 BIDS, CONTRACTS, SPECIFICATIONS, ETHICS AND CE LAWS

 Course Description:
 The course deals with the fundamentals on obligations and contracts, bidding
processes, preparation of specification, principles of professional ethics as applied
to the civil engineering profession, and the policies and objectives of some
important civil engineering related laws and governmental regulations. Designed to
prepare civil engineering students for professional practice, the course includes the
study of Civil Engineering Code of Ethics, legal processes in the practice of civil
engineering in the Philippines, ethical relations and duty of a civil engineer to his
fellow professionals, clients and the general public, basic elements of contracts,
Civil Engineering Law, (RA 544) National Building Code, Structural Code, basic
labor laws, Government Procurement Law, and the Manual of Professional Practice
for Civil Engineers.
 Textbook:
 1. Mead, Mead, and Akerman. 1992. Contracts, Specifications and Engineering Relation. USA:
 McGraw-Hill Book Company.

 References:

 1. RA 544: An Act to Regulate the Practice of Civil Engineering in the Philippines.
 2. Act No. 3815 : The Revised Penal Code of the Philippines
 3. R.A. 386 : Civil Code of the Philippines
 4. P.D. 442: Labor Code of the Philippines
 5. P.D. 1096: National Building Code of the Philippines
 6. National Structural Code of the Philippines
 7. CIAP Document 102: Uniform General Conditions
 of Contract for Private Construction
 8. FIDIC, Manuals of Practice,
9. DPWH “Blue Book”.
10. Philippine Institute of Civil Engineers, Inc. 2003. Manual of Professional Practice for Civil
Engineers, 2nd Edition. Manila: Philippine Institute of Civil Engineers, Inc.


 Topics:

 1. Code of Ethics for Civil Engineers

 2. Purpose , Preparation, and Qualities of Effective Specifications
3. RA 544: An Act to Regulate the Practice of Civil Engineering in the Philippines:
policies and objectives: policies and objectives
4. Manual of Professional Practice for Civil Engineers, (2nd Edition. Manila:
Philippine Institute of Civil Engineers, Inc.) : general features and objectives
 5. National Building Code of the Philippines: policies and objectives
6. National Structural Code of the Philippines: policies and objectives
 7. CIAP Document 102: Uniform General Conditions of Contract for Private
 Construction
 8. FIDIC, Manuals of Practice : general features and objectives
 9. DPWH “Blue Book” : general features and objectives.
 10. Procurement Act of the Philippines
  BASICS IN OBLIGATIONS AND CONTRACTS

 Civil Code Provisions on Obligations:

 Article 1156. An obligation is a juridical necessity to give, to do or not to do. (n)

 - enforceable by the courts.

 Article 1157. Obligations arise from:

 (1) Law;
 (2) Contracts;
 (3) Quasi-contracts;
 (4) Acts or omissions punished by law; and
 (5) Quasi-delicts.

 Article 1159. Obligations arising from contracts have the force of law between the contracting
parties and should be complied with in good faith.
 - contract is the law between the parties, but provisions in the contract which are
 against the law are void.
 Article 1166. The obligation to give a determinate thing includes that of delivering all its
accessions and accessories, even though they may not have been mentioned.

 Article 1167. If a person obliged to do something fails to do it, the same shall be executed at
his cost. This same rule shall be observed if he does it in contravention of the tenor of the
obligation. Furthermore, it may be decreed that what has been poorly done be undone.

 Article 1168. When the obligation consists in not doing, and the obligor does what has been
forbidden him, it shall also be undone at his expense.

 Article 1169. Those obliged to deliver or to do something incur in delay from the time the
obligee judicially or extrajudicially demands from them the fulfillment of their obligation.

 However, the demand by the creditor shall not be necessary in order that delay may exist:
 (1) When the obligation or the law expressly so declare; or
 (2) When from the nature and the circumstances of the obligation it appears that the
 designation of the time when the thing is to be delivered or the service is to be
 rendered was a controlling motive for the establishment of the contract; or
 (3) When demand would be useless, as when the obligor has rendered it beyond
 his power to perform.
 In reciprocal obligations, neither party incurs in delay if the other does not comply or is not
ready to comply in a proper manner with what is incumbent upon him. From the moment one
of the parties fulfills his obligation, delay by the other begins.

 Article 1170. Those who in the performance of their obligations are guilty of fraud,
negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for
damages.

 Article 1231. Obligations are extinguished:

 (1) By payment or performance;
 (2) By the loss of the thing due;
 (3) By the condonation or remission of the debt;
 (4) By the confusion or merger of the rights of creditor and debtor;
 (5) By compensation;
 (6) By novation.
 Civil Code Provisions on Contracts:

 Article 1305. 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.

 Article 1306. 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.

 Article 1308. The contract must bind both contracting parties; its validity or compliance
cannot be left to the will of one of them.

 Article 1317. No one may contract in the name of another without being authorized by the
latter, or unless he has by law a right to represent him.

 A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be unenforceable, unless it is
ratified, expressly or impliedly, by the person on whose behalf it has been executed, before it
is revoked by the other contracting party.

 Essential Requisites of Contracts

 Article 1318. 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.

