A FEASIBILITY STUDY ON

THE CONSTRUCTION OF
SUBDIVISION IN THE
MUNICIPALITY OF SAN
ESTEBAN, ILOCOS SUR

TABLE OF CONTENTS

Page

1
EXECUTIVE SUMMARY 4
I.INTRODUCTION 5
1.1 Statement of the Problem 6 1.2
Research Objectives 6
1.3 The Proponent 6
1.3.1 Proponent’s Mission 6
1.3.2 Proponent’s Vision 7
II. MARKETING FEASIBILITY 8
2.1 Primary Target Market 8
2.2 Factors that may affect demand 8
2.4.3 Population Profile and Consumer Spending 10
2.4 Marketing Strategy 11
Current Status of Real Estate Industry in the Philippines 11
III. THE MARKET AREA 13
3.1 Short History of San Esteban 13
3.2 Economy of San Esteban 14
3.3 Demographics of San Esteban `14
3.4 Population by age group 15
3.5 Location 15
3.6 San Esteban’s Business Environment 15
3.7 LGU Government Efficiency 16
3.8 Infrastructure Efficiency 16
3 Marketing Action Plan 17
IV. Strengths, Weaknesses, Opportunities and Threats Analysis 18-21
V. TECHNICAL ASPECT 22
5.1 Proposed Site Development Plan 22
5.2 Proposed Project Location 22
5.3 Site Lay-out 22-23
5.4 Land Use and Distribution 23
5.5 Facilities and Utilities 23
5.6 Power Distribution System 23
5.7 Water Distribution 24
5.8 Construction Phase 24
5.9 Contracting 24

2
 5.10 Minimum Design Standards 26
5.11 Site Criteria 26
5.12 Planning Considerations 27
5.13 Facilities and Amenities 28
5. 14 Design Parameters 31
VI. FINANCIAL FEASIBILITY 42
5.1 Construction Cost Estimate 42
5.2 Project Timeline 43
5.3 Means of Financing 44
5.4 Projected Income Statement 45
VII CONCLUSIONS
6.1 Soundness of the Project 46
6.2 Benefits of the Project 47
VIII RECOMMENDATIONS 47

EXECUTIVE SUMMARY

This feasibility study is for the construction of subdivision in Brgy. Bateria, San Esteban,
Ilocos Sur. Initially, the proponents shall pre-sell the subdivided lots through its accredited
sales agents. The subject land area has a total of seven thousand two-hundred fifty-eight
(7,258) square meters. The total saleable lots for a complex subdivision shall be seventy-
percent of the total area.

3
The proponent seeks to sell the saleable area square under a pre-selling terms and conditions.
After pre-selling the lots, the proponent shall proceed to the development of the area.

The potential buyers shall choose from among the subdivided lots. There shall be a
reservation fee if the potential buyer wants to secure the lot. The potential buyer shall be
provided with a flexible financing scheme of one year and two years.

The estimated cost of the project shall be Php 22,000,000.00. The proponent seeks to execute
the development plan in a three-year timeline.

However, the first year shall consist of rigid planning, taking into consideration all the
relevant factors like the marketability of the project location, the consultation process to the
local government and tapping the support of the various stakeholders.

The business environment and political set-up of the area all make up the architecture of the
project.

It shall be the duty of the proponent, in coordination with the owner, to comply with all laws
and regulations relative to the construction of the project.

4
 I
INTRODUCTION

The real estate industry is a key driver of the Philippine economy, generating a gross value
added of nearly 529 billion in Pesos in 2021. Due to the growing middle-class population and
the sustained remittances from overseas Filipino workers’ (OFWs) purchasing and investing
power in real estate properties had been gradually increasing in recent years.

Residential real estate in the Philippines comprises a wide range of residential properties,
from public and private housing to mid-range subdivisions, condominiums, and high-class
villages. In 2020, a survey revealed that most Filipino households live in a single-house unit,
with more than half owning the property or having an owner-like possession. For
metropolitan cities like Metro Manila, renting apartments, purchasing rent to own units in
subdivisions and taking a lease in a condominium is quite common. The average selling price
would depend on the area of property.

However, the exodus of households from rural areas left a demand for affordable housing at
an all-time high. As a result, there has been a growing and constant demand for socialized
and low-cost housing among low-income families. On top of that, Philippines’ geographical
location makes susceptible to some constraints further challenging the country’s housing
situation. To address the housing gap, government agencies and the private sector adopted a
resolution that would expedite the inventory of idle government lands and fast-track the
development and release of socialized housing for growing of informal settlers.

After the pandemic that hit in 2020, numerous new trends and innovations are expected to see
in the real estate industry, these new offerings show the trust and reliability of investors and
developers in the national and local real estate markets in the post-pandemic growth in the
industry allowing more people to engage in the industry.

1.1 The Problem

The purpose of the study is to determine the feasibility of opening a subdivision village in
Bateria, San Esteban, Ilocos Sur. Data will be collected through observational research
method and through surveys distributed to potential target market.

1.2 Research Objectives

5
The following questions will be answered after the completion of the study:

 Is it possible? Can this be done within the allotted capital, time frame, legal and
regulatory conditions, and technical capabilities?
 Is it financially viable? Even it falls within the budget, will it have long term benefits
that outweigh costs? Is there a less expensive or financially risky way to achieving the
same result? How does it compare to the cost of doing nothing about this situation?
 Will it be accepted by the community? Will people be in favor of this idea? Will
anyone be opposed to it? How much public support is necessary to make this
successful? (What kind of consultation might be necessary to determine this?)
I.3 The Proponent

JB Realtor’s Development Project is a sole proprietorship organized to conduct real estate

development projects in marketable areas.

Initially, the proponent shall be engaged in pre-selling subdivided lots.

1.3.1 Mission

The proponent’s mission is to create energetic, positive, results driven work environment
focused on the investment and development of long-term relationships. We measure our
success by the results delivered to clients. Our ethics are built on our commitment to offer
superior customer service, combining an entrepreneurial flair and bespoke of service of a
fast-growing organization.

1.3.2 Vision

The proponent’s vision is to be the leading real estate service provider in Ilocos region and
the preferred place of employment for real estate professionals. We consistently strive to
develop collaborative partnerships, based on transparency and mutual trust, which serve to
build enduring client relationships. As we expand, we’re committed to these principles,
which have served our company and clients through the years.

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 II

Market Feasibility

Market feasibility discusses the description of the industry, current market, anticipated future
market potential, competition, sales projections and potential buyers. These are important to
the progress of the business as these serve as business development factors.

2.1 Primary Target Market

The business primarily targets middleclass who are identified to possess financial capacity to
own a real estate property, specifically a subdivision lot. This class includes politicians, and
business owners, professionals, managers, and civil servants.

Secondarily are the working class, both young and old, whose interests in investing are
apparent.

2.1.1 Factors that may affect the Demand

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The domestic economy is one of the biggest external factors that may affect the demands of
the business. When the economy of the country is in the good condition, the flow of demand
is stable.

