CE 593: CE LAWS, ETHICS & CONTRACTS CONTRACTS

MODULE 1: - Civil engineering code of ethics

- A construction contract is an agreement between
REPUBLIC ACT 544 a client that wants construction done and a
- This is an Act to Regulate the Practice of Civil general contractor. This type of contract details
Engineering in the Philippines the contractor's scope of work, including their
right to subcontract any of the work, how and
PROFESSIONAL REGULATION COMMISSION what they will charge for the work, and any
(PRC) applicable plans or work orders.
- Oral/verbal Contract
- an agency that administers, implements and
- Written Contract
enforces the regulatory laws and policies of the
country with respect to the regulation and PHILIPPINE INSTITUTE OF THE CIVIL
licensing of the various professions and ENGINEER (PICE)
occupations under its jurisdiction, including the
enhancement and maintenance of professional - is a national organization that bonds all Civil
and occupational standards and ethics and the Engineers around the country and it should be
enforcement of the rules and regulations relative introduced as early as a student to promote the
thereto. association of Civil Engineering students from
- is tasked to regulate and supervise the practice of different schools and practitioners of the said
professions exercised in partnership with profession by establishing PICE Chapters.
Professional Regulatory Boards in the fields of
health, business, education, social sciences, lawful
engineering and technology. (RA No. 8981)
Practices once registered as Licensed Civil Engineer: amoral moral
1. Planning of Civil Engineering Project unethical ethical
2. Design of Civil Engineering Project
3. Construction of Civil Engineering Project immoral amoral
4. Operation of Civil Engineering Project
completion
unlawful
Note: These practices can’t be done without
SUPERVISOR ETHICS
SUPERVISORS -Also known as construction site - relation with another person
supervisors, site supervisors monitor the progress of - moral principles that govern a person's behavior
construction projects and ensure compliance with or the conducting of an activity.
construction safety regulations. They supervise - A branch of philosophy dealing with what is
construction workers and subcontractors, educate morally right or wrong.
construction workers on site safety practices, and evaluate - Rules of behavior based on ideas about what is
employee performance. morally good and bad
BUILDING PERMITS: There are five offences that breach the country's
regulatory laws and regulations regarding the licensing
1. Architectural Documents
and regulation of the many professions and occupations
2. Civil Documents
that fall under its jurisdiction. These offences include:
3. Electrical Documents
4. Mechanical Documents (1) Fraud – If a person commits a crime by using a
5. Sanitary Documents substandard material it is considered as a fraud.
6. Geotechnical Documents - Wrongful/criminal deception intended to result in
7. Geodetic Documents financial or personal gain.
8. Transfer Certificate of Title (2) Deceit – the action or practice of deceiving someone
by concealing or misrepresenting the truth.
(3) Illegal practice of profession – may result to EXTRAJUDICIAL SETTLEMENT
suspension of professional license issued by the
- to settle without having to go to court
Professional Regulation Commission (PRC). (signed
- some cases cannot be settled through
doc that
extrajudicial settlement.
(4) Incompetence – penalized and imprisonment.
- Lack of ability to do something successfully. Requirements needed from Government to start a
(5) Negligence – examples are actions that results to project:
homicide
- Failure to take proper care in doing something. 1. Building Permit
2. Clearance
3 KINDS OF LAWS 3. Licensed
1. Divine Law 3 TYPES OF CONTRACTOR
2. Natural Law
3. Human Law (1) General Engineering Contractor – is a person
whose principal contracting business is in connection
Reputation – needs to maintain with fixed works requiring specialized engineering
knowledge and skill.
PROPERTIES OF HUMAN LAWS
(2) General Building Contractor – is a person whose
1. Human laws must concern with divine laws
principal contracting business is in connection with any
2. Human laws must promote the common good
structure built, being built, or to be built, for the support,
3. Human laws must be just and not discriminatory
shelter and enclosure of persons, animals, chattels or
4. Human laws must be practicable
movable property of any kind, requiring in its
5. Human laws regulate external actions only
construction the use of more than two unrelated building
6. Human laws are fallible
trades or crafts, or to do or superintend the whole or any
part thereof.
ILLEGAL CONTRACT
(3) Specialty Contractor – is a person whose operations
- A contract is illegal if it involves doing pertain to the performance of construction work requiring
something that is a criminal act or a civil wrong, special skill and whose principal contracting business
or against the public good. involves the use of specialized building trades or crafts
REPUBLIC ACT NO. 4566
➢ CIVIL COURT – legal contract
➢ CRIMINAL COURT – illegal contract - also known as the “Contractor’s License Law”
- an act creating the Philippine licensing board for
FUNCTIONS OF AN ENGINEER*
contractors, prescribing its powers, duties and
1. It is His duty to formulate an ideal and from it to functions, providing funds therefor, and for other
create a reality purpose
2. He must investigate conditions and determine means
RIGHTS OF CONTRACTOR
by which those conditions can be utilized or modified
to meet certain ends 1. Construct
3. Making project proposals 2. Alter
4. Develop ideas and elaborate plans 3. Subtract
5. Consider and prescribe the methods and manner of 4. Repair
construction 5. Add
6. Supervise or superintend the execution of the work 6. Improve (renovation)
and see that it is properly constructed 7. Move
8. Demolition of any structures
All engineering success is a consequence of personality,
native ability, opportunity, and application: normally it
may be achieved just to the extent that the individual is
willing to pay the price of intelligent devotion to its
attainment.
MODULE 2: development in the performance of their professional
duties
CODE OF ETHICS FOR CIVIL ENGINEERS
2. Civil Engineers shall perform services only in areas
It shall be considered unprofessional and inconsistent of their competence
with honorable and dignified bearing for any registered 3. Civil Engineers shall issue public statements only in
Civil Engineer: an objective and truthful manner.
4. Civil Engineers shall act in professional matters for
• To act for his clients* in professional matters each employer or client as faithful agents or trustees,
otherwise than as a faithful agent or trustee, or to and shall avoid conflicts of interest
accept any remuneration other than his stated charges 5. Civil Engineers shall build their professional
for services rendered to his clients. reputation on the merit of their services and shall not
• To attempt to injure falsely or maliciously, directly or compete unfairly with others
indirectly, the professional reputation, prospects, or 6. Civil Engineers shall act in such a manner as to
business of another Engineer. uphold and enhance the honor, integrity, and dignity
• To attempt to supplant another Engineer after definite of the engineering profession
steps have been taken toward his employment. 7. Civil Engineers shall continue their professional
• To compete with another Engineer for employment development throughout their careers, and shall
on the basis of his professional charges, by reducing provide opportunities for the professional
his usual charges and in his manner attempting to development of those engineers under their
underbid after being informed of the charges named supervision
by another.
THE STUDY OF ETHICS
• To review the work of another Engineer for the same
client, except with the knowledge or consent of such Ethics is derived from the Greek word ethos which means
Engineer, or unless the connection of such Engineer “characteristics way of acting”. Its Latin equivalent is
with the work has been terminated. mos, mores, meaning “tradition or custom”. Ethics
• To advertise in self-laudatory language, or in any includes cultural mannerism, religion, politics, laws, and
other manner derogatory to the dignity of the social aspirations of a group of people. In our study, ethos
Profession. refers to those characteristics’ belongings to man as a
• To use the advantages of a salaried position to rational being, endowed with intellect and free-will.
compete unfairly with Engineers in private practice.
The ethos of man as man are the following:
• To act in any manner or engage in any practice which
will tend to bring discredit on the honor or dignity of 1. He is able to distinguish between good or evil, right
the Engineering Profession. and wrong, moral and immoral.
2. He feels within himself an obligation to do what is
FUNDAMENTAL PRINCIPLES
good and to avoid what is evil.
- Engineers uphold and advance the integrity, honor and 3. He feels himself accountable for his actions,
dignity of the engineering profession by: expecting reward or punishments for them.

1. Using their knowledge and skill for the enhancement In other words, man is endowed by nature with a moral
of human welfare and the environment; sense. He is self-conscious of his dignity and submits to
2. Being honest and impartial and serving with fidelity the duty of doing what is good and avoiding what is
the public, their employers and clients; wrong. This much is expected of man: that he conducts
3. Striving to increase the competence and prestige of himself according to the “dictates of reason”.
the engineering profession;
ETHICS, its meaning
4. Supporting the professional and technical societies of
their disciplines Ethics is defined as the science of the morality of human
acts. And because actions reflect the motives of the doer,
FUNDAMENTAL CANON
Ethics is said to be the study of human motivation, and
1. Civil Engineers shall hold paramount the safety, ultimately, of human rational behavior. That aspect of the
health and welfare of the public and shall strive to subject matter which primarily interest, Ethics is morality.
comply with the principles of sustainable
Human Acts are those actions performed by man,
knowingly and freely. They are also called deliberate or
intentional actions, or, voluntary actions. As such, they too essential to be dismissed, the Creator has seen it fit to
are differentiated from the so-called acts of man which are gift man with the natural insight of it. No matter how
instinctive and involuntary. rudimentary and vague, the primitive has it. And modern
man, finding convenient reasons to turn his back from it,
Morality is the quality of human acts by which they are
discovers that he is in the center of it.
constituted as good, bad, or indifferent. That which is
good is described as moral; that which is bad is immoral, Moral integrity is the only true measure of what man
and that which is indifferent is amoral. ought to be. The most powerful king, or the most
successful professional, is nothing unless he too is
Human acts reveal the thoughts and inclination of the
morality upright. Thus, the philosophers speak of Ethics
person doing them. They are then manifestation of one’s
as the “only necessary knowledge”. “We are tempted to
character or moral conduct. A person who has habit or
center everything on human happiness”, says Jacques
inclination to do good is said to be virtuous. On the
Leclerq, “forgetting that man’s greatness, perfection and
contrary, one who has the habit of doing wrong is vicious.
happiness, his whole meaning in fact, consist in
ETHICS AS VALUE EDUCATION transcending the commonly accepted human good”.
(Christianity and Money).
In the classical tradition, Ethics is Moral Philosophy and
is distinguished from Moral Theology. As branch of Morality is the foundation of every human society.
philosophy, Ethics relies solely on human reason to Rightly, Russell observes that “without civic morality,
investigate truths. Moral Theology, on the other hand, communities perish; without personal morality their
employs reason insofar as it is enlightened by faith or survival has no value”. Every culture admits the
divine revelation. importance of morality as a standard of behavior. When
the moral foundations of a nation are threatened that
In contemporary curriculum, Ethics takes the form of society, itself is threatened. In the words of Senator
Value Education. A value is something a person prizes, Leticia Ramos Shahani:
cherishes, and esteems as important to him. It includes
ideas, things, or experiences. The aim of Value Education “At the bottom of our economic problems and political
is to guide the individual in choosing wisely his values instability is the weakness and corruption of the moral
and in acting upon them. foundations of our society. We do need an economic
recovery programmed. We also urgently need a moral,
Ethics is the rational foundation of any attempt at Value intellectual and spiritual recovery programmed” (Nick
Education. Ethics goes deeper into the reasons why we Joaquin, “The Pinoy X-rayed”, Philippine Daily Inquirer)
must choose certain values. Ethics explains human values
in relation to the ultimate purpose of human existence. TWO ETHICAL SYSTEMS

