Ethics 1 7

CIVIL ENGINEERING LAWS,
CONTRACTS AND ETHICS

Republic Act No. 544
An act to regulate the practice of

Civil Engineering in the
Philippines.
ARTICLE I
• Sec 1. Title of the Act
CIVIL ENGINEERING LAW
• Sec 2. Definition of Terms
A Civil Engineer refers to a person duly registered
with the Board of Examiners for Civil Engineers.
ARTICLE II – BOARD OF EXAMINEERS FOR
CIVIL ENGINEERS
• Sec 3. Composition of Board
- Composed of Chairman and 2 Members.
- Shall be appointed by the Secretary of Public Works and Communications.
-The members appointed by the Secretary of Public Works and Communications shall
hold office for a term of three years or until their successors have been appointed.
- Each member of the Board shall qualify the proper oath of office before entering upon
the performance of his duties.
- Any members of the Board may be removed by the Secretary of Public Works and
Communications for neglect of duty, incompetency, malpractice, unprofessional, unethical,
immoral, or dishonorable conduct, after having been given opportunity to defend himself in a
proper administrative investigation.
ARTICLE II – BOARD OF EXAMINEERS FOR CIVIL
ENGINEERS
• Sec 4. Powers and Duties of the Board
- The Board of Examiners for Civil Engineers is vested with authority, to administer
oaths, issue, suspend and revoke certificates of registration for the practice of civil
engineering.
- Issue certificates of recognition to civil engineers already registered under this Act for
advanced studies, research, and/or highly specialized training in any branch of civil
engineering.
- Investigate violations of this Act and the regulations and issue subpoena and subpoena
duces tecum to secure appearance of witnesses in connection with the charges presented to the
Board.
- Inspect at least once a year educational institutions offering courses in civil
engineering, civil engineering works, projects or corporations, established in the Philippines.
- The Board shall also adopt a code of ethics in the practice of civil engineering and
have an official seal to authenticate its official documents.
ARTICLE II – BOARD OF EXAMINEERS FOR
CIVIL ENGINEERS
• Sec 5. Qualification of Board Members
- Citizen and resident of the Philippines.
- At least 30 years old with good moral character.
- A graduate of Civil Engineering and a registered Civil
Engineer.
- Have practiced civil engineering not less than 10 years.
- Not a member nor a former member of the faculty of any
school, institute, or college where Civil Engineering is taught.
ARTICLE II – BOARD OF EXAMINEERS FOR CIVIL
ENGINEERS
• Sec 6. Fees and Compensation of the Board
- Application for examination – P40.00
- Certificate of registration – P20.00
- Each member receives P5.00 for each applicant examinee.
- Salary (employment outside the BCS) plus compensation from Bureau of
Civil Service.
• Sec 7. Annual Report

- The Board shall submit a detailed report of its activities and
proceedings to the secretary of Public Works and Communications by the end of
Fiscal Year.
ARTICLE III – EXAMINATION AND
REGISTRATION
• Sec 8. Examination Requirement
- Applicants for registration for the practice of civil
engineering shall be required to pass a technical examination as
provided.
• Sec 9. Holding of Examination

- Examination is given in the City of Manila on the 2nd Monday
of February and August of each year.
REGISTRATION
• Sec 10. Subjects for Examination
- Applicants are examined on the following subjects: mathematics,
including algebra, plane and spherical trigonometry, analytics, descriptive and
solid geometry, differential and integral calculus, and rational and applied
mechanics; hydraulics, surveying, including highway and railroad surveying;
plane, topographic and hydrographic surveying, and advance surveying; design
and construction of highways and railroads, masonry structures, wooden and
reinforced concrete buildings, bridges, towers, walls, foundations, piers, ports,
wharves, aqueducts, sanitary engineering works, water supply systems, dikes,
dams, and irrigation and drainage canals.
REGISTRATION
•Sec 11. Executive Officer of the Board
- The Commissioner of Civil Service shall be the executive
officer of the Board and shall conduct the examinations given by
said Board.
- The Commissioner shall designate any subordinate officer of
the Bureau of Civil Service to act as the Secretary and custodian of
all records including examination papers and minutes of the
deliberation of the Board.
REGISTRATION
• Sec 12. Qualifications for Examination
- At least 21 years old
- Citizen of the Philippines
- With good reputation and moral character
- A graduate of civil engineering course
• Sec 13. Oath of Civil Engineers
- All examination passers are required to take a professional oath before
the Board of Examiners for Civil Engineers or other Government Officials
authorized to administer oaths, prior to entering upon the practice of the civil
engineering profession.
REGISTRATION
•Sec 14. Seal and Use of Seal
- Standard design of the Seal as approved by the Board
and must bear the serial number of the certificate issued by
the Board.
- Plans and Specifications prepared or under the
supervision must be sealed/stamped within the validity dates
of the certificate.
REGISTRATION
• Sec 15. Exemption from Registration

- Officers or enlisted men of US and AFP
- Civil Engineer or experts called in by the Philippine Government
- Any person residing in the Philippines may make plans and
specifications for:
a. Any building in chartered cities or in towns
b.Any wooden building enlargement or alteration for farm
purposes only and does not cost more than ten thousand pesos.
REGISTRATION
• Sec 16. Refusal to Issue Certificate
- any person convicted by the court of any criminal offense
involving moral turpitude.
- any person guilty of immoral or dishonorable misconduct.
- any person of unsound mind.
• Sec 17. Suspension and Revocation of Certificates
- The Board has the power to suspend or revoke the certificate
of registration for any cause mentioned in the preceding section.
REGISTRATION
• Sec 18. Re-issue and replacement of Certificates
- certificate of registration expires after one year from the date of
issuance and is revoked.
• Sec 19. Transitory Provisions
- Civil Engineers are required to obtain Certificate of Registration.
- Civil Engineers licensed under Act 2985 are automatically
registered.
- All graduates of Civil Engineering who have passed the CSE for
Senior Civil Engineer or are employed in the Government for 5 years are
exempted.
ARTICLE IV – Enforcement of Act and Penal
Provisions
• Sec 20. Enforcement of the Act by Officers of the Law
• - It shall be the duty of all duly constituted law officers of the national,
provincial, city and municipal governments, or any political subdivision
thereof, to enforce the provisions of this Act and to prosecute any person
violating the same.
• Sec 21. Registration Required
- no person shall practice or offer to practice civil engineering in the
Philippines without having obtained the proper certificate of registration from
the Board of Examiners for Civil Engineers.
ARTICLE IV – Enforcement of Act and
Penal Provisions
•Sec 22. Penal Provisions
- any person guilty of misdemeanor shall be
sentenced to a fine not less than P500.00 nor more
than P2,000.00 or to suffer imprisonment for not less
than 6 months nor more than one year, or both.
ARTICLE V – Miscellaneous Provisions
• Sec 23. Preparation of Plans and Supervision of
Construction by Registered Civil Engineer
- design, plans, and specifications must be prepared, signed
and sealed by a registered Civil Engineer.
- Plans and Design of the structures must be in compliance
to the law or ordinance of a city, province, or municipality where
the structure is constructed.
• Sec 24. RA 1582 (1956)
- practice of Civil Engineering is a professional service.
- members of the firm, association or corporation must be
licensed Engineers or Architects and must obtain certificate of
registration.
- Architects and Engineers shall render work and services
proper for their respective profession and must be responsible for
their own respective acts.
• Sec 25. Reciprocity Requirements
- No person who is not a citizen of the Philippines at the
time he applies to take examination shall be allowed to take
it unless he can prove in the manner provided by the Rules of
Court
- by specific provision of law, the country of which he is
a citizen, subject, or national either admits citizens of the
Philippines to the practice of the same profession without
restriction.
• Sec 26. Roster of Civil Engineers
- a roster showing names and places of business of all
registered CE must be prepared by the Commisioner of Civil
Service at least once a year.
- copies of the roster is on file with the Secretary of
Public Works and Communications and furnished to all
department heads, mayors, Director of Public Works,
Bureaus, Government Agencies.
• Sec 27. Repeal
- All laws, parts of laws, orders, ordinances, or
regulations in conflict with the provisions hereof are hereby
repealed except the provisions of Act No. 3159 amending Act
No. 2985, pertaining to the practice of "maestro de obras”.
• Sec 28. Construction of Act
- If any part or section of this Act shall be declared
unconstitutional, such declaration shall not invalidate the
other provisions hereof.
•Sec 29. Effectivity
- This act shall take effect upon its approval.
• Official Title: Republic Act No. 544
(Also Known As Civil Engineering Law)
• Approval Date - June 17, 1950
• Includes Modifications Pursuant to: Republic Act
No. 1582 (1956)
AMENDMENTS TO THE
CIVIL ENGINEERING LAW
7.1. ARTICLE II. BOARD
OF CIVIL ENGINEERING
The Board of Civil Engineering is a collegial body under the
administrative supervision by the Commission.
Selection of members
• The said members are selected from the list submitted by PICE.
This list considers three (3) nominees for each position.
Selection of the chairman
• The President of the Philippines will appoint the chairman from

