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- /.),. Ci/". ~(y
Republic of the Philippines
DEPARTMENT OF PUBLIC WORKS AND HIGHWAYS
OFFICE OF THE SECRETARY
Manila
DEC 05 201Z
DEPARTMENT ORDER ) SUBJECT: IMPOSmON OF SANcnONS ON
) CONTRACTORS AND DPWH
NO. 88 _ ) IMPlEMENTING OFFICIALS
FOR FAILURE TO UNDERTAKE
series of 201f:t:{·"'·fY ) REPAIR WORKS FOR ANY
DAMAGE TO THE PROJECT
WITHIN THE DEFECTS
LIABILITY PERIOD PRIOR TO
ISSUANCE OF CERTIFICATE OF
ACCEPTANCE

It has been observed that in the implementation of infrastructure projects, some

contracts which were Issued certif1catlon of completion yet were not Issued the
Certificate of Acceptance even after the one year defects liability period had lapsed.
This is because of the failure of the contractor to undertake the repair/corrective
works of the defect(s)/damage(s) to the infrastructure projects within the defects
liability period on account of the use of inferior quality of materials or substandard
works.

Henceforth, in order to correct this malpractice, and for an effective implementation

of DPWH infrastructure projects, the provisions of RA 9184 under Section 62-
Warranty, is hereby stressed. Under Subsection 62.2.2.1, to quote" 71Ie contractor
shall undertake the repair wo'*s; at his own expense, of any damage to
the infrastructure on account of the use of materials of inferior quality,
within ninety (90) days from the time the Head of the PnN:uring Entity has
issued an order to undertake repair. rn case of failure or refu$81to comply
with this mandate, the procuring entity shall undertake such repair works
and shall be entitled to full reimbursement of expenses incurred therein
upon demand" unquote. SUbsection 62.2.2.2, to quote "TIle defects liability
period shall be covered by the Performance security of the contractor ....,
,

required In section 39.:1 of this rRR, which shall guarantee that the
contractor performs his responsibilities stated in the immediately
preceding Section. rf the cont:ractor fails to comply with its obligations
under section 62.2.2.:1 of this rRR, the procuring entity shall fodeit its'
perfonnance security, subject its pmperty(ies) to attachment or
garnishment proceedings, and perpetually disqualify It kDm pal't/clpatlng
in any public bidding. All Payables of the GOPin his favor shaHbe offset to
recover the costs. " unquote.

Further, all Implementing Offices of the Department shall undertake the

follOWing:
a. Review and list all contracts of infrastructure projects under their office
that were already issued a Certificate of Project Completion yet were not
issued the Certificate of Acceptance;
b. Determine the contractor for the project that were already issued a notice
to repair works but have not undertaken the works after the defects
liability period and after the lapse of ninety days (90) from the time the
procuring entity issued such notice;
c. For contractors who have not complied with the undertaking in under
Item b, forfeit the performance security posted by the contractor for the
project, and undertake the repair works by administration;
d. Submit the Ust of the contractors who did not comply with the above
cited provision, to the DPWH Central Office POCW so that they will not be
qualified/made eligible to participate in any future biddings.
 D.O. No. 88 5.2012 Page 2 of 2

Likewise, penalty shall be meted to the concerned DPWH Officials who are
responsible/answerable for such non-compliance which is considered a less
grave offense under Item 0.1 - Simple Neglect of Duty as provided in the
Revised Rules on Administrative cases in the Civil service and shall be
punishable by suspension of one (1) month and one (1) day to six (6) months
for the first offense and dismissal from the service for the second offense.

This Order takes effect immediately.

ELIO L. SINGSON
retary

I1II1I111
WIN2102000

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 Republic of the Philippines

CIVIL SERVICE
COMMISSION
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 Revised Implementing Rules and Regulations

For purposes of this Section, "extraordinary circumstances" shall refer to events that
may be determined by the NEDAin accordance with the Civil Code of the Philippines,
and upon the recommendation of the procuring entity concerned.j;

61.4. All contracts shall be denominated and payable in Philippine currency, and this shall
be stated in the Bidding Documents: Provided, however, That subject to the
quidellnes" issued by the GPPB, the procuring entity may provide in the Bidding
Documents that obligations may be paid in foreign currency; Provided, turther. That
should the procuring entity receive bids denominated in foreign currency, the same
shall be converted toPhilippine currency based on the exchange rate prevailing on
the day of the bid opening for purposes of bid comparison and evaluation.u,

Section 62. Warranty

62.1. For the procurement of goods, in order to assure that manufacturing defects shall be
corrected by the supplier, a warranty security shall be required from the' contract
awardee for a minimum period of three (3) months, in
the case of Expendable
Supplies, or a minimum period of one (1) year, in the case of Non-expendable
Supplies, after acceptance by the procuring entity of the delivered supplies.

