person. The Subcontract Works shall be
rendered within the same working hours of the Contractor, unless otherwise
agreed upon by the Parties in writing. The Subcontractor shall render harmless
and indemnify the Contractor in respect of all claims, demands, proceedings,
damages, costs, charges and expenses whatsoever arising out of or in relation to
any such matters insofar as the Subcontractor is responsible therefor.

SECTION V
COMMENCEMENT/COMPLETION /LIQUIDATED DAMAGES

5.1 The Subcontract Works shall commence on ______________ and completed on

__________________, in accordance with the Subcontract Documents.

5.2 The Subcontractor shall designate its authorized representative to submit, for
approval of the Contractor, a work schedule which shall show the order in which
the Subcontractor proposes to carry out the Subcontract Works in the form
of a
Bar Chart or CPM to include manpower, materials and equipment leveling of each
activity and summary. The Subcontractor whenever required shall also provide
a
general description of the activities and methods it proposes for adoption in the
Project.

5.3 The Subcontractor acknowledges the fact that other contractor’s, vendors, or even
the Contractor may have to carry out the works in adjacent sites or within the
Site
itself. The Subcontractor must comply with the Contractor’s
instruction
concerning relation to other contractors/vendors or Contractor’s personnel to
prevent interference, which may adversely affect the progress of other works for
Project.
Page 4 of 20 -4-
5.4 In the event that completion of the Subcontract Works is likely to be or has been
delayed by reasons of the occurrence of any matter for which the Contractor may
be entitled to claim an extension of time for completion under the Main Contract
between the Contractor and the Client, the Subcontractor shall immediately
give written notice to the Contractor followed by fully substantiated details of the
cause of the delay and the estimated length of delay in sufficient time so as to allow
the Contractor to claim an extension of time in accordance with the provisions of
the Main Contract. Should the Subcontractor fail to so notify the
Contractor and give said details within three (3) calendar days after the date of
the occurrence giving rise to the claim has first shown itself, the
Subcontractor shall not be entitled to any extension of the time for completion.
.

5.5 In no event shall the Subcontractor be entitled to an extension of time in excess of

that granted to the Contractor by the Client.

5.6 In the event that the Subcontract Works is not completed within the completion
date as stipulated in Sub-Article 5.1, plus any Contractor’s approved written
extension thereof, the Subcontractor shall pay to the Contractor, by way
of
liquidated damages, the amount equivalent to one tenth (1/10) of one percent (1%)
of the total final Subcontract Price, for each and every calendar day of delay up
to
maximum of 10% of the said Subcontract Price. The Contractor may deduct
from
any sum or sums due or to become due to the Subcontractor, the sum or sums
accruing as liquidated damages without prejudice to the right of Contractor to
proceed against the Subcontractor’s performance bond/or performance
guarantee
and/or pursue other remedies available at law for the collection of such liquidated
damages. This provision requiring the payment of liquidated damages by the
Subcontractor to the Contractor shall not relieve the Subcontractor of its
other
responsibilities and obligations under this Subcontract.

SECTION VI
SUBCONTRACT PRICE

6.1 The Contractor agrees to pay the Subcontractor for its full, complete and
satisfactory execution and completion of the Subcontract Works including the
remedying of any defect(s) therein and all in strict accordance with the
Subcontract Documents, the Subcontract Lump Sum Price of
_____________________________ ) inclusive of the 12% value-added tax.

6.2 A downpayment of _ % of the Subcontract Price is payable to the Subcontractor

provided that the Contractor has received a Downpayment Bond callable on
demand or (Downpayment Bank Guarantee acceptable to the Contractor), a
performance bond (or performance guarantee issued by a bank) acceptable to the
Contractor, the billing invoice and approved material submittal
and provided further that the Subcontractor has mobilized sufficient
equipment,
manpower, and facilities for the commencement of the Subcontract Works.

6.3 The Subcontractor shall ensure that the downpayment bond (or downpayment
bank guarantee), is valid and enforceable until the downpayment has been
recouped/ repaid, as indicated in the interim/progress payment certificate. The
downpayment shall be fully recouped/ repaid at 100 % completion of the
Subcontract Works. If the terms of the bonds/or bank guarantee specify its
expiry

Page 5 of 20 -5-
 date, and the downpayment has not been recouped/repaid, the Subcontractor
shall
extend the validity of the bond/or bank guarantee until the downpayment has been
repaid.

6.4 If the downpayment has not been repaid prior to the issue of the Taking-Over
Certificate for the Subcontract Works or prior to termination of the
Subcontract, the whole of the balance then outstanding shall immediately
become due and payable by the Subcontractor to the Contractor.