The choices of users, owners, and renters form the demand side of the market, while the
choices of owners, developers and renovators form the supply side. In order to apply simple
supply and demand analysis to real estate markets, a number of modifications need to be
made to standard microeconomic assumptions and procedures. In particular, the unique
characteristics of the real estate market must be accommodated. These characteristics include:

 Durability. Real estate is durable. A building can last for decades or even centuries, and
the land underneath it is practically indestructible. As a result, real estate markets are
modelled as a stock/flow market. Although the proportion is highly variable over time,
the vast majority of the building supply consists of the stock of existing buildings, while a
small proportion consists of the flow of new development. The stock of real estate supply
in any period is determined by the existing stock in the previous period, the rate of
deterioration of the existing stock, the rate of renovation of the existing stock, and the
flow of new development in the current period. The effect of real estate market
adjustments tend to be mitigated by the relatively large stock of existing buildings.
 Heterogeneity. Every unit of real estate is unique in terms of its location, the building,
and its financing. This makes pricing difficult, increases search costs, creates information
asymmetry, and greatly restricts substitutability. Housing stock depreciates, making it
qualitatively different from new buildings. The market-equilibrating process operates
across multiple quality levels. Further, the real estate market is typically divided into
residential, commercial, and industrial segments. It can also be further divided into
subcategories like recreational, income-generating, historical or protected, and the like.
 High transaction costs. Buying and/or moving into a home costs much more than most
types of transactions. The costs include search costs, real estate fees, moving costs, legal
fees, land transfer taxes, and deed registration fees. Transaction costs for the seller
typically range between 1.5% and 6% of the purchase price. In some countries in
continental Europe, transaction costs for both buyer and seller can range between 15%
and 20%.
 Long time delays. The market adjustment process is subject to time delays due to the
length of time it takes to finance, design, and construct new supply and also due to the

8
 relatively slow rate of change of demand. Because of these lags, there is great potential
for disequilibrium in the short run. Adjustment mechanisms tend to be slow relative to
more fluid markets.
 Both an investment good and a consumption good. Real estate can be purchased with
the expectation of attaining a return (an investment good), with the intention of using it (a
consumption good), or both. These functions may be separated (with market participants
concentrating on one or the other function) or combined (in the case of the person that
lives in a house that they own). This dual nature of the good means that it is not
uncommon for people to over-invest in real estate that is, to invest more money in an
asset than it is worth on the open market.
 Immobility. Real estate is locationally immobile (save for mobile homes, but the land
underneath them is still immobile). Consumers come to the good rather than the good
going to the consumer. Because of this, there can be no physical marketplace. This spatial
fixity means that market adjustment must occur by people moving to dwelling units,
rather than the movement of the goods. For example, if tastes change and more people
demand suburban houses, people must find housing in the suburbs, because it is
impossible to bring their existing house and lot to the suburb (even a mobile homeowner,
who could move the house, must still find a new lot). Spatial fixity combined with the
close proximity of housing units in urban areas suggest the potential for externalities
inherent in a given location.

2.2.2 Population Profile, and Consumer Spending Pattern of the Market Area

After determining the market area, a literature of the demographic profile and consumer
spending pattern should be considered.

Demographic profile of the people in the proposed site is essential in determining whether or
not to develop a subdivision. It includes the total population in the market area, the number of
employed persons, working women, income level, population age, housing and family
structure. Among all the different aspects of demographic profile, total population reveals
some information of the area in question, but it is the population profile, especially income
distribution and age distribution.

9
2.2 Marketing Strategy

The proponents see personal selling as still the most effective marketing strategy when it
comes to selling any product or service. The marketing mix of personal selling and press
media combined creates a powerful marketing tool.

Personal selling is when a salesperson meets a potential buyer face to face with the aim of
selling a product or service. The most traditional form of sales, many sales people are lured to
the industry by the adrenaline rush of high-stakes personal selling.

Face to face meeting certainly still has a place in marketing. One advantage of this is that it
addresses indifferences immediately such that any issues by the client or potential buyers are
addressed.

2.3 Current Status of Real estate industry in the Philippines

Census of Philippines Business and Industry: Real Estate Activities 1

1
Philippine Statistics Authority

10
Figure 1 presents the selected statistics on the number of establishments, total employment,
total revenue, total expense, and total value added. It also included ratios on employment per
establishment, revenue per expense, and value added per employee.

III

The MARKET AREA

2
Philippine Statistics Authority

11
3.1 Short History of San Esteban3

San Esteban is a coastal municipality in the province of Ilocos Sur.

The municipality has a land areas of 19.62 square kilometers or 7.58 square miles which
constitutes 0.76% of Ilocos Sur’s total area. Its population as determined by the 2020 Census
was 8,381. This represented 1.19% of the total population of Ilocos Sur province, or 0.16% of
the over-all population of the Ilocos Region. Based on these figures, the population density is
computed at 427 inhabitants per square kilometer or 1,106 inhabitants per square mile.

Barangay Population Population Population Change Annual

percentage Population
Growth4
Ansad 7.67% 643 692 -7.08% -1.53%
Apatot 18.97 1,590 1,678 -5.24% -1.13%
Bateria 6.04% 506 512 -1.17% -0.25%
Cabaroan 10.52% 882 867 1.73% 0.36%
Cappa-cappa 9.70% 813 811 0.25% 0.05%
Poblacion 9.56% 801 745 7.52% 1.54%
San Nicolas 12.80% 1,073 945 13.54% 2.71%
San Pablo 11.67% 978 1,030 -5.05% -1.08%
San Rafel 8.60% 721 659 9.41% 1.91%
Villa 4.46% 374 410 -8.78% -1.92%
Quirino
Total 8,381 8,349 0.38% 0.08%

3.2 Economy of San Esteban5

3
https://sanesteban.gov.ph
4
https://sanesteban.gov.ph

5
https://sanesteban.gov.ph
https://sanesteban.gov.ph

12
 Fiscal year Annual Regular Income Change
2009 27,335,705.33 -
2010 62,293,190.31 127.88%
2011 61,168,285.94 -1.81%
2012 53,353,851.49 -12.78%
2013 52,594,736.49 -1.42%
2014 32,905,152.50 -37.44%
2015 37,469,407.25 13.87%
2016 146,496,161.13 290.98%

3.3 Demographics6

The household population of San Esteban in the 2015 Census was 8,344 broken down into
2,001 households or an average of 4.17 members per household.
Census Date Household Population Number of Average
Households household size
1990 May 1 6,317 1,277 4.95
1995 Sep 1 6,508 1,361 4.78
2000 May 1 7,168 1,482 4.84
2007 Aug 1 7,777 1,718 4.53
2010 May 1 8,068 1,831 4.41
2015 Aug 1 8,344 2,001 4.17

3.4 Population by age group7

According to the 2015 Census, the age group with the highest population in San Esteban is 5
to 9, with 794 individuals. Conversely, the age group with the lowest population is Under 1,
with 127 individuals.
details

6
https://sanesteban.gov.ph
https://sanesteban.gov.ph

7
https://sanesteban.gov.ph
https://sanesteban.gov.ph

13
Combining age groups together, those aged 14 and below, consisting of the young dependent
population which include infants/babies, children and young adolescents/teenagers, make up
an aggregate of 27.37% (2,285). Those aged 15 up to 64, roughly, the economically active
population and actual or potential members of the work force, constitute a total of 63.44%
(5,297). Finally, old dependent population consisting of the senior citizens, those aged 65
and over, total 9.19% (767) in all.

3.5 Location

The municipal center of San Esteban is situated at approximately 17° 20' North,

120° 27' East, in the island of Luzon. Elevation at these coordinates is estimated at
9.9 meters or 32.4 feet above mean sea level

3.6 SAN ESTEBAN’S BUSINESS ENVIRONMENT8

3.6.1

3.6.2

8
https://cmci.dti.gov.ph/lgu-profile.php?lgu=San%20Esteban

14
 3.6.3

3.7 MARKETING ACTION PLAN

Pre-entry level
Marketing
(Identification
Research
of market,etc.)
Target Market

Full blast sales

Building Networks
marketing

15 Strategic Marketing
 IV

IV.