THE ART OF CORRECT LIVING There are two general categories under which ethical
theories may be classified:
Art, in general, is the appreciation of beauty. It implies
order and harmony of parts in given whole. 1. The Atheistic approach assumes that only matter
exists and that man is responsible only to himself since
Human life does not imply merely physical survival. It is there is no God who creates and rules the universe.
a vocation towards the refinement of the spirit. The Morality is an invention of man to suit his requirements
demands of daily life include and derives meaning from and to preserve his society. Moral truths are therefore
the cultivation of those traits that truly reflect man’s temporary and mutable depending on the situation.
innate dignity. In this context, Ethics is an art. It is the Accordingly, the concept of good and evil is always
breath of life, pulsating with the desire for growth and relative and changeable.
development. It is a master plan indicating where man
must go and what he ought to do in order to live well. In Atheistic theories propose the following principles:
a sense, every man is an artist, creating something of
1. Matter is the only reality
beauty out of his self.
2. Man is matter and does not have spiritual dimension.
IMPORTANCE OF ETHICS 3. Man is free and must exercise his freedom to promote
the welfare of society.
Ethics is an indispensable knowledge. Without moral 4. There is no life after death
perception, man is only an animal. Without morality, man 5. Man is accountable only to the State.
as rational being is a failure. Because moral knowledge is
 PROFESSIONAL ETHICS
2. The Theistic approach begins with assumption The practice of a profession cannot be regulated entirely
that God is the Supreme Lawgiver. Everything must by legislation. Each profession therefore subscribes to a
conform to God’s eternal plan of creation. Man must set of moral code. This Code of Ethics guides the
exercise his freedom in accordance with God’s will. There actuation of a professional where the law is silent or
are absolute principles of morality which are not inadequate.
changeable. Man is accountable for his actions and
A code of ethics implies that, before anything else, a
deserves either a reward or punishment in this life or in
professional is a person who has the obligation to listen to
the next.
the “dictates of reason”. The need for it is obviously to the
Theistic theories postulate the following truths: advantage of the profession. Many businessmen, for
example, do realize that “honest business” translates to
1. God is the Supreme Creator and Lawgiver.
“good business”. The public patronizes firms that are
2. Man is free and must use his freedom to promote his
perceived to be reputable. The Code of Ethics for
personal and social interests along with his
Business proposed by the Bishops-Businessmen’s
fellowmen.
Conference for Human Development, Philippines,
3. Man has an immortal soul which cannot die
provides:
4. Man is accountable for his actions, both good and
evil. Towards the customers, business shall, in the production
of goods and services:
ETHICS AND LAW - Strive after a quality that will enable them to serve
their purpose efficiently and effectively;
Ethics studies human motivation. It goes deeper than the
- Avoid anything that would be detrimental to the
study of external actions. It explores thoughts and
health, safety or growth of the proper user or
feelings. It requires that man desires that which is good
beneficiary of such goods and services;
and act in accordance with that desire. On the contrary,
- And seek to apply or make use of the discoveries and
law requires that we perform the required action
inventions of science with adaptions that will improve
regardless of our feelings towards such action. The law is
their products or services, thereby benefiting
concerned with the externality of the act. “For law is
customers/users and increasing their number.
definitely concerned”, says Mortimer J. Adler, “with what
we do, nit with what we feel”. (Ethics: The study of Moral In this marketing arrangement, business shall:
Values, vi).
- Deliver the product or service in quality, quantity, and
Ethical norms cover thoughts and feelings. Laws do not time agreed upon, and at a reasonable price, and avoid
judge man’s thoughts and desires. In the Ethics of St. the creating of artificial shortages, price
Paul, for example, a man commits adultery when he manipulation, and like practices;
regards a woman lustfully. This is not the case with law - Establish an after-sales and complaints service
which requires an external act as proof that a crime has commensurate to the kind of product or service
been committed. supplied and the prices paid;
- Ensure that all mass media, promotional, and package
Morality therefore, has a wider implication than law,
communications be informative and true, and take
because law can either be moral or immoral. Thus, what
into account the precepts of morality and the sound
is legal not necessarily moral; but what is moral is
cultural values of the community, and manifest
necessarily worth legalizing.
respect for human dignity.
Ethics is not simply a body of do’s and don’ts in the
manner laws are. Ethics is a personal commitment to
uphold what is true and good. Ethics aims to develop
“right disposition and inner spirit” for accepting what is
lawful. (Bernard Haring, The Law of Christ, Vol. I
Mereien Press, Calc, 1960)
 PROFESSIONAL ORGANIZATION OF CIVIL ▪ Association of Civil Engineering Educators of the
ENGINEERS (PICE) Philippines (ACEEP)
▪ City and Municipal Engineers Association of the
Brief History of PICE
Philippines (CMEAP)
In the late 1920s, group of civil engineers from the ▪ District Engineers League of the Philippines (DELP)
government sector formed the Philippine Society of Civil ▪ Philippine Association of Building Officials (PABO)
Engineers (PSCE) which was the first civil engineering ▪ Provincial Engineers Association of the
organization in the Philippines with Engr. Marcial Philippines (PEAP)
Kasilag as its first president. ▪ Road Engineering Association of the
Philippines (REAP)
In 1937, the Philippine Association of Civil ▪ Philippine Accredited Materials Engineers
Engineers (PACE) was formed. This time, it was a group Association (PAMEA)
of civil engineers in the private sector with Engr. Enrique ▪ Filipino Planning Engineers Association (FPEA)
Sto. Tomas Cortes as its first president. ▪ Structural Engineers Association of Davao (SEAD)
The objectives of both organizations were similar with
each other in which both of them wants to: "elevate the
standards of the profession, encourage research and ASSOCIATION OF STRUCTURAL ENGINEERS
engineering knowledge and technology, foster fellowship OF THE PHILIPPINES
among members, and promote interrelation with other
The Association of Structural Engineers of the
technological and scientific societies".
Philippines, Inc. abbreviated as ASEP is an organization
The PACE being the most active than the PSCE led to the of structural engineers of the Philippines affiliated with
transfer of many PSCE members to PACE. In 1950, the Philippine Institute of Civil Engineers.
Republic Act No. 544 (also known as the "Civil
BACKGROUND: ASEP was established in 1961 to
Engineering Law") was passed through the efforts
promote the advancement of Filipino civil engineers in
of PACE President Alberto Guevarra.
the field of structural engineering. The publication of the
In 1972, PACE President Engr. Cesar A. Caliwara, National Structural Code of the Philippines (NSCP) and
exerted a serious effort in merging the two organization. the referral codes of the Philippine National Building
Leaders of PACE and PSCE negotiated, and talked about Code were published by the organization.
the choice of name. Some concerns were raised such as
ADVOCACY: ASEP exists in the advancement of
formal accounting and turnover of assets and liabilities,
structural engineering in the Philippines as well as
accreditation of bonafide members and election rules for
upholding ethical values in the promotion of national and
the first officers which were sooner resolved. These gave
international professional collaboration with
birth to the Philippine Institute of Civil Engineers Inc. and
governments, industry and the academe.
on December 11, 1973, the Securities and Exchange
Commission issued a registration certificate to the The organization specifically lobbies on legislation of the
association. Philippines in the national and local levels.
In February 1974, the first election of officers was held NOTABLE PUBLICATIONS
and Engr. Cesar Caliwara became its first president. In
order to truly unite the civil engineers of the Philippines, • National Structural Code of the Philippines
provincial chapters were organized. On August 13, 1975, • National Building Code of the Philippines
the Professional Regulation Commission (PRC) • ASEP Steel Handbook
recognized the PICE as the only official organization of CHARACTERISTICS OF HUMAN ACTS-
civil engineers in the Philippines.
1. It must be performed by a conscious agent who is
Affiliate societies- aware of what he is doing and of its consequences,
▪ Association of Structural Engineers of the 2. It must be performed by an agent who is acting freely.
Philippines. (ASEP)
▪ Association of Accredited Consultant CE of the 3. It must be performed by an agent who decides
Philippines (AACCEP) willfully to perform the act.
KINDS OF ACTION OF PERSON- REPUBLIC ACT NO 9184 (GOVERNMENT
PROCUREMENT REFORM ACT OR GPRA)
1. Wish
The GPRA applies to all branches of the Philippine
2. Intention
government, and to all procurement activities involving
3. Consent services and infrastructure projects.

4. Election The GPRA prescribes standard template conditions of

contract (also known as the General Conditions of
5. Use Contract and the Special Conditions of Contract). It
6. Fruition affects the overall construction contract when a
government project is involved.
The principal laws governing the construction market in
the Philippines are as follows. The GPRA also applies to foreign-funded infrastructure
projects, unless otherwise provided by the relevant treaty,
PHILIPPINE CIVIL CODE international agreement, or executive agreement.
The Philippine Civil Code ("Civil Code") is the general REPUBLIC ACT NO 6957, AS AMENDED BY
law that governs contractual relations in the Philippines, REPUBLIC ACT NO 7718 (PPP LAW)
which include construction contracts. Construction
contracts are governed by the general rule under the Civil The PPP Law governs public-private partnership (PPP)
infrastructure projects, specifically those which are under
Code that parties are free to stipulate the terms of their
the following schemes:
agreement, provided that these are not contrary to law,
morals, good customs, public order, or public policy.
• build-operate-and-transfer;
Consequently, unless otherwise provided by law or • build-and-transfer;
contract, a construction contract will be governed by the • build-lease-and-transfer;
provisions of the Civil Code on Obligations and Contracts • build-transfer-and-operate;
• contract-add-and-operate;
and those applicable to contracts for a "piece of work".
• develop-operate-and-transfer;
PRESIDENTIAL DECREE NO 1746 (PD 1746) • rehabilitate-operate-and-transfer; and
• rehabilitate-own-and-transfer.
PD 1746 created the Construction Industry Authority of
the Philippines (CIAP) for the purpose of regulating the PRESIDENTIAL DECREE NO 1096 (NATIONAL
construction industry in the Philippines. PD 1746 also BUILDING CODE OF THE PHILIPPINES)
established the Philippine Contractors Accreditation
Board (PCAB), the licensing body for persons seeking to The National Building Code sets out the national policy
engage in construction activities in the Philippines. and the legal requirements relating to the design, location,
siting, construction, alteration, repair, conversion, use,
REPUBLIC ACT NO 4566 (CONTRACTOR'S occupancy, maintenance, moving, demolition of, and
LICENCE LAW) addition to public and private buildings and structures. It
also serves as a basis for local ordinances enacted by local
The Contractor's License Law requires contractors to
obtain a license from the PCAB (PCAB License), and also government units for implementation within their
sets out the procedure and requirements for the issuance respective territorial jurisdictions.
of such license. PRESIDENTIAL DECREE NO 1445
(GOVERNMENT AUDITING CODE OF THE
EXECUTIVE ORDER NO 1008 (CONSTRUCTION
PHILIPPINES OR GACP)
INDUSTRY ARBITRATION LAW OR CIAC LAW)
The GACP needs to be considered when dealing with
The CIAC Law created the Construction Industry
construction contracts involving the government.
Arbitration Commission (CIAC), which has its
own CIAC Rules of Procedure. The CIAC has original The GACP specifies that the powers of the Philippine
and exclusive jurisdiction over construction disputes Commission on Audit (COA) extend to the examination,
arising from a contract entered into by parties involved in audit and settlement of all debts and claims of any sort
construction in the Philippines which contain an due from or owing to the government or any of its
arbitration clause. subdivisions, agencies and instrumentalities. This
becomes relevant when, in the event of a dispute, a 19 outbreak, but its growth has been severely impacted by
contractor obtains a favorable judgment against the the pandemic.
government.
The COVID-19 pandemic has resulted in the imposition
There have been several instances in the past when a of varying degrees of health and safety protocols across
CIAC award against the government has been modified the country. During the first half of 2020, only essential
and reduced by the COA, pursuant to its power to approve construction projects, ie, those relating to COVID-19
money claims against the government. In Taisei Shimizu facilities, emergency works, priority public and private
Joint Venture v COA and DOTr (2020), the Supreme infrastructure projects, as defined, and the like, were
Court ruled that the COA may not disregard final and allowed to operate on a skeletal workforce. As the policy
executory judgments rendered by courts and other direction for permissible work during the quarantine
adjudicative bodies by disallowing any part of such final period stabilised, public and private construction projects
award. eventually resumed operations at full operating capacity,
subject to compliance with health and safety protocols.
1.2 Standard Contracts
In an effort to adapt to the circumstances, the CIAC issued
The use of standard contracts is not mandatory in
guidelines on how to conduct online proceedings in
construction projects procured by a private (ie, non-
construction arbitration proceedings, which essentially
government entity) employer, and parties are generally
require the parties to agree to the conducting of online
free to agree on the form that will be used.
proceedings.
There have been attempts to come up with template
The lockdowns have likewise given rise to force majeure
construction contracts for private projects in the
claims. "Force majeure" under Philippine law, pertains to
Philippines. For instance, the CIAP has developed two
events which could not be foreseen, or though foreseen,
sets of template contracts: (i) CIAP Document 101, or the
were inevitable (Article 1174, Civil Code). This general
"General Conditions of Contract for Government
principle on force majeure, however, gives way to
Construction"; and (ii) CIAP Document 102, or the
contractual stipulations by the parties.
"Uniform General Conditions of Contract for Private
Construction". Although these CIAP template contracts 2. PARTIES
are rarely used, the Philippine Supreme Court has, in 2.1 The Employer
some instances, considered certain provisions of CIAP
Document 102 as evidence of prevailing practice in the Companies That Act as Employers
construction industry, and has applied these provisions in
Private individuals, privately-owned entities, and
instances where there appear to be gaps or uncertainty in
government agencies and instrumentalities typically act
the parties' construction contract. (See Werr Corp
as employers in construction projects in the Philippines.
International v Highlands Prime, Inc, 2017.)
Rights and Obligations
On the other hand, for construction and infrastructure
projects procured by the Philippine government, standard The general rights and obligations of the employer under
forms are normally used that contain the clauses and terms a construction contract normally include the following.
required under the relevant laws and regulations. For
Rights
example, in construction projects procured by the
government under the GPRA, or those undertaken by the
• To inspect the works or any portion thereof;
government in accordance with the Build-Operate- • to require the correction of defects due to faulty
Transfer Law (BOT Law), standard forms are used that materials, equipment, or workmanship that may
contain the terms required under the relevant law and their appear within a certain period upon completion of the
allied regulations. For government infrastructure projects works;
that are funded by way of foreign grants covered by the • to stop the works or any portion thereof, if the
Official Development Assistance Act (ODA Act), FIDIC contractor fails to complete or correct the same, and
forms are typically used. to carry out or correct the work by itself or through
other contractors;
1.3 COVID-19 • to obtain title and ownership over all completed
works, and over all materials, equipment, tools, and
The Philippines construction industry was the fastest
supplies for which payment has been made under the
growing in the Asia-Pacific region prior to the COVID-
contract; and
• to request variations, in accordance with the contract. TYPES OF PCAB LICENCES

