TOPIC 9: CONSTRUCTION INDUSTRY AUTHORITY OF THE PHILIPPINES (CIAP DOCUMENT 102)

The document that provides uniform guidelines for fairness and clarity in private construction contracts in the Philippines.

CIAP Document 102

The issuing body responsible for the creation and maintenance of CIAP Document 102.

Construction Industry Authority of the Philippines (CIAP)

The first year of issuance of CIAP Document 102.

1997

The latest revision year of CIAP Document 102.

2022

CIAP Document 102 was created to address issues such as project abandonment, financial losses, and disputes.

Foreword Purpose of CIAP Document 102

The goal of CIAP Document 102 is to ensure balance of risks and clear definition of rights and obligations.

To promote fairness and harmonious relationships in construction

The term used to describe the formal contract signed by the Owner and Contractor, excluding attachments.

Agreement

The document that includes all materials, specifications, and drawings attached to the Agreement.

Contract Documents

The money advanced by the Owner to the Contractor before construction begins.

Advance Payment or Down Payment

The type of bond submitted with the bid to guarantee contract execution if awarded.

Bid Bond

The drawings that show the actual constructed structure and all installed systems.

As-Built Drawings

A listing of work parts and corresponding values used for progress billing.

Breakdown of Work and Corresponding Value

The maximum time allowed for project completion under the contract.

Completion Time Limit

The total amount payable by the Owner to the Contractor for work done.

Contract Price

The person or firm licensed by PCAB and awarded the project contract.

Contractor

The form of security guaranteeing material quality and workmanship after project completion.

Guarantee Bond

The public notice that invites contractors to bid on a project.

Invitation to Bid

The official set of rules governing how bids must be prepared and awarded.

Instruction to Bidders

The approved security ensuring the Contractor fulfills payment obligations to workers and suppliers.

Payment Bond

The approved security ensuring that the Contractor executes work faithfully according to the contract.

Performance Bond

The person or entity authorized to act on behalf of the Owner during the project.

Owner’s Representative

The amount retained (usually 10% or less) from progress payments to ensure completion and defect repair.

Retention

The term describing additional instructions issued before bidding to modify general conditions.

Special Provisions or Conditions

The written description of materials, equipment, and construction methods to be used.

Specifications

The additional or amended specification issued to supplement existing ones.

Supplementary Specifications

The party issuing bonds required of the Contractor.

Surety

The set of rules applied when interpreting contract discrepancies.

Interpretation of Contract Rules

Under interpretation rules, if drawings and specs conflict, specifications prevail; if general vs. detailed specs conflict, detailed specs prevail.

Conformity to the Contract

The standard of conduct required of all parties: act with justice, honesty, and good faith.

Standard of Conduct Clause

The rule for document priority in case of conflict (Agreement > Instruction to Bidders > Addenda > etc.).

Order of Document Priority

The clause stating that Contractor must study and compare all Contract Documents and report any error or omission.

Review of Contract

The entity responsible for providing drawings and specifications (three free sets).

Owner

The type of drawing that clarifies unclear requirements or provides construction details.

Detail or Supplementary Drawings

The set of drawings prepared by the Contractor and approved before installation.

Shop Drawings

The maximum time allowed for Owner’s approval of shop drawings.

Seven (7) working days

Before bidding, the Contractor must inspect the site and assess all physical conditions.

Site Inspection Requirement

The Contractor must comply with all laws, ordinances, and regulations affecting the project.

Compliance with Laws Clause

The Owner pays for permits, licenses, and easements, while the Contractor secures the final occupancy permit.

Permits and Licenses Clause

The Contractor’s tax obligation under CIAP Document 102.

Payment of all applicable sales, use, and similar taxes

The entity responsible for providing construction stakes and benchmarks for grade lines and levels.

Owner via Certified Surveyor

If the Contractor requests substitutes for materials, written approval from the Owner is required.

Brand Name Materials & Substitutes Clause

The entity responsible for testing materials to meet government and specification standards.

Approved Laboratory (at Contractor’s cost)

The period when the Owner may temporarily use completed portions of work before full acceptance.

Trial Usage Period

The penalty for project delays, typically 0.1% of the contract price per day, up to 10%.

Liquidated Damages

The bond ensuring post-completion defect correction.

Guarantee Bond

The body responsible for dispute resolution under CIAP Document 102.

Construction Industry Arbitration Commission (CIAC)

The grace period for retention release after completion.

Sixty (60) days

The section detailing the contractor’s insurance obligations, such as liability and fire insurance.

Article 31 – Contractor’s Insurance and Bonds

The standard time for Owner payment processing after progress billing submission.

Thirty (30) days

The legal framework applied when interpreting contract terms.

Civil Code of the Philippines and Rules of Court

Contractor’s Key Responsibilities

• Provide qualified personnel and workers

• Ensure work safety and compliance

• Repair defective work at own cost

• Act during emergencies to protect life and property

• Maintain site cleanliness after completion

Owner’s Responsibilities

• Provide drawings, data, and approvals promptly

• Pay Contractor as agreed

• Ensure safety of consultants and site visitors

• Issue permits and licenses as required

Types of Bonds Required from Contractor

• Bid Bond

• Performance Bond

• Payment Bond

• Guarantee Bond

Grounds for Contract Termination by Owner

• Contractor default or fraud

• Abandonment of project

• Bankruptcy

• Violation of laws or regulations

Valid Causes for Time Extension

• Force majeure or Acts of God

• Owner-caused delay

• Approved design changes

• Unforeseen subsurface conditions

Insurance Required of Contractor

• Liability Insurance

• Accident Insurance for Workers

• Fire Insurance

• Performance and Payment Bonds

• Guarantee Bond

Interpretation Hierarchy in Case of Conflicts

• Agreement (with Notice of Award)

• Instruction to Bidders

• Addenda

• Specifications

• Special Conditions

• General Conditions

• Drawings

• Bonds

• Other Documents