CELAWS

Fundamental Principles

Civil Engineers uphold and advance the integrity, honor and dignity of the civil
engineering profession by:

1. Using their knowledge and skill for the enhancement of human welfare and the
environment.
2. Being honest and impartial and serving with fidelity the public, their
employers/employees and clients;
3. Striving to increase the competence and prestige of the civil engineering
profession; and
4. Supporting the professional and technical societies of their disciplines.

Fundamental Canons

5. Civil Engineers shall hold paramount the safety, health and welfare of the public
and shall strive to comply with the principles of sustainable development in the
performance of their duties.
6. Civil Engineers shall perform services only in areas of their competence.
7. Civil Engineers shall issue public statements only in an objective and truthful
manner.
8. Civil Engineers shall act in professional matters for each employer or client as
faithful agents or trustees, and shall avoid conflicts of interests.
9. Civil Engineers shall build their professional reputation on the merit of their
services and shall not compete unfairly with others.
10. Civil Engineers shall act in such a manner as to uphold and enhance the honor,
integrity, and dignity of the civil engineering profession.
11. Civil Engineers shall continue their professional development throughout their
careers, and shall provide opportunities for their professional development of
those civil engineers under their supervision.

GUIDELINES TO PRACTICE UNDER THE FUNDAMENTAL CANONS OF ETHICS

CANON 1.Civil Engineers shall hold paramount the safety, health and welfare of the
public and shall strive to comply with the principles of sustainable development in the
performance of their professional duties.

a) Civil Engineers shall recognize that the lives, safety, health, and welfare of the
general public are dependent upon engineering judgments, decisions and
practices incorporated into structures, machines, products, processes and
devices
b) Civil Engineers shall approve or seal only those design documents, reviewed or
prepared by them, which are determined to be safe for public health and welfare
in conformity with accepted engineering standards.
 c) Civil Engineers whose professional judgment is overruled under circumstances
where the safety, health, and welfare of the public are endangered, or the
principles of sustainable development ignored, shall inform their clients or
employers of the possible consequences.
d) Civil Engineers who have knowledge or reason to believe that another person or
firm may be in violation of any of the provisions of Canon 1 shall present such
information to the proper authority in writing and shall cooperate with the
proper authority in furnishing such further information or assistance as may be
required.
e) Civil Engineers should seek opportunities to be of constructive service in civic
affairs and work for the advancement of the safety, health, and well-being of
their communities, and the protection of the environment through the practice of
sustainable development.
f) Civil Engineers should be committed to improving the environment by adherence
to the principles of sustainable development so as to enhance the quality of life of
the general public.

CANON 2. Civil Engineers shall perform services only in areas of their competence.

g) Civil Engineers shall undertake to perform engineering assignments only when

qualified by education or experience in the technical field of engineering
involved
h) Civil Engineers may accept an assignment requiring education or experience
outside of their own fields competence, provided their services are restricted to
those phases of the project in which they are qualified. All other phases of such
project shall be performed by qualified associates, consultants, or employees.
i) Civil Engineers shall not affix their signatures or seals to any civil engineering
plan or document dealing with subject matter in which they lack competence by
virtue of education or experience or to any such plan or document not reviewed
or prepared under their supervision or control.
j) Civil Engineers shall not use the Specialty Engineering Title such as Structural
Engineer, Transportation Engineer, Water Engineer, Geotechnical Engineer,
Construction Engineer, etc. without the PICE Specialist Accreditation.

CANON 3. Civil Engineers shall issue public statement only in an objective and truthful
manner.

k) Civil Engineers should endeavor to extend the public knowledge of civil

engineering and sustainable development, and shall not participate in the
dissemination of untrue, unfair or exaggerated statements regarding civil
engineering.
l) Civil Engineers shall be objective and truthful in professional reports, statements,
or testimony. They shall include all relevant and pertinent information in such
reports, statements, or testimony
m) Civil Engineers, when serving as expert witnesses, shall express civil engineering
opinion only when it is founded upon adequate knowledge of the facts, upon a
background of technical competence, and upon honest conviction
 d) Engineers shall issue no statements, criticisms, or arguments on engineering
matters which are inspired or paid for by interested parties, unless they indicate
on whose behalf the statements are made.
e) Engineers shall be dignified and modest in explaining their work and merit, and
will avoid any act tending to promote their own interests at the expense of the
integrity, honor and dignity of the profession.

Canon 4. Civil Engineers shall act in professional matters for each employer or client as
faithful agents or trustees, and shall avoid conflicts of interest.

f) Engineers shall avoid all known or potential conflicts of interest with their
employers or clients and shall promptly inform their employers or clients of any
business association, interests, or circumstances which could influence their
judgment or the quality of their services.
g) Engineers shall not accept compensation from more than one party for services
on the same project, or for services pertaining to the same project, unless the
circumstances are fully disclosed to and agreed to, by all interested parties.
h) Engineers shall not solicit or accept gratuities, directly or indirectly, from
contractors, their agents, or other parties dealing with their clients or employers
in connection with work for which they are responsible.
i) Engineers in public service as members, advisors, or employees of a
governmental body or department shall not participate in considerations or
actions with respect to services solicited or provided by them or their
organization in private or public engineering practice.
j) Engineers shall advise their employers or clients when, as a result of their
studies, they believe a project will not be successful.
k) Engineers shall not use confidential information coming to them in the course of
their assignments as a means of making personal profit if such action is adverse
to the interests of their clients, employers or the public.
g) Engineers shall not accept professional employment outside of their regular
work or interest without the knowledge of their employers.

DEFINITION OF TERMS
Reputation - overall quality or character as seen or judged by people in general

Merit - the quality of being particularly good or worthy, especially so as to

deserve praise or reward

Solicit - ask for or try to obtain something from someone

Gratuity - a gift of money, over and above payment due for service

Unlawful - not conforming to, permitted by, or recognized by law or rules

Political - relating to the ideas or strategies of a particular party or group

Competence - the ability to do something successfully or efficiently

Commission - a form of payment to an agent for services rendered

Contingent - dependent on
Compromised - accept standards that are lower than is desirable

Falsify - alter (information or evidence) so as to mislead

Propriety - the state or quality of conforming to conventionally accepted standards

of behavior or morals

Misleading - giving the wrong idea or impression

Derogatory - showing a critical or disrespectful attitude

Dignity - the state or quality of being worthy of honor or respect

Prospects - the possibility that something will happen in the future

Criticize - to express disapproval of something or someone

Indiscriminately - affecting or harming many people or things in a careless

or unfair way

Consent- to agree to do or allow something

Maliciously- having or showing a desire to cause harm to another person

CANON 5. Civil engineers shall build their professional reputation on the merit of
their services and shall not compete unfairly with others

This conduct of ethic is not limited only to the profession of Civil Engineering but
it is a conduct that should be practiced by all professions. This conduct must be applied
from the day you are looking to start your career until the end of your career life.
Civil Engineering belongs to the service industry hence a professional must build
his reputation based on how well he has delivered his services to his clientele, no more,
no less. And since there are already a multitude of practicing Civil Engineers in the
industry, competition becomes a natural occurrence on different fronts like applying for
work, getting a project, getting a promotion, etc. But no matter how fierce the
competition a professional must always remain fair in competing with others.
With regards to fair competition in the Civil Engineering profession, the flowing
guidelines are enumerated:
a) Civil Engineers shall not give, solicit, or receive either directly or indirectly, any
political contribution, gratuity, or unlawful consideration in order to secure
work, exclusive of securing salaried positions through employment agencies.
b) Civil Engineers should negotiate contracts for professional services fairly and on
the basis of demonstrated competence and qualifications for the type of
professional service required.
c) Civil Engineers may request; propose or accept professional commissions on a
contingent basis only under circumstances in which their professional judgments
would not be compromised.
d) Civil Engineers shall not falsify or permit misinterpretation of their academic or
professional qualifications or experience.
e) Civil Engineers shall give proper credit for engineering work to those to whom
credit is due, and shall recognize the propriety interests of others. Whenever
 possible, they shall name the person or persons who may be responsible for
designs, inventions, writings, or other accomplishments.
f) Civil Engineers may advertise professional services in a way that does not contain
misleading language or is in any other many derogatory to the dignity of the
profession.
1. Professional cards in recognized, dignified publication, and listing
in rosters or directories published by responsible organization,
provided that the cards are consistent in size and content and are
in a section of publication regularly devoted to such professional
card.
2. Brochures which factually describe experience, facilities,
personnel and capacity to render service, providing they are not
misleading with the respect to the engineers’ participation in
project described.
3. Display advertising in recognized dignified business and
professional publications, providing it is factual and is not
misleading with respect to the engineer’s extent of participation in
project described.
4. A statement of engineers name or the name of the firm and
statement of the type of service posted on projects for which they
render service.
5. Preparation or authorization of descriptive articles for the lay or
technical, press, which are factual and dignified. Such articles shall
not imply anything more than direct participation in the project
described.
6. Permission by engineers for their names to be used in commercial
advertisements, such as may published by contractors, materials
suppliers, etc., only by means of a modest, dignified notation
acknowledging the engineers’ participation in the project
described. Such permission shall not include public endorsement
of proprietary products.
g) Civil Engineers shall not maliciously of falsely, directly or indirectly, injure the
professional reputation, prospects, practice or employment of another engineer
or indiscriminately criticize another’s work.
h) Civil Engineers shall not use equipment, supplies, and laboratory or office
facilities of their employers to carry on outside practice without the consent of
their employers.
CANON 6. Shall act in such a manner as to uphold and enhance the honor, integrity, and
dignity in civil engineering profession.

a) Shall not knowingly act in a manner w/c will be derogatory to the honor,
integrity, or dignity of civil engineering profession or knowingly engage in
business or professional practices of a fraudulent, dishonest or unethical nature.

CANON 7. Shall continue their professional development throughout their carriers and
provide opportunities for professional development of those civil engineers.
 a) Should keep current in their specialty fields by engaging in;

 Professional practice
 participating in continuing education courses
 reading technical literature
 attending professional meetings and seminars

b) Should encourage their engineering employees to become registered at the

earliest possible date.

c) Should encourage engineering employees to attend and present papers at

professional and technical society meetings.

d) Shall uphold the principle of mutually satisfying relationships between

employers and employees w/ respect to terms of employment including
professional grade descriptions, salary ranges, and fringe benefits.

SECTION 1

THE PRACTICE OF CIVIL ENGINEERING

SECTION 1.1 GENERAL

Addresses the procurement of

civil engineering services for a
quality project.
Quality by definition is one satisfactorily
meeting both the expectations of the
client or
employer and the requirements of the project. It requires professional dedication, effort,
adequate time for investigation, planning and innovation, fair compensation, and
appropriate authority and responsibility. It cannot be achieved only by effort at the
beginning or end of the project.

SECTION 1.2 PROFESSIONAL RESPONSIBILITY

The standard of civil engineers is to be given responsibility for;

- studying
- designing
- conceiving
- observing construction
- assisting in the programming for operating and maintaining engineering works.

The health, safety, well-being and comfort of the public in using a facility, and the
ultimate facility cost, all depend to a considerable extent on how well members of the
project team fulfil their professional and contractual responsibilities. The civil engineer,
therefore, has obligations as trustee to the public interest as well as faithful to the
private interests of clients. Successfully fulfilling these responsibilities require candor,
engineer and the client. Only in this way can a professional relationship be established
and a successful project implemented.

Civil engineers shall conduct themselves in a highly professional manner and

serve as faithful trustees or agents of their client or employers.

Civil engineers are therefore bound by the fundamental canons of ethics

contained.

Care and protection of the environment is paramount in the civil engineering

works engagements.

Civil engineers must always strive to maintain the highest standard of ethical
professional practice in their dealing with client employers, employees, competitors and
the community.

SECTION 1.3 CLIENT-CIVIL ENGINEER RELATIONSHIP

Regardless of their specific field of engineering, projects involve collaboration

among multiple individuals, in many cases from different organizations, and the end
result is strongly influenced by how effectively project staff members can collaborate
with each other

Many Engineering works are conceived, designed and constructed through the
efforts of Civil Engineers employed in governmental agencies or in industry. Other
engineering projects come to fruition through the efforts of Civil Engineering firms
engaged for a specific project or program by public agencies or private clients.

1. OBLIGATIONS OF THE CIVIL ENGINEER

1. The Civil Engineer shall perform Scope of the Services as stated in SECTION 2
2. The Civil Engineer shall exercise reasonable skill, care and diligence in the
performance of his obligations.
3. The Civil Engineer shall act independently and, as required by the contract,
perform necessary skills and professional judgement, when required to certify,
decide or exercise discretion between the clients and a Third Party with whom
the client has a contract.
4. The Civil Engineer is authorized to act as the Client’s faithful agent when
required but only as implied in section 2 or implied in the contract adopted for
the Project.
5. When aware of any matters which will change or has changed the scope of the
services, the Civil Engineer shall give written notice to the Client containing
particulars of the change.
6. For Specified Staged Services, the Civil Engineer shall not initiate or proceed with
any subsequent stage of the Services without the approval of the client.
7. When required, the Civil Engineer shall direct and co-operate with all other
professionals and integrate their work where applicable into that being
undertaken by the Civil Engineer and other professionals, but shall not be
professionally liable for their work.
 8. The Civil Engineer may recommend specialist suppliers and/or contractors to
design and execute certain parts of the Works, in which case the Civil Engineer
shall co-ordinate the design of such part or parts with overall design of the
Works, but he shall be relieved of all responsibility for the design, manufacture,
installation and performance of any such part or parts of the Works. The Civil
Engineer shall not be liable for acts of negligence, default or omission by such
person or persons.
9. The Civil Engineer shall notify the Client of any interest the Civil Engineer has
which may significantly conflict with the interests of the Client under their
contract.

2. OBLIGATIONS OF THE CLIENT

1. The Client shall pay the Civil Engineer for his Services, the amount of fees and
expenses set out in or determined in their Agreement.
2. The Client shall provide the Civil Engineer within reasonable time, all
information required by the Civil Engineer in the performance of his services and
a decision in writing on all matters properly referred to the client in writing.
3. The client shall cooperate with the civil engineer and shall not interfere with or
obstruct the proper performance of the Services.
4. The client shall, as soon as practicable, make arrangements to enable the Civil
Engineer to enter the site and inspect facilities needed in the performance of his
Services.
5. The client shall arrange for the provision of services from other professionals or
others as may be required and bear all costs.
6. When the Civil Engineer is required to administer the work of other
professionals or other third parties who are directly contracted by the Client or
when the Civil Engineer is required to act as Engineer-to-the-Contract for any
contract on behalf of the Client then all instructions by the client shall be given
through the Civil Engineer.
7. When aware of any matter which will change or has changed the scope of the
Civil Engineer’s Services, the client shall notify in writing within 7 days the Civil
Engineer containing as far as practicable, the particulars of the change.

3. LIABILITY OF THE CIVIL ENGINEER AND THE CLIENT

1. The civil engineer shall only be liable to pay damages to the client arising out of
or in connection with their agreement if a breach of duty of care is established
against civil engineer.

2. The client shall only be liable to pay damages to the civil engineer if a breach of
the client’s duty to the civil engineer is established against the client.

3. Resolution of any conflicts arising from the agreement between the civil engineer
and the client shall be done by giving preference to the process of arbitration.
4. Establishment of the breach of duty on the part of the civil engineer and that of
the client’s duty to the civil engineer shall be undertaken by a third party
arbitrator mutually acceptable to the client and the civil engineer.

1.3.3.aLIMITATION OF CIVIL ENGINEER’S RESPONSIBILITY

1. The civil engineer shall have no responsibility or liability for cost, loss or
damage of whatsoever nature arising from any errors in or omission from
data, documents, plans, design or specifications not prepared by the civil
engineer, or other personnel under the direct control of the civil engineer,
and arising from any act or omission or lack of performance or any negligent
or fraudulent act or omission by the client or any other consultant, contractor
or supplier to the client or any employee or agent of the client, other
consultants, contractors or suppliers.

2. Not with standing any recommendation or lack of recommendation made by

the civil engineer to the client, the civil engineer shall not be held to have
made any warranty or promise as to the suitability, competence or
performance of any other consultant, contractor, supplier, or other third
party.

3. The civil engineer shall not be responsible for the techniques, method,
programmes, sequences or procedures adopted by any contractor or other
third party responsible for executing any aspects of the project, nor for their
performance on time. Their failure to carry out the work in accordance with
any contract documents or for any other acts or omissions.

1.3.3.bDAMAGES

If found that the civil engineer undertaking services is liable to the client,
damages shall be payable on the following terms:

4. Damages payable shall be limited to the amount of reasonably foreseeable

loss and damage suffered as a direct result of such breach;

5. The maximum amount of damages payable in respect of liability, whether

under the law or contract, or otherwise, is limited to the amount specified in
the specific provision or, if no such amount or provision is specified, to the
lesser of ₱300,000 or 10% of the total amount of damages of the portion of
the work attributable to the civil engineer’s breach of duty or twenty five
percent of the total of fees payable under their agreement.

6. If found to be liable, in circumstances where the acts or omissions of a third

party have contributed to the loss or damage, the proportion of damages
payable by the party found liable shall be limited to that proportion which is
attributable to that party’s breach of duty, whether the claim are made under
contract or otherwise.
4. SUSPENTION AND TERMINATION OF SERVICES

If a circumstances arises by which the plans are impractical or impossible to

perform by the engineer in accordance to agreement of the civil engineer and the client
and leads to further revision. Both parties shall be notified.

If by reason of the abovementioned circumstances services have been

suspended, the time for their completion shall be extended by the extent of the delay
plus a reasonable period for their resumption.

The client may suspend all or part of the services or terminate the agreement by
written notice not less than 30 days to the civil engineer who shall immediately make
the arrangements to stop the services and minimize further expenditure.

The civil engineer by written notice not less than 30 days may terminate the
agreement or suspend the whole or part of the services under the following conditions:

a) when 30 days after the due date, the civil engineer has not receive any payment
on any account which has not by that time contested in writing; or
b) when the services has been suspended for the period exceeding 6 calendar
months, or if it is clear to the civil engineer the it will be impractical or
impossible to resume the services before the period of suspension.

When the services are suspended or terminated the civil engineer shall be
entitled to the payment for the services carried out including consequential costs,
expenses, and disruption fees incurred as the result of suspension or termination and
remobilization fees on resumption.

5. SETTLEMENTS OF DISPUTES

If the dispute arises on either party then that party shall notify the other by
means of writing with the details of the dispute and request that the dispute be resolve
by conciliation. If the matter that the dispute is not resolve by conciliation between the
parties with in the prescribe time then the matter of dispute shall be refer to arbitration.

6. OWNERSHIP OF DATA, DESIGNS AND DOCUMENTS

The design analysis, drawings, specifications, and reproduction thereof are

instruments owned by the professional civil engineer and shall be used only for the
specific project covered by the agreement between the client and engineer.

1.4 CIVIL ENGINEERING SERVICES

Civil Engineers and civil engineering firms, whether they serve public or private
employees (client) can provide a variety of important services. Typical services may
include:
  Design, consultation and advice
 Feasibility studies
 Field investigation and engineering data collection
 Environmental assessment, impact statements of engineering reports
 Opinions of probable construction cost
 Preliminary and final designs, drawings, specifications and construction bidding
documents
 Assistance in securing construction bids and in awarding contracts
 Construction administration and observation
 Arrangements for or performance of testing of materials and equipment
 Assistance in start-up, assessment of capacity, and operation of facilities
 Preparation of operation and operating manuals
 Appraisals and rate studies
 Value engineering
 Expert testimony
 Assessment of risks
 Structural remediation or rehabilitation
 Project management and controls
 Provision of supplement temporary staff
 Teaching
Civil Engineers may also serve as construction managers or program managers and may
employ other sub consultants and subcontractors as part of their services.

Professional Civil Engineering firms draw upon the combined talents of various
disciplines such as economists, planners, engineers and designers, estimators,
architects, scientists. Representatives, surveyors and others.

The Civil engineer provides services which may result in the client’s committing
financial resources for construction of a proposed project.

Project implementation has become increasingly complex, involving financial,

environmental, regulatory, technical and managerial matters. As a result, clients have
opted to pursue a number of implementation approaches, one such approach is
commonly called program management.

The program manager is generally a Civil engineer.

5. SPECIALIZATION IN CIVIL ENGINEERING

The practice of civil engineering, the PICE (Philippine Institute of Civil
Engineering) recognizes the initial five areas of specialization:

 Knowledge – just like facts, information, and skills acquired by a person through
education or practical understanding of a subject.
 Experience - practical contact with and observation of facts or events
 Education and Training- contain occupations in the same field of work that
requires similar skills and plans towards obtaining the necessary knowledge,
competencies, and trainingfor success in a particular career pathway.
 The PICE (Philippine Institute of Civil Engineering) recognizes specializations in
the following fields:

 Structural Engineering- creates drawings and specifications, perform

calculations, review the work of other engineers, write reports and evaluations,
and observe construction sites.
 Geotechnical Engineering- is the study of the behaviour of soils under the
influence of loading forces and soil-water interactions
 Water Engineering- is someone who deals with the provision of clean water,
disposal of waste water and sewage, and the prevention of flood damage. Their
job involves repairing, maintaining and building structures that
control water resources
 Transportation Engineer- is the application of technology and scientific
principles to the planning, functional design, operation and management of
facilities for any mode of transportation in order to provide for the safe, efficient,
rapid, comfortable, convenient, economical, and environmentally compatible
movement of people and goods
 Construction Management- is a professional service that uses specialized,
project management techniques to oversee the planning, design, and
construction of a project, from its beginning to its end.