Obligations There are two main types of PCAB licence: a Regular

Licence and a Special Licence.
• To pay the contract price; REGULAR LICENCE
• to provide the contractor access to and possession of
the site, to enable the contractor to perform the Under the Implementing Rules (IRR) of the Contractors'
construction works; Licence Law, a Regular Licence may be issued only to
• to provide pertinent information regarding the site Filipino sole proprietorships, and to partnerships and
that may be needed by the contractor in connection corporations that have at least 60% Filipino equity
with the construction works; participation and are organized under Philippine law. A
• to obtain relevant government permits and licences Regular Licence authorizes the licensee to engage in
needed for the project; and construction contracting within the field and scope of the
• to obtain and maintain the relevant insurance licence classification during the licence's validity,
coverages required under the contract. renewable annually.
SPECIAL LICENCE
On the other hand, a Special Licence may be issued to a
GENERAL RELATIONS BETWEEN THE joint venture, a consortium, a foreign constructor or a
EMPLOYER, CONTRACTOR, project owner, and only authorizes the licensee to engage
SUBCONTRACTORS AND FINANCIERS in the construction of a single, specific project. It must be
renewed annually for as long as the project is in progress.
Generally, no principal-agent, employer-employee, or The number of renewals is limited to the period until the
partnership relationship is created between the employer, completion of the specific project for which the licence
on one hand, and the contractor, subcontractors, and was issued.
financiers, on the other hand. The employer is not bound
by the acts of such parties, and its relationship with them Regular Licence with Annotation – the Quadruple-A
will generally be governed by the terms of the relevant Licence
agreements among the parties. In 2015, the IRR of the Contractor's Licence Law was
amended to allow for the issuance of a Regular Licence
with Annotation, which is a sub-type of Regular Licence
2.2 The Contractor under the Quadruple A Category ("Quadruple-A
Licence"). A Quadruple-A Licence may be issued to a
Companies That Act as Contractors corporation organised under Philippine law, including
ones that are up to 100% foreign-owned. An applicant for
The entities that typically act as contractors in a Quadruple-A Licence must have a minimum paid-up
construction projects are Philippine stock corporations capitalisation of at least PHP1 billion at the time it applies
that secure the appropriate licence from the PCAB. for the licence. The holder of a Quadruple-A Licence may
undertake only specific types of vertical and horizontal
There are also instances where multiple contractors, each
projects, each with a prescribed minimum contract value.
holding a PCAB licence, form an unincorporated joint
venture (UJV) to undertake only a single specific project. Rights and Obligations under a Construction
In such cases, the UJV itself must obtain its own PCAB Contract
licence.
The general rights and obligations of the contractor under
A consortium between a PCAB-licensed contractor and a a construction contract normally include the following.
non-contractor may also be formed to undertake only a
single specific project. In such a case, the consortium Rights
itself must obtain its own PCAB licence.
• To receive the contract price;
Entities that act as contractors are also normally required • to be given access to and possession of the site, to
by employers to satisfy certain legal, financial and enable the contractor to perform the constructions
technical eligibility requirements. works;
• to receive pertinent information regarding the site that
may be needed by the contractor in connection with
the construction works; and
• to receive an extension of time, where applicable, in 2.3 The Subcontractors
accordance with the terms of the contract.
Companies That Act as Subcontractors
Obligations See 2.2 The Contractor for the kinds of entities that
typically act as contractors in construction projects.
• To perform and complete the works within the
timelines provided in the contract and, at completion RIGHTS AND OBLIGATIONS UNDER A
date, to hand over the sites and the completed works CONSTRUCTION CONTRACT
to the employer;
• to perform the works using materials, goods, The rights and obligations of a subcontractor are
equipment and methods of constructions of the governed, not by the construction contract between the
quality and standards required under the contract; employer and the contractor, but by its own agreements
• to provide and pay for all labour, materials, with the contractor. Normally, in the agreements between
equipment, tools, construction equipment, and all the contractor and the subcontractor, the subcontractor
machinery, transportation, and other facilities and will have the same rights and obligations as those of the
services necessary for the proper execution and contractor under the latter’s contract with the employer,
completion of the works; to the extent applicable to the portion of the works
• to obtain the permits necessary for the works from the
subcontracted to the contractor. However, the contractor
relevant government agencies;
would not be relieved of its obligations towards the
• to warrant that the works conform with the
requirements of the applicable law, the contract and employer with respect to the subcontracted works.
other requirements of the employer, and are free from GENERAL RELATIONS BETWEEN THE
hidden defects, imperfections or faults; SUBCONTRACTOR AND EMPLOYER
• to rectify or remedy any defect or deficiency during
the construction period or within a period of time Construction contracts may or may not allow the
thereafter; contractor to subcontract the whole or a portion of the
• to comply with all relevant labour laws applying to its works, or may require the contractor to obtain the
employees; employer’s consent prior to such subcontracting.
• to ensure security and safety at the site; and
• to procure and maintain appropriate bonds and If subcontracting is allowed, it is generally the contractor
insurance from reputable and financially sound that remains liable to the employer for all the acts of its
companies acceptable to the employer. subcontractors, including any negligent, willful or
reckless acts or omissions on the part of any
GENERAL RELATIONS BETWEEN THE subcontractor. It is also the contractor, and not the
CONTRACTOR AND EMPLOYER employer, that is typically responsible for the proper and
An employee is on a company’s payroll and receives timely payment of all subcontractors.
wages and benefits in exchange for following the GENERAL RELATIONS BETWEEN THE
organization’s guidelines and remaining loyal. SUBCONTRACTOR AND CONTRACTOR
A contractor is an independent worker who has autonomy See 2.2 The Contractor with regard to general relations
and flexibility but does not receive benefits such as health between the contractor and subcontractors.
insurance and paid time off.
GENERAL RELATIONS BETWEEN THE
GENERAL RELATIONS BETWEEN THE SUBCONTRACTOR AND FINANCIER
CONTRACTOR AND SUBCONTRACTORS
Generally, no principal-agent, employer-employee or
The contractor is normally responsible for all the acts of partnership relationship is created between subcontractors
its subcontractors, including any negligent, willful or and financiers. The subcontractors' relationship with the
reckless acts or omissions on the part of any financiers will generally be governed by the terms of the
subcontractor, its agents or employees, as if they were the agreements (if any) that may exist between them.
acts, negligence and omissions of the contractor.
GENERAL RELATIONS BETWEEN THE
CONTRACTOR AND FINANCIERS
See 2.1 The Employer.
2.4 The Financiers GENERAL RELATIONS BETWEEN THE
FINANCIER, CONTRACTOR AND
SUBCONTRACTORS
COMPANIES AND/OR INSTITUTIONS THAT
Normally, there would be no direct relationship between
ACT AS FINANCIERS
the financier and the contractor and subcontractors.
For construction projects procured by a private (ie, non- However, as mentioned above, certain rights may be
government entity) employer, the financing required by granted to the financier under the construction contract, in
the employer and/or the contractor is usually secured from order to protect the financier’s financial interest in the
private financial institutions, such as banks. project.

On the other hand, for construction projects procured by 3. WORKS

the government, the financier would normally be the
3.1 Scope
government itself through direct government
appropriations and financing arrangements secured from Typically, the scope of the works is determined by the
private financial institutions. Another typical source of employer and its relevant consultants based on the
financing for construction projects procured by the former’s requirements, and is included in the tender
government would be Official Development Assistance documents for the project. However, it is also common for
(ODA) in the form of loans and/or grants secured from the scope of the works to be prepared jointly by the
foreign governments and/or from international financial employer (and its relevant consultants) and the contractor,
institutions such as the World Bank and the Asian and once agreed and finalized, to be incorporated in the
Development Bank. construction contract.
RIGHTS AND OBLIGATIONS UNDER A Methods of description used for the scope of the works
CONSTRUCTION CONTRACT include the following:
Financiers are not typically made parties to the • programmed of works;
construction contract. However, there are instances where • terms of reference;
the construction contract would expressly provide that the • drawings (including supplementary details and
financiers are entitled to certain rights, such as the shop drawings) and specifications prepared by
following: the architect and/or other relevant consultants;
and
• extensive information, auditing and inspection rights;
• project schedules and milestones.
• granting of a security interest over the project;
• to cure the breach on behalf of the defaulting party; 3.2 Variations
and
SCOPE AND PRICE OF VARIATIONS
• to nominate a third party (which may be the financier
REQUESTED BY THE EMPLOYER
itself) to assume the rights of the defaulting party.
In practice, the scope of variations requested by the
Construction contracts do not usually provide for
employer would typically include:
obligations of financiers.
GENERAL RELATIONS BETWEEN THE • changes in quantities or an increase in the scope of the
FINANCIER AND EMPLOYER work of the contractor resulting from adjustments in
work drawings;
The relationship between the employer and the financier • extra work or alterations, additions to or deductions
would normally be governed not by the construction from the scope of the work; and
contract, but by the financing or other similar agreement • the need for additional or a different type of work
between the employer and the financier. However, as resulting from materially different sub-surface
mentioned above, certain rights may be granted to the conditions from those shown in the drawings,
financier under the construction contract, in order to specifications, or contract documents.
protect the financier’s financial interest in the project.
In determining the price of the variation, the value of any
extra work or change is usually determined by the
employer in any one or more of the following ways:
• by a lump sum acceptable to the contractor; 3.4 Construction
• by unit prices either stipulated in the contract or
The contractor is generally responsible for the
subsequently agreed upon; and/or
performance of all the works, and their completion within
• by actual direct cost-plus value-added tax, if any, and
the timelines provided under the construction contract,
a fixed percentage for the contractor's profit and
and is normally expected to supply all the materials,
overheads (eg, 15%).
goods and equipment needed for the works. It is also the
SCOPE AND PRICE OF VARIATIONS contractor’s responsibility to rectify or remedy any defect
REQUESTED BY THE CONTRACTOR or deficiency that may arise during the construction
period and/or within a certain period thereafter.
Generally, the parties may contractually agree on the
determination of the scope and price of variations If allowed under the contract, the contractor may
requested by the contractor. subcontract a portion of the works. In such cases, the
contractor normally remains responsible for all acts of its
The usual procedure adopted is that the contractor subcontractors, as if they were the acts, negligence and
proposes a variation to be adopted by the employer. Once omissions of the contractor itself.
approved, the variation will then be valued by the parties
by agreement or through a third party (eg, an engineer). The employer, on the other hand, is generally liable only
to pay the contract price to the contractor, and allow the
It must be noted that under Philippine law (Civil Code, contractor and subcontractor access to the site to perform
Article 1724), a contractor can only demand an increase the works. The employer is generally not involved in the
in the price if there is a change in the plans and performance of the works.
specifications under the following conditions:
3.5 Site Access
• the variation is authorized by the employer in writing;
and PRIOR TO CONSTRUCTION
• the additional price to be paid to the contractor has Responsibility for matters relating to the status of the site
been determined in writing by both parties. prior to construction is normally stipulated in the contract.
3.3 Design The contract may provide that any remedial works needed
to prepare the site for construction are included in the
It is more common in the Philippines for design works to scope of the contractor’s works, or that any such remedial
be separately contracted by the employer to a design works shall be the responsibility of the employer (through
consultant. In such cases, the construction contract will its other contractors) prior to the commencement of the
typically provide that the employer is fully responsible for works.
the adequacy of the design. The drawings and
specifications prepared by the architect or the design However, contractors typically visit the project site prior
consultant are normally attached to, and an integral part to the bidding and awarding of the contract in order to
of, the construction contract, and must be adhered to by assess the facilities that would be needed and the
the contractor in their performance of the works. It is also difficulties that could potentially attend the execution of
usually stipulated in construction contracts that the the works. Most contracts also require the employer to
architect or the design consultant shall inspect the works provide the contractor with a geodetic survey and
to determine compliance with the drawings and subsurface exploration.
specifications. The employer may require the rectification The employer is normally responsible for any violation of
of works that the architect or design consultant determines environmental laws and regulations relating to the status
to be non-compliant. of the site prior to construction. Accordingly, any
However, there are also instances where the employer and regulatory penalties that may result from such violations
the contractor agree that a part or the whole of the works would be imposed on the employer.
shall be designed by the contractor. In such cases, the Construction contracts often provide that all
contractor is responsible for the adequacy of the design, archaeological finds, and other similar items found on the
and all such responsibilities normally assigned to the site, shall be considered the property of the employer.
owner in relation to the design are instead assigned to the
contractor.
DURING CONSTRUCTION However, the scope of maintenance works usually
involves the regular scheduled maintenance of the works,
On the other hand, construction contracts normally
day-to-day administration, management, upkeep, repairs,
provide that, while performing the works during the
overhauls, improvements and replacements that are
construction period, the contractor is responsible for the
necessary for the safe and proper operation of the works.
site and must comply with all applicable environmental
laws and regulations. The contractor may also be held The construction contract may provide that the manual for
responsible for violations under environmental laws and the maintenance works shall be prepared by the contractor
regulations if the violation arises from its own acts or and turned over to the employer on completion of the
omissions. construction.
3.6 Permits 3.8 Other Functions
The following are the primary permits required for a Other functions in the construction process are usually
construction project: contracted by the employer to third parties.

