CPES is a uniform rating system for evaluating the performance of constructors based on a set of criteria. The evaluation is done at certain stages during the actual construction of the project and upon its completion.
CIAP Document 102 is titled the "Uniform General Conditions of Contract for Private Construction." It incorporates prevailing industry best practices so that it may contribute to the enhancement of fair contractual relationships in the construction industry.
The CIAP through the PDCB is tasked to ensure the implementation of eight (8) action items under the Policy Reform Advocacy of the PCIR 2020-2030, to wit:
- #16 Rationalize policies on quarry materials on sourcing, extraction and transport (including taxation)
- #17 Support improvement of Right-of-Way Acquisition Policies
- #18 Advocate for the enactment of a new Public-Private Partnership (PPP) law, and support policy development for standardized PPPs at the local level
- #19 Support improvement of procurement policies (eg. Policy on electronic bidding beginning with procurement of simple government construction projects, up to more sophisticated design-build-maintain contracts)
- #20 Pursue trade liberalization policies with reciprocity which includes support to the amendment of the Public Service Act (PSA)
- #21 Biodiversity sensitive strategic environment assessment
- #22 Advocate for a law on Security of Payments
- #23 Enhance Standards and Compliance on Sustainability and Resiliency especially on public infrastructure projects through strict implementation of existing laws, the passage of the Philippine Building Act, promotion of enterprise-driven efforts, provision of Sustainability Incentive Programs, and inclusion of Professional Liability Insurance (PLI) for Design-Build projects
CIAP Document 102 (Uniform General Conditions of Contract for Private Construction)
What is the Construction Industry Authority of the Philippines (CIAP)?
CIAP is an attached agency of the Department of Trade and Industry (DTI), created by then-President Ferdinand Marcos through Presidential Decree No. 1746 (P.D. No. 1746), as amended by Executive Order Nos. 679 and 768. The CIAP is designed to promote, accelerate, and regulate the growth and development of the construction industry.
2: What is CIAP Document 102?
CIAP Document 102 is titled the "Uniform General Conditions of Contract for Private Construction." It incorporates prevailing industry best practices so that it may contribute to the enhancement of fair contractual relationships in the construction industry.
Does CIAP Document 102 apply to all construction contracts?
No, it only applies to contracts for private construction. A separate document, CIAP Document 101, titled "General Conditions of Contract for Government Construction," applies to public contracts/contracts with the government.
SECTION I - DEFINITIONS AND DOCUMENTS ▾
ART. 1: DEFINITIONS
Who are the parties involved in a contract for private construction under CIAP Document 102?
The parties are the OWNER (1.20) and his CONTRACTOR (1.13), or the CONTRACTOR his SUBCONTRACTOR.
An OWNER is the person or entity or authorized representative thereof who signed the Contract as Owner (1.20). He is represented by an OWNER'S REPRESENTATIVE, who is the person or entity commissioned by the Owner or authorized in writing by the Owner to act on his behalf (1.21).
A CONTRACTOR is the person or firm duly registered and licensed by the Philippine Contractors Accreditation Board whose bid proposal has been accepted and to whom was awarded the Contract to execute the WORK.
A SUBCONTRACTOR is a contractorduly registered and licensed by the Philippine Contractors Accreditation Board who signs a construction Contract with the main CONTRACTOR.
Does CIAP Document 102 provide for a specific bidding process in order for a party to become a Contractor?
CIAP Document 102 does not explicitly give a step-by-step process for the bidding. Nevertheless, it defines several terms in relation to the bidding process.
An INVITATION TO BID is the notice published by the Owner or the invitation issued to prospective bidders, giving information as to the nature of the proposed project, conditions for the issuance of Contract documents, date of bidding, and information that would give the Contractor a general idea of the magnitude and extent of the project (1.02).
BID DOCUMENTS collectively refer to all documents provided or made available to prospective bidders, which include the Invitation to Bid and a copy of the Contract which the winning bidders would be required to sign with the Owner and the Contract Documents (1.06).
A BID BULLETIN contains additional information on Bid Documents issued to bidders before the date of bidding (1.07).
A BID is the tender, or proposal, or quotation, or offer of a bidder to perform the work described in the Contract (1.04).
A BID BOND serves as a guarantee that the bidder will enter into the Contract with the Owner for the construction of the Work, if the Contract is awarded to him (1.05).
What is a 'contract for private construction'?
CONTRACT is the term used to describe the combination of two sets of documents: the AGREEMENT (1.03) and CONTRACT DOCUMENTS (1.11).
AGREEMENT is the term used to describe the agreement signed by the OWNER and the CONTRACTOR, excluding the CONTRACT DOCUMENTS (1.03).
CONTRACT DOCUMENTS are the documents attached to the Agreement identified therein as Contract Documents, including all additions, deletions and modifications incorporated to those Contract Documents. These generally include the following (1.11):
Special Provisions or Conditions
Other Bid Documents
What are special provisions or conditions, specifications, supplementary specifications and drawings?
SPECIAL PROVISIONS OR CONDITIONS are instructions which are issued prior to bidding to supplement and/or modify the Drawings, Specifications and/or General Conditions of the Contract (1.26).
SPECIFICATIONS are the written or printed description of the work to be done describing qualities of the material to be used, the equipment to be installed and the mode of construction (1.25).
SUPPLEMENTARY SPECIFICATIONS are additional information which may be issued as an addition to or amendment of the provisions of the Specifications (1.28).
DRAWINGS are graphical presentations of the Work, including supplementary details and shop drawings (1.15).
What is the WORK that the Contractor must perform pursuant to the Agreement?
WORK is all Contractor-provided labor and/or materials, as well as equipment, transportation or other facilities necessary to commence and complete construction and to fulfill all his obligations per the Contract (1.32). Note: Modify to better express the meaning of Work.
The WORK must be completed within a certain TIME LIMIT or COMPLETION TIME. (1.30). The OWNER shall issue a written CHANGE ORDER to the Contractor to authorize changes or variations in the work whether or not it requires an adjustment in the Contract Price or Contract Time. (1.09).
What are COSTS as defined under CIAP Document 102?
COSTS means all expenditures properly incurred or to be incurred, whether on or off the site, including overhead and other charges properly allocable thereto but does not include any allowance for profit (1.14). The Contractor incurs costs when performing the WORK.
May the Contractor sub-contract in order to complete the Work under the Agreement?
Yes. A Contractor may engage a SUB-CONTRACTOR to acts for or in its behalf in executing any part of the Contract (1.27).
If a party merely furnishes materials without labor, said party is a supplier and not a Sub-Contractor (1.27).
Generally, what is the amount to be paid by the Owner to the Contractor for the execution of the Work?
The Owner should pay the CONTRACT PRICE, or the amount in money or other consideration to be paid by the Owner to the Contractor for the execution of the Work in accordance with the Contract.
The Owner's obligation to pay the CONTRACT PRICE ends when he makes the FINAL PAYMENT to the Contractor. There is a FINAL PAYMENT when payment is made of the final progress billing and all approved claims including but not limited to variations in the work, Contract Price adjustments and/or escalation, acceleration of work, and others (1.16).
Must the Contractor provide any securities to guarantee the performance of the Work?
Yes. There are three kinds of bonds defined in CIAP Document 102: Guarantee Bond, Payment Bond, and Performance Bond. The Contractor and his Surety furnish these bonds. A Surety is the person, firm, or corporation which issues the bond required of the Contractor (1.29).
GUARANTEE BOND is furnished as a guarantee of the quality of the materials provided, the equipment installed, and the workmanship performed by the Contractor (1.17).
PAYMENT BOND is furnished as a guarantee of good faith on the part of the Contractor to faithfully comply with the Contract in respect of its obligations arising therefrom to its workers, subcontractors, and suppliers (1.22).
PERFORMANCE BOND is furnished as a guarantee of good faith on the part of the Contractor to execute the Work in accordance with the Contract (1.23).
What are acts of God orforce majeure?
ACTS OF GOD OR FORCE MAJEURE (1.01) refer to any event beyond the reasonable control of the Owner or the Contractor, as the case may be, and which is unavoidable notwithstanding the reasonable care of the party affected and shall include, without limitation, the following:
War, hostilities or warlike operations (whether a state of war be declared or not), invasion, act of foreign enemy, civil war;
Rebellion, revolution, insurrection, mutiny, usurpation of civil or military government, conspiracy, riot, civil commotion, terrorist acts;
Confiscation, nationalization, mobilization, commandeering or requisition by or under the order of any government or de jure or de facto authority or ruler or any other act or failure to act of any local or state or national government authority;
Strike, sabotage, lock-out, embargo, import restriction, port congestion, lack of usual means of public transportation and communication, industrial dispute, shipwreck, shortage or restriction of power supply, epidemics, quarantine, plague;
Earthquake, landslide, volcanic activity, fire, flood, inundation, tidal wave, typhoon or cyclone, hurricane, storm, lightning, or other inclement weather condition, nuclear and pressure waves, or other natural or physical disaster;
Shortage of labor, materials or utilities where caused by circumstances that are themselves Force Majeure.
What does WRITTEN NOTICE mean?
'Written Notice' means information, advice or notification pertinent to the project delivered in person or sent by registered mail, or by courier to an individual, firm or corporation at the latter's last known business address (1.31).
ARTICLE 2: EXECUTION, CORRELATION, MEANING OF TERMS AND INTENT OF DOCUMENTS
What is the intent of the Contract?
The intent of the Contract is to include all labor, materials, equipment and transportation necessary for the proper execution of the Work (2.01).
What is the standard of conduct required of the parties?
Each party to the Contract acknowledges that, in the exercise of his rights and in the performance of his duties, he must act with justice, give the other party his due, and observe honesty and good faith (2.02).
What are the rules regarding the interpretation of Contract under CIAP Document 102, in the case of conflict, discrepancies, errors or omissions?
Article 2.03[a] provides for the following rules:
RULE 1: The Agreement and the Contract Documents shall be taken as mutually explanatory of one another. The various provisions of the Contract shall be interpreted together, attributing to the doubtful ones that sense which may result from all of them taken jointly.
RULE 2: The provisions of the Civil Code of the Philippines on the interpretation of contracts and of the Rules of Court on the Interpretation of Documents shall be applied.
RULE 3: Where the conflict between or among the provisions of the Agreement and/or the Contract Documents cannot be resolved by Rules 1 and 2, it shall be understood that:
(a) Detailed Drawings shall prevail over the General Drawings;
(b) Words and figures shall prevail over the Drawings;
(c) Words shall prevail over figures in Contract Documents; and
(d) Written dimensions shall prevail over measured dimensions.
RULE 4: Where the conflict cannot be resolved by applying Rule 3 or where Rule 3 does not apply, the conflict shall be resolved by giving precedence to the Agreement or to provisions of a Contract Document higher in order of priority among the various documents which comprise the Contract. The order of priority among these documents shall be as follows:
(a) Agreement as modified by Notice of Award of Contract, if such be the case, and the Contractor's conformity thereto:
(b) Instruction to Bidders and any amendment thereto;
(c) Addenda to Bid Documents;
(f) Special Conditions of Contract;
(g) General Conditions of Contract;
(h) Other Contract Documents; and
(i) Other documents forming part of the Contract attached thereto or incorporated therein by reference.
Where the order of precedence is modified in the Agreement, such modified order of precedence shall be followed; however, the mere listing of Contract Documents in the Agreement or any Contract Document shall not be interpreted as establishing an order of precedence among them.
RULE 5: Where there is a discrepancy, defective description, error or omission in any Contract Document, the Contract Documents shall be interpreted as being complementary to each other. Thus, what is called for in one Contract Document, although not mentioned in another Contract Document where it should have been mentioned, shall be deemed to be called for by the Contract.
RULE 6: The apparent silence of the Drawings, Specifications or any other Contract Document as to any detail, or the lack of detailed description concerning any part of the work, shall be understood to mean that good and accepted construction practice in accordance with the usage or custom of the place shall be followed.
In addition to the above rules:
Specifications prevail over Drawings (2.04[a]).
Detailed specification requirements prevail over general conditions (2.04[a]).
In all cases where a device, item or part of equipment is referred to in the singular number, such reference shall apply to as many such devices, items, or parts as are required to complete the work (2.03[d]).
Should the above rules of interpretation be followed in all cases?
No. If the Contract provides for a different set of rules of interpretation, those shall be followed (RULE 7, 2.03[a]).
What does "mutually explanatory" mean, in RULE 1?
"Mutually explanatory" means that all of the CONTRACT DOCUMENTS be given equal weight when interpreting a particular doubtful provision, as opposed to making reference to a specified priority of documents.
What are the applicable provisions of the Civil Code on interpretation of contracts?
Articles 1370 to 1379 of the Civil Code cover the rules on interpretation of contracts under Civil Law. Foremost among these rules are:
If the terms of the contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control. If the words appear contrary to the evident intention of the parties, intention prevails over words (Art. 1370).
If a stipulation of any contract can have several meanings, the meaning which will be most adequate to render the stipulation effective shall be adopted (Art. 1373).
Words, which may have different significations, shall be understood in that which is most in keeping with the nature and object of the contract (Art. 1375).
The usage or custom of the place shall be borne in mind when interpreting the ambiguities of a contract, and shall fill the omission of stipulations which are ordinarily established (Art. 1376).
What are the applicable provisions of the Rules of Court on interpretation of documents?
Rule 130(B)(4) of the Revised Rules of Evidence provides for the rules on interpretation of documents.
Who is responsible for resolving conflicts or discrepancies in the interpretation of the Contract?
The Owner is responsible for resolving such conflicts or discrepancies. The interpretation of or explanation by the Owner shall be issued in the form of instructions to the Contractor (2.03 [b] and [c]).
What is the consequence of the Owner failing to issue the instruction in writing?
