PRACTICE OF PROFESSION IN THE Its decisions will become final and executable after PROFESSION APO

PHILIPPINES the lapse of period to file an appeal. 1. Civil Philippine Institute of Civil
Definition of a Professional 2. Legislative Engineering Engineers (PICE)
In the Philippines, a professional is a person PRC formulates rules and policies on 2. Electrical Institute of Integrated
who has completed a prescribed university course. professional regulation. PRC also reviews, revises, Engineering Electrical Engineers (IIEE)
He/she passed a licensure examination. He/she has and approves resolutions, embodying policies 3. Electronics Institute of Electronics and
been issued a Certificate of promulgated by the Professional Regulatory Board. Engineering Communications Engineers
Registration/Professional ID Card or Professional When these rules and policies are published, these of the Philippines (IECEP)
Tax Receipt (PTR). He/she is a member of good have the force and effect of the law. 4. Mechanical Philippine Society of
standing of an accredited professional organization 3. Executive Engineering Mechanical Engineers
(APO). He/she follows a set of standards/codes of PRC administers, implements, and enforces (PSME)
practice and adheres to professional code of ethics. the regulatory policies of the national government.
Professionals are under the control and supervision PRC is charge in administering and conducting Guidelines and Instructions for Engineering
of PRC. licensure examinations. The regulatory policies Licensure Examination
Professional Regulation Commission (PRC) include primarily the maintenance of professional The respective PRBs conduct the
It is a government agency mandated under and occupational standards and ethics and the examinations under the supervision/administration
RA 8981 (An Act Modernizing the Professional enforcement of the rules and regulations relative of the PRC. The following table shows
Regulation Commission. It is an act to support the thereto. Requirements for those who wish to apply for
PD 223 (“Creating the Professional Regulation Professions in the Philippines licensure examination of engineering professions
Commission and Prescribing its Powers and There are 42 professions under the mandated by each corresponding law.
Functions, and for other Purposes”). There are 42 supervision of PRC. Each profession has its Enginee Admission Mandat
professions under its control and supervision. The corresponding Professional Regulatory Board ring Requirements ing Law
only profession not under PRC is Law which is (PRB), except the Merchant Marine Profession Professi
under the Supreme Court of the Philippines. which has two PRBs. Each professional should be a ons
member of its corresponding Accredited 1. a. Citizen of the RA
SUMMARY OF FUNCTIONS OF PRC Professional Organization (APO). For example, Chemical Philippines 9297(05
There are many functions of PRC and these Philippine Institute of Chemical Engineers Engineer b. Good moral character -13-04):
functions can be grouped into three categories. (PiChE) is the corresponding APO for the Chemical ing c. BS Chemical The
These categories are Judicial, Legislative, and Engineering profession. Each APO provides Engineering graduate or Chemica
Executive. assistance and coordinates with PRC in matters its equivalent from a l
1. Judicial relating to professional practice. The following able government-recognized Engineer
PRC investigates cases filed against gives some engineering professions and its school/institute/college/u ing Law
examinees and professionals under its control and corresponding APO. niversity
supervision. It has the same level of authority of a
Regional Trial Court making its decisions have the
force and effects of the decisions of a court of law.
2. Civil a. At least 21 years old RA d. Has not been involving moral Engineer
Engineer b. Citizen of the 544(06- convicted of an offense turpitude ing Act
ing Philippines 17-50) involving moral c. Registered Mechanical of 1998
c. Good reputation/moral as turpitude Engineer/ holder of a
character amended e. BS Electrical valid Certificate of
d. Graduate of a Civil by RA Engineering graduate Registration/
Engineering course from 1582(06 from a government- Professional license
school/institute/college/u -16-56): recognized d. Four years of more
niversity recognized by The school/institute/college/u active Mechanical
government Civil niversity Engineering practice
Engineer e. Competent to practice
ing Law 4. a. Citizen of the RA 9292 as attested by at least two
3. For Professional RA Electroni Philippines or foreign (Repeali professional mechanical
Electrical Electrical Engineering 7920(02 cs country under foreign ng RA engineers
Engineer a. Citizen of the -24-95): Engineer reciprocity provisions 5734)(0 For Registered
ing Philippines New ing b. Good moral character/ 4-17- Mechanical Engineer
b. Good reputation with Electrica has not been convicted of 04): a. Citizen of the
high moral values l an offense involving Electron Philippines
c. Has not been convicted Engineer moral turpitude ics b. Has not been
of an offense involving ing Law c. BS Electronics and Engineer convicted of a crime
moral turpitude Communications ing Law involving moral
d. Registered Electrical Engineering or of 2004 turpitude
Engineer with valid Electronics Engineering c. BS Mechanical
Certificate of graduate or its equivalent Engineering graduate
Registration/ from a government- from a government-
Professional license & recognized recognized
with at least 4 years of school/institute/college/u school/institute/college/u
active practice niversity niversity
For Registered Electrical 5. For Professional RA
Engineer Mechani Mechanical Engineering 8495(02
a. Citizen of the cal a. Citizen of the -03-98): General Instructions to Examinees
Philippines Engineer Philippines Philippi 1. Report to the Test Center before 6:30AM
b. At least 21 years old ing b. Has not been ne on the first day of examination to verify your room
c. Good reputation with convicted of an offense Mechani and seat number.
high moral values cal 2. Late examinees will not be admitted.
 3. Attend to your personal needs before the
start of examination in every subject. No examinee
will be allowed to go out of the examination room
while the examination is in progress.
4. Always put your answer sheet on top of
the armchair while taking the examination.
5. Stop answering the questions at the end
of the time allotted for the subject. Arrange your test
papers as follows; (1) Notice of Admission, (2)
Answer Sheet, and (3) Test Questionnaire.
6. Do not leave the room until; (1) your test
papers are received by your watchers, (2) you’ve
signed the Examinees Record of Attendance, (3) the
lower portion of your Notice of Admission is signed
and is returned to you by the watchers.
Prohibited Acts inside the Examination Room
1. Accepting or receiving anything,
including food from any person while the
examination is in progress.
2. Giving any consideration to the room
watchers and other examination personnel.
3. Talking about answers inside the room or
along the corridors while the examination is in
progress.
4. Writing unnecessary markings on the test
papers that are not called for in the test questions.
5. Taking out/ copying the examination test
questions.
6. Copying of answers using
communication by means of words, signs, gestures,
codes and other several acts.
7. Bringing of materials (includes
programmable calculators) not allowed by the PRC.
REVISED SYLLABI FOR THE SUBJECTS IN
THE CHEMICAL ENGINEERING
LICENSURE EXAMINATION
Introduction
According to Commission on Higher
Education, chemical engineering is a profession that
involves conceptualization, development, designs,
improvement and application of safe, health, ethical
and economic ways of utilizing materials and energy
in unit process and operations for the benefit of
society and the environment through the knowledge
of mathematics, chemistry, biology, information
technology and other natural, applied and social
sciences, gained by study, research and practice.
Thus, after finishing the course, a student is obliged
to take the licensure examination in accordance to
Sec. 14, Art. II of R.A. No. 318: “The Chemical
Engineering Law” states, to wit: “Except as
otherwise specifically allowed under the provision
of this Act, all applicants for registration for the
practice of chemical engineering shall be required to
undergo an examination as prescribed in this Act”;
and pass it at the same time and a student will be
considered as a registered chemical engineer. In
addition, according to Sec. 16 of the supra law
provides in part, to wit: “The examination shall
cover questions relating to general inorganic,
organic, analytic and industrial chemistry, applied
mechanic, chemical engineering, and engineering
law and ethics: Provided that the relative weight of
the chemical engineering subject shall not be less
than forty percent.” Meanwhile the one who will
give the content of the examination is stated in Sec.
6 of P.D. No. 223, as amended by P.D. No. 657, the
Board has the power, function, and responsibility to
determine and prepare the contents of the chemical
engineering licensure examination.
Scope of Examination
During licensure examination, the
examinees’ knowledge and understanding of the
concepts, principles, terminology, and the
application of these concepts and principles in the
solution of problems encountered in each particular
subject given in the licensure examinations. The said
examination is divided into three parts: Physical and
Chemical Principles; Chemical Engineering; and
General Engineering:
I. PHYSICAL AND CHEMICAL PRINCIPLES
A. General Inorganic Chemistry: Matter and energy,
theory of atoms and molecules, chemical periodicity,
calculation principles in chemical changes, chemical
bonding, solutions, chemical equilibrium, chemical
kinetics, and nuclear chemistry.
B. Organic Chemistry: Structural characteristics and
reaction mechanism of different organic
compounds: aliphatic, aromatics, arenas, alcohols,
aldehydes, ketones, carboxylic acids, carbohydrates,
amino acids, and proteins.
C. Analytical Chemistry: Theory and practice of
gravimetric and volumetric methods of analysis and
their application methods in the analysis of acids,
bases, salts, and minerals.
D. Physical Chemistry: Properties of gases, liquids,
solids and solutions; introduction to first and second
laws of thermodynamics; thermochemistry;
homogeneous and heterogeneous equilibria;
transference and conductance of ionized solutions;
and electrochemistry.
E. Chemical Engineering Thermodynamics: First
and second laws of thermodynamics, P-V-T
relationships of fluids, heat effects, thermodynamics
of flow processes, power and refrigeration cycles,
phase equilibria, and chemical reaction equilibrium.
II. CHEMICAL ENGINEERING
A. Chemical Engineering Calculations: Elementary
mass and energy balances; stoichiometry, principles
of equilibrium applicable to unit operations and
processes; material and energy balances applicable
to industrial process, e.g., gaseous, liquid and solid
fuels, sulfur, nitrogen compound, etc.
B. Reaction Kinetics: Principles and applications of
chemical kinetics to the design of chemical reactors.
C. Unit Operations: Principles of fluid mechanics;
heat, mass and momentum transfer; separation
processes; stage-wise operations.