STRENGTHS,
WEAKNESSESS,OPPORTUNITIES AND
THREATHS

(SWOT ANALYSIS)

STRENGTHS

POWERFUL SALES TEAM

16
  

FINANCIAL VIABILITY

HIGH CUSTOMER RETENTION

STRATEGIC MARKETING TOOLS

WEAKNESSES

Weak promotional tools in the

locality

Slow penetration of the new

industry

Booming of the present

industries

17
 Adaptability of new trends in
the market

OPPORTUNITIES

RISING DEMAND

EXPANSION OPPORTUNITIES

TRAINING AND DEVELOPMENT

OF SALES TEAM

EXPANSION OF VAST
NETWORK

18
 THREATS

PRESENCE OF NEW PLAYERS

UNSTABLE WORKING
CONDITIONS

CHANGE IN BUSINESS
TECHNICAL FEASIBILITY
ENVIRONMENTS

POLITICAL CONSTRAINTS

19
 V.

TECHNICAL ASPECT

The technical aspect of the study states the operational flow of the project and the analysis of
various factors that affect the technical and operational activities.

5.1 Proposed Site Development Plan

The area allocated for the proposed subdivision is 7,258 square meters. The preparation of the
Site Development Plan is aligned with the appropriate sections of the National Building Code
and the Housing and Land Use Regulatory Board Guidelines.
5.2 Proposed Project Location

The proponent seeks to develop the Bateria is a barangay in the municipality of San Esteban,
in the province of Ilocos Sur. Its population as determined by the 2020 Census was 506. This
represented 6.04% of the total population of San Esteban.

5.3 Site Layout and Land Use Distribution

Land Use No. of Lots Area (sq.m.) Percent %

Saleable 6,084 83.82
Non-saleable 1,174 16.17

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 Total 7,258 100

5.4 Facilities and Utilities

It is envisioned that the proposed development project will have complete facilities and
utilities compliant with existing laws and regulations.

5.5 Power Distribution System

The will be provided by ISECO (Ilocos Sur Electric Cooperative), via a dedicated indoor or
outdoor power substation as may be determined during the FS/Detailed Design Phase.
Emergency or standby power requirement will be thru a pad-mounted, outdoor type diesel
driven stand-by generator with an estimated capacity of 1000KW, 3-Ph, 230VAC, 60Hz.
Final genset KW rating will be consistent with the total emergency loads requiring a stand-by
power back-up.

All electrical design, equipment and installations will comply with the provisions of the
Philippine Electrical Code (PEC) with the applicable regulations of the local and national
government offices concerned in the enforcement of electrical laws and ordinances and with
the requirements of ISECO having franchise jurisdiction. Other applicable provisions of the
National Fire Code of the Philippines (NFCP) as well as International Standards such as
NFPA, NEMA, NEC and ANSI will also apply.

5.6 Water Distribution System

The water distribution system will be constructed in coordination with the local government
unit of San Juan-Engineering Department which shall ensure that the distribution system and
its components meet government standards.
5.7 CONSTRUCTION PHASE

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The plans having been approved with appropriate zoning and a final plat on file, the
developer is in a position to begin construction of any site improvements necessary prior to
selling lots. In large lot, minor subdivisions a minimum of improvements may be required
depending on local subdivision regulations governing road improvement standards, water
availability and sewage requirements. In a major subdivision providing for standard sizes of
single-family, detached residential lots (1/4 to 1/2 acre), construction of roads curbs, gutters,
sidewalks, utility lines and any necessary site grading and clearing has to occur prior to
marketing lots ready for home construction. A set of typical construction plans for contract
would include a site layout and dimension plan, a rough grading plan, a drainage
improvements plan, a utility plan, a street and sidewalk plan, construction details, a fine
grading and seeding/sodding plan and possibly a tree and shrub planting plan, signage/entry
plan, lighting plan and construction plans for any special amenities (pool, clubhouse,
fountains, etc.). These documents are normally prepared by both a civil engineer and a
landscape architect.

5.8 CONTRACTING FOR CONSTRUCTION.

Upon approval of construction financing, a contract may be awarded for construction.

Depending on the size of the project, a developer may or may not wish to act as general
contractor (organizing all grading, paving, utility and landscape contractors and supervising
construction, coordination and implementation). Either way he chooses, one or many
construction contracts must be obtained. Such contracts, again depending on their size, may
be either fixed price or cost-plus contracts. There is also the choice of bidding for the contract
or selecting a contractor without competitive bid. All of these decisions are usually made in
consultation with the developer's planning and design consultants be they surveyors, civil
engineers and/or landscape architects

5.9 GOVERNMENT APPROVALS.

Any development of unimproved land requires some form of governmental approval.

The zoning ordinance of the municipality of San Juan is the specific, legally binding guide to
what can or cannot be built at any given site. A fairly specific site development plan which
shows building locations, street layout and lot sizes is sometimes required for a rezoning
approval. A public hearing is usually required to hear any objections or support by adjacent
land owners and other interested parties. The zoning ordinance usually allows for a legal
protest by adjacent property owners and referendum by petition against any decision by the

22
city council or county court. These opportunities for public scrutiny and protest often
influence a developer's approach to a site which requires re-zoning. In the case of re-zoning
from agricultural to low-density residential, re-zoning approval is usually possible with little
need for elaborately detailed plans The preliminary plat approval is contingent on submitting
a plan to the commission and council or court which demonstrates compliance with the local
subdivision regulations. These regulations are very specific regarding street standards,
building setbacks, lot sizes, densities, required amenities, required public improvements
(required from the developer), signage, utility locations and other design guidelines. A
preliminary plat has to show very specific information.

5.10 MINIMUM DESIGN STANDARDS

Design Standards for Subdivision

Residential subdivision projects shall conform with the following minimum design standards,
applicable local government units' (LGU) zoning ordinances as well as pertinent provisions
of the National Building Code if project is with housing component:

5.10.1 Site Criteria

5.10.1.1 Location

Conformity with Zoning Ordinance/Comprehensive Land Use Plan

Subdivision projects shall be located in residential zones or other areas appropriate for
residential uses. If there is no Zoning Ordinance or approved Comprehensive Land Use Plan,
the dominant land use principle and site suitability factors cited herein shall be used in
determining suitability of a project.

Subdivision projects supportive of other major urban activities (e.g. housing for industrial
workers) may be allowed in area zoned for the said urban activities.

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 5.10.1.2 Physical Suitability

Subdivision projects shall be located within suitable sites for housing and outside hazard
prone areas and protection areas as provided for by pertinent laws. Critical areas (e.g. areas
subject to flooding, landslides and those with unstable soil) must be avoided.

The site shall be stable enough to accommodate foundation load without excessive
earthmoving, grading or cutting and filling.

5.10.1.3 Accessibility

The site must be served by a road that is readily accessible to public transportation lines. Said
access road shall conform with the standards set herein to accommodate expected demand
caused by the development of the area. In no case shall a subdivision project be approved
without the necessary access road/right-of-way. Said access road right-of-way may be
constructed either by the developer or the local government unit.

5.11 Planning Considerations

5.11.1 Area Planning

Planning and designing of subdivision projects shall take into account the following:

a. safety and general welfare of the future occupants

b. adequate, safe, efficient and integrative road circulation system servicing every lot therein;

c. judicious allocation of land uses for diversity and amenity;

d. preservation of site e. proper siting or orientation of lots;

f. harmony with existing and proposed development in the vicinity;

g. Application of workable design principles or parameters for a well planned and self-
sustaining environment.