The execution of the work affected by the interpretation or explanation without the Owner's timely objection or protest shall be considered executed in accordance with the Owner's interpretation or explanation (2.03[c]). Thus, the Owner cannot later on say that the work was done incorrectly.
What should the Contractor do if it spots a discrepancy in any of the documents enumerated in 2.04[a]? What are the consequences of not reporting to the Owner?
The Contractor should immediately report the discrepancy to the Owner, who shall promptly correct it. Any work involving such discrepancies shall be estimated by the Contractor and unit prices or lump sum amounts shall be agreed upon by the parties whenever possible before the work is done.
Any work done by the Contractor involving discrepancies found by the Contractor and not reported to and without the knowledge of the Owner shall be considered as having been done at the Contractor's risk (2.04[b]).
Who is responsible for adequacy of the design and sufficiency of the drawings and specifications?
Generally, the Owner shall be fully responsible for the adequacy of the design and for sufficiency of the Drawings and Specifications (2.04[c]).
However, if any part or whole of the Works, when agreed upon, are to be designed by the Contractor, then all responsibilities assigned to the Owner for such design shall automatically be assigned to the Contractor (2.04[d]).
What do "APPROVED DIRECTED AND ACCEPTABLE", "FURNISH", "INSTALL", "PROVIDE" AND "NECESSARY" mean?
APPROVED, DIRECTED AND ACCEPTABLE: The words "approved", "directed" and "acceptable", or words of like import shall mean approved, directed by or acceptable to the Owner.
FURNISH: The word "furnish" shall be understood to mean "purchase and/or fabricate and deliver to the jobsite or other location when so designated."
INSTALL: The word "install" shall mean to build in, mount in positions, connect or apply any object specified ready for the intended use.
PROVIDE: The word "provide" shall be understood to mean "furnish and install."
REQUIRED OR NECESSARY: The words "required" or "necessary" shall mean as required or necessary for the complete execution of that portion of the Work (2.05).
What is the responsibility of the Owner with respect to performing acts which may affect the Contractor's timely completion of the work?
Article 2.06 enumerates some instances where the Owner may be required to act, and such action may affect the Contractor's timely completion of the work, such as:
Giving his decision, opinion or consent;
Expressing his satisfaction and approval;
Supplying equipment or materials
In these cases, the Owner shall exercise such discretion fairly and in a timely manner, taking due regard of Completion Time and the approved construction schedule notwithstanding any provision in the Contract requiring the Contractor to notify the Owner when such action is due (2.06).
What is the Contractor's responsibility in giving notices or submissions to the Owner?
The Contractor shall give notices or submissions in a timely manner so as to avoid delays in the Work (2.06).
What is the responsibility of the Owner when the Contract or accepted industry practice requires that before any part of the Work is covered, it must be inspected and approved?
The Owner shall provide a sufficient number of inspectors at the project site while work is in progress. Failure of the Owner to provide inspectors is a waiver of the Owner to inspect and approve that part of the Work (2.06).
What must the Owner do with respect to removing/ replacing defective or inferior equipment, materials, or work?
If the Owner is: (a) authorized by the Contract or General Conditions to require the Contractor to remove or replace defective or inferior materials or equipment or to replace bad or defective work; and (b) represented by a professional duly authorized to supervise the Contractor's work and to exercise the discretion and authority of the Owner, the Owner shall promptly condemn (seize) such materials, equipment or work in order to minimize the damage or loss of the Contractor (2.07).
However, where even with the exercise of due diligence, the Owner could not have discovered the use of inferior materials and equipment or the defective work, the Owner shall promptly condemn it upon discovery, and the Contractor shall bear all the cost of removing and replacing the defective or inferior material or equipment or work (2.07).
What is the duty of the Contractor in reviewing the contract and its attached documents?
The Contractor shall carefully study and compare the various documents comprising the Contract and shall report to the Owner any error, inconsistency or omission that may be discovered in its provisions. The Contractor, however, shall not be liable to the Owner for any damage resulting from any such error, inconsistency or omissions.
The Contractor shall follow the Drawings and Specifications and all additional detail drawings and instructions issued by the Owner as being in full and strict conformity with the Contract and requirements of the Work.
The Contractor shall not be liable to the Owner for undetected error, inconsistency or omission in the Contract or for complying with instructions or following Drawings or Specifications, or for using or following the approved shop drawings, product data or sample (2.08).
How should the Owner's approval of documents be construed?
Generally, the Owner's approval shall be construed as the Owner's acknowledgment that the approved shop drawings, product data and sample comply with the Contract.
The above rule does not apply in the case of shop drawings, product data and samples for any portion of the work provided or supplied by a specialty contractor (2.08), for which the latter shall be directly liable to the Owner.
What documents should the Contractor maintain at the Project site?
The Contractor shall maintain in good order at the Project site on a current basis one (1) record copy of all Drawings, Specifications, addenda, Change Orders and other modifications, and changes made during construction, including approved shop drawings, product data and samples. These documents and samples shall be available to the Owner for the latter's inspection (2.09).
The Contractor shall advise the Owner, on a current basis and in writing, of changes in the Work made during construction, except those made in accordance with Change Orders or Owner's instruction (2.09).
Once the Owner provides a copy of the contract documents to the Contractor, does ownership of these documents transfer to the Contractor?
No. The Drawings, Specifications and models, including all additional instructions and copies thereof, furnished to the Contractor shall remain the property of the Owner. They are not to be used by the Contractor on any other work, and, with the exception of the signed Contract inclusive of Contract Documents, they shall be returned to the Owner upon completion of the Work before Final Payment to the Contractor is made (2.10).
ARTICLE 3: DRAWINGS AND SPECIFICATIONS
How many sets of Drawings and Specifications must the Owner initially provide to the Contractor?
The Owner shall furnish the Contractor, free of charge, three (3) sets of Drawings and Specifications, inclusive of the signed Contract. All other copies of Drawings and Specifications as required by the Contractor will be furnished to him at cost of reproduction (3.01).
How should the Drawings and Specifications be interpreted / understood?
All Drawings and models are to be read and understood together with the Specifications, to form a part thereof. Where figures are given, they are to be followed in preference to measurements by scale. Anything shown on the Drawings but not mentioned in the Specifications, or vice versa, or anything not expressly set forth in either but which is reasonably implied, shall be furnished as if specifically shown and mentioned in both (3.02).
What are the clarifications that a Contractor may request the Owner regardingthe meaning of drawings and specifications?
The meaning of the Drawings (including notes thereon) or of the Specifications, or
Any obscurity as to the wording of the Specifications.
Directions and explanations necessary and proper to make more definite and certain any requirement of the Drawings (including notes) or of the provisions of the Specifications (3.03).
What must a Contractor do if he discovers discrepancy in the figures in the Drawings, and what is the consequence if he continues the Work notwithstanding the discrepancies?
The Contractor shall report to the Owner any discrepancy in the figures in the drawings immediately upon its discovery. The Owner shall make the necessary correction.
If the Contractor, without notifying the Owner of such discrepancy, performs his work according to the drawings notwithstanding such discrepancy , the Owner may direct the Contractor to redo his work without an adjustment of his Contract Price and his Contract Time.
ARTICLE 4: DETAIL DRAWINGS AND SPECIFICATIONS
How many additional detail drawings and instructions should the Owner provide to the Contractor?
CIAP Document 102 does not provide for an exact number. However, it provides that the Owner shall furnish additional detail drawings and instructions essential to their proper interpretation and proper execution of the Work (4.01).
How should the additional detail drawings and instructions be considered?
All additional drawings and instructions are to be considered of equal force as those which originally accompany the Specifications (4.01).
ARTICLE 5: SHOP DRAWINGS
What are shop drawings?
Shop drawings represent:
All working and erection dimensions;
Arrangement and sectional views;
Necessary details, including complete information for making connections with other work; and
Kinds of materials and finishes.
Shop drawings shall be dated, numbered consecutively, and shall contain:
The name of project;
The descriptive names of equipment, materials, and classified item numbers and
The location at which materials or equipment are to be installed in the Work (5.02).
Who prepares the shop drawings?
The Contractor shall prepare the shop drawings at his own expense (5.01).
How many shop drawings should the Contractor prepare and submit for the Owner's approval?
The Contractor shall submit two (2) copies of all shop or setting drawings, templates, patterns and models (5.01). Submission of shop drawings shall be accompanied by a letter of transmittal in duplicate (two copies), containing the name of the project, the Contractor's name, number drawings, titles, and other pertinent data (5.03).
If the shop drawings show variations from the Contract requirements because of standard shop practice or other reasons, the Contractor shall make specific mention of such variations in his letter of submittal (5.04[d]).
May the Contractor execute any work called for by the shop drawings without the Owner's approval?
No. The Owner must first give his approval before the Contractor can execute such work (5.04[c]).
May the Owner make corrections to the shop drawings? If there are corrections, what is the process for re-submission of those documents?
The Owner may make corrections, if he desires (5.01). In that case, the Contractor shall make the corrections in the shop drawings required by the Owner and file with the latter three (3) corrected copies (5.01; 5.04).
Satisfactory shop drawings will be identified by the Owner, dated, and one (1) copy will be returned to the Contractor.
Should shop drawings be disapproved by the Owner, one (1) set of such shop drawings will be returned to the Contractor indicating therein the corrections and changes to be made (5.04).
The Contractor shall make the required corrections and changes and resubmit the shop drawings, in duplicate (two copies), until the Owner's approval is obtained (5.04[a]).
Upon receipt of approval, the Contractor shall insert the date of approval on the tracings and promptly furnish the Owner with three (3) additional prints of approved drawings.
How many days does the Owner have to approve shop drawings?
Generally, the Owner has to approve the shop drawings within 7 working days of submission by the Contractor.
This period does not apply in the following cases:
When the CONTRACT specifies the contrary; or
When the Contractor's submission is deficient (such as if corrections are needed)
Unless specified to the contrary or unless the Contractor’s submission is deficient, shop drawing approval by the Owner shall be made within seven (7) working days of submission by the Contractor (5.06).
Is the Owner responsible, in all cases, for the accuracy of drawings?
Generally, the Owner is responsible, except if the Contractor is a specialty contractor or is engaged by the Owner as a specialty contractor in which case it is the specialty contractor which is responsible In such case, the Owner's approval shall not relieve the Contractor of responsibility for accuracy of such shop drawings, nor for proper fitting and construction of work, nor for furnishing of materials or work required by the Contract and not indicated on the shop drawings.
The Owner's approval of such drawings or schedule shall not relieve the specialty contractor from responsibility for deviations from the Drawings or Specifications, unless he has, in writing, called the Owner's attention to such deviations at the time of submission and secured the Owner's written approval (5.05).
Summarize the submissions, approvals, and corrections procedures for shop drawings.
First, the Contractor submits two (2) copies of all shop drawings to the Owner for approval. The Owner will generally have seven (7) working days from submission to act on those drawings.
If the drawings are approved:
The Owner shall identify those drawings which he approves, date them, and then return one (1) copy to the Contractor.
Upon receipt of such approval, the Contractor shall insert the date of approval on the tracings and promptly furnish the Owner with three (3) additional prints of approved drawings.
If the drawings require corrections and/or are disapproved by the Owner:
One (1) set of such shop drawings will be returned to the Contractor, indicating therein the corrections and changes to be made (5.04).
The Contractor shall make the required corrections and changes and resubmit the shop drawings, in duplicate (two  copies). The process repeats until the Owner's approval is obtained (5.04[a]).
SECTION II: LAWS, REGULATIONS, SITE CONDITIONS, PERMITS AND TAXES ▾
ARTICLE 6: LAWS AND SITE CONDITIONS
What are the laws and regulations which the Contractor shall comply with? What is the effect of non-compliance with such laws and regulations?
LAWS refers to all laws, ordinances and other governmental rules and regulations applicable to the project and to its execution (1.19).
In general, the Contractor shall comply with all Laws in so far as they are binding upon or affect the parties thereto, or the Work. He shall also comply with regulations of firms furnishing utilities for the project.
If the Contractor performs work contrary to such Laws or regulations, he shall bear all additional costs arising therefrom (6.01).
Is the Contractor expected to have previously visited the Contract site in preparation for his bid?
Yes. Before the bidding and the awarding of the Contract, the Contractor is expected to have visited the project site and made his own estimate of the facilities required in and difficulties attending the execution of the Work, on account of local conditions and all other contingencies.
The Owner shall, however, furnish the Contractor a geodetic survey and sub-surface exploration which the Contractor is entitled to rely upon in the preparation of his Bid (6.02).
ARTICLE 7: PERMITS, TAXES AND SURVEYS
Who is responsible for securing and paying for construction permits and licenses?
The Owner, with the Contractor's assistance, shall secure and pay all construction permits and licenses necessary for the execution of the Work or of any temporary work and easements in relation thereto.
As for the final occupancy permit, the Contractor shall secure it but he shall not be responsible to the Owner if the license is not issued or there was delay in its issuance for reasons that are not attributable to the Contractor's fault (7.01).
Who is responsible for paying taxes?
The Contractor shall pay the tax, wherever the law of the place where the project is located requires a sales, consumer, use, or other similar tax related or pertinent only to the construction of the project (7.02).
What is the responsibility of the Owner re: site surveys and benchmarks on site?
The Owner shall furnish all surveys describing the physical characteristics, legal limitations, and utility locations of the site. He shall also furnish rights-of-way for access to the site.
The Owner shall be responsible for the establishment of lot lines, boundary lines, easements and benchmarks which shall be made by a certified surveyor.
The Owner may request the Contractor to verify before the start of the construction the result of such surveys, provided the Owner shall pay for the cost of such verification.
The Contractor shall be entitled to rely on such surveys and the Owner shall pay for any damage or cost to the Contractor brought about by errors in data furnished (7.03).
