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MALACAÑAN PALACE
MANILA

BY THE PRESIDENT OF THE PHILIPPINES

[ Memorandum Circular No. 57, April 20, 1988 ]

PROCEDURE FOR THE COMPUTATION OF THE THIRTY PERCENT (30%) PER ANNUM CEILING IN PRICE ESCALATION FOR GOVERNMENT INFRASTRUCTURE CONTRACTS.

In view of the diverse interpretations on the computation of price escalation claims which contribute to the delay in processing price escalation claims submitted to this Office for approval and in order to accurately implement the intent of the Memorandum submitted by the then Prime Minister and approved by this Office on July 18, 1984, allowing a price escalation ceiling of thirty (30%) percent per annum, the following computation shall govern contract price escalation claims for infrastructure works accomplished since November 1, 1983.

The Allowable Escalation Rate (AER) shall be as follows:

AER

=

(N1 x 1%) + (N2 x 2.5%)

Where:

AER	=	allowable escalation rate
N1	=	number of months from the date of bidding/date agreed upon in the contract (for negotiated contract) up to October 31, 1983.1aшphi1
N2	=	number of months from November 1, 1983 up to the period under consideration.

Illustration:

Date of Bidding	:	January 1, 1982
Period	:	Nov. 1-30, 1983
AER	=	(22 months x 1% per month)
		(1 month x 2.5% per month)
	=	24.5%

All escalations computed thru the parametric formula provided under Presidential Decree No. 1594 and its Implementing Rules and Regulations shall be compared to the corresponding AER and payment of those in excess of the AER shall not he allowed except with the prior approval of the President.

Heads of all departments, agencies and instrumentalities of the Government, including government-owned and/or controlled corporations shall take proper and necessary measures for the prompt and strict implementation of this Circular.

By authority of the President:

(Sgd.) CATALINO MACARAIG, JR.
Executive Secretary

Manila, April 20, 1988

The Lawphil Project - Arellano Law Foundation

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