6.5 Except for any variation to the Subcontract Works which variation shall be based
on and valued at the same unit rates as stated in the Bill of Quantities with its
corresponding unit rates (Annex J) , the Subcontract Price shall not be subject
to
upward adjustment whatsoever for any increase in the cost of materials, tools,
equipment, labor, overhead, premiums on bonds and insurance, permits, fees,
licenses, fluctuations in exchange rate, freight charges, duties and taxes including
Value Added Tax, fuels and oil or for any other reason(s). The Subcontractor
undertakes to save the Contractor free and harmless from any claim arising from
the foregoing. The Expanded Withholding Tax shall be deducted from
Subcontractor’s progress billings and remitted to the Bureau of Internal
Revenue.
The payment for Local Business Tax shall be the sole and exclusive responsibility of
the Subcontractor.

6.6 A variation to the Subcontract Works means any modification, addition, alteration
or deletion to the Subcontract Works as ordered in writing by the
Contractor, by way of a variation order.

6.7 The Subcontract shall be on a unit rate basis and the following shall constitute a
variation to the Subcontract Works:

(a) Increase or decrease in the Bill of Quantities with its corresponding

rates per each cost item as specified in the Bill of Quantities with its
corresponding rates (Annex J)

(b) Settlement of quantities and unit rates for additional cost items not
expressly specified in the Bill of Quantities with its corresponding rates
(Annex J) but which are in the Contractor’s opinion deemed to be a

necessary part of the original scope of the Subcontract Works as

stipulated in the Subcontract or are otherwise contingently
and
indispensably necessary if such is required to achieve completion of the
Subcontract Works.

SECTION VII
TERMS OF PAYMENT

7.1 The Subcontractor shall submit its monthly Progress Report to the Contractor’s
representative for approval. Within Seven (7) days after approval of
Subcontractor’s Progress Report together with the Invoice, payment to the
Subcontractor shall be made at the Contractor’s office less 10% retention and
the recoupment of the downpayment, if any. It is hereby understood that the
total maximum amount to be paid to the Subcontractor shall be equivalent to 90%
of the Subcontract Price within the terms of payment as stated in Purchase
Order No. __________
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 The balance of 10% shall be retained by the Contractor for a period of One (1) year
from turnover of the completed Subcontractor Works to Contractor or during the
warranty period to answer for any defect(s) in the completed Subcontract Works.
The said 10% retention shall be released to the Subcontractor within thirty (30)
days from the expiration of the One (1) year period or warranty period, whichever
is later, or upon submission by the Subcontractor of an acceptable Warranty Bond
equivalent to the amount of retention.

7.2. Any progress or final payment shall not be made by the Contractor unless the
Subcontractor shall accompany the same with an affidavit stating that all
materials,
labor, equipment and other things utilized by the Subcontractor under this
Subcontract and any and all taxes, duties and/or other charges of any kind due
or
will be due to the government arising from the execution or completion of the
Subcontractor Works have been fully paid for. Approved certificate of
completion
and acceptance is required prior to the processing of payment of the last and final
billing.

7.3 In addition to the foregoing, the Subcontractor shall also submit the following to the
Contractor before final payment is released to the Subcontractor:

7.3.1 ___ (__) set of reproductible and _____ (__) sets of prints of “As-built”
drawings;

7.3.2 Original and _____ (__) copies of Operating Manuals of machineries and
equipment supplied and installed;

7.3.3 Any document(s) related to the Subcontract Works required for

purpose
of obtaining permits such as, but not limited to building and occupancy
permit

SECTION VIII
PERMITS AND LICENSES

8.1 The Subcontractor agrees to conform with the provisions of laws, ordinances,
rules and regulations pertaining to the Subcontract Works and undertakes to
secure at its expense all necessary permits/ clearances/licenses pertinent to all
phases of the Subcontract Works from the proper government offices.

8.2 The Subcontractor shall give all notices required by such law, ordinances, rules
and regulations, pay all fees and payable to any public authority or official in
respect to the Subcontract Works, and indemnify the Contractor for any and
all
fines, penalties and losses the Contractor may incur by reason of any breach by
Subcontractor of the undertaking stipulated herein. In the event the

Subcontractor shall fail or refuse to comply with the foregoing provisions, the
Contractor shall have the right, but not the obligation, to obtain the said
permits/licenses/clearances and/or pay the corresponding fees thereon, all of which
to be charged by the Contractor against the Subcontractor and/or the
latter’s
Performance Bond.

SECTION 1X
RIGHT TO PERIODIC INSPECTION/DEFECTIVE WORKS

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9.1 At any or all times while the Subcontract Works is in progress, the Contractor
reserves the right to have its authorized representative(s) make periodic inspection
of the same, and to reject the whole or any portion thereof which in the opinion of
the Contractor’s representative fails to conform with the
Subcontract
Documents.