• Contractor's Licence from the Philippine Contractor's Operational services are usually covered by a separate
Accreditation Board; agreement between the employer and an operation and
• Environmental Compliance Certificate (and allied maintenance service provider (which may or may not be
permits) or Certificate of Non-Coverage (as may be the contractor). See 3.7 Maintenance.
applicable) from the Department of Environment and
Financing arrangements are also usually covered by a
Natural Resources;
separate financing agreement and are independent of the
• zoning/locational clearance, building permit (and
construction. However, the financier may also be
other related permits, eg, electrical permits,
provided with certain rights (see 2.4 The Financiers),
mechanical permits, etc) and occupancy permit, from
which may be exercised in accordance with the terms of
the relevant local government unit;
the construction contract.
• fire safety evaluation clearance, from the Bureau of
Fire Protection; The transfer of the project from the contractor to the
• for projects near airports, a height clearance permit employer is normally governed by the terms of the
from the Civil Aviation Authority of the Philippines; construction contract.
and
3.9 Tests
• such other permits as may be required under
applicable special laws and/or regulations. Upon completion of the works, the contractor will
normally request the employer to conduct an inspection.
Except for the Contractor's License (which the contractor The employer (through its relevant consultants) may
must obtain and hold in its own name), all the permits
conduct tests, at its own expense, to determine whether
required for the construction project would normally be
the contractor has satisfactorily completed the works in
issued in the employer’s name. However, the contract
accordance with the contract and the employer's
usually provides that the contractor is responsible for instructions.
obtaining such permits for and on behalf of the employer
If the tests reveal that the contractor has not satisfactorily
3.7 Maintenance
completed the works, it would be the contractor’s
The maintenance of the works is normally governed by a responsibility to promptly replace or repair the works at
contract between the employer and another service its own expense. In such cases, the contractor would also
provider. The maintenance contract is typically separate typically shoulder the expenses that will be incurred to
from the construction contract, but there are also instances conduct further tests until the works are satisfactorily
where the construction, operation and maintenance of the completed.
project are integrated in a single contract (eg, in public-
private partnership projects between the government and If the tests determine that the works have already been
private proponents that involve the construction, satisfactorily completed, the employer will certify such
operation and maintenance of infrastructure facilities). completion in accordance with mechanics set out in the
construction contract.
The scope of operation and maintenance works varies
depending on the type of project involved, and is
generally dependent on the agreement of the parties.
3.10 Completion, Takeover, Delivery • The engineer or architect who drew up the plans and
specifications for a building is liable for damages if
The contracts would provide separate milestones for
within 15 years from the completion of the structure,
Substantial Completion and Final Completion.
the same should collapse by reason of a defect in
Substantial Completion typically entails completion of at
those plans and specifications, or due to the defects in
least 95% of the works, which already allows the
the ground.
employer to use the site. Final Completion refers to the
• The contractor is responsible for damages if the
completion of all the works under the contract.
edifice falls, within 15 years, on account of defects in
SUBSTANTIAL COMPLETION the construction or the use of materials of inferior
quality furnished by the contractor, or due to any
If the contractor determines that it has met Substantial violation of the terms of the contract.
Completion, it will request the employer to inspect the
works. If the employer finds that Substantial Completion Actions under either of the above must be brought within
has indeed been met, it will issue a Certificate of ten years following the collapse of the building.
Substantial Completion. If the employer finds that
The Civil Code does not provide for a period within which
Substantial Completion has not been met, it will notify
to report discovered defects after the initial defects’
and allow the contractor to perform the works necessary
liability period.
to achieve Substantial Completion.
4. PRICE
After issuance of the Certificate of Substantial
Completion, the works and the site would be turned over 4.1 Contract Price
to the employer.
The contract price is typically expressed as a lump sum or
FINAL COMPLETION a fixed amount in the contract, subject only to adjustments
as may be needed in case of variations, and as may be
If the contractor determines that it has met Final
agreed upon by the parties. The contract price would
Completion, it will request the employer to inspect the
already consider all costs and expenses that the contractor
works. If the employer finds that Final Completion has
may incur for the proper execution, completion and
indeed been met, it will issue a Certificate of Final
performance of the works.
Completion. If there are any defective of non-compliant
works, the employer may issue a "punch list" identifying COST-PLUS CONTRACTS
such works. Upon the contractor's completion of the
punch list to the employer’s satisfaction, the employer Cost-plus contracts are also regularly used in the
will issue the Certificate of Final Completion. Philippines, particularly in instances where the scope of
the works has not been clearly defined. The variations of
3.11 Defects and Defects Liability Period cost-plus contracts that are typically used are cost plus
fixed percentage, and with lesser frequency, cost plus
The construction contract usually provides for a defects
fixed fee.
liability period where the contractor can be held liable for
defects in the works upon notice by the employer. MILESTONE PAYMENTS
Typically, the defects liability period would be for a
period of one year counted from Substantial or Final It is also common for construction contracts to provide for
Completion. milestone payments. Each milestone payment is usually
subject to verification or testing by the employer prior to
In the event that defects are discovered during the defects payment. Contracts also often provide for a down
liability period, the employer may require that the defects payment, normally upon delivery of the performance
be remedied at the sole cost of the contractor. If the bond required under the contract and after the necessary
contractor fails to remedy the defects, the employer may permits and licences have been obtained from the relevant
(i) remedy the defects or request another party to do so, government agencies. Full payment of the contract price
and (ii) claim from the warranty security or retention an is made upon Final Completion, subject to any agreement
amount to defray the costs for such rectification. relating to any retention amount.
In the absence of any contractual stipulation, the defects
liability period under the Civil Code (Article 1723)
applies.
4.2 Payment employer's other consultants may also be taken into
account in preparing the plans, schedules and milestones.
Parties are free to stipulate the conditions of late or non-
payment, which may include the payment of interest or In some instances, the contract may also provide that the
penalties, and may also constitute a ground for the contractor should prepare a contractor's plan, consistent
suspension of work or termination of the contract. with the scope of the work and the requirements of the
employer, for approval by the employer. Once approved,
The following measures are typically applied in case of
the contractor’s plan is binding between the parties, and
late or non-payment:
the works would need to be performed in accordance with
• within an agreed period after a receipt of request for its terms.
payment from the contractor, the employer shall pay In either case, any amendment to the plans, schedules and
the amount as certified; milestones requires approval by the employer and the
• where the employer fails to pay the amount due on contractor.
time, the employer shall pay, in addition to the
amount due, interest thereon; The completion of milestones is subject to verification
• a delay in the payment of any progress billing shall and testing (see 3.9 Tests and 3.10 Completion,
automatically extend the Completion Time by a Takeover, Delivery). Milestone certificates would also
period equal to the delay; usually be issued by the employer to evidence the
• the contractor has the right to suspend work or completion of milestones.
terminate the contract upon written notice to the 5.2 Delays
employer, if the employer fails to pay the contractor
the approved request for payment; and/or In relation to delay in payments, see 4.2 Payment.
• if the contractor incurs a delay in the mobilisation
Parties are free to stipulate what constitutes a delay in
and/or in the progress of the work for reasons
performance and the effects of the delay on the respective
attributable to the employer, the contractor may be
obligations of the parties.
entitled to a claim for extra cost, and delay in said
payment shall entitle the contractor to an extension of A party is generally required to notify the other party that
time and to payment of interest. the latter is causing a delay. This is consistent with Article
1169 of the Civil Code, which states that those obliged to
Advance payments, delayed payments and/or interim
deliver or do something incur a delay from the time the
payments are schemes which are generally used and may
demand is made. However, demand is not necessary for
be stipulated in construction contracts. For instance, the
the delay to exist when the law or obligation expressly so
parties may mutually agree on the amount of advance
declares, such as express stipulation in the agreement as
payment to be made by the employer, subject to the
to the contract key dates or timeline. Nevertheless, a
contractor’s posting of a surety bond of equivalent
notification requirement is common practice in order to
amount to guarantee repayment. The advance payment is
determine the period from which an extension of time or
used for mobilization, purchase of materials, etc.
additional cost claim shall be based, if any. After
4.3 Invoicing notification, the claiming party is generally required to
substantiate the impact of the delay and its corresponding
The particular means and form of invoicing are not entitlement to an extension of time and/or additional cost
normally provided in the contract. However, in milestone claim.
payments, approval by the employer is generally required
before the contractor may issue invoices to the employer 5.3 Remedies in the Event of Delays
for the particular payment.
The employer would typically be entitled to the payment
5. TIME of liquidated damages and other consequential costs
(which may be collected from the performance bond) in
5.1 Planning the event of delay by the contractor. Substantial delay
Generally, the plans, schedules and milestones are may also be cause for the employer to terminate the
arranged and determined by the employer, and finalized construction contract.
and incorporated into the contract upon agreement with
the contractor. Inputs from the architect and the
5.4 Extension of Time where an act is prohibited or prevented by law, while a
physical impossibility is where an act can no longer be
In practice, if the contractor is obstructed or delayed in the
accomplished by reason of its nature.
completion of the work by reasons not attributable to the
contractor (ie, employer's action, neglect, delay or fault; As for difficulty beyond the contemplation of the parties,
third-party strikes or lockouts; an act of God or force the Civil Code provides that when the service has become
majeure; etc), the contractor is entitled to an equitable so difficult as to be manifestly beyond the contemplation
adjustment of the completion time. of the parties, the obligor may also be released from the
obligation, in whole or in part. The scenario contemplated
The contractor must, within a period specified under the
includes exceptional changes in circumstances, taking
contract, notify the employer. In turn, the employer must,
into account the risks assumed by the parties at the
within a similar specified period, give the contractor an
inception of the contract.
equitable adjustment of the completion time, subject to
the employer's determination as to the period. If the Unforeseen circumstances may be classified as force
contractor and the employer cannot agree on the proposed majeure or a change in legislation that would entitle the
period, the contract may provide mechanisms to settle the contractor to an extension of time, and/or additional cost,
dispute. The parties may also stipulate that the employer’s depending on the circumstances and the ability of the
failure to reply to the contractor may be deemed as contractor to substantiate its claims.
approval by the employer of the adjustment requested by
6. LIABILITY
the contractor.
6.1 Exclusion of Liability
5.5 Force Majeure
Liability for future fraud cannot be contractually excluded
Under the principle of force majeure (also known as
under mandatory law (Civil Code, Article 1171). In
fortuitous events) in Philippine law, no person is
addition, limitation of liability for gross negligence and
responsible for events which could not be foreseen or
willful misconduct may be considered void, as it is
which, though foreseen, were inevitable. The most
contrary to public policy.
common force majeure events in construction contracts in
the Philippines include: war, riot, sabotage, acts of 6.2 Willful Misconduct and Gross Negligence
terrorism, insurrections, acts of public enemies; strike,
industrial dispute, blockade, labour dispute, lockout; fire, Willful misconduct and gross negligence are governed by
explosion, flood, typhoon, tornado, epidemic or the Civil Code provisions on tort. Gross negligence has
pandemic, earthquakes, or other natural disasters; export been interpreted by the Supreme Court to be the "want of
or import restrictions; closing of harbours, docks, canals, even slight care and diligence" and "such entire want of
or other assistance to or adjuncts of the shipping or care as to raise a presumption that the person in fault is
navigation of or within any place; rationing or allocation, conscious of the probable consequences of carelessness,
whether imposed by law, decree, or regulation; etc. and is indifferent, or worse, to the danger of injury to
person or property of others".
Nonetheless, parties are free to contractually limit or
exclude certain circumstances from being qualified as Under Article 2176 of the Civil Code, whoever by act or
force majeure events. omission causes damage to another, there being fault or
negligence, is obliged to pay for the damage
5.6 Unforeseen Circumstances done. Meanwhile, in addition to actual damages, a party
that acts with gross negligence may also be liable for
Unforeseen circumstances may be in the following forms:
exemplary damages under Article 2231 of the Civil Code.
fortuitous events, as discussed under 5.5 Force Majeure,
legal or physical impossibility, or difficulty beyond the As explained in 6.1 Exclusion of Liability, limitation of
contemplation of the parties. The provisions of the Civil liability for gross negligence and willful misconduct may
Code are deemed written into the contract. Unless the be considered void.
parties stipulate otherwise, the provisions of the Civil
Code will govern. 6.3 Limitation of Liability

