CEM Final Exam Reviewer PDF

LECTURE #1 WHY DO WE NEED TO UNDERSTAND CONTRACT ADMINISTRATION? The purpose of contract administration is to ensure that the compliance performs in accordance with all of the terms and conditions of the contractual agreement. WHAT IS CONTRACT ADMINISTRATION? - is the management of contracts made...

LECTURE #1 WHY DO WE NEED TO UNDERSTAND CONTRACT ADMINISTRATION? The purpose of contract administration is to ensure that the compliance performs in accordance with all of the terms and conditions of the contractual agreement. WHAT IS CONTRACT ADMINISTRATION? - is the management of contracts made with customers, vendors, partners, or employees. - Contract management includes negotiating the terms and conditions in contracts and ensuring compliance with the terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during its implementation or execution. - It can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk. - Common commercial contracts include employment letters, sales invoices, purchase orders, and utility contracts. OBLIGATIONS JURIDICAL NECESSITY to give, to do or not to do (ARTICLE 1156) was derived from the Latin word “obligatio or obligare” meaning tying or binding. REQUISITE OF OBLIGATION JURIDICAL OR LEGAL TIE o This is the link that binds the parties o Juridical means pertaining to law or justice. o (who are the parties being referred to? –active subject and passive subject) ACTIVE SUBJECT o Also known as the obligee or creditor , he or she is the person who holds the right to demand the obligation PASSIVE SUBJECT o ALSO KNOWN AS DEBTOR OR OBLIGOR who has the duty to fulfill an obligation to comply otherwise shall be visited by Harmful/ Undesirable Legal Consequences PRESTATION o PRESTATION MEANS BENEFITS. o the conduct to be performed by the passive subject for the active subject. EXAMPLE Under a contract of sale, D agreed to deliver a book to C for Php1000. - C is the active subject - D is the passive subject - the delivery of the book is the prestation - the contract of sale is the juridical tie that binds X and Y. Suppose X had already delivered the book but Y has not yet paid for it. In this case, X becomes the active subject and Y is the passive subject. The active subject has the right to go to court in case of non-performance by the passive subject. The passive subject should hence comply with the obligation to avoid civil action against him. SOURCES OF OBLIGATION Law - when there is an enforcement of law itself; the obligation cannot be presumed, and should be expressly or clearly provided for in the law in order to demandable; such as the obligation of income earning persons to pay taxes according to the National Internal Revenue Code. Contract - when there is a meeting of the minds between the parties; the obligation have the force of law and should be complied with in good faith; such as the contract of sale of a book for Php1000. Quasi-contract - when there is no meeting of the minds between parties, but one party benefited at the expense of the other party; there is an obligation to pay for compensation so that no one shall be unjustly enriched or benefited at the expense of another  Negotiorum gestio - if one (the officious manager) voluntarily takes charge of the agency or management of another person's property on his behalf without his consent or authority; such as the obligation to reimburse the expenses incurred by someone who voluntarily saved your abandoned house from fire. Solutio indebiti - if one received something that does not rightfully and legally belong to him; such as the obligation to return a money received by mistake. Delict - when there is a civil liability resulting from criminal offense; should be governed by the penal laws; such as the obligation of a thief to return the money he had stolen. Quasi-delict - when there is fault or negligence that causes damage on another, there being no prior meeting of the minds between the parties; there is an obligation to pay for the damage done; such as the obligation of a driver to pay for the damages he caused to another due to negligence. WRITTEN CONTRACT - an agreement made on a printed document that has been signed by both the lender and the borrower. Written contracts are legally binding and easier to enforce than oral contracts. PARTS OF CONTRACT 1. TITLE - Usually is on top of the document and generally derived from the agreement and dictated by the parties 2. SALUTATION - This part is merely place for the purpose of the style and usual to impress the parties or public who may glance or read the contract. It is often worded as ”know all men by these presents” 3. BODY - Part which identifies the contracting parties as well as their intention to be bound on the object and cause as well as the other terms and conditions of the contract. 4. SIGNATURES OF THE PARTIES - The signature of the parties or their legal representative are proof of their consent and give binding effect there to as without the same instrument would be an ordinary writing. 5. NOTARIAL ACKNOWLEDGEMENT - The acknowledgement is not part of the contract and may be omitted in the document especially if the parties are intimately known and trust each other. LECTURE #2 KINDS OF OBLIGATION 1. From the viewpoint of sanction a. Civil obligation (perfect obligation): defined in Art. 1156, Civil Code, and sanctioned by judicial process b. Natural obligation: the duty not to recover what has voluntarily been paid although payment was no longer required; it is sanctioned by law, but only because conscience had originally motivated the payment Example: Knowing that it already prescribed, a debtor still paid his debt to the creditor. c. Moral obligation: sanctioned by conscience or morality, or the laws of the church. Example: the duty of a catholic to hear mass on Sundays 2. From the viewpoint of subject matter a. Real obligation: the obligation to give b. Personal obligation: to obligation to do or no 3. From the affirmativeness and negativeness of the obligation a. positive or affirmative obligation: the obligation to give or to do b. negative obligation: the obligation not to give or not to do 4. From the persons obliged a. unilateral: when only one of the parties is bound b. bilateral: where both parties are or may be bound  i. reciprocal: the performance of one is dependent upon the performance of the other ii. non-reciprocal: the performance of one is not dependent on the performance by the other GROUNDS OF LIABILITY IN THE PERFORMANCE OF OBLIGATIONS a. Fraud - use of deceit or other machinations to intentionally evade the fulfillment of the obligation. This type of fraud is applicable in obligations only-it is different from CAUSAL OR INCIDENTAL fraud (fraud that exists between parties when there is no pre-existing contractual relations or obligations between them). b. Negligence - fault-no intent. Absence of due diligence c. Default d. Violation of the Terms of Obligation (unless excused in proper cases by fortuitous events) FRAUD DISTINGUISED FROM NEGLIGENCE FRAUD NEGLIGENCE There is deliberate intention to cause damage There is no deliberate intention to cause damage Liability cannot be mitigated Liability may be mitigated Waiver for future fraud is void Waiver for future negligence may be allowed in certain cases: gross – can never be excused in advance; Against public policy simple – may be excused in certain cases Kinds of Damages Those liable under this Article should pay damages, only if prejudice or damage was caused. a. Moral - for moral and physical anguish b. Exemplary - corrective or to set an example c. Nominal - to vindicate a right-when no other kind of damages may be recovered d. Temperate - when the exact amount of damages cannot be determined e. Actual - actual losses as well as unrealized profits f. Liquidated - predetermined beforehand by agreement. Kinds of Diligence Under the Civil Code a. That agreed upon by the parties b. In the absence of that agreed upon by the parties, that required by law c. In the absence of that required by law, that expected of a good father of a family. Primary Classification of Obligations 1. Pure obligation 6. Joint Obligation 2. Conditional Obligation 7. Solidary Obligation 3. Obligation with a period 8. Divisible obligation 4. Alternative Obligation 9. Indivisible Obligation 5. Facultative Obligation 10. Obligation with a Penal Clause 1. Pure obligation – demandable at once, with no term and no condition E.g. I will give you ten pesos. 2. Conditional Obligation - one whose demand ability or extinguishment depends upon the happening of a condition. - condition is a future and an uncertain event or a past event unknown to the parties e.g. I will give you one million pesos if you pass the Bar. Definition of Condition: It is an uncertain event which wields influence on a legal relationship (Manresa) 3. OBLIGATION WITH A PERIOD – future & certain, past & uncertain, payable when able. When stipulation says “payable when able “ – it is with a period. Remedy:  agreement among parties court shall fix period of payment when parties unable to agree Kinds of Obligation with a Period: a. Resolutory (in diem) – takes effect at once but terminate upon arrival of the day certain (that which must necessarily come, although it may not be known when). b. Suspensive (ex die) – takes effect on the day stipulated 4. FACULTATIVE OBLIGATION – only one prestation has been agreed upon but another may be given in substitution. 5. ALTERNATIVE OBLIGATION – bound by different prestations but only one is due ALTERNATIVE FACULTATIVE Various things are due but the giving Only one thing is due but a substitute may be given principally of one is sufficient to render payment/fulfillment easy If one of prestations is illegal, others may be If principal obligations is void and there is no valid but obligation remains necessity of giving the substitute: nullity of P carries with it nullity of S If it is impossible to give all except one, the If it is impossible to give the principal, the substitute last one must still be given does not have to be given: If it is impossible to give the substitute, the principle must still be given Right to choose may be given either to debtor The right of choice is only given to the debtor or creditor 6. JOINT OBLIGATION – presumption when 2 or more creditors or 2 or more debtors concur in one and the same obligation. Each obligor answers only for a part of the whole liability and to each obligee belongs only a part of the correlative (equivalent) rights. General Rule: When there are two or more debtors or two or more creditors the obligation is joint. 