What is a benchmark, and what is the Contractor's responsibility on site surveys and benchmarks?
A benchmark is a point of reference by which something can be measured. All other grade, lines, levels, and benchmarks necessary for the prosecution of the work shall be established and maintained by the Contractor (7.02).
The Contractor shall provide and maintain well-built batterboards at all corners. He shall establish benchmarks in not less than two widely separated places (7.02).
As work progresses, the Contractor shall establish benchmarks at each floor giving exact levels of various floors, and shall lay-out the exact locations of all partitions as a guide to all trades (7.03).
May the Contractor engage the services of a Geodetic Engineer for making surveys? What is the extent of work that the Geodetic Engineer can do?
The Contractor shall, at his option or when required under the Contract, engage the services of a licensed Geodetic Engineer to confirm and certify the location of column centers, piers, walls, pits, trenches, pipe work, utility lines and work of a similar nature. The Geodetic Engineer shall also verify and certify the lines and levels of any part of the Work at any time if so required by the Owner. The certification shall be provided to the Owner and the Contractor.
If the Geodetic Engineer finds any deviation from the Drawings in the Work of the Contractor, he shall report his findings to the Contractor and copy the Owner within 24 hours from discovery .(7.04).
What is the value of the Geodetic Engineer's certification?
It shall be regarded as an independent and disinterested verification of such lay-out. It does not exempt the Contractor from any loss or damage caused by the Engineer's act or omission, but it may mitigate liability (7.04).
SECTION III: EQUIPMENT AND MATERIALS ▾
ARTICLE 8: GENERAL
What laws must the materials and equipment conform to?
All materials and equipment must conform to all Laws which may be in force and applicable during the period of construction (8.01).
What is the effect if the Contractor fails to comply with the applicable laws?
The Contractor shall bear all damages by reason of any delay in the Work arising from his failure to comply with the applicable laws (8.01).
What if the applicable laws are revised or changed during the construction period, and the cost or time of completion of the Contract is affected as a result?
The Owner shall recognize that a constructive change in the Work has occurred and make a corresponding adjustment of the Contract Price and Completion Time (8.01).
ARTICLE 9: EQUIPMENT
If the Owner, in the detailed Specifications, refers to certain equipment by name and catalog number, does this mean that the Contractor can only use that specified equipment?
No. This procedure is not to be construed as eliminating from competition other products of equal or better quality by other manufacturers where they are fully suitable in design (9.01).
Can the Contractor substitute equipment? When can he do this and what process should be followed?
The Contractor can substitute equipment, upon approval of the Owner in writing.
The Contractor shall furnish the complete list of proposed substitutions preferably prior to the signing of the Contract together with such engineering and catalog data as the Owner may require. Thus, the Contractor may furnish the complete list of proposed substitutions even after the signing of the Contract.
All requests for substitution of equipment shall be in writing. The Owner will approve or disapprove the request in writing. No substitute equipment shall be used unless approved in writing by the Owner.
The Contractor shall abide by the Owner's judgment as to the acceptable proposed substitute equipment (9.02).
ARTICLE 10:MATERIALS, FIXTURES, APPLIANCES, AND FITTING FURNISHED BY THE CONTRACTOR
Must the Contractorfurnish a sample of all materials, fixtures, appliances and fitting to the Owner for the latter's approval?
Not in all cases. The Contractor shall furnish for approval samples as specified or required (10.01).
What is the procedure that the Contractor must follow when furnishing samples of materials, fixtures, appliances and fittings to the Owner for approval?
Three (3) samples shall be submitted, of adequate sizeto show quality, type, color, range, finish, and texture of material. That number may change, if specified (10.01[a]).
Each sample shall be labelled, bearing the material's name and quality, the Contractor's name, date, project name, and other pertinent data (10.01[b]).
If the Specifications require the manufacturer's printed installation directions, such directions shall accompany the samples submitted for approval (10.01[c]).
A letter of transmittal in triplicate (3 copies) from the Contractor requesting approval shall accompany all sets of samples (10.01[d]).
How much time does the Owner have to approve the materials, samples, or equipment?
The Owner must act on the submission of equipment, samples, or materials within seven (7) days of submission by the Contractor (10.08). The 7-day period may be disregarded in the following cases:
If specified to the contrary; or
If the Contractor's submission is deficient.
Can the Contractor order materials without Owner's prior approval?
If the material does not require prior approval per the Specifications, the Contractor may order such material without the Owner's prior approval (10.01). If the material requires the Owner's prior approval, the Contractor shall not order it until such approval is given in writing (10.01[e]). The Owner’s approval must be timely.
All materials shall be furnished substantially equal in every respect as the approved samples (10.01[e]).
When an item or class of materials is specified exclusively by trade name, manufacturer's name or by catalog reference, may the Contractor substitute another kind of material?
Generally, only such specified item shall be used for completing the Work as required by the Contract (10.02[a]).
However, the Contractor may substitute another material, article or process if the substitution is approved in writing by the Owner (10.02[b]). The Contractor shall be responsible for the materials and articles installed or used without the Owner’s approval. (10.02[c]).
Samples of materials for use in reinforced concrete work such as steel bars, cement, and aggregates and their certificates of origin shall be approved by the Owner (10.02[d]).
The Owner’s action on the request for substitution of materials or for approval of samples of materials shall be given in a timely manner.
Who is responsible for testing of samples and what standards must be followed?
The Owner shall be responsible for the testing. of samples which require the its approval.
The Contractor shall submit to the Owner as many samples as may be needed for purposes of testing. Testing of all samples shall comply with the Specifications and government standards and shall be performed by a competent entity or testing laboratory approved by the Owner (10.03).
However, if the Contractor supplies the samples, all costs of shipment, delivery, handling and testing of Contractor-supplied samples are to be paid by the Contractor (10.03).
May the items furnished by the Contractor be secondhand instead of brand-new?
Unlessthe Contract provides otherwise, all materials shall be new and their quality shall be of the best grade of their respective kinds taking into account the nature of the project and requirements of the Contract (10.04).
Who is responsible for providing storage space for the materials?
The Owner shall provide the Contractor, either at or near the project site, sufficient space for the Contractor's and Sub-contractors' use for storage of their materials and for erection of their sheds and tool houses (10.05[a]).
The Contractor shall store all cement, lime, and other materials affected by moisture on platforms and protected from the weather. The materials shall be so stored as to ensure the preservation of their quality and fitness for the work. Stored materials shall be so located so as to facilitate prompt inspection (10.05[b]).
What if the stored materials, sheds, or storage platform need to be moved?
The Contractor is responsible for the move and shall do so at his own expense (10.05[c]).
What are defective materials?
Defective materials are defined as all materials not conforming to the Specifications (10.06).
The Specifications, Drawings, Special Provisions and Supplementary Specifications shall provide any detail or description concerning the nature and quality of the Work to be performed. Should they fail to do so, it is understood that generally accepted construction practice shall be followed (10.06).
What shall the Contractor do in case materials are considered defective?
The Contractor shall remove or replace defective materials when ordered to do so by the Owner.
Upon the Contractor's failure to do so, the Owner may remove and replace them and deduct the cost of removal and replacement from any money due or to become due the Contractor.
Even if the defects of the materials have been subsequently corrected, no materials shall be used until the Owner's approval is given (10.06).
If materials, fixtures and equipment have to be imported, can an extension of the Completion Time be granted to account fortheir delayeddelivery?
The Contractor shall make timely arrangements for the purchase and delivery of all specified imported materials, fixtures, appliances and equipment in order to avoid delay in the completion of the Work (10.07).
Should Contractor-supplied imported materials, fixtures, appliances and equipment arrive late, an extension of time may be granted by the Owner if they arrived late for reasons other than the negligence or inadvertence of the Contractor.
ARTICLE 11: MATERIALS, EQUIPMENT, FIXTURES, APPLIANCES AND FITTINGS FURNISHED BY THE OWNER
How should materials, equipment, fixtures, appliances and fittings be provided?
Materials, equipment, fixtures, appliances and fittings specifically indicated in the Contract shall be provided in accordance with the Owner-approved construction schedule.
Materials furnished by the Owner shall be deemed acceptable to the Owner. No further test shall be required unless the Owner directs otherwise and pays the cost of such test.
The Contractor shall advise the Owner in writing of any defect he discovers in materials furnished by the Owner The Contractor shall be responsible for material loss of or damage to any Owner-provided material, equipment, fixture, appliance or fitting in his custody, if he uses them without a timely disclosure of such defect to the Owner.
ARTICLE 12: ROYALTIES AND PATENTS
Who is responsible for paying all royalties and license fees on patented materials and processes?
The Contractor shall pay all royalties and license fees on all patented materials and processes furnished by him. He shall defend all suits or claims corresponding thereto for infringement of any patent rights and shall save the Owner harmless from loss on account thereof.
The Owner shall be responsible for paying royalties and license fees for Owner-furnished patented materials and processes.
ARTICLE 13: MANUFACTURER'S DIRECTIONS
What is the importance of the manufacturer's printed directions?
All Contractor-supplied manufactured articles, equipment, appliances, fixtures and fittings shall be applied, installed, connected, used, and conditioned by him in accordance with the manufacturer's printed directions.
How many copies of the manufacturer's directions shall be submitted to the Owner?
Where reference is made to the manufacturer's directions, the Contractor shall submit the specified number of copies of such directions to the Owner.
SECTION IV - PREMISES AND TEMPORARY STRUCTURES ▾
ARTICLE 14: USE OF PREMISES
What are the limitations on the Contractor's use of the premises?
The Contractor shall confine his apparatus, the storage of materials, and the operations of his workmen to limits indicated by Law or directions of the Owner (14.01).
He shall also not unreasonably encumber the work premises with his materials (14.01).
He shall also not load or permit any part of the structure to be loaded with a weight that will endanger its safety (14.02).
He shall also enforce the Owner's safety instructions re: signs, advertisements, fires and the ban on smoking (14.02).
ARTICLE 15: TEMPORARY STRUCTURES AND FACILITIES
Is the Contractor obliged to provide an office on site? What kind of office shall be provided?
Yes. The Contractor shall, taking into account the location and size of the site, at all times provide and maintain an adequate weathertight temporary office. At the minimum, the office shall have the necessary basic facilities, like water, light, and telephone (15.01).
When practicable or depending upon the nature and complexity of the project, the Owner may require the Contractor to comply with other requirements for temporary structures and facilities per the Contract.
Is the Contractor obliged to provide temporary housing for workers?
No, the Contractor is not obliged to do so (15.02), unlike his obligation to provide a temporary office (15.01).
What are the requirements that must be followed re: temporary housing for workers?
The temporary buildings for housing workers, or the erection of tents or other forms of protection will be permitted only at such places as the Owner shall designate. If no particular area is designated, the Contractor may use his own discretion in determining such areas in consultation with the Owner (15.02).
The sanitary condition of the grounds in or about such structures at the project site shall at all times be maintained in a manner satisfactory to the Owner.
Nobody shall be allowed to sleep or cook within the building line of the project under construction (15.02).
What are the safety and sanitation requirements for the project site that the Contractor must follow?
From the commencement of the Work and until its completion, the Contractor shall:
Furnish and put up all temporary barricades and guard lights necessary for the protection, proper prosecution and completion of the Work (15.03[a]);
Maintain guard lights at the top of the falsework tower, barricades, railings, etc. (15.03[b]);
Provide and maintain ample sanitary toilet accommodation and other necessary conveniences, including water connections for the use of personnel and laborers on the work properly secluded from public observation in such manner and at such points as shall be approved by the Owner, and their use shall be strictly enforced (15.03[c]);
Keep such places clean and free from flies (15.03[d]); and
Remove all connections and appliances connected therewith prior to completion of the Work (15.03[e]).
What are the limitations on temporary signs?
No signs or advertisements will be allowed to be displayed without the Owner's approval.
The Contractor may erect one (1) painted sign, giving the names and addresses of the Owner, the Contractor, and the various sub-contractors.
The Owner shall approve the size, color, lettering, and location of such temporary signs (15.04).
What are the effects of the Owner making a temporary or trial usage of equipment or work supplied by the Contractor before final completion and written acceptance by the Owner?
Temporary or trial usage shall not be construed as evidence that the Owner has accepted it.
The test run shall be made by the Owner for such reasonable length of time, as the Owner shall deem necessary. The Owner shall not be liable for injury to or breaking of any part of such work which may be caused by weakness or inaccuracy of structural parts or by defective material or workmanship (15.05).
May the Contractor make a trial usage prior to the Owner's trial usage?
He may, at his own expense, make a trial usage with prior notice to and for the Owner's benefit (15.05).
SECTION V: PROTECTION OF WORK AND PROPERTY ▾
ARTICLE 16: PROTECTION OF WORK AND OWNER'S PROPERTY
What must the Contractor do to protect theWorksand the owner's property?
In order for the Contractor to protect the Works and the Owner's property, he must:
take all reasonable measures to protect from damage (i) the Works, (ii) the Owner's property, and (iii) the equipment supplied by the Owner and shall make good any damage or loss thereto,
o Exception: The Contractor does not need to remunerate the Owner for damage caused by agents or employees of the Owner, or due to force majeure or causes considered Acts of God;
provide reliable watchmen to guard the site, provide all doorways with locks and lock such doors at the close of each day's work; provided, however, that if the Owner deems the security service inadequate or incompetent, the Contractor shall increase or change the security personnel;
prohibit smoking at the site and signs to this effect shall be posted conspicuously;
prohibit fires built on the site;
o Exception: Unless the Owner gives his or her express consent
provide and maintain in good working order an adequate number of fire-fighting equipment and such equipment shall not be used for any other purpose (16.01).