Under the Civil Code, a debtor in obligation to perform a Parties may contractually limit their liability. Typically,
service will be released when the obligation becomes limitations on liability expressly pertain to the liabilities
legally or physically impossible without any fault on the of the contractor in general under the contract. Parties
part of the obligor. Legal impossibility refers to instances also usually agree to limit liabilities for certain types of
consequential damages, such as lost profits. In these material for a certain period of time counted from the
cases, parties typically agree that these damages cannot completion of the works. The guarantees usually include:
be claimed by one party against another, subject to
statutory limits on limitations of liability (eg, fraud, gross • that the works conform to the requirements of
negligence). When contracts provide for a limitation of applicable law, the contract, and the relevant
liability, the cap is usually set at an amount equivalent to requirements of the employer, and that the same shall
the contract price, or an agreed percentage of the contract be free from hidden defects, imperfections, or faults;
price. • that all materials, facilities and equipment used in the
works (if supplied by the contractor) are standard
In addition, in the absence of any agreement to the products of trade and comply with the standards
contrary, parties are also generally not liable for events of provided in the contract, and are free from defects;
force majeure. and
• that all civil works and installation of materials,
However, it is not possible to limit liability if it arises
facilities and equipment are carried out in a
from a fraudulent act or an act constituting gross
workmanlike manner according to the standards
negligence or willful misconduct. Such a stipulation
provided in the contract or sound professional
would be considered void, as explained in 6.1 Exclusion
practices.
of Liability.
A certain amount of the contract price may also be subject
7. RISK, INSURANCE and SECURITIES
to retention by the employer after completion of the
7.1 Indemnities works, which will cover any violation of warranties
within the warranty period. Alternatively, the contractor
Indemnities are normally used to limit risk in construction
may be required to deliver a warranty security (eg, a bond
contracts. Typically, indemnities are given by the
or letter of credit) to the employer, which shall remain in
contractor to the employer for the following:
force until the warranty period expires.
• the failure of the contractor or subcontractors to 7.3 Insurance
perform their obligations pursuant to the contract or
in accordance with applicable laws and regulations; Construction contracts often require the contractors to
• the failure of the contractor to complete the works obtain and maintain insurance policies from reputable and
within the agreed period; financially sound insurance companies acceptable to the
• the contractor's or subcontractor's negligence, errors, employer. The policies required normally include:
omissions, negligent supervision, and negligent
• contractor's all-risk insurance – against all risks,
construction administration;
including fire, earthquake, typhoon, hurricane,
• breach of warranties and of confidentiality
windstorm, any other similar perils, or any other
obligations under the contract;
cause;
• infringement or violation of the intellectual property
• third-party liability insurance – against all claims for
rights of third persons;
bodily or personal injury, death and/or damage to
• death, disease or injury to the contractor's or property;
subcontractor's employees, or damage to any property
• professional liability insurance – against losses
arising from the construction works, which are
suffered from negligence, wrong advice and other
attributable to the contractor;
similar acts of advisers; and
• employment-related claims of the contractor’s
• automobile liability insurance – against bodily injury,
employees;
death and property damage arising from owned, non-
• unpaid bills for labour and materials; and owned and hired vehicles.
• damage caused by the contractor or its employees to
any property of the employer and the adjoining 7.4 Insolvency
property.
The insolvency of a party is normally considered an event
7.2 Guarantees of default that would entitle the other party to terminate
the contract, in accordance with the terms of the contract.
The contractor generally guarantees the works performed This remedy is usually afforded to both the employer and
in the contract against defects in workmanship and contractor.
In the event of insolvency of the employer, the contractor Depending on the specific type of employment under
is also usually given the right to cease all work which the worker is engaged, employment contracts
immediately. normally provide for the effective date/duration of the
employment relationship, the compensation and benefits
7.5 Risk Sharing
granted to the employee, the reporting structure and work
Risks arising from the construction works are generally schedule, job description, rules on employment
the responsibility of the contractor. In line with this, termination, and other company rules and policies
contracts usually provide that the contractor is fully affecting the employee.
responsible for the care of the works from the
8.2 Subcontracting
commencement of the works until handover to the
employer, at which time the responsibility for the care of Contracting and subcontracting are legally permitted and
the works would pass to the employer. However, even are usual market practice in the construction industry.
after handover to the employer, the contractor would still Construction projects are normally farmed out to
normally be liable for any loss or damage caused by its contractor companies and, subject to the agreement
actions, and for loss or damage that may be the result of a between the employer and the contractor, portions or
previous event for which the contractor was liable. phases of the project may be further subcontracted to
another entity.
Risks that may possibly be shared by the parties would
include force majeure and unforeseen circumstances • In a contracting/subcontracting arrangement, workers
(refer to 5.5 Force Majeure and 5.6 Unforeseen of the contractor/subcontractor are assigned and/or
Circumstances). The parties would typically provide that deployed to the project to perform the work under the
losses or damages arising out of force majeure or construction contract/s.
unforeseen circumstances shall not be the responsibility • For a contracting arrangement to be valid and for the
of the contractor. contractor to be considered a legitimate/independent
contractor, the following conditions must be satisfied:
8. CONTRACT ADMINISTRATION and CLAIMS
• the contractor is engaged in a distinct and independent
8.1 Personnel business and undertakes to perform the job/work on
its own responsibility, according to its own manner
PARTY RESPONSIBLE FOR PERSONNEL
and method;
The contractor would usually be responsible for providing • the contractor has substantial capital to carry out the
and paying for all labour and manpower needed for the job on its own account, manner and method, and
performance and completion of the works, and for investment in the form of tools, equipment,
ensuring that all relevant labour laws applying to its machinery and supervision;
employees are complied with. • the contractor is free from control and/or direction of
a principal in all matters connected with the
The contractor would also be required to implement an performance of the work except as to the result
appropriate construction safety and health programme at thereof; and
the contract site and require all its employees to obey all
• a service agreement ensures compliance with all the
applicable laws and regulations concerning safety at
rights and benefits of the contractor’s employees
work.
under labour laws.
Consequently, contracts often provide that the employer
Furthermore, the elements of an employment relationship
should not be answerable or accountable for the payment
should not be present between the employer and the
of wages, all applicable workers' compensation, disability
contractor’s employees, particularly:
and other employment benefits, and any liabilities relating
to the employment of the contractor's employees. • selection and engagement of the individual;
• payment of wages to the individual;
EMPLOYMENT ARRANGEMENTS
• power to dismiss or impose other disciplinary action
Workers in the construction industry are usually engaged on the individual; and
on project employment. Nevertheless, such workers may • power to control the individual with respect to the
also be engaged under other types of employment such as means and method by which the work is to be
on a regular, casual, fixed-term, or piece-work basis. accomplished (“control test”).
The most important element to determine the existence of o to use the name of the author with respect to a
an employer-employee relationship is the so-called work they did not create; and
“control test”.  The presence of such power of control will • provisions as to the ownership of IP rights in
indicate an employment relationship, while its absence feedback.
indicates an independent contracting relationship. Even
though no actual control is exercised, there can still be an 9. REMEDIES and DAMAGES
employment relationship if there is a right to exercise 9.1 Remedies
control. Thus, the principal should be interested only in
the results of the performance of the agreed services by Philippine general contract law states that in the event of
the contractor’s employees. The absence of such control a breach of contract, the injured party may choose
should be evident both in the agreement with the between fulfilment of the obligation, otherwise referred to
contractor and in the day-to-day interaction between the as "specific performance", and the rescission of the
principal and the contractor’s employees. obligation (if the breach is substantial), with the payment
of damages in either case. The law further provides that
8.3 Intellectual Property those who, in the performance of their obligations, are
guilty of fraud, negligence or delay, and those who in any
Intellectual property (IP) clauses typically found in
manner contravene the intention behind such obligation,
construction contracts in the Philippines include:
are liable for damages.
• a comprehensive description of “intellectual
The remedies of specific performance, rescission and
property” should include trademarks, copyrights,
damages are available to all relevant parties in a
designs, patents, or other IP recognized anywhere in
construction contract. Nevertheless, the parties may
the world;
contractually agree to limit or expand the available
• delineation of the IP to be retained by the contractor
remedies of the parties. Aside from the statutory
and employer, usually for IP developed before and
remedies, parties typically agree that the following
after the construction engagement;
remedies are available in case of breach:
• granting of permission to use pre-existing IP or IP
retained by parties, without payment (due to strict • payment of liquidated damages by the contractor, in
“technology transfer agreement” regulations, case of delay;
“licensing” of IP is usually avoided); • suspension of work by the contractor in case of the
• an agreement concerning ownership of jointly employer’s breach, in which case the contractor is
developed IP; entitled to an equitable adjustment of the completion
• an agreement concerning ownership of modifications time and/or contract price;
of IP; • the employer’s right to order suspension of work due
• the confidential treatment of all IP disclosed and to the contractor’s breach; and
shared between the contractor and employer; • termination of contract for specified causes, such as
• the automatic assignment of IP created during bankruptcy or insolvency and negative slippage of the
engagement; contractor.
• a provision requiring execution of necessary
See 4.2 Payment and 5.3 Remedies in the Event of
documents to effect/complete/formalise record
Delays.
assignments of IP;
• a provision to co-operate in enforcement of assigned 9.2 Restricting Remedies
IP;
It is common practice for parties to a construction contract
• an agreement to subsequently assign IP that may not
in the Philippines to agree on the remedies available to
be covered by provisions on automatic assignment;
each party in case of breach. The only limitation would be
• a waiver of moral rights, except where such waiver
mandatory laws applicable to limitations of liability and
shall permit another:
public policy, such as those prohibiting:
o to use the name of the author, or the title of their
work, or otherwise make use of their reputation • waiver of remedies/actions arising from future fraud;
with respect to any version or adaptation of their and
work which, because of alterations therein, • waiver of remedies/actions involving gross
would substantially injure the literary or artistic negligence or wilful misconduct.
reputation of another author; or
9.3 Sole Remedy Clauses (National Irrigation Administration v Court of Appeals,
1999).
Sole remedy clauses are not typically used in construction
contracts in the Philippines. However, waivers of rights 10.2 Alternative Dispute Resolution
and remedies are generally allowed under Philippine law,
Republic Act No 9285 (The Alternative Dispute
and thus enforcement of such waivers is possible.
Resolution Act of 2004) recognises mediation, arbitration
Nevertheless, sole remedy clauses may, in certain and other forms of alternative dispute resolution
circumstances, be considered void and unenforceable if mechanisms.
they essentially limit claims/remedies in situations where
Arbitration, mediation and the use of Dispute Boards are
limitations of liability are disallowed (eg, fraud).
alternative means of dispute resolution available to parties
9.4 Excluded Damages to a construction contract. These are commonly used in
the Philippines, subject to the limitation that, where a
As mentioned in 6.3 Limitation of Liability, parties
construction contract involves an arbitration clause, it is
usually agree to limit liabilities for certain types of
the CIAC which has jurisdiction over a dispute arising
consequential damages, such as lost profits. In such cases,
therefrom.
parties typically agree that these damages cannot be
claimed by one party against another, subject to statutory Dispute Boards are also becoming popular in construction
limits on limitations of liability (eg, fraud). contracts in the Philippines, particularly those which
adopt, or are based on, a FIDIC contract.
9.5 Retention and Suspension Rights
KINDS OF RIGHTS-
Construction contracts typically allow the employer to
retain a portion of the contract sum for a specified period 1. Natural Rights- are those based on the natural law.
after the completion of the works, until the lapse of the Right to live, right to education, the right to work.
agreed defects liability period.
2. Human Rights - are those based on human laws.
Suspension rights are usually allowed and are not
3. Alienable and Inalienable Rights - alienable rights are
typically contractually excluded. Normally, the contractor
those which can be surrendered, renounced or removed.
is given the right to suspend work or terminate the
contract on written notice to the employer, if the employer 4. Right of Jurisdiction- is the power to own, to sell, to
fails to pay the contractor an approved request for barter, to lend, to change, or give away one's personal
payment. The employer is also usually given the right to possessions.
order suspension of work due to a breach on the part of
the contractor. 5. Right of Property- is the power to own, to sell, to barter,
to lend, to change, or give away.
10. DISPUTE RESOLUTION
6. Juridical Rights - refers to all rights insofar as they are
10.1 Regular Dispute Resolution based on law. These rights must be respected, allowed,
fulfilled, as a manner of strict justice.
Disputes arising out of construction contracts that have no
arbitration clauses are resolved through ordinary court Bill of Rights
litigation, before the first and second-level courts in the
Philippines. Section 1. No person shall be deprived of life, liberty, or
property without due process of law
If a construction contract provides for arbitration as the
mode of dispute resolution, the dispute will be resolved
via arbitration before the CIAC, regardless of whether
another institution is chosen. The Philippine Supreme
Court has held that “as long as the parties agree to submit
their dispute to voluntary arbitration, regardless of what
forum they may choose, their agreement will fall within
the jurisdiction of the CIAC, such that, even if they
specifically choose another forum, the parties will not be
precluded from electing to submit their dispute before the
CIAC because this right has been vested by law”
REPUBLIC ACT 544 Section 3. Composition of Board.
ARTICLE I “Within thirty days after the approval of this Act there
shall be created a Board of Examiners for Civil Engineers,
TITLE OF THE ACT AND DEFINITION OF
hereinafter referred to as the Board, to be composed of a
TERMS
chairman and two members who shall be appointed by the
Section 1. Title of Act.” This Act shall be known as the President of the Philippines, upon recommendation of the
“Civil Engineering Law.” Commissioner of PRC.”

