NPM 063-2012

Requesting Entity: Philippine National Railways (PNR)

Issues Concern: Amendment to Order



Whether the PNR may issue an amendment to order for the installation of brakepads to the rolling stocks, necessary for the contract implementation of its Transport of Fifty (50) units Donated Used Rolling Stock from East Japan Railway Company.

[A]n amendment to order is allowed under Annex “D” of the IRR (Contract Implementation Guidelines for the Procurement of Goods, Supplies and Materials), and may be issued only in the following instances:

1.Emergency cases or during fortuitous events requiring necessary adjustments within the general scope of the contract in order to fully meet the requirements of the project involving any of the following:

a.Drawing, design or specifications, if the goods to be furnished are to be specifically manufactured for the Government in accordance therewith;
b.Method of shipment or packing; or
c.Place of delivery.

2.Where there are additional items needed and necessary for the protection of the goods, which were not included in the original contract.

In applying the first instance, an “emergency” is defined as a sudden, urgent, usually unexpected occurrence or occasion requiring immediate action. On the other hand, the term “fortuitous” means a happening, or produced by chance, or accidental. Fortuitous event or causo fortuito has also been defined as exempting a person from responsibility necessitates that (1) the event must be independent of the human will; (2) the occurrence must render it impossible for the debtor to fulfill the obligation in a normal manner; and (3) the obligor must be free of participation in, or aggravation of, the injury to the creditor. The event must have been impossible to foresee, or if it could be foreseen, must have been impossible to avoid. There must be an entire exclusion of human agency from the cause of the injury or loss.

In applying the second instance, an amendment to order may be issued when items excluded in the original contract are added to ensure that the goods to be delivered are protected from possible damage or unnecessary exposure. Section 1.3 of Annex “D” of the IRR provides that the payments for the additional items should be based on the unit prices in the original contract for items or goods similar to those in the original contract. If the contract does not contain any rate applicable to the additional items, then suitable prices shall mutually be agreed upon between the parties.

Based on the foregoing, an amendment to order may be issued if the circumstances involved in the procurement project are covered by any of the two instances mentioned in Annex “D” of the IRR. x x x The installation of the brake pads may be considered under the second instance of Annex “D” of the IRR if it will be established that it is necessary for the protection of the fifty (50) units of donated rolling stock and such installation was not part of the terms of the original contract.