9.2 The Subcontractor shall replace all rejected work(s), at its own expense, until the
same is acceptable to the Contractor and Client. It is therefore understood
that if materials supplied and/or works undertaken by the Subcontractor under
this Subcontract are
found defective and require repair or replacement, the Subcontractor shall be
obliged, at its own expense, to repair or replace defective materials or works within
seven (7) days after written notice by the Contractor to the Subcontractor.
The
Contractor may, at its option, undertake such repair or replacement and all costs and

expenses thereof shall be charged against the Subcontractor. The Contractor

may
proceed against the latter’s Performance Bond and/or Contractor shall withhold any
payment due the Subcontractor until the latter has paid for all such costs and
expenses without prejudice to the other legal remedies available to Contractor
under this Subcontract and/or in law.

SECTION X
PROTECTION OF WORKS/SUPPLIES AND OCCUPATIONAL SAFETY,
HEALTH AND ENVIRONMENTAL RULES & POLICIES

10.1 The Subcontractor shall be responsible for the continuous and adequate protection
of the Subcontract Works or any part(s) thereof from any loss or damage that
may
be caused by neglect, carelessness, willfull act or omission or sabotage of its
workers/employees/personnel or any other party, or from such causes, as theft, fire,
typhoon, earthquake, or flood or other calamity for as long as the Subcontract
Works has not been completed, accepted and turned over to the Contractor.

10.2 The Subcontractor shall be wholly responsible for any machinery, equipment,
materials or work area delivered or placed by Contractor to the Subcontractor
or
otherwise place in the possession, custody or disposition of the Subcontractor
in
relation to or pursuant to this Subcontract, and any damage or loss thereof or any
of
its part(s) for whatever cause, except when caused solely by the Contractor or its

employees/agents/representatives, shall be the liability of the Subcontractor

who
shall indemnify Contractor and/or repair or replace the same at the option of the

Contractor.

10.3 The Subcontractor shall confine its materials, equipment, and the operations of its
workmen to limits indicated by applicable law, ordinances, rules, regulations,
permits or direction of the Contractor’s Representative and shall not unreasonably
encumber the premises with its materials or equipment.

10.4 The Subcontractor shall not load or permit any part of the structure being
constructed or under construction to be loaded with a weight that will endanger its
safety.

10.5 Subcontractor obliges itself to be familiar with all pertinent rules and policies of
the Contractor, especially those concerning Safety. Strict observation of all
Safety rules by the Subcontractor is paramount.
Page 8 of 20 -8-
10.6 In an emergency affecting the safety of life or the Subcontract Works or of
adjoining property, the Subcontractor, without special instruction or
authorization of the Contractor, is hereby permitted to act, at its discretion
to prevent a threatened loss or injury, or it shall so act, without appeal, if so
instructed or authorized by the Contractor.

SECTION XI
CLEANING OF PREMISES

11.1 The Subcontractor shall at all times keep the Contractor’s premises free from
accumulation of waste or materials or rubbish caused by its employees or workers.
Upon the completion of the Subcontractor Works and before turnover of the
same
to the Contractor for acceptance, the Subcontractor shall remove all its
rubbish,
tools, scaffoldings and surplus, equipment and its other things from the work area
and Site and shall leave its works and the immediate premises “broom” clean or its
equivalent unless otherwise specified. In case of dispute, the Contractor may
remove any waste accumulation, rubbish, and all of Subcontractor’s
scaffoldings,
surplus, equipment and things and charge the costs of such removal against the
Subcontractor.

SECTION XII
INDEPENDENT CONTRACTOR

12.1 The Subcontractor hereby warrants that it is an independent business organization.

duly licensed to provide the works and services required under this Subcontract.

It is understood that Subcontractor is financially capable to meet the required

works and services under this Subcontract; it has the operating capital to
execute
and complete the Subcontract Works, and remedy any defect(s) therein; it has
sufficient and adequate labor, equipment, tools, materials, consumables and
supervision needed in the execution and completion of the Subcontract
Works
and the remedying of any defect(s) therein; it shall maintain sufficient financial
resources to meet the compensation and benefits due its employees assigned to
perform this Subcontract independent of the consideration due
Subcontractor
herein; it has the required knowledge, experience and professional competence to
undertake the Subcontract Works. There is no petition, action or proceeding,
whether judicial or extra judicial, seeking to declare the Subcontractor
insolvent
or to suspend payments to its creditors.

12.2 The Subcontractor is not to be considered agent or employee of the Contractor.

by virtue of this Subcontract. The Subcontractor warrants and represents to
the
Contractor that all workers assigned to perform the Subcontract Works are
its
employees and no agents or employees of Subcontractor shall be or shall be
deemed to be the agents or employees of the Contractor. The agents or employees
of the Subcontractor are not entitled to any of the salaries and benefits that the
Contractor provides for its employees. Subcontractor shall be solely and
entirely
responsible for its acts and for the acts of its employees and agents.

