COMMISSION ON AUDIT CIRCULAR NO.

77-67
TO

December 2, 1977

: All Heads of Departments, Bureaus and offices of the National Government;

Managing Heads of Government - Owned and/or Controlled Corporations,
Boards and Commissions; Provincial Governors, City and Municipal Mayors; All
COA Regional Directors and Supervising Auditors; All Auditors of Departments,
Bureaus and Offices; Provincial and City Auditors; Corporation Auditors; and All
Others Concerned.

SUBJECT : Contracts for Architectural Services.

This Commission has noted that in a certain case the government was obliged to pay
architect's fees of no less than P2,000,000.00 to a certain firm for it's contract for the
preparation of complete and comprehensive preliminary designs, studies and drawings for a
building of government office which was never constructed. Such expense is undoubtedly a
waste of government money and is therefore unnecessary.
In a contract for architectural services there are two aspects of payment which ought to
be considered, viz; (1) that pertaining to the preparation of the plans, designs and specifications
and (2) that which corresponds to the responsibility of the contracting architect which, according
to the Secretary of Public Works, Transportation and Communications in the aforecited case, is
a liability imposed on architects under Article 1923 of the Civil Code the pertinent portion of
which is herein below quoted as follows:
"The engineer or architect who draws up plans and specifications for a
building is liable for damages if within fifteen years from the completion of the
structure the same should collapse by reason of defects in the ground. x x x. If
the engineer or architect supervises the construction he shall be subsidiarily
liable with the contractor. x x x."
which is inherent in nature, and a legal burden so attached to the contracting architect that it
cannot be waived even by agreement between the contracting parties. Thus, in the event that
the prepared design, plan or specification is not utilized for the reason that the corresponding
project has been abandoned or the building has not been constructed, the engineer or the
architect concerned may duly be paid the amount corresponding to the plans, designs and
specifications, and the amount pertaining to the aforementioned inherent legal liability of the
architect should invariably be deducted from the architect's fee agreed upon in the contract.
To prevent the incurrence of similar unnecessary expenditure in the future as that
mentioned herein before, and to avoid any misunderstanding between the contracting parties,
all concerned are cautioned that before entering into a contract for architectural services with
any architectural firm, they shall see to it that the plan, design or specification which may be
prepared will be used or executed, and that every contract to be entered into for the purpose
should contain a stipulation that in the event that the project for which the plan is to be drawn
will not be executed, the amount corresponding to the inherent legal responsibility of architects
under Article 1723 of the Civil Code, supra, shall be deducted from the architect's fee agreed
upon.

All concerned should be guided accordingly.

(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman