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Denomination of Contracts

Post by Soysoy on Thu Sep 03, 2009 11:12 am

Can an LGU enter into a contract with a local supplier denominated in foreign legal tender, e.g. US dollars?
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Re: Denomination of Contracts

Post by engrjhez® on Thu Sep 03, 2009 6:37 pm

Soysoy wrote:Can an LGU enter into a contract with a local supplier denominated in foreign legal tender, e.g. US dollars?

The PBDs consistent with the Revised IRR is yet to be released. If we look back on the past PBD:

19. Bid Currencies

19.1. Prices shall be quoted in the following currencies:

(a) For GOODS and services that the Bidder will supply from within the Philippines, the prices shall be quoted in Philippine Pesos.

(b) For GOODS and services that the Bidder will supply from outside the Philippines, the prices may be quoted in the currency(ies) stated in the BDS. However, for purposes of bid evaluation, bids denominated in foreign currencies shall be converted to Philippine currency based on the exchange rate prevailing on the day of the bid opening.

19.2. Unless otherwise specified in the BDS, payment of the contract price shall be made in Philippine Pesos.


It is noteworthy to emphasize that the general rule is to bid in Philippine Pesos. I believe this shall remain unamended in the new PBD. The contract price currency shall follow this rule. Very Happy
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Re: Denomination of Contracts

Post by Soysoy on Fri Sep 04, 2009 10:09 am

thank you very much for the info.
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Re: Denomination of Contracts

Post by engrjhez® on Fri Sep 04, 2009 11:03 am

Soysoy wrote:thank you very much for the info.

You are most welcomed! Very Happy
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Re: Denomination of Contracts

Post by suizoph on Wed Aug 10, 2011 6:39 pm

This is a query in connection with foreign currency denominated bids. This pertains to our procurement of heavy equipments I inquired earlier where the bid was in YEN and the units will be imported from Japan.
GPPB issued Resolution no. 020-2005 dated Oct. 7, 2005, stating the procedures on the Preparation of Bidding Documents Involving Foreign Dominated bids.....etc. Admittedly during the procurement of our heavy equipments we did not include in the Bidding Documents a Special Conditions of the Contract pertaining to PROVISION OF A SUM to cover the possible increase of actual amount of expenditure of the procuring entity resulting from the appreciation/depreciation of a peso from day of bid opening through the time of the opening of LC until the time of its negotiation, including the accrual of expenses by reason of the opening of letters of credit as reflected in Section 4.1 of the GPPB Resolution. In the process of opening Letter of Credit, the YEN has appreciated and it requires additional amount in terms of pesos to cover the appreciation until the opening of the Letter or Credit. The Supplier is invoking the provision in GPPB Resolution 020-2005..Item number 4.2.3., considering that the increase shall not exceed 10% of the ABC and the savings generated from the contract is more than enough to cover the additional cost.
Given the foregoing facts, may we inquire IF THE SUPPLIER CAN BE PAID ADDITIONAL COST PURSUANT TO ITEMS 4.2.3 and 4.2.4 of GPPB Res. 020-2005, stating to the effect that the face value of the Letter of Credit shall be the foreign equivalent of the peso contract price plus the provisional sum not to exceed 10% of the ABC.

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Re: Denomination of Contracts

Post by RDV @ GP3i on Thu Aug 11, 2011 3:01 pm

suizoph wrote:This is a query in connection with foreign currency denominated bids. This pertains to our procurement of heavy equipments I inquired earlier where the bid was in YEN and the units will be imported from Japan.
GPPB issued Resolution no. 020-2005 dated Oct. 7, 2005, stating the procedures on the Preparation of Bidding Documents Involving Foreign Dominated bids.....etc. Admittedly during the procurement of our heavy equipments we did not include in the Bidding Documents a Special Conditions of the Contract pertaining to PROVISION OF A SUM to cover the possible increase of actual amount of expenditure of the procuring entity resulting from the appreciation/depreciation of a peso from day of bid opening through the time of the opening of LC until the time of its negotiation, including the accrual of expenses by reason of the opening of letters of credit as reflected in Section 4.1 of the GPPB Resolution. In the process of opening Letter of Credit, the YEN has appreciated and it requires additional amount in terms of pesos to cover the appreciation until the opening of the Letter or Credit. The Supplier is invoking the provision in GPPB Resolution 020-2005..Item number 4.2.3., considering that the increase shall not exceed 10% of the ABC and the savings generated from the contract is more than enough to cover the additional cost.
Given the foregoing facts, may we inquire IF THE SUPPLIER CAN BE PAID ADDITIONAL COST PURSUANT TO ITEMS 4.2.3 and 4.2.4 of GPPB Res. 020-2005, stating to the effect that the face value of the Letter of Credit shall be the foreign equivalent of the peso contract price plus the provisional sum not to exceed 10% of the ABC.

Why should the Supplier be paid for the additional cost for the opening of the L/C? It is the procuring entity that is suppose to open the L/C in favor of the supplier. Therefore, the additional cost due to the depreciation of the Peso against the Yen from bid opening to the time of L/C opening until negotiation of the L/C is to be borne by the procuring entity. It is only the charges for the L/C opening and/or incidental expenses; i.e., bank commissions, documentary stamp tax, cable, etc. that should be shouldered by the supplier. If the procuring entity failed to include a provisional sum in the APP and in the bidding documents to cover for the currency fluctuation, I believe the procuring entity can still amend its APP to include such sum from which the difference in the contract amount and the L/C amount could be taken.
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Re: Denomination of Contracts

Post by suizoph on Fri Aug 12, 2011 1:55 pm

Very Happy Very Happy Very Happy Maraming salamat po sa reply. God bless I love you I love you

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Re: Denomination of Contracts

Post by RDV @ GP3i on Fri Aug 12, 2011 3:07 pm

suizoph wrote: Very Happy Very Happy Very Happy Maraming salamat po sa reply. God bless I love you I love you

You are most welcome, suizoph Very Happy
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