SECTION XIII
HOLD FREE AND HARMLESS
13.1 The Subcontractor shall indemnify and hold the Contractor free and harmless.
against all claims, actions, expenses and liabilities arising out of: (a)
Page 9 of 20 -9-
 Subcontractor’s non-payment of the wages/salaries or other sums due and
payable
to its workers,/employees; (b) Subcontractor’s non-compliance with or
violation
of laws, ordinance, rules and regulations, whether national, local, administrative or
otherwise; (c) any damage, accident, injury (including death) caused or sustained
by Subcontractor’s personnel or to the employees and/or properties of the
Contractor or third parties by reason of any act, fault, negligence or omission of
Subcontractor, its personnel, or agents, (d) any damage to person or property
consequent upon the use, misuse, or failure of any equipment and facilities utilized
by the Subcontractor even though such equipment be furnished, leased, or
loaned
to the Subcontractor by the Contractor; and/or (e) any damage to the
environment, of whatever nature and description.

13.2 The Subcontractor shall keep and protect the Subcontract Works free from any
lien or encumbrance and shall hold the Contractor free and harmless from any lien

or claim filed or made by any third party on account of alleged non payment for labor,
materials, services or other things furnished or performed as part of the
Subcontract
Works. The Subcontractor shall promptly discharge or remove any such lien
or
claim by payment, bonding or otherwise, and shall notify the Contractor when it has

done so. The Subcontractor shall indemnify the Contractor for any damage or
loss
suffered by the latter on account of any lien, claim or encumbrance.

13.3 In the event that the Contractor shall incur any loss, expense, or liability under the
foregoing, the Subcontractor shall reimburse the Contractor any and
all
payments that Contractor may make, as well as, all expenses and costs, including

but not limited to litigation expenses and legal fees, that may be incurred by the
Contractor in connection therewith. Subcontractor hereby further agrees
that
the Contractor shall be entitled to proceed against the Performance Bond herein

provided and/or automatically set-off the receivables due the Subcontractor

under
this Subcontract or any other contract with Contractor or its
subsidiaries/affiliates
and/or immediately terminate this Subcontract without prejudice to the right of
the
Contractor to file the appropriate legal action against the Subcontractor.

SECTION XIV
PERFORMANCE BOND

14.1 The Subcontractor shall, upon signing of this Subcontract, submit to the
Contractor a Performance Bond (or Performance Guarantee issued by a bank)
acceptable to the Contractor (with official receipt for premium payment/or
payment of bank fees) in the amount equivalent to (Php. _______or 30 %, Thirty
percent of the Subcontract Price, conditioned on the true, full, complete and
faithful
performance by the Subcontractor of any and all its obligations or
undertakings
under this Subcontract.

14.2 The Performance Bond shall be CALLABLE ON DEMAND. By express and

clear terms, the Bond shall clearly state that the Contractor shall be paid upon first
written demand declaring the Subcontractor to be in default under this
Subcontract, without any need by the Contractor providing or showing
the grounds or reasons for its demand and/or amount specified. The terms of
this Subcontract shall further be made an integral part of the Performance
Bond. Further, the phrase “CALLABLE ON DEMAND” shall be shown
typewritten by the bonding company on the face of the Performance Bond.
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14.3 In the event of any breach by the Subcontractor of any of its obligations,
representations, or undertakings provided in this Subcontract, the Contractor
may
immediately proceed against the Performance Bond/ Performance Guarantee.

14.4 Notwithstanding any statement in the Performance Bond/Performance Guarantee

that it shall be valid for a period shorter than the term of this Subcontract, the
Performance Bond/Performance Guarantee shall be effective for the entire duration
of this Subcontract, unless a claim or claims has/have been filed by the
Contractor against the Subcontractor, in which case, said bond/guarantee
shall
continue to be in full force and effect until such claim or claims has/have been paid.
In case of expiration of the Performance Bond/Performance Guarantee before
completion or acceptance of the Subcontract Works, the Subcontractor is
hereby
required to renew or extend the Performance Bond/Performance Guarantee before
its expiration, or if expired, to post a new Performance Bond/Performance
Guarantee for the same amount, under the same conditions described under Article
14.2 and effective until completion and acceptance of the Subcontract Works.
Failure or refusal to renew or extend the effectivity of the Performance
Bond/Performance Guarantee shall not relieve the Subcontractor of its
liability
hereof. All premiums and other expenses in securing, extending, and renewing the
Performance Bond/Performance Guarantee shall be shouldered by the
Subcontractor.

14.5 A new or an additional Performance Bond/Performance Guarantee shall be posted

by the Subcontractor (a) to cover any increase in the Subcontract Price;
(b) to
cover variations in the Subcontract Works; (c) in case of any deficiency in

Subcontractor’s declared maximum financial capability; (d) in the event the

bonding company/bank becomes a delinquent, insolvent, or is blacklisted by the
Contractor or by the appropriate accrediting/licensing bonding companies, or shall

be dissolved for whatever reasons, or all or substantially all of the bonding

company’s/bank’s assets shall be sold, and/or (e) when the Contractor determines

that the Performance Bond/Performance Guarantee has become insufficient or

inadequate.