1.6 SELECTION OF A CIVIL ENGINEER

The engagement of civil engineer is one of the most important decisions to be made during
the developmentofanengineering project.
The accomplishment of the clients objectives and commitment of financial
resources, soundness of design, and suitability of the proposed for its intended
function rest upon the experience, organization, skill, integrity, and judgment of
the civil engineer. The civil engineer‘s recommendations based on these factors, affect
lifecycle costs and thereby influence the economic feasibility of the undertaking.
Qualifications, experience, reputation, and quality of client service are of critical
importance in the selection of a civil engineer as a consultant. The civil engineer
competence in specialty fields, performance on other project of similar nature,
interrelationship with design team members, personnel insurance and other annual
charges and the resulting life cycle cost of the project.

1.7 PRIME PROFESSIONAL PRACTICE

The guidelines of this manual refer specifically to the engagement of engineering

services where the consulting Civil Engineers serve as the client directly as a prime
professional, and where the client is usually also the owner of the project.

Some information also is applicable when the Civil Engineer serves the client
indirectly as a sub-consultant through another engineer or architect who serves as the
prime professional. These services may also be performed through another entity on a
design-build construction management, or turnkey project.

8. EMPLOYMENT

The guidelines in this manual also refer to Civil Engineers employed by

professional consulting firms, government agencies, educational institutions,
construction firms, manufacturing and commercial entities and other entities.

9. DESIGN COMPETITION

A process through which a Civil Engineer is a selected above other competitors

based on proposal or an innovative approach to solving a client’s needs. Competing
firms are normally shortlisted from a number or engineers responding to a
client’,solicitation either directly, by a letter request or indirectly through a newspaper
or other form or publication. The civil engineer should be awarded a stipend to
participate in the competition.

10. CONTINGENCY BASIS OF EMPLOYMENT

Canon 5c or the PICE Code of Ethics provides that “Engineers may request,
propose or accept professional commissions on a contingency basis only under
circumstances in which their professional judgments would not be compromised”.
Although contingent commissions are permissible, it is the general view of PICE that it is
not in the best interest of the client or the public for the Civil Engineer to provide
professional services on a contingency basis.

11. PROFESSIONAL PRACTICE OF FOREIGN CIVIL ENGINEERS

Foreign Civil Engineers are allowed by law to practice civil engineering in the
Philippines under the following instances.

1. The laws of the foreigner’s state or county allow the citizens of the
Philippines to practice civil engineering on the same basis and grant the same
privileges as those enjoyed by the subjects or citizens if such foreign state or
country.
2. Allowed under international agreement.
3. Consultants to be engaged in foreign-funded, joint venture or foreign-assisted
projects of the government.
4. Employees of Philippine or foreign private institutions pursuant to law.
5. Civil Engineers who were former citizens of the Philippines, who had been
registered and issued a certificate of registration and a professional
identification card prior to their naturalization as foreign citizens, and who,
while in the country on a visit, sojourn or permanent residence, desire to
practice their profession.
The application of the law is however not automatic. Foreign civil engineers must still
secure a certificate of registration/license or special permit from the Professional
Regulation Commission. Agencies, organizations or individuals, whether public or
private, who secure the services of a foreign Civil Engineer, are made responsible by law
(R.A. 8981) for securing a special permit from the PRC and the Department of Labor and
Employment pursuant to their respective rules

Group 2
OBLIGATIONS
CHAPTER 1

GENERAL PROVISIONS

Art. 1156. An obligation is a juridical necessity to give to do or not to do.

Art. 1157. Obligations arise from:
1. Law;
2. Contracts;
3. Quasi-contracts;
 4. Acts or omissions punished by law; and
5. Quasi-delicts. (1089a)
Art. 1158. Obligations arise from law are not presumed. Only those expressly determined in
this Code or special laws are demandable, and shall be regulated by the precepts of the law,
which establishes them; and as to what has not been foreseen, by the provisions of this book.
(1090)
Art. 1159. Obligations arising from contracts have that force of law between the contracting
parties and should complied with in good faith. (1091a)
Art. 1160. Obligations derived from quasi-contracts shall be subject to the provisions of
Chapter 1, Title XVII, (EXTRA-CONTRACTUAL OBLIGATIONS).
Art. 1161. Civil obligations arising from criminal offenses shall be governed by the penal
laws, subject to the provisions of article 2177, and of the pertinent provisions of chapter 2,
Preliminary Title, on Human Relations and of Title XVIII (DAMAGES), regulating damages.
(1092a)
Art. 1162. Obligations derived from quasi-delicts shall be governed by provision of Chapter
2, Title XVII (EXTRA-CONTRACTUAL OBLIGATIONS), and by special laws. (1093a)

CHAPTER 2
NATURE AND EFFECT OF OBLIGATIONS
Art. 1163. Every person obliged to give something is also oblige to take care of it with the
proper diligence of a good father of a family, unless the law or the stipulation of the parties
requires another standard of care (1094a)
Art. 1164. The creditor has a right to the fruits of the thing from the time the obligation to
deliver it arises. However, he shall acquire no real right over it until the same has been
delivered to him (1095)
Art. 1165. When what is to be delivered is a determinate thing, the creditor, in addition to the
right granted him by article 1170, may compel the debtor to make the delivery.
If the thing is inderterminate or genetic, he may ask that the obligation be complied
with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same things to two or more
persons who do not have the same interest, he shall be responsible for any fortuitous event
until he has effected the delivery. (1096)
Art. 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.
(1097a)
Art. 1167. If a person obliged to do something fails to do it, the same shall be
executed at his cost.
The 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.
Art. 1168. When the obligation consists in not doing something incur in delay from
time the oblige judicially or extrajudicially demands from them the fulfillment of their
obligation.
However, the demand by the creditor shall not be necessary in order that may
 1. When the obligation or the law expressly so declares; 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 the 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 proper manner with what is incumbent
upon him. Form the moment one of the parties fulfills his obligations, delay by
the other begins. (1100a)
Art. 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.
(1101)
Art. 1171. Responsibility arising from fraud is demandable in all obligations. Any waiver of
an action for future fraud is void. (1102a)
Art. 1172. Responsibility arising from negligence in the performance of every kind of
obligation is also demandable, but such liability may be regulated by the courts, according to
the circumstances. (1103)
Art. 1173. The fault or negligence of the obligor consists in the omission of that diligence
which is required by the nature of the obligation and corresponds with the circumstances of
the perons of the time and of the place. When negligence shows bad faith, the provisions of
articles 1171 and 2201, paragraph 2, shall apply.
If the law or contract does not state the diligence which as to be observed in the
performance, that which is expected of a good father of a family shall be required. (1104a)
Art. 1174. Except in cases expressly specified by the law, or when it is otherwise
declared by stipulation, or when the nature of the obligation requires the assumption of
risk, no person shall be responsible for those events which could not be foreseen, or which,
though foreseen, were inevitable. (1105a)
Art. 1175. Usurious transaction shall be governed by special laws.
Art. 1176. The receipt of the principal by the creditor without reservation with
respect to the interest, shall give rise to the presumption that said interest has been paid.
The receipt of a later installment of a debt without reservation as to prior installments,
shall likewise raise the presumption such installments have been paid. (1110a)
Art. 1177. The creditors, after having pursued the property in possession of the
debtor tosatisfy their claims, may exercise all the rights and bring all the actions of the latter
for the same purpose, save those which are inherent in his person; they may also impugn
the acts which the debtor may have done to defraud them. (1111)
Art. 1178. Subject to the laws, all rights acquired in virtue of an obligation are
transmissible, if there has been no stipulation to the contrary. (1112)

CHAPTER 3
DIFFERENT KINDS OF OBLIGATIONS
SECTION 1. - Pure and Conditional Obligations

Art. 1179. Every obligation whose performance does not depend upon a future or uncertain
event, or upon a past event unknown to the parties, is demandable at once.
Every obligation which contains a resolutory condition shall also be demandable, without
prejudice to the effects of the happening of the event. (1113)

Art. 1180. When the debtor binds himself to pay when his means permit him to do so, the
obligation shall be deemed to be one with a period, subject to the provisions of Article 1197.
(n)

Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment
or loss of those already acquired, shall depend upon the happening of the event which
constitutes the condition. (1114)

Art. 1182. When the fulfillment of the condition depends upon the sole will of the debtor, the
conditional obligation shall be void. If it depends upon chance or upon the will of a third
person, the obligation shall take effect in conformity with the provisions of this Code. (1115)

Art. 1183. Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the impossible or unlawful condition shall
be valid.
The condition not to do an impossible thing shall be considered as not having been agreed
upon. (1116a)

Art. 1184. The condition that some event happen at a determinate time shall extinguish the
obligation as soon as the time expires or if it has become indubitable that the event will not
take place. (1117)

Art. 1185. The condition that some event will not happen at a determinate time shall render
the obligation effective from the moment the time indicated has elapsed, or if it has become
evident that the event cannot occur.

If no time has been fixed, the condition shall be deemed fulfilled at such time as may have
probably been contemplated, bearing in mind the nature of the obligation. (1118)

Art. 1186. The condition shall be deemed fulfilled when the obligor voluntarily prevents its
fulfillment. (1119)

Art. 1187. The effects of a conditional obligation to give, once the condition has been
fulfilled, shall retroact to the day of the constitution of the obligation. Nevertheless, when the
obligation imposes reciprocal prestations upon the parties, the fruits and interests during the
pendency of the condition shall be deemed to have been mutually compensated. If the
obligation is unilateral, the debtor shall appropriate the fruits and interests received, unless
from the nature and circumstances of the obligation it should be inferred that the intention of
the person constituting the same was different.

In obligations to do and not to do, the courts shall determine, in each case, the retroactive
effect of the condition that has been complied with. (1120)

Art. 1188. The creditor may, before the fulfillment of the condition, bring the appropriate
actions for the preservation of his right.
The debtor may recover what during the same time he has paid by mistake in case of a
suspensive condition. (1121a)

Art. 1189. When the conditions have been imposed with the intention of suspending the
efficacy of an obligation to give, the following rules shall be observed in case of the
improvement, loss or deterioration of the thing during the pendency of the condition:

(1) If the thing is lost without the fault of the debtor, the obligation shall be extinguished;

(2)If the thing is lost through the fault of the debtor, he shall be obliged to pay damages; it is
understood that the thing is lost when it perishes, or goes out of commerce, or disappears in
such a way that its existence is unknown or it cannot be recovered;

(3)When the thing deteriorates without the fault of the debtor, the impairment is to be borne
by the creditor;

(4)If it deteriorates through the fault of the debtor, the creditor may choose between the
rescission of the obligation and its fulfillment, with indemnity for damages in either case;

(5)If the thing is improved by its nature, or by time, the improvement shall inure to the
benefit of the creditor;

(6)If it is improved at the expense of the debtor, he shall have no other right than that granted
to the usufructuary. (1122)

Art. 1190. When the conditions have for their purpose the extinguishment of an obligation to
give, the parties, upon the fulfillment of said conditions, shall return to each other what they
have received.
In case of the loss, deterioration or improvement of the thing, the provisions which, with
respect to the debtor, are laid down in the preceding article shall be applied to the party who
is bound to return.

As for the obligations to do and not to do, the provisions of the second paragraph of Article
1187 shall be observed as regards the effect of the extinguishment of the obligation. (1123)

Art. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.

The injured party may choose between the fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.

The court shall decree the rescission claimed, unless there be just cause authorizing the fixing
of a period.

This is understood to be without prejudice to the rights of third persons who have acquired
the thing, in accordance with Articles 1385 and 1388 and the Mortgage Law. (1124)

Art. 1192. In case both parties have committed a breach of the obligation, the liability of the
first infractor shall be equitably tempered by the courts. If it cannot be determined which of
the parties first violated the contract, the same shall be deemed extinguished, and each shall
bear his own damages. (n)

SECTION 2: OBLIGATIONS WITH A PERIOD

TERMINOLOGIES:
Obligation with a Period
- Is one whose effects or consequences are subjected in one way or another to the
expiration or arrival of said period or term.
Period
- Is a future and certain event upon the arrival of which the obligation (or right) subject
to it either arises or is terminated.
Tenor
- The amount of time left for the repayment of a loan or contract or the initial term
length of a loan. Tenor can be expressed in years, months or days.
Resolutory Period
- The obligation is valid up to a day certain and terminates upon arrival of the period.

Article 1193: Obligations for whose fulfillment a day certain has been fixed, shall be
demandable only when that day comes.

Obligations with a resolutory period take effect at once, but terminate upon arrival of the day
certain.

A day certain is understood to be that which must necessarily come, although it may not be
known when.

If the uncertainty consists in whether the day will come or not, the obligation is conditional,
and it shall be regulated by the rules of the preceding Section. (1125a)

Article 1194: In case of loss, deterioration or improvement of the thing before the arrival of
the day certain, the rules in Article 1189 shall be observed. (n)

Article 1195: Anything paid or delivered before the arrival of the period, the obligor being
unaware of the period or believing that the obligation has become due and demandable, may
be recovered, with the fruits and interests. (1126a)

Article 1196: Whenever in an obligation a period is designated, it is presumed to have been

established for the benefit of both the creditor and the debtor, unless from the tenor of the
same or other circumstances it should appear that the period has been established in favor of
one or of the other. (1127)
Article 1197: If the obligation does not fix a period, but from its nature and the
circumstances it can be inferred that a period was intended, the courts may fix the duration
thereof.

The courts shall also fix the duration of the period when it depends upon the will of the
debtor.

In every case, the courts shall determine such period as may under the circumstances have
been probably contemplated by the parties. Once fixed by the courts, the period cannot be
changed by them. (1128a)

Article 1198: The debtor shall lose every right to make use of the period:
(1)When after the obligation has been contracted, he becomes insolvent, unless he gives a
guaranty or security for the debt;
(2)When he does not furnish to the creditor the guaranties or securities which he has
promised;
(3)When by his own acts he has impaired said guaranties or securities after their
establishment, and when through a fortuitous event they disappear, unless he immediately
gives new ones equally satisfactory;
(4) When the debtor violates any undertaking, in consideration of which the creditor agreed
to the period.
(5) When the debtor attempts to abscond. (1129a)

SECTION 3: ALTERNATIVE OBLIGATIONS

Article 1199: A person alternatively bound by different prestations shall completely perform
one of them.

The creditor cannot be compelled to receive part of one and part of the other undertaking.
(1131)

Article 1200: The right of choice belongs to the debtor, unless it has been expressly granted
to the creditor.

The debtor shall have no right to choose those prestations which are impossible, unlawful or
which could not have been the object of the obligation. (1132)
Article 1201: The choice shall produce no effect except from the time it has been
communicated. (1133)

Article 1202: The debtor shall lose the right of choice when among the prestations whereby
he is alternatively bound, only one is practicable. (1134)

Article 1203: If through the creditor's acts the debtor cannot make a choice according to the
terms of the obligation, the latter may rescind the contract with damages. (n)

Article 1204: The creditor shall have a right to indemnity for damages when, through the
fault of the debtor, all the things which are alternatively the object of the obligation have
been lost, or the compliance of the obligation has become impossible.

The indemnity shall be fixed taking as a basis the value of the last thing which disappeared,
or that of the service which last became impossible.

Damages other than the value of the last thing or service may also be awarded. (1135a)

Article 1205 :When the choice has been expressly given to the creditor, the obligation shall
cease to be alternative from the day when the selection has been communicated to the debtor.

Until then the responsibility of the debtor shall be governed by the following rules:

(1)If one of the things is lost through a fortuitous event, he shall perform the obligation by
delivering that which the creditor should choose from among the remainder, or that which
remains if only one subsists;

(2)If the loss of one of the things occurs through the fault of the debtor, the creditor may
claim any of those subsisting, or the price of that which, through the fault of the former, has
disappeared, with a right to damages;

(3)If all the things are lost through the fault of the debtor, the choice by the creditor shall fall
upon the price of any one of them, also with indemnity for damages.

The same rules shall be applied to obligations to do or not to do in case one, some or all of
the prestations should become impossible. (1136a)

Article 1206: When only one prestation has been agreed upon, but the obligor may render
another in substitution, the obligation is called facultative.

The loss or deterioration of the thing intended as a substitute, through the negligence of the
obligor, does not render him liable. But once the substitution has been made, the obligor is
liable for the loss of the substitute on account of his delay, negligence or fraud. (n)

SECTION 4.

JOINT AND SOLIDARY OBLIGATIONS

ARTICLE 1207

The concurrence of two or more creditors or of two or more debtors in one and the same
obligation does not imply that each one of the former has a right to demand, or that each one
of the latter is bound to render, entire compliance with the prestation. There is a solidary
liability only when the obligation expressly so states, or when the law or the nature of the
obligation requires solidarity. (1137a)

ARTICLE 1208

If from the law, or the nature or the wording of the obligations to which the preceding article
refers the contrary does not appear, the credit or debt shall be presumed to be divided into as
many shares as there are creditors or debtors, the credits or debts being considered distinct
from one another, subject to the Rules of Court governing the multiplicity of suits. (1138a)

ARTICLE 1209

If the division is impossible, the right of the creditors may be prejudiced only by their
collective acts, and the debt can be enforced only by proceeding against all the debtors. If one
of the latter should be insolvent, the others shall not be liable for his share. (1139)

ARTICLE 1210

The indivisibility of an obligation does not necessarily give rise to solidarity. Nor does
solidarity of itself imply indivisibility.

ARTICLE 1211
Solidarity may exist although the creditors and the debtors may not be bound in the same
manner and by the same periods and conditions. (1140)

ARTICLE 1212

Each one of the solidary creditors may do whatever may be useful to the others, but not
anything which may be prejudicial to the latter. (1141a)

ARTICLE 1213

A solidary creditor cannot assign his rights without the consent of the others. (n)

ARTICLE 1214

The debtor may pay any one of the solidary creditors; but if any demand, judicial or
extrajudicial, has been made by one of them, payment should be made to him. (1142a)

ARTICLE 1215

Novation, compensation, confusion or remission of the debt, made by any of the solidary
creditors or with any of the solidary debtors, shall extinguish the obligation, without
prejudice to the provisions of Article 1219.

The creditor who may have executed any of these acts, as well as he who collects the debt,
shall be liable to the others for the share in the obligation corresponding to them. (1143)

ARTICLE 1216

The creditor may proceed against any one of the solidary debtors or some or all of them
simultaneously. The demand made against one of them shall not be an obstacle to those
which may subsequently be directed against the others, so long as the debt has not been fully
collected. (1144a)

ARTICLE 1217

Payment made by one of the solidary debtors extinguishes the obligation. If two or more
solidary debtors offer to pay, the creditor may choose which offer to accept.
He who made the payment may claim from his co-debtors only the share which corresponds
to each, with the interest for the payment already made. If the payment is made before the
debt is due, no interest for the intervening period may be demanded.

When one of the solidary debtors cannot, because of his insolvency, reimburse his share to
the debtor paying the obligation, such share shall be borne by all his co-debtors, in proportion
to the debt of each. (1145a)

ARTICLE 1218

Payment by a solidary debtor shall not entitle him to reimbursement from his co-debtors if
such payment is made after the obligation has prescribed or become illegal. (n)

ARTICLE 1219

The remission made by the creditor of the share which affects one of the solidary debtors
does not release the latter from his responsibility towards the co-debtors, in case the debt had
been totally paid by anyone of them before the remission was effected. (1146a)

ARTICLE 1220

The remission of the whole obligation, obtained by one of the solidary debtors, does not
entitle him to reimbursement from his co-debtors. (n)

ARTICLE 1221

If the thing has been lost or if the prestation has become impossible without the fault of the
solidary debtors, the obligation shall be extinguished.

If there was fault on the part of any one of them, all shall be responsible to the creditor, for
the price and the payment of damages and interest, without prejudice to their action against
the guilty or negligent debtor.

If through a fortuitous event, the thing is lost or the performance has become impossible after
one of the solidary debtors has incurred in delay through the judicial or extrajudicial demand
upon him by the creditor, the provisions of the preceding paragraph shall apply. (1147a)

ARTICLE 1222
A solidary debtor may, in actions filed by the creditor, avail himself of all defenses which are
derived from the nature of the obligation and of those which are personal to him, or pertain to
his own share. With respect to those which personally belong to the others, he may avail
himself thereof only as regards that part of the debt for which the latter are responsible.
(1148a)

SECTION 5. –

DIVISIBLE AND INDIVISIBLE OBLIGATIONS

Article 1223

The divisibility or indivisibility of the things that are the object of obligations in which
there is only one debtor and only one creditor does not alter or modify the provisions of
Chapter 2 of this Title. (1149)

Article 1224

A joint indivisible obligation gives the rise to indemnity for damages from the time
anyone of the debtors does not comply with his undertaking. The debtors who may have
been ready to fulfill their promises shall not contribute to the indemnity beyond the
corresponding portion of the price of the thing or of the value of the service in which the
obligation consists.

Article 1225

For the purpose of the preceding articles, obligation to give definite things and those
which are not susceptible of partial performance shall be deemed to be indivisible.

When the obligation has for its object the execution of a certain number of days of
work, the accomplishment of work by metrical units, or analogous things which by their
nature are susceptible of partial performance, it shall be divisible.