among the members of the Board.
7.1.1. TERMS OF OFFICE
The Board members shall hold office for a term of three (3) years
after their appointment. The first Board members hold office for
the following terms:
• Chairman - three years
• 2 members - for two years
• 2 members - for one year
7.1.1. TERMS OF OFFICE
Each member will be qualified by taking proper oath of office. And any member
may be removed by the President of the Philippines after given opportunity to
defend himself in the administrative investigation of the Commission. During
investigation, the member is suspended under the power of the President and a
temporary member is appointed. Grounds for termination are:
• Neglect of duty
• Incompetence
• Malpractice
• Unprofessionalism
• Unethical
• Immorality
• Dishonorable conduct
7.1.2. POWERS AND DUTIES OF THE BOARD
The board has the authority to:

• Administer oaths, issue, suspend, revoke, and reinstate certificates of
registration and professional identification card for the practice.
• Issue and revoke special temporary permits
• Investigate such violations of this Act and the regulations, and issue
subpoena and subpoena duce tecum in connection with charges
presented to the Board
• Inspect educational institutions offering courses in civil engineering
• Civil engineering works, projects, or corporations
• Discharge such powers and duties as may affect ethical and
technological standards of the profession
7.1.3. PROMULGATION OF IMPLEMENTING RULES
AND REGULATIONS
Rule and regulations are made known in different ways:
• The latest editions of the Civil Engineering Code and Manual of Professional
Practice (prepared by PICE)
• The PICE shall prepare a code of ethics in the practice
• The Board shall also adopt an official seal to authenticate its official
documents
7.1.4. QUALIFICATIONS OF BOARD MEMBERS
At the time of appointment each Board member shall be:

• A citizen and resident of the Philippines
• At least 30 years old and of good moral character
• A holder of a bachelor's degree in Civil Engineering from a recognized institution
• A Civil Engineer duly qualified to practice in the Philippines
• Has practiced for a period of not less than 10 years before his appointment. At
least 5 years as
• Civil Engineer-of-record
• Civil Engineer In-charge of Construction
• Civil Engineer Prime Professional
• Not a member of faculty of any institute teaching Civil Engineering course
• An active member in good standing of the PICE
7.1.5. COMPENSATION OF THE BOARD
The Board members shall receive compensation the sum compared

to the amount received by similar members in other existing
professional regulatory boards.
The compensation is computed as:
• 100Php each application for examination
• 50Php for each certificate registration
• 15Php for each applicant examined (each Board member)
• An appointed Board member in the service of the government shall receive
compensation as stated above in addition to his salary in the Government.
7.1.6. ANNUAL REPORT
• The Board shall submit to the Commission a detailed report of its

activities and proceedings during the period covered at the end of
each fiscal year.
7.2. ARTICLE III. EXAMINATION
REGISTRATION AND CERTIFICATION
The Civil Engineering Board Examination is a requirement for

registration of the practice. According to RA 1080 as approved on
(15th June 1954), board examinations are considered as civil service
examinations.
The following are the PRC requirements when applying for the
examination, (including the payment of 900Php):
• NSO/PSA Birth Certificate
• NSO/PSA Marriage contract (for married female applicants)
• Transcript of Records with scanned picture and remarks "for Board Examination
Purposes"
• Valid NBI Clearance (for both new and retakers)
• Two (2) Certificates of Good Moral Character from any 2 of the following:
• Barangay
• Church
• School
• Employer
7.2.1. HOLDING OF EXAMINATION
The places of Examination are the following:

• Manila
• Baguio
• Cagayan de Oro
• Cebu
• Davao
• Iloilo
• Lucena
• Pagadian
• Tacloban
• Tuguegarao
• Zamboanga
7.2.2. SUBJECTS OF EXAMINATION
Resolution No. 02, Series of 1995, otherwise known as Promulgation of the Syllabi for
the Subjects in the Civil Engineering Licensure Examination states that the Board shall
provide:
• A minimum of 500 questions for each subject from which the Commission's computer will
randomly select a few days prior to the examination.
• The number of questions for each subject shall not be less than 20 at 4 points each. The
maximum number of questions shall not be more than 100 at 1 point each. Examinees shall be
given 10 computation and scratch sheets shall be submitted with the answer sheets.
• The Examination questions and problems are prepared considering the following:
• The areas covered by the examination shall be those included in the topics enumerated in the
syllabus for the particular subjects. The examination questions in each subject shall be
comprehensive and well-balanced in scope.
• Questions and answers should relate to matters which are of general applicability in the civil
engineering practice in the Philippines.
• Questions and answers shall be framed in a clear and concise manner taking into consideration
the degree or level of proficiency for each topic. Instructions or requirements should be
clearly stated.
The assigned weight and estimated time for each subject shall be
indicated. Whenever applicable, references shall be made to
statements issued by:
• The Board of Civil Engineering
• The National Building Code of the Philippines
• The National Structural Code of the Philippines
• The National Standards Office
• The National Water Resources Council
• The Philippine Institute of Civil Engineers
• The Associate of Structural Engineers of the Philippines
• Electronic and scientific calculators are not allowed.
*For areas not covered by Philippine sources, references may also
be made to the setting agencies int he United States:
• ACI - American Concrete Institute
• ASCE - American Society of Civil Engineers
• ASHTO -Association of State Highway and Transportation Officials
• NSC - Nominated Sub-Contract
• UBC - Uniform Building Code
and also international agencies such as:
• IBO International Building Officials
• FIDIC International Federation of Engineers
Applicants for registration for the Civil
Engineering practice shall be examined in:
• General Civil Engineering • Manpower and equipment scheduling and control • Design and construction of highways including • Flow nets
pedestrian facilities, railways, ports and harbors,
• Project planning, designs, and management • Material control and airports • Effective stress
• Manual of practice, codes and regulations • PERT-CPM • Structural engineering • Compressibility of soil
• Economics • Bar char schedule • Theory of structures • Shear strengths of soil
• Environmental impact assessment • Project monitoring • Properties of materials • Lateral earth pressure
• Materials testing and inspection • S-curve • Lateral load analysis • Soil bearing capacity
• Surveying • Network analysis • Earthquake engineering • Slope stability
• Highway and railroad surveying • Time scheduling • Wind engineering • Solid waste disposal systems
• Plane, topographic and hydrographic surveying • Project activities • Functional planning • Ground improvement
• Advanced surveying • Project cost • Floor plans, elevations, sections, utilities • Water resources and hydraulics engineering
• Numerical methods for computer application • Project control • Design of wooden, reinforced concrete, steel, and • Hydrology
composite buildings, bridges, towers, walls,
• Mathematics (algebra, plane and spherical • Quality assurance foundations, silos, and masonry structures. • Hydraulics
trigonometry, analytic, descriptive, and solid
geometry, differential and integral calculus, and • Bidding • Geotechnical engineering • Design of piers, ports, wharves, aqueducts,
rational and applied mechanics) reservoirs, spillways, open channels, pressure
• Tender documents • Soil composition conduits, navigation canals and locks
• Construction management and engineering
• Specifications • Classification of soils • Sanitary works
• Contracts
• Construction supervision • Compaction of soils • Water supply system
• Environment
• Transportation engineering • Flow of water in soils • Dikes, dams, and irrigation and drainage canals
• Cost estimates
• Theory and practice of transportation engineering • Permeability • Hydropower
• Unit cost development
• Transportation and traffic engineering studies, • Seepage
• Construction schedule planning
To pass the Civil Engineering Board Examination, a candidate must
obtain a general average of 70% with no grades lower than 50% in
any given subject.
• Mathematics, Surveying, and Transportation Engineering = 35%
• Hydraulics and Geotechnical Engineering = 30%
• Structural Engineering and Construction = 35%
7.2.3. QUALIFICATIONS FOR EXAMINATION
Applicants for the Examination should satisfy the following

qualifications"
• Be at least twenty-one years old
• Be a citizen of the Philippines
• Be of good reputation and moral character
• Be a holder of a bachelor's degree in Civil Engineering from a recognized
and legally constituted school, institute, college, or university
7.2.4. OATH OF CIVIL ENGINEERS
• Successful candidates are required to take a professional oath

before the Board or Commission authorized government officials
prior to the issuance of the certificate of registration.
7.2.5. CERTIFICATE OF REGISTRATION
• The Board and the Commission issue individual certificates of

registration to successful examination candidates after taking the
professional oath. The certificate is subject to payment prescribed
by the Commission.
7.2.6. MEMBERSHIP IN THE PICE
• All registered Civil Engineers are automatic members of the

Philippine Institute of Civil Engineers (PICE) and shall comply with
all the membership requirements therein.
7.2.7. PROFESSIONAL IDENTIFICATION CARD
Individual professional identification cards are issued to registered Civil

Engineers bearing the following:
• Name and picture of the registrant
• Registration number
• Date of issuance of card
• Expiry date of card
• Signature of the chairman of the Commission
* NO professional identification card shall be issued to a new registrant
without certificate of active membership issued by PICE.
* The same certificate is required for renewal of the professional card.
7.2.8. INDICATION OF CERTIFICATE OF
REGISTRATION/PROFESSIONAL IDENTIFICATION
CARD AND PROFESSIONAL TAX RECEIPT
The Civil Engineer shall be required to indicate the following on the

plans and documents he signs with his practice.
• Certificate of Registration
• Professional Identification Card, its date of issuance and duration of validity
• Professional tax receipt number
7.2.9. SEAL AND USE OF SEAL
• The design of the seal is as authorized by the Board. The serial

number of the certificate shall be included in the design of the
seal.
• All official documents (estimates, designs, specifications) and
plans shall be sealed and signed by the engineer.
7.2.10. REFUSAL TO ISSUE CERTIFICATE
The Certificate shall not be issued to any person

• Convicted of ay criminal offense
• Guilty of immoral or dishonorable conduct
• Of Unsound mind
• A candidate who has not taken the oath of Civil Engineers
In the vent of refusal, the Board shall send a written statement to
the applicant stating the reason for refusal.
7.2.11. SUSPENSION AND REVOCATION OF
CERTIFICATES AND CANCELLATION OF
PROFESSIONAL IDENTIFICATION CARDS
After due notice and hearing (the registrant has the opportunity to
defend himself) the Board can suspend or revoke the certificate of
registration due to:
• malpractice
• unprofessional
• unethical
• immoral
• dishonorable conduct
• non-membership in good standing in PICE for three (3) consecutive years
7.2.12. RE-ISSUE AND REPLACEMENT OF
CERTIFICATES AND PROFESSIONAL
IDENTIFICATION CARDS
• After a year when the certificate is revoked, the registrant can
apply for a new certificate of registration with the form
prescribed for examination, and the Board may exempt the
applicant from the examination.
• The application for the professional identification card shall be

accomplished similar as renewal.
7.2.13. CONTINUING PROFESSIONAL
DEVELOPMENT (CPD)
• PICE is responsible for developing a CPD program. Other

organizations can also be CPD providers upon PICE and Board
accreditation.
• All registered Civil Engineers shall maintain a program of
professional development.
7.2.14. CERTIFICATE OF SPECIALIZATION
PICE has the authority to issue, suspend, and revoke a certificate of

specialization to a registered Civil Engineer who has demonstrated
his advanced knowledge, experience, education, and training.
Specialty organization of Civil Engineering (SOCE) can be formed in

each recognized branch only by specialists with the following
conditions:
• Such SOCE is affiliated to and recognized by the PICE.
• Only one SOCE for each Civil Engineering branch, without membership
prejudice to other professional organizations.
7.2.15. SPECIALIST IDENTIFICATION CARD
• All registered Civil Engineers with a certificate of specialization

shall be issued individual specialist identification card from PICE,
which is renewed in accordance to PICE requirements.
7.2.16. TRANSITORY PROVISIONS
Upon the effectivity of RA 544,