D. Plant Design: Application of physical and
chemical principles in the design of industrial plants
or parts thereof involving preparation of process
flow sheets, mass and energy balances, and
equipment design.
E. Chemical Process Industries: Unit processes and
operations involved in the inorganic and organic
chemical industries.
F. Biochemical Engineering: Aspects of biological
sciences, primarily microbiology and biochemistry,
which are applicable to process industries
G. Environmental Engineering: Types of pollutants;
physical, chemical, and biological processes
applicable to pollution control and abatement.
H. Instrumentation and Process Control: Principles
and operations of a wide variety of process
instruments and the proper selection thereof for
practical industrial application.
I. Laws, Contracts, and Ethics: Legal and ethical
issues related to the practice of chemical
engineering, including intellectual property and
environmental laws.
III. GENERAL ENGINEERING
A. Mathematics: Algebra, Trigonometry, Analytic
Geometry, Differential Calculus, Integral Calculus,
Differential Equation, Statistics & Probability
Theory
B. PHYSICS: Mechanics, waves, sound, heat,
electricity, magnetism, and light.
C. ENGINEERING MECHANICS: Statics and
dynamics; free body concepts ;equilibrium of
coplanar and non-coplanar systems; analysis of
frames and trusses ;friction; centroids and moments
of inertia, motion of particles and rigid bodies; mass,
force and acceleration; work and energy; impulse
and momentum.
D. STRENGTH OF MATERIALS: Axial stress and
strain, stresses in torsion and bending, combined
stresses, beam deflections, indeterminate beams, and
elastic instability including thermal expansion.
E. ENGINEERING ECONOMICS: Introductory
financial accounting; financial mathematics: time
value of money; capital investments decision
criteria; and engineering oriented applications.
PRACTICE OF CHEMICAL ENGINEERING
PROFESSION
What Chemical Engineers do?
Chemical engineers apply the principles of
chemistry, biology, physics, and mathematics to
solve problems that involve the production or use of
chemicals, fuel, drugs, food, and many other
products. They design processes and equipment for
large-scale manufacturing, plan and test production
methods and byproducts treatment, and direct
facility operations.
Duties of Chemical Engineers
Chemical engineers typically do the following:
 Conduct research to develop new and
improved manufacturing processes
 Develop safety procedures for those working
with dangerous chemicals
 Develop processes for separating
components of liquids and gases, or for
generating electrical currents, by using
controlled chemical processes
 Design and plan the layout of equipment
 Conduct tests and monitor the performance
of processes throughout production
 Troubleshoot problems with manufacturing
processes
 Evaluate equipment and processes to ensure
compliance with safety and environmental
regulations
 Estimate production costs for management
Some chemical engineers specialize in a
particular process, such as:
 Oxidation (a reaction of oxygen with
chemicals to make other chemicals)
 Polymerization (making plastics and
resins)
 Nanomaterial (extremely small substances)
 Biological engineering
 Developing specific products
In addition, chemical engineers work in the
production of energy, electronics, food, clothing,
and paper. They must understand how the
manufacturing process affects the environment and
the safety of workers and consumers.
Chemical engineers also conduct research in
the life sciences, biotechnology, and business
services. They work mostly in offices or
laboratories. They may spend time at industrial
plants, refineries, and other locations, where they
monitor or direct operations or solve onsite
problems. Chemical engineers must be able to work
with those who design other systems and with the
technicians and mechanics that put the designs into
practice.
Chemical engineers can be exposed to health
or safety hazards when handling certain chemicals
and plant equipment, but such exposure can be
avoided if proper procedures are followed.
Chemical Engineer Work Schedules
Practically, all chemical engineers work
full time. Occasionally, they may have to work
additional hours to meet production targets and
design standards or to troubleshoot problems with
manufacturing processes.
IMPORTANT QUALITIES FOR CHEMICAL
ENGINEERS
Analytical skills. Chemical engineers must
be able to troubleshoot designs that do not work as
planned. They must be able to ask the right questions
and then find answers that work.
Creativity. Chemical engineers must be
able to explore new ways of applying engineering
principles. They work to invent new materials,
advanced manufacturing techniques, and new
applications in chemical and biomedical
engineering.
Ingenuity. Chemical engineers learn the
broad concepts of chemical engineering, but their
work requires them to apply those concepts to
specific production problems.
Interpersonal skills. Because their role is
to put scientific principles into practice in
manufacturing industries, chemical engineers must
develop good working relationships with other
workers involved in production processes.
Math skills. Chemical engineers use the
principles of calculus and other advanced topics in
mathematics for analysis, design, and
troubleshooting in their work.
Problem-solving skills. In designing
equipment and processes for manufacturing, these
engineers must be able to anticipate and identify
problems, including such issues as workers’ safety
and problems related to manufacturing and
environmental protection.
Licenses, Certifications, and Registrations
Licensure for chemical engineers is not as
common as it is for other engineering occupations,
nor is it required for entry-level positions. A
Professional Engineering (PE) license, which allows
for higher levels of leadership and independence,
can be acquired later in one’s career. Licensed
engineers are called professional engineers (PEs). A
PE can oversee the work of other engineers, sign off
on projects, and provide services directly to the
public. State licensure generally requires:
 A degree from an ABET-accredited
engineering program
 A passing score on the Fundamentals of
Engineering (FE) exam
 Relevant work experience, typically at least
4 years
 A passing score on the Professional
Engineering (PE) exam
The initial FE exam can be taken after one
earns a bachelor’s degree. Engineers who pass this
exam commonly are called engineers in training
(EITs) or engineer interns (EIs). After meeting work
experience requirements, EITs and EIs can take the
second exam, called the Principles and Practice of
Engineering.
Several states require engineers to take
continuing education to keep their license. Most
states recognize licensure from other states if the
licensing state’s requirements meet or exceed their
own licensure requirements.
Advancement for Chemical Engineers
Entry-level engineers usually work under
the supervision of experienced engineers. In large
companies, new engineers also may receive formal
training in classrooms or seminars. As junior
engineers gain knowledge and experience, they
move to more difficult projects with greater
independence to develop designs, solve problems,
and make decisions.
Eventually, chemical engineers may
advance to supervise a team of engineers and
technicians. Some may become architectural and
engineering managers. However, preparing for
management positions usually requires working
under the guidance of a more experienced chemical
engineer.
An engineering background
enables chemical engineers to discuss a product’s
technical aspects and assist in product planning and
use.
IMPLEMENTING RULES AND
REGULATIONS OF THE CHEMICAL
ENGINEERING LAW
Introduction
The Chemical Engineering Law of 2004,
otherwise known as R.A. 9297, is the act regulating
the practice of chemical engineering. This law was
approved by ex-President Gloria Macapagal –
Arroyo last 13th of May, 2004. It covers the creation
of the professional regulatory board for chemical
engineers, the licensure examination and
registration, the legal framework of the practice of
chemical engineering and the general provisions.
Pursuant to Section 6 (h) and (i), Article II, and
Section 36, Article V, the Board of Chemical
Engineering with the approval of the Philippine
Regulatory Commission adopts and promulgates the
Implementing Rules and Regulation for R.A. 9297
through its Board Resolution No. 13 series of 2014.
Key rules and regulation will be discussed concisely
in order to understand them easily.
The significant rules and regulation that needs to be
well-understood and shall be discussed here are:
 Rule II – Board of Chemical Engineering
 Rule III – Licensure Examination for
Chemical Engineers
 Rule IV – Registration and Issuance of
Certificate of Registration and Professional
Identification Card
 Rule V – Practice of Chemical Engineering
 Rule VI – Teaching and Lecturing
Engagements in Chemical Engineering
 Rule VII – Design and Specifications for
Industrial Plants
 Rule XI – Integrated and Accredited
National Organization of Chemical
Engineers
 Rule XII – Prohibitions in the Practice of
Chemical Engineering
 Rule XIV – Administrative Proceedings
 Rule XIV – Enforcement and Penalties
Rule II – Board of Chemical Engineering
Rule II of the IRR talks about the function
and management of the Board of Chemical
Engineering. The R.A. 9297 mandates the creation
of the Board and empowers it to supervise and
regulate the practice of the chemical engineering
profession in the Philippines (Section 4). Among the
several powers and duties of the Board (Section 6),
some of these are:
a. Prescribe the subjects, construct the test
questions, and score and rate the
examination papers in the licensure
examination;
b. Issue, together with the PRC (Professional
Regulation Commission), Certificates of
Registration and Professional Identification
Cards to applicants who have passed the
LEChE;
c. Adopt a Code of Ethics and a Code of
Technical Standards for the practice of
chemical engineering;
d. In coordination with CHED (Commission
on Higher Education), inspect facilities,
faculty, equipment, and other aspects
related to the chemical engineering
program of educational institutions;
e. Hear and decide administrative cases filed
against chemical engineers and firms
employing chemical engineers; and
f. Prosecute or institute criminal action
against any violator of R.A. 9297.
Rule III - Licensure Examination for Chemical
Engineers
Rule III of the IRR focuses on the LEChE.
All persons desiring to register as Chemical
Engineers must pass the LEChE (Section 15).
Qualifications for the LEChE (Section 16) include:
the person must be a Filipino citizen of good moral
character and of who has not been convicted with
moral turpitude offense, who is a graduate of a
government-recognized educational institution
conferred with the degree of BS in Chemical
Engineering or its equivalent. The LEChE has
examination fees which every applicant shall pay
(Section 18), and is conducted twice a year on dates
and venue prescribed by the Commission (Section
19). The scope of LEChE (Section 22) covers but not
limited to chemical engineering (40%), physical and
chemical principles (30%), and general engineering
(30%).