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When a developer or planner submits a Planned Unit Development (PUD) type of project, the
layout shall likewise conform to the standards for residential/condominium projects:

5.11.2. Open spaces

Open spaces shall conform to the provisions of P.D. 1216 and its implementing rules and
shall include the following:

Streets - adequate and safe means of vehicular and pedestrian circulation and
easements for utilities and planting strips, shall be provided.
Walks - paved walks shall be provided to the living units from streets, parking spaces
and from living units to play areas
Parks and playground - suitable recreational area(s) shall be allocated within the
subdivision. Where applicable, a hierarchy of such recreational areas may be provided
for, such that, a strategically located main park area is supplemented or complemented
by one or more smaller pocket(s) or areas for recreational use. These areas must be
accessible to living units and free from any form of hazard or risk_ Said parks and
playgrounds shall be cleared and free from any debris. Parks and playgrounds as
much as possible shall be at street level.

5.12 Facilities and Amenities

Areas required for subdivision facilities and amenities shall be judiciously allocated in
accordance with the provisions herein specified.

5.12.1 Density

Density of subdivision projects shall conform with the residential densities set forth in the
zoning ordinance of the city/municipality where project is located. Where there is a mixture
of housing types within the subdivision (such as single-detached, row house, town houses,
etc.), density shall include the total number of dwelling units in multi-story structure plus the
total number of lots intended for single and semi-detached houses

25
 5.12.2 Site Preservation

Slope

The finished grade shall have a desired slope to allow rain water to be channeled into street
drains. Where cut and fill is necessary, an appropriate grade shall be attained to prevent any
depression in the area.

Grading and ditching shall be executed in a manner that will prevent erosion or flooding of
adjoining properties.

5.12.3 Preservation of Site Assets

Suitable trees with a caliper diameter of 200 millimeters or more, shrubs and desirable
ground cover per Department of Environment and Natural Resources (DENR) rules shall be
preserved. Where a good quality top soil exists in the site, it shall be banked and shall be
preserved for finishing grades of yards, playgrounds, parks and garden area. c. Ground Cover
Grass, shrubs, plants and other landscaping materials used for ground cover shall be of a
variety appropriate for its intended use and location. They shall be planted so as to allow
well-tended cover of the area.

Ground Cover

Grass, shrubs, plants and other landscaping materials used for ground cover shall be of a
variety appropriate for its intended use and location. They shall be planted so as to allow
well-tended cover of the area.

Easements

Subdivision projects shall observe and conform to the following provisions on easements as
may be required by:

a. Chapter IV, Section 51 of The Water Code, on water bodies;

b. National Power Corporation (NPC), on transmission lines;

c. PHIVOLCS per Resolution No. 515, Series of 1992, on identified fault traces;

26
 d. Other public utility companies and other entities' right-of-way;

e. National/local government units for projects abutting national roads (primary roads) where
adequate easement shall be provided for, including loading and unloading areas; f. Other
related laws

5.12.4 Circulation

Depending on the classification of roads adjacent to the subdivision and the size of the
project site, road network should result into a hierarchy of functions and should define and
serve the subdivision as one integrated unit.

a. Roads complemented with pathwalks within the subdivision must be so aligned to facilitate
movement and to link the subdivision to the nearest major transportation route and/or
adjacent property. Whenever there are existing roads within the project site which shall be
made part of the subdivision plan, these shall be improved in accordance with the standards
set forth herein.

b. Streets should conform to the contours of the land as far as practicable Where a proposed
project adjoins a developed property, roads within the said project shall be
connected/integrated/aligned with existing ones. Where a proposed project adjoins
undeveloped property, a provision for future connection shall be mandatory.

c. As far as practicable, streets shall be laid out at right angles to minimize critical
intersections such as blind corners, skew junction, etc.

d. Roads shall conform to sound engineering practices.

e. Subdivision projects shall comply to the pertinent requirements of Batas Pambansa No.
344, otherwise known as the Accessibility Law

Installation of Street Names/Signs:

The developer shall bear the cost of installation of street names/signs coincident with the
construction of streets.

27
5.13 Design Parameters

1. Land Allocation For open market and medium cost subdivision projects with an area of
one (1) hectare or more, the percentage (%) allocation of land shall be as follows:

a. saleable area — maximum of 70% of the gross area

b. non-saleable area — minimum of 30% of the gross area The following non-saleable area
shall be observed consistent with PD No. 1216:

b.1 Parks/Playgrounds Allocation of area for parks and playgrounds shall be

mandatory for projects one (1) hectare or more and shall be deemed nonbuildable
area. The same shall be strategically located within the subdivision project. Area
allocated for parks and playgrounds shall in no case be less than 100 square meters.

The percentage requirement for parks/playgrounds shall be as follows:

Table 1. Parks and Playgrounds Allocation

DENSITY PARKS/PLAYGROUNDS
(No. of lots/Dwelling unit per Allocation in Percent of Gross Area
hectare)

5.14
20 and below 3.5
Community Facilities
21 —25 4.0
26 —35 5.0
36 — 50 6.0
51 —65 7.0
Above 65 9.0

Mandatory provision of areas for community facilities, such as neighborhood multi-purpose

center both for open market and medium cost housing projects with area one (1) hectare and
above. These areas are non-saleable. However, the developer may provide additional areas
for community facilities such as schools and commercial/retail centers in excess of the

28
mandatory requirement set forth in this rule which shall be deemed saleable. The use of the
said area shall be indicated in the plan and shall be annotated in the title thereto.
Facilities According to the Number of Saleable Lots/ Dwelling Units for Subdivision Projects
I hectare and Above

No. of Neighborhood Convenience Elementary High Tricycle

Saleable Stores & Other School School Terminals
Lots Multi-Purpose Commercial
and/or Center Areas
Dwelling
unit
10 & - - - - -
below - - - - -
11-99 X Centers** - - -
100-499 X - - - -
500-999 X - - - -
1000-1499 X X X - X
1500-1999 X X X X X
2000-2499 X X X X X
2500 &
over

*mandatory non-saleable

** optional saleable but when provided in the plan the same shall be annotated in the
title

Circulation System

Hierarchy of Roads

The circulation system for open market and medium cost housing projects shall have
the following hierarchy of roads:

Table 3. Hierarchy of Roads

29
 Project Size Range (Has.) Open Market Medium Cost

2.5 & below major, minor, motor Major, minor, motor

court,alley court,alley
Above 2.5-5
major, collector,minor, Do
Above 5----10 motor
Major, collector,minor,
Above 10----15 do motor

Above 15---30 do Do

Above 30 do Do

do Do

Minimum road right-of-way shall be in accordance with b.3.2 of this section.

In no case shall a major road be less than 10 meters when used as main access road
and/or as future connection.

a) Major Road - a street or road linking the site and serves as the main traffic artery
within the project site and shall traverse the longer axis of the property.

b) Collector Road - a street or a road that services pedestrian/vehicular traffic from

minor roads leading to major roads.

c) Minor Road - a road which main function is to provide direct access to lots and
other activity centers.

d) Motor Courts - shall have a right-of-way of not less than 6 meters in width with
provision for sufficient space for vehicular turn around in the form of a cul-de-sac, loop,
branch or "T", with a maximum length of 60 meters inclusive of terminal.

e) Service Roads - roads which provide for the distribution of traffic among individual
lots and activity centers.

30
 f ) Alley - a 2-meter wide walkway which shall be used to break a block and to serve
pedestrians and for emergency purposes. It shall not be used as access to property.

a. Road Right-of-Way (ROW) The corresponding right-of-way for hierarchy of roads

shall be as follows:

a) Major roads shall maintain a uniform width of road right-of-way. Tapering of road
width shall not be allowed where the road right-of-way is wider than the prescribed standard
for the interconnecting road 2.5the proposed su2.5vision.

b) Interior Subdivision project must secure right-of-way to the nearest public road and
the right-of-way shall be designated as interconnecting road with a minimum width of 10
meters. This fact shall be annotated on the title of said road lot and must be donated and
deemed turned over to the LGU upon completion of the said interconnecting road.

