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Infra Suspension by LGU

Post by xub_agent on Wed Oct 20, 2010 4:49 pm

what is the correct process in suspending infra projects if the LGU finds out that the said project was awarded to a private contractor in violation of RA 9184?

may an LGU suspend the project which is already on-going without violating RA 8975? is it excepted under Sec. 3 of the same law?

thanks! Smile
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Re: Infra Suspension by LGU

Post by RDV @ GP3i on Wed Oct 20, 2010 5:09 pm

xub_agent wrote:what is the correct process in suspending infra projects if the LGU finds out that the said project was awarded to a private contractor in violation of RA 9184?

may an LGU suspend the project which is already on-going without violating RA 8975? is it excepted under Sec. 3 of the same law?

thanks! Smile

The guidelines for the "Suspension of Work" for infra projects is contained in Item 9 of Annex "E" (Contract Implementation Guidelines for the Procurement of Infrastructure Projects) of the revised IRR.

However, if the reason is because "the said project was awarded to a private contractor in violation of RA 9184", it is not one of the valid reasons for the suspension of the project by the procuring entity.

If the reason is due to the unlawful act(s) of the contractor relative to the procurement process, such as the use of corrupt, fraudulent or collusive practices, I think the proper action by the procuring entity (or LGU) is to terminate the contract for unlawful acts, which could be one of the valid reasons to terminate the contract.

If there are other public officials involved in the unlawful award of the contract in violation of RA 9184, then these public officials should be charged as well under the Anti-Graft Law (RA 3019).

RA 8975 (prohibiting lower courts from issuing TROs, preliminary injunctions or preliminary mandatory injunctions for infra projects) would not even be applicable in the case that you brought.
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Re: Infra Suspension by LGU

Post by riddler on Wed Oct 20, 2010 5:40 pm

RDV @ GP3i wrote:
xub_agent wrote:what is the correct process in suspending infra projects if the LGU finds out that the said project was awarded to a private contractor in violation of RA 9184?

may an LGU suspend the project which is already on-going without violating RA 8975? is it excepted under Sec. 3 of the same law?

thanks! Smile

The guidelines for the "Suspension of Work" for infra projects is contained in Item 9 of Annex "E" (Contract Implementation Guidelines for the Procurement of Infrastructure Projects) of the revised IRR.

However, if the reason is because "the said project was awarded to a private contractor in violation of RA 9184", it is not one of the valid reasons for the suspension of the project by the procuring entity.

If the reason is due to the unlawful act(s) of the contractor relative to the procurement process, such as the use of corrupt, fraudulent or collusive practices, I think the proper action by the procuring entity (or LGU) is to terminate the contract for unlawful acts, which could be one of the valid reasons to terminate the contract.

If there are other public officials involved in the unlawful award of the contract in violation of RA 9184, then these public officials should be charged as well under the Anti-Graft Law (RA 3019).

RA 8975 (prohibiting lower courts from issuing TROs, preliminary injunctions or preliminary mandatory injunctions for infra projects) would not even be applicable in the case that you brought.

you may also use the GPPB Uniform Guidelines for Blacklisting Contractors that also spells out the process to suspend the Contractors for gross violation of the contract during implementation stage. e.g. non-following legal orders from the PE, like non installation of Warning signs, absence of contractor's project engineers, no log- book, etec. etc. Very Happy
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Re: Infra Suspension by LGU

Post by riddler on Wed Oct 20, 2010 5:46 pm

matter of fact we have just terminated (clause 19 of the GCC) an on-going infra project for gross violations of the GCC of our contract using the above guidelines and award the project to the next 2nd LCRB pursuant to Section 53.3 of the new IRR.

Very Happy
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Re: Infra Suspension by LGU

Post by xub_agent on Thu Oct 21, 2010 3:25 pm

riddler wrote:matter of fact we have just terminated (clause 19 of the GCC) an on-going infra project for gross violations of the GCC of our contract using the above guidelines and award the project to the next 2nd LCRB pursuant to Section 53.3 of the new IRR.

Very Happy

thanks riddler for the legal advice!

follow up questions:

1. re termination of contract, does it have to be coursed through proper courts or just a notice of termination by concerned LGU?

2. what are the steps that should be taken by the LGU?

3. what constitute unlawful acts? does the awarding of project despite lack of bidding documents constitutes an unlawful act?