14.6 The Performance Bond/Performance Guarantee shall continue to be in full force

and effect notwithstanding the happening of one or more or all of the following
events: (a) the novation of this Subcontract; (b) the change or extension of the
time
to complete the Subcontract Works; (c) the modification, increase or decrease
in
the Subcontract Price; (d) the cancellation, rescission, or termination of the

Subcontract if the continuation of the life of the Performance

Bond/Performance
Guarantee is necessary to enforce any liability or obligation of the
Subcontractor;
(e) the takeover of the Subcontract Works; and/or (f) any other events similar
to any of the foregoing, it being understood that as long as the Subcontractor has
an obligation or liability to the Contractor , the bonding company/bank and
the Subcontractor shall be solidarily liable to the Contractor.

SECTION XV
INSURANCE

15.1 The Subcontractor shall secure from an insurance company accredited by and
acceptable to Contractor a primary comprehensive general liability insurance and

automobile liability insurance effective at the commencement of the Subcontract

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 Works and until the Subcontract Works is turned over to and finally accepted
by the Contractor to cover the following:

15.1.1 Physical loss of or damage to the Subcontract Works, materials and

equipment therefor;
15.1.2 Cost of rectifying defects of workmanship and materials; and
15.1.3 Physical loss or damage to any property of Contractor or third parties.

15.2 If not covered under Sub-Article 15.1, a primary comprehensive general liability
insurance to cover the following risks subject to the following minimum limits: -

(a) Bodily Injury - P_____________ per person

P _____________per accident

(b) Property Damage - P_____________ per property

P_____________ per accident

15.3 Certificates of such insurance policies and official receipts of premium payments
shall be submitted to Contractor within five (5) days prior to the commencement

of the Subcontract Works. If at any time the insurance becomes inadequate,

the
Subcontractor shall submit additional insurance within five (5) days from date
of
receipt of written notice, subject to approval of the Contractor. Insurance policies
should contain thirty (30) day pre-cancellation notice to the Contractor and prior

notice to Contractor of a proposed reduction in the scope of cover.

15.4 The bonds/insurances shall not be construed as a limitation of the Subcontractor’s

liability and responsibility under this Subcontract and shall in no way prevent the
Contractor from claiming indemnification for damages suffered by it which may
exceed the amount of the bonds/insurances.

SECTION XVI
SUSPENSION OF SUBCONTRACT WORKS

16.1 The Contractor may, at any time and with cause or upon direction of the Client or
any governmental authority instruct the Subcontractor to suspend the progress of

the Subcontract Works or any part(s) thereof. The Contractor shall notify
the
Subcontractor of the period of suspension. During the period of suspension,
the
Subcontractor shall continue to protect, store and secure the Subcontract
Works
including those suspended against any deterioration, loss or damage. The
Subcontractor shall rectify any deterioration loss or damage, at its cost, so that
the
Subcontract Works or such part(s) thereof shall conform to specifications .
The
Subcontractor shall only be entitled to be paid the cost of the work actually
performed by it prior to the effectivity of the suspension. The Subcontractor
shall
resume the execution of the Subcontract Works or part(s) suspended on the
date
fixed by the Contractor.

SECTION XVII
SUBLETTING AND ASSIGNMENT

17.1 The Subcontractor shall not sub-contract, sublet or assign the whole or any part
of this Subcontract without the written consent of the Contractor. The
Page 12 of 20 - 12 -
 Contractor may assign the whole or any part of this Subcontract by giving
the Subcontractor seven (7) days prior written notice thereof.

SECTION XVIII
GUARANTEE AND WARRANTY BOND/

18.1 For a period of One (1) year from the acceptance of the completed Project by the
Client, the Subcontractor guarantees that the completed
Subcontract Works is free of defects and that no sub-standard materials have
been
utilized; that all materials, equipment and supplies used have been fully paid and
that full wages and benefits of its workers/personnel (who performed the
Subcontract Works) as required under existing laws have been fully paid and
complied with. The Subcontractor guarantees that it shall rework, repair or
replace, as the case may, any defect in the completed Subcontract Works.
The
Subcontractor guarantees that it shall commence such rework, repair or
replacement within three (3) days from the date of the Contractor’s written notice.

Should the Subcontractor fail to do such rework, repair or replacement, the

Contractor may do so or cause it to be done by another, and the costs and expenses

incurred therefor shall be charged against any retention money, or the Contractor

may proceed against the Warranty Bond/or Warranty Guarantee issued by a bank
without prejudice to the right of the Contractor to avail of other remedies in law.

Neither the foregoing nor any provision in the Subcontract Documents, nor
any
bond/Guarantee or insurance policy shall be held to limit the Subcontractor’s
liability for defects and damages and the right of the Contractor pertinent thereto
under the law.