Interconnecting Road

Subdivision projects abutting main public road must provide a setback of 3-meter
deep by 5-meter in length at both sides of the subdivision entrance to accommodate loading
and unloading of passengers

Road Pavement

All roads for both open market and medium cost housing projects shall be paved with
either concrete or asphalt. Concrete pavement shall have a minimum thickness of 150
millimeters and a minimum compressive strength of 20.7 Mega Pascal (Mpa) while asphalt
shall have a minimum thickness of 50 millimeters.

Sidewalk pavement shall have a minimum compressive strength of 17.2 Mega Pascal.

Road Intersection

Roads should intersect at right angles as much as practicable. Multiple intersections

along major roads shall be minimized. Distance between offset intersections should not be
less than 20 meters from corner to corner. Intersections should occur on straight sections
instead of on curved sections of road and on gentle grades with clear sight distance.

Road intersections shall be provided with adequate curb radii consistent with sound
engineering principles

31
 Road Grade/Slope Crown of the roads shall have a slope of not less than 1.5 percent,
while curbs and gutters shall not be less than 7 percent to 9 percent

Grades and vertical curbs shall conform to the design requirements of the Department
of Public Works and Highways (DPWH).

ROAD GRADE/SLOPE

2. Lot requirements

a. Lot Layout:

The following shall be considered when plotting the subdivision project:

A.1 Preservation of site assets and proper siting orientation of lots; blending with
existing and proposed development in the vicinity; and

A.2 Application of workable design principles/parameters for a well planned

environment. To accommodate a wider range of clientele (in terms of income level and
lifestyle), and to provide diversity in housing design in a subdivision project, the
owner/developer is encouraged to allocate areas for various housing types such as single -
detached, duplex/single attached and row houses.

b. Minimum Lot Area

The minimum lot area for various types of housing under open market and medium
cost housing project shall be as follows:

Minimum Lot Area

Types of Housing Open Market Medium Cost

Single 120 100
Detached
Duplex/Single Detached 96 80
Rowhouse 60 50

Saleable lots designated as duplex/single attached and/or rowhouse lots shall be

provided with housing units.

32
 Price of saleable lots intended for single-detached units shall not exceed 40 percent of
the maximum selling price of house and lot packages.

Lot Design

Saleable lots shall be designed such that they are not bisected by political boundaries,
water courses, drainage ways and utility lines.

A lot shall be served by an independent access road.

Whenever possible, lot frontage elevation shall be at street level.

Lot lines shall preferably be made perpendicular to street lines.

Deep lots and irregularly shaped lots shall be avoided.

Lots shall be planned with adequate width for side yards.

Lots shall be protected against risks. C.8 Lots shall not be laid out if potential risks
exist e.g. erosion, slides, flooding, fault lines, etc.

Lot Frontage

The minimum lot frontages for various types of housing under open market and
medium cost housing projects shall be as follows:

TYPE OF HOUSING/LOT FRONTAGE (m)

Single Detached
a. Corner lot 12
b. Regular lot 10
c. Irregular lot 6
d. Interior lot 3
2. Duplex/Single Attached 8
3. Rowhouse 4
The number of rowhouses shall not exceed 20 units per block/cluster but in no case shall this
be beyond 100 meters in length.

Length of Block

Maximum length of block shall be 400 meters, however, blocks exceeding 250 meters
shall be provided with an alley approximately at mid-length.

33
 Shelter Component

a Minimum floor area for open market housing shall be 42 square meters and 30
square meters for medium cost housing.

a. Minimum level of completion - complete house for all types of dwelling units
based on the submitted specifications. Provision of firewall shall be in conformity
with the Fire Code of the Philippines and mandatory for duplexes/single attached
units and every unit for rowhouses.

Firewall Requirement for Rowhouse

Yard/Setback
The minimum setback of dwelling units both for open market and medium cost
housing projects shall conform to the National Building Code of the Philippines.

5.15 Water Supply System

a. Specific Rules:

The subdivision water supply shall be mandatory or obligatorily connected to an appropriate

public water system or community system provided that the water supply is enough to meet
the total daily requirements of the anticipated population.

When neither a public water system, nor an acceptable community system is available, a
centralized water supply system shall be accepted, provided that:

a.1 The technical consultant of the developer shall determine the location and
discharge capacity of the water source(s) within the subdivision;

a.2 The permit to drill well(s) or tap water lines from the appropriate government
agencies shall be obtained;

a.3 The water source shall be sufficient to meet the daily water requirements of every
household in the subdivision;

34
 a.4 No hazards shall exist in the immediate vicinity of the water source that might
reduce or pollute the supply;

a.5 Water distribution shall be assured. Accordingly, every water service entrance or
connection shall be provided with a pressure-compensating, self-regulating, constant flow
valve or fitting to ensure equitable distribution of water, water and power conservation, and
long-term savings on operational costs of the water system.

a.6 Each subdivision shall have at least an operational deep well and pump sets with
sufficient capacity to provide Average Daily Demand (ADD) to all homeowners.

b. Water Requirement - Every dwelling unit shall be served by an individual supply of

water sufficient to meet the total hourly domestic needs of every household for any 8
hour period.

The Average Daily Demand (ADD) for both open market and medium cost housing projects
is 150 liters per capita per day (LCPD) household connection. (Per Board Resolution No.
506, series of 1992)

c. Fire Protection Demand - Provision for fire protection shall comply with the requirements
of the National Fire Protection Code.

d. Water Tank Capacity - 20% ADD plus fire reserve.

e. Pipes - Pipes shall conform to the standards required by Metropolitan
Waterworks and Sewerage System (MWSS) and/or Local Water Utilities
Administration (LWUA).
Electrical power supply
Mandatory individual household connection to primary and/or alternate
sources of power.

Installation practices, materials and fixtures used shall be in accordance with the provisions
of the Philippine Electrical Code and/or local utility company.

Provision of street lighting per pole is mandatory at 50-meter distance and every other pole if
distance is less than 50 meters.

35
 Electrical bills for streetlights shall be proportionately shouldered by the users
thereof prior to issuance of Certificate of Completion (COG) and turn-over of
open space to LGU.

Sewage Disposal System

The sewage disposal system for open market and medium cost subdivision
projects shall either be any of the following:
a. Connection to Community Sewer System
Connections shall be made to an approved public or community sewer
system, subject to the requirements and provisions of the Sanitation Code
of the Philippines and other applicable rules and regulations.
b. Septic Tanks

Where community sewer system is not available, sewage shall be disposed of and treated in
individual septic tanks.

Construction of individual septic tanks shall conform to the design standards of Sanitation
Code of the Philippines (PD 856) and National Plumbing Code of the Philippines (RA 1378).

5.16 Drainage System

The drainage system of the subdivision shall conform to the natural drainage pattern of the
subdivision site, and shall drain into appropriate water bodies or public drainage system. In
no case shall drainage outfalls drain into a private lot. Its layout shall conform to sound
engineering design/ principles certified by a duly licensed civil/sanitary engineer. Drain lines
shall be of durable materials and approved installation practices.

For both open market and medium cost subdivision projects, underground drainage system
shall be properly engineered and environmentally sound and shall be provided with adequate
Reinforced Concrete Pipes (RCP), catch basins manholes, inlets and cross drain for efficient
maintenance. Minimum drainage pipes diameter shall be 30 centimeters.

Garbage Disposal System

The subdivision shall have a sanitary and efficient refuse collection and disposal system,
whether independently or in conjunction with the municipal/city garbage collection and
disposal services

36
 VI.
Financial Feasibility

The success or failure of any development to be profitable is contingent on controlling costs,

the amount and rate at which lots are sold and the terms of the project financing. All of these
factors are carefully examined in a financial feasibility analysis, except in the most
speculative developments.