The Contractor must box or otherwise provide protection to the trees and other plants in the site. No trees within the site located outside building lines shall be cut or removed without the specific approval from the Owner (16.03). Any damage to the trees, plants, streets or sidewalks that result from fault or negligence of the Contractor shall be repaired by the Contractor at his own expense (16.03).
If it should be necessary to interrupt or obstruct the natural flow of rivers or streams, the drainage of the surface, or the flow of artificial drains, the Contractor shall do so in such a way that no damage shall result to either public or private interests. For any natural or artificial drainage which he or she may have obstructed, the Contractor must provide other means of drainage. Otherwise, the Contractor shall be liable for all the damages which may result therefrom (16.04).
What should the parties do about old materials?
All materials of value as determined through a joint inventory by the Owner and the Contractor found at the work site shall be carefully stored at the place designated by the Owner. The Contractor shall be responsible for their safekeeping until final acceptance of the Work (16.02).
ARTICLE 17: PROTECTION OF ADJACENT PROPERTY AND EXISTING UTILITIES
Does the Contractor also have the responsibility to protect adjacent property and/or existing utilities?
Yes, the Contractor also has the responsibility of protecting adjacent property and existing utilities. The Contractor shall adequately protect adjacent property as provided by Law and the Contract. Any neighboring property or building which may be jeopardized must be thoroughly protected against damage during construction at the Contractor's expense (17.01).
In addition to this, the Contractor shall be liable for and pay for all damages to adjacent and existing utilities occasioned in any manner by his act or neglect, or by that of his agents, employees, or workmen (17.02).
How can one ascertain if any damage is caused to adjacent property?
Prior to commencement of the Works, the Contractor shall, insofar as is legally and physically possible, survey and ascertain the condition of any existing adjacent properties or buildings and record the results thereof through photographic record or by any other means (17.03).
ARTICLE 18: PROTECTION OF LIFE, WORK, AND PROPERTY DURING AN EMERGENCY
What are the responsibilities of a Contractor during an emergency?
During an emergency endangering life, the Work or the adjoining property, the Contractor shall act, at his discretion, to prevent or minimize the threatened loss or injury even without any instruction or authorization from the Owner (18.01).
Emergency work shall be treated as one performed under a Change Order. The exception to this is if the emergency was due to the Contractor's fault or negligence (18.01).
SECTION VI: LABOR, WORK AND PAYMENTS ▾
ARTICLE 19: LABOR
What qualifications or characteristics must the Contractor's workmen have?
The Contractor shall employ only competent and duly qualified professionals, technical personnel, foremen, mechanics and workers to supervise or execute the Work (19.01).
Upon written request of the Owner, the Contractor shall remove from the site an employee who is careless or incompetent or obstructs the progress of the work or acts contrary to instructions or conducts himself improperly (19.01).
ARTICLE 20: WORK
How must the Contractor conduct his or her work?
The Contractor shall use such methods and appliances for the performance of the Work as will ensure its timely completion and of the required quality.
If, at any time before the commencement or during the progress of the Work, such methods or appliances appear to the Owner to be inefficient or inappropriate for producing the quality of work required, or insuring the required rate of progress, the Owner may order the Contractor to increase the rate of their efficiency, or to improve their system of operation. The Contractor must comply with such order. Failure, however, of the Owner to demand such increase of efficiency or improvement of the character or methods of work or of the appliances shall not relieve the Contractor from his obligation to turn out such quality of work and rate of progress as are called for in the Contract (20.01).
All stakes and benchmarks placed by the Contractor in laying out the work and approved by the Owner shall be carefully guarded and preserved by the Contractor. Unless such stakes or marks are displaced or rendered useless through the carelessness or neglect of the Owner or of his agents or employees, they shall be replaced by the Contractor at his expense (20.02).
What is a defective work? What are the options available to the Owner in case of defective work?
Work that fails to comply with the Contract is defective.
Defective work shall be condemned by the Owner upon discovery, and when such work has been condemned it shall be immediately removed by the Contractor and replaced in accordance with the Drawings and Specifications (20.03).
The Owner, however, may accept defective or non-conforming work, in which case, the Owner shall issue to the Contractor a change order to reflect a reduction in the Contract Price where appropriate by an amount not exceeding the value of the unfinished work as determined in the Breakdown of Work and Corresponding Value. Such adjustment shall be effected whether or not final payment has been made (20.15).
Can the Owner inspect the premises during the progress of the Work?
Yes. The Owner may conduct inspections of the Work.
The Owner shall have access to the Work at all times. The Owner shall provide a sufficient number of inspectors while Work is in progress to ensure its timely inspection.
The Contractor shall furnish without additional charge all reasonable labor and materials necessary for the convenient inspection that may be required by the inspectors.
The Owner shall allow inspectors to witness the pouring of concrete and the absence of the Owner's inspectors at any time during the progress of the work shall be an implicit approval of the quality of the cement mix and the authority to pour it.
If the Specifications, the Owner's instructions, the Laws, or any public authority requires any work to be specifically tested, the Contractor shall give timely notice to the Owner and other parties required to be present of the date and time of such inspection. Inspection by the Owner shall be made at the source of supply.
If any work should be covered up without timely notice to the Owner, or before the Owner can make a timely inspection thereof, it must, if required by the Owner, be uncovered for examination at the Contractor's expense. If the Owner fails to make an examination, its re-examination may be ordered by the Owner at the Owner's expense but if such work be found not in accordance with the Contract, the Contractor shall shoulder the cost of uncovering and re-doing the work.
If there are indications that the work done is not in accordance with the Drawings and Specifications, the Owner may at any time before final acceptance of the Work make an examination of the portion already completed by removing or tearing out the same. If such work is found to be defective in any material respect due to fault of the Contractor, he or she shall defray all the costs of such examination and of satisfactory reconstruction. If, however, such work is found to meet the requirements of the Contract, the actual cost of labor and materials necessarily involved in the examination and replacement plus 15 percent (15%), shall be allowed the Contractor and he shall, in addition, if completion of the work has been delayed thereby, be granted a suitable extension of time on account of the additional work involved.
All inspection and tests shall be performed as not to delay the work unnecessarily (20.04).
What is the scope of work that is required of the Contractor during an emergency?
The Contractor is required to perform any work and furnish and install all materials and equipment necessary during an emergency endangering life or property (20.05).
Can the Contractor make adjustments to the scope or quantities of work to be done?
Yes. Adjustments in working drawings to suit field conditions which cannot be foreseen at the time of calling for bids, may be necessary during construction. It is the essence of the Contract to recognize such changes in Drawings as normal. The resulting change in quantities or the increase in the scope of work of the Contractor shall be covered by a Change Order.
However, work done by the Contractor without timely notice to the Owner that an adjustment is required of Contract Price and Completion Time shall be at his own risk and expense (20.06).
Can the Owner make changes to the work?
Yes. The Owner may at any time order extra work or make changes by altering, adding to or deducting from the Contractor’s scope of work and within the general scope thereof; provided however that the changes do not exceed twenty five percent (25%). Such changes shall be ordered by the Owner in writing.
The issuance by the Owner of the revised Drawings or Supplemental Specifications changing the nature or work to be performed or of the materials to be provided shall be treated as sufficient written instruction of the Owner to the Contractor to execute the change (20.07).
What happens if there are any deviations to the sub-surface conditions?
If, during the progress of the work, sub-surface conditions at the site materially different from those shown on the Drawings or indicated in the Specifications or in any Contract Document, are discovered, the attention of the Owner shall be called to such conditions before they are disturbed.
The Owner shall thereupon investigate the conditions, and if he finds that they differ from those shown on the Drawings or indicated in the Specifications or in the report of the Owner's geodetic survey and sub-surface exploration, he shall make such changes in the Drawings and Specifications as he may find necessary.
If as a result of sub-surface conditions, additional or a different type of work be required, although no change in the Drawings or Specifications is made, a Change Order shall be necessary and issued to the Contractor (20.07)
What happens to the Contract if adjustments are required?
If there are any changes which shall lead to an increase or decrease in the amount due under the Contract, or in the time required for or manner of its performance, an equitable adjustment shall be made and the Contract modified accordingly. In the event that the Work is increased by such changes, the Contractor shall furnish proportionate additional performance bond.
In case where, without fault of the Contractor the Owner initiates a deductive change order for the purpose of transferring certain work items or part of the scope of work to another party or for the owner to supply certain construction materials, then the Contractor shall be entitled to 15% of deductive change order to recover his overhead and profit (20.07).
How shall extra work be valued?
The value of any extra work or change shall be determined by the Owner in any one or more of the following ways:
By a lump sum acceptable to the Contractor.
By unit prices either stipulated in the Contract or subsequently agreed upon, provided the aggregate value of changes does not exceed 25% of the original Contract Price.
o Changes required by the Owner which in the aggregate exceed twenty five percent (25%) for overruns shall be covered by a supplemental contract. The Contractor shall not be obliged to execute such changes in accordance with the unit rate specified in his Bid, a supplementary contract being treated as one separate from and independent of the Contract.
o Where the aggregate value of all changes per pay item exceed twenty five percent (25%) and the Contractor, without demanding the execution of a supplemental contract executes the additional work required without objection or protest, the value of the changes shall be determined in accordance with the second bullet point above.
By actual direct cost plus value added tax, if any, plus fifteen percent (15%) for Contractor's profit and overhead.
o Contractor shall keep and present a correct account of the direct cost together with vouchers and other supporting documents (20.07).
What if the Contractor and the Owner fail to agree as to the adjustment of the Contract Price and/or Completion Time?
In case any extra work shall be required in the proper performance of the Work, and the Contractor and the Owner shall fail to arrive at any agreement as to the adjustment of Contract Price and/or Completion Time, the Owner may award such extra work to another contractor (20.07)
Are there any instances where the Contractor can claim for extra costs?
Yes, the Contractor can is entitled to extra cost in the following instances. When instructions by the Owner or the Drawings or Specifications issued after submission of the Bid involve a change, he shall give the Owner written notice thereof within fifteen (15) days after the receipt of such instruction before proceeding to execute the work, except in emergency endangering life or property provided for in Article 18.01.
In addition to this, if the Contractor incurs a delay in the mobilization and/or in the progress of his work for reasons attributable to the Owner, such as but not limited to delay of delivery of Owner-supplied materials, movements or work executed by the Owner which interfere with the progress of the Contractor's work, delayed decisions by the Owner and other matters related thereto, he or she shall give the Owner written notice thereof within fifteen (15) days after recognition of such delay and request the issuance of a change order.
The amount due to the Contractor under this article shall be paid by the Owner in the same manner as any other sum to which the Contractor may be entitled under the Contract, particularly under Articles 20.06, 20.07, 22.05 and 22.10. Any delays in said payment shall entitle the Contractor to an extension of time and to payment of interest in accordance with Article 22.05. Refusal or unreasonable delay by the Owner to pay the amount due shall entitle the Contractor to suspend or terminate the Contract whenever permitted under Article 26 (20.08).
Does the Owner have any responsibility with regard to the cleanliness of the premises?
The Contractor shall at all times keep the premises free from accumulations of waste materials or rubbish caused by his employees. Rubbish shall not be thrown from windows or other parts of the structure without the use of rubbish chutes. At the completion of the Work, the Contractor shall remove all temporary work, its rubbish therefrom and all his tools, scaffolding and surplus materials and turn over the work for occupancy.
All dirt, stains, and the like on all finishing of floors, walls and ceiling, decorative work, finishing hardware and fixtures shall be removed.
All woodwork, finishing hardware and all metal works shall be cleaned and polished. All glazing, marble and tile work shall be washed and cleaned. The Contractor shall also clean the site as shown in the Drawings and all areas which the Contractor used in the execution of the project.
If the Contractor fails to clean up after due notice at the completion of the Work, the Owner may do so and the cost thereof charged to the Contractor.
If a dispute arises between the Contractor and separate contractors as to their responsibility for cleaning up, the Owner may clean up the site and charge the cost thereof to the contractors responsible therefor as the Owner shall determine to be just (20.09).
Can the Owner make use of completed portions of the Work?
Yes, the Owner may take possession of and use any completed or partially completed portion of the Work, although the time for completing it or portions thereof may not have expired; but such taking of possession and use shall not be deemed an acceptance of any work not completed in accordance with the Contract. Neither shall it be deemed a waiver by the Owner of the right to claim damages due to delay in the completion of the Work. If such prior use increases the Contractor’s cost or delays the completion of uncompleted work or causes refinishing of completed work, the Contractor shall be entitled to extra compensation or extension of time or both.
However, if the Owner does take over any portion prior to overall completion, he or she shall issue a Certificate of Completion for such portion taken over and release retention as required by the Contract (20.10).
What constitutes substantial completion of the Work?
There is substantial completion when the Contractor completes ninety five percent (95%) of the Work, provided that the remaining work and the performance of the work necessary to complete the Work shall not prevent the normal use of the completed portion (20.11).
The Owner shall be deemed to have recognized the substantial completion of the Work through:
The approval of the Contractor's billing for completing at least 95% of the Work; or
The issuance of a Certificate of Substantial Completion or equivalent document. However, the date of this document shall not be controlling if substantial completion is shown to have been made at an earlier date, unless the Contractor accepts the certificate without taking exceptions thereto in writing within fifteen (15) days from receipt (20.11).
Notwithstanding this, the equipment, fixtures and utilities furnished and/or installed by the Contractor which the Contract requires to be test-run prior to acceptance shall be test-run successfully before the Work can be accepted as substantially completed. The Owner shall, without delay, cause the test-run of the Facility. Should the Contractor be unable to completely install or furnish and test-run the Facility through no fault of his, the Contractor shall automatically be entitled to an extension of Completion Time equal to the period of delay (20.11).
The Supreme Court has applied the 95% threshold to determine what constitutes substantial completion.in the absence of agreement to the contrary.