18.2 The Subcontractor shall furnish the Contractor a Warranty Bond CALLABLE
ON DEMAND/or Warranty Guarantee issued by a bank (with the Official
Receipt for the premium payment or payment of fees thereon) in the amount
equivalent to (Ten (10) percent) of the total Subcontract Price effective from
the
acceptance of the completed Subcontract Works by the Contractor and valid
for
a period of One (1) year from acceptance of the completed Project by the Client

under the Main Contract. The Warranty Bond/or Warranty Guarantee shall
clearly state that the Contractor shall be paid upon first written demand declaring
the Subcontractor’s work to be defective and/or substandard under this
Subcontract, without any need by the Contractor providing or showing
the
grounds or reasons for its demand and/or amount specified. The Warranty Bond/or
Warranty Guarantee shall be taken from a bonding company/ or bank acceptable to
the Contractor. This Warranty Bond/or Warranty Guarantee shall answer for any

and all defects in the Subcontract Works, unpaid wages/salaries

of
Subcontractor’s workers/personnel and/or unpaid materials and supplies and
cost
of equipment and other services in respect of this Subcontract.

SECTION XIX
DEFAULT

19.1. The Subcontractor shall be deemed in default upon its breach of any of its
obligations, representations, undertakings or warranties hereof and/or upon the
occurrence of any of the following events:
Page 13 of 20 - 13 -
 (a) the Subcontractor persistently or repeatedly refuses or fails to supply
sufficient or properly skilled workmen or proper materials, or fails to make
prompt payment for its materials or labor, or persistently disregards laws,
ordinances, rules, regulations or orders of any public authority having
jurisdiction;

(b) the Subcontractor incurs delay of at least 30 days in complying with any
catch-up schedule approved by the Contractor;

(c) the Subcontractor fails to complete the Subcontract Works in accordance

with the Subcontract Documents on the date of completion
stipulated herein or any approved extension period thereto;

(d) the Subcontractor sublets or assigns to another or permits the performance

of the Subcontract Works or any part(s) thereof by another without the
prior written approval of the Contractor;

(e) the Subcontractor fails to commence the Subcontract Works or suspends

the performance thereof without justification;

(f) the Subcontractor removes plant, goods, equipment or materials from the
Site which are necessary for the due and timely performance of the
Subcontract Works without the consent of the Contractor;

(g) the Subcontractor refuses or fails to comply with any written direction or
instruction of the Contractor;

(h) the Subcontractor fails to remove materials from the Site or to pull down
and replace work for 7 days after receiving written notice from the
Contractor that the said materials or work has been condemned or rejected
by the Contractor or the Client;

(i) the Subcontractor fails to comply with the safety rule/s and/or policy/ies
of the Contractor

(j) the Subcontractor abandons the Subcontract Works;

(k) the Subcontractor becomes insolvent or bankrupt, or makes a general

assignment for the benefit of its creditors, or performs any act of
bankruptcy.

SECTION XX
TERMINATION/TAKEOVER

20.1 In the event of default by Subcontractor, the Contractor may, without prejudice
to Contractor’s right or remedy and courses of action available in law or equity
and
without releasing the Subcontractor from any of its obligations or liabilities
under
this Subcontract, after giving the Subcontractor at least seven (7) days
written
notice, terminate this Subcontract at any time thereafter and take over the
Subcontract Works and itself complete the same or may employ any other
contractor to complete the Subcontract Works. All essential equipment
belonging
to the Subcontractor as may be needed for the completion of the Subcontract

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 Works shall, at the option of the Contractor, remain in the place of work until
completed. The Contractor may require the Subcontractor (except when
the
termination occurs by reason of the bankruptcy of the Subcontractor or of its
having committed an act of bankruptcy) to assign to the Contractor the benefit of
any agreement for the supply of materials or goods. The Contractor may proceed

against the Performance Bond upon or any time after termination or takeover of the
Subcontract Works. Any sums or payments due the Subcontractor prior to
the
termination of the Subcontract Works including the retention monies shall not
be
released to the Subcontractor until the Contractor shall have been fully paid of
all
losses, expenses and damages incurred by it as a result of such termination and/or
takeover including any extra costs to finish the Subcontract Works plus the costs
it
incurred in remedying any defects therein and any liquidated damages due from the
Subcontractor prior to the termination.

SECTION XXI
NON-WAIVER OF RIGHTS

21.1 The failure of either Party to insist upon a strict performance of any of the terms
and covenants hereof shall not be considered a relinquishment or waiver of any
rights or remedies pertinent thereto, nor shall the same be considered as a waiver
or condonation of any subsequent breach of default of the terms and covenants
hereof, all of which shall continue to be in full force and effect.

21.2 No waiver express or implied by either of the Parties of any of their respective
rights or remedies under this Subcontract shall be deemed to have been made, and

no evidence thereon shall be admissible, unless such waiver is expressed in a

written instrument duly signed by the Party waiving said rights or remedies.