4. may the contractor validly demand full payment of the unfinished projects?

hope to hear you soon...
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Re: Infra Suspension by LGU

Post by engrjhez® on Thu Oct 21, 2010 8:39 pm

xub_agent wrote:
follow up questions:

1. re termination of contract, does it have to be coursed through proper courts or just a notice of termination by concerned LGU?
Contract generally is an agreement between two parties. All contracts, provided not contrary to law, is recognized to be legal and binding once signed by both parties. It may therefore be terminated in the same way they are enacted even if not coursed thru courts.

xub_agent wrote:2. what are the steps that should be taken by the LGU?
It depends on what was the reason for termination. If it is due to the fault of the contractor, the PE may initiate Blacklisting Procedures.

xub_agent wrote:3. what constitute unlawful acts? does the awarding of project despite lack of bidding documents constitutes an unlawful act?
Corrupt, Fraudulent, Coercive, and Collusive practices are unlawful acts according to GPRA. Yes, awarding to a supposed to be ineligible bidder is still unlawful from the view of RA 3019 and RA 6713.

xub_agent wrote:4. may the contractor validly demand full payment of the unfinished projects?
No way! Basic rule in the GOP is that only goods delivered and services rendered are eligible for payment.

xub_agent wrote:hope to hear you soon...
Hope to hear from you soon too. Smile
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Re: Infra Suspension by LGU

Post by xub_agent on Fri Oct 22, 2010 11:05 am

engrjhez® wrote:
xub_agent wrote:
follow up questions:

1. re termination of contract, does it have to be coursed through proper courts or just a notice of termination by concerned LGU?
Contract generally is an agreement between two parties. All contracts, provided not contrary to law, is recognized to be legal and binding once signed by both parties. It may therefore be terminated in the same way they are enacted even if not coursed thru courts.

xub_agent wrote:2. what are the steps that should be taken by the LGU?
It depends on what was the reason for termination. If it is due to the fault of the contractor, the PE may initiate Blacklisting Procedures.

xub_agent wrote:3. what constitute unlawful acts? does the awarding of project despite lack of bidding documents constitutes an unlawful act?
Corrupt, Fraudulent, Coercive, and Collusive practices are unlawful acts according to GPRA. Yes, awarding to a supposed to be ineligible bidder is still unlawful from the view of RA 3019 and RA 6713.

xub_agent wrote:4. may the contractor validly demand full payment of the unfinished projects?
No way! Basic rule in the GOP is that only goods delivered and services rendered are eligible for payment.

xub_agent wrote:hope to hear you soon...
Hope to hear from you soon too. Smile

Thank you very much for all your replies. i think ur replies have already solved our prob.

More Power!

p.s. but this may not be my last consultation.. hehe Smile
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Re: Infra Suspension by LGU

Post by engrjhez® on Fri Oct 22, 2010 1:15 pm

xub_agent wrote:

Thank you very much for all your replies. i think ur replies have already solved our prob.

More Power!

p.s. but this may not be my last consultation.. hehe Smile

No problem Atty, no consultation fees are collected in this forum. Drop by anytime and we'll be happy to assist you.
Smile
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Re: Infra Suspension by LGU

Post by riddler on Fri Oct 22, 2010 7:59 pm

[quote="xub_agent"]
riddler wrote:matter of fact we have just terminated (clause 19 of the GCC) an on-going infra project for gross violations of the GCC of our contract using the above guidelines and award the project to the next 2nd LCRB pursuant to Section 53.3 of the new IRR.

Very Happy

thanks riddler for the legal advice!
xub_agent wrote:
follow up questions:

1. re termination of contract, does it have to be coursed through proper courts or just a notice of termination by concerned LGU?

2. what are the steps that should be taken by the LGU?...

Very Happy Very Happy hello, perhaps the following CLauses of the GCC may help, depending on the applicable mode of termination of the contract for the PE to choose. Very Happy and i believed that a proper notice of termination shall suffice follwing the steps to be taken as mentioned in the GCC. Very Happy