6.1 CONSTRUCTION COST ESTIMATE FOR SUBDIVISION WORK

Item Description Quantity Unit Unit rate Amount

1 General 6,700,000.00
Site Establishment,
disestablishment, restoration and
cleanup
Survey setout
Environmental controls
Traffic control
2 Site Preparation 2,000,000.00
Clear approved trees, chip,
stockpile
Clear approved
vegetation,chip,stockpile
Demolish and dispose of
structures
Decommission, backfill and
compact dam
Decontamination/remediation
3 Earthworks
Balanced cut and fill
Excavation works
Import and compact fill
Dispose of surplus materials
4 Drainage 1,500,000.00
Interallotment Drainage

37
 Concrete pipe
Storm water pollution control
Water urban design
5 Roadworks 2,500,000.00
Curb and gutter
Sub-grade, sub-base, basecourse,
coat HBS, AC wearing surface
Concrete footpaths, cycleways,
layback and drive ways
7 Service utilities
Water System 900,000.00
Electrical System 800,000.00
Sewer manhole
Electricity, telecommunications
and Gas
Timber
masonry
8 Fencing/Gates
Street trees
Shrubs and ground cover
8 Other items
Bank
Standard project Home
Premium Project Home
Landscaping
9 Contingency
Total Estimated Project Cost 22,633,600.00

6.2 PROJECT TIMELINE

SECOND
FIRST PHASE LAST PHASE
PHASE

TaContracting
Pre-construction
38 FULL
IMPLEMENTATION

OF THE PROJECT
 Public
Market Consultation
Base

6.3 MEANS OF FINANCING

TOTAL
DEBT 40% 9,734,400.00
LONG-TERM
LOANS
TOTAL
DEBT
EQUITY 60% 14,601,600.00
CAPITAL
TOTAL EQUITY
TOTAL 24,336,000.00
INVESTMENT

6.4 INCOME STATEMENT

FOR THE YEAR ENDED 2023
2023

GROSS SALES  Note 1   24,336,000.00

COST OF DEVELOPMENT
Cost of real estate
development Note 2 5,700,000.00
Payment to Lot sellers 14,000,000.00
TOTAL COSTS OF DEVELOPMENT     19,700,000.00

39
GROSS PROFIT 4,636,000.00
GENERAL,ADMINISTRATIVE AND SELLING
EXPENSES
COMMISSION TO
AGENTS 2,433,600.00
PROFESSIONAL & CONSULTANCY FEES
MARKETING FEES 78,000.00
OFFICE SUPPLIES 22,500.00
TRANSPORTATION
AND TRAVEL 55,000.00
TRAINING FEES 105,000.00
MISC EXP 90,800.00
UTILITIES 69,700.00
COMMUNICATION 24,000.00
OFFICE EQUIPMENT 55,000.00
GENERAL,ADMINISTRATIVE AND SELLING
EXPENSES   2,933,600.00
NET
PROFIT         1,702,400.00

Note 1  
Saleable area 6.084

Price per sqm 4,000.00

24,336,000.00
Note 2
Drainage System 1,500,000.00
Road Construction 2,500,000.00
Electrical system 800,000.00
Water system 900,000.00
5,700,000.00

Bottomline The preparation of the financial statement

reflecting the income statement of the
project shall be at the end of the year, when
the period of full force marketing shall have
been finished.

40
 VII.
CONCLUSIONS

7.1 SOUNDNESS OF THE PROJECT

The Feasibility Study proposes the construction of a subdivision village in the municipality of
San Esteban, Ilocos Sur.

Technically, the project is estimated to undergo difficulties in the initial phase since the
project is considered a major one. The proponents are expected also to undergo different
consultation meetings with the stakeholders affected.

The proponents shall deal with expected turnabouts of the project like looking for the most
feasible project location in San Esteban. Notwithstanding this, the proponents have chosen
the barangay of Bateria because it is situated in between the equally accessible adjacent
barangays. Business activities in the said barangay reflect a sound economy. The public
meetings held with the locals gained a positive nod. Ideally, the introduction of the project is
welcomed and accepted.

The Feasibility Study has verified the technical, economic, institutional and environmental
feasibility of the proposed project.

In view of the situation, the study evaluated the financial feasibility of the project. The
Project is logically related to present and proposed plans for Santiago's growth and
development, and is financially viavle, therefore, its funding and execution is to be
recommended.

7.2 BENEFITS OF THE PROJECT

Significant benefits to the economy can be derived from the proposed Project, including both
direct and indirect. All anticipated benefits have been evaluated on the basis of either
quantifiable or non-quantifiable parameters. However, since these benefits are not fully
quantifiable, non-quantifiable considerations have become important in the overall economic
justification of the Project.

41
Evaluation of the major benefits includes the opening of job opportunities for the locals,
which will contribute to more economic activities. Indirectly, the benefits will accrue to the
whole of San Esteban.

VIII

RECOMMENDATIONS

8.1 IMPLEMENTATIONOFTHEPROJECT

The study concluded that the implementation of the Project is feasible, whereas the LOCAL
GOVERNMENT and external support is essential.

ANNEXES

CONSTRUCTION AGREEMENT

KNOW ALL MEN BY THESE PRESENTS:

This CONSTRUCTION AGREEMENT made and executed this ___th day of

________ 2016 in the City of Xxx by and between:

Spouses xxx and xxx, with residential address at xxx, xxx, xxx, hereinafter referred
to as the OWNERS;

-and-

42
 Xxx CONSTRUCTION, a single-proprietorship construction enterprise duly
organized and existing under the laws of the Philippines, with office address at xxx xxx, xxx
represented by its Proprietor-Manager Engr. Xxx, hereinafter referred to as
the CONTRACTOR;

WITNESSETH: -

WHEREAS, the OWNERS, Spouses xxx and xxx, shall construct of two-storey
Residential Building with Roofdeck and Penthouse located at xxx, xxx xxx, the same to be
funded by a construction/housing loan from a reputable Bank;

WHEREAS, the CONTRACTOR presented and warranted to the OWNERS that it is

capable, competent, and a duly registered construction enterprise licensed and authorized by
law to construct and to complete the aforementioned Residential Building in  accordance with
the plans and specifications hereinafter referred to as Design and Contract Documents;

WHEREAS, on the basis of the foregoing representation and warranty of the

CONTRACTOR, the OWNERS accepted the offer of the CONTRACTOR to construct the
above-mentioned Residential Building.

NOW, THEREFORE, for and in consideration of the foregoing premises and the
covenants and undertakings hereinafter set forth, the parties hereto agree as follows:

ARTICLE 1. DESIGN AND CONTRACT DOCUMENTS. - This Agreement,

together with the following Design and Contract Documents, copies of which are attached
hereto as Annexes “A” to “D” hereof, as prepared by xxx in his capacity as the LICENSED
ENGINEER and MANAGER of the CONTRACTOR shall constitute as the Entire
Agreement, to wit:

(a)          Annex “A” - Architectural Plans , consisting of three (3) sheets;

(b)         Annex “B” - Structural Plans, consisting of two (2) sheets;
(c)          Annex “C” - Electrical Plans, consisting of two (2) sheets;  
(d)         Annex “D” - Plumbing Plans, consisting of three (3) sheets.

The DESIGNER/SIGNATORY of the Design and Contract Documents is also

the CONTRACTOR in this Agreement.

Any part of the Design and Contract Documents may be changed by the parties to
this Agreement to improve, preserve and protect the beauty and strength of the structure.