What happens if the Contractor cannot complete the Work due to the actions of the Owner?
If the targeted date of completion has arrived and the Contractor cannot achieve substantial compliance due to the uncompleted Facility caused by the Owner's fault, negligence or delay, the Contractor shall be deemed to have achieved substantial completion provided (i) the contractor has completed at least ninety five percent (95%) of the work minus the uncompleted Facility, and (ii) the Contractor has completed the work required on the Facility but for that which is directly affected by the Owner's fault, negligence or delay. The Owner shall release to the Contractor the Contract Price less the cost of the uncompleted portion of the work and the amounts mentioned in Article 22.03. (20.11).
What happens if the Owner discovers any defects?
If there are any defects, the Owner shall issue a punch list, which the Contractor must receive not later than thirty (30) days from the date of substantial completion. The Owner may add to the punch list items, not later than sixty (60) days from date of substantial completion corrective work on the items in the original punch list or lists (20.11). The period of thirty days, calculated from the date of receipt by the Contractor of the last item in the punch list submitted, is known as the "Period of Making Good of Known Defects or Faults" (20.12).
The Contractor shall execute at his own expense all works necessary for making good of known defects, imperfections or faults (20.13).
If, in the opinion of the Owner, the defect or fault in the punch list is due to a cause attributable to it, the value of such work shall be ascertained and paid for as if it were additional work (20.13).
If the Contractor shall fail to do any such corrective work, the Owner shall, upon written notice to the Contractor, be entitled to carry out such work by his own workmen or by other contractors, and charge the cost thereof to the Contractor. The Owner may withhold an amount not exceeding the Contract cost of executing such work from the payment to the Contractor (20.13).
What happens if the Owner instructs the Contractor to conduct a special test?
Special test, inspection or approval, not otherwise required in the Contract which the Owner instructs the Contractor to perform after the date of substantial completion, shall be treated as a separate work which the Owner may cover by a supplemental agreement (20.14).
What can lead to an adjustment in prices?
There shall be added to or deducted from the Contract Price such sums affecting the execution of the Work caused by any of the following: an event of force majeure including abnormal changes in costs of materials, increases in labor costs mandated by law or wage order, increase in the cost of oil, and the deterioration of peace and order.
Adjustment of prices due to escalation or reduction of costs of executing the work shall be made using a parametric formula to be agreed upon by the parties. In default of such agreement, the parametric formula of the Department of Public Works & Highways [DPSWH] shall be applied.
The adjustment of prices shall be determined on the basis of the original Contract unit prices of labor and materials and such unit prices in effect during the relevant period of work accomplishment.
The Contract Price shall be adjusted, not oftener than once a month, due to increase or decrease of the direct cost of labor and materials of more than five percent (5%) of the original Contract unit prices of the relevant items of work. The adjustment shall include the first five percent (5%).
In case the project is behind schedule by more than fifteen percent (15%) from the approved construction schedule, not due to excusable delays, the payment for work accomplished shall be made on the basis of the Contract Price as adjusted in accordance with the escalation rate applicable during the period in which it should have been accomplished
These adjustments shall not apply to an increase or decrease in the cost of materials and services provided or supplied by the Owner (20.16).
What is the manner of payment?
Payments in money under the Contract shall be made in the currency stipulated; and if it is not legally possible to deliver such currency, then in Philippine pesos (20.17).
ARTICLE 21:TIME OF COMPLETION OF WORK
When does Work commence and what is the period for its completion?
Unless a later date is provided, it generally commences within seven days from receipt of the Notice to Proceed, which notice shall be issued by the Owner to the Contractor only when the Contract so provides. Premature commencement of construction shall be at the Contractor's risk unless it is due to their mutual desire to have the Contractor commence the work early, and the Owner gives the Contractor express or implied authority to do so (21.01).
The Contractor shall complete the Work in accordance with the Contract within the period fixed therein and as adjusted due to changes both directed and constructive.
For projects involving several phases of work with milestones, commencement date shall be reckoned from the time the Contractor receives the Notice to Proceed and/or Possession of Site for each milestone as shall be necessary to enable the Contractor to execute the contract works in accordance with the schedule stipulated in the Contract (21.02).
What is a construction schedule and what are its contents?
Immediately after the Contract has taken effect, the Contractor shall submit for approval a construction schedule in a form acceptable to the Owner. This schedule indicates the approximate date each pay item will be started and completed, the equipment to be used and number of men to be employed to complete the Work in accordance with the schedule. The progress of the work shall be at a rate sufficient to complete the Work in an acceptable manner within the Completion Time (21.03).
What happens when there is slippage?
Delays by the Contractor in the implementation of the contract are referred to as "slippage".
In case of slippage, the Owner may call for meetings with the Contractor and other contractors involved to determine the possible causes contributing to the slow progress of the construction work.
If such slippage is due to the fault or negligence of the Contractor, the Owner may require the Contractor to submit a catch-up schedule which shall be subject to approval by the Owner (21.03)
Can the Owner accelerate the schedule?
Yes, the Owner may order the acceleration of work to meet a desired completion date. Acceleration of work for the benefit or convenience of the Owner or caused by the fault of or delay by the Owner, shall be treated as extra work for which a Change Order shall be issued and the Contractor shall be paid for the cost of such acceleration. However, where the reason for acceleration is due to the fault of the Contractor, and for the purpose of catching up with the original schedule, such additional cost for acceleration shall be borne by the Contractor alone (21.03).
Can the Contractor ask for an extension of time?
Yes, there are certain instances when the Contractor shall be entitled to an equitable adjustment of Completion Time. For example, the Contractor shall be entitled to an extension of time when the Contractor is obstructed or delayed in the completion of the Work by:
a) the act, neglect, delay or fault of the Owner, or any other contractor employed by the Owner on the Work;
b) third-party strikes or lockouts or strikes by employees other than the Contractor's employees or a lockout by an employer other than the Contractor;
c) an act of God or force majeure;
d) unsuitable weather conditions which render the work impracticable or impossible or which slow down the prosecution of the Work;
e) peace and order conditions;
f) changes ordered or authorized by the Owner or authorized under the Contract; and
g) delay authorized by the Owner pending arbitration of an unresolved dispute between the Owner and the Contractor.
For delay caused by b), c), d), e) and f), the Contractor shall, within fifteen (15) days from the occurrence of the event which caused the delay, notify the Owner and the Owner shall, not later than fifteen (15) days from receipt of such notice, give the Contractor an equitable adjustment of the Completion Time. The failure of the Owner to reply to the Contractor or to give an equitable adjustment of the Completion Time shall be deemed an approval by the Owner of the adjustment requested by the Contractor.
For delay caused by a) and g), and in default of an agreement between the Owner and the Contractor, the Contractor shall be entitled to an adjustment of Completion Time equal to the delay caused by such factors. However, the Contractor shall not be entitled to extension of Completion Time due to the alleged failure of the Owner to furnish materials or information or provide drawings, unless in the construction schedule approved by the Owner, they are necessary to prosecute the Work in the order required, and the failure of the Owner to provide them caused a delay in the work of the Contractor.
The Owner, taking into account the construction schedule approved by him and the progress of the work of the Contractor, is conclusively presumed to know when materials, equipment or supplies or drawings to be provided by the Owner shall be required by the Contractor, and the failure of the Contractor to give prior or timely notice to the Owner of the date when such material, equipment or supplies or drawings shall be required shall not be a ground for denying the Contractor an adjustment of Completion Time.
The failure of the Owner to reply to the Contractor's request for adjustment of Completion Time within fifteen (15) days from the date of receipt of the request shall be deemed an approval by the Owner of the adjustment requested by the Contractor. Such request shall be deemed a formality which does not affect the right of the Contractor to an equitable adjustment of Completion Time as provided.
Delay in the payment of any progress billing as required in Article 22.05 shall automatically extend the Completion Time by a period equal to the delay. The Contractor shall not be required to give notice to the Owner nor be required to establish that such delay actually delayed the prosecution of the Work or delayed the Contractor to a period equal to the delay in the payment of the billing (21.04).
What happens when there is delay in the completion of the Work?
Time is an essential feature of the Contract.
Upon failure of the Contractor to complete the Work within the Completion Time, the Contractor shall be liable to pay the Owner liquidated damages in the amount stipulated in the Contract as indemnity. The Owner may deduct from any sum due the Contractor the amount which has accrued as liquidated damages. Liquidated damages shall accrue from the first day of delay in completing the work within the Completion Time until the date of substantial completion as determined under Article 20.11.
The amount of damages for corrective works uncompleted within the Period of Making Good of Known Defects shall be based on the value of such uncompleted corrective work in the Breakdown of Work and Corresponding Value for approved billings.
However, there are also certain instances when the Contractor shall have the right to suspend performance of the Work. For example, he or she may suspend the performance of the Work upon failure of the Owner to pay approved billings under the conditions provided in Article 27. The Contractor will also be entitled to the payment of interest under Article 22.05 (21.05).
ARTICLE 22: PAYMENTS
How are payments determined and paid?
Except in cases where unit prices form the basis for payment under the Contract, the Contractor shall, within fifteen days from the receipt of Notice to Proceed or from commencement of the Work, submit a Breakdown of Work and Corresponding Value of the Contract Amount. This Breakdown shows the value assigned to each part of the work and thus is used as the basis for all Requests for Payment. It may also be used for determining the value of uncompleted work (22.01).
The Breakdown of Work and Corresponding Value is what the Owner will use to estimate the value of work accomplished by the Contractor, serving as a basis for compensation (22.05).
The Owner shall estimate the value of work accomplished by the Contractor using as basis the schedule stipulated in the Breakdown of Work and Corresponding Value. Such estimate of the Owner of the amount of work performed shall be taken as the basis for the compensation to be received by the Contractor. While such preliminary estimates of amount and quantity shall not be required to be made by strict measurement or with exactness, they must be made as close as possible to the actual percentage of work accomplishment (22.04).
The Contractor may submit not more than once each month a Request for Payment. Each request shall be computed from the work completed on all items listed in the Breakdown of Work and Corresponding Value, less a retention of 10% of the progress payment to the Contractor. When 50% of the Contract has been accomplished, no further retention shall be made on progress billings for the balance of the Work (22.02).
In general, and unless the Contract provides otherwise, no payment shall be made for materials or items not incorporated in the work, except where such acquisition is made necessary due to shortages or to transportation difficulties or other similar causes in which case, payment shall be made conditioned upon the submission by the Contractor of bills of sale or upon compliance with such other procedures as will establish the Owner's title to such material or item or otherwise adequately protect the Owner's interest (22.02).
When a Request for Payment is submitted, the Owner shall, within 30 days from receipt thereof: (i) evaluate and certify the Contractor's accomplishment; and (ii) pay the amount as certified. If the Owner fails to pay on time, the Owner shall also pay interest thereon, computed from the due date in accordance with the 30-day regular loan rate of the Lank Bank of the Philippines prevailing on the due date. (22.05).
For payments made in excess of ninety percent (90%) of the Contract Price, the Owner shall require the Contractor to submit a sworn statement to the effect that all bills for labor, other than current wages, and all bills for materials have been duly paid by the Contractor and his Sub-contractor, if any, excepting only such bills as may be enumerated in such sworn statement. The Contractor shall render the Owner free and harmless from any claims and payment of such bills, and shall indemnify the Owner the cost of defending himself against such claims (22.07).
Is the approval of the Owner of a progress billing merely provisional or is it considered final?
The approval is merely provisional. The owner has the right to verify the contractor's actual work accomplishment prior to payment.
Therefore, the owner, for any just cause may question a prior evaluation of the percentage of accomplishment of the contractor and to downgrade such accomplishment after re-evaluation. It is the right of every owner to re-evaluate or re-measure in good faith the work of its contractor during the progress of the work.
Can the Owner deduct anything from the payment due the Contractor?
Yes, the Owner may deduct from any payment due the contractor for:
The estimated cost of defective work not remedied; (Note: Unqualified power should not be allowed)
The amount of substantiated and unpaid claims by subcontractors and suppliers unjustifiably withheld by the Contractor; and
The amount which has accrued as liquidated damages (22.03).
Who has duty to pay the laborers, sub-contractors and suppliers?
The Contractor shall pay punctually all workmen employed by him on the project. He shall also pay promptly all materials purchased by him, rentals for equipment used by him on the project and all taxes due from him. He shall remit as required by law all amounts legally required to be withheld from the salaries or wages of his employees or workmen (22.06).
In case the Owner has reasonable grounds of belief that the Contractor has not remitted to the appropriate government agency the employer's and employee's contributions to the Social Security System or to Medicare, or the withholding tax on the employees' wages, the Owner may require evidence of remittance of such contributions or withholding tax in addition to the sworn statement mentioned above, and withholding release of the amount sufficient to cover such unremitted payments until the evidence required by the Owner is provided by the Contractor (22.09).
Other than the submission of a request for payment, are there any other documents or requirements that the Contractor must complete?
Yes, for the construction of buildings, the Contractor shall submit, before final payment, several documents including:
Certificate of Final Building Occupancy, unless such certificate cannot be obtained.
Certificate of Final Inspection of utilities, unless such certificate cannot be obtained.
Original and three (3) sets of prints of "As-Built Drawings" of Electrical, Sanitary, Gas, Telephone and Mechanical works, if such works are within the scope of the Contract. "As-Built Drawings" are the working drawings showing the system and actual locations of outlets, fixtures, services and equipment that were installed.
Three (3) copies of Directory of Panel Boards and list of circuits.
Three (3) copies of Instructions and Manual for operating and maintaining of fixtures and equipment.
Three (3) copies of Keying Schedule.
A release of liens arising under the Contract as provided in Article 34.01, and the sworn statements required in Article 22.09 (A) and Article 22.07 (22.08).
What happens during the final payment?
Whenever the Contractor notifies the Owner that the Work under the Contract has been completely performed by the Contractor, the Owner shall, within 10 days from receipt of such notice, proceed to verify the work, make the final estimates, certify to the completion of the work, and accept the same.
Except for causes herein specified, the Owner shall pay to the Contractor within the period stated in Article 22.05 the amount which shall be found due, less such sums as may be lawfully retained under any of the provisions of the Contract; provided that final payment on the Contract shall not be made until the Contractor has submitted a statement under oath showing that all taxes due from him in connection with this Contract have been duly paid.
The acceptance by the Contractor of final payment shall constitute a waiver of all his claims against the Owner, except the following:
a) a claim covered by a prior notice to the Owner reserved by the Contractor to be filed in accordance with the Contract;
b) a claim pending before and unresolved by the Owner at the time the request for final payment is made;
c) a dispute referred to arbitration in accordance with Article 34.05; and
d) a claim which the Owner acknowledges with the payment not to be covered by it (22.09).
NOTE: include provision where contract is terminated before completion of the Work.
Can the Contractor be held liable for defects or inferior work after final payment?
Yes. While generally acceptance by the Owner of the Work shall relieve the Contractor of liability for defects, there are a few exceptions such as when:
The defect is hidden and the Owner could not have discovered the defect even with the exercise of reasonable diligence.
The Owner accepted the Work with express reservations seasonably made as to the specific portion of the Work which was found to be defective and which requires replacement or correction. If the reservation fails to specify the portion which is alleged to be defective, the Owner shall state in as much detail as possible the nature and extent of the defect; otherwise the reservation shall be considered a general reservation and shall be ineffective.
Furthermore, if the Owner finds the Work poor or inferior or does not comply with the Drawings and Specifications, it shall forthwith be condemned and the Contractor notified thereof to give the Contractor an opportunity without loss of time and without incurring unnecessary cost, to correct the defective work. Work not so condemned within one year from notice from the Contractor that corrective works have been completed cannot later be rejected by the Owner. If the Owner, after the lapse of this one-year period, instructs the Contractor to remove or replace it thereafter, the instruction shall be treated as an additional work for which the Contractor shall be compensated.
The Contractor shall be liable to the Owner for any hidden defect discovered and notified to the Contractor which the Contractor receives from the Owner within the warranty period as provided in the Contract, or in default of any provision fixing the warranty period, within one year from the completion and acceptance of the Work, or from the date stated in the Certificate of Acceptance, or in default thereof, from the posting of the Guarantee Bond (22.10).
The one-year defects liability period in CIAP Document No. 102 is considered as "established usage in the Philippines for private and government construction contracts".
Can the Contractor be held liable for any loss or damage suffered by third persons from any defects of the Work?
Yes, there is nothing that limits the liability of the Contractor to third persons who may have suffered losses resulting from the collapse of the Work due to defects in the construction or caused by or resulting from the use of inferior materials or to any violation of the terms of the Contract in accordance with Article 1723 of the Civil Code of the Philippine (22.10).
Article 1723 of the Civil Code states that "The engineer or architect who drew up the plans and specifications for a building is liable for damages if within fifteen years from the completion of the structure, the same should collapse by reason of a defect in those plans and specifications, or due to the defects in the ground. The contractor is likewise responsible for the damages if the edifice falls, within the same period, on account of defects in the construction or the use of materials of inferior quality furnished by him, or due to any violation of the terms of the contract. If the engineer or architect supervises the construction, he shall be solidarily liable with the contractor…"
When can the funds retained by the Owner in accordance with the Contract be released?
The amount retained by the Owner under the provisions of the Contract shall be released in accordance with its provisions; in default thereof, not later than the expiration of the period during which the Contractor shall complete corrective works on punch list items, upon the posting of the Contractor's Guarantee Bond (22.11). (This provision is ambiguous; it may unduly extend the Contractor’s obligation to do corrective works.)
R.V. Santos Co., Inc. v. Belle Corp., G.R. Nos. 159561-62, 3 October 2012.
William Golangco Construction Corp. v. Philippine Commercial and International Bank, G.R. No. 142830, 24 March 2006.
Transcept Construction and Management Professionals, Inc. v. Aguilar, G.R. No. 177556, 8 December 2010.
ARTICLE 23: SEPARATE CONTRACTS WITH OTHER CONTRACTORS
Can the Owner have separate contracts with other contractors?
Yes. The Owner may perform work outside of the Contractor's scope of work or award separate contracts to other contractors. If the Contractor claims that delay, damage or additional cost is involved as a result, the Contractor shall make such claim as provided in the Contract. The Owner shall provide for the coordination of the work performed by the Owner and/or each separate contractor with the Work of the Contractor (23.01).
What are the possible obligations that the Contractor may have with separate contractors?
One possible example is with regard to the storage of materials and work coordination. The Contractor shall, whenever and to the extent possible, afford other contractors reasonable opportunity for the introduction and storage of their materials and the execution of their work, and shall properly connect and cooperatein the Owner's effort to coordinate his work with that of other contractors so as to minimize interference or obstruction in the progress of the work performed by each of them (24.01).
Another example is with regard to the cutting, fitting or patching of work. The Contractor shall do all cutting, fitting or patching of his work that may be required to make its several parts come together properly and fit it to receive or be received by work of other contractors shown upon, or reasonably implied by, the Drawings and Specifications for the completed structure. In addition to this, the Contractor shall not endanger any work by cutting, digging or otherwise and shall not cut or alter the work of any other contractor save with the consent of the Owner. Any cost caused by defective or ill-timed work shall be borne by the party responsible therefor. The Contractor shall not endanger any work by cutting, digging or otherwise and shall not cut or alter the work of any other contractor save with the consent of the Owner. (24.02).
Lastly, if any part of the Contractor's work depends for proper execution or results upon the work of any other contractor, the Contractor shall inspect and promptly report it to the Owner. His failure to inspect and report it shall constitute an acceptance of the other contractor's work as fit and proper for the reception of his work except as to defects which may develop in the other contractor's work after the execution of the Contractor's work.
To insure the proper execution of his subsequent work the Contractor shall verify work already in place and shall at once report to the Owner any discrepancy noticed between the executed work and the drawings (24.03).
What if the Contractor causes damage to the work of a separate contractor?
Should the Contractor cause damage to the work of any separate contractor, the Contractor agrees to relieve the Owner of any liability which may arise therefrom (24.04). On the other hand, should a separate contractor cause damage to the Contractor's work, then the Owner shall hold harmless the Contractor in respect thereof (24.05).
ARTICLE 25: SUB-CONTRACTS
Can the Contractor contract another entity to complete a portion of the Work?
The general rule is that no portion of the Work shall be sublet or sub-contracted without the Owner's consent. However, any part thereof or any specialty work therein, may be sublet or sub-contracted, subject to the provisions of Articles 25.02 and 34.03. The consent of the Owner to the Contractor's engagement of a subcontractor, by itself, shall not create any contractual relation between the sub-contractor and the Owner (25.01).
If such an arrangement is implemented, the Contractor is fully responsible to the Owner for the acts and omissions of its sub-contractor (25.02).
If a subcontracting agreement is implemented, does it create a relationship between the Owner and the sub-contractor?
No, the consent of the Owner to the Contractor's engagement of a subcontractor, by itself, shall not create any contractual relation between the sub-contractor and the Owner (25.01).
SECTION VIII: SUSPENSION OF WORK AND TERMINATION OF CONTRACT ▾
ARTICLE 26: CONTRACTOR'S RIGHT TO SUSPEND WORK OR TERMINATE CONTRACT
Can the Contractor suspend work or terminate the Contract?
Yes, the Contractor may suspend work or terminate the Contract upon fifteen (15) days' written notice to the Owner for any of the following reasons:
If an order of any court or other public authority caused the work to be stopped or suspended for an aggregate period of ninety (90) days through no act or fault of the Contractor or his employees.
If the Owner shall fail to pay the Contractor the approved Request for Payment as provided in Article 22.05.
If the Owner shall fail to pay the Contractor any sum within thirty (30) days after its award by arbitration.
If the Owner suspends the work without just cause for more than the aggregate period of fifteen (15) days without the Contractor's consent.
If the Owner fails to deliver at the construction site Owner-supplied materials or equipment, for the scope of work along the critical path, beyond fifteen (15) days after its scheduled delivery date as provided for in the Contract.
If the Owner delays his or her approval of Variation Orders for additional works for more than fifteen days after submission.
The Contractor may request the Owner to suspend work if the suspension is necessary for the proper execution of the Work or by reason of weather or other conditions which affect the safety of the works and the laborers (26.01).
Will a suspension or termination of the Contractaffect the Completion Time or the Contract Price?
Yes, for suspension of work due to the circumstances described in Article 26, the Contractor shall be entitled to an equitable adjustment of Completion Time and/or Contract Price (26.01).
ARTICLE 27: OWNER'S RIGHT TO SUSPEND THE WORK
Can the Owner suspend the work without cause? If so, for how long?
Yes, the general rule is that the Owner may, at any time and without cause, suspend the work or any portion thereof for a period of not more than the aggregate period of fifteen (15) days by notice in writing to the Contractor and shall fix the date on which work shall be resumed.
The Contractor will be allowed an adjustment in the Contract Price to include demobilization and remobilization costs and/or stand-by time as applicable as well as adjustment of Completion Time which shall not be less than the period of suspension and shall include the delay due to remobilization of equipment and personnel (27.01).
Can the Owner suspend the work for more than 15 days?
Yes. While the general rule is that the Owner can only suspend the work for a period of not more than fifteen (15) days, there are two exceptions:
a) if there if there is a just cause or
b) if the Contractor consents to a longer suspension (27.01).
What are the just causes for suspension of work?
The Owner, by a written order, may direct the Contractor to stop the work or any portion thereof, in any of the following cases until the cause for such order has been eliminated:
a) Unsuitable weather or other conditions considered unfavorable for the prosecution of the work;
b) Failure of the Contractor to correct conditions which constitute a danger to his workers or the general public, or to correct defective work;
c) Failure of the Contractor to carry out valid orders issued by the Owner or to comply with any provision of the Contract, or his persistent failure to carry out the Works in accordance with the Contract;
d) The necessity for adjusting the Drawings to suit site conditions found during construction, or in case of a change in Drawings and Specifications;
e) Failure of the Contractor to supply sufficient skilled workmen or suitable materials or equipment;
f) Failure of the Owner to supply Owner-supplied/furnished materials on time, where such failure is due to causes beyond the reasonable control of the Owner;
g) Delay by the Owner in obtaining a right-of-way, where such obligation is assumed by the Owner under the Contract, and the delay is not due to the fault or negligence by the Owner;
h) Force majeure or fortuitous event;
i) Peace and order problems; or
j) Any condition similar to the above beyond the control of the Owner (27.02).
The Contractor shall immediately comply with such order to suspend the work or any part thereof for such period or periods and in such manner as the Owner may direct, and during such suspension shall properly protect and secure the Work.
The Contractor shall be entitled to an equitable adjustment of Completion Time and Contract Price for suspension of work due to Items [a], [d], [f], [g], [ h], [i] & [j]. However, for Item [a], no such adjustment shall be allowed if unsuitable weather conditions were taken into account in determining the Completion Time as provided for in the Bid Documents. If the actual number of days of unsuitable weather exceeds the period taken into account in the Bid Documents, the Contractor shall be entitled to an adjustment of Completion Time and Contract Price (27.02).
ARTICLE 28: OWNER'S RIGHT TO TERMINATE CONTRACT
Can the Owner terminate the Contract without prior notice to the Contractor?
Yes, upon the occurrence of any of the following events:
If Contractor is adjudged bankrupt or insolvent;
If Contractor makes a general assignment of his assets for the benefit of his creditors;
If a trustee or receiver is appointed for the Contractor or for any of the Contractor's property; or
If the Contractor files a petition for suspension of payments, or to reorganize under the bankruptcy law (28.01).
Are there instances when the Owner is required to give prior notice before terminating the Contract?
Yes, the following grounds for termination with cause require 15 days' written notice::
The Contractor repeatedly fails to supply, based on the construction schedule, the sufficient number of skilled workmen or suitable materials or equipment;
The Contractor repeatedly fails to make without just cause prompt payments to subcontractors for labor, materials or equipment, and completion of the Work is being delayed;
The Contractor disregards the Laws or orders of any public body having jurisdiction;
The Contractor otherwise violates in any substantial way any provision of the Contract; or
Slippage of the Contractor in excess of 25% in the prosecution of work per agreed construction schedule plus any time adjustment duly granted to the Contractor (28.02).
What happens if an Owner terminates the contract with cause?
Subject to Articles 29.02 and 29.03, last paragraph below, the Owner may exclude the Contractor from the site and take possession of the Work and of all the Contractor's tools, appliances, construction equipment and machinery at the site and use the same and incorporate into the work all materials and equipment stored at the site including those stored elsewhere for which the Owner has paid the Contractor, and finish the work as Owner may deem expedient. In such case, the Contractor shall not be entitled to receive any further payment until the work is finished (28.02).
[NOTE: It should be made clear that the Owner shall credit the Contractor for the value of all such tools, materials and equipment which are integrated into and form part of the Work, and for the rental value of the use of equipment. The excess or unused materials, unused equipment as well as the heavy equipment shall be returned to the Contractor after use.
[This provision is intended to allow the Owner only to possess them in order to use them if it should be necessary to complete the Project, if possible, on time and within budget. It should not be interpreted to mean an appropriation/ confiscation of such materials and equipment as additional damages.]
Can the Owner terminate the contract without cause?
Yes, upon 15 days' written notice to the Contractor, the Owner may, without prejudice to any other right or remedy, elect to abandon the work ,or terminate the Contract for its convenience.. In such case, the Contractor shall be paid for all work executed and any expense sustained plus reasonable termination costs (28.03).
