2007-07-30

NPM 030-2007

Requesting Entity: Calamba Water District

Issues Concern: Price Adjustment Due to Increase in Minimum Wage

 

Details

1. Whether increase in minimum wage is an extraordinary circumstance which justifies increase in contract amount

Based on the definition of the term "extraordinary circumstance" under Section 61.1 and its Guidelines (Guidelines for Contract Price Escalation), a mandated wage increase is not an occurrence during contract implementation which would justify an increase in the contract price as determined by the NEDA and upon prior approval of the GPPB. Thus, Section 61.1 is not applicable in the instant case.

2. Whether contract amount may be increased based on the increase in minimum wage.

Considering that the wage order increasing the minimum wage was issued by the DOLE after contract award and signing, thus, the parties may amend the contract applying Section 17.7.4 of the IRR-A in relation to Section 27.1 of the GCC of the SBD, subject to proof of the substantial effect of the wage order to the contract price.