However, even though the object or service may be physically divisible, an obligation is
indivisible if so provided by law or intended by the parties.
In obligations not to do, divisibility or indivisibility shall be determined by the character
of the prestation in each particular case. (1151a)

SECTION6:
OBLIGATIONS WITH A PENAL CLAUSE
 Art. 1226. The penalty shall substitute the indemnity for damages and the payment of
interest in case of noncompliance, if there is no stipulation to the contrary.
Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is
guilty of fraud in the fulfilment of the obligation.
The penalty may be enforced only when it is demandable in accordance with the
provisions of this Code. (1152a)
 Art. 1227. The debtor cannot exempt himself from the performance of the obligation
by paying the penalty, save in the case where this right has been expressly reserved
for him. Neither can be creditor demand the fulfilment of the obligation and the
satisfaction of the penalty at the same time, unless this right has been clearly granted
him. However, if after the creditor has decided to require the fulfilment of the
obligation, the performance thereof should become impossible without his fault, the
penalty may be enforced. (1153a)
 Art. 1228. Proof of actual damages suffered by the creditor is not necessary in order
that the penalty may be demanded.
 Art. 1229. The judge shall equitably reduce the penalty when the principal obligation
has been partly or irregularly complied with by the debtor. Even if there has been no
performance, the penalty may also be reduced by the courts if it is iniquitous or
unconscionable. (1154a)
 Art. 1230. The nullity of the penal clause does not carry with it that of the principal
obligation.
The nullity of the principal obligation carries with it that of the penal clause. (1155)

CHAPTER 4
EXTINGUISHMENT OF OBLIGATIONS

 Art. 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.
 Other causes of extinguishment of obligations, such as annulment, rescission,
fulfilment of a resolutory condition, and prescription, are governed elsewhere in this Code.
(1156a)
SECTION1.
PAYMENT OR PERFORMANCE
 Art. 1232. Payment means not only the delivery of money but also the performance,
in any other manner, of an obligation.
 Art. 1233. A debt shall not be understood to have been paid unless the thing or service
in which the obligation consists has been completely delivered or rendered, as the
case may be.
 Art. 1234. If the obligation has been substantially performed in good faith, the obligor
may recover as though there had been a strict and complete fulfilment, less damages
suffered by the obligee.
 Art. 1235. When the obligee accepts the performance, knowing its incompleteness or
irregularity, and without expressing any protest or objection, the obligation is deemed
fully complied with.
 Art. 1236. The creditor is not bound to accept payment or performance by a third
person who has no interest in the fulfilment of the obligation, unless there is a
stipulation to the contrary.
Whoever pays for another may demand from the debtor what he has paid, except that he
paid without the knowledge or against the will of the debtor, he can recover only
insofar as the payment has been beneficial to the debtor. (1158a)
 Art. 1237. Whoever pays on behalf of the debtor without the knowledge or against the
will of the latter, cannot compel the creditor to subrogate him in his rights, such as
those arising from a mortgage, guaranty, or penalty. (1159a)
 Art. 1238. Payment made by a third person who does not intend to be reimbursed by
the debtor is deemed to be a donation, which requires the debtor’s content. But the
payment is in any case valid as to the creditor who has accepted it.
 Art. 1239. In obligation to give, payment made by one who does not have the free
disposal of the thing due and capacity to alienate it shall not be valid, without
prejudice to the provisions of article 1427 under the Title on “Natural Obligations.”
(1160a)
 Art. 1240. Payment shall be made to the person in whose favour the obligation have
been constituted, or his successor in interest, or any person authorized to receive it.
(1162a)
 Art. 1241. Payment to a person who is incapacitated to administer his property shall
be valid if he has kept the thing delivered, or insofar as the payment has been
beneficial to him.
Payment made to a third person shall also be valid insofar as it has redounded to the
benefit of the creditor. Such benefit to the creditor need not to be proved in the
following cases.
(1)If after the payment, the third person acquires the creditor’s right;
(2)If the creditor ratifies the payment to the third person;
 (3)If by the creditor’s conduct, the debtor has been led to believe that the third person
had authority to receive the payment. (1163a)
 Art. 1242. Payment made in good faith to any person in possession of the credit shall
release the debtor. (1164)
 Art. 1243. Payment made to the creditor by the debtor in after the latter has been
judicially ordered to retain the debt shall not be valid. (1165)
 Art.1244. The debtor of a thing cannot compel the creditor to receive a different one,
although the latter may be of the same value as, or more valuable than that which is
due.
In obligations to do or not to do, an act or forbearance cannot be substituted by
another act or forbearance against the obligee’s will. (1166a)
 Art. 1245. Dation in payment, whereby property is alienated to the creditor in
satisfaction of a debt in money, shall be governed by the law of sales.
 Art. 1246. When the obligation consists in the delivery of an indeterminate or generic
thing, whose quality and circumstances have not been stated, the creditor cannot
demand a thing of superior quality. Neither can the debtor deliver a thing of inferior
quality. The purpose of the obligation and other circumstances shall be taken into
consideration. (1167a)
 Art. 1247. Unless it is otherwise stipulated, the extrajudicial expenses required by the
payment shall be for the account of the debtor. With regard to the judicial costs, the
Rules of Court govern.
 Art. 1248. Unless there is an express stipulation to that effect, the creditor cannot be
compelled partially to receive the prestations in which the obligation consists. Neither
may the debtor be required to make partial payments.
However, when the debt is in part liquidated and in part unliquidated, the creditor may
demand and the debtor may affect the payment of the former without waiting for the
liquidation of the latter. (1169a)
 Art. 1249. The payment in debts in money shall be made in the currency stipulated,
and if it is possible to deliverer such currency, then in the currency which is legal
tender in the Philippines.
The delivery of promissory notes payable to order, or bills of exchange or other
mercantile documents shall produce the effect of payment only when they have been
crashed, or when through the fault of the creditor they have been impaired.
In the meantime, the actioned derived from the original obligation shall be held in
abeyance. (1170)
 Art.1250. In case an extraordinary inflation or deflation of the currency stipulated
should supervene, the value of the currency at the time of the establishment of the
obligation shall be the basis of payment, unless there is an agreement to the contrary.
 Art. 1251. Payment shall be made in the place designated in the obligation.
There being no express stipulation and if the undertaking is to deliver a determine
thing, the payment shall be made wherever the thing might be at the moment the
obligation was constituted.
 In any other case the place of payment shall be domicile of the debtor.
If the debtor changes his domicile in bad faith or after he has incurred in delay, the
addition expenses shall be borne by him.
These provisions are without prejudice to venue under Rules of Court. (1171a)

SUBSECTION 1: Application of Payments

Art. 1252. He who has various debts of the same kind in favor of one and the same creditor,
may declare at the time of making the payment, to which of them the same must be applied.
Unless the parties so stipulate, or when the application of payment is made by the party for
whose benefit the term has been constituted, application shall not be made as to debts which
are not yet due.

If the debtor accepts from the creditor a receipt in which an application of the payment is
made, the former cannot complain of the same, unless there is a cause for invalidating the
contract. (1172a)

Art. 1253. If the debt produces interest, payments of the principal shall not be deemed to have
been made until the interest have been covered. (1173)

Art. 1254. When the payment cannot be applied in accordance with the preceding rules, or of
application cannot be inferred from other circumstances, the debt which is most onerous to
the debtor, among those due, shall be deemed to have satisfied.

If the debts due of the same nature and burden; the payment shall be applied to all of them
proportionately. (1174a)

SUBSECTION 2: payment by Cession

Art. 1255. The debtor may cede or assign his property to his creditors in payment of his
debts. This cession, unless there is stipulation to the contrary, shall only release the debtor
from responsibility for the net proceeds of the thing assigned. The agreements which, on the
effect of the cession are made between the debtor and his creditor shall be governed by
special laws. (1175a)

SUBSECTION 3: Tender of Payment and Consignation

Art. 1256. If the creditor to whom tender of payment has been made refuses without just
cause to accept it, the debtor shall be released from responsibility by the consignation of the
thing or sum due.

Consignation alone shall produce the same effect in the following cases:

(1) When the creditor is absent or unknown, or does not appear at the place of payment;
(2) When he is incapacitated to receive the payment at the time it is due;
(3) When, without just cause, he refuses to give a receipt;
(4) When two or more persons claim the same right to collect;
(5) When the title of the obligation has been lost. (1176a)

Art. 1257. In order that consignation of the thing due may release the obligor, it must first be
announced to the person interested in the fulfillment of the obligation.

The consignation shall be ineffectual if it is not made strictly in consonance with the
provisions which regulate payment. (1177)

Art. 1258. Consignation shall be made by depositing the things due at the disposal of judicial
authority, before whom the tender of payment shall be proved, in a proper case, and the
announcement of the consignation in other cases.

The consignation having been made, the interested parties shall also be notified thereof.
(1178)

Art. 1259. The expenses of consignation, when properly made, shall be charged against the
creditor. (1178)

Art. 1260. Once the consignation has been duly made, the debtor may ask the judge to order
the cancellation of the obligation.

Before the creditor has accepted the consignation, or before a judicial declaration that the
consignation has been properly made, the debtor may withdraw the thing or the sum
deposited, allowing the obligation to remain in force. (1180)

Art. 1261. If the consignation having been made, the creditor should authorize the debtor to
withdraw the same, he shall lose every preference which he may have over the thing. The co-
debtors, guarantors and sureties shall be released. (1181a).

SECTION 2. LOSS OF THE THING DUE

Art. 1262. An obligation which consists in the delivery of a determinate thing shall be
extinguished if it should be lost or destroyed without the fault of the debtor, and before he has
incurred in delay.

When by law or stipulation, the obligor is liable even for fortuitous events, the loss of
the thing does not extinguish the obligation, and shall be responsible for damages. The same
rule applies when the nature of the obligation requires the assumption of risk. (1182a)

Art. 1263. In an obligation to deliver a generic thing, the loss of destruction of

anything of the same kind does not extinguish the obligation. (n)

Art. 1264. The courts shall determine whether, under the circumstances, the partial
loss of the object of the obligation is so important as to extinguish the obligation

Art. 1265. Whenever the thing is lost in the possession of the debtor, it shall be
presumed that the loss was due to his fault, unless there is proof of the contrary, and without
prejudice to the provisions of article 1165. This presumption does not apply in a case of
earthquake, flood, storm or other natural calamity (1183a)

Art. 1266. The debtor in obligations to do shall also be released when the
presentation becomes legally or physically impossible without the fault of the obligor. (1184a)

Art. 1267. When the service has been so difficult as to manifestly beyond the
contemplation of the parties, the obligor may also be released therefrom, in whole or in part.
(n)

Art. 1268. When the debt of a thing certain and determinate proceeds from a
criminal offense, the debtor shall not be exempted from the payment of its price, whatever
may be the cause for the loss, unless the thing having been offered by him to the person
who should receive it, the latter refused without justification to accept it. (1185)

Art. 1269. The obligation having been extinguished by the loss of the thing, the
creditor shall have all the rights of action which the debtor may have against third persons by
reason of the loss. (1186)

SECTION 3. CONDONATION OR REMISSION OF THE DEBT

Art. 1270. Condonation or remission is essentially gratuitous, and requires the acceptance by
the obligor. It may be expressly or impliedly.

One and the other kind shall be subject to the rules which govern inofficious
donations. Express cordonation shall, furthermore, comply with the forms of donation. (1187)
Art. 1271. The delivery of a private document evidencing a credit, made voluntarily by the
creditor to the debtor, implies the renunciation of the action which the former had against the
latter.

If in order to nullify this waiver it should be claimed to be inofficious, the debtor and
his heir may uphold it by proving that the delivery of the document was made in virtue of
payment of the debt. (1188)

Art. 1272. Whenever the private document in which the debt appears is found
in the possession of the debtor, it shall be presumed that the creditor delivered it voluntarily,
unless the contrary is proved. (11889)

Art. 1273. The renunciation of the principal debt shall extinguished the
accessory obligations, but the waiver of the latter shall leaver the former in force. (1190)

Art. 1274. It is presumed that the accessory obligation of pledge has been remitted
when the thing pledged, after its delivery to the creditor, is found in the possession of the
debtor, or of a third person who owns the thing (1191a)

SECTION 4. CONFUSION OR MERGER OF RIGHTS

Art. 1275. The obligation is extinguished from the time the characters of creditor and debtor
are merged in the same person (1192a)

Art. 1276. Merger which takes place in the person of the principal debtor or creditor benefits
the guarantors. Confusion which takes place in the person of any the latter does not
extinguish the obligation. (1193)

Art. 1277. Confusion does not extinguish a joint obligation except as regards share
corresponding to the creditor or debtor in whom the two characters concur. (1194)

SECTION 5. COMPENSATION

Art. 1278. Compensation shall take place when two persons, in their own right, are creditors
and debtors of each other. (1195)
Art. 1279. In order that compensation may be proper, it is necessary:
(1) That each one of the obligors be bound principally, and that he be at the same time
a principal creditor of the other;
 (2)That both debts consists in a sum of money, or if the things due are consumable,
they be of the same kind, and also of the same quality if the latter has been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5)That over neither of them there be any retention of controversy, commenced by
third persons and communicated in due time to the debtor. (1196)
Art. 1280. Notwithstanding the provisions of the preceding article, the guarantor may set up
compensation as regards what the creditor may owe principal debtor. (1197)
Art. 1281. Compensation may be total or partial. When the two debts are of the same
amount, there is a total compensation. (n)
Art. 1282. The parties may agree upon the compensation of debts which are not yet due. (n)
Art. 1283. If one of the parties to a suit over an obligation has a claim for damages against
the other, the former may set it off by proving his right to said damages and the amount
thereof. (n)
Art. 1284. When one or both debts are rescissible or voidable, they may be compensated
against each other before they are judicially rescinded or avoided. (n)
Art. 1285. The debtor who had consented to the assignment of rights made by a creditor in
favor of a third person, cannot set up against the assignee the compensation which would
pertain to him against the assignor, unless the assignor was notified by the debtor at the time
he gave his consent, that he reserved his right to the compensation.
If the creditor communicated the cession to him but the debtor did not consent thereto,
the latter may set up the compensation of debts previous to the cession, but not of subsequent
ones.
If the assignment is made without the knowledge of the debtor, he may set up the
compensation of all credits prior to the same also later ones until he had knowledge of the
assignment. (1198a)
Art. 1286. Compensation takes place by operation of law, even though the debts
may be payable at different places, but there shall be an indemnity for expenses of
exchange or transportation to the place of payment. (1199a)
Art. 1287. Compensation shall not be proper when one of the debts arises from a
depositum or from the obligations of a depository or a bailee in commodatum.
Neither can compensation be set up against a creditor who has a claim for support due
by gratuitous title, without the prejudice to the provisions of paragraph 2 of article 301.
(1200a)
Art. 1288. Neither shall there be compensation of one of the debts consists in civil
liability arising from penal offense. (n)
Art. 1289. If a person should have against him several debts which are susceptible of
compensation, the rules on the application of payments shall apply to the order of the
compensation. (1201)
Art. 1290. When all the requisites mentioned in article 1279 are present, compensation takes
effect by operation of law, and extinguishes both debts to the concurrent amount, even though
the creditors and debtors are not aware of the compensation. (1202a)

SECTION 6. NOVATION

Art. 1291. Obligations may be modified by;

(1) Changing their object or principal conditions;
(2) Substituting the person of the debtor;
(3) Subrogating a third person in the rights of the creditor. (1203)
Art. 1292. In order that an obligation may be extinguished by another which substitute the
same, it is imperative that it be so declared in unequivocal terms, or that the old and the new
obligations be on every point incompatible with each other. (1204)
Art. 1293. Novation which consists in substituting a new debtor in the place of the original
one, may be made even without the knowledge or against the will of the latter, but not
without the consent of the creditor. Payment by the new debtor him the rights mentioned in
articles 1236 and 1237. (1205a)
Art. 1294. If the substitution is without the knowledge or against the will of the debtor, the
new debtor’s insolvency or non-fulfillment of the obligation shall not give rise to any liability
on the part of the original debtor. (n)
Art. 1295. The insolvency of the new debtor, who has been proposed by the original debtor
and accepted by the creditor, shall not revive the action of the latter against the original
obligor, except when said insolvency was already existing and public knowledge, or known
to the debtor, when he delegated his debt. (1206a)
Art. 1296. When the principal obligation is extinguished in consequence of a novation,
accessory obligations may subsist only insofar as they may benefit third person who did not
give their consent. (1207)
Art. 1297. If the new obligation is void, the original one shall subsist, unless the parties
intended that the former relation should be extinguished in any event. (n)
Art. 1298. The novation is void if the original obligation was void, except when annulment
may be claimed only by the debtor, or when ratification validates acts which are voidable.
(1208a)
Art. 1299. If the original obligation was subject to a suspensive or resolutory condition, the
new obligation shall be under the same condition, unless it is otherwise stipulated. (n)
Art. 1300. Subrogation of a third person in the rights of the creditor is either legal or
conventional. The former is not presumed, except in cases expressly, mentioned in this Code;
the latter must be clearly established in order that it may take effect. (1209a)
Art. 1301. Conventional subrogation of a third person requires the consent of the original
parties and of the third person. (n)
Art. 1302. It is presumed that there is legal subrogation:
(1)When a creditor pays another creditor who is preferred, even without the debtor’s
knowledge;
(2) When a third person, not interested in the obligation, pays with the express or tacit
approval of the debtor;
(3)When, even without the knowledge of the debtor, a person interested in the
fulfillment of the obligation pays, without prejudice to the effects of confusion as to the
latter’s share. (1201a)
Art. 1303. Subrogation transfers to the persons subrogated the credit with all the rights
thereto appertaining, either against the debtor or against third persons, be they guarantors or
possessors of mortgages, subject to stipulation in a conventional subrogation. (1212a)
Art. 1304. A creditor, to who partial payment has been made, may exercise his right
for the remainder, and he shall be preferred to the person who has been
subrogated in his place in virtue of the partial payment of the same credit. (1213.)

CONT
RACTS
CHAPTER 1

GENER
AL
PROVISION
ART. 1305. A Contracts is a meeting of minds between two persons whereby
one bind himself with the respect to the other, to give something or to render some service.
(1254a)

ART. 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may redeem convenient, provided they are not contrary to
law, morals, good customs, public order, or public policy. (1255a)

ART. 1307. Innominate contracts shall be regulated by the stipulation of the parties,
Art. 1308. The contract must bind both contracting parties; its validity or compliance cannot
be left to the will of them. (1256a)

Art. 1309. The determination of the performance may be left to the third persons, whose
decisions shall not be left to the binding until it has been made known to both contracting
parties. (n)

Art. 1311. Contracts take effect only between the parties, their assigns and heirs, except in
cases where the rights and obligations arising from the contracts 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 the 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 (1257a)

Art. 1312. In contracts creating real rights, third person who come into
possession of the object of the contract are bound thereby, subject to the provisions of the
Mortgage Law and the Land Registration Law. (n)

Art. 13113. Creditors are protected in cases of contracts intended to defraud them (n)

Art. 1314. Any third person who induces another to violate his contracts shall be
liable for damage to the other contracting party. (n)

Art. 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 consequence which, according to their nature, may be in keeping with good
faith, sage and law. (1258)
Art. 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 the name of another by the 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. (1259a)

CHAPTER 2
ESSENTIAL REQUISITES OF CONTRACTS
Art. 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 establish. (1261)
SECTION 1. CONSENT
Art. 1319. Consent is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the qualified acceptance constitute a counter-offer.
Acceptance made by letter or telegram does not bind the offerer except from the time
it came to his knowledge. The contract, in such a case, is presumed to have been entered into
in the place where the offer was made. (1262a)

Art. 1320. An acceptance may be express or implied. (n)

Art. 1321. The person making the offer may fix the time, place, and mannes or
acceptance, all which must be complied with. (n)

Art. 1322. An offer made through an agent is accepted from the time
acceptance is communicated to him. (n)

Art. 1323. An offer becomes ineffective upon the death, civil interdiction,
insanity, or insolvency of either party before acceptance is conveyed. (n)

Art. 1324. When the offer has allowed the offeree a certain period to accept the offer
may be withdrawn at any time before acceptance by communicating such withdrawal,
except when the option is founded upon a consideration, as something paid or promised. (n)
Art. 1325. Unless it appears otherwise, business advertisements of things for sale
are not definite offers, but mere invitations to make an offer. (n)

Art. 1326. Advertisement 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, (n)

Art. 1327. The following cannot give consent to a contract:

4. Unemancipated minors;
5. Insane or demented person, and deaf-mutes who do not know how to write. (1263a)
Art. 1328. Contracts entered into during a lucid interval are valid. Contracts agreed to in a
state of drunkenness or during a hypnotic spell are voidable. (n)

Art. 1329. The incapacity declared in article 1327 is subject to the modification determined
by law, and is understood to be without prejudice to special disqualification establish in the
laws. (1264)
Art. 1330. A contract where consent is given through mistake, violence, intimidation, undue
influence, or fraud is voidable. (1265a)

Art. 1331. In order that mistake may invalidate consent, it should refer to the substance to the
thing which is the object of the contract, or to those conditions which have principally moved
one or both parties to enter into contract.
Mistake as to the identify or qualifications of one of the parties will vitiate consent
only when such identify or qualifications have been the principal cause of contract.
A simple mistake of account shall give rise to its correction. (1266a)

Art. 1332. When one of the parties is unable to read, or if the contract is in
language not understood by him, and mistake or fraud is alleged, the person enforcing the
contract must show the terms thereof have been fully explained to former. (n)

Art. 1333. There is no mistake if the party alleging it knew the doubt, contingency
or risk affecting the object of the contract. (n)

Art. 1334. Mutual error as to the legal effect of an agreement when the real
purpose of the parties is frustrated may vitiate consent. (n)
Art. 1335. There is violence when in order to wrest consent, serious or irresistible
force is employed.
There is intimidation when one of the contracting parties is compelled by a reasonable
and well-grounded fear of an imminent and grave peril upon his person or property, or upon
the person or property of his spouse, descendants or ascendants, to give his consent.
To determine the degree of the intimidation, the age, sex and condition of the person
shall be borne in mind.
A threat to enforce one’s claim through competent authority, if the claim is just or
legal, does not vitiate consent. (1267a)

Art. 1336. Violence or intimidation shall annul the obligation, although it may
have been employed by a third person who did not take part in contract. (1268)

Art. 1337. 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. The
following circumstances shall be considered: the confidential, family, spiritual and other
relations between the parties, or the fact the person alleged to have been unduly
influenced was suffering from mental weakness, or was ignorant or in financial distress. (n)
Art. 1338. There is fraud when, through insidious words or machinations of one
of the contracting parties, the other is included to enter into a contract which without
them, he would not have agreed to (1269)
Art. 1339. Failure to disclose facts, when there is a duty to reveal them, as when the parties
are bound by confidential relations constitute fraud. (n)

Art. 1340. The usual exaggerations in trade, when the other party had an opportunity to know
the facts, are not in themselves fraudulent. (n)

Art. 1341. The mere expression of an opinion does not signify fraud, unless made by an
expert and the other has relied on the former’s special knowledge. (n)

Art. 1342. Misrepresentation by a third person does not vitiate consent, unless such
misrepresentation has created substantial mistake and the same is mutual. (n)

Art. 1343. Misrepresentation made in good faith is not fraudulent but may constitu0tes error.
(n)
Art. 1344. In order that fraud may take contract voidable, it should be serious and should not
have been employed by both contracting parties.