7. SOLIDARY OBLIGATION - must be expressed in stipulation or provided by law or by nature of obligation. The relationship between the active and the passive subjects is so close that each of the former or of the latter may demand the fulfillment of or must comply to the whole obligation. 8. DIVISIBLE OBLIGATION - obligation that is capable of partial performance. 9. INDIVISIBLE OBLIGATION - one not capable of partial performance. 10. WITH PENAL CLAUSE - an accessory undertaking to assume greater liability in case of breach. In obligation with a penal clause, the penalty shall substitute the indemnity for damages and the payment of interest in case of non-compliance, if there is no stipulation to the contrary. Nevertheless, damages shall be paid if the obligor refuses to pay the penalty or is guilty of fraud in the fulfillment of the obligation. Principal Purpose of the Penal Clause- to insure the performance of the obligation and also to substitute for damages and the payment of interest in case of non-compliance Modes of Extinguishment of Obligation 1. Payment or performance - delivery of money and performance, in any other manner of the obligation. 2. Loss of the thing due - partial or total/ includes impossibility of performance. 3. Condonation or remission of debt - gratuitous abandonment of debt; right to claim; donation; rules of donation applies; express or implied 4. Confusion or merger of rights - character of debtor & creditor is merged in same person with respect to same obligation. Merger or Confusion – It is the meeting in one person the qualities of a creditor and debtor with respect to the same obligation. 5. Compensation - Set off; it is a mode of extinguishment to the concurrent amount the obligation of persons who are in their own right reciprocally debtors or creditors.. Compensation shall take place when two persons, in their own right, are creditors and debtors of each other. 6. Novation - extinguishment of obligation by creating/ substituting a new one in its place. 7. Annulment  8. Rescission 9. Fulfillment of resolutory condition Contracts Meeting of minds bet 2 parties whereby one binds himself with respect to other to give something or render some service. PRINCIPAL CHARACTERISTICS: 1. Autonomy of wills – parties may stipulate anything as long as not illegal, immoral, etc. 2. Mutuality – performance or validity binds both parties; not left to will of one of parties 3. Obligatory Force – parties are bound from perfection of contract: a. Fulfill what has been expressly stipulated b. All consequences w/c may be in keeping with good faith, usage & law 4. Relativity – binding only between the parties, their assigns, heirs; strangers cannot demand enforcement KINDS OF CONTRACTS AS TO PERFECTION OR FORMATION: 1. Consensual – perfected by agreement of parties 2. Real – perfected by delivery ( commodatum, pledge, deposit ) 3. Formal/solemn – perfected by conformity to essential formalities ( donation ). AS TO CAUSE: 1. Onerous – with valuable consideration 2. Gratuitous – founded on liberality 3. Remunerative – prestation is given for service previously rendered not as obligation AS TO IMPORTANCE OR DEPENDENCE OF ONE UPON ANOTHER: 1. Principal – contract may stand alone. 2. Accessory – depends on another contract for its existence; may not exist on its own. 3. Preparatory – not an end by itself; a means through which future contracts may be made. AS TO PARTIES OBLIGED: 1. Unilateral – only one of the parties has an obligation. 2. Bilateral – both parties are required to render reciprocal prestations. AS TO NAME OR DESIGNATION: 1. Nominate 2. Innominate Do ut des – I give that you may give Do ut facias – I give that you may do Facio ut des – I do that you may give Facio ut facias – I do that you may do STAGES IN A CONTRACT: 1. Preparation – negotiation 2. Perfection/birth 3. Consummation – performance Essential Elements 1. CONSENT – meeting of minds between parties on subject matter & cause of contract; concurrence of offer & acceptance Requirements: a. Plurality of subject b. Capacity c. Intelligence and free will d. Manifestation of intent of parties e. Cognition by the other party f. Conformity of manifestation and cognition ELEMENTS OF VALID OFFER a. Definite b. Complete c. intentional ELEMENTS OF VALID ACCEPTANCE a. Unequivocal b. unconditional WHEN OFFER BECOMES INEFFECTIVE: 1. Death, civil interdiction, insanity or insolvency of either party before acceptance is conveyed 2. Express or implied revocation of the offer by the offeree 3. Qualified or conditional acceptance of the offer 4. Subject matter becomes illegal or impossible before acceptance is communicated PERSONS WHO CANNOT GIVE CONSENT TO A CONTRACT: 1. Minors 2. Insane or demented persons 3. Illiterates/ deaf-mutes who do not know how to write 4. Intoxicated and under hypnotic spell 5. Art 1331 - person under mistake; mistake may deprive intelligence 6. Art 1338 - person induced by fraud (dolo causante) 2. OBJECT – The prestation. REQUISITES: a. Within the commerce of man - either existing or in potency b. Licit or not contrary to law, good customs c. Possible d. Determinate as to its kind or determinable w/o need to enter into a new contract e. Transmissible 3. CAUSA – reason why parties enter into contract. REQUISITES: a. It must exist b. It must be true c. It must be licit Art 1350. Cause - It is the essential and impelling reason why a party assumes an obligation Art 1351. Motive – is the purely personal or private reason which a party has in entering into a contract Motive - May vary although he enters into the same kind of contract, May be unknown to the other, The presence of motive  Cause - Always the same, Always known, Cannot cure the absence of cause 4. FORM – in some kind of contracts only as contracts are generally consensual; form is a manner in which a contract is executed or manifested REQUISITES: a. There is a written instrument d. Clear & convincing proof b. There is meeting of minds e. Facts put in issue in pleadings c. True intention not expressed in instrument Kinds of Defective Contracts 1. RESCISSIBLE CONTRACTS – Those which have caused a particular economic damage either to one of the parties or to a 3rd person and which may be set aside even if valid. Those validly agreed upon because all the essential elements exists but in some cases established by law, the remedy of rescission is granted in the interest of equity. In contract law, rescission has been defined as the unmaking of a contract between parties. Which Contracts are Rescissible? a. Contracts entered into by persons exercising fiduciary capacity 1. Entered into by guardian whenever ward suffers damage by more than 1/4 of value of object 2. Agreed upon in representation of absentees, if absentee suffers lesion by more than ¼ of value of property 3. Contracts where rescission is based on fraud committed on creditor (accion pauliana) 4. Objects of litigation; contract entered into by defendant w/o knowledge or approval of litigants or judicial authority 5. Payment by an insolvent – on debts w/c are not yet due; prejudices claim of others 6. Provided for by law - art 1526, 1534, 1538, 1539, 1542, 1556, 1560, 1567 and 1659 b. Payments made in a state of insolvency 1. Plaintiff has no other means to obtain reparation 2. Plaintiff must be able to return whatever he may be obliged to return due to rescission 3. The things must not have been passed to 3rd parties who did not act in bad faith 4. It must be made within the 4 years. Meaning of Rescission - Remedy granted by law to the contracting parties and sometimes even to third persons in order to secure reparation of damages caused by them by a valid contract, by means of the restoration of things to their condition in which they were prior to the celebration of the said contract. 2. VOIDABLE CONTRACTS – intrinsic defect; valid until annulled; defect is due to vice of consent or legal incapacity. What Contracts are Voidable? a. Those where one of the parties is incapable of giving consent to a contract (legal incapacity). b. Those where the consent is vitiated by mistake, violence, intimidation, undue influence or fraud (vice of consent). mistake – false belief into something violence – serious or irresistible force is employed to wrest consent. intimidation – one party is compelled by a reasonable & well-grounded fear of an imminent & grave danger upon person & property of himself, spouse, ascendants or descendants (moral coercion).  undue influence – person takes improper advantage of his power over will of another depriving latter of reasonable freedom of choice. fraud – thru insidious words or machinations of contracting parties, other is induced to enter into contract w/o w/c he will not enter (dolo causante) 3. UNENFORCEABLE CONTRACT - valid but cannot compel its execution unless ratified; extrinsic defect; produce legal effects only after ratified. Those that cannot be enforced in court or sued upon by reason of defects provided by law until and unless they are ratified according to law. KINDS/VARIETIES: a. Unauthorized/No sufficient authority - entered into in the name of another when: No authority conferred or in excess of authority conferred (ultra vires). Curable by RATIFICATION b. Both parties’ incapable of giving consent - 2 minor or 2 insane persons. Curable by ACKNOWLEDGEMENT c. Failure to comply with Statute of Frauds. i.e., are not in writing nor subscribed by the party charged or by his agent; Curable by Agreements... Statute of Frauds purpose is not only to prevent fraud but also to guard against the mistakes of honest men by requiring that certain agreement specified must be in writing. 