ARTICLE 29: OWNER'S RIGHT TO PROCEED WITH THE WORK AFTER REDUCTION IN CONTRACTOR'S SCOPE OF WORK; PARTIAL TAKEOVER FROM CONTRACTOR
When can an Owner elect to carry out the Work?
The Owner may, after seven (7) days following receipt by the Contractor of written notice and without prejudice to any other remedy the Owner may have and without terminating the Contract, elect to carry out the work if the Contractor:
Repeatedly fails to supply sufficient skilled workmen or suitable materials or equipment;
Repeatedly fails to make prompt payments to subcontractors for labor, materials or equipment;
Fails within a mutually agreed time after written notice of the Owner to carry out remedial or repair work;
Fails despite repeated remedial work to rectify the defects or the result of remedial work does not conform to the specifications;
Fails to perform the Work in accordance with the Contract (29.01).
In such cases, an appropriate change order shall be issued deducting from the payments due the Contractor the cost of carrying out the specific work. This can also include the compensation of additional services made necessary by such default. If the payments are worth more than what was owed to the Contractor, he or she shall pay the difference. (29.01).
What happens to the materials and equipment at the site?
The Contractor, upon receiving notice of termination of the Contract, shall vacate the site and deliver possession of the Work, or the parts thereof specified in the notice, to the Owner and promptly remove all his materials, plant, appliances and other essential equipment from the site, except those which the Owner may need for the construction of the project. At the option of the Owner, they shall remain on the site until the Work is completed. The Owner shall credit the Contractor with a reasonable rental for the use the same.
In case such materials and/or equipment do not belong to the Contractor, then the Owner, provided it does not violate the lease contract of the Contractor, shall have the option to retain them for use in the project and pay reasonable rent directly to the lessor for their use, chargeable against the Contractor (29.02).
The Owner shall then take over the work, and use such tools, appliances and materials of every description as may be found at the site for the purpose of completing the Work (29.03).
How much does the Owner pay the Contractor if the former takes over the work?
Upon such termination of this Contract, the Owner will ascertain and fix the value of the work completed by the Contractor and not paid for by the Owner and of all usable materials of the Contractor taken over by the Owner at the time of said termination.
If the cost to the Owner of completing the work is not in excess of the Contract Price, then the difference between them may be applied to settle claims filed against the Contractor, and the balance may be paid to the Contractor. No amount in excess of the combined value of the unpaid completed work, retained percentage and usable materials taken over by the Owner at the time of the termination of the Contract shall be paid to the Contractor until the completion of the work (29.04).
In case of suspension of work, all unpaid work executed including costs incurred during suspension shall be charged to the Owner (29.04).
Can the Owner recover damages from the Contractor?
Yes. neither the taking over by the Owner of the work for completion by administration nor the re-letting of the same to another Contractor shall be construed as a waiver of the Owner's rights to recover damages against the original Contractor and/or his sureties for the failure to complete the work as stipulated.
In such case, the Owner may be able to recover:
Liquidated damages which may have accrued up to the day before the Owner effectively takes over the work or the date of substantial completion whichever occurs earlier;
The excess cost incurred by the Owner in the completion of the project over the Contract Price inclusive of re-letting the same. If the Owner completes the work by administration, the direct cost of completing the work shall include the reasonable cost of managerial and administrative services incurred from the time the Owner effectively took over the work by administration (29.05).
What are liquidated damages?
According to Article 2226, liquidated damages are those agreed upon by the parties to a contract, to be paid in case of delay in the completion of the Work. Where the Contractor refuses or fails to satisfactorily complete the Work within the specified Contract time, the Contractor shall be liable to pay the Owner liquidated damages in the amount stipulated in the Contract. Liquidated damages shall accrue from the first day of delay in completing the Work until the date of substantial completion as determined under Article 20.11.
The Owner shall claim but does not have to prove that it has incurred actual damages. Such amount shall be deducted from any money due or which may become due. The Owner may collect such liquidated damages from the retention money or other securities posted by the Contractor, whichever is convenient to the Owner. In no case, however, shall such liquidated damages exceed 1/10 of 1% for every day of delay nor shall the total sum of liquidated damages exceed ten percent (10%) of the total contract price.
If before the completion of the Work, parts or sections have already been certified as completed by the Owner's Engineer or was used by the Owner, the liquidated damages for delay shall be reduced in proportion to the value of the completed portion (29.06).
SECTION IX: RESPONSIBILITIES AND LIABILITIES OF CONTRACTOR AND OF OWNER ▾
ARTICLE 30: CONTRACTOR’S RESPONSIBILITY FOR ACCIDENTS AND DAMAGES
What are the safeguards that should be undertaken by the Contractor?
The Contractor shall take all necessary precautions for the safety of employees and workmen on the Work, and comply with all Laws to prevent injury to persons on, about, or adjacent to the premises where the Work is being performed.
The Contractor shall erect and properly maintain at all times, as required by the conditions and progress of the work, such as barriers, shoring, supports, braces, lights, danger signs and necessary safeguards, as will protect workmen and the public and as will effectively prevent any injury to persons and damage to property in consequence of his work.
The Contractor shall designate a responsible member of his organization at the site, whose duty shall be the prevention of accidents and damage to the Work, the Owner's property, and adjoining property. The name and position.
The Contractor shall be primarily responsible for all safety measures in prosecuting the Work in accordance with the safety manual approved by the Construction Industry Authority of the Philippines (CIAP) (30.01).
Will the owner be responsible for the death or injury of the Contractor or his employees from any source or cause by or to the Contractor's plant or materials? What about damages caused by the Contractor or his employees to any property of the Owner and adjoining property?
No. Article 30.02(a)states that the Contractor shall indemnify and save harmless the Owner from and against all losses and all claims, demands, payments, suits, actions, recoveries, and judgment of every nature and description brought or recovered against him, for any act or omission of said Contractor, or of his agents or employees, in the execution of the Work or the guarding of it.
Who will pay for the repair and damages of the Contractor?
Claims for payment and repairs for damages for which the Contractor is liable shall be settled by the Contractor at his own expense. (30.02[b])
What if the Contractor fails to repair and pay claims?
The Owner may repair the same and pay the claims, and deduct the entire cost of such repairs and claims from the payments due the Contractor.
What if the Contractor defaults?
The Owner shall have the right to undertake reasonable safety and protection measures, and charge the cost of such measures to the Contractor. (30.03)
ARTICLE 31: CONTRACTOR’S INSURANCE AND BONDS
What are the kinds of insurance required of the Contractor?
What is the purpose for securing an insurance?
To protect himself, his sub-contractors, and the Owner from claims for bodily injury, death or property damage.
Can the Contractor commence work without insurance and subsequently acquire one?
No, the Contractor shall not commence work under the Contract until he has obtained the insurance coverage required and shall have filed the insurance.
Is there any special clause that should be provided for in the Insurance policy?
Yes, the insurance policy shall contain a clause providing that it shall not be cancelled by the insurance company without written notice to and approval of the Owner. The nature, extent and amount of such insurance coverage shall be as agreed upon between the Owner and the Contractor. The Contractor shall ensure that such insurance policy is effective during the execution of the Work.
Accident Insurance for workers
In addition to compulsory coverage of workers under the workmen's compensation law, the Contractor must obtain insurance coverage for accidental death or injury of his officers, employees and laborers without regard to their tenure of employment as permanent or regular workers. The amount of the coverage shall be at least P100,000 per worker. The Contractor shall pay the appropriate premiums without any cost to those covered by the policy.
In addition to such Fire Insurance as the Contractor elects, he must secure and maintain the policies upon such structures and materials and in such amounts as shall be designated in the joint names of the Contractor and the Owner as their respective interest may appear.
What are the bonds required of the Contractor?
Performance and Payment Bond
How much is the performance bond?
15% of the Contract amount for the faithful performance of his work; and
15% bond covering Contractor's obligations arising from the Contract to its workers, subcontractors and suppliers.
How long will the bond remain in effect?
It shall remain in effect until replaced by the Contractor's guarantee bond.
When will the performance and payment bond be released?
Upon posting by the Contractor of a Guarantee Bond equivalent to the amount of the retention released to the Contractor.
For how long should the Guarantee Bond be held by the Owner?
For a period of one (1) year commencing from the date of posting as a guarantee that all materials and workmanship installed under the Contract are of acceptable quality.
What if the Contractor gets a sub-contractor to do its work, who shall guarantee for the sub-contractor?
The Contractor shall secure guarantees from said sub-contractors and deliver copies of the same to the Owner upon completion of work. The term "guarantee" shall include "warranty".
What are the other guarantees by the Contractor?
All work performed by him directly and for which guarantees are required.
For a period of one year, or for a longer period where so provided in the Specifications, all materials and workmanship installed under the Contract are to be of acceptable quality in every respect and to remain so during the guarantee period.
Repairs and necessary work to correct defective work to the Owner's satisfaction. This shall be done at Contractor's exclusive expense and shall be commenced within five (5) days after receipt of written notice by the Owner.
What if the contractor fails to commence or do the work so ordered?
The Owner may have the work done by another contractor and charge the cost against monies retained as provided for in the Contract and/or against his sureties.
What is the effect of the surety or bondsman issuing any bond called for in the Contract?
He is deemed conclusively to have accepted the mandatory conditions, and any provision thereby issued or in any document made prior to, concurrent with, or after the issuance of the bond which tends to nullify, modify, or limit by time or otherwise, any right of the Owner shall be void and shall not prevail over the mandatory conditions.
What are the mandatory conditions of these bonds?
The surety or bondsman agrees in advance to future novation/s of the bond either by adjusting the scope of the Contractor's work caused by directed or constructive changes, the Completion Time or the Contract Price. Where the Contract provides that the Contractor shall obtain the approval of the surety or bondsman to any such adjustment, the required approval shall be deemed to be a mere formality, the absence of which shall not affect the obligation and liability of the surety or bondsman under the bond.
The bond issued shall continue to have force and effect beyond the effectivity period stated in the bond if the work or the obligation for which it was issued has not been completely performed. This is without prejudice to the right of the surety or bondsman to demand from the Contractor the payment of the premium on the bond or to the right of the Owner to pay such unpaid premium for the Contractor. The additional premium on the bond for an extension of the Contract time due to reasons other than the fault or negligence of the Contractor shall be billed at cost to the Owner. The bond may not be cancelled or otherwise terminated by the bondsman or surety without the express written consent of both the Owner and the Contractor. the right of the surety shall be limited to demand the payment of unpaid premium.
The Owner shall have a right of recourse against the surety on the bond until (a) it is cancelled by the Owner and returned to the Contractor, (b) it is replaced by another bond unless the Owner reserves the right to recover against the former bond due to default of the Contractor, (c) the Owner issues to the Contractor an unconditional Certificate of Acceptance of the Work.
Until the Owner takes over the work or terminates the Contract, the Contractor shall not be deemed in default notwithstanding the reduction of the Contractor's scope of work and any assistance provided by the Owner to enable the Contractor to catch up and complete the remaining work. The Owner's assistance to the Contractor shall not prejudice nor limit the right of the Owner to have a later recourse against the bond.
The Owner's remedies are without prejudice to its rights under the Civil Code and other applicable laws.
ARTICLE 32: Owner's Responsibilities and Liabilities
What are the responsibilities and liabilities of the Owner?
How much should the advance payment to the Contractor be?
The advance payment should be in an amount to be mutually agreed upon by the Owner and the Contractor.
What is the purpose of the advance payment?
The Contractor shall use the advance payment for mobilization, purchase of materials, and the like for the project. This shall be recouped pro rata in the progress billings.
iii. Are there any conditions before any advance payment is made?
The Contractor shall post a surety bond of equivalent amount callable on demand and acceptable to the Owner to guarantee its repayment.
When is a bond callable on demand?
A bond is callable on demand when the surety is obliged to pay the Owner upon its call. It means payable on demand.
Protection of employees and professionals performing services for the Owner
The Owner shall be responsible for and shall maintain such insurance as will protect him from liability for personal injury including disease and death of persons under his employ or service whether as temporary or permanent in status that are assigned to the project.
Owner's optional Insurance
What is the purpose of this?
To protect him from his contingent liability for damages, for personal injury, including death, which may arise from the work under the Contract.
Additional information and services required of the Owner
The Owner shall, at the request of the Contractor, at the time of the execution of the Contract, furnish to the Contractor reasonable evidence that the Owner can fulfill its obligations under the Contract. Unless such reasonable evidence is furnished, the Contractor may not be required to execute the Contract or to commence or continue the Work.
ARTICLE 33: Liens, Disputes, and Arbitration
Can the Contractor release the Work even though there are legal liens attached to it?
No. The Contractor shall release the Work from any legal liens attaching therewith as a result of unpaid claims of subcontractors and/or suppliers for the supply of materials and/or equipment to the Contractor for the project.
What documents should be executed by the Contractor in respect of any such legal liens?
A sworn statement by the Contractor or a duly authorized officer of the Contractor stating that all such claims have been fully paid; and furnishing the Owner, when required, with receipts or acknowledgements of payment issued by the subcontractors and/or suppliers.
What will happen if any of such claims remain unpaid as of the time of executing the sworn statement?
The Contractor shall furnish the Owner with an indemnity bond equal to the amount of the claims still unpaid. The indemnity bond may be issued by the surety which previously issued the Contractor's performance bond or any other bond required under the Contract or by any other surety acceptable to the Owner. The Owner may recover against the Contractor and/or surety, on the latter's indemnity bond, any amount paid by the Owner to discharge such liens, including costs incurred incident thereto and a reasonable amount of attorney's fees.
Can the Contract be assigned?