Art. 1345. Simulation of a contract may be absolute or relative. The former takes place when
the arties do not intend to be found at all; the latter, when the parties conceal their true
agreement. (n)
Art. 1346. An absolutely simulated or fictitious contract is void. A relative simulation, when
it does not prejudice a third person and is not intended for any purpose contrary to law,
morals, good customs, public policy bind the parties to their real agreement. (n)

SECTION 2. OBJECT OF CONTRACTS

Art. 1347. All things which are not outside the commerce of men, including future
things, may be the object of a contract. All rights which are not intransmissible may also be
the object of contracts.

No contract may be entered into upon future inheritance except in cases expressly
authorized by law.

All services which are not contrary to law, moral, good customs, public order or
public policy may likewise be the object of a contract. (1271a)

Art. 1348. Impossible things or services cannot be the object of contracts.

(1272)

Art. 1349. The object of every contract must be determine as to its kind. The fact that
the quantity is not determine shall not be an obstacle to the existence of the contract, provided
it is possible to determine the same, without the need of a new contract between the parties.
(1273)

SECTION 3. CAUSE OF CONTRACTS

Art. 1350. In onerous contracts the cause is understood to be, for each contracting
party, the prestation of promise of a thing or service by the other, in remuneratory ones, the
service or benefit which is remunerated; and in contracts of pure beneficence, the mere
liberality of the benefactor. (1274)

Art. 1351. The particular motives of the parties in entering into a contract are different
from the cause thereof.

Art. 1352. Contracts without case, or with unlawful case, produce no effect whatever.
The cause is unlawful if it is contrary to law, morals good customs, public order or public
policy. (1275a)

Art. 1353. The statement of a false cause in contracts shall render them void, if it
should not be proved that they were founded upon another cause which is true and lawful.
(1276)

Art. 1354. Although the cause is not stated in the contract, it is presumed that it exist
and is lawful, unless the debtor proves the contrary. (1277)

Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not
invalidate a contract, unless there has been fraud, mistake or undue influence.

CHAPTER 3:

FORM OF CONTRACTS

Art. 1356. Contracts shall be obligatory, in whatever form they may have been
entered into, provided all the essential requisites for their validity are present. However, when
the law requires that a contract be in some form in order that it may be valid or enforceable,
or that a contract be proved in a certain way, that requirement is absolute and indispensable.
In such cases, the right of the parties stated in the following article cannot be exercised.
(1278a)

Art. 1357. If the law requires a document or other special form, as in the acts and
contracts enumerated in the following article, the contracting parties may compel each other
to observe that form, once the contract has been perfected. This right may be exercised
simultaneously with the action upon the contract. (1279a)

Art. 1358. The following must appear in a public document:

 (1) Acts and contracts which have for their object the creation, transmission,
modification or extinguishment of real over immovable property; sales of real
property or of an interest therein are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the
conjugal partnership of gains;
(3) The power to administer property; or any other power which has for its object an
act appearing or which should appear in a public document, or should prejudice a
third person;
(4) The cession of actions or rights proceeding from an act appearing in a public
document.
All other contracts where the amount involved exceeds five hundred pesos must
appear in writing, even a private one. But sales of goods, chattels or things in
action are governed by articles 1403, No. 2 and 1405. (1280a)

CHAPTER 4:

REFORMATION OF CONTRACTS

Art. 1359. When, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the
agreement, by reason of mistake, fraud, inequitable conduct or accident, one of parties may
ask for the reformation of the instrument to the end that such true intention may be expressed.

If mistake, fraud, inequitable conduct or accident has prevented a meeting of the

minds of the parties, the proper remedy is not reformation of the instrument but annulment of
the contract.

Art. 1360. The principles of the general law on the reformation of instruments are
hereby adopted insofar as they are not in conflict with the provision of this code.

Art. 1361. When a mutual mistake of the parties causes the failure of the instrument to
disclose their real agreement, said instrument may be reformed.

Art. 1362. If one party was mistaken and the other acted fraudulently or inequitably in
such a way that the instrument does not show their true intention, the former may ask for the
reformation of the instrument.

Art. 1363. When one party was mistaken and the other knew or believed that the
instrument did not state their real agreement, but concealed that fact the former, the
instrument may be reformed.
 Art. 1364. When through the ignorance, lack of skill, negligence or bad faith on the
part of the person drafting the instrument or of the clerk or typist, the instrument does not
express the true intention of the parties, the courts may order that the instrument be reformed.

Art. 1365. If two parties agree upon the mortgage or pledge of real or personal
property, but the instrument states that the property is sold absolutely or with right of
repurchase, reformation of the instrument is proper.

At. 1366. There shall be no reformation in the following cases:

(1) Simple donations inter vivos wherein no condition is imposed;

(2) Wills;
(3) When real agreement is void.

Art. 1367. When one of the parties has brought an action to enforce the instrument, he
cannot subsequently ask for its reformation.

Art. 1368. Reformation may be ordered at the instance of either party or his
successors in interest, if the mistake was mutual; otherwise, upon petition of the
injured party, or his heirs and assigns.

Art.1369. the procedure for the reformation of instruments shall be governed by rules
of court to be promulgated by the Supreme Court.

CHAPTER 5
INTERPRETATION OF CONTRACTS

Art. 1370. If the terms of a contract are clear and leave no doubt upon the intention of the
contracting parties, the literal meaning of its stipulations shall control. If the words appear to
be contrary to the evident intention of the parties, the latter shall prevail over the former.
(1281)

Art. 1371. In order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered. (1282)

Art. 1372. However general the terms of a contract may be, they shall not be understood to
comprehend things that are distinct and cases that are different from those upon which the
parties intended to agree. (1283)

Art. 1373. If some stipulation of any contract should admit of several meanings, it shall be
understood as bearing that import which is most adequate to render it effectual. (1284)

Art. 1374. The various stipulations of a contract shall be interpreted together, attributing to
the doubtful ones that sense which may result from all of them taken jointly. (1285)
Art. 1375. Words which may have different significations shall be understood in that which is
most in keeping with the nature and object of the contract. (1286)

Art. 1376. The usage or custom of the place shall be borne in mind in the interpretation of the
ambiguities of a contract, and shall fill the omission of stipulations which are ordinarily
stablished. (1287)

Art. 1377. The interpretation of obscure words or stipulations in a contract shall not favor
theparty who caused the obscurity. (1288)

Art. 1378. When it is absolutely impossible to settle doubts by the rules established in the
preceding articles, and the doubts refer to incidental circumstances of a gratuitous contract,
theleast transmission of rights and interests shall prevail. If the contract is onerous, the doubt
shall be settled in favor of the greatest reciprocity of interests.

If the doubts are cast upon the principal object of the contract in such a way that it cannot be
known what may have been the intention or will of the parties, the contract shall be null and
void. (1289)

Art. 1379. The principles of interpretation stated in Rule 123 of the Rules of Court shall
likewise be observed in the construction of contracts. (n)

CHAPTER 6
RESCISSIBLE CONTRACTS

Art. 1380. Contracts validly agreed upon may be rescinded in the cases established by
law.(1290)

Art. 1381. The following contracts are rescissible:

(1)Those which are entered into by guardians whenever the wards whom they represent
suffer lesion by more than one-fourth of the value of the things which are the object thereof;

(2)Those agreed upon in representation of absentees, if the latter suffer the lesion stated in
the preceding number;

(3)Those undertaken in fraud of creditors when the latter cannot in any other manner collect
the claims due them;

(4)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;

(5) All other contracts specially declared by law to be subject to rescission. (1291a)

Art. 1382. Payments made in a state of insolvency for obligations to whose fulfillment
the debtor could not be compelled at the time they were effected, are also rescissible.
(1292)

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.
(1294)
Article 1384: Rescission shall be only to the extent necessary to cover the damages
caused.(n)

Article 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.
(1295)

Article 1386: Rescission referred to in Nos. 1 and 2 of Article 1381 shall not take place with
respect to contracts approved by the courts.(1296a)

Article 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.

Alienation by onerous title are also presumed fraudulent when made by persons against
whom some judgment has been rendered in any instance or some writ of attachment
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.(1297a)

Article 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. (1298a)

Article 1389: The action to claim rescission must be commenced within four years.

For persons under guardianship and for absentees, the period of four years shall not
begin until the termination of the former’s incapacity, or until the domicile of the latter
is known. (1299)

CHAPTER 7
VOIDABLE CONTRACTS
Article 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 authority action in
court. They are susceptible of ratification. (n)

Article 1391: The action for annulment shall be brought within four years.

This period shall begin: In cases of intimidation, violence or undue influence, from the
time the defect of the consent ceases.

In case of mistake or fraud, from the time of the discovery of the same.

And when the action refers to contracts entered into by minors or others incapacitated
persons, from the time the guardianship ceases. (1301a)

Article 1392: Ratification extinguishes the action to annul a voidable contract. (1309a)

Article 1393: Ratification may be effected expressly or tacitly. It is understood that there is a
tacit ratification if, with knowledge of the reason which renders the contract voidable and
such reason having ceased, the person who has a right to invoke it should execute an act
which necessarily implies an intention to waive his right. (1311a)

Article 1394: Ratification may be effected by the guardian of the incapacitated person.(n)

Article 1395Ratification does not require the conformity of the contracting party who has no
right to bring the action for annulment.(1312)

Article 1396: Ratification cleanses the contract from all its defects from the moment it was
constituted. (1313)

Article 1397: The action for the annulment of contracts may be instituted by all who are
thereby principally or subsidiary. However, persons who are those cannot allege the
incapacity of those with whom they contracted; nor can those who exerted intimidation,
violence, or undue influence, or employed fraud, or caused mistake base their action upon
these flaws of the contract. (1302a)

Article 1398: An obligation having been annulled, the contracting parties shall restore to each
other the things which have been the subject matter of the contract, with their fruits, and the
price with its interest, except in cases provided by law.

In obligation to render service, the value thereof shall be the basis for damages. (1303a)
Article 1399: When the defect of the contract consists in the incapacity of one of the parties,
the incapacitated person is not obliged to make any restitution except insofar as he has been
benefited by the thing or price received by him. (1304)

Article 1400: Whenever the person obliged by the decree of annulment to return the thing
cannot do so because it has been lost through his fault, he shall return the fruits received and
the value of the thing at the same time of the loss, with interest from the same date.(1307a)

Article 1401: The action for annulment of contracts shall be extinguished when the thing
which is the object thereof is lost through the fraud or fault of the person who has a right to
institute the proceedings.

If the right of action is based upon the incapacity of any one of the contracting parties,
the loss of the thing shall not be an obstacle to the success of the action, unless said loss
took place through the fraud or fault of the plaintiff. (1314a)

Article 1402; As long as one of the contracting parties does not restore what in virtue of the
decree of annulment he is bound to return, the other cannot be compelled to comply with
what is incumbent upon him.(1308)

CHAPTER 8
UNENFORCEABLE CONTRACTS
-An unenforceable contract or transaction is one that is valid but one the court will not
enforce.
Art. 1403. The following contracts are unenforceable, unless they are ratified.
(1) Those entered into the name of another person by one who has been given no
authority or legal representation, or who has acted beyond his powers;
(2) Those that do not comply with the Statue of Frauds as set forth in this number. In the
following cases an agreement hereafter made shall be unenforceable by action, unless
the same, or some note or memorandum therefore, be in writing, and subscribed by
the party charged, or by his agent; evidence, thereof, of the agreement cannot be
received without, the writing or a secondary evidence of its contents:
a. An agreement that by its terms is not to be performed within a year from the
making thereof;
b. A special promise to answer for the debt, default, or miscarriage of another;
c. An agreement made in consideration of marriage, other than a mutual promise
to marry;
d. An agreement for the sale of goods, chattels or things in action, at a price not
less than five hundred pesos, unless the buyer accept and receive part of such
goods and chattels, or the evidences, or some of them, of such things in action,
or pay at the time some part of the purchase money; but when a sale is made
by auction and entry is made by the auctioneer in his sales book, at the time of
the sale, of the amount and kind of property sold, terms of sale, price, names
of the purchasers and person on whose account the sale is made. It is sufficient
memorandum;
 e. An agreement for the leasing for a longer period than one year, or for the sale
of real property or of an interest therein;
f. A representation as to the credit incapable of giving consent to a contract.
(3) Those where both parties are incapable of giving consent to a contract.

Art. 1404. Unauthorized contracts are governed by article 1317 and the principals of agency.
Art. 1405. Contracts infringing the Statue of Frauds, referred to in No. 2 of article 1403, are
ratified by the failure to object to the presentation of oral evidence to prove the same, or by
the acceptance of benefits under them.
Art. 1406. When a contract is enforceable under the Stature of Frauds, and a public document
is necessary for its registration in the Registry of Deeds, the parties may avail themselves of
the right under article 1357.
Art. 1407. In a contract where both parties are incapable of giving consent, express or
implied ratification by the parent, or guardian, as the case may be, of one of the contracting
parties shall give the contract the same effect as if only one of them were incapacitated.
If ratification is made by the parents or guardians, as the case may be, of both
contracting parties, the contract shall be validated from the inception.
Art. 1408. Unenforceable contracts cannot be assailed by third persons.

CHAPTER 9
VOID OR INEXISTENT CONTRACTS
-A void contract is a formal agreement that is illegitimate and unenforceable from the
moment it is created.
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
by waived.
Art. 1410. The action or defense for the declaration of the inexistence of a contract does not
prescribe.
Art. 1411. When the nullity proceeds from the illegality of the cause or object of the contract,
and the act constitutes a criminal offense, both parties being in pari delicto, they shall have no
action against each other, and both shall be prosecuted. Moreover, the provisions of the Penal
Code relative to the disposal of effects or instruments of crime shall be applicable to the
things or the price of the contract.
This rule shall be applicable when only one of the parties is guilty; but the innocent
one may claim what he has given, and shall not be bound to comply with his promise.
Art. 1412. If the act in which the unlawful or forbidden cause consist does not
constitute a criminal offense, the following rules shall be observed:
(1) When the fault is not the part of both contracting parties, neither may recover what he
has given by virtue of the contract, nor demand the performed of the other’s
undertaking.
(2) When only one of the contracting parties is at fault, he cannot recover what he has
given by reason of the contract, or as for the fulfilment of what has been promised
him. The other, who is not at fault, may demand the return of what he has given
without any obligation to comply with his promise.

Art. 1413. Interest paid in excess of the interest allowed by the usury laws may be recovered
by the debtor, with interest thereon from the date of the payment.
Art. 1414. When money is paid or property delivered for an illegal purpose, the contract may
be repudiated by one of the parties before the purpose has been accomplished, or before any
damage has been caused to a third person. In such case, the courts may, if the public interest
will thus be subserved, allow the party repudiating the contract to recover the money or
property.
Art. 1415. Where one of the parties to an illegal contract is incapable of giving consent, the
courts may, if the interest of justice so demands, allow recovery of money or property
delivered by the incapacitated person.
Art. 1416. When the agreement is not illegal per se but is merely prohibited, and the
prohibition by the law is designed for the protection of the plaintiff, he may, if public policy
is thereby enhanced, recover what he has paid or delivered.
Art. 1417. When the price of any article or commodity is determined by statue, or by
authority of law, any person paying any amount in excess of the maximum price allowed may
recover such excess.
Art. 1418. When the law fixes, or authorizes the fixing of the maximum number of hours of
labor, and a contract is entered into whereby a laborer undertakes to work longer than the
maximum thus fixed, he may demand additional compensation for service rendered beyond
the time limit.
Art. 1419. When the law sets, or authorizes the setting of a minimum wage for laborers, and a
contract is agreed upon by which a laborer accepts a lower wage, he shall be entitled to
recover the deficiency.
Art. 1420. In case of a divisible contract, if the illegal terms can be separated from the legal
ones, the latter may be enforced.
Art. 1421. The defense of illegality of contracts is not available to third persons whose
interests are not directly affected.
Art. 1422. A contract which is the direct result of a previous illegal contract, is also void and
inexistent.
 Group 3
PRESIDENTIAL DECREE (P.D.) NO. 1096

ADOPTING A NATIONAL BUILDING CODE OF THE PHILIPPINES

(NBCP)THEREBY REVISING REPUBLIC ACT NUMBERED SIXTY-

FIVEHUNDRED FORTY-ONE (R.A. No. 6541)

Republic Act No. 6541, entitled "An Act to Ordain and Institute a National Building Code of

the Philippines",

Chapter 1 GENERAL PROVISIONS

Section 103. Scope and Application.

(a)The provisions of this Code shall apply to the design, location, sitting, construction,

alteration, repair, conversion, use, occupancy, maintenance, moving, demolition of, and

addition to public and private buildings and structures, except traditional indigenous family

dwellings as defined herein.

(b)Building and/or structures constructed before the approval of this Code shall not be

affected thereby except when alterations, additions, conversions or repairs are to be made

therein in which case, this Code shall apply only to portions to be altered, added, converted or

repaired.

Section 104. General Building Requirements.

All buildings or structures as well as accessory facilities thereto shall conform in all respects

to the principles of the safe construction and must be suited to the purpose for which they are

designed.

Section 105. Site Requirements.

The land or site upon which will be constructed any building or structure, or any ancillary or

auxiliary facility thereto, shall be sanitary, hygienic or safe. In the case of sites or buildings

intended for use as human habitation or abode, the same shall be at a safe distance, as

determined by competent authorities, from streams or bodies of water and/or sources ofr

considered to be polluted; from a volcano or volcanic site and/or any other building

considered to be a potential source of fire or explosion.

CHAPTER 2 ADMINISTRATION AND ENFORCEMENT

Section 203. General Powers and Functions of the Secretary under this Code.
For purposes of carrying out the provisions of this Code, the Secretary shall exercise the

following general powers and functions:

(1)Formulate policies, plans, standards and guidelines on building design, construction, use

occupancy and maintenance, in accordance with this Code.

(2)Issue and promulgate rules and regulations to implement the provisions of this Code and

ensure compliance with policies, plans, standards and guidelines formulated under paragraph

1 of this Section.

(3)Evaluate, review, approve and/or take final action on changes and/or amendments to

existing Referral Codes as well as on the incorporation of other referral codes which are not

yet expressly made part of this Code.

(4)Prescribe and fix the amount of fees and other charges that the Building Official shall

collect in connection with the performance of regulatory functions.

206. Qualifications of Building Officials.

No person shall be appointed as a Building Official unless he possesses the following

qualifications:

1. A Filipino citizen and of good moral character.

2. A duly registered architect or civil engineer.

3.A member of good standing of a duly accredited organization of his profession for not less

than two years.

4.Has at least five years of diversified and professional experience in building design and

construction.

Section 207. Duties of a Building Official.

In his respective territorial jurisdiction, the Building Official shall be primarily responsible

for the enforcement of the provisions of this Code as well as of the implementing rules and
regulations issued therefor. He is the official charged with the duties of issuing building

permits.

In the performance of his duties, a Building Official may enter any building or its premises at

all reasonable times to inspect and determine compliance with the requirements of this Code,

and the terms and conditions provided for in the building permit as issued. When any

building work is found to be contrary to the provisions of this Code, the Building Official

may order the work stopped and prescribe the terms and/or conditions when the work will be

allowed to resume.

Likewise, the Building Official is authorized to order the discontinuance of the occupancy or

use of any building or structure or portion thereof found to be occupied or used contrary to

the provisions of this Code.

Section 212. Administrative Fines.

For the violation of any of the provisions of this Code or any of the rules or regulations issued

there under the Secretary is hereby empowered to prescribe and impose fines not exceeding

ten thousand pesos.

Section 214. Dangerous and Ruinous Buildings or Structures.