4. VOID OR INEXISTENT - Those, which of certain defects generally produce no effect at all. Inexistent Contracts - Refer to agreements which lack one or some or all the elements or do not comply with the formalities which are essential for the existence of a contract KINDS OF VOID CONTRACT: 1. Those lacking in essential elements: no consent, no object, no cause (inexistent ones) - essential formalities are not complied with (ex: donation propter nuptias - should conform to formalities of a donation to be valid) a. Those w/c are absolutely simulated or fictitious - no cause b. Those which cause, or object did not exist at the time of the transaction - no cause/object c. Those whose object is outside the commerce of man - no object d. Those w/c contemplate an impossible service - no object e. Those w/c intention of parties relative to principal object of the contract cannot be ascertained 2. Those expressly prohibited or declared void by law - Contracts w/c violate any legal provision, whether it amounts to a crime or not 3. Illegal/Illicit ones - Those whose cause, object or purpose is contrary to law, morals, good customs, public order or public policy; Ex: Contract to sell marijuana VOIDABLE VS. RESCISSIBLE CONTRACTS Voidable Rescissible Defect is intrinsic Defect is extrinsic Contract is voidable even if there is no damage Contract is not rescissible id there is no damage or prejudice or prejudice Annullability of the contract is based on law Rescissibility of the contract is based on equity Susceptible of ratification Not susceptible of ratification The causes of annulment Are different form UNENFORCEABLE VS. RESCISSIBLE CONTRACTS a. An unenforceable contract cannot be enforced by a proper action in court, while a rescissible contract can be enforced, unless it is rescinded. b. The causes for the unenforceable character of the former are different from the causes fro the rescissible character of the latter.  c. The former is susceptible of ratification, while the latter is not d. The former cannot be assailed by third persons, while the latter may be assailed by third persons who are prejudiced UNENFORCEABLE VS. VOIDABLE a. An unenforceable contract cannot be enforced by a proper action in court, while a voidable contract can be enforced, unless it is annulled b. The causes for the unenforceable character of the former are different from the causes for the voidable character of the latter LECTURE #3 THELABOR CODEOF THEPHILIPPINES PRESIDENTIAL DECREE NO. 442, AS AMENDED.- A decree instituting a labor code thereby revising and consolidating labor and social laws to afford protection to labor, promote employment and human resources development and insure industrial peace based on social justice. CHAPTER 1 GENERAL PROVISIONS ART1. Name of Decree. This Decree shall be known as the “Labor Code of the Philippines". ART. 2. Date of effectivity. This Code shall take effect six (6) months after its promulgation. ART. 3. Declaration of basic policy. The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane conditions of work. ART. 4. Construction in favor of labor All doubts in the implementation and interpretation of the provisions of this Code, including its implementing rules and regulations, shall be resolved in favor of labor. ART. 5. Rules and regulations. The Department of Labor and other government agencies charged with the administration and enforcement of this Code or any of its parts shall promulgate the necessary implementing rules and regulations. Such rules and regulations shall become effective fifteen (15) days after announcement of their adoption in newspapers of general circulation. ART. 6. Applicability. All rights and benefits granted to workers under this Code shall, except as may otherwise be provided herein, apply alike to all workers, whether agricultural or non-agricultural. (As amended by Presidential Decree No. 570-A, November 1, 1974). CHAPTER 2 EMANCIPATION OF TENANTS ART. 7. Statement of objectives In as much as the old concept of land ownership by a few has spawned valid and legitimate grievances that gave rise to violent conflict and social tension and the redress of such legitimate grievances being one of the fundamental objectives of the New Society, it has become imperative to start reformation with the emancipation of the tiller of the soil from his bondage. ART. 8. Transfer of lands to tenant-workers Being a vital part of the labor force, tenant-farmers on private agricultural lands primarily devoted to rice and corn under a system of share crop or lease tenancy whether classified as landed estate or not shall be deemed owner of a portion constituting a family-size farm of five (5) hectares, if not irrigated and three (3) hectares, if irrigated. In all cases, the land owner may retain a n area of not more than seven (7) hectares if such landowner is cultivating such area or will now cultivate it. ART. 9. Determination of land value. - For the purpose of determining the cost of the land to be transferred to the tenant-farmer, the value of the land shall be equivalent to two and one-half (2-1/2) times the average harvest of three (3) normal crop years immediately preceding the promulgation of Presidential Decree No. 27 on October 21, 1972. - The total cost of the land, including interest at the rate of six percent (6%) per annum, shall be paid by the tenant in fifteen (15) years of fifteen (15) equal annual amortizations. - In case of default, the amortization due shall be paid by the farmers’ cooperative in which the defaulting tenant-farmer is a member, with the cooperative having a right of recourse against him. - The government shall guarantee such amortizations with shares of stock in government-owned and government-controlled corporations. ART. 10. Conditions of ownership. - No title to the land acquired by the tenant-farmer under Presidential Decree No. 27 shall be actually issued to him unless and until he has become a full-fledged member of a duly recognized farmers’ cooperative. - Title to the land acquired pursuant to Presidential Decree No. 27 or the Land Reform Program of the Government shall not be transferable except by hereditary succession or to the Government in accordance with the provisions of Presidential Decree No. 27, the Code of Agrarian Reforms and other existing laws and regulations. ART. 11. Implementing agency. The Department of Agrarian Reform shall promulgate the necessary rules and regulations to implement the provisions of this Chapter. BOOK ONE PRE-EMPLOYMENT ART. 12. Statement of objectives. It is the policy of the State: a. To promote and maintain a state of full employment through improved manpower training, allocation and utilization; b. To protect every citizen desiring to work locally or overseas by securing for him the best possible terms and conditions of employment; c. To facilitate a free choice of available employment by persons seeking work in conformity with the national interest; d. To facilitate and regulate the movement of workers in conformity with the national interest; e. To regulate the employment of aliens, including the establishment of a registration and/or work permit system; f. To strengthen the network of public employment offices and rationalize the participation of the private sector in the recruitment and placement of workers, locally and overseas, to serve national development objectives; g. To insure careful selection of Filipino workers for overseas employment in order to protect the good name of the Philippines abroad. Title I RECRUITMENT AND PLACEMENT OF WORKERS Chapter I GENERAL PROVISIONS ART. 13. Definitions a. "Worker “means any member of the labor force, whether employed or unemployed. b. "Recruitment and placement “refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not: Provided, That any person or entity which, in any manner, offers or promises for a fee, employment to two or more persons shall be deemed engaged in recruitment and placement. c. "Private fee-charging employment agency “means any person or entity engaged in recruitment and placement of workers for a fee which is charged, directly or indirectly, from the workers or employers or both. d. "License “means a document issued by the Department of Labor authorizing a person or entity to operate a private employment agency. e. "Private recruitment entity “means any person or association engaged in the recruitment and placement of workers, locally or overseas, without charging, directly or indirectly, any fee from the workers or employers.  f. "Authority “means a document issued by the Department of Labor authorizing a person or association to engage in recruitment and placement activities as a private recruitment entity. g. "Seaman" means any person employed in a vessel engaged in maritime navigation. h. "Overseas employment “means employment of a worker outside the Philippines. i. "Emigrant “means any person, worker or otherwise, who emigrates to a foreign country by virtue of an immigrant visa or resident permit or its equivalent in the country of destination. ART. 14.Employment promotion. The Secretary of Labor shall have the power and authority: a. To organize and establish new employment offices in addition to the existing employment offices under the Department of Labor as the need arises; b. To organize and establish a nationwide job clearance and information system to inform applicants registering with a particular employment office of job opportunities in other parts of the country as well as job opportunities abroad; c. To develop and organize a program that will facilitate occupational, industrial and geographical mobility of labor and provide assistance in the relocation of workers from one area to another; and d. To require any person, establishment, organization or institution to submit such employment information as may be prescribed by the Secretary of Labor. ART. 15. Bureau of Employment Services. a. The Bureau of Employment Services shall be primarily responsible for developing and monitoring a comprehensive employment program. It shall have the power and duty: 1. To formulate and develop plans and programs to implement the employment promotion objectives of this Title; 2. To establish and maintain a registration and/or licensing system to regulate private sector participation in the recruitment and placement of workers, locally and overseas, and to secure the best possible terms and conditions of employment for Filipino contract workers and compliance therewith