All changes in the Design and Contract Documents shall be subject to the following

conditions:

(a)  The parties to this Agreement shall first conduct a personal conference and
consultation to mutually discuss and agree upon the changes proposed by any of the parties
hereto;

(b) The DESIGNER/CONTRACROR shall affix the signature of its duly

authorized Engineer on the As-Built Plans and

43
 (c) The said changes shall be approved in writing by the OWNERS prior the
implementation thereof by the DESIGNER/CONTRACTOR;

The OWNERS shall be formally furnished by the DESIGNER/CONRACTOR with

copies of the following documents or records (a) within seven (7) days from the date of the
execution of this Agreement or (b) within seven (7) days from the approval thereof by the
Local Government of Xxx City or (c) within seven (7) days from the completion, approval
and signing of the final official versions thereof by the parties to this Agreement  --
whichever period comes first -- to wit:

(a)             The original copies  or duplicate original copies or certified true copies of  both
the PRELIMINARY AND FINAL DESIGN AND CONTRACT DOCUMENTS AND
AMENDED VERSIONS THEREOF, if any, duly discussed and approved/signed by the
parties to this Agreement prior to the official approval thereof by the City Building
Official of the Local Government of xxx City;

(b)            The original copies  or duplicate original copies or certified true copies of

the FINAL DESIGN AND CONTRACT DOCUMENTS duly discussed and
approved/signed by the parties to this Agreement and officially filed with, received by,
processed, and approved by the City Building Official of the Local Government of xxx
City, pursuant to applicable building and other laws;

(c)             The original copies or duplicate original copies or certified true copies of ALL
BUILDING AND OTHER INCIDENTAL LICENSES AND PERMITS  officially
processed, approved, issued and released by the City Building Official and other
concerned offices of the Local Government of Xxx City, pursuant to applicable building
and other laws;

(d)            The original copy or duplicate original copy or certified true copy of the PRELIMINARY
AND FINAL SCOPE OF WORKS AND AMENDED VERSIONS THEREOF, if
any, duly discussed, approved and signed by the parties to this Agreement, detailing;

(i)                           the construction-related activities involved,

(ii)                        the time or schedule of commencement and completion of the stipulated works and
services,
(iii)                      the final turnover of the Residential Building,
(iv)                      the necessary construction-related charts, graphs, illustrations, and documentations, and
(v)                         all other topics, items and information related to the Construction;

(e)             The original copy or duplicate original copy or certified true copy of

the PRELIMINARY AND FINAL BILL OF MATERIALS AND AMENDED
VERSIONS THEREOF, if any, duly discussed, approved and signed by the parties to this
Agreement; and

(f)              The original copies or duplicate original copies or certified true copies of any and all
other relevant materials, documents, records, plans, papers and legal instruments as

44
 may be required from time to time by the OWNERS from the CONTRACTOR for the
information and reference of the OWNERS.

ARTICLE 2. SCOPE OF WORK. - The CONTRACTOR shall implement the

Proposed Construction at xxx, xxx, xxx, xxx., Xxx.

The CONTRACTOR shall:

(a) Furnish all labor, materials, tools and equipment, technical knowhow and
supervision therein; and

(b) Perform all the works stipulated and required under this Agreement.

The DESIGNER/CONTRACTOR shall secure the Permits and Licenses (Building

Permits, Occupancy Permits and other Incidental Permits) required by the City Building
Official and other concerned internal offices of the Local Government of Xxx City at the
expense of the OWNERS and subject to the right of the OWNERS to examine the
expenses incurred for said purposes and the documentary proofs thereof.

ARTICLE 3. TERMS OF PAYMENT. - Payment for this Contract shall be based

on the following:

(a)          Down Payment -  Thirty Percent (30%) of the Total Contract Price, the same to be
paid on instalment basis depending on the actual dates of the releases of the
construction/housing loan or instalments thereof by the lending Bank;

(b)         Progress Billings - based on Actual Accomplishments, subject to submission by the

CONTRACTOR of the true and accurate Accomplishment Reports and subject to
confirmatory site inspection by the OWNERS; and

(c)          Retention - Five Percent (5%) of the Total Contract Price to be released upon Turn-
Over to the OWNERS of the Finished Project and the Occupancy of the Residential
Building by the OWNERS.   

ARTICLE 4. EXCLUSIONS. -  The OWNERS-supplied materials such as Lighting

Fixtures, Air Conditioning Units, Water Tank, Fence, WI-FI, CCTV, Cable TV, Telephone,
Furniture,  and the like are excluded from the obligations of the
DESIGNER/CONTRACTOR under this Agreement.

All Items and/or Materials which are not indicated in the Design, Drawing Plans, or
Contract Documents and which are not discussed, approved and signed by the parties to this
Agreement shall be excluded from their respective obligations.

ARTICLE 5. CONTRACT AMOUNT. -  The CONTRACT AMOUNT shall be

xxx MILLION PESOS (Pxxx, 000, 000.00).

The OWNERS shall pay the CONTRACTOR for the entire performance and supply
of the works, labor, services, materials, machinery and equipment stipulated in this
Agreement in accordance with the agreed schedule of payment stipulated in the Article 3
of this Agreement.

45
 The CONTRACTOR hereby guarantees and warrants the stability, strength and
structural integrity of the subject two (2)-storey Residential Building with Roofdeck and
Penthouse within the period mandated by the Civil Code of the Philippines and other
applicable building laws, rules and regulations.

The OWNERSs shall not incur any expenses above and beyond the aforementioned
agreed contract amount, except for the additional or extra works or changes that may be
required and authorized in writing by the OWNERS and consented to in writing by the
CONTRACTOR.

ARTICLE 6. DEFECTIVE WORKS AND MATERIALS. – All defective works

discovered by the OWNERS in the course of the construction until the date of occupancy
shall be promptly made good, repaired, remedied, restored, corrected and rectified by the
CONTRACTOR at its expense within seven days from such discovery or within such
reasonable period as may be mutually agreed upon by the parties, at the option of the
OWNERS.

All unsuitable, sub-standard, and poor-quality construction materials and works shall
be rejected by the OWNERS and the CONTRACTOR and shall be promptly made good,
remedied, corrected, rectified, and replaced by the CONTRACTOR at its
expense, notwithstanding that such works and materials were overlooked by the
OWNERS.

If the work or any part thereof shall be found to be not in conformity with the agreed
specifications, the CONTRACTOR shall forthwith remove and replace such materials to
comply with the agreed specifications.

All materials and workmanship are guaranteed by the CONTRACTOR for a period

of six (6) months from the date of the turn-over of the construction project.

As stated in Article 6 of this Agreement, the CONTRACTOR hereby guarantees and

warrants the structural stability, strength and integrity of the subject two (2)-storey
Residential Building with Roofdeck and Penthouse within the period mandated by the Civil
Code of the Philippines and other applicable building laws, rules and regulations.