 Elements of Contracts:
 1. Two or more competent contracting parties
 2. Mutual agreement (meeting of the minds) by all parties to the contract
 3. Valuable consideration or cause – something equivalent given or done for the
 act or promise to give, to do or not to do something of value.
 4. Obligations of the parties must not be contrary to law, morals, good customs
 and public policy
 5. Must be set forth according to the form and executed in the manner prescribed
 by law.
 Competence of Contracting Parties:

 1. Minor/infant – contracts entered into by him is voidable at his option

 2. Insane person – contract is voidable at the option of the insane person
 3. Drunken person - if not conscious that he had entered into a contract, contract
 is voidable at his option.
 4. Convicts – competence to enter into contract is suspended for some time until
 suspension is lifted by proper authorities
 5. Professionals – only licensed professionals are competent to enter into contracts
 for professional services.
 6. Corporations – contracts entered into must be thru a duly authorized agent or
 representative
 7. Enemy Alien – cannot contract or sue under existing contract unless permitted
 by the government, but may be sued in our courts under existing
 contracts
 8. Governments – can enter into contracts but with certain restrictions, procedures
 and form of contract are rigidly prescribed by law.
 9. Foreign countries and their sovereign – can make contracts and sue under existing
 contracts in our courts, but may not be sued in such courts without
 their consent.
 Quasi –contracts - a contract implied by law on the theory that it would be unjust to allow
 a person to accept the benefits of a labor or anything of value which belongs
 to another without refunding or paying him, under the principle of “unjust
 enrichment”.
 Ex: If acting under a mistaken belief you paid a debt that is not yours, the
 payee can be obliged to return to you what you have paid.

 Oral vs. written contracts:

 - if the contract is to be immediately consummated, oral contracts will suffice.

 - if the contract requires much time and involves complicated obligations, written
 contract is advisable
 - there are contract, however, which the law requires to be in writing in order
 to be enforceable by the courts. E.g. those involving real properties.

 Construction Contracts:

 - How obtained? a) thru competitive bidding

 b) negotiation

 Types of Construction Contracts:

 1. Lump sum – the owner of the project pays to the contractor an agreed sum of money
 for the completion of the project according to plans and specifications.
 Advantage:
 a. simply practicable
 b. a limit to the cost of the project is fixed
 c. good for work that is very certain and pre-estimated

 Disadvantages:
 a. contractors tend to use cheap materials to gain more
 b. creates problem when “extra work’ is required
 2. Unit-price - The owner pays the contractor an agreed amount of money for each
 unit of work done.

 Advantage:
 a. good when actual quantities of work-in-place are uncertain

 Disadvantage:
 a. quality of work maybe sacrificed if no clear specifications as to how the
 work must be performed

 3. Cost-plus –a-percentage – The owner pays the contractor the actual cost of
 construction work, with a specified percentage thereof as compensation
 for the contractor’s overhead expenses, personal services and profit

 Advantages:
 a. risk of construction is entirely removed from the contractor
 b. owner pays only the cost of construction as actually incurred
 Disadvantages:
 a. every increase in cost increases the amount payable to the contractor,
 contractors exploit this opportunity to gain more
 b. labor inefficiency, unsatisfactory performance on the part of the contractor
 since his profit does not depend upon his ability to work

 4. Cost-plus-a-fee – The owner pays the contractor the actual cost of construction work
 plus a fixed sum to pay for the contractor’s overhead expenses, personal services
 and profit.

 Advantages:
 a. contractor can no longer profit from any increase in construction cost, he will
 make efforts to finish the job soon
 b. the risk of construction is entirely removed from the contractor
 c. the owner pays only the cost of construction as actually incurred

 Disadvantage:
 a. labor inefficiency on the part of the contractor since his profit is already fixed
 5. Cost-plus-a-variable-premium - The contractor undertakes to complete the work for
 a fixed sum and a definite completion time. In addition to the fixed sum, he is paid
 a stated premium which may be decreased or increased accordingly as the actual
 cost and completion time of the project are greater than or less than the said fixed
 sum and definite completion time.

 Advantages:
 a. If the actual construction cost is less than the fixed sum, the owner and
 the contractor share the gain. Half of the gain is added to the stated premium
 of the contractor, and the other half goes to the owner.
 b. If the actual construction cost is greater than the fixed sum, the owner provides
 half of the loss and the other half is deducted from the contractor’s stated
 premium.
 c. If the project is actually completed before the fixed completion time, the contractor
 receives a certain agreed sum per day of time saved; if completed after the fixed
 completion time, a corresponding deduction, per day of delay, is made in the
 contractor’s stated premium.

 Disadvantage:
 a. The contractor gets an unfairly high premium when the fixed sum is deliberately
 made high and/or the fixed completion time is deliberately made long.


 Contract Documents for Large Construction Project

 1. Advertisement
 - a written invitation to bidders to furnish materials or services of value
 - includes information on what to furnish, the site of work, deadline for submission
 of bids, required bidder’s bond, date of opening of bids, manner of addressing
 the bids, where to secure plans and specifications of the work, and statement of
 owner’s right to reject any bid.