SECTION XXII
SEPARABILITY CLAUSE

22.1 If any term or condition of this Subcontract is held invalid or contrary to law, the
validity of other terms and conditions thereof shall not be affected thereby.

22.2 This Subcontract supersedes and renders void any and all agreements and
undertaking, oral and/or written, previously entered between the Parties regarding
the subject matter hereof and shall not hereafter be considered modified, altered or
novated except by written instrument duly signed by the Parties or Party against
which it is being invoked.

SECTION XXIII
REPRESENTATIONS AND UNDERTAKINGS

23.1 The Subcontractor represents that it or its representative has not offered or paid,
directly or indirectly, any of the Contractor’s officials or employees any
consideration or commission for this Subcontract nor has it or its
representative
exerted or utilized corrupt or unlawful influence to secure or solicit this
Subcontract. Any violation of this undertaking shall constitute sufficient ground

for the termination of this Subcontract by the Contractor or the reduction

from
the contract price of the consideration or commission paid, without prejudice to the
right of action of the Contractor as provided under Sub-Article 23.5.
Page 15 of 20 - 15 -
23.2. The Subcontractor shall provide certified true copies of records, documents
and
other relevant information pertaining to the Subcontract upon request of the
Contractor.

23.3. The directors, officers, employees and other agents of the Subcontractor
undertake
to disclose any family relations by consanguinity or affinity up to the third civil
degree with a director, officer or employee of the Contractor and further disclose

any close personal relations with any director, officer, or employee of the
Contractor whether in the form of close personal friendship, social, fraternal and

professional connections all giving rise to intimacy which assures free access to
such director, officer or employee of the Contractor.

23.4 The directors, employees and other agents of the Subcontractor who may have such
family or close personal relations with any director, officer or employee of the
Contractor as described in the preceding paragraph hereof, shall not, in any manner

and at all times capitalize, exploit or take advantage of such family or close personal
relations.

23.5. The Subcontractor agrees that the breach of the representations and undertakings
herein shall be a sufficient ground for the immediate cancellation or termination of
this Subcontract or any other existing contract between the Contractor and the
Subcontractor and/or the immediate and automatic de-listing of the
Subcontractor’s from the list of accredited contractors of the Contractor and
that the same shall serve to bar Subcontractor from any future accreditation.
The foregoing sanctions shall be without prejudice to a claim or suit for damages by
the Contractor against the Subcontractor or any reconsideration by the
Contractor as may be warranted under the circumstances.

SECTION XXIV
AUDIT CLAUSE

24.1 The Subcontractor shall maintain a complete set of accounting records. The
Contractor shall have access at any time to all of the Subcontractor’s and
its permitted sub-subcontractor(s) personnel, books records, correspondence,
instructions, plans, drawings, receipts, vouchers and memoranda of every
description pertaining to the Subcontract Works for the purpose of auditing
and for any other reasonable purpose.

SECTION XXV
APPOINTMENT

25.1 The Contractor is hereby irrevocably appointed by the Subcontractor, as the

Subcontractor’s duly authorized attorney-in-fact after the completion and/or
acceptance of this Subcontract, or even after the termination or cancellation
thereof for Contractor to take possession of whatever equipment, facilities, tools
and/or materials of the Subcontractor at the Site and, to dispose
said property/properties for whatever price and, to apply the proceeds thereof
to whatever liability and/or indebtedness the Subcontractor may have to
the Contractor plus reasonable expenses for the same, including storage, and
the balance, if any, shall be turned over to the Subcontractor.

Page 16 of 20 - 16 -
 SECTION XXVI
CONFIDENTIALITY

26.1 The Subcontractor shall not disclose details of the Subcontract Works to any
person or persons except those engaged in the performance of the Subcontract
Works. The Subcontractor shall not give any items concerning the details of
the
Subcontract Works to the press or a news agency without the Contractor’s
prior
written approval.

26. 2 The Subcontractor agrees to treat confidential all of the Contractor’s and Client’s
proprietary data, information, and other documents supplied to the
Subcontractor in connection with the Subcontract Works, and shall not
under any circumstances provide them to any third parties, and shall use them
exclusively for the purpose of the Subcontract Works.

26.3. The obligations contained in this Article shall continue in full force notwithstanding
the completion of the Subcontract Works or termination thereof. Upon
completion of the Subcontract Works, or upon request by the Contractor,
the
Subcontractor shall return such proprietary information without delay to the
Contractor.

26.4 The Subcontractor shall require its employees or agents to execute a non-
disclosure agreement prior to performing any of the Subcontract Works and
shall also submit a copy thereof to the Contractor.