Rule IV – Registration and Issuance of Certificate
of Registration and Professional Identification
Card
Rule IV talks about the registration and
issuance of certificates of recognition and
professional identification cards of the PRC to each
person who passed the LEChE upon the
recommendation of the Board after payment of
prescribed fees (Section 27). The certificate of
registration shall state the full name of the registrant,
his/her registration number, and is signed by the
Chairman and Members of the Board and the
Chairperson of the PRC indicating that the person
named therein is entitled to practice the profession
with all the privileges appurtenant thereto and shall
remain in full force and effect until suspended or
revoked (Section 25). The professional identification
card bears the signature, number, date of issuance,
and expiry date, issued to every registrant who has
paid prescribed fees of annual registration for
another and every after three (3) years (Section 26).
Both can be replaced if lost, burned, destroyed, or
mutilated after accomplishing required affidavits,
evidences, and compliances (Section 28).
Rule V – Practice of Chemical Engineering
Rule V discusses the aspects of chemical
engineering practice. The scope of practice in
relation to industrial plants in forms of service
includes (Section 30):
a. consultation requiring chemical
engineering knowledge, skill and
proficiency;
b. investigation, estimation and/or evaluation;
c. planning and designing;
d. preparation of feasibility studies and
preparation of specifications;
e. supervision of installations;
f. operation including quality management
excluding chemical analysis and operation
of chemical laboratory; and
g. Research and development.
Rule VI – Teaching and Lecturing Engagements in
Chemical Engineering
Rule VI focuses on the chemical
engineering education. The teaching, lecturing, and
reviewing of professional chemical engineering
subjects in the curriculum of the BS in Chemical
Engineering or a subject in Chemical Engineering
licensure examination in any educational institution
is also considered as a professional chemical
engineering service Section 35).
Rule VII – Design and Specifications for Industrial
Plants
Industrial plant design and specifications
are ruled over by Rule VII. As per Section 39, any
proposal, design, specifications, work drawings, or
plan for an industrial plant or any part thereof
submitted to any government agency, shall not be
processed or approved, nor shall such plant be issued
any permit, license, franchise, authorization, or
certification, unless such is signed by a chemical
engineer with his seal and registration number
affixed thereto. Every sheet must be stamped the
chemical engineer’s professional seal when filed
with government authorities or when submitted or
used professionally (Section 40).
Rule XI – Integrated and Accredited National
Organization of Chemical Engineers
Rule XI is all about the national
organization of chemical engineers in the country.
The Philippine Institute of Chemical Engineers, Inc.
(PIChE) is the existing integrated and accredited
national organization of registered chemical
engineers, duly accredited by the Board, approved
by PRC, and registered in SEC (Securites and
Exchange Commission) as a nonprofit nonstock
corporation (Section 51). A chemical engineer duly
registered with the PRC is automatically a member
of the PIChE and receives benefits and privileges
provided for. Some of the functions, duties, and
responsibilities of PIChE are as follows:
a. Nominate to vacancies in the Board of
Chemical Engineering
b. Pursue programs in continuing professional
education
Rule XII – Prohibitions in the Practice of Chemical
Engineering
According to Rule XII, no person shall
practice chemical engineering or render chemical
engineering service without valid certificate of
registration and a valid professional identification
card (Section 52).
Rule XIV – Administrative Proceedings
Rule XIV focuses on the suspension and
revocation of certificate of registration. The Board
may, after due notice and hearing, suspend or revoke
the certificate of registration of a chemical engineer
for any of the following grounds (Section 55):
a. Any act of misinterpretation in connection
with an alleged performance of chemical
engineering services;
b. Acts inimical to the chemical engineering
profession; or
c. Gross immorality or commission of any act
involving moral turpitude.
But, the Board may reissue a revoked certificate of
registration or revoked certificate of compliance for
reasons it may deem sufficient and upon proper
petition that may be filed after at least two years
from date of surrender (Section 56).
Rule XIV – Enforcement and Penalties
Rule XIV highlights the penal clause
(Section 61) which states that any person who
violates any of the provision of the R.A. 9297 shall
be guilty of misdemeanor and shall, upon conviction,
be sentenced to a fine of not less than P10 000.00 nor
more than P1 000 000.00 or imprisonment for a
period of not less than six months nor more than five
years or both at the discretion of the court.
CODE OF ETHICS FOR CHEMICAL
ENGINEERS
Introduction
“With Great Power Comes Great
Responsibility” is a famous quote said by Benjamin
Parker, a character more commonly known as
“Uncle Ben” in the Marvel comic series Spiderman.
To relate, as an Engineer though not literally with
great power just like Spiderman, comes with a
responsibility - a responsibility that practice your
morality and ethics as a professional one. To be an
engineer is a grateful achievement every engineering
student’s desire. But, he must bear in mind the ethics
that should be practice and be a good example out of
it.
Code of Ethics
According to Investopedia (2008), a code
of ethics is a guide of principles designed to help
professionals conduct business honestly and with
integrity. It is a document that gives outline about the
mission and values of the business or organization,
how professionals are supposed to approach
problems, the ethical principles based on the
organization's core values and the standards to which
the professional is held. Furthermore, code of ethics
deals with core value system. It may discuss
standards of responsible conduct as they relate to the
larger public good and the environment. Presented in
the table is the Code of Ethics for Chemical
Engineers according to PIChE (Philippine base):
Table 1. Code of Ethics for Chemical Engineers
Section 1. The chemical engineer shall be
guided in all his relations by the highest
standards of honor and integrity and shall act with
fairness and impartiality to all.
Section 2. The chemical engineer shall uphold at
all times the dignity of the chemical engineering
profession and shall protect it from
misrepresentation.
Section 3. The chemical engineer shall
avoid being associated with any enterprise which
is of questionable character or is contrary to law
or public welfare.
Section 4. The chemical engineer shall
express a professional opinion only when he is
adequately informed of the facts related there and
the purposes for which the opinion is asked.
Section 5. The chemical engineer shall
not issue statements, criticism or arguments on
matters of public concern which are inspired or
paid for by private interests, unless he indicates in
whose behalf he is making the statement.
Section
6. The chemical engineer shall not indulge in
self-laudatory advertisement nor make
exaggerated, untrue, or misleading statements in
media or any public forum.
Section 7. The chemical engineer shall be
mindful of the safety and convenience of the
public at all times and shall make every
effort to remedy or bring to the attention of his
client or employer any dangerous defect in
equipment or structures or dangerous conditions
of operation which come to his knowledge.
Section 8. The chemical engineer shall
consider it his professional obligation to protect
the interest of his client, employer
or any person of responsibility and he shall act
accordingly as long as it does not
conflict with law, public policy, and welfare.
Section 9. The chemical engineer shall make
known to his client or employer all his other
professional obligations, financial
interests, or other considerations which might
restrict or interfere with his meeting the legitimate
expectations of his client or employer before
undertaking an engagement.
Section 10. The chemical engineer shall not
accept compensation, financial or otherwise form
more than one client or employer who is in the
same line of business or has conflicting
interest with the others, without the consent of all
parties; he shall not accept compensation directly
or indirectly from parties dealing with his client
or employer except with the consent of his client
or employer.
Section 11. The chemical engineer
shall present clearly the
consequences or risk that will arise if his
professional judgment or work, for which he is
responsible, is overruled.
Section 12. The chemical engineer shall not
hesitate to engage, or advise his client or
employer to engage the services of other
experts or specialists on problems on which his
information or experience is inadequate.
Section 13. The chemical engineer shall regard as
the property of his client or
employer any plan, design, or other record
which results from the use of information which
is not common knowledge or public property, but
which information is obtained from his client or
employer.
Section 14. The chemical engineer shall
exchange general information and experience
with his fellow chemical engineers, contribute to
the work of engineering societies and schools, and
cooperate in such other endeavors as will enhance
the effectiveness of the chemical engineering
profession.
Section 15. The chemical engineer shall
encourage and provide opportunity for the
professional development or advancement of
chemical engineers in his employ.
Section 16. The chemical engineer shall
recognize the view that inadequate compensation
for professional services ten toward inferior and
unreliable work and shall not accept
compensation beneath the generally accepted
level of professional fee.
Section 17. The chemical engineer shall not
compete with another engineer unfairly, such
as reducing his usual professional charges for
work after having been informed of the
charges asked by others.
Section 18. The chemical engineer shall not
injure or attempt to injure falsely or maliciously,
directly or indirectly, the professional reputation,
competence, capability, prospects, or practice of
another professional.
Section 19. The chemical engineer shall
endeavor at all times to give credit to those to
whom credit is properly due.
Section 20. The chemical engineer shall not
review the work of another chemical engineer for
the same client or employer without the prior
knowledge and consent of such engineer when the
client or employer relation of such chemical
engineer has already been terminated, prior notice
is sufficient.
Section 21. The chemical engineer shall report
any infraction of any rules of professional
conduct to the Philippine Institute of Chemical
Engineers (PICHE) for proper appraisal
and shall be ready to testify, if necessary.
Section 22. This Code shall take effect after
fifteen (15) days following its publication in the
Official Gazette.
Code of Ethics was implemented to state
the principles and expectations governing the
behavior of individuals and organizations in the
conduct of their profession. These are seen as
reasonable necessities for running an organization in
a complex society in which moral concepts plays an
important part. Often, acts that violate ethical codes
may also violate a law or regulation and can be
punishable at law or by government agency remedies
(Morton, et.al, 2010)
CONTRACTS
Introduction
Every field of profession applies contract, a
written agreement which concerns a certain
employer’s employment. It happens between two or
more parties which relate them with the
consideration to be paid for the promise made, legal
capacity of the parties to act, authentic consent of the
parties, and the legality of the agreement
(lawhandbook.org.au, 2017). As for engineers, these
are made to represent a contractual relations among
all parties involved in engineering design and
construction projects (asce.org/contractdocuments/).