 2. Instruction to bidders
 - to amplify anything which has been omitted in the advertisement because of
 the cost and space limitation
 - includes description of work, how to prepare bid proposals, bid delivery and
 withdrawal, bidder’s bond, bidder’s responsibility, interpretation of contract
 documents, requirement for signing bids, conditions for the award of contract,
 effectivity of contract, instruction for the execution of performance bond, time
 of project completion, interpretation of standard specification, and contract
 documents needed.

 3. Bid Proposal
 - the contract amount and services which the contractor offers to the owner for
 the construction of the project; bid proposal form is usually furnished by the owner
 to ensure uniformity and easy comparison of bids.

 4. General Conditions
 - includes the intent of the contract, definition of terms, bond requirements,
 financial protection, reports and payments, contractual relations, conduct of
 work for protection of properties and the general public, retainage matters,
 termination of contract and arbitration matters, terms of completion and
 acceptance

 5. Agreement
 - the contract in its written form, contains the scope of work, contract price, and
 components of the whole contract.



 6. Performance bond
 - A form of bond intended to protect the owner in the event that the contractor
 is unable to finish the work in accordance with the plans and specifications.
 - A bonding company (surety) guarantees the owner that the project will be completed
 by the contractor. In the event the contractor is unable to finish the project, the surety
 uses the amount of the bond to engage the services of another contractor who will
 finish the project. If and when the original contractor finishes the project, the
 performance bond he posted is cancelled.

 7. General Specifications
 - specifications of general character relating to the project.

 8. Detailed Specifications
 - specifications relating to a particular item of work.

 9. Plans and Drawings

 Payment for Extra Work
 - When changes in the contract are made necessary because conditions arise which had
 not been readily determined before the beginning of the work, the contractor may,
 by written notice to the owner, negotiate for supplemental contract or variation order.

 Payment Due to Inflation

 - In the event of an inflation in currency, the contract stipulation on the limit of
 inflation rate beyond which the contractor can claim for extra cost shall be the basis.
 - If there is no contract stipulation on this matter, the contractor may ask the
 court to intervene but he must prove that the inflation is extra-ordinary.
 Labor Code of the Philippines

 - the law governing employment practices and labor relations .

 - prescribes the rules for hiring and termination of private employees,
 the conditions of work including maximum working hours and overtime,
 employee benefits such as holiday pay, thirteenth month pay and retirement pay;
 and the guidelines in the organization and membership in labor union as well as
 in collective bargaining.
 - contains several provisions which are beneficial to labor.
 - it prohibits termination from employment of Private employees except for
 just or authorized causes as prescribed in Article 282 to 284 of the Code.
 - The right to trade union is expressly recognized, as is the right of a union to insist on a
 closed shop .
- Strikes are also authorized for as long as they comply with the strict requirements under the
 Code, and workers who organize or participate in illegal strikes may be subject to dismissal.
- Moreover, Philippine jurisprudence has long applied a rule that any doubts in the
interpretation of law, especially the Labor Code, will be resolved in favor of labor and
against management.
 Torts or Quasi-delict: (Civil Code of the Philippines)

Art. 2176.. Whoever by act or omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage done. Such fault or negligence, if there is
no pre-existing contractual relation between the parties, is called a quasi-delict and is
governed by the provisions of this Chapter.

Negligence is the omission to do something which a reasonable man, guided by those

considerations which ordinarily regulate the conduct of human affairs, would do, or the
doing of something which a prudent and reasonable man would d0. It also refers to the
conduct which creates undue risk of harm to another, the failure to observe that degree
of care, precaution and vigilance that the circumstance justly demand, whereby that other
person suffers injury. The Court declared the test by which to determine the existence of
negligence in Picart v. Smith.

The test by which to determine the existence of negligence in a particular case may be
stated as follows: Did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person would have used in the same situation?
If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to
be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The
existence of negligence in a given case is not determined by reference to the personal
judgment of the actor in the situation before him. The law considers what would be reckless,
blameworthy, or negligent in the man of ordinary intelligence and prudence and determines
liability by that.
 It is settled that in negligence cases the aggrieved parties may choose between an action
under the Revised Penal Code or of quasi-delict under Article 2176 of the Civil Code of the
Philippines. What is prohibited by Article 2177 of the Civil Code of the Philippines is to recover
twice for the same negligent act.

Actions based upon quasi-delicts prescribe after four years from the commission
of the fault or negligent deed.

Criminal Negligence: (Revised Penal Code)

Art. 365 Imprudence and negligence. — Any person who, by reckless imprudence, shall commit
any act which, had it been intentional, would constitute a grave felony, shall suffer the penalty of
arresto mayor in its maximum period to prision correccional in its medium period; if it would have
constituted a less grave felony, the penalty of arresto mayor in its minimum and medium periods
shall be imposed; if it would have constituted a light felony, the penalty of arresto menor in its
maximum periodic shall be imposed.

Any person who, by simple imprudence or negligence, shall commit an act which would
otherwise constitute a grave felony, shall suffer the penalty of arresto mayor in its medium and
maximum periods; if it would have constituted a less serious felony, the penalty of arresto mayor
in its minimum period shall be imposed.