• Registered status of each Civil Engineer shall retain.
• Certificates of registration shall have the same force and
effect.
• Certificates of recognition for advanced strudies, research and
specialized training in any specialized branch shall be replaced
by equivalent certificates of specialization by the PICE.
• Certificates of Specialization previously issued shall have the
same force and effect.
ENGINEERING CONTRACT
What Is a Contract?
• A contract is a legally binding document that recognizes and

governs the rights and duties of the parties to the agreement.
• A contract is legally enforceable because it meets the
requirements and approval of the law.
• A contract typically involves the exchange of goods, service,
money, or promise of any of those.
• "Breach of contract“ - means that the law will have to award the
injured party either the access to legal remedies such as damages
or cancellation.
• In the Anglo-American common law, formation of a contract
generally requires an offer, acceptance, consideration, and mutual
intent to be bound. Each party must be those who are binding by
the contract. Although most oral contracts are binding, some
types of contracts may require formalities such as being in writing
or by deed.
Engineering Contracts: Everything You Need to
Know
• Engineering contracts are legal agreements between a business

and an engineering company detailing services promised, and
payment for those services.
What Is a Contract?
• Contracts are agreements in which a person or business agrees to
specific terms and conditions that can be legally enforced.
• In a contract, responsibilities and obligations are outlined and
agreed upon by the two parties involved.
Four Functions of Engineering Contracts
Engineering contracts cover four particular issues of an agreement

between an engineer and the company they are going to work on a
project for.
These functions are:
1. Scope of work
2. Period of performance
3. Payment
4. Termination
Scope of Work
• the company proposing the work should outline each task that is
part of the project and provide deadlines.
• They should also be clear about their vision for the project and
the end goal.
• Any parts of the project that should not be handled by the
contracted engineer should be clearly stated in the contract.
Period of Performance
• Engineering contracts should give the expected time frame for the
project and a deadline for total completion.
• Companies usually provide payment for the project at its
beginning, so it is especially important to set deadlines in a
contract.
Payment
• Contracts make sure that products and services are paid for in a
timely manner.
• An engineering contract should outline when payments will be
received, from whom, and how much, as well as instructions for
invoicing.
• Some projects with a longer time span will be paid in installments
at preset milestones in the progress of the project. If this is the
case, the contract should lay out these milestones and payment
amounts.
Termination
• Engineering contracts usually contain termination clauses. These

types of clauses specify how, and for what reasons, the contractor
or customer can terminate the agreement.
• Valid reasons for termination include:
• Convenience issues that prevent project progress or completion
• Natural disasters
Lump Sum Contracts
• also called a fixed price contract.

• This type of contract requires the contractor to agree to perform the
specified work outlined in the contract for one fixed price.
• have a fixed price for the work promised and that price is only allowed
to change under a change order.
• For a change order to take place, the client and the contractor need to
determine additional work to be performed and require additional
payment or remove some of the work originally agreed upon and settle
on a lower payment.
• If the client and contractor have agreed on a clear vision and schedule
for the project, a lump sum contract will likely work well for their
agreement.
Lump Sum Contracts
Some advantages of a lump sum contract are:

• They offer fewer risks financially for the customer because they can budget for
the fixed cost and not worry about it changing
• There is less supervision needed for the contracted work because a clear
schedule has been set
• They encourage efficient work by the contractor to get done earlier and to
achieve a better pay rate
Some disadvantages of a lump sum contract are:
• If changes to the contract are needed it can be expensive and complicated
• The design plans need to be definitively set before writing the contract
• Fixed payment amounts can encourage contractors to choose cheaper materials
and methods in order to increase their profit.
Measurement Contract
• also called a re-measurement contract or a measure and value

contract.
• This type of contract includes a Bill of Quantities (BOQ) that the
employer provides when the engineering design is able to be
explained in detail, but the quantity of work cannot.
• As a project is worked on, the contractor can create a BOQ
quoting each item used in the project.
• The contract will quote the price of the project based on the BOQ.
Civil Code of the
Philippines
Effective: August 30, 1950
Enacted: June 18, 1949
Enacted by: Code Commission with the advice and consent of the Philippine Legislature
Signed: June 18, 1949
The Civil Code of the Philippines is the product of the codification
of private law in the Philippines. It is the general law that governs
family and property relations in the Philippines. It was enacted in
1950, and remains in force to date with some significant
amendments.
What is CONTRACT
• An agreement through meeting of the minds between two persons

whereby one binds himself, with respect to the other, to give
something or to render some service. It have the force of
law between the parties and have been complied with in good
faith.
Force of law
• refers to the legal aspect of an agreement as a contract.

• This means that you can go to court and ask for a civil action in
case of non-compliance of the contract.
In good faith
• denotes fairness and honesty of intention in the performance of

the contract, so as to not destroy or injure the right of one of the
parties.
• It would not be in good faith, for instance, when one party has
exempted himself from the contract while the other is still bound
to it.
What is Obligation?
• An obligation is the juridical necessity that results when a

contract is completed or perfected.
• There can be no contract if there is no obligation, though not all
obligations arise from contracts.
• The obligation that arises from contracts is called conventional
obligation
Characteristics of Contract
• Obligatory - the force of law between the contracting parties

compel them to perform under the threat of civil action or
lawsuit.
• Autonomy - such stipulations, clauses, terms and conditions are
established by the contracting parties as they may deem
convenient, provided they are not contrary to law, morals, good
customs, public order, or public policy.
• Mutuality - the bind must involve both of the parties,so that the
validity or compliance of a contract cannot be left to the will of
only one of them.
Characteristics of Contract
• Relativity - the effectivity is only between the parties, their

assigns and heirs, except in case where the rights and obligations
arising from the contract are not transmissible by their nature, or
by stipulation or by provision of law.
• Consensuality - the mere consent that perfected the contract
should bound the parties to the fulfillment of what has been
expressly stipulated, and all the consequences which, according to
their nature, may be in keeping with good faith, usage and
law. However, real contracts, such as deposit, pledge and
commodatum, are not perfected until the delivery of the object of
the obligation.
Elements of Contract
• Consent - a meeting of the minds between parties with respect to

the object and cause; there is a certain offer by one party and
there is an absolute acceptance by another party.
• Object - the thing, right, or service to be provided or performed
under the contract.
• Cause (causa) - the essential purpose or reason for the contract:
• for onerous contracts, the promise of a thing or service by the other.
• for remuneratory contracts, the service or benefit which is being
remunerated.
• for contracts of pure beneficence, the mere liberality of the benefactor.
Elements of Contract
• Natural elements - those which are part of the contract even if

the parties do not provide (stipulate) them, and is presumed by
law to exists; such as a warranty of hidden defects or eviction in
contract of sale.
• Accidental elements - those which are established or stipulated in
the contract by the contracting parties as they may deem
convenient; such as stipulations, clauses, terms and conditions.
Stages of Contract
• Preparatory or conception - process of formation through

bargaining or negotiation, which begins from the time the
prospective contracting parties manifest their interest in the
contract that leads to the perfection of the contract. Either party
may stop the process or withdraw an offer made.
• Pefection or birth - process of arriving at a definite agreement or
meeting of the minds as to the elements of the contract,
particularly the essential ones (object and cause).
• Consumption or death - the fulfillment of the respective
obligations of the parties under the contract, resulting to its
accomplishment and extinguishment.
Form of Contract
The form of a contract is manifested by:

• intent or will - its psychological existence; only conceptual and
cannot have legal value.
• expression of such intent or will - its physical or logical existence;
substantial and can have legal value.
Form of Contract
A contract may be in the form of:

• an oral agreement, or those that are partly oral and partly written, which are oral contract in
legal effect.[11]
• a single written agreement signed by both parties, wherein all its terms are in writing [11],
regardless if it is hand-written or electronically encoded/printed.[12]
• a written agreement with two copies; one signed by one party, the other signed by the other
party.
• a set of signed written agreements which are related and not contradictory.
• a set of unsigned written agreements identified as part of the signed written agreements.
• any formal written agreement/s:
• private instrument - has no acknowledgement from a notary public or any authorized official.
• public instrument - has acknowledgement from a notary public or any authorized official.
Form of Contract
A contract should also be in:

• a form required by the law for its validity.[13]
• a form required by the law to be enforceable or be proved in a
certain way.[13]
• a form required by the law for for the convenience of the parties
or for the purpose of affecting third persons.
Reformation of Contract
The reformation of instrument requires:

• a meeting of the minds of the parties.
• a written instrument that does not express the real intention of
the parties due to mistake, fraud, inequitable conduct, or
accident; such real intention must always prevail.
• a petition/request for the reformation of the instrument; this is in
order for the facts to be put into legal proceeding.
• a clear and convincing proof to support such petition.
Interpretation of Contract
The interpretation of contract has the following rules:

• there is no need for interpretation if the terms of a contract are clear
and leave no doubt upon the intention of the contracting parties.
• the evident intention of the parties shall prevail if there is a conflict
between such intention and the words.
• the specific terms shall prevail if there is inconsistency or confusion over
the uses of general terms covering the same subject matter.
• the most adequate meaning shall prevail if some provisions have several
meanings.
• the interpretation of a contract as a whole shall prevail if there

are various doughtful provisions in the entirety.
• the most sensible meaning shall prevail if a word has multiple
meanings; this is in keeping with the nature and object of the
contract.
• the usage or custom of the place shall prevail if the parties
entered into their contract with reference to such usage or
custom.
• the interpretation of obscure terms or stipulations shall be against
the party who caused the obscurity.
• the above rules are unable to settle doubts, the supplementary

rule shall resolved such doubts:
• in incidental circumstances of a gratuitous contract, the interpretation
should be made which would result in the least transmission of rights and
interests.
• in onerous contract, the interpretation should be in favor of the greatest
reciprocity of interests.
• in object, the contract shall be null and void since the intention of the
parties cannot be known.
Classifications of Contract
according to form:
• Informal contract - in any form as long as all the requisites or
essential elements for its validity are present.
• Formal contract - in a form required by the law.
according to the involvement of the parties:
• Unilateral contract - one party is bound to fulfill an obligation for
an act by another party.
• Bilateral contract - both parties are bound to fulfill their mutual
promises or respective obligation to each other reciprocally.
according to name or designation:

• Nominate contract - has specific name or designation in law; such
as commodatum, lease, agency, and sale.
• Innominate contract - has no specific name or designation in law;
shall be regulated by the stipulations of the parties, by the Civil
Code, by the rules governing the most analogous nominate
contracts, and by the customs of the place. [25]
• do ut facias (I give that you may do)
• facia ut des (I do that you may give)
• facio ut facias (I do that you may do)
according to perfection:
• Consensual contract - perfected by mere consent; such as the
[26]
contract of sale, lease and agency.

• Real contract - perfected by mere consent and the delivery of
the object; such as deposit, pledge and commodatum.[7]
• Solemn contract - perfected through compliance with the form
required by law; identical with formal contract.
[13]
according to cause or purpose:

• Onerous contract - the purpose is the performance of an obligation by
one party as the other party performs or has performed its own
obligation.
• Remuneratory contract - the purpose is the remuneration or payment
by one party for a service or benefit previously rendered by the other
party.
• Gratuitous contract - the purpose is the mere liberality or the feeling
by one party that the other party (which is the benefactor/giver) has
been generous; such as in free, pure donation.
according to the obligatory force:

• Valid contract - with such stipulations, clauses, terms and conditions that are
not contrary to law, morals, good customs, public order, or public policy.
• Rescissible contract - with legal validity, but may be rescinded or revoked in
the cases established by law.
• Voidable/Annullable contract - with legal validity but may be invalidated by a
court action on the grounds of mistake, violence, intimidation, undue influence,
fraud, or incapacity of one of the parties to give consent.
• Unenforceable contract - with legal validity but cannot be enforce through
court action by reason of defects, unless it is ratified according to law.
• Void contract - with no validity at all because of certain defects, such as
illegality; considered inexistent from the very beginning and cannot be ratified
according to law.
Resources
General References: • ↑ Jump up to:11.0 11.1 Manuel v. Rodriguez; • ↑ Jump up to:23.0 23.1 23.2 Civil Code,
G.R. No. L-13435 (1960) Article 1378
Websites:
• ↑ Sec. 17, Republic Act No. 8792 (Electronic • ↑ Civil Code, Article 1191
Citations: Commerce Act of 2000)
• ↑ Civil Code, Article 1307
• ↑ Civil Code, Article 1305 • ↑ Jump up to:13.0 13.1 13.2 13.3 13.4 Civil
Code, Article 1356 • ↑ Civil Code, Article 1315
• ↑ Jump up to:14.0 14.1 Civil Code, Article • ↑ Civil Code, Article 1380
• ↑ Jump up to:3.0 3.1 3.2 Civil Code, Article 1359
1306 • ↑ Civil Code, Article 1390
• ↑ Civil Code, Article 1370 par. 1
• ↑ Civil Code, Article 1308 • ↑ Civil Code, Article 1403
• ↑ Civil Code, Article 1370 par. 2
• ↑ Jump up to:7.0 7.1 Civil Code, Article 1316
• ↑ Civil Code, Article 1319 https://philawgov.wikia.org/wiki/Contract
• ↑ Jump up to:9.0 9.1 9.2 9.3 9.4 9.5 Civil
Code, Article 1350 • ↑ Civil Code, Article 1376
CIVIL CODE OF THE PHILIPPINES - CONTRACTS
REPUBLIC ACT NO. 386
AN ACT TO ORDAIN AND INSTITUTE THE CIVIL CODE OF THE
PHILIPPINES
PRELIMINARY TITLE
CHAPTER 1
Effect and Application of Laws
Article 1. This Act shall be known as the "Civil Code of the Philippines."
x-x-x
TITLE II
CONTRACTS
CHAPTER 1
General Provisions
Article 1305. A contract is a meeting of minds between two persons whereby one
binds himself, with respect to the other, to give something or to render some
service.
Article 1306. The contracting parties may establish such stipulations, clauses,
terms and conditions as they may deem convenient, provided they are not contrary
to law, morals, good customs, public order, or public policy.
Article 1307. Innominate contracts shall be regulated by the stipulations of the

parties, by the provisions of Titles I and II of this Book, by the rules governing the
most analogous nominate contracts, and by the customs of the place.
Article 1308. The contract must bind both contracting parties; its validity or
compliance cannot be left to the will of one of them.
Article 1309. The determination of the performance may be left to a third person,
whose decision shall not be binding until it has been made known to both
contracting parties.
Article 1310. The determination shall not be obligatory if it is evidently inequitable.

