NPM No. 087-2017


Issues Concern: Imposition of Liquidated Damages



1.    What is the total amount of liquidated damages that a Procuring Entity may impose against the winning bidder (supplier).

The applicable rule is Section 68 of the 2016 revised Implementing Rules and Regulations (IRR), and the Contract Implementation Guidelines for the Procurement of Goods, Supplies and Materials clearly states that the total sum of liquidated damages arising from the breach of the supplier should not exceed ten percent (10%) of the total contract price. In fact, the Philippine Bidding Documents for Procurement of Goods likewise contains this rule that the applicable rate for liquidated damages is one tenth (1/10) of one (1) percent of the amount of the unperformed portion for every day of delay and the maximum deduction shall be ten percent (10%) of the contract amount.

2.    Is the collection of liquidated damages pegged at 10%? or is it possible to impose more than that amount, such as by computing the actual amount of liquidated damages as computed in the total number of days of delay?

Accordingly, the Guidelines is clear on the maximum amount of liquidated damages that may be imposed in case of breach of obligation by a supplier. Thus, the supplier who defaulted in the performance of its obligation shall be held liable only up to a maximum amount of ten percent (10%) of the total contract price.