Dangerous buildings are those which are herein declared as such or are structurally unsafe or

not provided with safe egress, or which constitute a fire hazard, or are otherwise dangerous to

human life, or which in relation to existing use, constitute a hazard to safety or health or

public welfare because of inadequate maintenance, dilapidation, obsolescence, or

abandonment; or which otherwise contribute to the pollution of the site or the community to

an intolerable degree.

Section 215. Abatement of Dangerous Buildings.

When any building or structure is found or declared to be dangerous or ruinous, the Building

Official shall order its repair, vacation or demolition depending upon the degree of danger to

life, health, or safety.

CHAPTER 3 PERMITS AND INSPECTION

Section 301. Building Permits.

No person, firm or corporation, including any agency or instrumentality of the government

shall erect, construct, alter, repair, move, convert or demolish any building or structure or

cause the same to be done without first obtaining a building permit therefor from the Building

Official assigned in the place where the subject building is located or the building work is to

be done.

Section 302. Application for permits.

In order to obtain a building permit, the applicant shall file an application therefor in writing

and on the prescribed form from the office of the Building Official. Every application shall

provide at least the following information:

(1) A description of the work to be covered by the permit applied for;

(2) Certified true copy of the TCT covering the lot on which the proposed work is to be done.

If the applicant is not the registered owner, in addition to the TCT, a copy of the contract of

lease shall be submitted;

(3) The use or occupancy for which the proposal work is intended;

(4) Estimated cost of the proposed work.

To be submitted together with such application are at least five sets of corresponding plans

and specifications prepared, signed and sealed by a duly mechanical engineer in case of

mechanical plans, and by a registered electrical engineer in case of electrical plans.

Section 306. Non-Issuance, Suspension or Revocation of Building Permits.

The Building Official may order or cause the non-issuance, suspension or revocation of

building permits on any or all of the following reasons or grounds:

(a) Errors found in the plans and specifications;

(b) In correct or inaccurate data or information supplied;

(c) Non-compliance with the provisions of this Code or of any rule or regulation.

Notice of non-issuance, suspension or revocation of building permits shall always be made in

writing, stating the reason or grounds therefor.

CHAPTER 4 TYPES OF CONSTRUCTION

Section 401. Types of Construction.

For purposes of this Code, all buildings proposed for construction shall be classified or

identified according to the following types:

(1) Type I. Type I buildings shall be a wood construction. The structural elements may be any

of the materials permitted by this Code.

(2)Type II. Type II buildings shall be of wood construction with protective fire-resistant

materials and one-hour fire resistive throughout: Except, that permanent non-bearing

partitions may use fire-retardant treated wood within the framing assembly.

(3) Type III. Type III buildings shall be of masonry and wood construction. Structural

elements may be any of the materials permitted by this Code: Provided, that the building shall

be one-hour fire-resistive throughout. Exterior walls shall be of incombustible fire-resistive

construction.

(4) Type IV. Type IV buildings shall be of steel, iron, concrete, or masonry construction.

Walls, ceiling, and permanent partitions shall be of incombustible fire resistive construction:

Except, that permanent non-bearing partitions of one-hour fire-resistive construction may use

fire-retardant treated wood within the framing assembly.

(5) Type V. Type V buildings shall be fire-resistive. The structural elements shall be of steel,

iron, concrete, or masonry construction. Walls, ceilings, and permanent partitions shall be of

incombustible fire-resistive construction.

Section 402. Changes in Types.

No change shall be made in the type of construction of any building which would place the

building in a different sub-type or type of construction unless such building is made to

comply with the requirements for such sub-type of construction: Except, when the changes is

approved by the Building Official upon showing that the new or proposed construction is less

hazardous, based on life and fire risk, than the existing construction.

CHAPTER 5 REQUIREMENTS FOR FIRE ZONES

Section 501. Fire Zones Defined.

Fire zones are areas within which only certain types of buildings are permitted to be

constructed based on their use or occupancy, type of construction, and resistance to fire.

Section 506. Restrictions on Existing Buildings.

Existing buildings or structures in fire zones that do not comply with the requirements for a

new building erected therein shall not hereafter be enlarged, altered, remodeled, repaired or

moved except as follows:

(a) Such building is entirely demolished;

(b)Such building is to be moved outside the limits of the more highly restrictive Fire Zone to

a zone where the building meets the minimum standards;

(c)Changes, alterations and repairs may be made provided that in any 12-month period, the

value of the work does not exceed twenty percent of the value of the existing building, and
provided that, such changes do not add additional combustible material, and do not, in the

opinion of the Building Official, increase the fire hazard;

(d)Additions thereto are separated from the existing building by fire walls, as set forth in

Sub-section 604 (b);

(e)Damage from fire or earthquake, typhoons or any fortuitous event may be repaired, using

the same kind of materials of which the building or structure was originally constructed,

provided that, the cost of such repair shall not exceed twenty percent of the replacement cost

of the building or structure.

Section 507. Designation of Fire Zones.

The Secretary shall promulgate specific restriction for each type of Fire Zone. Cities and

municipalities shall be divided into such Fire Zones in accordance with local, physical, and

spatial framework plans submitted by city or municipal planning and/or development bodies

CHAPTER 6 FIRE-RESISTIVE REQUIREMENTS IN CONSTRUCTION

Section 601. Fire-Resistive Rating Defined.

Fire-resistive rating means the degree to which a material can withstand fire as determined by

generally recognized and accepted testing methods.

Section 602. Fire-Resistive Time Period Rating.

Fire-resistive time period rating is the length of time a material can withstand being burned

which may be one-hour, two-hours, three-hours, four-hours, etc.

Section 603. Fire-Resistive Standards.

All materials of construction, and assemblies or combinations thereof shall be classified

according to their fire-retardant or flame-spread ratings as determined by general accepted

testing methods and/or by the Secretary.

CHAPTER 7 CLASSIFICATION AND GENERAL REQUIREMENT OF ALL

BUILDINGS BY USE OF OCCUPANCY

Section 701. Occupancy Classified.

(a)Buildings proposed for construction shall be identified according to their use or the

character of its occupancy and shall be classified as follows:

(1)Group A. Residential Dwellings Group

A Occupancies shall be dwellings.

(2) Group B. Residentials, Hotels and

Apartments

Group B Occupancies shall be multiple dwelling units including boarding or lodging houses,

hotels, apartment buildings, row houses, convents, monasteries, and other similar building

each of which accommodates more than ten persons.

(3) Group C. Education and Recreation

Group C Occupancies shall be buildings used for school or day-care purposes, involving

assemblage for instruction, education, or recreation, and not classified in Group I or in

Division 1 and 2 or Group H Occupancies.

(4) Group D. Institutional

Group D Occupancies shall include:

Division 1. Mental hospitals, mental sanitaria, jails, prisons, reformatories, and buildings

where personal liberties of inmates are similarly restrained.sa d

Division 2. Nurseries for full-time care of children under kindergarten age, hospitals,

sanitaria, nursing homes with non-ambulatory patients, and similar buildings each

accommodating more than five persons.

Division 3. Nursing homes for ambulatory patients, homes for children of kindergarten age or

over, each accommodating more than five persons:

Provided, that Group D Occupancies shall not include buildings used only for private or

family group dwelling purposes.

(5)Group E. Business and Mercantile

Group E Occupancies shall include:

Division 1. Gasoline filling and service stations, storage garages and boot storage structures

where no work is done except exchange of parts and maintenance requiring no open flame,

welding, or the use of highly flammable liquids.

Division 2. Wholesale and retail stores, office buildings, drinking and dining establishments

having an occupant load of less than one hundred persons, printing plants, police and fire

stations, factories and workshops using not highly flammable or combustible materials and

paint stores without bulk handlings.

Division 3. Aircraft hangers and open parking garage with no repair work is done except

exchange of parts and maintenance requiring no open flame, welding or the use of highly

flammable liquids.

(6) Group F. Industrial

Group F Occupancies shall include: ice plants,

power plants, pumping plants, cold storage, and creameries, factories and workshops using

incombustible and non-explosive materials, and storage and sale rooms for incombustible and

non-explosive materials.

(7)Group G. Storage and Hazardous

Group G Occupancies shall include:

Division 1. Storage and handling of

hazardous and highly flammable
material.
Division 2. Storage and handling of flammable materials, dry cleaning plants using

flammable liquids; paint stores with bulk handling, paint shops and spray painting rooms.

Division 3. Wood working establishments, planning mills and box factories, shops, factories

where loose combustible fibers or dust are manufactured, processed or generated; warehouses

where highly combustible material is store.

Division 4. Repair garages.

Division 5. aircraft repair hangers.

(8)Group H. Assembly Other Than Group 1

Group H Occupancies shall include:

Division 1. Any assembly building with a stage and an occupant load of less than 1000 in the

building.

Division 2. Any assembly building without stage and having an occupant load of 300 or more

in the building.

Division 3. Any assembly building without a stage and having an occupant load of less than

300 in the building.

Division 4. Stadia, reviewing stands, amusement park structures not included within

Group I or in Division 1, 2, and 3 of this Group.

(9) Group I. Assembly Occupant Load 1000 or More

Group I Occupancies shall be any assembly building with an age and an occupant load of

1000 or more in the building.

(10) Group J. Accessory

Group J Occupancies shall include:

Division 1. Private garage, carports, sheds and agriculture buildings.

Division 2. Fences over 1.80 meters high, tanks, and towers.

(b) Other sub-groupings or divisions within Groups A to J may be determined by the

Secretary. Any other occupancy not mentioned specifically in this Section, or about which
there is any question shall be included in the Group which it most nearly resembles based on

the existing or proposed life and fire hazard.

Section 702. Change in Use.

The character of occupancy of existing buildings may be changed subject to the approval of

the Building Official and the building may be occupied or purposes set forth in other Groups:

Provided the new or proposed use is less hazardous, based on life and fire risk, than the

existing use.

CHAPTER 8 LIGHT AND VENTILATION

Section 801. General Requirements of Light and Ventilation.

(a)Subject to the provisions of the Civil Code of the Philippines on Basement of Light and

View and to the provisions of this part of the Code, every building shall be designed,

constructed, and equipped to provide adequate light and ventilation.

(b)All buildings shall face a street or public alley or a private street which has been duly

approved.

(c)No building shall be altered nor arranged so as to reduce the size of any room or the

relative area of windows to less than that provided for buildings under this Code, or to create

an additional room, unless such additional room conforms to the requirements of this Code.

(d)No building shall be enlarged so that the dimensions of the required court or yard would

be less than that prescribed for such building.

Section 805. Ceiling Heights.

(a) Habitable rooms provided with artificial ventilation have ceiling heights not less than 2.40

meters measured from the floor to the ceiling; Provided that for buildings of more than one-

storey, the minimum ceiling height of the first storey shall be 2.70 meters and that for the

second storey 2.40 meters and succeeding storeys shall have an unobstructed typical head-

room clearance of not less than 2.10 meters above the finished floor. Above stated rooms

with a natural ventilation shall have ceiling height not less than 2.70 meters.

(b)Mezzanine floors shall have a clear ceiling height not less than 1.80 meters above and

below it.

Section 806. Size and Dimensions of Rooms.

(a) Minimum sizes of rooms and their least horizontal dimensions shall be as follows:

1. Rooms for Human Habitations. 6.00 square meters with at least dimensions of 2.00

2. Kitchens. 3.00 square meters with at least dimension of 1.50 meters;

3. Bath and toilet. 1.20 square meters with at least dimension of 0.90 meters.

Section 807. Air Space Requirements in Determining the Size of Rooms.

(a) Minimum space shall be provided as follows:

1. School Rooms. 3.00 cubic meters with 1.00 square meter of floor area per person;

2. Workshops, Factories, and Offices. 12.00 cubic meters of space per person;

3. Habitable rooms. 14.00 cubic meters of space per person.

Section 808. Window Openings.

(a) Every room intended for any use, not provided with artificial ventilation system as herein

specified in this Code, shall be provided with a window or windows with a total free area of

openings equal to at least ten percent of the floor area of room, and such window shall open

directly to a court, yard, public street or alley, or open water courses.

CHAPTER 9 SANITATION

Section 902. Water Supply System.

(a)Whenever available, the potable water requirements for a building used for human

habitation shall be supplied from existing municipal or city waterworks system.

(b)The quality of drinking water from meteoric, surface or underground sources shall

conform to the criteria set in the latest approved National Standards for Drinking Water.

(c)The design, construction and operation of deepwells for the abstraction of groundwater

shall be subject to the provisions of the Water Code of the Philippines.

(d)The design, construction and operation of independent waterworks, systems of private

housing subdivisions or industrial estates shall be governed by existing laws relating to local

waterworks system.

(e)The water piping installations inside buildings and premises shall conform to the

provisions of the National Plumbing Code of the Philippines.

Section 903. Wastewater Disposal System.

(a)Sanitary sewage from buildings and neutralized or pretreated industrial wastewater shall

be discharged directly into the nearest street sanitary sewer main of existing municipal or city

sanitary sewerage system in accordance with the criteria set by the Code on Sanitation and

the National Pollution Control Commission.

(b)All buildings located in areas where there are no available sanitary sewerage system shall

dispose their sewage "Imhoff" or septic tank and subsurface absorption filed.

(c)Sanitary and industrial plumbing installations inside buildings and premises shall conform

to the provisions of the National Plumbing Code.

Section 904. Storm Drainage System.

(a) Rain water drainage shall not discharge to the sanitary sewer system.
(b) Adequate provisions shall be made to drain low areas in buildings and their premises.

Section 905. Pest and Vermin Control.

(a) All buildings with hollow and/or wood construction shall be provided with rat proofing.

(b)Garbage bins and receptacles shall be provided with ready means for cleaning and with

positive protection against entry of pest and vermins.

(c) DINING rooms for public use without artificial ventilation shall be properly screened.

Section 906. Noise Pollution Control.

Industrial establishments shall be provided with positive noise abatement devices to tone

down the noise level of equipment and machineries to acceptable limits set down by the

Department of Labor and the National Pollution Control Commission.

CHAPTER 10 BUILDING PROJECTION OVER PUBLIC STREETS

Section 1001. General Requirements.

(a)No part of any building or structure or any of its appendages shall project beyond the

property line of the building site, except as provided in this Code.

(b) The projection of any structure or appendage over a public property shall be the distance

measured horizontally from the property line to the outermost point of the projection.

Section 1002. Projection into Alleys or Streets.

(c)No part of any structure or its appendage shall project into any alley or street, national

road or public highway except as provided in this Code.

(d) Footings located at least 2.40 meters below grade along national roads or public highway

may project not more than 300 millimeters beyond the property line.

(c)Foundations may be permitted to encroach into public sidewalk areas to a width not

exceeding 500 millimeters; provided, that the top of the said foundations is not less than 600
millimeters below the established grade; and provided further, that said projections does not

obstruct any existing utility such as power, communication, gas, water, or sewer lines, unless

the owner concerned shall pay the corresponding entities for the rerouting of the parts of the

affected utilities.

Section 1007. Doors, Windows, and the like.

Doors, windows and the like less than 2.40 meters above the pavement or ground line shall

not, when fully opened or upon opening, project beyond the property line except fire exit

doors.

CHAPTER 11 PROTECTION OF PEDESTRIANS DURING CONSTRUCTION OR

DEMOLITION

Section 1101. General Requirement.

(a)No person shall use or occupy a street, alley or public sidewalk for the performance of

work covered by a building permit except in accordance with the provisions of this Chapter.

(b)No person shall perform any work on any building or structure adjacent to a public way in

general use for pedestrian travel, unless the pedestrians are protected as specified in this

Chapter.

(c)Any material or structure temporarily occupying public property, including fence,

canopies, and walkways, shall be adequately lighted, between sunset and sunrise.

Section 1102. Storage in Public Property.

Materials and equipment necessary for work to be done under a permit when placed or stored

on public property shall not obstruct free and convenient approach to and used of any fire

hydrant, fire or police alarm box, utility box, catch basin, or manhole and shall not interfere

with any drainage of any street or alley gutter.

Section 1103. Mixing Mortar or Public Property.

Section 1104. Protection of Utilities.

Section 1105. Walkway.

(a)When the Building Official authorizes a sidewalk to be fenced or closed, or in case there

is no sidewalk in front of the building site during construction or demolition, a temporary

walkway of not less than 1.20 meters wide shall be provided.

(b)The walkway shall be capable of supporting a uniform live load of 650 kilograms per

square meter. A durable wearing surface shall be provided throughout the construction

period.

Section 1107. Maintenance and Removal of Protective Devices.

(a)Maintenance. All protective devices shall be properly maintained in place and kept in

good order for the entire length of time pedestrians may be endangered.

(b)Removal. Every protective fence or canopy shall be removed within 30 days after such

protection is no longer required as determined by the Building Official.

Section 1108. Demolition.

(a)The work of demolishing any building shall not be commended until all the necessary

pedestrian protective structures are in place.

(b)The Building Official may require the permittee to submit plans, specifications and

complete schedule of demolition. When so required, no work shall be done until such plans,

specifications and schedule are approved by the Building Official.

INTRODUCTION
 The Procurement Law aims to promote transparency in anything that government

needs to buy, provide, or construct, including bridges and roads.

RULE I – GENERAL PROVISIONS

Section 1. Short Title and Purpose

This 2016 Revised Implementing Rules and Regulations, hereinafter called the IRR,

is promulgated pursuant to Section 75 of Republic Act No. (R.A.) 9184, otherwise known as

the “Government Procurement Reform Act,” for the purpose of prescribing the necessary

rules and regulations for the modernization, standardization, and regulation of the

procurement activities of the Government of the Philippines (GoP).

Section 2. Declaration of Policy

The provisions of this IRR are in line with the commitment of the GoP to promote

good governance and its effort to adhere to the principles of transparency, accountability,

equity, efficiency, and economy in its procurement process. It is the policy of the GoP that

procurement of Goods, Infrastructure Projects and Consulting Services shall be competitive

and transparent, and therefore shall undergo competitive bidding, except as provided in Rule

XVI of this IRR.

Section 3. Governing Principles on Government Procurement

The procurement of the GoP shall be governed by these principles:

a)Transparency in the procurement process and in the implementation of

procurement contracts through wide dissemination of bid opportunities and

participation of pertinent non-government organizations.

b)Competitiveness by extending equal opportunity to enable private contracting

parties who are eligible and qualified to participate in competitive bidding.

 c) Streamlined procurement process that will uniformly apply to all government

procurement. The procurement process shall be simple and made adaptable to

advances in modern technology in order to ensure an effective and efficient method.

d)System of accountability where both the public officials directly or indirectly

involved in the procurement process as well as in the implementation of procurement

contracts and the private parties that deal with GoP are, when warranted by

circumstances, investigated and held liable for their actions relative thereto.

e)Public monitoring of the procurement process and the implementation of

awarded contracts with the end in view of guaranteeing that these contracts are

awarded pursuant to the provisions of the Act and this IRR, and that all these

contracts are performed strictly according to specifications.

Section 4. Scope and Application of the IRR

1. This IRR shall apply to all procurement of any branch, agency, department, bureau,

office, or instrumentality of the GoP, including government-owned and/or -

controlled corporations (GOCCs), government financial institutions (GFIs), state

universities and colleges (SUCs), and local government units (LGUs).

2. Any Treaty or International or Executive Agreement to which the GoP is a

signatory affecting the subject matter of the Act and this IRR shall be observed. In

case of conflict between the terms of the Treaty or International or Executive

Agreement and this IRR, the former shall prevail.

3. Unless the Treaty or International or Executive Agreement expressly provides another

or different procurement procedures and guidelines, R.A. 9184 and this IRR shall

apply to Foreign-funded Procurement of Goods, Infrastructure Projects, and

Consulting Services by the GoP.

 The GoP negotiating panels shall, as its default position, adhere to R.A. 9184 and this

IRR, or at the very least, selection through competitive bidding, in all Foreign-funded

Procurement. If the Treaty or International or Executive Agreement states otherwise, then the

negotiating panel shall ensure that the reasons for the adoption of a different rule or method

of procurement are clearly reflected in the records of discussion.

4.4 This IRR shall not apply to the following activities:

a) Procurement of Goods, Infrastructure Projects and Consulting Services funded from

Foreign Grants covered by R.A. 8182, as amended by R.A. 8555, entitled “An Act

Excluding Official Development Assistance (ODA) from the Foreign Debt Limit in

order to Facilitate the Absorption and Optimize the Utilization of ODA Resources,

Amending for the Purpose Paragraph 1, Section 2 of R.A. 4860, As Amended,” unless

the GoP and the foreign grantor/foreign or international financing institution agree

otherwise;

b) Acquisition of real property which shall be governed by R.A. 10752, entitled “An

Act Facilitating the Acquisition of Right-Of-Way Site or Location for National

Government Infrastructure Projects,” and other applicable laws, rules and regulations;

and

c) Public-Private sector infrastructure or development projects and other

procurement covered by R.A. 6957, as amended by R.A. 7718, entitled “An Act

Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure

Projects by the Private Sector, and for Other Purposes,” as amended: Provided,

however, that for the portions financed by the GoP, in whole or in part, the provisions

of the Act and this IRR shall apply.

4.5 The following are not procurement activities under R.A. 9184 and this IRR:
 a) Direct financial or material assistance given to beneficiaries in accordance

with the existing laws, rules and regulations, and subject to the guidelines of the

concerned agency;

b)Participation in local or foreign scholarships, trainings, continuing education,

conferences, seminars or similar activities that shall be governed by applicable COA,

CSC, and DBM rules;

c) Lease of government-owned property as lessor for private use;

d) Hiring of Job Order Workers;

e)Joint Venture under the revised NEDA Guidelines (GOCC and Private

Entities), and Joint Venture Agreements by LGU with Private entities; and

f) Disposal of Property and Other Assets of the Government.

