A. CONTRACT TIME
B. CONTRACT SUM
C. PROGRESS/FINAL PAYMENT
D. SUBSTANTIAL COMPLETION AND ITS EFFECTS
E. CORRECTION OF WORK
F. CONTRACTORS RIGHT TO SUSPEND WORK OR TERMINATE CONTRACT
G. OWNER’S RIGHT TO TERMINATE CONTRACT
I. GUARANTEE BOND
Transcept Construction and Management Professionals, Inc. v. Aguilar, G.R. No. 177556, 8 December 2010
ARTICLE 30: CONTRACTOR’S RESPONSIBILITY FOR ACCIDENTS AND DAMAGES
ARTICLE 31: CONTRACTOR’S INSURANCE AND BONDS
A. Liability Insurance
B. 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.
C. Fire Insurance
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.
A. Performance and Payment Bond
B. Guarantee Bond
D. Other remedies
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
A. Advance Payment
B. 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.
C. Owner’s optional Insurance
ARTICLE 33: Liens, Disputes, and Arbitration
A. 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.
B. 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.
C. 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.
A. 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])
B. 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)]
C. 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])
D. 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).
A. May the Contractor subcontract the Contract?
Yes. The Contractor may subcontract any part of the Contract with the approval of the Owner (33.03).
B. What are the conditions the Owner may impose for the approval of the subcontract?
C. 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.
D. What is the Contractor’s liability to the Owner for the fault or negligence of the nominated subcontractor?
A. 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.
B. 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.
C. What if either party disagrees with the resolution of the adjudicator?
Such shall be deemed as a dispute which may be submitted to arbitration.
V. SETTLEMENT OF DISPUTES
A. Dispute or agreement submitted to Arbitration
B. Substituted Service
ARTICLE 26: CONTRACTOR’S RIGHT TO SUSPEND WORK OR TERMINATE CONTRACT
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).
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
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).
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).
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
Yes, upon the occurrence of any of the following events:
Yes, the following grounds for termination with cause require 15 days’ written notice::
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.]
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
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:
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).
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).
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).
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:
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).
ARTICLE 23: 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).
ARTICLE 24: CONTRACTOR-SEPARATE CONTRACTORS RELATIONS
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).
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
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).
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).
ARTICLE 19: LABOR
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
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).
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).
Yes. The Owner may conduct inspections of the Work.
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).
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).
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).
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)
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).
The value of any extra work or change shall be determined by the Owner in any one or more of the following ways:
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)
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).
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).
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).
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:
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.
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).
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).
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).
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).
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
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).
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).
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)
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).
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:
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).
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
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).
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.
Yes, the Owner may deduct from any payment due the contractor for:
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).
Yes, for the construction of buildings, the Contractor shall submit, before final payment, several documents including:
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:
NOTE: include provision where contract is terminated before completion of the Work.
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:
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”.
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…”
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 16: PROTECTION OF WORK AND OWNER’S PROPERTY
In order for the Contractor to protect the Works and the Owner’s property, he must:
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).
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
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).
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
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).
ARTICLE 14: USE OF 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
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.
No, the Contractor is not obliged to do so (15.02), unlike his obligation to provide a temporary office (15.01).
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).
From the commencement of the Work and until its completion, the Contractor shall:
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).
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).
He may, at his own expense, make a trial usage with prior notice to and for the Owner’s benefit (15.05).
ARTICLE 8: GENERAL
All materials and equipment must conform to all Laws which may be in force and applicable during the period of construction (8.01).
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).
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
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).
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
Not in all cases. The Contractor shall furnish for approval samples as specified or required (10.01).
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 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]).
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.
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).
Unless the 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).
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]).
The Contractor is responsible for the move and shall do so at his own expense (10.05[c]).
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).
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).
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
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
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
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.
Where reference is made to the manufacturer’s directions, the Contractor shall submit the specified number of copies of such directions to the Owner.
ARTICLE 6: LAWS AND SITE CONDITIONS
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).
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
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).
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).
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).
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).
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).
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).
ART. 1: DEFINITIONS
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 contract or duly registered and licensed by the Philippine Contractors Accreditation Board who signs a construction Contract with the main 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.
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 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).
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).
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.
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).
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).
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).
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:
‘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
The intent of the Contract is to include all labor, materials, equipment and transportation necessary for the proper execution of the Work (2.01).
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).
Article 2.03[a] provides for the following rules:
(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.
(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.
In addition to the above rules:
No. If the Contract provides for a different set of rules of interpretation, those shall be followed (RULE 7, 2.03[a]).
“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.
Articles 1370 to 1379 of the Civil Code cover the rules on interpretation of contracts under Civil Law. Foremost among these rules are:
Rule 130(B)(4) of the Revised Rules of Evidence provides for the rules on interpretation of documents.
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]).
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.
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]).
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]).
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:
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).
The Contractor shall give notices or submissions in a timely manner so as to avoid delays in the Work (2.06).
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).
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).
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).
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.
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).
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
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).
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).
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
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).
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
Shop drawings represent:
Shop drawings shall be dated, numbered consecutively, and shall contain:
The Contractor shall prepare the shop drawings at his own expense (5.01).
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]).
No. The Owner must first give his approval before the Contractor can execute such work (5.04[c]).
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.
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:
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).
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).
If the drawings are approved:
If the drawings require corrections and/or are disapproved by the Owner:
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.
3. 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.
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.
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.
The CIAP through the PDCB ensures that the CPES is implemented by concerned agencies of the government.
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:
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.
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).
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.
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