16. Termination for Default of Contractor

16.1. The Procuring Entity shall terminate this Contract for default when any of the following conditions attend its implementation:
16.2. Due to the Contractor’s fault and while the project is on-going, it has incurred negative slippage of fifteen percent (15%) or more in accordance with Presidential Decree 1870, regardless of whether or not previous warnings and notices have been issued for the Contractor to improve his performance;
16.3. Due to its own fault and after this Contract time has expired, the Contractor incurs delay in the completion of the Work after this Contract has expired; or
16.4. The Contractor:
(a) abandons the contract Works, refuses or fails to comply with a valid instruction of the Procuring Entity or fails to proceed expeditiously and without delay despite a written notice by the Procuring Entity;
(b) does not actually have on the project Site the minimum essential equipment listed on the Bid necessary to prosecute the Works in accordance with the approved Program of Work and equipment deployment schedule as required for the project;
(c) does not execute the Works in accordance with this Contract or persistently or flagrantly neglects to carry out its obligations under this Contract;
(d) neglects or refuses to remove materials or to perform a new Work that has been rejected as defective or unsuitable; or
(e) sub-lets any part of this Contract without approval by the Procuring Entity.
16.5. All materials on the Site, Plant, Equipment, and Works shall be deemed to be the property of the Procuring Entity if this Contract is rescinded because of the Contractor’s default
.
17. Termination for Default of Procuring Entity
17.1. The Contractor may terminate this Contract with the Procuring Entity if the works are completely stopped for a continuous period of at least sixty (60) calendar days through no fault of its own, due to any of the following reasons:
(a) Failure of the Procuring Entity to deliver, within a reasonable time, supplies, materials, right-of-way, or other items it is obligated to furnish under the terms of this Contract; or
(b) The prosecution of the Work is disrupted by the adverse peace and order situation, as certified by the Armed Forces of the Philippines Provincial Commander and approved by the Secretary of National Defense.
18. Termination for Other Causes
18.1. The Procuring Entity may terminate this Contract, in whole or in part, at any time for its convenience. The Head of the Procuring Entity may terminate this Contract for the convenience of the Procuring Entity if he has determined the existence of conditions that make Project Implementation economically, financially or technically impractical and/or unnecessary, such as, but not limited to, fortuitous event(s) or changes in law and National Government policies.
18.2. The Procuring Entity or the Contractor may terminate this Contract if the other party causes a fundamental breach of this Contract.
18.3. Fundamental breaches of Contract shall include, but shall not be limited to, the following:
(a) The Contractor stops work for twenty eight (28) days when no stoppage of work is shown on the current Program of Work and the stoppage has not been authorized by the Procuring Entity’s Representative;
(b) The Procuring Entity’s Representative instructs the Contractor to delay the progress of the Works, and the instruction is not withdrawn within twenty eight (28) days;
(c) The Procuring Entity shall terminate this Contract if the Contractor is declared bankrupt or insolvent as determined with finality by a court of competent jurisdiction. In this event, termination will be without compensation to the Contractor, provided that such termination will not prejudice or affect any right of action or remedy which has accrued or will accrue thereafter to the Procuring Entity and/or the Contractor. In the case of the Contractor's insolvency, any Contractor's Equipment which the Procuring Entity instructs in the notice is to be used until the completion of the Works;
(d) A payment certified by the Procuring Entity’s Representative is not paid by the Procuring Entity to the Contractor within eighty four (84) days from the date of the Procuring Entity’s Representative’s certificate;
(e) The Procuring Entity’s Representative gives Notice that failure to correct a particular Defect is a fundamental breach of Contract and the Contractor fails to correct it within a reasonable period of time determined by the Procuring Entity’s Representative;
(f) The Contractor does not maintain a Security, which is required;
(g) The Contractor has delayed the completion of the Works by the number of days for which the maximum amount of liquidated damages can be paid, as defined in the GCC Clause 9; and
(h) In case it is determined prima facie by the Procuring Entity that the Contractor has engaged, before or during the implementation of the contract, in unlawful deeds and behaviors relative to contract acquisition and implementation, such as, but not limited to, the following:
(i) corrupt, fraudulent, collusive and coercive practices as defined in ITB Clause 3.1(a);
(ii) drawing up or using forged documents;
(iii) using adulterated materials, means or methods, or engaging in production contrary to rules of science or the trade; and
(iv) any other act analogous to the foregoing.
18.4. The Funding Source or the Procuring Entity, as appropriate, will seek to impose the maximum civil, administrative and/or criminal penalties available under the applicable law on individuals and organizations deemed to be involved with corrupt, fraudulent, or coercive practices.
18.5. When persons from either party to this Contract gives notice of a fundamental breach to the Procuring Entity’s Representative in order to terminate the existing contract for a cause other than those listed under GCC Clause 18.3, the Procuring Entity’s Representative shall decide whether the breach is fundamental or not.
18.6. If this Contract is terminated, the Contractor shall stop work immediately, make the Site safe and secure, and leave the Site as soon as reasonably possible.
19. Procedures for Termination of Contracts
19.1. The following provisions shall govern the procedures for the termination of this Contract:
(a) Upon receipt of a written report of acts or causes which may constitute ground(s) for termination as aforementioned, or upon its own initiative, the Implementing Unit shall, within a period of seven (7) calendar days, verify the existence of such ground(s) and cause the execution of a Verified Report, with all relevant evidence attached;
(b) Upon recommendation by the Implementing Unit, the Head of the Procuring Entity shall terminate this Contract only by a written notice to the Contractor conveying the termination of this Contract. The notice shall state:
(i) that this Contract is being terminated for any of the ground(s) afore-mentioned, and a statement of the acts that constitute the ground(s) constituting the same;
(ii) the extent of termination, whether in whole or in part;
(iii) an instruction to the Contractor to show cause as to why this Contract should not be terminated; and
(iv) special instructions of the Procuring Entity, if any.
The Notice to Terminate shall be accompanied by a copy of the Verified Report;
(c) Within a period of seven (7) calendar days from receipt of the Notice of Termination, the Contractor shall submit to the Head of the Procuring Entity a verified position paper stating why the contract should not be terminated. If the Contractor fails to show cause after the lapse of the seven (7) day period, either by inaction or by default, the Head of the Procuring Entity shall issue an order terminating the contract;
(d) The Procuring Entity may, at anytime before receipt of the Bidder’s verified position paper to withdraw the Notice to Terminate if it is determined that certain items or works subject of the notice had been completed, delivered, or performed before the Contractor’s receipt of the notice;
(e) Within a non-extendible period of ten (10) calendar days from receipt of the verified position paper, the Head of the Procuring Entity shall decide whether or not to terminate this Contract. It shall serve a written notice to the Contractor of its decision and, unless otherwise provided in the said notice, this Contract is deemed terminated from receipt of the Contractor of the notice of decision. The termination shall only be based on the ground(s) stated in the Notice to Terminate; and
(f) The Head of the Procuring Entity may create a Contract Termination Review Committee (CTRC) to assist him in the discharge of this function. All decisions recommended by the CTRC shall be subject to the approval of the Head of the Procuring Entity.
19.2. Pursuant to Section 69(f) of RA 9184 and without prejudice to the imposition of additional administrative sanctions as the internal rules of the agency may provide and/or further criminal prosecution as provided by applicable laws, the procuring entity shall impose on contractors after the termination of the contract the penalty of suspension for one (1) year for the first offense, suspension for two (2) years for the second offense from participating in the public bidding process, for violations committed during the contract implementation stage, which include but not limited to the following:
(a) Failure of the contractor, due solely to his fault or negligence, to mobilize and start work or performance within the specified period in the Notice to Proceed (“NTP”);
(b) Failure by the contractor to fully and faithfully comply with its contractual obligations without valid cause, or failure by the contractor to comply with any written lawful instruction of the procuring entity or its representative(s) pursuant to the implementation of the contract. For the procurement of infrastructure projects or consultancy contracts, lawful instructions include but are not limited to the following:
(i) Employment of competent technical personnel, competent engineers and/or work supervisors;
(ii) Provision of warning signs and barricades in accordance with approved plans and specifications and contract provisions;
(iii) Stockpiling in proper places of all materials and removal from the project site of waste and excess materials, including broken pavement and excavated debris in accordance with approved plans and specifications and contract provisions;
(iv) Deployment of committed equipment, facilities, support staff and manpower; and
(v) Renewal of the effectivity dates of the performance security after its expiration during the course of contract implementation.
(c) Assignment and subcontracting of the contract or any part thereof or substitution of key personnel named in the proposal without prior written approval by the procuring entity.
(d) Poor performance by the contractor or unsatisfactory quality and/or progress of work arising from his fault or negligence as reflected in the Constructor's Performance Evaluation System (“CPES”) rating sheet. In the absence of the CPES rating sheet, the existing performance monitoring system of the procuring entity shall be applied. Any of the following acts by the constructor shall be construed as poor performance:
(i) Negative slippage of 15% and above within the critical path of the project due entirely to the fault or negligence of the contractor; and
(ii) Quality of materials and workmanship not complying with the approved specifications arising from the contractor's fault or negligence.
(e) Willful or deliberate abandonment or non-performance of the project or contract by the contractor resulting to substantial breach thereof without lawful and/or just cause.
In addition to the penalty of suspension, the performance security posted by the contractor shall also be forfeited.
20. Force Majeure, Release From Performance
20.1. For purposes of this Contract the terms “force majeure” and “fortuitous event” may be used interchangeably. In this regard, a fortuitous event or force majeure shall be interpreted to mean an event which the Contractor could not have foreseen, or which though foreseen, was inevitable. It shall not include ordinary unfavorable weather conditions; and any other cause the effects of which could have been avoided with the exercise of reasonable diligence by the Contractor.
20.2. If this Contract is discontinued by an outbreak of war or by any other event entirely outside the control of either the Procuring Entity or the Contractor, the Procuring Entity’s Representative shall certify that this Contract has been discontinued. The Contractor shall make the Site safe and stop work as quickly as possible after receiving this certificate and shall be paid for all works carried out before receiving it and for any Work carried out afterwards to which a commitment was made.
20.3. If the event continues for a period of eighty four (84) days, either party may then give notice of termination, which shall take effect twenty eight (28) days after the giving of the notice.
20.4. After termination, the Contractor shall be entitled to payment of the unpaid balance of the value of the Works executed and of the materials and Plant reasonably delivered to the Site, adjusted by the following:
(a) any sum to which the Contractor is entitled under GCC Clause 28;
(b) the cost of his suspension and demobilization;
(c) any sum to which the Procuring Entity is entitled.
20.5. The net balance due shall be paid or repaid within a reasonable time period from the time of the notice of termination