ARTICLE 7. THIRD PARTY LIABILITY; and CONSTRUCTION ALL RISKS

INSURANCE. - The OWNERS shall be held free and harmless from any and all civil and
criminal liabilities and from any and all legal, administrative, judicial and extrajudicial
claims, demands, suits or actions by the Construction Workers, Staff, Personnel and Agents
of the CONTRACTOR, by any and all Third Parties and Entities, whether natural or juridical,
and by any and all concerned Local and National Government Agencies arising from, caused
by, by reason of, or due to the construction of the subject residential building, such as, but not
limited to:

(a)             Salaries, Wages, Allowances and Workers Benefits, as required by applicable labor laws,
(b)            Overtime pays, as required by applicable labor laws,
(c)             Holiday pays, as required by applicable labor laws,
(d)            Service incentive leaves, as required by applicable labor laws,

46
(e)             Any and all other mandatory and existing leaves mandated and required by applicable
labor laws, rules and regulations,
(f)              Thirteenth month pays, as required by applicable labor laws,
(g)            Compensations for Injury or Death of the Construction Workers, Staff, Personnel and
Agents of the CONTRACTOR, pursuant to applicable laws, rules and regulations and/or by
equity and natural justice,
(h)            Compensations for any and all Injury or Death caused to and sustained by any and all
Third Parties or Entities, pursuant to applicable laws, rules and regulations and/or by equity
and natural justice,
(i)               Premiums for the coverage of the Construction Workers, Staff, Personnel and Agents of
the CONTRACTOR under the Social Security System (SSS), PHILHEALTH, and PAG-
IBIG, and other relevant labor legislations, payable by the CONTRACTOR to the
Government, pursuant to applicable laws, rules and regulations and/or by equity and natural
justice,
(j)               Any and all Income and Other Kinds of Taxes of whatever nature and kind, as well as
any and all administrative and regulatory fees and charges of whatever nature and kind,
payable by the CONTRACTOR to the Local and/or National Governments, pursuant to
applicable laws, rules and regulations and/or by equity and natural justice, and
(k)            Any and all other legal or financial obligations of whatever nature and kind not mentioned
above which are payable by the CONTRACTOR to the Local and/or National Governments
pursuant to applicable laws, rules and regulations and/or by equity and natural justice.

All of the aforecited items shall be for the sole account of and shall be the exclusive
duty, responsibility, liability and obligation of the CONTRACTOR.

The OWNERSs shall not be held liable for any and all of the aforecited obligations or
liabilities of the CONTRACTOR.

The OWNERS shall not be held liable for any and all liens and encumbrances which
the CONTRACTOR might incur from any and all third parties or entities arising from the
supply of materials, labor, or services rendered for the project.

The CONTRACTOR shall secure a CONTRUCTION ALL RISKS

INSURANCE at its own expense for the benefit of and to secure, assure and protect the
OWNERS, as the assured party, from any and all claims, risks, suits, actions and demands
by any and all persons or entities arising from, by reason of, caused by, and due to the subject
construction activities.

The said CONTRUCTION ALL RISKS INSURANCE shall be secured by the

CONTRACTOR prior to or at the latest within seven days from the date of the execution of
this Agreement.

The CONTRACTOR shall furnish the OWNERS the original copies or duplicate
original copies or certified true copies of the said CONTRUCTION ALL RISKS
INSURANCE and any and all of its related documents, memoranda, records, papers,
instruments, vouchers, official receipts and other proofs of payment of the premiums thereof,
the proofs of the execution and perfection of the said Insurance Contract, and the like, prior to
or at the latest within seven days from the date of the execution of this Agreement.  

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 ARTICLE 8. CHANGES AND ADDITIONS. -  In the event additional or revised
works not shown or indicated in the approved Design and Contract Documents are required
or ordered by the OWNERS, such additional or revised works required or ordered by the
OWNERS shall be communicated in writing by the OWNERS to the CONTRACTOR
through written change orders or memoranda for mutual discussion, approval and
documentation and signing thereof by the parties to this Agreement.

All mutually discussed, approved, documented and signed change orders or

memoranda, including any and all deletions and omissions, shall state the AGREED
COSTS of the additional, revised, deleted or omitted works.

Such agreed costs may or may not result in the upward or downward adjustments
of the agreed Contract Price stipulated in Article 5 of this Agreement.

The change orders or memoranda shall indicate any and all agreed TIME
EXTENSIONS that the additional or revised works would entail.

 All agreed costs shall be based on the prevailing market prices at the time the change
orders or memoranda are mutually approved and signed by the parties to this Agreement.

The specific amounts of the labor costs shall be indicated in the approved and signed
change orders or memoranda.

The CONTRACTOR shall be entitled to an amount equivalent to fifteen percent (15

%) of the total of the agreed costs to cover his profit margin and overhead expenses.

No change orders or memoranda shall be implemented without the prior mutual

discussion, approval and signature by and between the parties.

ARTICLE 9. TIME OF COMPLETION. -  The CONTRACTOR warrants that the

construction of the subject Project shall be completed within TWO HUNDRED (200)
working days, excluding Sundays & Holidays, counted (a) from the date of the issuance of
the Building Permit and other Related Licenses by the City Building Official and other
concerned internal offices of the Local Government of Xxx City or (b) from the date the Site
is ready for construction  as mutually determined by the parties --  whichever comes later.

ARTICLE 10. SAFEGUARDS. - The CONTRACTOR shall provide safeguards,

facilities, equipment and personnel for the full protection and safety of the construction site
and its entire premises and the safety and protection of the general public, pursuant to the
standard and/or acceptable norms and practices in the Construction Industry and/or as may be
mandated by applicable laws, rules and regulations.

The CONTRACTOR shall be solely responsible for and shall forever hold the
OWNERS free and harmless from and against any and all obligations, liabilities, damages,
losses, expenses, judgments, court costs or costs of suit, attorney's fees, litigation expenses,
demands, payments, suits, actions recoveries, decrees, executions and claims of whatever
nature, kind  and description brought, commenced, instituted and/or recovered against the
CONTRACTOR and/or jointly against the OWNERS as the co-defendants of the
CONTRACTOR (a) by any and all builders, agents, servants, laborers, employees or
representatives of the CONTRACTOR and/or (b) by any and all injured or aggrieved persons,

48
parties and/or entities arising from, by reason of, due to, and/or caused by the construction of
the subject residential building.

The CONTRACTOR shall be solely responsible for and shall exclusively bear any
and all costs and expenses caused by any and all losses, damages, accidents, torts, wrongful
acts, crimes or felonies, deaths, injuries, and fire sustained by his laborers or workers, staff,
personnel, representatives and agents and/or by any and all Third Parties and Entities arising
from or in connection with the execution of the works and services stipulated in this
Agreement.

ARTICLE 11. ESCALATION CLAUSE NOT APPLICABLE. - It is agreed that

the Contract Price stated in Article 5 of this Agreement is final and fixed.  

It is not subject to escalations or increases in the amounts, rates and valuations of

any and all taxes, licenses, permits, materials, inflation, deflation, and/or devaluation of the
Philippine Currency.

However in the event of new government-mandated increases in the minimum

wages of laborers issued subsequent to the date of the execution of this Agreement, the
necessary adjustments  shall be made by the parties to comply therewith.  

The said adjustments shall be subject to the mutual discussion, agreement, consent
and written approval by the parties prior to the implementation thereof.  

Xxx, xxx.

Spouses xxx                                             xxx CONSTRUCTION

And xxx                                                       Designer/Contractor
   Owners                                                 
                                                                 By:

                                                                  Xxxx

                                                                             Manager

WITNESSES:

___________________                   ___________________    

ACKNOWLEDGMENT

BEFORE ME in Xxx, Philippines on this ___th day of __________ 2016 personally

appeared:

xxx – ID xxx;
xxx – ID xxx; and

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Engr. xxx – ID xxx. 

who are known to me and to me known to be the same persons who executed the foregoing
Construction Agreement consisting of eleven (11) pages, including the page on which this
Acknowledgment is written, which Construction Agreement is signed by the abovenamed
parties on the margin of each page thereof, and who acknowledged to me that the same is
their free and voluntary act and deed.

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

                                                                   Notary Public

Doc. No. _____

Page No. _____
Book No. _____
Series of 2016.

Annexes:

Annex “A” - Architectural Plans , consisting of three (3) sheets;

Annex “B” - Structural Plans, consisting of two (2) sheets;
Annex “C” - Electrical Plans, consisting of two (2) sheets; 

Annex “D” - Plumbing Plans, consisting of three (3) sheets. 

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