The obligation for the warranty shall be covered by either retention money in an
amount equivalent to at least ten percent (10%) of every progress payment, or a
special bank guarantee equivalent to at least ten percent (10%) of the total contract
price. The said amounts shall only be released after the lapse of the warranty period
or, in the case of Expendable Supplies, after consumption thereof: Provided,
however, That the supplies delivered are free from patent and latent defects and all
the conditions imposed under the contract have been fully met.{.)

62.2. For the procurement of infrastructure projects, the following warranties shall be
made:

62.2.1. From the time project construction commenced up to final acceptance, the
contractor shall assume full responsibility for the following:
i .
a) aJ:~mage or destruction of the works except those occasioned by force
m ~re; and

b) safety, protection, security, and convenience of his personnel, third

parties, and the public at large, as well as the works, equipment,
installation and the like to be affected by his construction work;(a)

62.2.2. One (1) year from project completion up to final acceptance or the defects
liability period.

62.2.2.1. The contractor shall undertake the repair works, at his own expense, of
any damage to the infrastructure on account of the use of materials- of
inferior quality, within ninety (90) days from the time the Head of the
Procuring Entity has issued an order to undertake repair. In case of failure
or refusal to comply with this mandate, the procuring entity shall
undertake such repair works and shall be entitled to full reimbursement of
expenses incurred therein upon demand.

J, Refer to Apoendix 10 for the Guidelines on Procurements Involving Foreign-Denominated Bids, Contract Prices,
and Payment Using Letters of Credit.

93
 Revised Implementing Rtfles and Regulations

62.2.2.2. The defects liability period sh~lI!be covered by the Performance Security of:
the contractor required in Seeton 39.1 of this IRR, which shall guaran~'
that the contractor performs his responsibilities stated in the immediately .
preceding Section. If the contractor fails to comply with its obligations ~
under Section 62.2.2. ~ of. tbls IRR, the procuring entity shall forfeit its;
performance security/subJect its property(ies) to attachment or:'
garnishment proceedings,'andperpetually disqualify·it from participating in '.
any public bidding. All payables of the GOP in his favor shall be offset to :
recover the costs'(a) - •.
:i
62.2.3. From final acceptance of the project up to the period prescribed in
62.2.3.2.

62.2.3.1. The following shall be held responsible for "Structural Defects", i.e., major'
faults/flaws/deficiencies in one or more key structural elements of the
project which may lead to structural failure of the completed elements or
structure, or "Structural Failures", i.e., where one or more key structural
elements in an infrastructure facility fails "or collapses, thereby rendering '.
the facility or part thereof incapable of withstanding the design loads,
and/or endangering the safety of the users or the general public: .

a) Contractor - Where Structural Defects/Failures arise due to faults

attributable to improper construction, use of
quality/substandard materials, and any violation of the
plans and specifications, the contractor shall be held liable;

b) Consultants - Where Structural Defects/Failures arise due to faulty

and/or inadequate design and specifications as well as construction
supervision, then the: consultant who prepared the design or
undertook construction supervision for the project shall be held
liable;
'/
c) Procuring Entity's RePresentatives/project Manager/Construction
Managers and supervtsors - The project owner's representative(s),
project manager, construction manager, and supervisorts) shall be
held liable in lease'swhere the Structural Defects/Failures are due to
his/their willful intervention in altering the designs and other '
specifications! negligence or omission in not approving or acting on
proposed ch~es to noted defects or deficiencies in the design
and/or speciflcations: and the use of substandard construction
materials in the project;

d) Third Parties - Third Parties shall be held liable in cases where

Structural Defects/Failures are caused by work undertaken by them
such as.leaking pipes, diggings or. excavations, 'underground cables
and electrical wires, underground tunnel, miriing shaft and the like,
in which case the applicable warranty to such structure should be
levied to third parties for their construction or restoration works.

e) Users - In cases where Structural Defects/Failures are due to

abuse/misuse by the end user of the constructed facility and/or non-
compliance by a user with the technical design limits and/or