here's also an excerpt from the GPPB Uniform Guidelines for Blacklisting/Suspending Contractors, hope this may help too. Very Happy
4.2
Contract Implementation Stage
Pursuant to Section 69 (6) of R.A. 9184 and without prejudice to the imposition of
additional administrative sanctions as the internal rules of the agency may provide
and/or further criminal prosecution as provided by applicable laws, the procuring
entity shall impose on contractors after the termination of the contract the penalty of
suspension for one (1) year for the first offense, suspension for two (2) years for
the second offense from participating in the public bidding process, for violations
committed during the contract implementation stage, which include but not limited
to the following:
a) Failure of the contractor, due solely to his fault or negligence, to mobilize and start
work or performance within the specified period in the Notice to Proceed (“NTP”);
b) Failure by the contractor to fully and faithfully comply with its contractual
obligations without valid cause, or failure by the contractor to comply with any
written lawful instruction of the procuring entity or its representative(s) pursuant
to the implementation of the contract. For the procurement of infrastructure
projects or consultancy contracts, lawful instructions include but are not limited to
the following:
i.
Employment of competent technical personnel, competent
engineers and/or work supervisors;
ii.
Provision of warning signs and barricades in accordance with
approved plans and specifications and contract provisions;
iii.
Stockpiling in proper places of all materials and removal from the
project site of waste and excess materials, including broken
pavement and excavated debris in accordance with approved plans
and specifications and contract provisions;
iv.
Deployment of committed equipment, facilities, support staff and
manpower; and
v.
Renewal of the effectivity dates of the performance security after its
expiration during the course of contract implementation.
c) Assignment and subcontracting of the contract or any part thereof or
substitution of key personnel named in the proposal without prior written
approval by the procuring entity.

xub_agent wrote:

3. what constitute unlawful acts? does the awarding of project despite lack of bidding documents constitutes an unlawful act?...

xub_agent wrote:
4. may the contractor validly demand full payment of the unfinished projects?

hope to hear you soon...

20.4. After termination, the Contractor shall be entitled to payment of the unpaid balance of the value of the Works executed and of the materials and Plant reasonably delivered to the Site, adjusted by the following:
(a) any sum to which the Contractor is entitled under GCC Clause 28;
(b) the cost of his suspension and demobilization;
(c) any sum to which the Procuring Entity is entitled.
20.5. The net balance due shall be paid or repaid within a reasonable time period from the time of the notice of termination
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Re: Infra Suspension by LGU

Post by xub_agent on Tue Oct 26, 2010 10:05 am

thank you guys! its like im working with 5 minds here..btw, any latest supreme court cases on this matter? cant find one in the web.. Sad
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