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Liquidated damages

Liquidated damages

by Jet Cariaga -
Number of replies: 1

1. Can the procuring entity still accept the items under a contract afterwhich was computed and reaches the 10% or more than LD ceiling?

2. If the PE decides to rescind the contract under GPPB NPM 028-2017, what is the manner of asking the 10% liquidated damages considering also that the performance bond has expired?

3. Would the Procuring entity be at fault, just in case it was not able to inform the bidder that it already reaches the 10% LD and that the consequence is the automatic cancellation of contract? Thank you.

 

In reply to Jet Cariaga

Re: Liquidated damages

by Jessie Salvador -
  1. Yes. Sec.68 of the 2016 Revised IRR of RA 9184 as amended now reads: "xxx Once the cumulative amount of liquidated
    damages reaches ten percent (10%) of the amount of the contract, the Procuring Entity may rescind or terminate the contract, without prejudice to other courses of action and remedies available under the circumstances." Hence, rescission is no longer ipso facto or automatic upon reaching 10%. 
  2. The manner is similar to collection cases. Demand will be issued, and if the supplier/contractor fails or refuses to pay, the remedy of Small Claims or ordinary civil action may be resorted to.
  3. No, since there is no more automatic cancellation of contracts. 
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