It also is intended for those who wish to acquire
skills in drafting, negotiating and working with
commercial and engineering contracts. It aims to
bring a different approach to the subject; combining
the traditional legal perspective of the law of
contract with the needs of the commercial manager
or engineer who is seeking solutions to technical and
commercial problems (Ribeiro, 1996).
Type of Contracts in Engineering and
Construction Industry
This part discusses the
contract commonly used in Engineering and
Construction industry. It includes Lump Sum
Contract, Unit Price Contract, Cost Plus Contract,
Incentive Contracts, and Percentage of Construction
Fee Contracts.
Lump Sum Contract. It is also called as the “fixed-
free contract” wherein, the engineer or contractor
agrees to follow the described and specified project
for a fixed price. It is suitable if the scope and
schedule of the project are sufficiently defined to
allow the consulting engineer to estimate project
costs.
Unit Price Contract. This a contract agreement
wherein the purchaser agrees to pay the cost of all
labor and materials plus an amount for contractor
overhead and profit (usually as a percentage of the
labor and material cost). It is specified as the
following;
 Cost + Fixed Percentage Contract.
Compensation is based on a percentage of
the cost.
 Cost + Fixed Fee Contract. Compensation
is based on a fixed sum independent the
final project cost. The customer agrees to
reimburse the contractor's actual costs,
regardless of amount, and in addition pay a
negotiated fee independent of the amount
of the actual cost.
 Cost + Fixed Fee with Guaranteed
Maximum Price Contract. Compensation
is based on a fixed sum of money. The total
 project cost will not exceed an agreed upper
limit.
 Cost + Fixed Fee with Bonus Contract.
Compensation is based on a fixed sum of
money. A bonus is given if the project
finish below budget, ahead of schedule etc.
 Cost + Fixed Fee with Guaranteed
Maximum Price and Bonus Contract.
Compensation is based on a fixed sum of
money. The total project cost will not
exceed an agreed upper limit and a bonus is
given if the project is finished below
budget, ahead of schedule etc.
 Cost + Fixed Fee with Agreement for
Sharing Any Cost Savings Contract.
Compensation is based on a fixed sum of
money. Any cost savings are shared with
the buyer and the contractor.
These types of contracts are favored where the
scope of the work is indeterminate or highly
uncertain and the kinds of labor, material and
equipment needed are also uncertain. Under this
arrangement complete records of all time and
materials spent by the contractor on the work must
be maintained.
Incentive Contracts. It is an agreement wherein
compensation is based on the engineering and/or
contracting performance according to an agreed
target - budget, schedule and/or quality. This is
categorized into two.
1. Fixed Price Incentive Contracts. These
contracts are preferred when contract costs
and performance requirements are
reasonably certain.
2. Cost Reimbursement Incentive
Contracts. These contracts provides the
initially negotiated fee to be adjusted later
by a formula based on the relationship of
total allowable costs to total target costs.
This type of contract specifies a target cost,
a target fee, minimum and maximum fees,
and a fee adjustment formula. After project
performance, the fee payable to the
contractor is determined in accordance with
the formula.
Percentage of Construction Fee Contracts. It is
common for engineering contracts wherein
compensation is based on a percentage of
construction costs.
Elements of Engineering Contracts
In engineering field, the
making of contract is subjected to four elements.
These are General Conditions, Special Conditions,
Contract Drawings, and other documents.
A. Contract General Conditions
General condition of a
contract includes the rights and
responsibilities of the parties involved.
These contract conditions set the rights and
responsibilities of the parties involved as
well as the minimum contractor
performance requirements
(http://thelawdictionary.org/general-
conditions/). This is comprised by the
following:
1. Notice Inviting Bids – The Agency’s
formal invitation for bids. The date of the
Notice Inviting Bids is the date of formal
advertisement of the contract.
2. Instructions to Bidders – Additional
information provided for the bidders with
instructions on how to prepare and submit
the bids.
3. Agreement – The actual legal format of
the contract which will be executed by the
parties.
4. Contract Bonds – The Performance Bond
and Payment Bond as required under the
country’s public contract code.
5. General Provisions – The general terms
of the contract which are not project
specific.
B. Contract Special Conditions
These are the provisions
of a contract that are peculiar to the project
under consideration and do not fall under
the general conditions or supplementary
conditions. It is made up of the following;
1. Supplemental General Provisions –
Includes additions or modifications to
General Provisions as needed on a project
specific basis. Includes standard
supplemental language for federally funded
contracts.
2. Bid Forms – The various forms which
must be completed as part of the process for
submitting a bid.
3. Bid Price Form – A bid form on which
the bidder enters the Grand Total Bid price
for lump sum contracts or unit and total
prices for unit price contracts.
4. Measurement and Payment (unit price
contracts only) – The section which
describes the method of measurement and
 scope of payment for the work of the
contract, organized by bid item.
5. Special Provisions – The specifications
sections describing the conditions of the
work and contract administration
procedures.
6. Supplemental Technical Provisions –
The specifications which invoke, modify,
or supplement the Standard Specifications.
C. Contract Drawings
These are the project specific drawings
which describe and provide details of the
scope of work.
D. Other Documents
1. Standard Specifications –County’s
Standard Specifications describe the
standard methods and requirements for
performing certain types of work on a
company’s construction projects and are
incorporated into the contract via the
Supplemental Technical Provisions.
2. Other Company Standards – Other
standards established by the country’s
certain department, including safety, track
construction and maintenance, and others,
which are incorporated into the contract by
reference.
3. External References – Standards
developed by other agencies or entities in
the construction industry or having
jurisdiction over the work which are
incorporated into the contract by reference.
4. Project-specific Information – Includes
project specific studies or reports made
available to bidders for information but are
not part of the contract.
FUNCTIONS OF ENGINEERING a. Who has authority to make
CONTRACTS decisions concerning actions
As a chemical engineer, you will be which influence value?
involved in the design and development of a diverse b. Who is responsible for making
range of products. Your work will focus on changing decisions which impact value?
the chemical, biochemical and physical state of a c. Examples:
substance to turn it into something else, such as i. Choice of raw materials
making plastic from oil. Many chemical engineers ii. Choice of manpower and
also work at engineering consultancy and machineries
contracting firms. They are likely to be taken on iii. Choice of packaging
either to design and commission a new plant, or to iv. Choice of deliver
modify an existing plants. locations and timing
Chemical Engineer is also responsible for 3. Divide Risk and Uncertainty
conducting reviews and considering legal aspects of a. Who is exposed to the outcome(s)
contract award & administration. They are also of various adverse events?
responsible for preparing and drafting commercial b. All contracts are incomplete.
bids and tenders, estimating the costs of a project and c. Contracting parties cannot
ensuring that the costs are controlled. anticipate all possible events.
d. What does the contract specify?
Key Functions of Contract e. What do we do if something
happens which is not included in
1. Dividing Value from Exchange the contract?
a.
Defines product or service to be f. The longer the contract duration,
exchanged. the greater the uncertainty.
b. Defines quantity and quality. g. Measurement of key quantity and
c. Assigns a price or pricing formula. quality characteristics can create
d. Specifies time and location for challenges.
exchange. i. Objective Measurement
e. Specifies timing of payments. vs. Subjective
f. Lump sum - a complete payment Measurement
consisting of a single sum of mone ii. Can measurement be
2. Divide Control Rights and Decision- verified by an
Making independent third party?
Options for Unexpected Conditions
 a. Execute the contract.
b. Renegotiate the contract.
c. Utilize arbitration or mediation.
d. May be included in the contract.
e. Bring into the court system.
f.
ELEMENTS OF A CONTRACT
A contract is a meeting of the minds between two
persons whereby one binds himself, with respect to
the other, to give something or to render some
services. A contract is also defined as “a juridical
convention manifested in legal form, by virtue of
which one or more persons bind themselves in favor
of another or others, or reciprocally, to the
fulfillment of a prestation to give, to do, or not to
do.” A contract binds both contracting parties and
has the force of law between them.
There can be no contract unless the following
requisites are present:
(1) consent of the contracting parties;
(2) object certain which is the subject matter of
the contract; and
(3) cause of the obligation which is established.
Consent. Contracts are generally perfected by mere
consent, which is the reason why there’s such a thing
as oral contracts. It’s a meeting of the minds between
the parties: there’s a definite offer by one person and
there’s an absolute acceptance by another.
Subject Matter. A thing, right or service may be
the object or subject matter of a contract. All things
that are outside the commerce of man (e.g., the
moon) may not be the object of a contract. Rights
that are transmissible (e.g., the right to possess a
real property) may be the subject of a contract.
Services, on the other hand, must not be contrary to
law, morals, good customs, public order of public
policy (e.g., services of an assassin or a prostitute).
Cause. The cause varies according to the type of
contracts: (a) for onerous contracts, the cause is the
promise of a thing or service by the other; (b) for
remunatory contracts, the cause is the service or
benefit which is being remunerated; and (c) for
contracts of pure beneficence, the cause is the mere
liberality of the benefactor. These concepts may
appear alien, but since this is merely a brief
discussion, suffice it to state that a “cause” is
technically different from a contract’s object (or
subject matter, as discussed above) or motive.
These three requisites are important
because there’s no perfected contract without them.
LAWS ON CONTRACT
A contract is a voluntary arrangement
between two or more parties that is enforceable at
law as a binding legal agreement. Contract is a
branch of the law of obligations in jurisdictions of
the civil law tradition. A contract arises when the
parties agree that there is an agreement.
A contract is important because it can be used in the
legal system to ensure that both parties of an
agreement are equally compensated for their work,
goods or money. Contracts are legal agreements that
may or may not be written.
The Laws on Contract
(Article 1305-1422)
According to article 1305 of Republic act
no. 386 “Civil Code of the Philippines”, a contract is
a meeting of minds between two persons whereby
one binds himself, with respect to the other, to give
something or to render some service. For instance, a
contract is form when the two parties agreed to the
terms, rules and regulations mandated by the two
parties. That he/she must abide all the rules and
regulations being stated in the contract and being
held liable in case of violation from either one of the
parties.