under such rules and regulations as may be issued by the Minister of Labor; 3. To formulate and develop employment programs designed to benefit disadvantaged groups and communities; 4. To establish and maintain a registration and/or work permit system to regulate the employment of aliens; 5. To develop a labor market information system in aid of proper manpower and development planning; 6. To develop a responsive vocational guidance and testing system in aid of proper human resources allocation; and 7. To maintain a central registry of skills, except seamen. b. The regional offices of the Ministry of Labor shall have the original and exclusive jurisdiction over all matters or cases involving employer-employee relations including money claims, arising out of or by virtue of any law or contracts involving Filipino workers for overseas employment except seamen: Provided, That the Bureau of Employment Services may, in the case of the National Capital Region, exercise such power, whenever the Minister of Labor deems it appropriate. The decisions of the regional offices of the Bureau of Employment Services, if so authorized by the Minister of Labor as provided in this Article, shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission shall be final and inappeasable. (Superseded by Exec. Order 797, May 1, 1982). c. The Minister of Labor shall have the power to impose and collect fees based on rates recommended by the Bureau of Employment Services. Such fees shall be deposited in the National Treasury as a special account of the General Fund, for the promotion of the objectives of the Bureau of Employment Services, subject to the provisions of Section 40 of Presidential Decree No. 1177. ART. 16. Private recruitment Except as provided in Chapter II of this Title, no person or entity other than the public employment offices, shall engage in the recruitment and placement of workers. ART. 17. Overseas Employment Development Board. An Overseas Employment Development Board is hereby created to undertake, in cooperation with relevant entities and agencies, a systematic program for overseas employment of Filipino workers in excess of domestic needs and to protect their rights to fair and equitable employment practices. It shall have the power and duty: 1. To promote the overseas employment of Filipino workers through a comprehensive market promotion and development program; 2. To secure the best possible terms and conditions of employment of Filipino contract workers on a government-to-government basis and to ensure compliance therewith; 3. To recruit and place workers for overseas employment on a government-to-government arrangement and in such other sectors as policy may dictate; and 4. To act as secretariat for the Board of Trustees of the Welfare and Training Fund for Overseas Workers. ART. 18. Ban on direct-hiring. No employer may hire a Filipino worker for overseas employment except through the Boards and entities authorized by the Secretary of Labor. Direct-hiring by members of the diplomatic corps, international organizations and such other employers as may be allowed by the Secretary of Labor is exempted from this provision. ART. 19. Office of Emigrant Affairs a. Pursuant to the national policy to maintain close ties with Filipino migrant communities and promote their welfare as well as establish a data bank in aid of national manpower policy formulation, an Office of Emigrant Affairs is hereby created in the Department of Labor. The Office shall be a unit at the Office of the Secretary and shall initially be manned and operated by such personnel and through such funding as are available within the Department and its attached agencies. Thereafter, its appropriation shall be made part of the regular General Appropriations Decree. b. The office shall, among others, promote the well-being of emigrants and maintain their close link to the homeland by: 1. serving as a liaison with migrant communities; 2. provision of welfare and cultural services; 3. promote and facilitate re-integration of migrants into the national mainstream; 4. promote economic; political and cultural ties with the communities; and 5. generally to undertake such activities as may be appropriate to enhance such cooperative links. ART. 20. National Seamen Board. a. A National Seamen Board is hereby created which shall develop and maintain a comprehensive program for Filipino seamen employed overseas. It shall have the power and duty: 1. To provide free placement services for seamen; 2. To regulate and supervise the activities of agents or representatives of shipping companies in the hiring of seamen for overseas employment and secure the best possible terms of employment for contract seamen workers and secure compliance therewith; 3. To maintain a complete registry of all Filipino seamen. b. The Board shall have original and exclusive jurisdiction over all matters or cases including money claims, involving employer-employee relations, arising out of or by virtue of any law or contracts involving Filipino seamen for overseas employment. The decisions of the Board shall be appealable to the National Labor Relations Commission upon the same grounds provided in Article 223 hereof. The decisions of the National Labor Relations Commission shall be final and unappealable. ART. 21. Foreign service role and participation. To provide ample protection to Filipino workers abroad, the labor attaches, the labor reporting officers duly designated by the Secretary of Labor and the Philippine diplomatic or consular officials concerned shall, even without prior instruction or advice from the home office, exercise the power and duty: a. To provide all Filipino workers within their jurisdiction assistance on all matters arising out of employment; b. To insure that Filipino workers are not exploited or discriminated against;  a. To verify and certify as requisite to authentication that the terms and conditions of employment in contracts involving Filipino workers are in accordance with the Labor Code and rules and regulations of the Overseas Employment Development Board and National Seamen Board; b. To make continuing studies or researches and recommendations on the various aspects of the employment market within their jurisdiction; c. To gather and analyze information on the employment situation and its probable trends, and to make such information available; and d. To perform such other duties as may be required of them from time to time. ART. 22. Mandatory remittance of foreign exchange earnings. It shall be mandatory for all Filipino workers abroad to remit a portion of their foreign exchange earnings to their families, dependents, and/or beneficiaries in the country in accordance with rules and regulations prescribed by the Secretary of Labor. ART. 23. Composition of the Boards. a. The OEDB shall be composed of the Secretary of Labor and Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, and a representative each of the Department of Foreign Affairs, the Department of National Defense, the Central Bank, the Department of Education, Culture and Sports, the National Manpower and Youth Council, the Bureau of Employment Services, a workers’ organization and an employ3ers’ organization and the Executive Director of the OEDB as members. b. The National Seamen Board shall be composed of the Secretary of Labor and Employment as Chairman, the Undersecretary of Labor as Vice-Chairman, the Commandant of the Philippine Coast Guard, and a representative each of the Department of Foreign Affairs, the Department of Education, Culture and Sports, the Central Bank, the Maritime Industry Authority, the Bureau of Employment Services, a national shipping association and the Executive Director of the NSB as members. The members of the Boards shall receive allowances to be determined by the Board which shall not be more than P2,000.00 per month. c. The Boards shall be attached to the Department of Labor for policy and program coordination. They shall each be assisted by a Secretariat headed by an Executive Director who shall be a Filipino citizen with sufficient experience in manpower administration, including overseas employment activities. The Executive Director shall be appointed by the President of the Philippines upon the recommendation of the Secretary of Labor and shall receive an annual salary as fixed by law. The Secretary of Labor shall appoint the other members of the Secretariat. d. The Auditor General shall appoint his representative to the Boards to audit their respective accounts in accordance with auditing laws and pertinent rules and regulations. ART. 24. Boards to issue rules and collect fees. The Boards shall issue appropriate rules and regulations to carry out their functions. They shall have the power to impose and collect fees from employers concerned, which shall be deposited in the respective accounts of said Boards and be used by them exclusively to promote their objectives. Chapter II REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES ART. 25. Private sector participation in the recruitment and placement of workers Pursuant to national development objectives and in order to harness and maximize the use of private sector resources and initiative in the development and implementation of a comprehensive employment program, the private employment sector shall participate in the recruitment and placement of workers, locally and overseas, under such guidelines, rules and regulations as may be issued by the Secretary of Labor. ART. 26. Travel agencies prohibited to recruit. Travel agencies and sales agencies of airline companies are prohibited from engaging in the business of recruitment and placement of workers for overseas employment whether for profit or not. ART. 27. Citizenship requirement. Only Filipino citizens or corporations, partnerships or entities at least seventy-five percent (75%) of the authorized and voting capital stock of which is owned and controlled by Filipino citizens shall be permitted to participate in the recruitment and placement of workers, locally or overseas. ART. 28. Capitalization. All applicants for authority to hire or renewal of license to recruit are required to have such substantial capitalization as determined by the Secretary