In such case, the courts shall decide what is equitable under the circumstances.
Article 1311. Contracts take effect only between the parties, their assigns and
heirs, except in case where the rights and obligations arising from the contract are
not transmissible by their nature, or by stipulation or by provision of law. The heir is
not liable beyond the value of the property he received from the decedent.
If a contract should contain some stipulation in favor of a third person, he may
demand its fulfillment provided he communicated his acceptance to the obligor
before its revocation. A mere incidental benefit or interest of a person is not
sufficient. The contracting parties must have clearly and deliberately conferred a
favor upon a third person.
Article 1312. In contracts creating real rights, third persons 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 Laws.
Article 1313. Creditors are protected in cases of contracts intended to defraud
them.
Article 1314. Any third person who induces another to violate his contract shall be
liable for damages to the other contracting party.
Article 1315. Contracts are perfected by mere consent, and from that moment the
parties are bound not only to the fulfillment of what has been expressly stipulated
but also to all the consequences which, according to their nature, may be in keeping
with good faith, usage and law.
Article 1316. Real contracts, such as deposit, pledge and commodatum, are not
perfected until the delivery of the object of the obligation.
Article 1317. No one may contract in the name of another without being
authorized by the latter, or unless he has by law a right to represent him.
A contract entered into in the name of another by one who has no authority or legal
representation, or who has acted beyond his powers, shall be unenforceable, unless
it is ratified, expressly or impliedly, by the person on whose behalf it has been
executed, before it is revoked by the other contracting party.
CHAPTER 2
Essential Requisites of Contracts
General Provisions
Article 1318. There is no contract unless the following requisites concur:
(1) Consent of the contracting parties;
(2) Object certain which is the subject matter of the contract;
(3) Cause of the obligation which is established.
SECTION 1
Consent
Article 1319. Consent is manifested by the meeting of the offer and the
acceptance upon the thing and the cause which are to constitute the contract. The
offer must be certain and the acceptance absolute. A qualified acceptance
constitutes 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.
Article 1320. An acceptance may be express or implied.
Article 1321. The person making the offer may fix the time, place, and manner of
acceptance, all of which must be complied with.
Article 1322. An offer made through an agent is accepted from the time
acceptance is communicated to him.
Article 1323. An offer becomes ineffective upon the death, civil interdiction,
insanity, or insolvency of either party before acceptance is conveyed.
Article 1324. When the offerer 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.
Article 1325. Unless it appears otherwise, business advertisements of things for

sale are not definite offers, but mere invitations to make an offer.
Article 1326. Advertisements for bidders are simply invitations to make proposals,
and the advertiser is not bound to accept the highest or lowest bidder, unless the
contrary appears.
Article 1327. The following cannot give consent to a contract:
(1) Unemancipated minors;
(2) Insane or demented persons, and deaf-mutes who do not know how to
write.
Article 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.
Article 1329. The incapacity declared in article 1327 is subject to the modifications
determined by law, and is understood to be without prejudice to special
disqualifications established in the laws.
Article 1330. A contract where consent is given through mistake, violence,

intimidation, undue influence, or fraud is voidable.
Article 1331. In order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract, or to those conditions
which have principally moved one or both parties to enter into the contract.
Mistake as to the identity or qualifications of one of the parties will vitiate consent
only when such identity or qualifications have been the principal cause of the
contract.
A simple mistake of account shall give rise to its correction.
Article 1332. When one of the parties is unable to read, or if the contract is in a
language not understood by him, and mistake or fraud is alleged, the person
enforcing the contract must show that the terms thereof have been fully explained
to the former.
Article 1333. There is no mistake if the party alleging it knew the doubt,
contingency or risk affecting the object of the contract.
Article 1334. Mutual error as to the legal effect of an agreement when the real
purpose of the parties is frustrated, may vitiate consent.
Article 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 evil 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 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.
Article 1336. Violence or intimidation shall annul the obligation, although it may
have been employed by a third person who did not take part in the contract.
Article 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 that the person alleged to have
been unduly influenced was suffering from mental weakness, or was ignorant or in
financial distress.
Article 1338. There is fraud when, through insidious words or machinations of one
of the contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to.
Article 1339. Failure to disclose facts, when there is a duty to reveal them, as
when the parties are bound by confidential relations, constitutes fraud.
Article 1340. The usual exaggerations in trade, when the other party had an
opportunity to know the facts, are not in themselves fraudulent.
Article 1341. A mere expression of an opinion does not signify fraud, unless made
by an expert and the other party has relied on the former's special knowledge.
Article 1342. Misrepresentation by a third person does not vitiate consent, unless
such misrepresentation has created substantial mistake and the same is mutual.
Article 1343. Misrepresentation made in good faith is not fraudulent but may
constitute error.
Article 1344. In order that fraud may make a contract voidable, it should be
serious and should not have been employed by both contracting parties.
Incidental fraud only obliges the person employing it to pay damages.

Article 1345. Simulation of a contract may be absolute or relative. The former
takes place when the parties do not intend to be bound at all; the latter, when the
parties conceal their true agreement.
Article 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 order or public policy binds
the parties to their real agreement.
REPUBLIC ACT NO. 386

THE CIVIL CODE OF THE PHILIPPINES
SECTION 2
Object of Contracts
Article 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, morals, good customs, public order or
public policy may likewise be the object of a contract.
Article 1348. Impossible things or services cannot be the object of contracts.
Article 1349. The object of every contract must be determinate as to its kind. The
fact that the quantity is not determinate 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.
SECTION 3
Cause of Contracts
Article 1350. In onerous contracts the cause is understood to be, for each
contracting party, the prestation or 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.
Article 1351. The particular motives of the parties in entering into a contract are
different from the cause thereof.
Article 1352. Contracts without cause, or with unlawful cause, produce no effect
whatever. The cause is unlawful if it is contrary to law, morals, good customs, public
order or public policy.
Article 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.
Article 1354. Although the cause is not stated in the contract, it is presumed that it
exists and is lawful, unless the debtor proves the contrary.
Article 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 6
Rescissible Contracts
Article 1380. Contracts validly agreed upon may be rescinded in the cases
established by law.
Article 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.
Article 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.
Article 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.
Article 1384. Rescission shall be only to the extent necessary to cover the
damages caused.
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.
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.
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.
 Alienations 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.
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.
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.
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 action in court.
They are susceptible of ratification.
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 other
incapacitated persons, from the time the guardianship ceases.
Article 1392. Ratification extinguishes the action to annul a voidable contract.
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.
Article 1394. Ratification may be effected by the guardian of the incapacitated

person.
Article 1395. Ratification does not require the conformity of the contracting party
who has no right to bring the action for annulment.
Article 1396. Ratification cleanses the contract from all its defects from the
moment it was constituted.
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.
CHAPTER 8
Unenforceable Contracts
Article 1403. The following contracts are unenforceable, unless they are ratified:
(1) Those entered into in 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 Statute 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,
thereof, be in writing, and subscribed by the party charged, or by his agent;
evidence, therefore, 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 a
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 of a third person.
(3) Those where both parties are incapable of giving consent to a contract.
Article 1404. Unauthorized contracts are governed by article 1317 and the
principles of agency in Title X of this Book.
Article 1405. Contracts infringing the Statute 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 benefit under them.
Article 1406. When a contract is enforceable under the Statute 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.
Article 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.
Article 1408. Unenforceable contracts cannot be assailed by third persons.
CHAPTER 9
Void and Inexistent Contracts
Article 1409. The following contracts are inexistent and void from the beginning:
(1) Those whose cause, object or purpose is contrary to law, morals, good
customs, public order or public policy;
(2) Those which are absolutely simulated or fictitious;
(3) Those whose cause or object did not exist at the time of the transaction;
(4) Those whose object is outside the commerce of men;
(5) Those which contemplate an impossible service;
(6) Those where the intention of the parties relative to the principal object of
the contract cannot be ascertained;
(7) Those expressly prohibited or declared void by law.
These contracts cannot be ratified. Neither can the right to set up the defense of
illegality be waived.
CONTRACT ENGINEERING
SERVICES
What are Contract Engineering Services?
• Contract Engineering Services is an arrangement wherein a 3rd party