I. Characteristics of a contract
There are five characteristics of a contract;
autonomy of the contract, mutuality of contracts,
relativity of a contract, consensuality of contracts
and the obligatory force of contract.
According to Republic Act no. 386, article
1306 of the “Civil Code of the Philippines”, the
contracting parties may establish such stipulations,
clauses, terms and conditions as they may deem
convenient, provided they are not contrary to law,
morals, good customs, public order, or public policy.
Hence, the autonomy of a contract is form when
parties are free to stipulate terms and provisions in a
contract, as long as these terms and provisions are
not contrary to law, morals, good customs, public
order and public policy. In addition, mutuality of
contracts is form when a contract must bind both
contracting parties thus its validity or compliance
cannot be left to the will of one of them
(article.1308). Thus, a contract is said to be valid, if
both parties commit to the said contract by affixing
their authorization such as signature. If either one of
the both parties doesn’t affix their authorization, the
said contract is invalid unless he/she will do so.
Moreover, a contract must not restraint either of the
two parties nor create a biased stipulation.
For example, in an employment contract
between A and B, the latter agreed that for a period
of five years after the termination of his
employment, he shall neither engage or interest
himself in any business enterprise similar to or in
competition with those operated by A, nor enter into
the employment of any enterprise in the Philippines,
except after obtaining the written permission of A
(Aldeguer, 2014).
For instance, this agreement is void because
it is contrary to public policy. The agreement is
clearly one in undie or unreasonable restraint of
trade. It is not necessary for the protection of A.
Besides, it would practically force B to get out of the
country in order to obtain a livelihood in case should
decline to give him a written permission to work
elsewhere in the country (Aldeguer,2014).
In order to claim that an agreement is valid,
the following valid stipulations must be followed in
an employment contract:
A. Non-competition agreements – those that
impose restrictions on an employer‘s
ability to compete with a former employer
are valid as long as:
i. It is supported by adequate
consideration;
ii. The restraint is confined within the
limits that are reasonably necessary for
the protection of the employer‘s
business
iii. Restraint does not impose undue
hardship on the employee.
B. Non-solicitation agreements – requirement
to newly-hired employees to sign a non-
solicitation agreement to obligate the
employee not to solicit contacts and fellow
employees of the employer. Non-
solicitation agreements run for an indefinite
period.
C. Confidentiality – imposes upon an
employee a duty to keep confidential trade
secrets and other confidential company
information during employment and after
employment. This may also run for an
indefinite period.
The 3rd characteristics of a contract is its
relativity wherein, contracts are binding only upon
the parties and their successors-in-interest.
However, there are exceptions; first is the stipulation
in favor of a third person (stipulation pour autrui) as
in a beneficiary of an insurance policy. According to
Article 1311, contracts take effect only between the
parties, their assigns and heirs, except in case where
the rights and obligations arising from the contract
are not transmissible by their nature, or by
stipulation or by provision of law. The heir is not
liable beyond the value of the property he received
from the decedent.
If a contract should contain some stipulation in
favor of a third person, he may demand its
fulfillment provided he communicated his
acceptance to the obligor before its revocation. A
mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly
and deliberately conferred a favor upon a third
person. The second exception is that a contracts must
create real rights. And lastly, the third person is
liable to pay damages in case he induces a party to
violate his contract.
In addition, stipulation pour autrui (stipulation in
favor of a third person) will prosper as long as the
following requisites are present:
a. It must be for the benefit or interest of the
third person;
b. Such benefit must not be merely
incidental; Contracting parties must clearly
and deliberately conferred such benefit or
interest upon the third person
c. That the third person must have
communicated his acceptance to the obligor
before his revocation.
The fourth characteristic of a contract is its
consensuality wherein, contracts are perfected by
mere consent and no form is prescribed by law for
their validity. According to Article 1315, contracts
are perfected by mere consent, and from that
moment the parties are bound not only to the
fulfillment of what has been expressly stipulated but
also to all the consequences which, according to their
nature, may be in keeping with good faith, usage and
law. However, it has exceptions such as real
contracts and contracts that are covered under the
statute of frauds.
For instance, real contracts, are contracts such
as pledge and chattel mortgage and according to
Article 1316, real contracts such as deposit, pledge
and commodatum, are not perfected until the
delivery of the object of the obligation. And the last
characteristic is the obligatory force of contracts in
which it constitutes the law as between the parties
who are compelled to perform under the threat of
being sued in the courts of law.
II. Classification of Contracts
Contracts are classified into 9
classifications and they are as follows; according to
their relations to the other contracts, according to
their perfection, according to their form, according
to their purpose, according to their subject matter,
according to the nature of the vinculum which they
produce, according to their cause and according to
the risks involved.
Nine classification of contracts:
1. According to their relation to other
contracts:
a. Preparatory -or those which have
for their object the establishment
of a condition in law which is
necessary as a preliminary step
towards the celebration of another
subsequent contract. Examples –
partnership, agency, common
carrier, insurance.
b. Principal – or those which can
subsist independently from other
contracts and whose purpose can
be fulfilled by themselves.
Examples – sale, lease, common
carrier, insurance.
c. Accessory – or those which can
exist only as a consequence of, or
in relation with, another prior
contract. Examples – pledge,
mortgage.
2. According to their perfection
a. Consensual – or those which are
perfected by the mere agreement
of the parties. Examples – sale,
lease.
b. Real – or those which require not
only the consent of the parties for
their perfection, but also the
delivery of the object by one party
to the other.
Examples – commodatum,
deposit, pledge.
3. According to their form
a. Common or informal – those
which require no particular form.
Example - loan
b. Special or formal – or those which
require some particular form.
Examples – donation, chattel
mortgage.
4. According to their purpose
a. Transfer of ownership. Example
– sale.
b. Conveyance of use. Example –
commodatum.
c. Rendition of services. Example –
agency, lease of services, labor.
5. According to their subject matter
a. Things. Examples – sale, deposit,
pledge.
b. Services. Examples – agency,
lease of services, labor.
6. According to the nature of the vinculum
which they produce
a. Unilateral – or those which give rise to
an obligation for only one of the
parties. Examples – commodatum,
gratuitous deposit.
b. Bilateral – or those which give rise to
reciprocal obligations for both parties.
Examples – sale, lease.
7. According to their cause
a. Onerous – or those in which each
of the parties aspires to procure for
himself a benefit through the
giving of an equivalent or
compensation. Examples – sale,
insurance, common carrier.
b. Gratuitous – or those in which one
of the parties proposes to give to
the other a benefit without any
equivalent or compensation.
Example – commodatum.
8. According to the risks involved
a. Commutative – or those where
each of the parties acquires
equivalent of his prestation and
such equivalent is pecuniarily
appreciable and already
determined from the moment of
the celebration of the contract.
Example – lease.
b. Aleatory – or those where each of
the parties has to his account the
acquisition of an equivalent of his
prestation, but such equivalent,
although precuniarily appreciable,
is not yet determined at the
moment of the celebration of the
contract, since it depends upon the
happening of an uncertain event,
thus charging the parties with the
risk of loss or gain. Example –
insurance.
9. According to their names or norms
regulating them
a. Nominate – or those which have
their own individuality and are
regulated by special provisions of
law. Examples – sale, lease,
common carrier, insurance,
deposit, agency.
b. Innominate – or those which lack
individuality and are not regulated
 by special provisions of law. In the
Roman law, the innominate
contracts were classified into four
groups: do ut des (I give and you
give), do ut facias (I give and you
do), facio ut facias (I do and you
do), and facio ut des (I do and you
do).
A contract of adhesion is defined as one in
which almost all the provisions have been drafted
only by one party, usually a corporation or insurance
company. The only participation of the other party is
the signing of his signature or his adhesion. Some
writers believe that such contract suppresses the will
of one of the contracting parties, hence not a true
contract. However, this is not always juridically true.
Normally, the party who adheres to it is in reality
free to reject entirely; if he adheres, then he gives his
consent. For example; an insurance contract, airline
tickets or bill of lading for vessels, and credit card
application/contract.
III. Essential elements of a contract
There are three essential elements of a
contract, they are consent, object certain and the
cause. For instance, consent is manifested by the
meeting of the minds of the offer and the acceptance
upon the thing and the cause which are to constitute
the contract, moreover, the offer must be certain and
the acceptance is absolute. The second one is object
which is commonly known as the subject matter of
the contract. Lastly, the cause of the obligation in
which the contract is established.
A. Consent
It is manifested by the meeting of the offer
(which must be definite) and acceptance (which
must be absolute) upon the thing and the cause which
constitute the contract. Acceptance through telegram
(or e-mail) shall bind the offer or from the time it
came to his knowledge. An Option to Purchase may
be withdrawn anytime if the option is without any
consideration (Reservation Fees) separate from the
purchase price. Invitations to Bid. Advertisements
for bidders are simply invitations to make proposals
and the advertiser is not bound to accept the highest
or lowest bidder unless the contrary appears.
Parties who are incapable of giving consent are
minors, insane or demented persons and deaf-mutes
who do not know how to read and write. Moreover,
there are instances that will vitiate a consent. They
are as follows;
1. Mistake -- unconscious ignorance or
forgetfulness of the existence or
nonexistence of a fact, past or present,
material to the contract. Example: Mistake
of object, mistake of identity.
2. Violence -- There is violence when, in
order to wrest consent, serious and
irresistible force is employed.
3. Intimidation -- There is intimidation when
one of the contracting parties is compelled
by a reasonable and well-grounded fear of
an imminent or grave evil upon his person
or property or upon the person or property
upon his spouse, descendants, or
descendants, to give his consent.
4. Undue Influence -- There is undue
influence when a person takes improper
advantage of his power over the will of
another, depriving the latter of a reasonable
freedom of choice.