Section 5. Definition of Terms

a) Approved Budget for the Contract (ABC). Refers to the budget for the contract

duly approved by the HoPE, as provided for in the General Appropriations Act

(GAA), continuing, and automatic appropriations, in the case of national government

agencies (NGAs); the corporate budget for the contract approved by the governing

board, pursuant to Executive Order (E.O). No. 518, s. 1979, in the case of GOCCs and

GFIs, and R.A. 8292 in the case of SUCs; the budget approved by the Sanggunian

through an appropriations ordinance in the case of LGUs.

b) Bid. Refers to a signed offer or proposal to undertake a contract submitted by a bidder

in response to and in consonance with the requirements of the Bidding Documents.

 For purposes of, and throughout this IRR, the term “Bid” shall be equivalent to and be

used interchangeably with “Proposal” and “Tender.

c) Bidder. Refers to a contractor, manufacturer, supplier, distributor and/or consultant

who submits a bid in response to the requirements of the Bidding Documents.

d) Bidding Documents. Refer to the documents issued by the Procuring Entity as the

basis for bids, furnishing all information necessary for a prospective bidder to prepare

a bid for the Goods, Infrastructure Projects and/or Consulting Services required by the

Procuring Entity.

e) Common - Use Supplies and Equipment (CSE). Refer to those goods, materials and

equipment that are used in the day-to-day operations of Procuring Entities in the

performance of their functions. For the purpose of this IRR, CSE shall be those

included in the Electronic Catalogue of the PhilGEPS.

f) Government Procurement Policy Board ( GPPB ). Refers to the Body created in

accordance with Rule XX of this IRR.

g) Head of the Procuring Entity (HoPE). Refers to: (i) the head of the agency or body,

or his duly authorized official, for NGAs and the constitutional commissions or

offices, and other branches of government; (ii) the governing board or its duly

authorized official, for GOCCs, GFIs and SUCs; or (iii) the local chief executive, for

LGUs: Provided , however, That in an agency, department, or office where the

procurement is decentralized, the head of each decentralized unit shall be considered

as the HoPE, subject to the limitations and authority delegated by the head of the

agency, department, or office.

 h) Philippine Government Electronic Procurement System ( PhilGEPS ) . Refers to

the electronic System as provided in Section 8 of this IRR. For purposes of, and

throughout this IRR, the term “PhilGEPS” shall have the same meaning as, and shall

be used interchangeably with, “G-EPS” referred to in the Act.

i) Procurement. Refers to the acquisition of goods, consulting services, and the

contracting for infrastructure projects by the Procuring Entity. In case of projects

involving mixed procurements, the nature of the procurement, i.e. , Goods,

Infrastructure Projects or Consulting Services, shall be determined based on the

primary purpose of the contract. Procurement shall also include the lease of goods and

real estate. With respect to real property, its procurement shall be governed by the

provisions of R.A. 10752 and other applicable laws, rules and regulations.

Section 6. Standardization of Procurement Process and Forms

1.To systematize the procurement process, avoid confusion and ensure

transparency, the GPPB shall pursue the development and approval of generic procurement

manuals, standard Bidding Documents, and forms, including those to be used for major

procurement like drugs and textbooks.

2.Procuring Entities are mandated to use the Generic Procurement Manuals

(GPMs), Philippine Bidding Documents (PBDs), and other standard forms issued by the

GPPB. However, whenever necessary, to suit the particular needs of the Procuring Entity,

modifications may be made, particularly for major and specialized procurement, subject to

the approval of the GPPB.

ARTICLE II - PROCUREMENT PLANNING

 SEC. 7. Procurement Planning and Budgeting Linkage. – All procurement should be

within the approved budget of the Procuring Entity and should be meticulously and

judiciously planned by the Procuring Entity concerned.

No government Procurement shall be undertaken unless it is in accordance with the

approved Annual Procurement Plan of the Procuring Entity. The Annual Procurement Plan

shall be approved by the Head of the Procuring Entity and must be consistent with its duly

approved yearly budget. In the case of Infrastructure Projects, the Plan shall include

engineering design and acquisition of right-of-way.

ARTICLE III – PROCUREMENT BY ELECTRONIC MEANS

SEC. 8. Procurement By Electronic Means and the Philippine Government Electronic

Procurement System (PhilGEPS).

 To promote transparency and efficiency, information and communications technology

shall be utilized in the conduct of procurement procedures. The G-EPS shall serve as

the primary and definitive source of information on government procurement.

SEC. 9. Security, Integrity and Confidentiality.

 The G-EPS shall ensure the security, integrity and confidentiality of documents

submitted through the system. It shall include a feature that provides for an audit trail

for on-line transactions and allow the Commission on Audit to verify the security and

integrity of the systems at any time.

ARTICLE IV – COMPETITIVE BIDDING

SEC. 10. Competitive Bidding.

 All procurement shall be done through competitive bidding, except as provided in

Rule XVI of this IRR.

ARTICLE V – BIDS AND AWARDS COMMITTEE (BAC)

 SEC. 11. The BAC and its Composition.

 Each procuring entity shall establish a single BAC for its procurement. The BAC shall

have at least five (5) members, but not more than seven (7) members. It shall be

chaired by at least a third ranking permanent official of the procuring entity other than

its head, and its composition shall be specified in the IRR.

SEC. 12. Functions of the BAC.

 The BAC shall have the following functions: advertise and/or post the invitation to

bid, conduct pre-procurement and pre-bid conferences, determine the eligibility of

prospective bidders, receive bids, conduct the evaluation of bids, undertake post-

qualification proceedings, recommend award of contracts to the Head of the Procuring

Entity or his duly authorized representative.

SEC. 13. Observers.

 To enhance the transparency of the process, the BAC shall, in all stages of the

procurement process, invite, in addition to the representative of the Commission on

Audit, at least two (2) observers to sit in its proceedings, one (1) from a duly

recognized private group in a sector or discipline relevant to the procurement at hand,

and the other from a non-government organization:

SEC. 14. BAC Secretariat.

 To assist the BAC in the conduct of its functions, the Head of the Procuring Entity

shall create a Secretariat that will serve as the main support unit of the BAC.

ARTICLE VI - PREPARATION OF BIDDING DOCUMENTS

SEC. 17. Form and Contents of Bidding Documents.

(a) Approved Budget for the Contract;

(b) Instructions to Bidders, including criteria for eligibility, bid evaluation and post

qualification, as well as the date, time and place of the pre-bid Conference (where

applicable), submission of bids and opening of bids;

(c) Terms of Reference;

(d) Eligibility Requirements;

(e) Plans and Technical Specifications;

(f) Form of Bid, Price Form, and List of Goods or Bill of Quantities;

(g) Delivery Time or Completion Schedule;

(h) Form and Amount of Bid Security;

(i) Form and Amount of Performance Security and Warranty; and,

(j) Form of Contract, and General and Special Conditions of Contract.

No bidding and award of contract shall be made unless the detailed engineering

investigations, surveys and designs including the acquisition of the ROW for the project have

been sufficiently carried out. These investigations must then be duly approved in accordance

with the standards and specifications prescribed by the Head of the Procuring Entity

concerned or his duly authorized representative, and in accordance with the provisions of

Annex “A” of IRR-A.

Prior to the conduct of the detailed engineering investigations, surveys and

designs,
the implementing office should draw a feasibility or preliminary engineering study .

Only after the acceptance and approval of the feasibility study shall detailed

engineering investigations be conducted. A schedule of detailed engineering activities shall

include the following:

1. Survey

2. Site Investigation
3. Soils and Foundation Investigation

4. Construction Materials Investigation

5. Preparation of Design Plans and Design Analysis

6. Preparation of Technical Specifications

7.Preparation of Quantity and Cost Estimates

8.Preparation of Program of Work

9.Preparation of Proposed Construction Schedule [and estimated Cash Flow for projects with

Schedule over six (6) Months]

10. Preparation of Site or Right-of-Way Plans including Schedule of Acquisition

11. Preparation of Utility Relocation Plan

12. Preparation and Submission of Design Report

13.Environmental Impact Statement for critical project or project in a critical area, as

defined by the DENR

14.Preparation of minimum requirements for a Construction Safety and Health Program for

the project being considered

15. Preparation of Bidding Documents

FIDIC CONTRACT FORMS

What does FIDIC mean? and What do they do?

 FIDIC stands for ‘Fédération Internationale des Ingénieurs - Conseils’, which is best

translated from French as The International Federation of Consulting Engineers. FIDIC

represents the consulting engineering industry both globally and domestically.

 It is founded on 1913 by three countries, each wholly or partly francophone. The

founding member countries of the FIDIC were Belgium, France and Switzerland. FIDIC

is well known in the consulting engineering field for its work in defining Conditions of

Contract for the Construction industry worldwide. It is Located at the World Trade

Center in Geneva, Switzerland.

COUNSIL OF ENGINEERING CONSULTANT OF THE PHILIPPINES

 The Consulting Engineers Council of the Philippines (CECOPhil) was organized in

October 1976.

 Nine local engineering firms doing consulting business in the Philippines constituted the

founding members of the Council.

 A smaller group within CECOPhil was later formed, consisting only of members who

were exclusively consultants and not at all engaged in construction.

 This paved the way for the group named, Council of Engineering Consultants of the

Philippines (CECOPHIL), to become the official Philippine affiliate of the Fédération

Internationale des Igénieurs Conseils (FIDIC).

What are the FIDIC forms of Contract?

 FIDIC’s Contracts Committee produces standard forms of contract for civil engineering

projects, which are used globally. The purpose of these standard forms is to define the

contractual relationship between the parties and to apportion risks between the contractor
 and the employer. FIDIC states that their contracts allocate risks fairly to the party that is

best able to bear and control that risk.

 It is important to remember that the FIDIC forms represent a starting point for the

preparation of a construction contract. However, they are routinely amended to reflect

the particular characteristics of each project and the requirements of the parties.

CHOICE OF FIDC Form of Contract

 The forms of contract are drafted for use on a wide range of project types. The main

forms are differentiated by the color of their covers. The choice of form depends on the

type of project being contemplated, The Following are;

 Green Book

 Pink Book

 Red Book

 Yellow Book

 Silver Book

 Gold Book

The Green Book - “Short Form of Contract”

 This is FIDIC’s recommended form of contract for use on engineering and building

works of relatively small capital value or where the construction time is short. FIDIC has

provided guidance that this would probably apply to contracts with a value of less than

US $500,000 or a construction time of less than six months. However, the Green Book

may also be suitable for simple or repetitive work.

 Although typically in these types of arrangements the contractor is to construct the works

according to the employer’s design, it does not matter whether the design is provided by

the employer or by the contractor.

 There is no engineer and payments are made in monthly intervals.

The Pink Book - “MDB Harmonised Edition”

 This is a variant of the Red Book. It is drafted for use on projects that are funded by

certain Multilateral Development Banks (‘MDBs’), which are supranational institutions

such as the World Bank, where the Red Book would otherwise have been applicable.

Where the project is funded by an MDB but the employer is not responsible for the

design, the parties should not use the Pink Book, but use and amend one of the other

FIDIC forms of contract.

 Prior to the publication of the Red Book, where the MDBs had originally adopted the

Red Book for the pro-jects they were funding, they amended the FIDIC General

Conditions. As a result of negotiations between FIDIC and the MDBs, the Pink Book

was drafted which incorporated the amendments that were commonly inserted by the

MDBs.

Asian Development Bank (multilateral bank)

 The Asian Development Bank (ADB) is a multilateral development bank dedicated to

reducing poverty in the Asia-Pacific region through sustainable economic growth, social

development and good governance. Established in 1966, it is owned by 67 member

countries, mostly from the Asia-Pacific. Canada is an ADB member and is the Bank’s

7th largest shareholder. In 2013, the ADB’s operations totaled US$21.02 billion, of

which US$14.38 billion was financed by ADB’s ordinary capital and special funds

resources, and US$6.65 billion by co-financing partners.

The Red Book - “Conditions of Contract for Construction for Building and Engineering

Works Designed by the Employer”

 In 1956 the first edition of the original form of Red Book was published. This was

updated and amended over four editions. Then in 1999 FIDIC released a totally new set

of standard forms of contract, including a brand new version of the Red Book, which

superseded the original version of the Red Book. The Red Book is the FIDIC

recommended form of contract for building or engineering works where the employer

has been responsible for nearly all the design. In fact FIDIC claim that the Red Book is

the most widely used international construction contract where most of the works have

been designed by the employer.

 A key feature of the Red Book is that payment is made according to bills of quantities,

although payment can also be made on the basis of agreed lump sums for items of work.

The Yellow Book - “The plant and design/ build contract”

 This form of contract is drafted for use on projects where the contractor carries out the

majority of the design (ie the contractor carries out the detailed design of the project so

that it meets the outline or performance specification prepared by the employer). The

Yellow Book is therefore traditionally used for the provision of plant and for building or

engineering works on a design/build basis.

 The Yellow Book is a lump sum price contract with payments made according to

achieved milestones on the basis of certification by the engineer (like the Red Book, the

engineer administers the contract). The contractor is also subject to a fitness-for-purpose

obligation in respect of the completed project.

The Silver Book - “Conditions of Contract for EPC/Turnkey Projects (the EPC turnkey

contract)”

 The Silver Book is drafted for use on EPC (Engineer, Procure, Construct) projects. These

are projects that require the contractor to provide a completed facility to the employer

that is ready to be operated at ‘the turn of a key’. These contracts therefore place the

overall responsibility for the design and construction of the pro-ject on the contractor.

 The Silver Book is used where the certainty of price and completion date is important.

The Silver Book allows the employer to have greater certainty as to a project’s cost as

the contractor assumes greater time and cost risks than under the Yellow Book.

 The Silver Book may also be used for privately financed BOT (Build, Operate, Transfer)

projects. These are projects where the employer takes total responsibility for the design,

construction, maintenance and opera-tion of a project and wishes to pass the

responsibility in respect of construction to the contractor.

 There is no engineer under the Silver Book as his responsibilities are assumed by the

employer. Similar to the Yellow Book, the contractor is also subject to a fitness-for-

purpose obligation in respect of the completed project.

The Gold Book - “The design build operate contract”

 FIDIC state that the Gold Book is drafted to minimise the risk of rapid deterioration after

the handover of a project due to poor design, workmanship or materials. The Gold Book

is therefore suitable where a long-term operation and maintenance commitment is

required along with design and build obligations. The contractor must operate and

maintain the completed project on behalf of the employer for a period of typically 20

years from the date of the Commissioning Certificate, which is issued at completion of

construction of the project. During this 20 year period the contractor must meet certain

targets and at the end of this period the project must be returned to the employer in an

agreed condition.
 Throughout the 20-year period the employer owns the plant but the contractor operates it

at the contractor’s own risk. However, the contractor has no responsibility for financing

the project or ensuring its long-term success.

The Blue Book - “Form of Contract for Dredging and Reclamation Works”

 FIDIC state that the Blue Book is suitable for all types of reclamation and dredging

works as well as ancillary construction works.

 Typically, under such form of contract the contractor constructs the works in accordance

with the employer’s design. However, this form of contract can also be adapted for

contracts that include or consist entirely of contractor-designed works.

The White Book - “FIDIC Client/Consultant Model Services Agreement”

 This form of contract is not for the provision of construction and engineering works

despite it also being referred to by the color of its cover. This form of contract is used to

appoint consultants to provide services to the employer such as feasibility studies,

design, contract administration and project management. The White Book typically

forms the basis of the agreement between the consultant and the employer where the

construction and engineering works are being undertaken pursuant to a FIDIC contract.

The Conditions of Subcontract for Construction

 Unlike the above forms of FIDIC contract, no color is given to this form of contract. This

is the FIDIC recommended form of subcontract for use with the Red, Yellow, Silver and

Gold books referred to above.

General Features of FIDIC Contracts

 i. FIDIC is usually divided in two parts:

• Part I consisting of the general conditions

o such issues as rights and obligations of each party, procedure for

payment, variation, certification and dispute resolution.

• Part II concerning the conditions of particular application

o and is to be used to introduce project specific clauses, such as language

of the contract, choice of law, the name of the person or firm appointed

to act as Engineer or Employers representative for the project among

other terms. The Appendix usually contains sample of documents to be

used for the procurement process.

ii. Default hierarchy for the documents forming the contract. The order of priority is

as stated below:

• The Contract Agreement

o consist of project of description, contract price, payment basis,

construction schedule, contract document list, contract scope,

conditions and obligations, contract laws

• The Letter of Acceptance (this is the formal acceptance of the contractor's

tender and marks the formation of the contract)

o means the letter of formal acceptance by the Employer

• The Letter of Tender

o formal invitation to make an offer for the supply of goods or

services

• Part II –the conditions of particular application

• Part I – general conditions of contract

 • The Specification and Drawings, The Employer’s Requirements, the

Schedules

• Further documents (if any), listed in the Contract Agreement or in the Letter of

Acceptance.

Dispute Resolution

o The process usually provides as a first step, for disputes to be submitted for

adjudication before an Engineer or a Dispute Board. If one (or both) of the

parties is dissatisfied, a period is allowed for amicable settlement. If the parties

are not able to settle the dispute during the ‘amicable settlement’ period, the

final stage is to proceed to arbitration. FIDIC contracts provide as a default

position that the arbitration rules of the International Chambers of Commerce

should apply in the arbitration of disputes arising from the contract.

FIDIC CODE OF ETHICS

A code of ethics is a guide of principles designed to help professionals conduct

business honestly and with integrity. A code of ethics document may outline 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.

RESPONSIBILITY TO SOCIETY AND THE CONSULTING INDUSTRY

The consulting engineer shall:

 Accept the responsibility of the consulting industry to society.

  Seek solutions that are compatible with the principles of sustainable

development.

 At all times uphold the dignity, standing and reputation of the consulting

industry.

COMPETENCE

The consulting engineer shall:

 Maintain knowledge and skills at levels consistent with development in

technology, legislation and management, and apply due skill, care and

diligence in the services rendered to the client.

 Perform services only when competent to perform them.

INTEGRITY

The consulting engineer shall:

 Act at all times in the legitimate interest of the client and provide all services

with integrity and faithfulness.

IMPARTIALITY

The consulting engineer shall:

 Be impartial in the provision of professional advice, judgement or decision.

 Inform the client of any potential conflict of interest that might arise in the

performance of services to the client.

 Not accept remuneration which prejudices independent judgement.

FAIRNESS TO OTHERS

The consulting engineer shall:

 Promote the concept of “Quality-Based Selection” (QBS).

  Neither carelessly nor intentionally do anything to injure the reputation or

business of others.

 Neither directly nor indirectly attempt to take the place of another consulting

engineer, already appointed for a specific work.

 Not take over the work of another consulting engineer before notifying the

consulting engineer in question, and without being advised in writing by the

client of the termination of the prior appointment for that work.

 In the event of being asked to review the work of another, behave in

accordance with appropriate conduct and courtesy.

CORRUPTION

The consulting engineer shall:

 Neither offer nor accept remuneration of any kind which in perception or in

effect either a) seeks to influence the process of selection or compensation

of consulting engineers and/or their clients or b) seeks to affect the

consulting engineer’s impartial judgement.

 Co-operate fully with any legitimately constituted investigative body which

makes inquiry into the administration of any contract for services or

construction.

The Department of Public Works and Highways

The Philippines’ Department of Public Works and Highways abbreviated as DPWH,

is the executive department of the Philippine government solely vested with the Mandate to

“be the State's engineering and construction arm” and, as such, it is “tasked to carry out the

policy” of the State to “maintain an engineering and construction arm and continuously

develop its technology, for the purposes of ensuring the safety of all infrastructure facilities

and securing for all public works and highways the highest efficiency and the most
appropriate quality in construction” and shall be responsible for “the planning, design,

construction and maintenance of infrastructure facilities, especially national highways, flood

control and water resources development systems, and other public works in accordance with

national development objectives,” provided that, the exercise of which “shall be decentralized

to the fullest extent feasible.”

Powers and Function of DPWH

The Department, in order to carry out its mandate, shall:

1. Provide technical services for the planning, design, construction,

maintenance, or operation of infrastructure facilities

2. Develop and implement effective codes, standards, and reasonable

guidelines to ensure the safety of all public and private structures in the

country and assure efficiency and proper quality in the construction of public works

3. Ascertain that all public works plans and project implementation

designs are consistent with current standards and guidelines

4. Identify, plan, secure funding for, program, design, construct or

undertake prequalification, bidding, and award of contracts of public works

projects with the exception only of specialized projects undertaken by Government

corporate entities with established technical capability and as directed by the

President of the Philippines or as provided by law

5. Provide the works supervision function for all public works constructions and ensure

that actual construction is done in accordance with approved government plans and

specifications

6. Assist other agencies, including the local governments, in determining the most

suitable entity to undertake the actual construction of public works projects

7. Maintain or cause to be maintained all highways, flood control, and other public
 8. Provide an integrated planning for highways, flood control and water resource

development systems, and other public works

9. Classify road and highways into national, regional, provincial, city, municipal, and

barangay roads and highways, based on objective criteria it shall adopt; provide or

authorize the conversion of roads and highways from one category to another

10. Delegate, to any agency it determines to have the adequate technical capability, any of

the foregoing powers and functions

DPWH (Blue Book)

The Department of Public Works and Highways (DPWH) is tasked to undertake the planning,

design, construction and maintenance of the Philippine infrastructure systems and facilities,

in particular national highways and bridges, major flood control and water resources

development system. Its main thrust is to provide and manage quality infrastructure facilities

and services that are responsive to the needs of the Filipino people in the pursuit of national

development objectives.