No, the Contract may not be assigned in whole or in part. Any purported assignment made of the Contract or any part thereof without the consent of either party shall be void and ineffective. (33.02[A])
May the Owner exact full compliance from both the Contractor and assignee?
Yes, he may do so even without waiving his right at any time thereafter to reduce the Contractor's scope of work by removing from the Contractor the part of the work which was assigned and giving it to any other contractor and/or terminating the Contract in either case, without any further cause than the assignment. [33.02(B)]
May the Owner request for contracts entered into by the Contractor with any other person?
Yes, the Owner may request any contract, agreement or binding written commitment entered into by the Contractor either before or after the execution of the Contract, with any other person as cooperator, consortium member, joint venture member, or supplier of equipment, technology, materials or services for the joint execution of the Work. (33.02[C])
What if the Owner finds that such contract entered into by the is a disguised assignment of the Contract?
The Owner shall notify the Contractor and shall have the rights under Article 33.02(B).
May the Contractor subcontract the Contract?
Yes. The Contractor may subcontract any part of the Contract with the approval of the Owner (33.03).
What are the conditions the Owner may impose for the approval of the subcontract?
That the subcontract shall be submitted to the Owner and the subcontract must require the subcontractor to obtain the same bonds and insurance coverage as are required of the Contractor under the Contract,
That the Contractor furnish the Owner copies of these insurance policies and bonds (33.03).
What is nominated subcontractor?
A nominated subcontractor is one selected by the Owner to carry out an element of the work requiring specialized skills and experience, whose scope of work, terms and prices are pre-negotiated with the owner and, as such, are imposed on the Contractor.
What is the Contractor’s liability to the Owner for the fault or negligence of the nominated subcontractor?
May the Owner entrust to his authorized representative the determination of matters which under the Contract require his acceptance, approval, or decision?
Yes, the Owner may, within a period of 15 days, entrust these to his authorized representative who shall act as his agent and whose determination binds the Owner.
What if the Contractor disagrees with the determination by the Owner or his representative?
Such disagreement shall be brought before an adjudicator, who shall be jointly engaged by the Owner and the Contractor, not later than fifteen (15) days before the commencement of the Work to resolve conflicts arising from the foregoing determination by the Owner or by his representative.
What if either party disagrees with the resolution of the adjudicator?
Such shall be deemed as a dispute which may be submitted to arbitration.
SETTLEMENT OF DISPUTES
Dispute or agreement submitted to Arbitration
What law governs disputes?
Disputes shall be referred to and finally be resolved by arbitration under the Rules of Procedure Governing Construction Arbitration promulgated pursuant to Executive Order No. 1008 (Construction Arbitration Law) by one or panel of three (3) arbitrators appointed in accordance with such Rules.
Where should arbitration take place?
The place of arbitration shall be in Metro Manila, Philippines.
How should the claim be done?
By filing a claim with the Construction Industry Arbitration Commission.
What is the effect of entering into a Construction Contract?
A party to a Construction Contract for a project in the Philippines shall, by entering into the same, be deemed to be submitting himself to the jurisdiction of the Construction Industry Arbitration Commission with regard to any dispute arising out or in connection with the Contract.
To whom should a claim be served?
His co-venturer, partner or authorized representative, notwithstanding any statement to the contrary in the Agreement, Contract Documents, or any other communication to the other party or after entering into the Contract, unless he has filed with the Construction Industry Arbitration Commission an irrevocable special power of attorney authorizing another person or entity to receive by personal service at a definite address in Metro Manila, Philippines such claim, notices, and processes.
What if a party, his co-venturer, or authorized representative declines service of such claim or notice? What if they cannot be found at his given address?
Such service shall be made upon the said party by filing the same with the Construction Industry Authority of the Philippines (CIAP) at its office address, and filing the claim, notice, or process shall complete the service upon the party concerned.
SECTION X - OWNER'S REPRESENTATIVE ▾
Who may be allowed to be a Representative of the Owner?
The Owner's Representative shall either be the Architect, the Engineer, Construction Manager or other person designated by the Owner as the Owner's Representative.
When should the Owner give the notice of appointment?
At the time of the Notice to Proceed or anytime thereafter.
When can the Owner's Representative's authority be deemed full and unqualified?
When the Owner does not notify the Contractor in writing the limits of authority of the Owner's Representative.
What if there is no written communication by the Owner to the Contractor notifying the latter of the designation of a particular person as Owner's Representative?
The Architect shall perform the functions and have the authority of the Owner's Representative if the project involves construction of a building.
The Engineer shall perform the functions and have the authority of the Owner's Representative if the project involves construction of an engineering structure, other than a building, or the construction of a building if it constitutes only minor portion of the project.
What are the other functions of an Owner's Representative?
He shall also perform the function of a Construction Manager unless the Owner designates another person as Construction Manager. If the Owner designates another person as Construction Manager and define his functions, those functions of a Construction Manager not delegated to the latter shall be performed by the Owner's representative.
To whom should communications to the Owner be coursed through?
Notwithstanding the designation by the Owner of an Architect, Engineer and/or Construction Manager, communications between the Contractor and the Owner shall be made only through the Owner's representative.
SECTION XI - SCHEDULE OF TIME LIMITS ▾
When is the Contract Time Reckoning?
The Contractor shall Commence the Work within seven (7) days from receipt of Notice to Proceed unless the notice or the Contract provides for a later date. (21.02)
When shall the Request for Time be filed?
The Request for Time shall be filed within fifteen (15) days from occurrence of event which caused the delay (21.04)
When should the Breakdown of Work & Corresponding Value be submitted?
The Breakdown of Work & Corresponding Value should be submitted within fifteen (15) days from receipt of the Notice to Proceed. ( 22.01)
When should notice be given to Owner for Claim for Extra Cost?
The Claim for Extra Cost should be submitted within fifteen (15) days: (a) after receipt of instruction involving extra cost; or (b) after recognition of delay due to Owner's fault. ( 20.08)
What is the period within which the Owner should act on Payment Request?
The Owner should act on payment request within thirty (30) days after receipt thereof( 22.05)
What is the period within which the Owner should act on Final Payment Request?
The Owner should act on final payment request within thirty (30) days from receipt thereof ( 22.05)
When should interest accrue for delayed payment by Owner?
Delay in payment of the amount due shall entitle the Contractor to interest from due date based on the thirty (30) day loan rate of the Land Bank of the Philippines. (22.05)
When should the retention be released?
Not later than sixty (60) days from substantial completion upon posting of Contractor's Guarantee Bond. (22.11)
SUBSTANTIAL COMPLETION AND ITS EFFECTS
When is there substantial completion?
If the Contractor completes ninety-five percent (95%) of the work; or the Owner approves the Contractor's billing for completing at least 95% of the work unless the Owner can establish that the unfinished portion prevents the normal use of the completed portion. [20.11 par. A(a) and (b)]
A Contractor who substantially completes the Work is not liable for liquidated damages, but only to damages representing the unaccomplished works.
Is the date of the Certificate of Substantial Completion or equivalent document controlling?
No, if substantial completion is shown to have been attained earlier, unless the Contractor accepts the certificate without taking any exceptions thereto in writing within fifteen (15) days from receipt of certificate. [20.11 par. A(c)]
CORRECTION OF WORK
When should the Contractor receive the punch list/s?
The Owner shall issue the punch list/s which the Contractor must receive not later than thirty (30) days from date of substantial completion. (20.11 par C[a])
When can the Owner add to the punch list items?
The Owner may add to the punch list items but only as to corrective work in the original punch list/s not later than sixty (60) days from substantial completion. (20.11 par. C[b])
What is the prescriptive period for the Owner to correct, remove, replace poor or inferior work of the Contractor?
The Owner has one (1) year from date of final payment to condemn poor or inferior work, otherwise, instructions to remove or replace such shall be treated as change order. (22.10)
When should known defects be corrected by Contractor?
The Contractor has thirty (30) days from receipt of the last item in the punch list to complete the corrective works. 20.12 and 20.13)
CONTRACTORS RIGHT TO SUSPEND WORK OR TERMINATE CONTRACT
What are the instances when a Contractor suspend work or terminate Contract?
If any court or other public authority orders work to be stopped or suspended for ninety (90) days through no fault of the Contractor or his employees;
If Owner fails to pay Contractor the approved request for payment within thirty (30) days from receipt;
If Owner fails to pay Contractor the agreed sum within thirty (30) days after its award by arbitrators;
If the Owner suspends the work without just cause for more than fifteen (15) days without Contractor's consent;
If the Owner fails to deliver at the construction site Owner-supplied/furnished materials and/or equipment, for work along the critical path beyond fifteen (15) days after its scheduled delivery date; and
If approval of Variation Orders for additional works along the critical path is delayed beyond fifteen (15) days after submission for approval by the Owner.
OWNER'S RIGHT TO TERMINATE CONTRACT
When can the Owner immediately and without notice terminate the Contract?
If the Contractor should declare bankruptcy, become insolvent or assigns his assets for the benefit of his creditors or appointment of trustee/receiver for Contractor or any of its property.
When can the Owner terminate the Contract after giving fifteen (15) days written notice to the Contractor or his Surety?
If the Contractor:
Disregards or violates provisions of the Contract Documents or Owner's instructions;
Fails to provide skilled superintendent, workmen or suitable materials or equipment;
Fails to make prompt payment to subcontractors, for labor or materials or equipment;
Disregards the authority of the Owner's Representative;
Violates in any substantial way any provisions of the Contract Documents;
Repeatedly delays prosecution of work per agreed Construction Schedule and/or PERT/CPM plus any time extension duly granted the Contractor
When should the Owner or his representative act on all matters under the Contract?
The Owner or his representative shall act within a period of fifteen (15) days on all matters under the Contract requiring the Owner's approval, acceptance or decision.
What is the period within which the Contractor may submit to the adjudicator his disagreement with the determination made by the Owner?
If the Contractor disagrees with the determination by the Owner or his representative, the same shall be submitted to an adjudicator to be jointly engaged within fifteen (15) days before the commencement of the work. If either party disagrees with the resolution of the adjudicator, such shall be deemed a dispute that may be submitted to arbitration.
When should the guarantee bond be furnished?
Upon release of retention.
How long will it be effective?
One year commencing from the date of acceptance as guarantee that all materials and workmanship installed are of good quality.
Transcept Construction and Management Professionals, Inc. v. Aguilar, G.R. No. 177556, 8 December 2010.
Constructors Performance Evaluation System (CPES)
WHAT IS CPES? ▾
CPES is a uniform rating system for evaluating the performance of constructors based on a set of criteria.The evaluation is done at certain stages during the actual construction of the project, and upon its completion.
WHAT LAW GOVERNS THE IMPLEMENTATION OF CPES? ▾
The implementation of CPES is governed by Section 12, Annex E of the Implementing Rules and Regulations (IRR) of RepublicActNo. 9184 (Government Procurement Reform Act). This law states that, all government procuring entities implementing infrastructure projects are mandated to evaluate the performance of constructors using the CPES. This requirement covers all national government agencies, department, bureau, office, or instrumentality of the Government, including Government-Owned and/or Controlled Corporations (GOCCs), Government Financial Institutions (GFIs), State Universities and Colleges (SUCs) and Local Government Units (LGUs).
HOW DOES THE CPES PROGRAM STARTED? ▾
In 1990, the Philippine Constructors Association (PCA), in cooperation with the CIAP held the 1st Philippine Construction Industry Congress which recommended all government agencies to submit to the Construction Industry Authority of the Philippines (CIAP) information on the performance of constructors in their projects to be the basis for determining their contracting capacity for purposes of awarding a project.
Taking cognizance of the value of the above recommendation, the CIAP, through one of its implementing boards, the Philippine Domestic Construction Board (PDCB), spearheaded the development of the CPES, by creating several working committees composed of representatives from government and private agencies. This is the same committee who formulated the 1st CPES Implementing Guidelines which was finally approved by the National Economic and Development Authority—Committee on Infrastructure (NEDA-InfraCom) on 30 January 1998 and implemented in 2000.
WHAT DOES CPES HOPE TO ACHIEVE? ▾
The CPES is envisioned to provide information on the performance of constructors in government projects which may be used as basis for prequalification/eligibility check of constructors, agency shortlist, awarding of contracts, project monitoring and control, blacklisting of constructors, policy review/formulation, industry planning, and credential/incentives/award.
In addition, this systematic monitoring and evaluation of constructor’s performance, will give the following benefits to the construction industry:
Early detection of problem areas encountered in the project and determination of appropriate corrective actions;
Provide necessary safeguards to ensure that the interest of government is at all times protected;
Contribute to the continuous improvement of the country’s construction capability.
WHO IS IN CHARGE OF CPES IMPLEMENTATION? ▾
The CIAP through the PDCB ensures that the CPES is implemented by concerned agencies of the government.
WHAT ARE THE OBJECTIVES OF CPES? ▾
Establish a uniform set of criteria for rating the performance of constructors;
Develop a centralized base of information on the performance rating of constructors which can be used as reference for licensing, eligibility, screening, quality improvement, and other purposes of government agencies, project owners, financing institutions, insurance companies and other interested parties; and
Contribute in ensuring that infrastructure projects are conformed with the specified requirements of project owners.
WHO WILL BE EVALUATED USING CPES? ▾
All constructors (local, foreign, joint ventures and consortia) licensed by the Philippine Contractors Accreditation Board (PCAB), and undertaking public construction projects in the Philippines are covered by the CPES.
HOW MANY TIMES SHOULD A PROJECT OF CONSTRUCTOR BE EVALUATED? ▾
Except for those projects with a duration of 90 calendar days and below which may be subjected to at least one (1) visit, all projects shall be subjected to a minimum of two (2) evaluations. However, more than two (2) evaluations may be conducted for very large and complex projects if the situation so warrants.