5. Fraud (Causal fraud) -- Insidious words or
machinations are employed to induce the
party to enter into a contract, without
which, he would not have entered into.
Usual exaggerations of trade when the
other party had the opportunity to know the
facts are not fraudulent (LET THE BUYER
BEWARE). Mere expression of opinion
does not signify fraud unless made by an
expert and the other party relied on the
former‘s special knowledge.
B. Object
Object is the subject matter of the contract
and the requisites of a valid object are as
follows:
1. Lawful
2. within the commerce of man
3. Possible
4. Determinate as to its kind
5. Must not be contrary to law, morals,
good customs, public order, and public
policy.
C. Cause
In onerous contracts, the cause is to be
understood, for each contracting party, the
prostration or promise of a thing, or service by the
other; in remunerator ones, the service or benefit
which is remunerated; and in contracts of pure
beneficence, the mere liberality of the benefactor. A
cause will be consider as valid if it true, it exist and
it must be lawful.
As an example; Mr. Danilo Santos bought
10 boxes of Fundador Brandy at a price of P10, 000
pesos per box from his supplier, Mr. John Smith,
proprietor of Exquisite Wines & Brandy, Inc.
determine the requisites of such contract of sale.
For the legal opinion, the consent refers to the
meeting of minds as when Mr. John Smith (the
seller) offered Mr. Danilo Santos to sell the 10 boxes
of Fundador Brandy at a price 36 of P10, 000 pesos
per box and when Mr. Danilo Santos agreed to buy
the said 10 boxes of Fundador Brandy at the price of
P10, 000 pesos per box. The object or subject matter
refers to the 10 boxes of Fundador Brandy at the
price of P10, 000 pesos per box. As to the seller, the
cause is the price of P10, 000 pesos per box. As to
the buyer, the cause is the 10 boxes of Fundador
Brandy (Aldeguer, 2014).
IV. Form of Contracts
Contracts may be in any form because they are
consensual in nature.
The following are the exceptions:
1. Real Contracts are perfected not by mere consent
but by delivery. Example: pledge, antichresis. For
instance, antichresis, under civil law and Roman
law, is a contract whereby a debtor pledges (i.e.,
conveys possession but not title) real property to a
creditor, allowing the use and occupation of the
pledged property, in lieu of interest on the loan.
2. Donation of personal property exceeds P5, 000 –
it must be in writing, otherwise, it is void.
3. Donation of real property – it must appear in a
public instrument.
4. Chattel mortgage where registration in the chattel
mortgage registry is required.
5. Contracts which are required to be in writing or in
a memorandum to be enforceable.
As an illustration, in case of sale of piece of
land is made through an agent, the agent‘s authority
must be in writing, otherwise the sale is void. For
instance, in the case of Marlen Dauden, a movie star
filed a complaint against X Co. to recover P14, 700
representing the balance of her compensation as
leading actress in two motion pictures produced by
the company. Upon motion of defendant, the lower
court dismissed the complaint because ―the claim
of plaintiff was not evidenced by any written
document, either public or private which violates the
statement in Article 1358 of the Civil Code of the
Philippines. However, according to Aldeguer, the
lower Court‘s dismissal is not in accordance with the
law. In the matter of formalities, contracts are valid
and binding from their perfection regardless of form
whether they be oral or written and further stated that
according Articles 1315 and 135 of the Civil Code
of the Philippines, as long as the three elements of a
contract exist (consent, object, and cause), the
contract is generally valid and binding.
V. Reformation of Instruments
This remedy is applicable when there is meeting of
minds as to the object and cause, but the true
intention is not expressed in the instrument.
The requisites are as follows:
1. There is meeting of minds of parties in the
contract.
2. The true intention of the parties is not expressed
in the instrument
3. The true intention is not expressed by reason of
mistake, fraud or inequitable conduct. Interpretation
of contracts.
The courts of justice are empowered to interpret
contracts in case of litigation. The following are the
rules to be observed in the interpretation of contracts.
The literal meaning shall prevail in the absence of
any obscurity therein. In case of doubt, the intention
of the parties shall prevail. In case of doubt, a
contract of adhesion shall be construed most strongly
against the person who caused the ambiguity (as in
the one who made it), moreover, contracts of labor
shall be construed liberally in favor of the laborer.
VI. Kinds of Defective Contracts
There are four kinds of defective contract namely
rescissible, voidable, unenforceable and void
contracts.
A. Rescissible Contracts
Rescissible contracts are defective by reason of
damage or lesion. In this kind of defective contract,
mutual return is incumbent upon actual participants.
Rescission is instituted only when the party suffering
damage has no other legal means to obtain reparation
for the same (Article 1380-1382). The action must
be commenced within 4 years.
Examples of rescissible contracts are as
follows:
1. Those entered into by guardians
whenever their wards represent
lesion by more than ¼ of the value
of the thing.
2. Those agreed upon in
representation of absentees, if the
latter suffer lesion stated in the
preceding number.
3. Those undertaken in fraud of
creditors
Grounds for rescissible contracts
There are four grounds for rescission; lesion,
fraud creditors, transfer of property in litigation,
transfer of insolvent respectively. However, the
ground for rescission is the defect in the contract but
a non-compliance of a binding and enforceable
contract.
1. Lesion
Lesion is the injury suffered by one who
does not receive a full equivalent for what he gives
in a commutative contract. Broadly speaking, lesion
is inequality of contracts.
 Lesion makes the contract rescissible if the
following sites are present. First, if the lesion that
was suffered is more than ¼ of the value of the thing.
Second, if the contract was entered by a guardian or
a representative of an absentee. Third, if the contract
was entered into in behalf of the ward or the absentee
involving the ward or absentee’s property and lastly,
if the contract does not require approval of the court
and/or there is no approval of the court (De Leon,
2014).
As an illustration, Mr. A was appointed by
the court as guardian of the minor, X. Mr. A sold the
vegetables that were planted in the lot of X. The
value of the vegetables is Php. 5000.00 but Mr. A
sold the vegetables for Php. 2000.00. The contract is
rescissible because the lesion is more than one-
fourth. However, if Mr. A sold the lot of X without
the court approval, the sale of the lot is
unenforceable even if there is a lesion.
2. The contract is in fraud creditors
The action to rescind a contract for being in
fraud of creditor is called accion pauliana. In
addition to the requirements for rescission stated, it
is also necessary that the creditor must have in his
favor a credit that existed prior to the contract that is
sought to rescinded and fraud must be established
since it is essential to be shown on both contracting
parties that have acted maliciously and with fraud
and for the purpose of prejudicing the creditor.
To have a clear understanding, a case in
which Mr. A filed a case against Mr. B for a sum of
money. Mr. A won and the decision making Mr. B
liable became final. Mr. B transferred all his
properties when he learned about the decision. At the
time of transfer, Mr. B is also indebted to Mr. C. The
transfer of all the properties of Mr. B is in fraud not
only of Mr. A but also of Mr. C.
3. Transfer of Property in Litigation
For example, Mr.A filed a case to recover his
boat from Mr. B. While the case is pending, Mr. B
transferred the boat to Mr. C without notifying the
court. The sale to Mr. C is rescissible. According to
article 1381, paragraph no. 4, a contract is
considered rescissible if those which refer to things
under litigation if they have been entered into by the
defendant without the knowledge and approval of
the litigants or of competent judicial authority.
4. Transfer of Insolvent
Payment by an insolvent even if he cannot be
compelled to pay at the time he made the payment is
voidable. For instance, if the obligation is not yet due
but the insolvent debtor still transferred his property
to a creditor in payment of his debt, the transfer can
be considered rescissible.
Art. 1383. The action for rescission is subsidiary;
it cannot be instituted except when the party
suffering damage has no other legal means to
obtain reparation for the same.
The person who seeks to rescind a contract
cannot do so unless there is no remedy that is
available. For example, if the obligation to the
creditor is secured by a mortgage, the transfer of a
property cannot be rescinded even if it is in fraud of
creditors.
Art. 1384. Rescission shall be only to the extent
necessary to cover the damages caused.
Rescission may be a total rescission or
partial rescission. Partial rescission occur if the
credit is less than the value of the thing which is the
object of the contract. For example, if the liability to
the creditor who can rescind a contract is Php.10,
000.00 and the value of the goods that were
transferred in fraud of creditors is Php.50, 000.00,
the contract is rescinded only up to Php. 10,000.00.
Art. 1385. Rescission creates the obligation to
return the things which were the object of the
contract, together with their fruits, and the price
with its interest; consequently, it can be carried
out only when he who demands rescission can
return whatever he may be obliged to restore.
Neither shall rescission take place when the
things which are the object of the contract are
legally in the possession of third persons who did
not act in bad faith.
In this case, indemnity for damages may be
demanded from the person causing the loss.
Mutual restitution is required in rescission. The
person who rescinded the contract must be able to
return what he receive and the losing party must be
able to restore what he received. Logically, this
applies to rescission where the ground is lesion.
Thus, rescission will not be allow in the following
cases:
a. The person who demands the rescission
cannot return what he may be obliged to
restore.
b. The thing involved is in the possession of
an innocent third person.
Art. 1386. Rescission referred to in Nos. 1 and 2
of Article 1381 shall not take place with respect to
contracts approved by the courts.
Art. 1387. All contracts by virtue of which the
debtor alienates property by gratuitous title are
presumed to have been entered into in fraud of
creditors, when the donor did not reserve
sufficient property to pay all debts contracted
before the donation.
Alienations by onerous title are also presumed
fraudulent when made by persons against whom
some judgment has been issued. The decision or
attachment need not refer to the property
alienated, and need not have been obtained by the
party seeking the rescission.
In addition to these presumptions, the design to
defraud creditors may be proved in any other
manner recognized by the law of evidence.