Section 2. Definition of Terms.” The members of the Board shall hold office for a term of
three years after appointment or until their successors
(a) The practice of civil engineering within the meaning shall have been appointed and shall have qualified. The
and intent of this Act shall embrace services in the first members of the Board appointed under this Act shall
form of: hold office for the following terms:
• Consultation
• Design • one member for one year
• Preparation of plans • one member for two years
• Specifications • one member for three years.
• Estimates Each member of the Board shall qualify by taking the
• Erection proper oath of office before entering upon the
• Installation and Supervision of the construction of performance of his duties.
o streets
o bridges Any member of the Board may be removed by the
o highways President of the Philippines, upon recommendation by the
o railroads Professional Regulation Commission for:
o airports and hangars
• neglect of duty
o port works
• incompetency
o canals
• malpractice
o river and shore improvements
• unprofessional
o lighthouses
o dry docks • unethical
o buildings • immoral
o fixed structures for irrigation • dishonorable conduct
o flood protection ; after having been given opportunity to defend himself in
o drainage a proper administrative investigation: Provided, that
o water supply and sewerage work during the process of investigation, the President of the
o demolition of permanent structures Philippines, upon the recommendation of the PRC, shall
o tunnels have the power to suspend such member under
investigation and shall appoint a temporary member in his
The enumeration of any work in this section shall not place. Vacancies in the Board shall be filled for the un
be construed as excluding any other work requiring expired term only.
civil engineering knowledge and application.
Section 4. Powers and Duties of the Board
(b) The term “civil engineer” as used in this act shall
The Board for Civil Engineers is vested with authority,
mean a person duly registered with the Board for
conformable with the provisions of this Act:
Civil Engineers in the manner as hereinafter
provided. - to administer oaths, issue, suspend and revoke
certificates of registration for the practice of civil
engineering
ARTICLE II - issue certificates of recognition to civil engineers
already registered under this Act for advanced
BOARD OF EXAMINERS FOR CIVIL studies, research, and/or highly specialized
ENGINEERS
 training in any branch of civil engineering subject Section 6. Fees and Compensation of Board
to the approval of the PRC
The Board for Civil Engineers shall charge for each
- to investigate such violations of this Act and the
application for examination the sum of P100 (one
regulations, there under as may come to the
hundred) payable to the collecting and disbursing officer
knowledge of the Board and, for this purpose
of the PRC upon filing of said application, and for each
- issue subpoena and subpoena duces tecum to
certificate of registration, fifty pesos.
secure appearance of witnesses in connection
with the charges presented to the Board Each member of the Board shall receive a compensation
- to inspect at least once a year educational of fifteen pesos for each applicant examined. A civil
institution offering courses in civil engineering, engineer in the service of the Government of the Republic
civil engineering works, projects or corporations, of the Philippines appointed as member of the Board shall
established in the Philippines and, for receive the compensation as herein provided, in addition
safeguarding of life, health and property to his salary in the Government.
- to discharge such other powers and duties as may
affect ethical and technological standards of the All authorized expenses of the Board, including the
civil engineering profession in the Philippines compensation provided for herein, shall be paid by the
collecting and disbursing officer of the PRC out of such
For the purpose of this Act, the Director of Public Works appropriation as may be made for the purpose. (See RA
and/or his authorized representative in the provinces and 6511 & PD 223)
chartered cities shall be ex-officio agents of the Board and
as such it shall be their duty to help in the enforcement of Section 7. Annual Report
the provisions of this Act. The Board may, with the The Board shall, at the end of each fiscal year, submit to
approval of the Professional Regulation Commission the PRC a detailed report of its activities and proceedings
issue such rules and regulations as may be deemed during the period covered by the fiscal year ended.
necessary to carry out the provisions of this Act. The
board shall also adopt a code of ethics in the practice of ARTICLE III
civil engineering and have an official seal to authenticate
EXAMINATION AND REGISTRATION
its official documents.
Section 8. Examination Requirement
Section 5. Qualifications of Board Members.
All applicants for registration for the practice of civil
Each member of the Board shall, at the time of his
engineering shall be required to pass a technical
appointment:
examination as hereinafter provided.
(a) Be a citizen and resident of the Philippines;
Section 9. Holding of Examination
(b) Be at least thirty years of age and of good moral
character; Examination of candidates desiring to practice civil
(c) Be a graduate of civil engineering from a recognized engineering in the Philippines shall be given in the City
and legally constituted school, institute, college or of Manila of each year, provided that such days do not fall
university; on official holidays, otherwise the examinations shall be
(d) Be a registered civil engineer duly qualified to held on the days next following.
practice civil engineering in the Philippines;
(e) Have practiced civil engineering, with a certificate as Section 10. Subjects of Examination
such, for a period of not less than ten years prior to Applicants for certificate of registration as civil engineer
his appointment; shall be examined, in the discretion of the Board, on the
(f) Not be a member of the faculty of any school, following subjects:
institute, college, or university where civil
engineering course is taught, nor have a pecuniary • Mathematics;
interest in such institutions; o Algebra
(g) No former members of the faculty of any school, o Plane and spherical trigonometry
institute or university where civil engineering is o Analytics
taught can become a member of the Board unless he o Descriptive and Solid geometry
had stopped teaching for at least three consecutive o Differential and Integral calculus
years. o Rational and Applied mechanics
• Hydraulics All successful candidates in the examination shall be
• Surveying; required to take a professional oath before the Board of
o highway and railroad surveying Civil Engineers or other Government Officials authorized
o plane, topographic and hydrographic surveying to administer oaths, prior to entering upon the practice of
o advance surveying the civil engineering profession.
• Design and Construction of;
Section 14. Seal and Use of Seal
o highways and railroads
o masonry structures All registered civil engineers shall obtain a seal of such
o wooden and reinforced concrete buildings design as the Board shall authorize and direct:
o bridges
- the serial number of the certificate issued by the
o towers
Board shall be included in the design of the seal.
o walls
- Plans and specifications prepared by, or under
o foundations
the direct supervision of a registered civil
o piers
engineer shall be stamped with said seal during
o ports
the life of the registrant’s certificate
o wharves
- shall be unlawful for anyone to stamp or seal any
o aqueducts
documents with said seal after the certificate of
o sanitary engineering works
registrant named thereon has expired or has been
o water supply systems
revoked, unless said certificate shall have been
o dikes
renewed or re-issued
o dams
o irrigation Section 15
o drainage canal
1. Registration shall not be required of the following
Section 11. Executive Officer of the Board persons:
The Commissioner of Professional Regulation A. Officers or enlisted men of the United States and
Commission shall be the executive officer of the Board Philippine Armed Forces, and civilian employees of
and shall conduct the examinations given by the said the Government of the United States stationed in the
Board. Philippines while rendering civil engineering services
for the United States and/or Philippines.
He shall designate any subordinate officer of the
B. Civil engineers or experts called in by the Philippine
Professional Regulation Commission to act as the
Government for consultation, or specific design and
Secretary and custodian of all records including
construction of fixed structures as defined under this
examination papers and minutes of the deliberation of the
Act, provided that their practice shall be limited to
Board.
such work.
Section 12. Qualifications for Examination
2. Any person residing in the Philippines may make
Any person applying for admission to the civil plans on specifications for any of the following:
engineering examination as herein provided shall, prior to
A. Any building in chartered cities or in towns with
the date of the examination, establish to the satisfaction of
building ordinances, not exceeding the space
the Board that he has the following qualifications:
requirement specified therein, requiring the services
a) Be at least twenty-one years of age; of a civil engineer.
b) Be a citizen of the Philippines; B. Any wooden building enlargement or alteration
c) Be of good reputation and moral character; which is to be used for farm purposes only and costing
d) Be a graduate of a four-year course in civil not more than ten thousand pesos.
engineering from a school, institute, college or C. Provided, however. That there shall be nothing in this
university recognized by the Government or the State Act that will prevent any person from constructing his
wherein it is established own (wooden or light material) residential house,
utilizing the services of a person or persons required
Section 13. Oath of Civil Engineers
for the purpose, without the use of a civil engineer, as
long as he does not violate local ordinances of the
place where the building is to be build
3. Nor shall anything in this Act prevent: for a new certificate of registration from the registrant
concerned. Such application shall be accomplished in the
- Draftsmen
same form prescribed for examination, but the Board
- student clerk-or-work
may, in its discretion, exempt the applicant from taking
- superintendents
the requisite examination.
- other employees of those lawfully engaged in the
practice of civil engineering under the provisions Section 19. Transitory Provisions
of this Act, from acting under the instruction,
As soon as this Act takes effect, any person desiring to
control or supervision of their employer.
practice the profession of civil engineering shall be
4. Nor shall anything in this Act prevent any person who required to obtain a certificate of registration in the
prior to the approval of this Act have been lawfully manner and under the conditions hereinafter provided.
engaged in the practice of “maestro de obras” to
All civil engineers duly licensed under the provisions of
continue as such, provided they shall not undertake the
Act Numbered Twenty-nine hundred and eighty-five, as
making of plans supervision for the following classes of
amended, at the time this Act takes effect, shall be
work:
automatically registered under the provisions.
a. Building of concrete whether reinforced or not.
Certificates of registration held by such persons in good
b. Building of more than two stories.
standing shall have the same force and effect as though
c. Building with frames of structural steel.
the same have been issued under the provisions of this
d. Building of structures intended for public gathering
Act.
or assemblies such as theaters, cinematographs,
stadia, churches, or structures of like nature. All graduates in civil engineering from a school, institute,
college, or university recognized by the Government who
5. Nor shall anything in this Act prevent professional
have passed the civil service examination for senior civil
architects and engineers to practice their professions.
engineer and have been practicing or employed in the
Section 16 Government as such during five years are exempted from
taking examination.
Engineers shall not issue a certificate to any person
convicted by a court of ARTICLE IV
- competent jurisdiction of any criminal offense ENFORCEMENT OF ACT AND PENAL
involving moral turpitude PROVISIONS
- to any person guilty of immoral or dishonorable
Section 20. Enforcement of the Act by officers of the law
conduct,
- to any person guilty of immoral or dishonorable It shall be the duty of all duly constituted law officers of
conduct, the national, provincial, city and municipal governments,
- to any person of unsound mind. or any political subdivisions thereof, to enforce the
provisions of this Act and to prosecute any person
In the event of a refusal to issue a certificate to any person,
violating the same.
the Board shall give to the applicant a written statement
setting forth its reason for such action, which statement Section 21. Registration required
shall be incorporated in the records of the Board.
Unless exempt from registration, no person shall practice
Section 17. Suspension and Revocation of Certificates or offer to practice civil engineering in the Philippines
without having obtained the proper certificate of
The Board shall have the power, after due notice and
registration from the Board for Civil Engineers.
hearings to suspend or revoke the certificate of
registration for any cause mentioned in the preceding Section 22. Penal provisions
section.
Any person who shall practice or offer to practice civil
Section 18. Re-issue and Replacement of Certificates engineering in the Philippines
The Board may, after the expiration of one year from the - without being registered in accordance with the
date of certificate of registration is revoked and for provisions of this Act
reasons it may deem sufficient, entertain an application
- any person presenting or attempting to use as his own or persons properly registered and licensed as architects,
the certificate of registration of a registered civil form, and obtain registration of, a firm, partnership or
engineer association using the term “Engineers” or “Engineers and
- or any person who shall give any false or forged Architects,” but, nobody shall be a member or partner of
evidence of any kind to the Board such firm, partnership or association unless he is duly
- or any person who shall impersonate any registrant licensed civil engineer or architect, and the members who
civil engineer of different name are civil engineers shall only render work and services
- or any person who shall attempt to use a revoked or proper for a civil engineer, as defined in this Act, and the
suspended certificate of registration members who are architects shall also only render work
- or any person who shall use in connection with his and services proper for an architect, as defined in the law
name or otherwise assume, use or advertise any title regulating the practice of architecture; individual
or description tending to convey the impression that members of such firms, partnership or association shall be
he is a civil engineer, without holding a valid responsible for their own respective acts.
certificate of registration
Section 25. Reciprocity requirements
- or any person who shall violate any of the provision
of this Act No person who is not a citizen of the Philippines at the
- shall be guilty of a misdemeanor and shall, upon time he applies to take the examination shall be allowed
conviction, be sentenced to a fine of not less than five to take it unless he can prove in the manner provided by
hundred pesos nor more than two thousand pesos, or the Rules of Court that, by specific provision of law, the
to suffer imprisonment for a period of not less than country of which he is a citizen, subject, or national either
six months not more than one year, or both, in the admits citizens of the Philippines to the practice of the
discretion of the court. same profession without restriction or allows them to
practice it after an examination on terms of strict and
ARTICLE V
absolute equality with citizens, subjects, or nationals of
MISCELLANEOUS PROVISIONS the country concerned, including the unconditional
recognition of degrees issued by institutions of learning
Section 23. Preparation of plans and supervisions of
duly recognized for the purpose by the Government of the
construction by registered civil engineer
Philippines: Provided, That if he is not a citizen of the
It shall be unlawful for any person to order or otherwise Philippines, and was admitted to the practice of a
cause the construction, reconstruction, or alteration of any profession in the Philippines after December 8, 1941, his
building or structure intended for public gathering or active practice in that profession, either in the Philippines
assembly such as theaters, cinematographs, stadia, or in the state or country where he was practicing his
churches or structures of like nature, and any other profession, shall not have been interrupted for a period of
engineering structures mentioned in section two of this two years or more prior to July 4, 1946, and that the
Act unless the designs, plans, and specifications of same country or state from which he comes allows the citizens
have been prepared under the responsible charge of, and of the Philippines by specific provision of law, to practice
signed and sealed by a registered civil engineer, and the same profession without restriction or on terms of
unless the construction, reconstruction and/or alteration strict and absolute equality with citizens, subjects or
thereof are executed under the responsible charge and nationals of the country or state concerned.
direct supervision of a civil engineer. Plans and designs
Section 26. Roster of civil engineers
of structures must be approved as provided by law or
ordinance of a city or province or municipality where the A roster showing the names and places of business of all
said structure is to be constructed. registered civil engineers shall be prepared by the
Commissioner of PRC periodically but at least once a
Section 24.
year. Copies of this roster shall be placed on file with the
The practice of civil engineering is a professional service, PRC and furnished to all department heads, mayors of all
admission to which must be determined upon individual, chartered cities, to the Director of Public Works, to such
personal qualifications. Hence, no firm, partnership, other Bureaus, government entities or agencies and
corporation or association may be registered or licensed municipal and provincial authorities as may be deemed
as such for the practice of civil engineering: Provided, necessary and to the public upon request.
however, That persons properly registered and licensed as
Section 27. Repeal
civil engineers may, among themselves or with a person
All laws, parts of laws, orders, ordinances, or regulations REPUBLIC ACT NO. 4566
in conflict with the provisions hereof; including parts of
PHILIPPINE CONTRACTORS ACCREDITATION
Act Numbered Twenty-nine hundred and eighty-five, as
BOARD
amended, as pertains to the practice of civil engineering,
are hereby repealed, except the provisions of Act Republic Act No. 4566 as amended by Presidential
Numbered Thirty-one hundred and fifty nine amending Decree No. 1746 provides that no contractor (including
Act Numbered Twenty-nine hundred and eighty-five, sub-contractor and specialty contractor) shall engage
pertaining to the practice of “maestro de obras.” in the business of contracting without first having secured
a PCAB license to conduct business. It is an offense to
Section 28. Construction of Act
engage in contracting business without a license first
If any part or section of this Act shall be declared being obtained. All architects and engineers preparing
unconstitutional, such declarations shall not invalidate the plans and specifications for work to be contracted in the
other provisions hereof. Philippines shall stipulate in their invitation to bidders,
whether a resident of the Philippines or not, and in their
Section 29. Effectivity
specifications that it will be necessary for any bidder,
This Act shall take effect upon its approval. whether contractor, sub-contractor or specialty
contractor, to have a license before his bid is considered.
Approved, June 17, 1950 (As amended by R.A. No. The purpose of the Contractor’s License Law (R.A.
1582, approved on June 16, 1956). 4566) is to ensure, for the safety of the public, that only
REPUBLIC ACT No. 1582 qualified and reliable contractors are allowed to undertake
construction in the country. The law also aims to promote
An Act to Repeal and Replace Section Twenty-Four of for the benefit of the public and private sectors and for the
Republic Act Numbered Five Hundred Forty-Four, national interest, the orderly growth of the contracting
entitled "An Act to Regulate the Practice of Civil sector and the upgrading of construction capability.
Engineering in the Philippines"
ARTICLE I
Section 1. Section twenty-four of Republic Act Numbered
Five hundred forty-four is hereby repealed, and in lieu ADMINISTRATION
thereof, the said section shall provide as follows: "Sec. 24. Section 1. Title of Act.
The practice of civil engineering is a professional service,
admission to which must be determined upon individual, This Act shall be known as the "Contractors' License
personal qualifications. Hence, no firm, partnership, Law."
corporation or association may be registered or licensed
Section 2. Composition of the Board.
as such for the practice of civil engineering: Provided,
However, That persons properly registered and licensed To carry out the purpose of this Act, there is hereby
as civil engineers may, among themselves or with a created a "Philippine Licensing Board for
person or persons properly registered and licensed as Contractors", under the office of the Board of
architects, form, and obtain registration of, a firm, Examiners, hereinafter referred to as the Board,
partnership or association using the term "Engineers" or consisting of a Chairman and two other members who
"Engineers and Architects," but, nobody shall be a shall be appointed by the President of the Philippines,
member or partner of such firm, partnership or association with the consent of the Commission on Appointments.
unless he is a duly licensed civil engineer or architect, and
Section 3. Qualifications of members.
the members who are civil engineers shall only render
work and services proper for a civil engineer, as defined Each member of the Board shall be of recognized standing
in this Act, and the members who are architects shall also in his branch of the contracting business for ten years, or
only render work and services proper for an architect, as more, a citizen and resident of the Philippines for at least
defined in the law regulating the practice of architecture; eight years immediately prior to his appointment, at least
individual members of such firms, partnership or thirty-five years of age and possessed of a good moral
association shall be responsible for their own respective character.
acts.
Section 4. Term of office.
Section 2. This Act shall take effect upon its approval.
Approved: June 16, 1956
The Chairman and members of the Board shall hold office Section 9. Definition of terms. As used in this Act:
for a term of three years. The members of the Board first
(a) "Persons" include an individual, firm, partnership,
appointed shall hold office for the following terms:
corporation, association or other organization, or any
Chairman for three years; one member for two years; and
combination of any thereof.
the other member for one year. Any member of the Board
may be removed by the President of the Philippines for (b) "Contractor" is deemed synonymous with the term
neglect or dereliction of duty, incompetence, malpractice, "builder" and, hence, any person who undertakes or offers
and unprofessional, unethical, immoral or dishonorable to undertake or purports to have the capacity to undertake
conduct: Provided, That in the course of investigation, the or submits a bid to, or does himself or by or through
President of the Philippines shall have the power to others, construct, alter, repair, add to, subtract from,
suspend such member under investigation and designate improve, move, wreck or demolish any building,
a temporary member in his place. Vacancies in the Board highway, road, railroad, excavation or other structure,
shall be filled for the period of the unexpired term only. project, development or improvement, or to do any part
thereof, including the erection of scaffolding or other
Section 5. Powers and duties of the Board.
structures or works in connection therewith. The term
The Board is vested with authority to issue, suspend and contractor includes subcontractor and specialty
revoke licenses of contractors, to investigate such contractor.
violations of this Act and the regulations thereunder as
(c) A "general engineering contractor" is a person whose
may come to its knowledge and, for this purpose, issue
principal contracting business is in connection with fixed
subpoena and subpoena duces tecum to secure appearance
works requiring specialized engineering knowledge and
of witnesses in connection with the charges presented to
skill, including the following divisions or subjects:
the Board, and to discharge such other powers and duties
irrigation, drainage, water power, water supply, flood
affecting the construction industry in the Philippines. The
control, inland waterways, harbors, docks and wharves,
Board may, with the approval of the President of the
shipyards and ports, dams, hydroelectric projects, levees,
Philippines, issue such rules and regulations as may be
river control and reclamation works, railroads, highways,
deemed necessary to carry out the provisions of this Act,
streets and roads, tunnels, airports and airways, waste
to adopt a code of ethics for contractors and to have an
reduction plants, bridges, overpasses, underpasses and
official seal to authenticate its official documents.
other similar works, pipelines and other system for the
Section 6. Board meetings. transmission of petroleum and other liquid or gaseous
substances, land leveling and earth moving projects,
The Board shall meet as frequently as is necessary to
excavating, grading, trenching, paving and surfacing
perform its duties, but it shall meet at least once a month.
work.
It may be convoked by the Chairman or upon written
request of the two other members. (d) A "general building contractor" is a person whose
principal contracting business is in connection with any
Section 7. Compensation.
structure built, being built, or to be built, for the support,
For every meeting attended, the Chairman of the board shelter and enclosure of persons, animals, chattels or
shall receive a per diem of fifty pesos, while the members movable property of any kind, requiring in its
thereof shall receive a per diem of twenty-five pesos each: construction the use of more than two unrelated building
Provided, that in no case will the total amount received by trades or crafts, or to do or superintend the whole or any
each of them exceed the sum of four hundred pesos for part thereof. Such structure includes sewers and sewerage
any one month. disposal plants and systems, parks, playgrounds and other
recreational works, refineries, chemical plants, and
Section 8. Annual report. similar industrial plants requiring specialized engineering
The Board shall, at the end of each fiscal year, submit to knowledge and skill, powerhouse, power plants and other
the President of the Philippines and the Congress a utility plants and installations mines and metallurgical
detailed report of its activities and proceedings during the plants, cement and concrete works in connection with the
period covered by the fiscal year ended. abovementioned fixed works. A person who merely
furnishes materials or supplies under section eleven
ARTICLE II without fabricating them into, or consuming them in the
performance of the work of the general building
APPLICATION OF THE ACT
contractor does not necessarily fall within this definition.
(e) A "specialty contractor" is a person whose operations For the purpose of classification, the contracting business
pertain to the performance of construction work requiring includes any or all of the following branches.
special skill and whose principal contracting business
a. General engineering contracting;
involves the use of specialized building trades or crafts.
b. General building contracting; and
Section 10. Public personnel. c. Specialty contracting.
This Act shall not apply to an authorized representative of Section 17. Power to classify and limit operations.
the Republic of the Philippines or any incorporated town,
The Board may adopt reasonably necessary rules and
city, province, or other municipal or political corporation
regulations to effect the classification of contractors in a
or subdivision of the Republic of the Philippines.
manner consistent with established usage and procedure
Section 11. Finished products. as found in the construction business, and may limit the
field and scope of the operations of a licensed contractor
This Act shall not apply to any sale or installation of any
to those in which he is classified to engage, as respectively
finished products, materials or articles or merchandise,
defined in section nine. A license may make application
which are not actually fabricated into and do not become
for classification and be thus classified in more than one
a permanent and fixed part of the structure.
classification if the licensee meets the qualification s
Section 12. Personal property. prescribed by the Board for such additional classification
or classifications. No additional application or license fee
This Act shall not apply to any construction, alteration, shall be charged for qualifying or classifying a licensee in
improvement of repair of personal property. additional classifications
Section 13. Minor work. Section 18. Incidental work.
This Act shall not apply to any work or operation on one Nothing in this Act shall prohibit a specialty contractor
undertaking or project by one or more contracts, with an from taking and executing a contract involving the use of
aggregate contract price of less than ten thousand pesos two or more crafts or trades, if the performance of the
for the labor, materials and all other items. work in such crafts or trades, other than in which he is
This exemption, however, shall not apply in any case licensed, is only incidental or supplemental to the
wherein the work or construction is only part of a larger performance of work in the said craft or trade for which
or major operation, whether undertaken by the same or a he is licensed.
different contractor, or in which a division of the ARTICLE IV
operation is made in contracts of amounts less than ten
thousand pesos for the purpose of evading or otherwise LICENSING
violating the provisions of this Act.
Section 19. Examinations required.
Section 14. Architects and engineers.
In accordance with the rules and regulations promulgated
This Act shall not apply to a registered civil engineer or a by it, the Board may investigate, classify and qualify
licensed architect acting solely in his professional applicants for contractors' licenses by written or oral
capacity. examination, or both.