of Labor. ART. 29. Non-transferability of license or authority. No license or authority shall be used directly or indirectly by any person other than the one in whose favor it was issued or at any place other than that stated in the license or authority be transferred, conveyed or assigned to any other person or entity. Any transfer of business address, appointment or designation of any agent or representative including the establishment of additional offices anywhere shall be subject to the prior approval of the Department of Labor. ART. 30. Registration fees. The Secretary of Labor shall promulgate a schedule of fees for the registration of all applicants for license or authority. ART. 31. Bonds All applicants for license or authority shall post such cash and surety bonds as determined by the Secretary of Labor to guarantee compliance with prescribed recruitment procedures, rules and regulations, and terms and conditions of employment as may be appropriate. ART. 32. Fees to be paid by workers. Any person applying with a private fee-charging employment agency for employment assistance shall not be charged any fee until he has obtained employment through its efforts or has actually commenced employment. Such fee shall be always covered with the appropriate receipt clearly showing the amount paid. The Secretary of Labor shall promulgate a schedule of allowable fees. ART. 33. Reports on employment status. Whenever the public interest requires, the Secretary of Labor may direct all persons or entities within the coverage of this Title to submit a report on the status of employment, including job vacancies, details of job requisitions, separation from jobs, wages, other terms and conditions and other employment data. ART. 34. Prohibited practices. It shall be unlawful for any individual, entity, licensee, or holder of authority: a. To charge or accept, directly or indirectly, any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor, or to make a worker pay any amount greater than that actually received by him as a loan or advance; b. To furnish or publish any false notice or information or document in relation to recruitment or employment; c. To give any false notice, testimony, information or document or commit any act of misrepresentation for the purpose of securing a license or authority under this Code. d. To induce or attempt to induce a worker already employed to quit his employment in order to offer him to another unless the transfer is designed to liberate the worker from oppressive terms and conditions of employment; e. To influence or to attempt to influence any person or entity not to employ any worker who has not applied for employment through his agency; f. To engage in the recruitment or placement of workers in jobs harmful to public health or morality or to the dignity of the Republic of the Philippines; g. To obstruct or attempt to obstruct inspection by the Secretary of Labor or by his duly authorized representatives; h. To fail to file reports on the status of employment, placement vacancies, remittance of foreign exchange earnings, separation from jobs, departures and such other matters or information as may be required by the Secretary of Labor. i. To substitute or alter employment contracts approved and verified by the Department of Labor from the time of actual signing thereof by the parties up to and including the periods of expiration of the same without the approval of the Secretary of Labor; j. To become an officer or member of the Board of any corporation engaged in travel agency or to be engaged directly or indirectly in the management of a travel agency; and k. To withhold or deny travel documents from applicant workers before departure for monetary or financial considerations other than those authorized under this Code and its implementing rules and regulations. ART. 35. Suspension and/or cancellation of license or authority. The Minister of Labor shall have the power to suspend or cancel any license or authority to recruit employees for overseas employment for violation of rules and regulations issued by the Ministry of Labor, the Overseas Employment Development Board, or for violation of the provisions of this and other applicable laws, General Orders and Letters of Instructions. Chapter III MISCELLANEOUS PROVISIONS ART. 36. Regulatory power. The Secretary of Labor shall have the power to restrict and regulate the recruitment and placement activities of all agencies within the coverage of this Title and is hereby authorized to issue orders and promulgate rules and regulations to carry out the objectives and implement the provisions of this Title. ART. 37. Visitorial Power. The Secretary of Labor or his duly authorized representatives may, at any time, inspect the premises, books of accounts and records of any person or entity covered by this Title, require it to submit reports regularly on prescribed forms, and act on violation of any provisions of this Title. ART. 38. Illegal recruitment. a. Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority, shall be deemed illegal and punishable under Article 39 of this Code. The Department of Labor and Employment or any law enforcement officer may initiate complaints under this Article. b. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the first paragraph hereof. Illegal recruitment is deemed committed in large scale if committed against three (3) or more persons individually or as a group. c. The Secretary of Labor and Employment or his duly authorized representatives shall have the power to cause the arrest and detention of such non-licensee or non-holder of authority if after investigation it is determined that his activities constitute a danger to national security and public order or will lead to further exploitation of job-seekers. The Secretary shall order the search of the office or premises and seizure of documents, paraphernalia, properties and other implements used in illegal recruitment activities and the closure of companies, establishments and entities found to be engaged in the recruitment of workers for overseas employment, without having been licensed or authorized to do so. ART. 39. Penalties. a. The penalty of life imprisonment and a fine of One Hundred Thousand Pesos (P1000,000.00) shall be imposed if illegal recruitment constitutes economic sabotage as defined herein; b. Any licensee or holder of authority found violating or causing another to violate any provision of this Title or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than two years nor more than five years or a fine of not less than P10,000 nor more than P50,000, or both such imprisonment and fine, at the discretion of the court; c. Any person who is neither a licensee nor a holder of authority under this Title found violating any provision thereof or its implementing rules and regulations shall, upon conviction thereof, suffer the penalty of imprisonment of not less than four years nor more than eight years or a fine of not less than P20,000 nor more than P100,000 or both such imprisonment and fine, at the discretion of the court; d. If the offender is a corporation, partnership, association or entity, the penalty shall be imposed upon the officer or officers of the corporation, partnership, association or entity responsible for violation; and if such officer is an alien, he shall, in addition to the penalties herein prescribed, be deported without further proceedings; e. In every case, conviction shall cause and carry the automatic revocation of the license or authority and all the permits and privileges granted to such person or entity under this Title, and the forfeiture of the cash and surety bonds in favor of the Overseas Employment Development Board or the National  Seamen Board, as the case may be, both of which are authorized to use the same exclusively to promote their objectives. Title II EMPLOYMENT OF NON-RESIDENT ALIENS ART. 40. Employment permit of non-resident aliens. - Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor. - The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. - For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. ART. 41. Prohibition against transfer of employment. a. After the issuance of an employment permit, the alien shall not transfer to another job or change his employer without prior approval of the Secretary of Labor. b. Any non-resident alien who shall take up employment in violation of the provision of this Title and its implementing rules and regulations shall be punished in accordance with the provisions of Articles 289 and 290 of the Labor Code. c. addition, the alien worker shall be subject to deportation after service of his sentence. ART. 42. Submission of list. Any employer employing non-resident foreign nationals on the effective date of this Code shall submit a list of such nationals to the Secretary of Labor within thirty (30) days after such date indicating their names, citizenship, foreign and local addresses, nature of employment and status of stay in the country. The Secretary of Labor shall then determine if they are entitled to an employment permit. BOOK TWO HUMAN RESOURCES DEVELOPMENT PROGRAM Title I NATIONAL MANPOWER DEVELOPMENT PROGRAM Chapter I NATIONAL POLICIES AND ADMINISTRATIVE MACHINERY FOR THEIR IMPLEMENTATION ART. 43. Statement of objective. - is the objective of this Title to develop human resources, establish training institutions, and formulate such plans and programs as will ensure efficient allocation, development and utilization of the nation’s manpower and thereby promote employment and accelerate economic and social growth. ART. 44. Definitions. As used in this Title: a. "Manpower “shall mean that portion of the nation’s population which has actual or potential capability to contribute directly to the production of goods and services. b. "Entrepreneurship “shall mean training for self-employment or assisting individual or small industries within the purview of this Title. ART. 45. National Manpower and Youth Council; Composition. - carry out the objectives of this Title, the National Manpower and Youth Council, which is attached to the Department of Labor for policy and program coordination and hereinafter referred to as the Council, shall be composed of the