The 2016 Revised Implementing Rules and Regulations – Annex “E”

4.2. The advance payment shall be made only upon the submission to and
acceptance by the procuring entity of an irrevocable standby letter of credit of
equivalent value from a commercial bank, a bank guarantee or a surety bond
callable upon demand, issued by a surety or insurance company duly licensed by
the Insurance Commission and confirmed by the procuring entity.

4.3. The advance payment shall be repaid by the contractor by deducting fifteen
percent (15%) from his periodic progress payments a percentage equal to the
percentage of the total contract price used for the advance payment.

4.4. The contractor may reduce his standby letter of credit or guarantee instrument
by the amounts refunded by the Monthly Certificates in the advance payment.

5. PROGRESS PAYMENT

5.1. Once a month, the contractor may submit a statement of work accomplished
(SWA) or progress billing and corresponding request for progress payment for
work accomplished. The SWA should show the amounts which the contractor
considers itself to be entitled to up to the end of the month, to cover (a) the
cumulative value of the works it executed to date, based on the items in the Bill
of Quantities, and (b) adjustments made for approved variation orders executed.

5.2. The procuring entity’s representative/project engineer shall check the contractor’s
monthly SWA and certify the amount to be paid to the contractor as progress
payment. Except as otherwise stipulated in the Instruction to Bidders, materials
and equipment delivered on the site but not completely put in place shall not be
included for payment.

5.3. The procuring entity shall deduct the following from the certified gross amounts
to be paid to the contractor as progress payment:

a) Cumulative value of the work previously certified and paid for.

b) Portion of the advance payment to be recouped for the month.

c) Retention money in accordance with the condition of contract.

d) Amount to cover third party liabilities.

e) Amount to cover uncorrected discovered defects in the works.

6. RETENTION MONEY

6.1. Progress payments are subject to retention of ten percent (10%) referred to as
the "retention money." Such retention shall be based on the total amount due to
the contractor prior to any deduction and shall be retained from every progress
payment until fifty percent (50%) of the value of works, as determined by the
procuring entity, are completed. If, after fifty percent (50%) completion, the
work is satisfactorily done and on schedule, no additional retention shall be
made; otherwise, the ten percent (10%) retention shall be imposed.

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6.2. The total "retention money" shall be due for release upon final acceptance of the
works. The contractor may, however, request the substitution of the retention
money for each progress billing with irrevocable standby letters of credit of from
a commercial bank, bank guarantees or surety bonds callable on demand, of
amounts equivalent to the retention money substituted for and acceptable to
Government, provided that the project is on schedule and is satisfactorily
undertaken. Otherwise, the ten percent (10%) retention shall be made. Said
irrevocable standby letters of credit, bank guarantees and/or surety bonds, to be
posted in favor of the Government shall be valid for a duration to be determined
by the concerned implementing office/agency or procuring entity and will answer
for the purpose for which the ten percent (10%) retention is intended, i.e., to
cover uncorrected discovered defects and third party liabilities.

7. CONTRACT COMPLETION

Once the project reaches an accomplishment of ninety five (95%) of the total contract
amount, the procuring entity may create an inspectorate team to make preliminary
inspection and submit a punch-list to the contractor in preparation for the final
turnover of the project. Said punch-list will contain, among others, the remaining
works, work deficiencies for necessary corrections, and the specific duration/time to
fully complete the project considering the approved remaining contract time. This,
however, shall not preclude the procuring entity's claim for liquidated damages.

8. LIQUIDATED DAMAGES

8.1. Where the contractor refuses or fails to satisfactorily complete the work within
the specified contract time, plus any time extension duly granted and is hereby in
default under the contract, the contractor shall pay the procuring entity for
liquidated damages, and not by way of penalty, an amount, as provided in the
conditions of contract, equal to at least one tenth (1/10) of one (1) percent of
the cost of the unperformed portion of the works for every day of delay.

8.2. A project or a portion thereof may be deemed usable when it starts to provide
the desired benefits as certified by the targeted end-users and the concerned
procuring entity.

8.3. To be entitled to such liquidated damages, the procuring entity does not have to
prove that it has incurred actual damages. Such amount shall be deducted from
any money due or which may become due the contractor under the contract
and/or collect such liquidated damages from the retention money or other
securities posted by the contractor whichever is convenient to the procuring
entity.

8.4. In case that the delay in the completion of the work exceeds a time duration
equivalent to ten percent (10%) of the specified contract time plus any time
extension duly granted to the contractor, the procuring entity concerned may
rescind the contract, forfeit the contractor's performance security and takeover
the prosecution of the project or award the same to a qualified contractor
through negotiated contract.

8.5. In no case however, shall the total sum of liquidated damages exceed ten
percent (10%) of the total contract price, in which event the contract shall

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