As a way of adhering to its mandate and responding to the needs of all its stakeholders, the

Department has been providing a manuscript which serves as a guide to data users for the

formulation of plans and programs for researchers both in the government and private sector.

The following are the three volumes of the DPWH Blue Book:

 Volume I – Guidelines on the Establishment of Procurement Systems and

Organizations in the DPWH

 Volume II – Standard Specifications for Highways, Bridges and Airports

  Volume III – DPWH Manual of Procedures for the Procurement of Locally-

Funded Infrastructure Project Through Public Bidding

DPWH has consistently been endeavoring to provide complete and accurate information

on the road network including services and other related areas of concern. Every effort is

being made to ensure that details that are provided in the are complete and accurate. Rest

assured that the Department shall continue to hold on to its commitment in providing services

needed for the country to achieve its aspiration of achieving sustainable growth and

development.

DEVELOP ENGINEERING SKILLS AND PROFICIENCY

THE CIVIL ENGINEERING SKILLS

1. READING COMPREHENSION

Understanding written sentences and paragraphs in work related documents

2. CRITICAL THINKING

Using logic and reasoning to identify the strengths and weaknesses of

alternative solutions, conclusions, or approaches to problem

3. ACTIVE LISTENING

Giving full attention to what other people are saying, taking time to

understand the points being made, asking questions as appropriate, and not

interrupting at inappropriate times

4. SPEAKING
 Talking to others to convey information effectively

5. MATHEMATICS

Using mathematics to solve problems

6. COMPLEX PROBLEM SOLVING

Identifying complex problems and reviewing related information to develop

and evaluate options and implement solutions

7. OPERATION ANALYSIS

Analyzing needs and product requirements to create a design

8. SYSTEM ANALYSIS

Determining how a system should work and how changes in conditions,

operations, and the environment will affect outcomes

9. TIME MANAGEMENT

Managing one’s own time and the time of others

10. SCIENCE

Using scientific rules and methods to solve problems

11. ACTIVE LEARNING

Understanding the implications of new information for both current and future

problem solving and decision making

12. SYSTEM EVALUATION

Identifying measures or indicators of system performance and the actions

needed to improve or correct performance, relative to the goals of the system

13. JUDGEMENT AND DECISION-MAKING

 Considering the relative costs and benefits of potential actions to choose the

most appropriate one

14. COORDINATION

Adjusting actions in relation to others’ actions

15. MONITORING

Monitoring/Assessing performance of yourself, other individuals, or

organization to make improvements or take corrective action

16. SOCIAL PERCEPTIVENESS

Being aware of others’ reactions and understanding why they react

as they do

17. LEARNING STRATEGIES

Selecting and using training/instructional methods and procedures appropriate

for the situation when learning or teaching new things

18. WRITING

Communicating effectively in writing as appropriate for the needs of the

audience

19. PERSUASION

Persuading others to change their minds or behavior

20. INSTRUCTING

Teaching others how to do something

21. MANAGEMENT OF MATERIAL RESOURCES

 Obtaining and seeing to the appropriate use of equipment, facilities, and

materials needed to do certain work

22. MANAGEMENT OF PERSONNEL RESOURCES

Motivating, developing, and directing people as they work, identifying the

best people for the job

23. SERVICE ORIENTATION

Actively looking for ways to help people

24. NEGOTIATION

Bringing others together and trying to reconcile differences

25. MANAGEMENT OF FINANCIAL RESOURCES

Determining how money will be spent to get the work done, and accounting

for these expenditures

WHAT KNOWLEDGE THAT CIVIL ENGINEERS NEEDED

Engineering and Technology - Knowledge of the practical application of engineering

science and technology. This includes applying principles, techniques, procedures, and

equipment to the design and production of various goods and services.

Building and Construction - Knowledge of materials, methods, and the tools involved

in the construction or repair of houses, buildings, or other structures such as highways and

roads.

Mathematics - Knowledge of arithmetic, algebra, geometry, calculus, statistics, and

their applications.

Design - Knowledge of design techniques, tools, and principles involved in production

of precision technical plans, blueprints, drawings, and models.

English Language - Knowledge of the structure and content of the English language

including the meaning and spelling of words, rules of composition, and grammar.

Administration and Management - Knowledge of business and management principles

involved in strategic planning, resource allocation, human resources modeling, leadership

technique, production methods, and coordination of people and resources.

Physics - Knowledge and prediction of physical principles, laws, their

interrelationships, and applications to understanding fluid, material, and atmospheric

dynamics, and mechanical, electrical, atomic and sub- atomic structures and processes.

Law and Government - Knowledge of laws, legal codes, court procedures, precedents,

government regulations, executive orders, agency rules, and the democratic political process.
 Customer and Personal Service - Knowledge of principles and processes for providing

customer and personal services. This includes customer needs assessment, meeting quality

standards for services, and evaluation of customer satisfaction.

Economics and Accounting - Knowledge of economic and accounting principles and

practices, the financial markets, banking and the analysis and reporting of financial data.

Computers and Electronics - Knowledge of circuit boards, processors, chips, electronic

equipment, and computer hardware and software, including applications and programming.

Personnel and Human Resources - Knowledge of principles and procedures for

personnel recruitment, selection, training, compensation and benefits, labor relations and

negotiation, and personnel information systems.

Public Safety and Security - Knowledge of relevant equipment, policies, procedures,

and strategies to promote effective local, state, or national security operations for the

protection of people, data, property, and institutions.

Sales and Marketing - Knowledge of principles and methods for showing, promoting,

and selling products or services. This includes marketing strategy and tactics, product

demonstration, sales techniques, and sales control systems.

Education and Training - Knowledge of principles and methods for curriculum and

training design, teaching and instruction for individuals and groups, and the measurement of

training effects.

Transportation - Knowledge of principles and methods for moving people or goods by

air, rail, sea, or road, including the relative costs and benefits.

Mechanical - Knowledge of machines and tools, including their designs, uses, repair,

and maintenance.
 Psychology - Knowledge of human behavior and performance; individual differences

in ability, personality, and interests; learning and motivation; psychological research

methods; and the assessment and treatment of behavioral and affective disorders.

Clerical - Knowledge of administrative and clerical procedures and systems such as

word processing, managing files and records, stenography and transcription, designing forms,

and other office procedures and terminology.

Chemistry - Knowledge of the chemical composition, structure, and properties of

substances and of the chemical processes and transformations that they undergo. This

includes uses of chemicals and their interactions, danger signs, production techniques, and

disposal methods.

WORK STYLES OF CIVIL ENGINEERS

1. INTEGRITY - Job requires being honest and ethical

2. DEPENDABILITY - Job requires being reliable, responsible, and dependable, and

fulfilling obligations

3. ATTENTION TO DETAIL - Job requires being careful about detail and thorough in

completing work tasks

4. ANALYTICAL THINKING - Job requires analyzing information and using logic to

address work-related issues and problems

5. INITIATIVE - Job requires a willingness to take on responsibilities and challenges

6. ACHIEVEMENT/EFFORT - Job requires establishing and maintaining personally

challenging achievement goals and exerting effort toward mastering tasks

7. SELF CONTROL - Job requires maintaining composure, keeping emotions in check,

controlling anger, and avoiding aggressive behavior, even in very difficult situations

8. PERSISTENCE - Job requires persistence in the face of obstacles

9. LEADERSHIP - Job requires a willingness to lead, take charge, and offer opinions

and direction

10. COOPERATION - Job requires being pleasant with others on the job and displaying a

good-natured, cooperative attitude

11. ADAPTABILITY/FLEXIBILITY - Job requires being open to change (positive or

negative) and to considerable variety in the workplace

12. STRESS TOLERANCE - Job requires accepting criticism and dealing calmly and

effectively with high stress situations

13. INDEPENDENCE - Job requires developing one’s own ways of doing things, guiding

oneself with little or no supervision, and depending on oneself to get things done

14. INNOVATION - Job requires creativity and alternative thinking to develop new ideas

for and answers to work-related problems

15. CONCERN FOR OTHERS - Job requires being sensitive to others’ needs and

feelings and being understanding and helpful on the job

16. SOCIAL ORIENTATION - Job requires preferring to work with others rather than

alone, and being personally connected with others on the job

Group 4

Technical Specifications, Bid Documents; Philippine Bidding

Documents for Consulting Services and Works.

I. Request for Expression of Interest

The Request for Expression of Interest provides information that
enables potential Bidders to decide whether to participate in the
procurement at hand. The Request for Expression of Interest shall be:

a) Advertised at least once in a newspaper of general nationwide

circulation which has been regularly published for at least two (2)
years before the date of issue of the advertisement, subject to Sections
21.2.2 of the IRR of R.A. 9184;
(b) Posted continuously in the Philippine Government Electronic
Procurement System (PhilGEPS) website and the website of the
Procuring Entity concerned, if available, and the website prescribed by
the foreign government/foreign or international financing institution, if
applicable, seven (7) calendar days starting on the date of
advertisement; and

(c) Posted at any conspicuous place reserved for this purpose in the
premises of the Procuring Entity concerned for seven (7) calendar
days, as certified by the head of the Bids and Awards Committee (BAC)
Secretariat of the Procuring Entity concerned.

Apart from the essential items listed in the Bidding Documents, the Request
for Expression of Interest should also indicate the following:

(d) The date of availability of the Eligibility Documents, the place where it
may be secured and the deadline for submission of the Letter of Intent
(LOI) together with the application for eligibility;

(e) The set of criteria and rating system for short listing of prospective
bidders to be used for the particular contract to be Bid, which shall
consider the following, among others:

(i) Applicable experience of the consultant and members in case of

joint ventures, considering both the overall experiences of the
firms or, in the case of new firms, the individual experiences of
the principal and key staff, including the times when employed
by other consultants;

(ii) Qualification of personnel who may be assigned to the job vis-à-

vis extent and complexity of the undertaking; and

(iii) Current workload relative to capacity;

(c) The number of consultants to be short listed and the procedure to be

used in the evaluation of Bids of short listed consultants, i.e., QBE or
QCBE; and if QCBE, the weights to be allocated for Technical and
Financial Proposals; and
 II. Eligibility Documents
Provides the information necessary for prospective bidders to
prepare responsive Eligibility Documents in accordance with the
requirement of the Procuring Entity.

1. Eligibility Criteria

1. The following persons/entities shall be allowed to participate in

the bidding for Consulting Services:

(a) Duly licensed Filipino citizens/sole proprietorships;

(b) Partnerships duly organized under the laws of the

Philippines and of which at least sixty percent (60%) of the
interest belongs to citizens of the Philippines;

(c) Corporations duly organized under the laws of the

Philippines and of which at least sixty percent (60%) of the
outstanding capital stock belongs to citizens of the
Philippines;

(d) Cooperatives duly organized under the laws of the

Philippines, and of which at least sixty percent (60%)
interest belongs to citizens of the Philippines; or

(e) Persons/entities forming themselves into a joint venture,

i.e., a group of two (2) or more persons/entities that intend
to be jointly and severally responsible or liable for a
particular contract: Provided, however, That Filipino
ownership or interest thereof shall be at least sixty percent
(60%). For this purpose, Filipino ownership or interest shall
be based on the contributions of each of the members of the
joint venture as specified in their JVA.

2. When the types and fields of Consulting Services involve the

practice of professions regulated by law, those who will actually
perform the services shall be Filipino citizens and registered
professionals authorized by the appropriate regulatory body to
practice those professions and allied professions specified in the
EDS.

3. If the Request for Expression of Interest allows participation of

foreign consultants, prospective foreign bidders may be eligible
subject to the qualifications stated in the EDS.

4. Government corporate entities may be eligible to participate only if

they can establish that they (a) are legally and financially
autonomous, (b) operate under commercial law, and (c) are not
dependent agencies of the GOP or the Procuring Entity.
2. Eligibility Requirements

1. The following eligibility requirements shall be submitted on or

before the date of the eligibility check specified in the Request for
Expression of Interest and Clause 5 for purposes of determining
eligibility of prospective bidders:

(a) Class “A” Documents –

Legal Documents

(i) Registration certificate from Securities and Exchange

Commission (SEC), Department of Trade and Industry
(DTI) for sole proprietorship, or Cooperative
Development Authority (CDA) for cooperatives, or
any proof of such registration as stated in the EDS;

(ii) Mayor’s permit issued by the city or municipality

where the principal place of business of the
prospective bidder is located;

Technical Documents

(iii) Statement of the prospective bidder of all its ongoing

and completed government and private contracts,
including contracts awarded but not yet started, if
any, whether similar or not similar in nature and
complexity to the contract to be bid, within the
relevant period provided in the EDS. The statement
shall include, for each contract, the following:

Financial Document

(v) The consultant’s audited financial statements,

showing, among others, the consultant’s total and
current assets and liabilities, stamped “received” by
the BIR or its duly accredited and authorized
institutions, for the preceding calendar year which
should not be earlier than two (2) years from the date
of bid submission.

(b) Class “B” Document

Valid joint venture agreement (JVA), in case a joint venture

is already in existence. In the absence of a JVA, duly notarized
statements from all the potential joint venture partners stating that
they will enter into and abide by the provisions of the JVA in the
instance that the bid is successful, shall be included in the bid.
Failure to enter into a joint venture in the event of a contract award
shall be ground for the forfeiture of the bid security. Each
 partner of the joint venture shall submit the legal eligibility
documents. The submission of technical and financial documents by
any of the joint venture partners constitutes compliance.

2. In the case of foreign consultants, the foregoing eligibility

requirements under Class “A” Documents may be substituted by
the appropriate equivalent documents, if any, issued by the foreign
consultant’s country.

3. The eligibility requirements or statements and all other documents

to be submitted to the BAC must be in English. A translation of the
documents in English certified by the appropriate embassy or
consulate in the Philippines must accompany the eligibility
requirements under Classes “A” and “B” Documents if they are in
other foreign language.

4. Prospective bidders may obtain a full range of expertise by

associating with individual consultant(s) and/or other consultants
or entities through a JV or subcontracting arrangements, as
appropriate. However, subcontractors may only participate in the
bid of one short listed consultant. Foreign Consultants shall seek
the participation of Filipino Consultants by entering into a JV with,
or subcontracting part of the project to, Filipino Consultants.

5. If a prospective bidder has previously secured a certification from

the Procuring Entity to the effect that it has previously submitted
the above- enumerated Class “A” Documents, the said certification
may be submitted in lieu of the requirements enumerated in
Clause 2.1 above.

3. Format and Signing of Eligibility Documents

1.Prospective bidders shall submit their eligibility documents through

their duly authorized representative on or before the deadline specified in
Clause 5.

2.Prospective bidders shall prepare an original and copies of the

eligibility documents. In the event of any discrepancy between the original
and the copies, the original shall prevail.

3.3. The eligibility documents, except for unamended printed

literature, shall be signed, and each and every page thereof shall be
initialed, by the duly authorized representative/s of the prospective
bidder.

3.4. Any interlineations, erasures, or overwriting shall be valid only

if they are signed or initialed by the duly authorized representative/s of
the prospective bidder.
4. Sealing and Marking of Eligibility Documents

1.Unless otherwise indicated in the EDS, prospective bidders shall enclose

their original eligibility documents described in Clause 2.1, in a sealed
envelope marked “ORIGINAL – ELIGIBILITY DOCUMENTS”. Each copy of shall

be similarly sealed duly marking the envelopes as “COPY NO.

-
ELIGIBILITY DOCUMENTS”. These envelopes containing the original and the
copies shall then be enclosed in one single envelope.

2.The original and the number of copies of the eligibility documents as

indicated in the EDS shall be typed or written in indelible ink and shall be
signed by the prospective bidder or its duly authorized representative/s.

3. All envelopes shall:

(a) Contain the name of the contract to be bid in capital letters;

(b) Bear the name and address of the prospective bidder in capital letters;

(c) Be addressed to the Procuring Entity’s BAC specified in the EDS;

(d) Bear the specific identification of this Project indicated in the EDS; and

(e)Bear a warning “DO NOT OPEN BEFORE…” the date and time for the
opening of eligibility documents, in accordance with Clause 5.

4.4. If the eligibility documents are not sealed and marked as required, the
Procuring Entity will assume no responsibility for its misplacement or
premature opening.

5. Deadline for Submission of Eligibility Documents

Eligibility documents must be received by the Procuring Entity’s

BAC at the address and on or before the date and time indicated in the
Request for Expression of Interest and the EDS.

6. Late Submission of Eligibility Documents

Any eligibility documents submitted after the deadline for

submission and receipt prescribed in Clause 5 shall be declared “Late” and
shall not be accepted by the Procuring Entity.

7. Modification and Withdrawal of Eligibility Documents

1. The prospective bidder may modify its eligibility documents after it has
been submitted; provided that the modification is received by the Procuring
Entity prior to the deadline specified in Clause 5. The prospective bidder
shall not be allowed to retrieve its original eligibility documents, but shall
be allowed to submit another set equally sealed, properly identified,
 linked to its original bid marked as “ELIGIBILITY MODIFICATION” and
stamped “received” by the BAC.

2. A prospective bidder may, through a letter of withdrawal, withdraw its

eligibility documents after it has been submitted, for valid and justifiable
reason; provided that the letter of withdrawal is received by the Procuring
Entity prior to the deadline prescribed for submission and receipt of
eligibility documents.

3. Eligibility documents requested to be withdrawn in accordance with this

Clause shall be returned unopened to the prospective bidder
concerned. A prospective bidder may also express its intention not to
participate in the bidding through a letter which should reach and be
stamped by the BAC before the deadline for submission and receipt of
eligibility documents. A prospective bidder that withdraws its eligibility
documents shall not be permitted to submit another set, directly or
indirectly, for the same project.

8. Opening and Preliminary Examination of Eligibility Documents

1. The Procuring Entity’s BAC will open the envelopes containing the
eligibility documents in the presence of the prospective bidders’
representatives who choose to attend, at the time, on the date, and at the
place specified in the EDS. The prospective bidders’ representatives who
are present shall sign a register evidencing their attendance.

2. Letters of withdrawal shall be read out and recorded during the

opening of eligibility documents and the envelope containing the
corresponding withdrawn eligibility documents shall be returned
unopened to the withdrawing prospective bidder. If the withdrawing
prospective bidder’s representative is present during the opening, the
original eligibility documents and all copies thereof shall be returned to
the representative during the opening of eligibility documents. If no
representative is present, the eligibility documents shall be returned
unopened by registered mail.

3. A prospective bidder determined as “ineligible” has seven (7) calendar

days upon written notice or, if present at the time of the opening of
eligibility documents, upon verbal notification, within which to file a
request for reconsideration with the BAC: Provided, however, that the
request for reconsideration shall not be granted if it is established that the
finding of failure is due to the fault of the prospective bidder concerned:
Provided, further, that the BAC shall decide on the request for
reconsideration within seven (7) calendar days from receipt thereof. If a
failed prospective bidder signifies his intent to file a request for
reconsideration, in the case of a prospective bidder w h o i s d e c l a r e d i
n e l i g i b l e , the B A C s h a l l h o l d t h e eligibility documents until such
time that the request for reconsideration or protest has been resolved.
 8.4. The eligibility documents envelopes and modifications, if any, shall be
opened one at a time, and the following read out and recorded:

(a) The name of the prospective bidder;

(b) Whether there is a modification or substitution; and

(c) The presence or absence of each document comprising the
eligibility documents vis-à -vis a checklist of the required documents.

8.5. The eligibility of each prospective bidder shall be determined by

examining each bidder’s eligibility requirements or statements against a
checklist of requirements, using non-discretionary “pass/fail” criterion, as
stated in the Request for Expression of Interest, and shall be determined
as either “eligible” or “ineligible.” If a prospective bidder submits the
specific eligibility document required, he shall be rated “passed” for that
particular requirement. In this regard, failure to submit a requirement, or
an incomplete or patently insufficient submission, shall be considered
“failed” for the particular eligibility requirement concerned. If a
prospective bidder is rated “passed” for all the eligibility requirements, he
shall be considered eligible to participate in the bidding, and the BAC shall
mark the set of eligibility documents of the prospective bidder concerned
as “eligible.” If a prospective bidder is rated “failed” in any of the eligibility
requirements, he shall be considered ineligible to participate in the
bidding, and the BAC shall mark the set of eligibility documents of the
prospective bidder concerned as “ineligible.” In either case, the BAC
chairperson or his duly designated authority shall countersign the
markings.

9. Short Listing of Consultants

1. Only prospective bidders whose submitted contracts are similar in

nature and complexity to the contract to be bid as provided in the EDS
shall be considered for short listing.

2. The BAC of the Procuring Entity shall draw up the short list of
prospective bidders from those declared eligible using the detailed set of
criteria and rating system to be used specified in the EDS.

3. Short listed consultants shall be invited to participate in the bidding for

this project through a Letter of Invitation to Bid issued by the BAC of the
Procuring Entity.

4. Only bids from short listed bidders shall be opened and considered for
award of contract. These short listed bidders, whether single entities or
JVs, should confirm in their bids that the information contained in the
submitted eligibility documents remains correct as of the date of bid
submission
`

III. Eligibility of Data Sheet

Intended to assist the Procuring Entity in providing the specific

information and requirements in relation to corresponding clauses in the
Eligibility Documents, and has to be prepared for each specific procurement.

