NPM No. 120-2017
Requesting Entity: Social Housing Finance Corporation
Issues Concern: Retention Fees; Warranty Security
Whether the Retention Fee, as contemplated in Annex “E” of the Contract Implementation Guidelines for the Procurement of Infrastructure Projects, is superseded by the Warranty Security provided under Section 220.127.116.11 of the 2016 revised Implementing Rules and Regulations (IRR) of Republic Act (RA) No. 9184
The “final acceptance of the works by the procuring entity” which marks the period when the retention money may be released, also marks the commencement of the warranty period contemplated in Section 62.2.3 of the 2016 revised IRR of RA 9184.
It is important to note, however, that retention money is intended to cover “uncorrected discovered defects and third party liabilities” prior to the issuance of the final acceptance while warranty security intends to cover “structural defects and failures” after the issuance of the procuring entity of the final acceptance and will be valid for a certain period, depending on the type of structure. Thus, the warranty security does not supersede the retention money, as the two serve different purposes.