2004-09-28

NPM 126-2004

Requesting Entity: Information Professionals, Inc.

Issues Concern: Withholding of at Least Ten Percent (10%) of the Contract Amount for Final Payments to Consultants

 

Details

Whether or not procuring entities may withhold at least ten percent (10%) of the contract amount for final payment to consultants for consulting services procured under R.A. 9184 and its IRR-A.

In view of the afore-mentioned provisions of the IRR-A of R.A. 9184 (Sections 39.1 and 39.2), the requirement to retain at least ten percent (10%) of the contract amount for the final payment under Section 8.3 of the IRR for Consulting Service was no longer required in the new procurement rules and regulations. However, it should be noted that although R.A. 9184 and its IRR-A did not require the retention of at least ten percent (10%) of the contract amount, neither did it prohibit procuring entities from imposing such requirement for its consulting services contracts.

We support the view elucidated by PWI that withholding at least ten percent (10%) of the contract amount for the final payment is no longer required under R.A. 9184 and its IRR-A. However, considering that the said law does not prohibit procuring entities from imposing such requirement, and considering further that the Civil Code of the Philippines allows parties to freely stipulate on the terms and conditions of their contract, we are of the opinion that SEC may validly require that the final payment, which should not be less than ten percent (10%) of the total contract amount, be withheld until after a certificate of completion indicating satisfactory completion of the consultancy services shall have been issued by it, or unless the same amount is substituted by a surety bond, callable on demand, or a letter of credit from an accredited insurance or financial institution.