July 19, 2024

The Construction Industry Authority of the Philippines (CIAP) has embarked on a new partnership with private sector organizations and associations in advocating fair and equitable contract conditions in the local construction industry. 

The construction sector has been dubbed as the country’s “nation-builder”, which generates huge revenues and investments. It plays an important role in the country’s overall infrastructure development, which is one of the priorities of President Ferdinand Marcos Jr. under his Build Better More program comprising of 194 infrastructure projects.

With these, it is expected more construction project contracts will be entered into in the coming years.

These construction projects, however, are accompanied with risks, which both contractors and project owners must address. Fair and equitable contractual terms and conditions are crucial to balanced risk sharing, defining parties’ rights and duties, and maintaining the long-term viability of the construction sector.

Disputes often arise out of inequitable contractual arrangements in the construction industry, resulting in project abandonment, significant losses, and even bankruptcy, therefore posing a danger to the industry’s sustainability.

According to the Construction Industry Arbitration Commission (CIAC), some of the arbitration cases lodged with them relates to breaches of contracts. These disputes have a dire effect on micro and small domestic/local contractors, who, in good faith, rely on these agreements with their clients, unknowingly engaging in unfair and/or inequitable contracts.

To eliminate or reduce these contractual problems and to assist the industry, especially micro and small domestic/local contractors, CIAP has rolled out an advocacy campaign on the adoption and use of a standardized set of conditions of contract for private construction.

The CIAP, through one of its implementing arms, the Philippine Domestic Construction Board (PDCB), approved and published the revised CIAP Document 102 or the Uniform General Conditions of Contract for Private Construction.

The CIAP Document 102 is intended to provide guidance to parties in drafting their respective private construction contracts, and its provisions are intended to serve as the recommended procedures, guidelines, and criteria to be used in the implementation of the contract, especially in the interpretation of any ambiguities and omissions of stipulations in the contract.

DTI Usec. and CIAP Alternate Chair Ireneo Vizmonte said  CIAP Document 102 continues to encapsulate the recommended terms and conditions in construction contracts, and reflect the usages, customs, and best practices in the construction industry.

The use of the document follows the premise that customs of usage of trade is a source of law, hence, judicial courts and quasi-judicial bodies such as CIAC recognizes the use of CIAP Document 102 as reference in resolving construction disputes.

DTI-CIAP Executive Director Atty. Marco Maat said CIAP recognizes stronger collaborations between government and the private sector to initiate compelling policy reforms such as the CIAP Document 102. – Press release