SECTION XXVII
ARBITRATION

27.1 In the event any dispute or differences arises between the Contractor and the
Subcontractor, either during the progress or after the completion or
abandonment
of the Subcontract Works, in connection with the interpretation of the
Subcontract
Documents or as to any matter of whatsoever nature arising thereunder or in
connection therewith, the Contractor and the Subcontractor hereby agree to
exert
all efforts to settle their differences or disputes amicably. Failing these efforts, such
dispute or differences can only and exclusively referred to and finally resolved by
arbitration under the Rules of Procedure Governing Construction Arbitration
promulgated by the Construction Industry Arbitration Commission , pursuant to
Executive Order 1008 (the Construction Industry Arbitration Law), as amended by
R.A. 9285 or the ADR Act of 2004. The place of arbitration shall be exclusively in
Makati, Metro Manila. Provided that if such dispute or differences is also part or
subject of a dispute or difference between the Contractor and the Client, the
Contractor may, at its sole discretion, elect by notice in writing to the
Subcontractor that such dispute or difference relating between the Contractor
and
the Subcontractor is made subject to any decision or award under the provision of

the Main Contract in which case any such decision or award by the Client or by

the arbitral panel affecting the Subcontract Works shall be binding upon the

Subcontractor to the same extent that the same is binding upon the
Contractor
under the Main Contract and provided further that, except to the like extent as
provided in the Main Contract, such reference shall not be made without the written
consent of the Parties until after completion, termination or abandonment of the
Main Contract, or final determination of any dispute between the Contractor
and
Page 17 of 20 - 17 -
 the Client relating to the same subject matter as the dispute between the
Subcontractor and the Contractor whichever is later.

27.2 Notice of the demand for arbitration shall be filed in writing with the other Party.
The demand for arbitration shall be made within a reasonable time after the dispute
has arisen and attempts to settle such disputes amicably have failed. In no case,
however, shall the demand be made later than the date of the issuance of the final
account. Reference to arbitration of question relating to the issuance or non-
issuance of any certificate, or of any dispute or difference under the Subcontract,

shall not be made until after the acceptance of the Subcontract Works, or

termination or abandonment of the Subcontract Works, unless with the

written
consent of the Contractor and the Subcontractor. Notwithstanding any
such
demand or reference to arbitration, the Subcontractor shall not cause any delay
to
the Subcontract Works during any arbitration proceedings, and shall comply
or
continue with any instruction or decision given by the Contractor in regard to the
subject matter of such demand or reference unless and until the same shall be the
subject of an award by the arbitral panel.

SECTION XXVIII
GOVERNING LAW AND OTHERS

28.1 This Subcontract shall be governed by and interpreted under the laws of the
Republic of the Philippines.

28.2. Parties agree that Contractor designated signatory/ies herein shall subscribe on

this Agreement by affixing and/or annotating their digital signature through the use of
GMO Sign, which digital signature shall be deemed to be authenticated by the said
system.

IN WITNESS WHEREOF, the Parties have hereunto signed this Subcontract

Agreement, the Contractor by its duly authorized representative and
the Subcontractor likewise by its duly authorized representative on the date and at
the place first above written.

EL CONSTRUCTION
GROUP(PHILS.) INC.
(Contractor )
(Contractor)

By: _________________________
By: ______________________________

SIGNED IN THE PRESENCE OF:

__________________________ _____________________________

Page 18 of 20 - 18 -
 REPUBLIC OF THE PHILIPPINES )
______________, METRO MANILA)S.S.

BEFORE ME, a Notary Public in and for _______________________, this

__________, 20___ personally appeared the affiant who exhibited to me his/her competent
evidence of identity as follows:

NAME COMPETENT EVIDENCE DATE/PLACE

IDENTITY

EL Construction _____________________

_______________

known to me to be the same persons who executed the foregoing Subcontract

Agreement and acknowledged to me that the same is his/her free voluntary act and deed
as well as the free and voluntary act and deed of the corporation herein represented.

IN WITNESS WHEREOF, I have hereunto set my hand this _______________ of

____________, 20____ at _________________.

Notary Public

Doc. No. ________

Page No. ________
Book No. ________
Series of 20_____.

Page 19 of 20 - 19 -
REPUBLIC OF THE PHILIPPINES )
______________, METRO MANILA)S.S

BEFORE ME, a Notary Public in and for _______________________, this

__________, 20___ personally appeared the affiant who exhibited to me his/her competent
evidence of identity as follows:

NAME COMPETENT EVIDENCE DATE/PLACE

IDENTITY

____________________ __________________

________________________ ____________________ ___________________

known to me to be the same person who executed the foregoing Subcontract

Agreement and acknowledged to me that the same is his/her free voluntary act and deed
as well as the free and voluntary act and deed of the corporation herein represented.

IN WITNESS WHEREOF, I have hereunto set my hand this _______________ of

____________, 20___ at _________________.

Notary Public

Doc. No. _______

Page No. _______
Book No. _______
Series of 20____.

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