provides contract engineering services to a client company for a specific
period of time (3, 6, 12 months, or longer), at a specified hourly “bill
rate”. And while contract engineering services are for a set period of
time, the contract can be renewed.
• In traditional employee-employer relationships, companies hire
individuals directly, who then become full time employees. But with
contractor engineering services, a number of work models are employed
to suit the overall needs of the organization as well as the contractor.
• If a company is looking for flexible ways to fill skillset gaps within the
organization, partnering with a contract engineering services provider is
a great option.
What to Consider?
• The need for contract engineering services will largely depend on the nature of
your project requirements. Software companies for example, want to find
seasoned and skilled developers that are experienced in the software code &
frameworks they use.
• Contract engineering services can fill in such voids as they generally have access
to a wide database of contract employees that fits these specifications. There
are other factors to be considered such as:
• Scope of the work, length of assignment, subject matter expertise requirements, etc.
• Opportunity costs of hiring an employee vs. contractor
• Ability to fund and maintain contractual staff within your organization
• Long-term, as well as short-term staffing needs, business goals, and market
conditions.
When to Hire a Contractor?
• A contract engineering services can provide contractors should work closely with
the company and the management in order to first define the requirements.
This includes scope of work, services provided, bill rate, and so on. Contract
engineering services are very beneficial when:
• It is no longer feasible for a company to maintain its own HR staff, since they
handle most of the paperwork involved in recruitment and staffing. This leaves
the managers free to tend to other tasks, projects, and pursuits.
• The company have an open position for a job of a specialized nature or require
multiple skilled workers for a specific job that is not long lasting nor something
that the business handles continually.
• Only a particular set of workers is needed to complete a specified task or during
a particular season.
• Hiring a long-term employee(s) isn’t economically feasible, or due to location, a
contractor is the only option to fill the needs.
Benefits of Hiring a Contractor
• With projects constantly kicking off and concluding, it can be

difficult to manage the recruiting on their own, and it might be
expensive to hire permanent employees to perform such tasks. It
is in such cases that engineering staffing bridges the recruitment
and expertise gaps that such organizations might face.
• Engineering staffing now will not only free up the management’s
time, but it will also help them to save on overhead costs in the
long run. Compared to full-time/permanent employees, a
contractor can be more affordable, and will also work with the
organization beyond the employee hiring process. This includes
active training and development, imparting soft skills, and so on.
Design and Build
Procurement
Design and Build Procurement
• Design and Build procurement works on the basis that the main
contractor is responsible for undertaking both the design and
construction work on a project, for an agreed lump-sum price.
• Design and build projects can vary depending on the extent of the
contractor’s design responsibility and how much initial design is
included in the employer’s requirements.
• Nevertheless, the level of design responsibility and input from the
contractor is much greater on design and build projects than a
traditional contract with a contractor’s designed portion.
Other Features of Design and Build
Procurement
• As design and construction can be carried out in parallel, the

overall programme time of design and build projects can be
shorter. However this depends on how much design the contractor
is responsible for.
• There is reasonable certainty over costs because the contract
price is known at the outset. Provided the employer does not
order changes during the construction of the work, the contractor
will be obliged (subject to the conditions) to complete the project
for the contract sum.
Other Features of Design and Build
Procurement
• If the employer does require design or specification changes

during the construction period, the contractor advises as to the
effect this may have on costs or additional time needed.
• Design and Build is a relatively low risk procurement option for
the employer, in terms of cost and time.
• There can be a risk related to design and quality, particularly if
the employer’s requirements were not properly gathered and if
insufficient time went into examining the contractor’s proposal.
Cost Plus Contracts
• The Cost Plus Contract is a type of a construction contract under

which the owner agrees to pay the complete cost of the materials
and labor needed to needed to build the project along with a fee
for the contractor’s overhead and profit.
• This contract type is favored where the scope of work is highly
uncertain or indeterminate and the type of labor, material, and
equipment needed to build the project is also uncertain in nature.
Cost Plus Contracts
• This type of contract involves payment of the actual costs,

purchases or other expenses generated directly from the
construction activity. Under this arrangement, complete records of
all time and materials spent by the contractor on the work must
be maintained.
• Cost Plus Contracts must contain specific information about
certain pre-negotiated amount (some percentage of the material
and labor cost) covering contractor’s overhead and profit. Costs
must be detailed and should be classified as direct or indirect
costs.
Cost Plus Contracts
There are multiple variations for Cost plus contracts, and the most common are:
• Cost Plus Fixed Percentage Contract– Compensation is based on a percentage of the cost;
• Cost Plus Fixed Fee Contract– Compensation is based on a fixed sum independent the
final project cost. The owner agrees to reimburse the contractor’s actual costs,
regardless of amount, and in addition pay a negotiated fee independent of the amount of
the actual costs;
• Cost Plus Fixed Fee with Guaranteed Maximum Price Contract– Compensation is based on
a fixed sum of money. The total project cost will not exceed an agreed upper limit;
• Cost Plus Fixed Fee with Bonus Contract– Compensation is based on a fixed sum of money.
A bonus is given if the project is finished below budget, ahead of schedule, etc.;
• Cost Plus Fixed Fee with Guaranteed Maximum Price with Bonus Contract–Compensation
is based on a fixed sum of money. The total project cost will not exceed an agreed upper
limit and a bonus is given if the project is finished below budget, ahead of schedule,
etc.; and
• Cost Plus Fixed Fee with Arrangement for Sharing Any Cost Savings Contract–
Compensation is based on a fixed sum of money. Any cost savings are shared with the
buyer and the contractor.
Cost Plus Fixed Fee construction contract
• The Cost Plus Fixed Fee construction contract is more predictable

than Cost Plus Fixed Fee Percentage Construction Contract
because the contractor’s fee for overhead and profit is, as its
name suggests, predetermined. Regardless of what the cost of
construction ultimately amounts to, the contractor’s fee remains
the same.
Cost Plus Fixed Percentage Construction
Contract
• Conversely, the Cost Plus Fixed Percentage Construction Contract

provides more variability with respect to the amount of the
contractor’s fee because it is directly linked to the cost of
construction, which in these types of arrangements is inherently
unpredictable. In fact, the Cost Plus Fixed Percentage
Construction Contract arguably incentivizes the contractor to not
keep the costs low because its fee increases with the cost of
construction.
Cost Plus with Guaranteed Maximum Price
Contract
• The Cost Plus with Guaranteed Maximum Price Contract seeks to

eliminate some of the risks associated with Cost Plus Contracts in
that it caps the owner’s overall financial exposure. Thus, while
the contract price is to be determined based on the cost of
construction and the contractor’s fee, owner’s costs are capped at
a certain amount.
• These types of Cost Plus Construction Contracts are oftentimes
grouped with bonus contracts, built-in contingencies, or cost
savings contracts which incentivize the contractor to complete the
project with agreed targets regarding schedule, quality, and
budget in exchange for additional compensation on the project.
PARTS OF A CONTRACT
Standard Contract Elements
• A business contract is made up of several elements. These