Secretary of Labor as ex-officio chairman, the Secretary of Education and Culture as ex-officio vice-chairman, and as ex-officio members, the Secretary of Economic Planning, the Secretary of Natural Resources, the Chairman of the Civil Service Commission, the Secretary of  Social Welfare, the Secretary of Local Government, the Secretary of Science and Technology, the Secretary of Trade and Industry and the Director-General of the Council. The Director General shall have no vote. - addition, the President shall appoint the following members from the private sector: two (2) representatives of national organizations of employers; two (2) representatives of national workers’ organizations; and one representative of national family and youth organizations, each for a term of three (3) years. ART. 46. National Manpower Plan. - The Council shall formulate a long-term national manpower plan for the optimum allocation, development and utilization of manpower for employment, entrepreneurship and economic and social growth. This manpower plan shall, after adoption by the Council, be updated annually and submitted to the President for his approval. Thereafter, it shall be the controlling plan for the development of manpower resources for the entire country in accordance with the national development plan. The Council shall call upon any agency of the Government or the private sector to assist in this effort. ART. 47. National Manpower Skills Center. - The Council shall establish a National Manpower Skills Center and regional and local training centers for the purpose of promoting the development of skills. The centers shall be administered and operated under such rules and regulations as may be established by the Council. ART. 48. Establishment and formulation of skills standards. - There shall be national skills standards for industry trades to be established by the Council in consultation with employers’ and workers’ organizations and appropriate government authorities. The Council shall thereafter administer the national skills standards. ART. 49. Administration of training programs. - The Council shall provide, through the Secretariat, instructor training, entrepreneurship development, training in vocations, trades and other fields of employment, and assist any employer or organization in training schemes designed to attain its objectives under rules and regulations which the Council shall establish for this purpose. - The Council shall exercise, through the Secretariat, authority and jurisdiction over, and administer, on- going technical assistance programs and/or grants-in-aid for manpower and youth development including those which may be entered into between the Government of the Philippines and international and foreign organizations and nations, as well as persons and organizations in the Philippines. - order to integrate the national manpower development efforts, all manpower training schemes as provided for in this Code shall be coordinated with the Council, particularly those having to do with the setting of skills standards. For this purpose, existing manpower training programs in the government and in the private sector shall be reported to the Council which may regulate such programs to make them conform with national development programs. - This Article shall not include apprentices, learners and handicapped workers as governed by appropriate provisions of this Code. ART. 50. Industry boards. - The Council shall establish industry boards to assist in the establishment of manpower development schemes, trades and skills standards and such other functions as will provide direct participation of employers and workers in the fulfillment of the Council’s objectives, in accordance with guidelines to be established by the Council and in consultation with the National Economic and Development Authority. - The maintenance and operations of the industry boards shall be financed through a funding scheme under such rates of fees and manners of collection and disbursements as may be determined by the Council. ART. 51. Employment service training functions. - The Council shall utilize the employment service of the Department of Labor for the placement of its graduates. The Bureau of Employment Services shall render assistance to the Council in the measurement of unemployment and underemployment, conduct of local manpower resource surveys and occupational studies including an inventory of the labor force, establishment and maintenance  without charge of a national register of technicians who have successfully completed a training program under this Act, and skilled manpower including its publication, maintenance of an adequate and up-to-date system of employment information. ART. 52. Incentive Scheme. - additional deduction from taxable income of one-half (1/2) of the value of labor training expenses incurred for development programs shall be granted to the person or enterprise concerned provided that such development programs, other than apprenticeship, are approved by the Council and the deduction does not exceed ten percent (10%) of the direct labor wage. - There shall be a review of the said scheme two years after its implementation. ART. 53. Council Secretariat. - The Council shall have a Secretariat headed by a Director-General who shall be assisted by a Deputy Director-General, both of whom shall be career administrators appointed by the President of the Philippines on recommendation of the Secretary of Labor. The Secretariat shall be under the administrative supervision of the Secretary of Labor and shall have an Office of Manpower Planning and Development, an Office of Vocational Preparation, a National Manpower Skills Center, regional manpower development offices and such other offices as may be necessary. ART. 53. Council Secretariat. - The Director-General shall have the rank and emoluments of an undersecretary and shall serve for a term of ten (10) years. The Executive-Directors of the Office of Manpower Planning and Development, the Office of Vocational Preparation and the National Manpower Skills Center shall have the rank and emoluments of a bureau director and shall be subject to Civil Service Law, rules and regulations. The Director-General, Deputy Director-General and Executive Directors shall be natural-born citizens, between thirty and fifty years of age at the time of appointment, with a master’s degree or its equivalent, and experience in national planning and development of human resources. The Executive Director of the National Manpower Skills Center shall, in addition to the foregoing qualifications, have undergone training in center management. Executive Directors shall be appointed by the President on the recommendations of the Secretary of Labor and Employment. - The Director-General shall appoint such personnel necessary to carry out the objectives, policies and functions of the Council subject to Civil Service rules. The regular professional and technical personnel shall be exempt from WAPCO rules and regulations. The Secretariat shall have the following functions and responsibilities: a. To prepare and recommend the manpower plan for approval by the Council; b. To recommend allocation of resources for the implementation of the manpower plan as approved by the Council; c. To carry out the manpower plan as the implementing arm of the Council; d. To effect the efficient performance of the functions of the Council and the achievement of the objectives of this Title; e. To determine specific allocation of resources for the projects to be undertaken pursuant to approved manpower plans; f. To submit to the Council periodic reports on progress and accomplishment of work programs; g. To prepare for approval by the Council an annual report to the President on plans, programs and projects on manpower and out-of-school youth development; h. To enter into agreements to implement approved plans and programs and perform any and all such acts as will fulfill the objectives of this Code as well as ensure the efficient performance of the functions of the Council; and i. To perform such other functions as may be authorized by the Council. ART. 54. Regional manpower development offices. - The Council shall create regional manpower development offices which shall determine the manpower needs of the industry, agriculture and other sectors of the economy within their respective jurisdictions; provide the Council’s central planners with the data for updating the national manpower plan; recommend programs for the regional level agencies engaged in manpower and youth development  within the policies formulated by the Council; and administer and supervise Secretariat training programs within the region and perform such other functions as may be authorized by the Council. ART. 55. Consultants and technical assistance, publication and research. - pursuing its objectives, the Council is authorized to set aside a portion of its appropriation for the hiring of the services of qualified consultants, and/or private organizations for research work and publication. It shall avail itself of the services of the Government as may be required. ART. 56. Rules and regulations. - The Council shall define its broad functions and issue appropriate rules and regulations necessary to implement the provision of this Code. Title II TRAINING AND EMPLOYMENT OF SPECIAL WORKERS Chapter I APPRENTICES ART. 57. Statement of objectives. This Title aims: 1. To help meet the demand of the economy for trained manpower; 2. To establish a national apprenticeship program through the participation of employers, workers and government and non-government agencies; and 3. To establish apprenticeship standards for the protection of apprentices. ART. 58. Definition of Terms. used in this Title: a. "Apprenticeship “means practical training on the job supplemented by related theoretical instruction. b. An "apprentice “is a worker who is covered by a written apprenticeship agreement with an individual employer or any of the entities recognized under this Chapter. c. An "apprentice able occupation “means any trade, form of employment or occupation which requires more than three (3) months of practical training on the job supplemented by related theoretical instruction. d. "Apprenticeship agreement “is an employment contract wherein the employer binds himself to train the apprentice and the apprentice in turn accepts the terms of training. ART. 59. Qualifications of apprentice. To qualify as an apprentice, a person shall: a. Be at least fourteen (14) years of age; b. Possess vocational aptitude and capacity for appropriate tests; and c. Possess the ability to comprehend and follow oral and written instructions. d. Trade and industry associations may recommend to the Secretary of Labor appropriate educational requirements for different occupations. ART. 60. Employment of apprentices. - Only employers in the highly technical industries may employ apprentices and only in apprenticeable occupations approved by the Secretary of Labor and Employment. (As amended by Section 1, Executive Order No. 111, December 24, 1986). ART. 61. Contents of apprenticeship agreements. - Apprenticeship agreements, including the wage rates of apprentices, shall conform to the rules issued by the Secretary of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75 percent of the applicable minimum wage, may be entered into only in accordance with apprenticeship programs duly approved by the Secretary of Labor and Employment. The Department shall develop standard model programs of apprenticeship. (As amended by Section 1, Executive Order No. 111, December 24, 1986). ART. 62. Signing of apprenticeship agreement.  - Every apprenticeship agreement shall be signed by the employer or his agent, or by an authorized representative of any of the recognized organizations, associations or groups and by the apprentice. An apprenticeship agreement with a minor shall be signed in his behalf by his parent or guardian, if the latter is not available, by an authorized representative of the Department of Labor, and the same shall be binding during its lifetime. - Every apprenticeship agreement entered into under this Title shall be ratified by the appropriate apprenticeship committees, if any, and a copy thereof shall be furnished both the employer and the apprentice. ART. 63. Venue of apprenticeship programs. - Any firm, employer, group or association, industry organization or civic group wishing to organize an apprenticeship program may choose from any of the following apprenticeship schemes as the training venue for apprentice: a. Apprenticeship conducted entirely by and within the sponsoring firm, establishment or entity; b. Apprenticeship entirely within a Department of Labor and Employment training center or other public training institution; or c. Initial training in trade fundamentals in a training center or other institution with subsequent actual work participation within the sponsoring firm or entity during the final stage of training. ART. 64. Sponsoring of apprenticeship program. - Any of the apprenticeship schemes recognized herein may be undertaken or sponsored by a single employer or firm or by a group or association thereof or by a civic organization. Actual training of apprentices may be undertaken: a. In the premises of the sponsoring employer in the case of individual apprenticeship programs; b. In the premises of one or several designated firms in the case of programs sponsored by a group or association of employers or by a civic organization; or c. In a Department of Labor and Employment training center or other public training institution. ART. 65. Investigation of violation of apprenticeship agreement. - Upon complaint of any interested person or upon its own initiative, the appropriate agency of the Department of Labor and Employment or its authorized representative shall investigate any violation of an apprenticeship agreement pursuant to such rules and regulations as may be prescribed by the Secretary of Labor and Employment. ART. 66. Appeal to the Secretary of Labor and Employment - The decision of the authorized agency of the Department of Labor and Employment may be appealed by any aggrieved person to the Secretary of Labor and Employment within five (5) days from receipt of the decision. The decision of the Secretary of Labor and Employment shall be final and executory. ART. 67. Exhaustion of administrative remedies. - person shall institute any action for the enforcement of any apprenticeship agreement or damages for breach of any such agreement, unless he has exhausted all available administrative remedies. ART. 68. Aptitude testing of applicants. - Consonant with the minimum qualifications of apprentice-applicants required under this Chapter, employers or entities with duly recognized apprenticeship programs shall have primary responsibility for providing appropriate aptitude tests in the selection of apprentices. If they do not have adequate facilities for the purpose, the Department of Labor and Employment shall perform the service free of charge. ART. 69. Responsibility for theoretical instruction. - Supplementary theoretical instruction to apprentices in cases where the program is undertaken in the plant may be done by the employer. If the latter is not prepared to assume the responsibility, the same may be delegated to an appropriate government agency.  LECTURE #4 CONTRACT OF LABOR - It is consensual, nominate, principal and cumulative contract whereby one person called the employer, compensates another, called laborer, worker or employee for the latter service. - The laborer’s wages shall be paid in legal currency. - The laborer’s wages shall not be subject to execution or attachment except for debts in food, shelter and medical attendance. WHAT ARE THE NORMAL WORK HOURSOF AN EMPLOYEE? The normal hours work of an employee shall not exceed in 8 hours a day. However, health personnel shall have a maximum of 40 hours a week. If made To work in excess of 40 hours, they are entitled of 30% additional pay. CAN THE NORMAL HOURS OF CAN BE LESS THAN8 HOURS Yes! The law sets a maximum no. Of hours but does not prohibit work done less than eight hours. Thus, part time work is allowed and pay corresponding to the actual hours worked will be paid. WHAT HOURS ARE OSED TO BE PAID? So called, compensable hours include all time during which an. a. Employee is required to be on duty, to be at employer’s premises or prescribed place. b. All time during which an employee is suffered or permitted to work. HOW MUCH SHOULD A PART-TIME The wage and benefit of an part time worker are in proportion to the number or hours worked. Assuming the she/he should be earning 400 for an 8 hours work, she/he shall then get 200 for work done in 4 hours. REST PERIOD The employer shall determine and schedule the weekly rest day of his/her employees subject to collective bargaining agreement and to such rules & regulations as the secretary of labor and employment may provide. However, the employer shall respect preference of employees as to their weekly rest day when such preference is based on religious grounds. THE EMPLOYER MAY REQUIRE HIS/HEREMPLOYEE TO WORK ON ANY DAY? - Under other circumstances analogous or similar to the foregoing as determine by the Secretary of Labor and Employment. THE EMPLOYER MAY REQUIRE HIS/HER EMPLOYEE TO WORK ON ANY DAY? In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measure. To prevent loss or damage to perishable goods. Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to employer, and THE EMPLOYER MAY REQUIRE HIS/HER EMPLOYEE TO WORK ON ANY DAY? a. In case of actual or impending emergencies caused by serious accident, fire, flood, typhoon, earthquake, epidemic or disaster or any calamity to prevent loss of life and property, or imminent danger to public safety. b. In case of urgent work to be performed on the machinery, equipment, or installation, to avoid serious loss which the employer would otherwise suffer. COMPENSATION FOR REST DAY, SUNDAY,AND HOLIDAY. - Where an employee is made and permitted to work on his schedule rest day, he/she shall be paid on additional compensation of at least 30% of his/her regular wage. An employee shall be entitled to such additional compensation for what performed on Sunday only when it is his/her established rest day. - when the nature of the work of an employee is such that he/she no regular workdays and no regular rest days can be scheduled, he/she shall be paid in additional compensation of at least 30% of his regular wage for worked performed on Sundays and holidays. - work performed on any special holiday shall be paid an additional compensation of at least 30% of the regular wage of the employee. Where such holiday work falls on the employees scheduled rest day. He/she shall be entitled to an additional compensation of at least 50% of his/her regular wage. - when the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this article. The employer shall pay such higher rate. RIGHT TO HOLIDAY PAY Every worker shall be paid his regular daily wage during holidays, except in retail and service establishment regularly employing less than 10 workers. The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his/her regular rate. WHAT IS OVERTIME? - Overtime work is work rendered beyond 8 hours. Every hour worked in excess of 8 hours earns an additional pay of 25%. The of 30% if done on a rest day or holiday. Undertime Not Offset by Overtime Article 88 of the Labor Code enunciates that undertime work on a business day shall not be offset by overtime work on any other day. The law discourages the offset because the hourly rate of overtime is higher than the hours missed when an employee works for less than eight hours. Permission given to the employee to go on leave for a day in a regular work week shall not exempt the employer from paying the additional compensation required for the overtime work done. WHO ARE COVERED BY THE RULES ON OVERTIME? Under the provisions of Article 82 of the Labor Code of the Philippines, working hours apply to employees in all establishments and undertakings whether for profit or not, EXCLUDING the following: - government employees; - managerial employees; - field personnel; - family members of the employer who depend on him for support; - domestic helpers; - persons who provide personal service to other people; and - workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. Night Shift Differential Pay - Every employee