Eligibility
Documents
1.2 State the types and fields of Consulting Services that will be
performed in
relation to the Project and the appropriate GOP regulatory body,
1.3 Select one, delete the
other.

If foreign participation is not allowed: No further

instructions.

If foreign participation is allowed: Foreign

consultants may be eligible to participate in
this Project, subject to the following
qualifications:

a)must be registered with the SEC and/or any agency authorized by

the laws of the Philippines;
b)when the types and fields of consulting services in which the
foreign consultant wishes to engage involve the practice of
regulated professions, the foreign consultant must
be
(i) List any additional acceptable proof of registration mentioned in
the ITB
Clause or state “No additional Requirements.”
(iii) The statement of all ongoing and completed government and
private
contracts shall include all such contracts within [state relevant
period] prior to the deadline for the submission and
receipt
of eligibility documents.
(iii.7) State acceptable proof of satisfactory completion of
completed
contracts.
4.2 Each prospective bidder shall submit one (1) original and [insert
number
of copies required] copies of its eligibility documents.
4.3(c) State the Bids and Awards Committee of the Procuring Entity
concerned
with the Project.
4.3(d) State specific details concerning the identification of the Project
5 The address for submission of eligibility documents is [insert
address].

The deadline for submission of eligibility documents is [insert

time and date].
8.1 The place of opening of eligibility documents is [insert address].

The date and time of opening of eligibility documents is [insert

date].
`

9.1 Similar contracts shall refer to [insert description of similar

contracts or
state "No further instructions..].
9.2 Insert here the detailed set of criteria and rating system to be used
by the
Procuring Entity for the short listing of consultants.

IV. Notice of Eligibility and Short Listing

[Name and Address of Short Listed Consultant]

Dear [Addressee]:
1.The [insert n a m e of Procuring Entity] (hereinafter called “Procuring Entity”
has received financing (hereinafter called “funds”) from [insert name of Funding
Source] (hereinafter called the “Funding Source”) toward the cost of [insert name
of project]. The Procuring Entity intends to apply a portion of the funds in the
amount of [insert amount of ABC] to eligible payments under the contract for
[insert name of contract] for which the Bidding Documents is issued.

2.The Procuring Entity now invites bids to provide the following Consulting
Services: [insert short description of objectives and scope of the project]. More
details on the services are provided in the Terms of Reference (TOR) for the
project.

3.The Consultant shall be selected and employed in accordance with [insert

evaluation procedure] procedures as described in the Bidding Documents.

4. This notice has been addressed to the following short listed consultants:

[Insert list of short listed consultants]

5. It is not permissible for you to transfer this invitation to any other

consultant.

6. The Bidding Documents shall be available at [indicate address] during

[insert office hours, e.g. 8:00 a.m. to 5:00 p.m.].

7. Select one of the following two paragraphs, and delete the other: 4
a) If the Procuring Entity intends to open the Pre-Bid Conference to all
interested
Bidd
ers:
The
[ins
ert
nam
e of
the

Proc
urin
`

b) If the Procuring Entity intends to limit the Pre-Bid Conference to

Bidders who have purchased the Bidding Documents:
The [insert name of the Procuring Entity] will hold a Pre-Bid
Conference on [insert time and date] at [insert address for Pre-Bid
Conference, if applicable], which shall be open only to all interested
parties who have purchased the Bidding Documents.

V. Contents of Bidding Documents

A. Pre-Bid Conference

1. If so specified in the BDS, a pre-bid conference shall be held at the

venue and on the date indicated therein, to clarify and address the
Consultants’ questions on the technical and financial components
of this Project.

2. Consultants are encouraged to attend the pre-bid conference to

ensure that they fully understand the Procuring Entity’s
requirements. Non-attendance of the Consultant will in no way
prejudice its bid; however, the Consultant is expected to know the
changes and/or amendments to the Bidding Documents discussed
during the pre-bid conference.

3. Any statement made at the pre-bid conference shall not modify the
terms of the Bidding Documents unless such statement is
specifically identified in writing as an amendment thereto and
issued as a Supplemental/Bid Bulletin.

B. Clarifications and Amendments to Bidding Documents

1. Consultants who have purchased the Bidding Documents may request for
clarifications on any part of the Bidding Documents for an interpretation.
Such a request must be in writing and submitted to the Procuring Entity at
the address indicated in the BDS at least ten (10) calendar days before the
deadline set for the submission and receipt of bids.

2. Supplemental/Bid Bulletins may b e i s s u e d u p o n t h e P r o c u r i

n g E n t i t y ’ s initiative for purposes of clarifying or modifying any
provision of the Bidding Documents not later than seven
(7) calendar days before the deadline for the submission and receipt of
bids. Any modification to the Bidding Documents shall be identified as an
amendment.
`

C. Preparation of Bids

Documents Comprising the Bid: Technical Proposal

1.While preparing the Technical Proposal, Consultants must give

particular attention to the following:

(a)The Technical Proposal shall not

include any financial
information. Any Technical c o n t a i P r o p o s a n i n g f i
n a n c i a l i n f o r m a t i o n declared l s h a l l be non-
responsive.

(b)For projects on a staff-time basis, the estimated

number of professional staff-months specified in the BDS
shall be complied with. Bids shall, however, be based on
the number of p r o f e s s i o n
al staff-months
estimated by the Consultant.

(c)Proposed professional staff must, at a minimum, have the

experience indicated in the BDS, preferably working
under conditions similar to those prevailing in the Republic
of the Philippines.

(d)No alternative p r o f e s s i o n a l s t a f f shall be

proposed, and only one Curriculum Vitae (CV) may be
submitted for each position.

2.The Technical Proposal shall contain the following

` (a) Bid security as prescribed in ITB Clause 15. If the Bidder
information/documents:
opts to submit the bid security in the form of:

(i) a bank draft/guarantee or an irrevocable Letter of

Credit issued by a foreign bank, it shall be
accompanied by a confirmation from a Universal or
Commercial Bank; or

a(ii)surety bond accompanied by a certification coming from

an authorized Insurance Commission that a
surety or insurance company is authorized to issue
\such instrument.

(b) Information indicated in the paragraphs below must

be provided by the Consultant and each partner and/or
subcontractor, if any, following the formats described in
Section VI. Terms of Reference

(c) [Terms of Reference normally contain the

following sections: (a) Background; (b) Objectives; (c)
Scope of the Services; (d) Training (when appropriate); (e)
Reports and Time Schedule; and (f) Data, Local Services,
Personnel, and Facilities to be provided by the Procuring
Entity.]
`

Documents Comprising the Bid: Financial Proposal

1.All information provided in a Consultant’s Financial Proposal shall be

treated as confidential. The Financial Proposal must be submitted in hard
copy using the format shown in Financial Proposal Forms.

2.The Financial Proposal requires completion of six (6) forms,

particularly, FPF
1, FPF 2, FPF 3, FPF 4, FPF 5, and FPF 6. FPF 1. Financial Proposal
Submission Form should form the covering letter of the Financial
Proposal. Form FPF 2. Summary of Costs FPF 3. Breakdown of
Price per Activity, FPF 4. Breakdown of Remuneration per Activity,
FPF 5. Reimbursable per Activity, and FPF 6. Miscellaneous
Expenses, relate to the costs of consulting services under two
distinct categories, namely: (a) Remuneration; and (b)
Reimbursable Expenditures.

3. Remuneration is divided into billing rate estimates for

international and domestic consultants. Reimbursable
Expenditures are divided into per diem rates for international and
domestic consultants and costs for other
reimbursable expenditure items required to perform
the consulting services.

4. The list of experts, and their respective inputs, identified in

Financial Proposal Forms, must match the list of experts and their
respective inputs shown in Technical Proposal Forms.

5. The Consultant shall be subject to Philippine taxes on amounts

payable by the Procuring Entity under the contract through mandated
withholding by local tax authorities of specified percentages of such
amounts or otherwise. The BDS details the taxes payable.

6. The Financial Proposal should clearly estimate, as a separate

amount, the local taxes (including social security), duties, fees,
levies, and other charges imposed under the applicable law, on the
Consultants, the subcontractors, and its personnel (other than
Philippine Nationals or permanent residents of the Philippines).

7. Unless otherwise provided in the BDS, total calculated bid prices,

as evaluated and corrected for minor arithmetical corrections,
such as computational errors, which exceed the approved budget
for the contract (ABC) shall not be considered.

Alternative Bids

Consultants shall submit only one bid and shall not associate with any
other entity other than those already provided in its eligibility documents
and allowed by the Procuring Entity.
`

Bid Currencies

1. All bid prices shall be quoted in Philippine Pesos unless otherwise

provided in the BDS. However, for purposes of bid evaluation, bids
denominated in foreign currencies shall be converted to Philippine
currency based on the exchange rate prevailing on the day of the
bid opening.

2. If so allowed in accordance with ITB Clause 13.1, the Procuring

Entity for purposes of bid evaluation and comparing the bid prices
will convert the amounts in various currencies in which the bid
price is expressed to Philippine Pesos at the exchange rate as
published in the Bangko Sentral ng Pilipinas (BSP) reference rate
bulletin on the day of the bid opening.

3. Unless otherwise specified in the BDS, payment of the contract

price shall be made in Philippine Pesos.

Bid Validity

4. Bids shall remain valid for the period specified in the BDS which
shall not exceed one hundred twenty (120) calendar days from the
date of the opening of bids.

5. In exceptional circumstances, prior to the expiration of the bid

validity period, the Procuring Entity may request Consultants to
extend the period of validity of their bids. The request and the
responses shall be made in writing. The bid security described in
ITB Clause 15 should also be extended corresponding to, at least,
the extension of the bid validity period. A Consultant may refuse
the request without forfeiting its bid security, but his bid shall no
longer be considered for further evaluation and award. A
Consultant granting the request shall not be required or permitted
to modify its bid.

Bid Security

1. The bid security, issued in favor of the Procuring Entity, in the

amount stated in the BDS shall be equal to the percentage of the
ABC in accordance with the following schedule:

Amount of Bid
Form of Bid Security
Security
a) Cash or
cashier’s/manager’s
check issued by a Universal
b) Bank draft/guarantee or
irrevocable letter of credit
issued by a Universal or Two percent (2%)
Commercial Bank: Provided,
however, that it shall be
confirmed or authenticated
by a Universal or Commercial
`

c) Surety bond callable upon

demand issued by a surety or
insurance company duly Five percent (5%)
certified by the Insurance
Commission as authorized to
issue such security.

d) Any combination of Proportionate to share of form

the with
foregoing.
For biddings conducted by LGUs, the Consultant may also submit
bid securities in the form of cashier’s/manager’s check, bank
draft/guarantee, or irrevocable letter of credit from other banks
certified by the BSP as authorized to issue such financial
statement.

2. The bid security should be valid for the period specified in the BDS.
Any bid not accompanied by an acceptable bid security shall be
rejected by the Procuring Entity as non-responsive.

3. No bid securities shall be returned to the Consultants after the

opening of bids and before contract signing, except to those that
failed or declared as post- disqualified, upon submission of a
written waiver of their right to file a motion for reconsideration
and/or protest. Without prejudice on its forfeiture, bid securities
shall be returned only after the bidder with the Lowest Calculated
and Responsive Bid has signed the contract and furnished the
performance security, but in no case later than the expiration of
the bid security validity period indicated in ITB Clause 15.2.

4. Upon signing and execution of the contract pursuant to ITB

Clause 30, and the posting of the performance security pursuant
to ITB Clause 31, the Consultant’s bid security will be discharged,
but in no case later than the bid security validity period as
indicated in ITB Clause 15.2.

D. Submission of Bids

Deadline for Submission of Bids

Bids must be received by the Procuring Entity’s BAC at the address and on
or before the date and time indicated in the BDS.

Late Bids

Any bid submitted after the deadline for submission and receipt of bids
prescribed by the Procuring Entity, pursuant to ITB Clause 18, shall be
declared “Late” and shall not be accepted by the Procuring Entity
`

E. Evaluation and Comparison of Bids

1. Process to be Confidential

1. Members of the BAC, including its staff and personnel, as well as its
Secretariat and TWG, are prohibited from making or accepting any kind of
communication with any Consultant regarding the evaluation of their bids
until the issuance of the Notice of Award, unless otherwise allowed in the BDS
or in the case of ITB Clause 2.

2. Any effort by a bidder to influence the Procuring Entity in the Procuring

Entity’s decision in respect of bid evaluation, bid comparison or contract
award will result in the rejection of the Consultant’s bid.

2. Clarification of Bids

To assist in the evaluation, comparison and post-qualification of the bids, the

Procuring Entity may ask in writing any Consultant for a clarification of its
bid. All responses to requests for clarification shall be in writing. Any
clarification submitted by a Consultant in respect to its bid and that is not in
response to a request by the Procuring Entity shall not be considered.

3. Bid Evaluation

1. For the evaluation of bids, numerical ratings shall be used. In order to

eliminate bias in evaluating the Bids, it is recommended that the highest
and lowest scores for each Consultant for each criterion shall not be
considered in determining the average scores of the Consultants, except
when the evaluation is conducted in a collegial manner.

2. For complex or unique undertakings, such as those involving new

concepts/technology or financial advisory services, participating short
listed consultants may be required, at the option of the Procuring Entity
concerned, to make an oral presentation to be presented by each
Consultant, or its nominated Project Manager or head, in case of consulting
firms, within fifteen (15) calendar days after the deadline for submission of
Technical Proposals.

3.3.The entire evaluation process, including the submission of the results thereof to
the Head of the Procuring Entity for approval, shall be completed in not more
than twenty-one (21) calendar days after the deadline for receipt of bids. The
bid with the highest rank shall be identified as the
Highest Rated Bid. The Head of the Procuring Entity shall approve or
disapprove the recommendations of the BAC within two (2) calendar days
after receipt of the results of the evaluation from the BAC.
15
 `

3.4. All participating short listed consultants shall be furnished the results
(ranking and total scores only) of the evaluation after the approval by the
Head of the Procuring Entity of the ranking. Said results shall also be
posted in the PhilGEPS and the website of the Procuring Entity, if
available, for a period of not less than seven (7) calendar days.

4. Opening and Evaluation of Technical Proposals

1. The Procuring Entity shall conduct a detailed evaluation of bids following the
procedures specified in the BDS depending on the evaluation procedure
identified in the Request for Expression of Interest and ITB Clause 1.1.

2. The BAC evaluates the Technical Proposals on the basis of their compliance with
the requirements under ITB Clause Error! Reference source not found. and
responsiveness to the TOR using the following criteria:

(a) Quality of personnel to be assigned to the Project which covers

suitability of key staff to perform the duties for the Project and
general qualifications and competence including education and
training of the key staff;

(b) Experience and capability of the CONSULTANT which include

records of previous engagement and quality of performance in
similar and in other projects; relationship with previous and
current clients; and, overall work commitments, geographical
distribution of current/impending projects and attention to be
given by the consultant. The suitability of the CONSULTANT to the
Project shall consider both the overall experiences of the firm and
the individual experiences of the principal and key staff including
the times when employed by other consultants; and

(c) Plan of approach and methodology with emphasis on the clarity,

feasibility, innovativeness and comprehensiveness of the plan
approach, and the quality of interpretation of project problems,
risks, and suggested solutions.

3. The BAC shall assign numerical weights to each of the above criteria
which shall be indicated in the BDS. A Bid shall be rejected at this stage if
it does not respond to important aspects of the TOR or if it fails to achieve
the minimum Technical Score (St) indicated in the BDS.

4. Technical Proposals shall not be considered for evaluation in any of the

following cases:

(a) late submission, i.e., after the deadline set in the ITB Clause Error!
Reference source not found.;

(b) failure to submit any of the technical requirements provided under 16

this ITB and TOR;
`

(c) the Consultant that submitted a Bid or any of its partner and/or
subcontractor belongs to one of the conflict of interest cases as
described in ITB Clauses Error! Reference source not found. to
Error! Reference source not found. and failed to make a proper
statement to that effect in the cover letter; or

(d) the Technical Proposal included any cost of the

services.
5.
Opening and Evaluation of Financial Proposals

5.1.Financial Proposals shall be opened on the date indicated in the BDS.

5.2.The Financial Proposals opened shall be evaluated based on the evaluation
procedure indicated in ITB Clause Error! Reference source not found.
using the corresponding procedure provided in the BDS.

6. Negotiations

1. Negotiations shall be held at the address indicated in the BDS. The aim is to
reach agreement on all points.

2. Negotiations shall cover the following:

(a) Discussion and clarification of the TOR and Scope of Services;

(b) Discussion and finalization of the methodology and work program

proposed by the Consultant;

(c) Consideration of appropriateness of qualifications and pertinent

compensation, number of man-months and the personnel to be
assigned to the job, taking note of over-qualified personnel to be
commensurate with the compensation of personnel with the
appropriate qualifications, number of man-months and schedule of
activities (manning schedule);

(d) Discussion on the services, facilities and data, if any, to be provided

by Procuring Entity concerned;

(e) Unless otherwise indicated in the BDS, discussion on the Financial

Proposal submitted by the Consultant; and

(f) Provisions of the contract.

7. Post Qualification

7.1.The Procuring Entity shall determine to its satisfaction whether the Consultant
that is evaluated as having submitted the Highest Rated Bid (HRB) complies
with and is responsive to all the requirements and conditions specified in the
Eligibility Documents and ITB Clauses Error! Reference source not found.
17and Error! Reference source not found.
`

2. Within a non-extendible period of three (3) calendar days from receipt by

the Consultant of the notice from the BAC that it is the HRB, the
Consultant shall submit the following documentary requirements:

(a) Tax clearance per Executive Order 398, Series of 2005;

(b) Latest income and business tax returns in the form specified in the
BDS;

(c) Certificate of PhilGEPS Registration; and

(d) Other appropriate licenses and permits required by law and stated
in the BDS.

Failure of the Consultant declared as HRB to duly submit the

requirements under this Clause or a finding against the veracity of such,
shall be ground for forfeiture of the bid security and disqualification of
the Consultant for award.

F. Award of Contract

8. Contract Award

1. Subject to ITB Clause 7, the Procuring Entity shall award the contract to
the Bidder whose bid has been determined to be the HRRB.

2. Prior to the expiration of the period of bid validity, the Procuring Entity
shall notify the successful Consultant in writing that its bid has been
accepted, through a Notice of Award received personally or sent by
registered mail or electronically, receipt of which must be confirmed in
writing within two (2) days by the Consultant with the HRRB and
submitted personally or sent by registered mail or electronically to the
Procuring Entity.
3. Notwithstanding the issuance of the Notice of Award, award of contract shall
be subject to the following conditions:

(a) Submission of the valid JVA, if applicable, within ten (10) calendar
days from receipt by the Consultant of the notice from the BAC that
the Consultant has the HRRB;

(b) Posting of the performance security in accordance with ITB Clause

10;

(c) Signing of the contract as provided in ITB Clause 9; and

(d) Approval by higher authority, if required.

18
`

9. Signing of the Contract

9.1.At the same time as the Procuring Entity notifies the successful Bidder that its
bid has been accepted, the Procuring Entity shall send the Contract Form to
the Bidder, which contract has been provided in the Bidding Documents,
incorporating therein all agreements between the parties.

2. Within ten (10) calendar days from receipt of the Notice of Award, the
successful Bidder shall post the required performance security and sign
and date the contract and return it to the Procuring Entity.

3. The Procuring Entity shall enter into contract with the successful
Bidder within the same ten (10) calendar day period provided that
all the documentary requirements are complied with.

4. The following documents shall form part of the contract:

(a) Contract Agreement;

(b) Bidding Documents;

(c) Winning bidder’s bid, including the Technical and Financial

Proposals, and all other documents/statements submitted;

(d) Performance Security;

(e) Notice of Award of Contract; and

(f) Other contract documents that may be required by existing laws

and/or specified in the BDS.

10. Performance Security

1. Unless otherwise provided in the BDS, to guarantee the faithful

performance by the winning Consultant of its obligations under the
contract, it shall post a performance security within a maximum period of
ten (10) calendar days from the receipt of the Notice of Award from the
Procuring Entity and in no case later than the signing of the contract.

2. The performance security shall be denominated in Philippine Pesos

and posted in favor of the Procuring Entity in an amount equal to the
percentage of the total contract price in accordance with the following
schedule:

Amount of Performance Security

For m of Performance Security (Equal to Percentage of the Total
Contract Price)
(a) Cash or cashier’s/manager’s
check issued by a Universal or Five percent (5%)
Commercial Bank.

19
`

(b) Bank
draft/guarantee or irrevocable
letter of credit issued by a
Universal or Commercial Bank:
Provided, however, that it shall
be confirmed
or authenticated by a Universal or
Commercial Bank, if issued by a
foreign bank.
(c) Surety bond
callable upon demand Thirty percent (30%)
issued by a surety or
insurance company
duly certified
by the
Insurance
Commission as
authorized to
issue such security; and/or
11. Notice to Proceed
(d) Any combination Proportionate to share of form with
1. of the foregoing.
Within three (3) calendar days from the date respect to total amount
of approval of the of security
contract
by the appropriate government approving authority, the Procuring Entity
shall issue its Notice to Proceed to the Consultant.

2. The date of the Consultant’s receipt of the Notice to Proceed will be

regarded as the effective date of the contract, unless otherwise specified
in the BDS.

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