Section 15. Material men. Section 20. Qualifications of applicants for contractors'
licenses.
This Act shall not apply to any person who only furnishes
materials or supplies without fabricating them into, or The Board shall require an applicant to show at least two
consuming them in the performance of, the work of the years of experience in the construction industry, and
contractor. knowledge of the building, safety, health and lien laws of
the Republic of the Philippines and the rudimentary
ARTICLE III administrative principles of the contracting business as
CLASSIFICATIONS the Board deems necessary for the safety of the
contracting business of the pubic. For the purpose of this
Section 16. Classification. section, a partnership, corporation, or any other
organization may qualify through its responsible
managing officer appearing personally before the Board
who shall prove that he is a bona fide responsible officer as may be required, the Board within fifteen days after the
of such firm and that he exercises or is in a position to approval of the application shall issue a license to the
exercise authority over the contracting business of his applicant permitting him to engage in business as a
principal or employer in the following manner: contractor under the terms of this Act for the remaining
part of the fiscal year.
(1) to make technical and administrative decisions; and,
Section 24. Death.
(2) to hire, superintend, promote, transfer, lay off,
discipline or discharge employees. A surviving member or members of a licensed partnership
by reason of death shall be entitled to continue in business
under such license until the expiration date thereof, if an
application for permission is made to the registrar within
thirty days after the death of the deceased member, and
Section 21. Notice of disassociation required. approved by the Board.
If the individual who has qualified under the preceding Section 25. No examination required.
section ceases for any reason whatsoever to be connected
with the licensee under this Act, or if any individual who Contractors actively engaged in the construction industry
has been denied a license, or whose license had been at the effectivity of this Act and licensed as such for the
revoked or suspended, or has filed to secure the last five years, may upon application, be issued license
restoration of his license if it has been suspended, or has without necessity of examination
been a responsible managing officer or employee of any
ARTICLE V
partnership, corporation, firm or association whose
application for a license has been denied, revoked, or RECORDS
suspended, or who has failed to secure the restoration of
Section 26. Publication of list.
its license if it has been suspended, shall in anyway
become associated with or be employed by a licensee, the The Board shall publish, at least once a year in a
licensee shall notify the Board in writing ten days from newspaper of general circulation, a list of the names and
such cessation, association or employment. Such notice addresses of contractors, registered under this Act and of
may entitle the license concerned to remain in force the licenses issued, suspend or revoked, and such further
within reasonable period as determined by the rules information with respect to this Act and its administration
prescribed by the Board. that it deems proper. Copies of such lists may also be
furnished by the Board upon request to any firm or
Section 22. Failure to notify in case of disassociation.
individual upon payment of a reasonable fee as fixed by
If the license fails to notify the Board within the tenday the Board.
period in accordance with the preceding section, his
Section 27. Changes.
license shall be ipso facto suspended. Such license may
be restored, however, upon the filing of an affidavit, All licenses shall report to the Board all changes of
executed by the licensee or the duly authorized personnel, name, style or addresses recorded under this
responsible managing officer of the licentiate firm, with Act within thirty days after the changes are made.
the Board, to the effect that the person originally
appearing for examination on behalf of the licensee has ARTICLE VI
been replaced by another individual, that this individual DISCIPLINARY ACTION
has been qualified by examination, that he can comply
with the provision of this section and that he has not had Section 28. Causes for disciplinary action.
his license suspended or revoked or that he has not been
The following shall constitute causes for disciplinary
connected with a licensee whose license has been
action:
suspended or revoke due to the lack of a good character
required of an applicant for a license. a. Willful and deliberate abandonment without lawful
and/or just excuse of any construction project or
Section 23. Issuance of licenses.
operation engaged in or undertaken by the licensee as
Upon the payment of the corresponding fee and the filing a contractor;
of the application, and after examination and investigation b. Willful material and substantial departure from or
disregard of plans and/or specifications in any
 material respect, and prejudicial to another without of one year after the final decision of revocation upon
consent of the owner or the person entitled to have the proper showing that all losses caused by the act or
particular construction project or operation completed omission for which the license was revoked have been
in accordance with such plans and/or specifications or fully satisfied and that all conditions imposed by the
their duly authorized representations; decision of revocation have been complied with.
c. Willful misrepresentation of a material and
Section 32. Jurisdiction.
substantial fact by an applicant in obtaining a license;
d. Aiding or abetting an unlicensed person to evade the The lapsing or suspension of a license by operation of law,
provisions of this Act, or knowingly combining or by order or decision of the Board or other competent
conspiring with an unlicensed person, or allowing authority, or the voluntary surrender of a license shall not
one's license to be used by an unlicensed person, or deprive the Board of jurisdiction to proceed with any
acting as agent or partner, or associate, or otherwise investigation of or action or disciplinary proceedings
of an unlicensed person with the intent to evade the against such license, or to render a decision suspending or
provisions of this Act. revoking it.
e. Failure to comply the provisions of this Act;
f. The doing of any willful or fraudulent act by the ARTICLE VIII
licensee as a consequence of which another is injured ENFORCEMENT AND PENALTIES
or damaged; and
g. The participation by a licensee in the performance by Section 33. Enforcement by officers of the law.
any partnership, corporation, firm, or association of
It shall be the duty of all duly constituted law enforcement
which he is a responsible managing partner,
officers of the national, provincial, city and municipal
employee or officer, of any act or omission
government or any political subdivisions thereof, to
constituting a cause for disciplinary action under this
enforce the provisions of this Act and report to the Board
Act.
any violation of the same.
ARTICLE VII
Section 34. Enforcement by the Board.
DISCIPLINARY PROCEEDINGS
Should any contractor not licensed by the Board engage
Section 29. Jurisdiction. on attempt to engage in the business of contracting, the
Board shall have the right to institute the proper action in
The Board shall, upon its own motion or upon the verified court and secure a writ of injunction without bond,
complaint in writing of any person, investigate the action restraining the said contractor.
of any contractor and may suspend or revoke any license
if the holder thereof has been guilty of or has committed Section 35. Penalties.
any one or more of the acts or omission constituting
Any contractor who, for a price, commission, fee or wage,
causes for disciplinary action.
submits or attempts to submit a bid to construct, or
Section 30. Prescription. contracts to or undertakes to construct, or assumes charge
in a supervisory capacity of a construction work within
All accusations or charges against licensees shall be filed the purview of this Act, without first securing a license to
within one year after the act or omission alleged as the engage in the business of contracting in this country; or
ground therefor, except that with respect to an accusation who shall present or file the license certificate of another,
alleging a violation of subsection (c) of section twenty- give false evidence of any kind to the Board, or any
eight the accusation may be filed within two years after member thereof in obtaining a certificate or license,
the discovery by the Board of the alleged facts impersonate another, or use an expired or revoked
constituting the fraud or misrepresentation certificate, or license, shall be deemed guilty of
Section 31. Restoration or renewal of licenses. misdemeanor, and shall, upon conviction, be sentenced to
pay a fine of not less than five hundred pesos but not more
After suspension of the license upon any of the grounds than five thousand pesos.
set forth in this Act, the Board may lift such suspension
upon proof of compliance by the contractor with the ARTICLE IX
requirements and conditions set forth by the Board. After MISCELLANEOUS PROVISIONS
revocation of a license upon any of the grounds set forth
in this Act, it shall be renewed or reissued within a period Section 36. License required in biddings.
All architects and engineers preparing plans and Section 41. Non-renewal of licenses.
specifications for work to be contracted in the Philippines
No license which has been under suspension for more
shall include in their invitation to bidders and in their
than a year immediately preceding the filing of an
specifications a copy of this Act, or such portions thereof
application for renewal shall be renewed.
as are deemed necessary to convey to the invited bidder,
whether he is a resident of the Philippines or not, the ARTICLE XII
information that it will be necessary for him to have a
license before his bid is considered. SPECIAL PROVISIONS
Section 42. Separability Clause.