BADGES OF FRAUD
The general rule of fraud is that fraud is not
presumed, it must be established by evidence. In one
case, the Supreme Court ruled that the following
may be considered badges of fraud. First, if the
consideration of the conveyance is fictitious or
inadequate. Second, if the transfer made by the
debtor after suit has begun and while it is pending
against him. Third, if a sale upon credit by an
insolvent debtor. Fourth, evidence of large
indebtedness or complete insolvency. Fifth, if the
transfer of all nearly all of his property by the debtor,
especially when he is insolvent or completely
embarrassed financially. Sixth, if the fact that the
transfer is made between father and son, when there
are present other circumstances. And lastly, if the
vendee failed to take exclusive possession of all the
property (De Leon, 2014).
Art. 1388. Whoever acquires in bad faith the
things alienated in fraud of creditors, shall
indemnify the latter for damages suffered by
them on account of the alienation, whenever, due
to any cause, it should be impossible for him to
return them.
If there are two or more alienations, the first
acquirer shall be liable first, and so on
successively.
If there is fraudulent rescissible transfer and the
transferee – the person acquired a property – is in
bad faith, the transferee has its obligation to return
the thing he acquired and if he cannot return the
thing, he must to pay the damages. And if there are
more than one transfer, the liability to pay the
damages to the creditor shall be in order of
acquisition therefore, the first acquirer is liable first
and so on (De Leon, 2014).
B. Voidable contracts
Voidable Contracts are contracts that are valid
but subject to annulment by reason of vitiated
consent or incapacity of one of the contracting
parties. The action to file annulment shall commence
within 4 years. The action for annulment shall
involve restitution with their fruits, and the price
with its interest (article 1391).
Art. 1390. The following contracts are voidable or
annullable, even though there may have been no
damage to the contracting parties:
(1) Those where one of the parties is incapable of
giving consent to a contract;
(2) Those where the consent is vitiated by
mistake, violence, intimidation, undue influence
or fraud.
These contracts are binding, unless they are
annulled by a proper action in court. They are
susceptible of ratification. (n)
Contracts become voidable because of the
incapacity of one of the parties and the consent is
vitiated. For example, Mr. A entered into a contract
whereby he sold his car to Mr. B. Mr. A is 17 years
old while Mr. B is 30 years old. The contract is
voidable because Mr. A is still a minor. However,
voidable contract are binding unless they are
annulled by proper action in court and lastly,
voidable contracts are susceptible of ratification.
C. Unenforceable Contracts
These contracts are valid but defective because
it cannot be enforced in courts. Examples of
unenforceable contracts are as follows (article
1403):
a. Those entered into in the name of another
who has been given no authority or legal
representation or who has acted beyond his
powers.
b. Those where both parties are incapable of
giving consent to a contract.
c. Those that do not comply under the Statute
of Frauds (The items covered must appear
in writing otherwise it cannot be enforced
in courts.)
d. An agreement that by its terms is not to be
performed within one (1) year; a special
promise to answer for the debt, default or
miscarriage of another.
e. An agreement for the sale of goods/chattels
at a price not less than P500
f. Sale of real property - An agreement for the
leasing for a longer period than one year.
g. Those covered under the Statute of Frauds
refer only to executory contracts, and does
not refer to executed contracts already.
Unenforceable contracts are those that cannot be
sued upon or enforced unless they are ratified. The
code commission explained that “as regards the
degree of defectiveness, voidable contracts are
farther away from absolute nullity than
unenforceable contracts. In other words, an
unenforceable contracts occupies an intermediate
ground between a voidable and void contract.
 A contract is unenforceable if it has the absence
of authority and if it violates the statute of frauds and
if it has the incapacity of either one of the parties.
D. Void Contracts
Void Contracts; these are contracts are
considered void because the object and cause are
illegal, contrary to law, inexistent or considered
simulated. These are contracts which are not subject
to ratification. The right to bring an action to declare
a contract void does not prescribe, the right to raise
the defense of illegality cannot be waived and a void
contract has no force or effect whatsoever.
Art. 1409. The following contracts are inexistent
and void from the beginning:
(1) Those whose cause, object or purpose is
contrary to law, morals, good customs, public
order or public policy;
(2) Those which are absolutely simulated or
fictitious;
(3) Those whose cause or object did not exist at
the time of the transaction;
(4) Those whose object is outside the commerce of
men;
(5) Those which contemplate an impossible
service;
(6) Those where the intention of the parties
relative to the principal object of the contract
cannot be ascertained;
(7) Those expressly prohibited or declared void
by law.
These contracts cannot be ratified. Neither can
the right to set up the defense of illegality be
waived.
As an example, on January 4, 1979, Ronald
Coloma sold his hotel in favor of Spouses Leo and
Vanessa Uy. A deed of sale was executed but
Spouses Uy named Johnny Uy (their unborn son) as
the buyer in the contract of sale. Accordingly,
Johnny Uy was named as the buyer in the deed of
sale by virtue of a Chinese custom naming children
as the heir of their parent’s properties. It was only on
March 1, 1980 that Johnny Uy was born (Aldeguer,
2014).
According to Aldeguer, the contract of sale
is void for being simulated and fictitious. Johnny Uy
was not even conceived yet at the time of the alleged
sale, hence had no legal personality to be named as
a buyer in the said deed of sale. Neither could he
have given his consent thereto. The contract of sale
is perfected at the moment there is a meeting of the
minds upon the thing which is the object of the
contract and upon the price. Consent is manifested
by the meeting of the offer and the acceptance upon
the 40 thing and the cause which are to constitute the
contract. Unemancipated minors, insane or
demented persons, and deaf-mutes who do not know
how to read and write cannot validly give consent to
contracts. In the instant case, Johnny Uy could not
have validly given his consent to the contract of sale,
as he was not even conceived yet at the time of its
alleged perfection. Therefore, for lack of consent of
one of the contracting parties, the deed of sale is null
and void. In pari delicto rule, this signifies that both
parties are at fault. If both parties are at fault, they
cannot sue each other nor demand performance from
each other. The courts will leave them as they are
and no award shall be granted.
Conclusion:
The law of contract is an act that serves as
a basis for individuals in constructing a lawful and
justified contract. Moreover, the law of contract is
important because it provides legality to agreements
made between two parties. It enables the contracting
parties to take legal action against the party who is
at default. In addition, the law of contract enables an
individual to verify, if a contracting parties violate
any rules and regulations in the legality of the
contract. If a contract is voidable, unenforceable,
rescissible or a void contract from the very
beginning. For instance, all of us valued our
properties, resources and rights, therefore, knowing
what is lawful, what is right, what is justifiable, what
is null and what is unacceptable is an obligation for
us in order to protect what we have. From simple
business transaction, buying at a convenience store,
loans, sales, etc. A contract is involved, thus,
knowing the law of contract is very important.
TYPES OF CONTRACT
Introduction
In the engineering industry, any
transaction is inefficient unless bound by an
appropriate contract. Griesemann-Gruppe, a
Germany-based group of company especializing in
plant engineering and construction, engineering and
industrial services cited five (5) common contracts
applied and practiced for their services.
I. EPC: Engineering, Procurement,
Construction
The engineering and construction
contractor will carry out the
detailed engineering design of the project,
procure all the equipment and materials
necessary, and then construct to deliver a
functioning facility or asset to their clients.
Companies that deliver EPC Projects are
commonly referred to as EPC Contractors.
 Normally the EPC Contractor has to
execute and deliver the project within an
agreed time and budget.
II. EPCM: Engineering, Procurement,
Construction Management
This type of contract is different to
an EPC Contract in that the Contractor is
not directly involved in the construction but
is responsible for administering the
Construction Contracts.
III. LSS: Lump Sum Service
A lump sum contract or fixed
price contract will require that the supplier
agrees to provide specified services for a
fixed price. A fixed price contract specifies
that the entire project will be done for a
set amount of money. This means if the
materials turned out to be much more than
anticipated, the costs could cut into the
contractor's profit. A supplier being
contracted under a lump sum agreement
will be responsible for the proper job
execution and will provide its own means
and methods to complete the work.
IV. Reimbursable: time and costs
A cost reimbursement contract
allows for the potential problems of a fixed
price contract to be avoided. The party who
wants the building or project completed
promises to compensate or reimburse the
contractor for the actual cost incurred,
hence the name cost reimbursement
contract.
A. Cost plus fixed fee contract
The contractor will get
back costs plus a predetermined
designated amount. This amount
does not change regardless of how
much is spent on materials.
B. Cost plus incentive contract
The contractor receives a larger
fee if he or she meets certain goals
such as keeping costs down or
completing the project in a
designated time.
C. Cost plus award contract
The contractor is paid a higher fee
if he meets certain performance
metrics or benchmarks for
successful performance.
D. A cost plus percentage of cost
contract
A contractor's fee rises as the
actual costs rise. This is
disfavored because there is no
incentive for cost control on the
part of the contractor, and the
federal government is prohibited
from entering into this type of
contract for work performed.
V. Unit Rate
This is a type of contract based on
estimated quantities of items included in the project
and unit prices (hourly rates, rate per unit work
volume, etc.) In general, contractor’s overhead and
profit is included in the rate. The final price of the
project is dependent on the quantities needed to carry
out and complete the work. In general this contract
is only suitable for well-known resources involved
project but unknown quantities at the time of the
contract which will be defined when the design and
engineering or construction work is completed.
DOCUMENTS ON ENGINEERING
CONTRACTS
From the definition taken from the Civil
Code of the Philippines, contracts are agreements of
two or more parties in exchange of services
rendering compensation. For one to be a legal
contract, the parties involved shall discuss the terms
and conditions, clauses, and stipulations. Of course,
this is providing that the agreements met are not
adverse to the existing laws and morals in the
Republic of the Philippines.
For something to be considered a contract,
the following shall be met. This is the general listing
of essential requirements or requisites of contracts.