elements establish the details that create a legally binding
contract and prevent any misunderstandings that are possible if a
particular element is removed. Business contracts do not require a
specific length to be valid. Nor do they need to be typed or
written. Basic, handwritten contracts are enforceable.
Document Title
• "Sale Agreement," "Equipment Transfer," and "Purchase Agreement"

are just three examples of document titles.
• The title should succulently state the purpose of the contract and
be placed at the top of the document for easy reference.
Preamble
• The preamble is used to easily show important details of the

document. These include the name of the agreement, the date of
execution, and the involved parties. When businesses are the
parties, the type of organization or entity will be listed.
Parties
• In a business contract, the first section will show the parties

involved. When, for example, a small business is hiring a
consulting firm, the contract will show that the small business is
paying for this particular service. An owner or manager of the
small business normally will be listed in the payee spot and the
consulting firm is listed as the Service Company or supplier.
Recitals
• An optional form, called recitals, may be included to include

background information to the agreement. Recitals can be a
valuable resource for contract interpretation. They provide terms
that show intent on the part of the parties.
Agreement
• The agreement legally called the consideration is a general

statement of what is expected of the service or provider to fulfill
the contract. The agreement is generally only a sentence or two in
length.
CONSTRUCTION
CONTRACT
The Agreement
• The agreement is the most fundamental document in a construction

contract bundle. This is basically “the contract,” a foundation that the
rest of the project details are built upon. This document will set out
what the general purpose of the contract is and the contract price. The
agreement can be a standard document or customized to fit a particular
project’s need. The form will vary depending on how the contract
payment is set up.
• The most common types of construction contracts include:
• Time and Materials
• Lump-Sum
• Unit-Price
• Cost-Plus
• Guaranteed Maximum Price
Common items in a
construction contract
General Conditions
• General conditions are essentially the framework of the construction

contract documents.
• They provide the “hows” of the project.
• Most importantly, general conditions establish all the rights and
obligations of the contracting parties.
• Additionally, it will lay out the roles of every party and the
responsibilities of each. Any time an issue arises on the project, the
gameplan on how to proceed is usually found here, amongst a litany of
detailed clauses.
• This includes how change orders are processed, how payment apps are
approved and any and all notice requirements that may arise on a job
site.
Special Conditions
• This is typically an addition or amendment to the general

conditions section. This document will detail the specific clauses
and conditions for each task or project. For instance, if there are
specific instructions that only apply to one job or portion of the
build, they will be included in this document.
Scope of Work
• also known as a statement of work

• is a crucial element of a construction contract.
• This document will describe, in detail, the precise tasks and
objectives of each contractor.
• It will determine the amount of work an individual needs to
complete to fulfill their contractual obligations.
Drawings
• Every construction project should include a set of drawings or

blueprints.
• Drawings provide an easily referenceable overview of the project as a
whole.
• They should be presented to contractors before any construction
activities begin.
• This document informs the contractors what and how to build the
structure.
• Construction drawings are a collaborative effort between the architect,
the clients, and the contractor. Ideally, these are the most up-to-date
version of the drawings.
Specifications
• The specifications section is where all the technical data and

requirements can be found.
• The specs should detail the materials and techniques expected to
be used on any given task.
• It will outline all the quality standards, acceptable materials, and
any quality testing necessary to ensure compliance. The architect
or the engineer will prepare these, and the client will verify them.
In turn, the client will then provide the specs to contractors who
are expected to perform according to those details.
Bill of Quantities
• . A bill of quantities is an itemized list of the various materials, parts,

and labor required.
• This list is typically provided during the bidding process. The purpose of
which is to allow prospective bidders to be able to estimate their costs
more accurately and simplify the evaluation process.
• Typically, bills of quantities are prepared by a quantity surveyor or
building estimator.
• A bill of quantities will look an awful lot like a schedule of values – to
the point where the terms might sometimes be used interchangeably.
Construction Schedule
• Construction schedules can be developed in a number of different

ways, such as Critical Path Method, Gantt charts, a line of balance
or any other schedule that meets the project’s needs.
• Schedules can be relatively simple outlines of the project.
However, the larger and more complex the project is, the greater
the need for more formal, detailed approaches.
• Detailed construction schedules keep everyone aware and
informed about the project status, which can reduce both
conflicts and delays.
Schedule of Values
• A schedule of values is provided by a contractor and lists all the

work items from start to finish.
• It will allocate the entire contract sum among the various portions
of the work.
• The schedule of values is also a useful management tool to form
the basis for submitting and reviewing progress payments. This
document can help keep the cash flowing and bills paid on time.

Ethics 1 7

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Ethics 1 7

Uploaded by

Copyright:

Available Formats

CIVIL ENGINEERING LAWS,

CONTRACTS AND ETHICS

An act to regulate the practice of

• Sec 7. Annual Report

• Sec 9. Holding of Examination

• Sec 15. Exemption from Registration

• The President of the Philippines will appoint the chairman from

The board has the authority to:

Rule and regulations are made known in different ways:

At the time of appointment each Board member shall be:

The Board members shall receive compensation the sum compared

• The Board shall submit to the Commission a detailed report of its

The Civil Engineering Board Examination is a requirement for

The places of Examination are the following:

• Economics • Bar char schedule • Theory of structures • Shear strengths of soil

• Surveying • Network analysis • Earthquake engineering • Slope stability

Applicants for the Examination should satisfy the following

• Successful candidates are required to take a professional oath

• The Board and the Commission issue individual certificates of

• All registered Civil Engineers are automatic members of the

Individual professional identification cards are issued to registered Civil

The Civil Engineer shall be required to indicate the following on the

• The design of the seal is as authorized by the Board. The serial

The Certificate shall not be issued to any person

• The application for the professional identification card shall be

• PICE is responsible for developing a CPD program. Other

PICE has the authority to issue, suspend, and revoke a certificate of

Specialty organization of Civil Engineering (SOCE) can be formed in

• All registered Civil Engineers with a certificate of specialization

Upon the effectivity of RA 544,

• A contract is a legally binding document that recognizes and

• Engineering contracts are legal agreements between a business

Engineering contracts cover four particular issues of an agreement

• Engineering contracts usually contain termination clauses. These

• also called a fixed price contract.

Some advantages of a lump sum contract are:

• also called a re-measurement contract or a measure and value

• An agreement through meeting of the minds between two persons

• refers to the legal aspect of an agreement as a contract.

• denotes fairness and honesty of intention in the performance of

• An obligation is the juridical necessity that results when a

• Obligatory - the force of law between the contracting parties

• Relativity - the effectivity is only between the parties, their

• Consent - a meeting of the minds between parties with respect to

• Natural elements - those which are part of the contract even if

• Preparatory or conception - process of formation through

The form of a contract is manifested by:

A contract may be in the form of:

A contract should also be in:

The reformation of instrument requires:

The interpretation of contract has the following rules:

• the interpretation of a contract as a whole shall prevail if there

• the above rules are unable to settle doubts, the supplementary

according to name or designation:

contract of sale, lease and agency.

according to cause or purpose:

according to the obligatory force:

Article 1307. Innominate contracts shall be regulated by the stipulations of the

Article 1310. The determination shall not be obligatory if it is evidently inequitable.

Article 1320. An acceptance may be express or implied.

Article 1325. Unless it appears otherwise, business advertisements of things for

Article 1330. A contract where consent is given through mistake, violence,