Section 37. Individual License. If any provisions of this Act are held unconstitutional, the
other provisions shall not be affected thereby.
It is unlawful for any person who is a responsible
managing partner, officer or employee of a licensed Section 43. Repeal.
partnership, corporation, firm, association or other All Acts or parts of Acts inconsistent with this Act are
organization to individually engage in the constructing hereby repealed.
business of individually act in the capacity of a contractor
within this jurisdiction without having a license in good Section 44. Effectivity.
standing to so engage or act.
This Act shall take effect upon its approval.
Section 38. Joint licenses.
Approved: June 19, 1965
It is unlawful for any two or more licensees, each of
whom has been issued a license to engage separately in
the capacity of a contractor, to jointly submit a bid or PRESIDENTIAL DECREE NO. 1746
otherwise act in the capacity of a contractor without first
having secured an additional license for acting in the (As Amended by Executive Order Nos. 679 & 768)
capacity of such a joint venture or combination in CREATING THE CONSTRUCTION INDUSTRY
accordance with the provisions of this Act as provided for AUTHORITY OF THE PHILIPPINES (CIAP)
an individual, partnership or corporation.
WHEREAS, the construction industry constitutes an
ARTICLE X important segment of the industrial sector and contributes
FEES significantly to the gross national product of the
Philippines;
Section 39. Fee.
WHEREAS, construction is now a major industry,
The amount of fees prescribed by this Act shall be as accounting for more than five hundred thousand workers
follows: and providing livelihood to more than three million
Filipinos;
(a) Fifty pesos for an original license;
WHEREAS, the construction industry has began to
(b) Sixty pesos for examination of an applicant;
venture into international markets, generating foreign
(c) Fifty pesos for an annual renewal. exchange and providing greater employment to Filipino
workers;
ARTICLE XI
WHEREAS, the orderly growth and development of the
RENEWAL OF LICENSES construction industry and the upgrading of the capability
Section 40. Renewal. of construction contractors are in consonance with
national interest and will benefit both public and private
A license may be renewed by the filing of a renewal sector;
application with the registrar not later than June thirtieth
of each fiscal year, accompanied by the annual renewal WHEREAS, the continued growth and development of
fee. A license renewed thereafter shall be subject to an the construction industry requires an increasing number
additional fee of Twenty Pesos. of skilled construction workers; and
WHEREAS, such growth and development have been (d) To establish criteria for the classification and
hampered by the lack of cohesive government policies categorization of contractors which accurately reflect
and the absence of a central agency to deal with the their contracting capacity and performance capability
problems of the industry and to coordinate with other
(e) To enforce relevant and reasonable rules and
government agencies on matters affecting the industry.
requirements, as well as implement practicable and
NOW, THEREFORE, I, FERDINAND E. MARCOS, efficient procedures for pre-qualification of public
President of the Philippines, by virtue of the powers projects;
vested in me by the Constitution, do hereby order and
(f) To recommend and encourage the adoption of
decree the creation of the Construction Industry Authority
equivalent and realistic contract conditions for
of the Philippines (CIAP) designed to promote, accelerate
construction;
and regulate the growth and development of the
construction industry as follows: (g) To seek the adoption of credit and other financing
policies necessary for sustaining the continued and
Section 1. Composition.
orderly development of the construction industry and for
There is hereby established a Construction Industry supporting Filipino contractors particularly those
Authority of the Philippines which shall be composed of involved in overseas construction;
the Minister of Trade and Industry as Chairman, the
(h) To identify and recommend other incentives necessary
Minister of Public Works and Highways, the Minister of
to support overseas construction;
Transportation and Communication, the Minister of
Labor and Employment, the Chairmen of the different (i) To establish procedures, guidelines and criteria for fair
agencies under the CIAP namely: the Philippine and expeditious adjudication and settlement of claims and
Contractors Accreditation Board, the Philippine Overseas disputes in contract implementation;
Construction Board, the Philippine Domestic
Construction Board, the Construction Manpower (j) To promote construction manpower training to
Development Foundation, the President of the Philippine supplement the manpower training efforts of the private
Contractors Association, and one representative of the sector, through the centralization of programming and
private construction sector to be appointed by the coordination of activities of all government agencies;
President, as members. The Chairman may designate a (k) To establish a funding mechanism with the private
special construction industry representative in the Middle sector to promote and develop the construction industry;
East who will become an ex-officio member of the Board.
The Chairman shall, also designate a Vice-Chairman from (l) To perform such other functions necessary to achieve
among the members. its objectives.

Sec. 2. Powers and Objectives. Sec. 3. Organization.

The Construction Industry Authority of the Philippines The Authority shall be attached to the Ministry of Trade
shall promote, accelerate and regulate the growth and and Industry for policy and program coordination. It shall
development of the construction industry in conformity exercise authority with respect to the government
with national goals. Specifically, the Authority shall have agencies that conduct business with or exercise regulatory
the following powers and objectives: powers over the construction industry. It shall exercise
jurisdiction and supervision over the following agencies
(a) To evolve an overall strategy and exercise centralized which shall act as its implementing arms.
authority for the optimum development of the
construction industry; a. The Philippine Contractors Accreditation Board;
b. The Philippine Overseas Construction Board;
(b) To monitor and study the operations of the c. The Philippine Domestic Construction Board;
construction industry both here and abroad, to identify its d. The Construction Manpower Development
needs, problems and opportunities and to recommend Foundation.
and/or implement policies, legislations, programs and
measures to support the development of the industry; Sec. 4. The Philippine Contractors Accreditation Board.

(c) To rationalize investments in the construction industry There is hereby created a Philippine Contractors
in accordance with national investment priorities and Accreditation Board under the jurisdiction and
development needs; supervision of the Authority. The Philippine Contractors
Licensing Board is hereby abolished and all its funds and 4. Formulate and recommend approximate and
records are hereby transferred to the Philippine standardized contract terms/conditions and guidelines for
Contractors Accreditation Board. determining contract price adjustments in private
construction;
(a) Composition. The Board shall be composed of a
Chairman and two (2) members to be appointed by the 5. Formulate and recommend rules and procedures for the
President upon recommendation of the Authority. The adjudication and settlement of claims and disputes in the
present Board of the Philippine Contractors Licensing implementation of contracts in private construction;
Board shall continue to hold office as the Board of the
6. Perform such other functions as may be assigned by the
Philippine Contractors Accreditation Board until their
Authority.
respective successors have been duly appointed.
Sec. 7. The Construction Manpower Development
(b) Functions. The Philippine Contractors Accreditation
Foundation.
Board shall perform the present functions of the
Philippine Licensing Board until such time as its other There is hereby created a Construction Manpower
functions, powers and duties are issued by the Authority. Development Foundation which shall serve as the
manpower development arm of the Authority.
Sec. 5. The Philippine Overseas Construction Board.
(a) Composition. The Foundation shall have a Board of
The Philippine Overseas Construction Board created
Directors as composed of a Chairman and four (4)
under P.D. 1167, as amended, is hereby placed under the
members to be appointed by the Minister of Trade and
jurisdiction and supervision of the Authority. It shall
Industry upon recommendation of the Authority.
continue to perform its present functions and shall
perform additional functions as may be assigned by the (b) Functions. The Foundation shall perform the
Authority. following functions:
Sec. 6. The Philippine Domestic Construction Board. 1. Draw up an overall construction manpower
development plan and relevant strategies;
There is hereby created a Philippine Domestic
Construction Board under the jurisdiction and supervision 2. Develop and implement manpower training programs
of the Authority. for the construction industry;
(a) Composition. The Board shall be composed of 3. Formulate and adopt construction skills and standards
Chairman and four (4) members to be appointed by the and establish skills testing and certification facilities in
President upon recommendation of the Authority. coordination with the National Manpower and Youth
Council;
(b) Functions. The Philippine Domestic Construction
Board shall formulate, recommend and implement 4. Recommend appropriate policies and measures to
policies, guidelines, plans and programs for the efficient rationalize training and export of trained manpower in the
implementation of public and private construction in the construction industry in coordination with the Ministry of
country. Labor and Employment (MOLE) and other pertinent
government agencies;
Specifically, it shall:
5. Develop a funding mechanism in cooperation with the
1. Formulate and recommend appropriate policies and
construction industry to enable it to carry out its functions
guidelines for pre-qualification, bidding and contract
by collecting fees and undertaking income generating
award for public infrastructure projects;
activities;
2. Monitor and evaluate information on the status of
6. Borrow from financing institutions to support its
public construction projects as well as on the performance
operations;
and contracting capacity of contractors engaged in such
projects; 7. Perform such other functions as may be assigned by the
Authority. The Foundation shall coordinate its activities
3. Adjudicate and settle claims and disputes in the
and work program with the National Manpower and
implementation of public construction contracts and for
Youth Council, the Bureau of Employment Services of
this purpose, formulate and adopt the necessary rules and
the MOLE, the Philippine Overseas Construction Board
regulations subject to the approval of the President;
and the Ministry of Education and Culture
Sec. 8. Executive Office. Special meetings may be called by the respective
Chairmen. The presence of the majority of the members
The Authority shall have an Executive Office headed by
of the Authority or the Boards of the implementing
a full-time Executive Director to be appointed by the
agencies shall constitute a quorum.
Chairman.
Section 11. Rules and regulations.
The Executive Office shall maintain a technical, legal and
management staff to assist the Executive Director in the The Authority shall issue such rules and regulations as
performance of these duties and responsibilities. may be necessary for the implementation of the general
provisions of this Decree.
The Executive Director shall report directly to the
Authority on matters pertaining to and/or concerning the Section 12. Funding.
Authority and shall be responsible for monitoring and
The amount of five million pesos (P5,000,000.00) is
implementation of the policies and programs of the
hereby authorized to be released from the Special
Authority, particularly by the four (4) agencies of the
Activities Fund to cover the operating and capital
Authority, to the purpose of ensuring effectiveness and
expenses of the CIAP and its implementing agencies for
proper coordination.
CY 1981, subject to Sec. 40 of P.D. No. 117. The
• Philippine Contractors Accreditation Board, Authority and its implementing agencies are hereby
• Philippine Domestic Construction Board empowered to collect fees and undertake income
• Construction Manpower Development Foundation generating activities as may be necessary in the execution
of its functions and responsibilities. The Authority and its
shall establish their own Secretariats to service their implementing agencies are hereby authorized to use its
respective Boards and to assist the Authority in the income to finance its operations, the provisions of law, to
execution of its functions and responsibilities, subject to the contrary, notwithstanding.
pertinent budgetary organization, compensation and civil
service rules and regulations. Section 13. Separability Clause.

Each of the three (3) agency Secretariats shall be headed The provisions of this Decree are declared to be separable
by their respective Executive Officers to be appointed by and if any provision or the application thereof is held
the Chairman of the Authority upon recommendation of invalid or unconstitutional, the validity of the other
their respective Boards. provisions shall not be affected.

The Philippine Overseas Construction Board shall Section 14. Repealing Clause.
continue to maintain its Executive Staff. All relevant
All provisions of existing laws, proclamations, decrees,
agencies of the government involved in the development
letters of instruction with this Decree are hereby repealed
and promotion of the construction industry are hereby
or modified accordingly.
directed to coordinate with the Authority in the execution
of its functions Section 15. Effectivity Clause.
Sec. 9. Compensation. This Decree shall take effect immediately. Done in the
City of Manila, this 28th day of November, in the year of
The Authority shall fix
Our Lord, nineteen hundred and eighty.
(a) per diems of the Chairmen and the members of the
CIAP AND ITS FUNCTIONS:
different Boards of the implementing agencies; and
• The construction industry in the Philippines is primarily
(b) the salaries and allowances of the Executive Director,
regulated by the Construction Industry Authority of the
the staff of the Executive Office as well as the office of
Philippines (CIAP), a government agency established
the different Secretariats under the Authority, subject to
through Presidential Decree No. 1746, series of 1980, as
pertinent budget, compensation, organization and civil
amended (PD 1746). The CIAP is composed of ex-officio
service rules and regulations.
members from different executive departments of the
Section 10. Meetings. Philippine government such as the Secretary for Trade
and Industry, Secretary for Transportation, Secretary for
The Authority and the Boards of the implementing Public Works and Highways, and the Secretary of
agencies shall meet as often as is necessary but not less Department of Labor and Employment. In addition, PD
than once a quarter.
1746 also requires the appointment of a representative
from the private construction sector to be part of the
CIAP.
• The main functions of the CIAP as provided in PD 1746
include evolving an overall strategy for the optimum
development of the construction industry; monitoring and
studying both domestic and international construction
industries to identify areas where there can be
improvement and to recommend and/or implement
changes which support the development of the industry;
and, formulating criteria for the classification and
categorization of contractors which reflect their
contracting capacity and performance capacity (Section 2,
PD 1746).
The CIAP implements its policies through the following
government agencies which are under its jurisdiction: the
Philippine Construction Accreditation Board (PCAB), the
Philippine Overseas Construction Board, the Philippine
Domestic Construction Board, and the Construction
Manpower Development Foundation.
Aside from the CIAP, local government units also
regulate the construction and renovation of buildings and
structures within their territories by ensuring compliance
with minimum safety standards under the National
Building Code (Republic Act No. 6541). For the
construction of condominiums and subdivisions, on the
other hand, these are further regulated by the Housing and
Land Use Regulatory Board.