Taken from Article 1318 from the Civil Code: There
is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the
contract;
(3) Cause of the obligation which is established
Scope of Practice
For engineers in exchange of their services, they
enter through a lot of contracts of varying types.
Rather than contracts, engineers are more familiar
and use the term ‘project’.
Specifically for chemical engineers, the practice of
their profession would mean they are rendering their
chemical engineering services for a fee, salary, or
even without those. (Section 3, R.A 9297)
The following are some examples of a chemical
engineer’s job responsibilities:
1. Consultation requiring chemical engineering
knowledge, skill and proficiency;
2. Investigation;
3. Estimation and/or valuation;
4. Planning;
5. Preparation of feasibility studies;
6. Designing;
7. Preparation of specifications;
8. Supervision of installation;
9. Operation, including quality management; but
excluding chemical analysis and operation of the
chemical laboratory; and
10. Teaching and reviewing any chemical
engineering subject or a subject that is within the
licensure examination (Source: Section 4, R.A.
9297)
Engineering Contracts
In forming a contract, the engineer involved
will input one or more from the said services above
for him to finish the project. Engineering contracts
are required to be written agreements before
beginning the services. This is because a written
agreement is always a good idea to effectively form
the plans, structures or road map with complete
detail. In a way, written contracts establish
professionalism and formality between two parties.
Taking for example between a verbal and
written contract in an engineering project. Projects
that are taken in by the engineers are normally very
long and thorough and verbal talk won’t be effective
to handing down important information.
People working on large projects are plenty
when it comes to manpower and written agreements
make it easier from the one in charge to pass down
what are the goals to be met, etc. That’s why a well-
drafted preparation and negotiation between two
parties are necessary to establish the terms.
Essence of a Contract
Accordingly, the Contract or Agreement
should always be completed and signed prior to, not
after, beginning the project services. The essence of
a contract is risk allocation. By defining the rights
and responsibilities of the parties, a contract
determines who will bear what risks and what the
resulting consequences will be.
In general, the party with the greatest
ability to control a risk should bear that risk.
Engineers should exercise extreme caution in
accepting any risks which are outside their exclusive
control. By allocating those risks up front, engineers
can anticipate and provide strategies to manage those
risks they have assumed. Examples of these risks can
be about safety, machine failure, impact on the
environment, and many others.
Of course, each contract should be created
based on the unique demands of each particular
project. Nevertheless, there are some key contractual
issues which apply to virtually any Engineering
Service Agreement or Engineering Contract.
After providing an overview of issues and
strategies for preparing for the contract, some of the
most important contractual clauses will be discussed
in detail below.
CONTRACT PREPARATION
The key to a successful contract negotiation
and execution is the preparation for that process. To
properly anticipate and address the unique risks of a
particular project, the engineer should prepare for
the contract by investigating the nature of the project
and the players. Such an investigation is key to
identifying the risks and issues which should be
addressed and clarified during the negotiation and
drafting process.
Next step is the negotiation. The parties
should meet or otherwise exchange the relevant
information as to the project, including information
as to the issues of concern identified through the
initial investigation.
A good checklist of information to discuss in
advance of preparing the Agreement would include
many or all of the following:
1. Client Research and Evaluation:
a. Sophistication/Experience.
b. Active versus Passive Project Involvement.
c. Solvency/Longevity.
d. History/Reputation.
e. Cost versus Quality Emphasis.
2. Project Description:
a. Project objectives, including the anticipated
uses or goals
b. Physical parameters of the project.
c. Owner’s program for the manner in which the
project will be developed.
d. Legal description of the project.
e. Financial criteria for the project:
i. Design budget.
ii. Construction budget.
iii. Funding plan and source.
f. Schedule, including milestones, dates,
durations, fast-tracking, permitting, deadlines.
g. Procurement or project delivery method (i.e.,
competitive bid, negotiated contract,
construction manager, design-build, fast-track,
etc.).
h. Unique project issues such as innovative
technologies or materials or regulatory oversight.
i. Other.
3. Project Team:
a. Owner’s representative and extent of authority.
b. Other owner representatives with design input.
c. Owner’s consultants and contractors.
 d. Design team members, roles, and
relationships.
e. Contractors (reputation, solvency,
competency, etc.)
SPECIFIC CONTRACT PROVISIONS
While each project and related agreement
will have its own requirements, the following
provisions should at least be considered in preparing
any Engineering Contract.
Scope of Work.
The single most important provision of any
Services Agreement is the scope of work. More than
any other provision, the scope of work statement
defines the parties’ expectations and establishes the
parameters of the services to be provided.
Accordingly, the scope of work should be as
complete and detailed as possible. Ambiguity and
open-ended descriptions should be avoided
wherever possible.
Owner Rights & Responsibilities.
Generally, a Services Agreement focuses
on the obligations of the engineer. Often, the only
obligation of the owner or prime consultant defined
in the contract is the duty to pay for the services.
However, depending on the nature of the project,
other rights and responsibilities of the owner or
prime consultant should be identified. For example,
what information is the owner or prime consultant
expected to provide, and what right does the
engineer have to rely on that information? Similarly,
what is the extent of the owner’s project input and
authority, and when is that input to be provided?
Consideration of these issues can be invaluable in
clarifying the expectations of the parties and can
greatly assist the engineer in providing a quality,
cost-effective service.
Parties to the Agreement.
Although it seems obvious, the Agreement
should also carefully define the parties to the
Agreement. Such provisions are necessary to
determine who is entitled to modify or control the
terms of the Agreement, who is obligated to make
payment under the Agreement, and who is entitled
to claim the benefits of the services. Ideally, the
Agreement will also provide that it is for the sole
benefit of the prime consultant and owner, and not
of any third party.
Ownership of Documents.
Whenever possible, the engineer should
retain all ownership of its design documents, and
simply grant the owner a limited license for use
solely with respect to the project which is the subject
of the contract. If the owner insists on ownership of
the documents, the right to use those documents
should be narrowly defined such that the documents
may not be misused to the engineer’s jeopardy. The
Agreement should also provide that any electronic
design documents are provided solely as a courtesy
with a disclaimer as to their future usefulness.
Finally, any client rights in the engineer’s work
product should be expressly contingent on payment
of all fees and costs under the Agreement.
Limitation of Liability.
Limitation of liability provisions seek to
limit the engineer’s potential liability to some finite
amount proportionate to the benefit of the project.
Such provisions are as valid tools of risk allocation.
To promote the effectiveness of limitation of liability
clauses, they should be prominently set forth in the
Agreement such that the client cannot claim surprise,
mistake, or duress. Ideally, a limitation of liability
clause limits the engineer’s liability not just to the
prime consultant and owner, but also to any
contractors, suppliers, or other third parties. The
limitation of liability should also exclude liability for
consequential damages such as lost profits and loss
of use.
Indemnity.
Indemnity is the companion to limitation of
liability. An indemnity provision seeks to have one
party indemnify the other for claims of liability
asserted against the party to be indemnified. The
preferable approach is a mutual indemnity provision
requiring each party to indemnify the other to the
extent they are negligent and thereby responsible for
the subject matter of the claim. The indemnity
provision should also clearly define who is covered
by the indemnity provision.
Insurance.
Indemnity obligations are only as useful as
the resources available to back them up.
Accordingly, the architect and engineer should
recommend and require that all project participants
have and maintain adequate insurance coverage.
Furthermore, the engineer should seek to be included
as an additional insured on all contractor insurance
policies.
Limitation of Third-Party Reliance.
Recently, one of the greatest sources of
claims against engineers and other design
professionals has come from third-party strangers to
the contract. Typically, such claims arise either from
a party who has received a copy of the project
documents and somehow come to rely on them, or
from a party who believes they were an intended
beneficiary of the services. To prevent and/or defeat
such claims, the Agreement should expressly
identify the intended beneficiaries of the services
and provide that the services are not to be used or
relied upon by any other party without the express
written consent of the affected engineer.
Consistency with Other Agreements.
Finally, once the engineer has negotiated an
appropriate Agreement, the engineer should make
certain that contractual obligations of other project
participants are consistent with that Agreement. The
engineer should make certain that any obligation or
risk it has undertaken is appropriately allocated or
transferred to any subconsultants or subcontractors
retained by the engineer.
Payment.
Though this obvious, the Agreement must
have the written clause of who will do the payment
once the project is finished and as to what method.
CONTRACT EXECUTION
The execution of the contract finally gives
relevance and meaning to the contract. Before
execution, it is just full of words. After execution, it
becomes the controlling authority establishing the
engineer’s rights and responsibilities on the project.
Nevertheless, it is frequently amazing how few
project participants are aware of the actual contract
terms.
Each key project team member should have
a copy of the relevant contract provisions, if not the
contract as a whole. Only by familiarity with, and
frequent reference to, the actual contractual
obligations can team members deliver the required
contract services without voluntarily providing more
or inadvertently providing less.
SAMPLE ENGINEERING CONTRACT
Sand and Gravel Project is filed by the
contractor who will do the mining extraction to the
DENR – EMB. They must seek the approval so as to
do their quarrying in a formal and legal way. The
DENR will send a representative such as a mining
engineer to supervise the operations and observe that
the miners will not violate the terms and conditions
according to the permit and environmental
compliance certificate (ECC).
Before starting the mining operations, the
contract/permit is duly investigated by the
representatives from DENR. They will negotiate
with the contractors, survey the area, and analyze
that the operations will not have a strong impact to
the environment that may result to its deterioration.
As implied, the parties who are in the
Agreement are the DENR-EMB and the Contractor.
The engineer’s role here is as the Employee of the
DENR and will be performing checks, observations,
and consultations in direct application to his
expertise. (The reporter will show an example in
front of a sand and gravel project that was prepared
by the engineer. The basic documents/requirements
for an engineering contract will be identified. Such
as the client description, project description, etc.)