shall be paid a night shift premium of not less than 10% of their regular wage for each hour of work performed between 10:00 PM and 6:00 AM. Meal Periods - Every employer is mandated by the Labor Code to give their employees not less than sixty (60) minutes’ time-off for their regular meals. During day shifts, this time-off is usually during 12:00 PM  LECTURE #5 Types of Conflicts 1. Plans and specifications/scope of work 2. Shop drawings and submittals 3. Change orders/extra or out of scope work 4. Differing site conditions 5. Construction sequencing/project access 6. Subcontractor substitution 7. Construction defects Dispute resolution methods 1. Designer/Initial decision maker 2. Dispute resolution boards (DRBs) 3. Mediation 4. Arbitration 5. Litigation 6. Government claims procedure Confronting Construction Conflicts During times like these, when the world is experiencing economic troubles and money is tight, disputes often arise because construction project participants are not as willing/able to compromise and use cash to smooth over the rough spots. As a result, many of these disputes ultimately must be resolved in the legal system. Types of Conflicts 1. Plans and specifications/scope of work — Disputes over the contract scope of work, represented by the plans and specifications (as modified or amended), are some of the most significant areas of dispute on a construction project. Typically occurring between the owner and the general contractor/subcontractor, contractors and design professionals often interpret the documents differently, particularly if the description of the work in the plans/specifications is unclear or ambiguous — or when the plans are contradictory to the specifications. Presumably, the purpose of the request for information (RFI) process is to handle problems related to the interpretation of the plans/specifications. However, that process often fails for a number of reasons, among them being the delay in responding to RFls, the failure or refusal of the design professional to acknowledge or recognize problems, the crossover between project design and construction means/methods, and the contractor's abuse or misuse of the RFI process. 2. Shop drawings and submittals — A corollary to disputes arising from the plans/specifications are disputes arising over shop drawings and other submittals. Primary among these are delays, either in the timeliness of the contractor/subcontractor submitting shop drawings and submittals or in the design professionals responding back in a timely fashion. 3. Change orders/extra or out-of-scope work — Typically, disputes over change orders and extra work or out-of-scope work boil down to the change order price and whether or not the contractor/subcontractor is entitled to extra time. Frequently, the owner requests pricing for the changed work but then disagrees with that price and time extension request — ordering the work to proceed as scheduled. This situation leaves the parties to fight over the amount and time at project's end. 4. Differing site conditions — There are two different approaches regarding the owner's responsibility for existing site conditions. The majority approach is that the owner has the duty to disclose all information in its possession. Even if there are no studies, the owner warrants that the construction is feasible and cannot contract away that implied warranty. Therefore, general exculpatory clauses arguably do not relieve the owner of its warranty.  The other minority approach — only applicable to public owners — is to enforce exculpatory clauses that put the responsibility for site conditions on the contractor. This is only it the owner has engaged in fraud or intentional failure to disclose known information. 5. Construction sequencing/project access — The owner typically warrants that the contractor/subcontractor will have access to the project site. Disputes arise, for example, when the owner fails to provide access particularly in remodels of occupied buildings, to obtain required permits or easements, to coordinate multiple prime contractors, or to timely provide owner-supplied equipment. 6. Subcontractor substitution — In the public setting, disputes over subcontractor substitution occur relatively often in those states that have legislation to protect subcontractors from bid shopping and bid peddling. Private owners often provide a requirement in their contracts that they must approve subcontractors. 7. Construction defects - During the course of construction, the owner may identify work that is not in conformance with the plans/specifications. If the contractor/subcontractor does not agree with the owner's assertion of that defective construction, a dispute arises. Typically, both the general contract and subcontracts allow the owner and general contractor, respectively, to order the removal and replacement or repair of the allegedly defective work Termination Termination, whether by the owner or the contractor, is the ultimate "dispute. Typically, contract provisions allow the owner to terminate the contractor for cause (i.e., a default termination) if the contractor: 1. fails to supply properly skilled workers or proper materials; 2. fails to make payments to subcontractors; 3. disregards laws, statutes, ordinances, codes, rules, and regulations; or 4. substantially breaches the contract documents. The contractor, whether provided in the contract or not, can terminate if the owner is in material breach of any of its contractual obligations, the most prevalent of which is failure to pay. Dispute resolution methods 1. Designer/initial decision maker — Some contracts provide that the design professional is the initial decision maker. ⁃ Others even provide that the design professional's decision is binding on all parties. ⁃ Over the years, the contractor side of the equation has felt that such a procedure is unfair in that the design professional works for the owner. ⁃ Therefore, newer contracts have the parties deciding in advance whether or not the design professional or a neutral initial decision maker will resolve ongoing disputes. 2. Dispute resolution boards (DRBs) ⁃ Many contracts now provide for DRBs, which are often comprised of senior and/or retired individuals who were actively involved in the construction industry, such as project engineers, managers, and executives. ⁃ These individuals conduct truncated hearings and provide their decisions with respect to disputes that the parties bring before them during the course of a project. ⁃ Although the DRB's decision is admissible in a court of law or an arbitration setting, they often are not binding on the parties. 3. Mediation ⁃ Whether it's during the course of construction (less frequent) or after the project is complete, mediation is arguably the most satisfying of dispute resolution methods. ⁃ It can occur as early in the process as the parties are able to organize a mediation and identify/schedule a mutually agreeable mediator. ⁃ However, a mediation is typically most successful after the parties, their attorneys, and the consultants have had an opportunity to review the other side's project files and prepare whatever impact/delay analysis may be necessary. 4. Arbitration ⁃ Beginning in the '80s and through the '90s, arbitration was the favored form of dispute resolution in the construction industry, at least when the owner was able to dictate the form of dispute resolution.  ⁃ The theory was that arbitration was both speedy and economical because the parties and arbitrators scheduled it at their convenience. ⁃ Unless the parties otherwise agreed, there was no discovery or jury as there is in litigation, and no appeal. ⁃ Finally, the arbitration panel was comprised of individuals knowledgeable in the construction industry. 5. Litigation ⁃ Litigation is dispute resolution in the courts, where all parties are subject to all of the forms of discovery, such as interrogatories, requests for admission, document production demands, and depositions. ⁃ The parties then have a trial, either by a court alone or by jury. If the parties are dissatisfied with the results, they have an appeal as a matter of right. Historically, litigation has a reputation for being a long, expensive process. ⁃ That's one key reason why arbitrations came into vogue on construction disputes. However, at about the same time that arbitration lost a bit of its luster, some state and federal courts made the process significantly faster and less expensive. 6. Government claims procedures - the public sector, there are often requirements that contractors must first file a government claim and even go through an administrative hearing procedure before they can proceed to arbitrate or litigate their claims. LECTURE #6 PD 1594 AND ITS IMPLEMENTING RULES AND REGULATIONS Presidential Decree No.1594 Prescribing Policies, Guidelines, Rules and Regulations for Government Contract I. DETAILED ENGINEERING - No bidding and/or award of contract for a construction project shall be made unless the detailed engineering investigations, surveys and designs for the project have been sufficiently carried out and approved. II. INSTRUCTION TO BIDDERS Who may allow to bid? 1. Filipino 2. Citizens (Single Proprietorship) 3. Partnership or corporation duly organized under the laws of the Philippines, and at least 75% of the capital stock of which belongs to Filipino citizens 4. Contractors forming themselves into a joint venture 5. Foreign contractors for internationally bid foreign-assisted projects Organizations of the BAC - Bids and Award Committee (BAC) or Designated Procurement Unit BAC Composition 1. Chairman - At least third ranking of the office 2. Executive Officer and Secretary - Legal Officer of the office, - Administrative Officer of the agency (when does not have a legal officer) 3. Member (regular) - Technical member 4. Member (provisional) - At least two, with experience in the type of contract to be bid and in project management 5. Members from the private sector - On qualified representative from constructors' association recognized by CIAP (Construction Industry Authority of the Philippines. - One qualified representative from any of the ff. organizations: 1. End-user group or non - governmental organizations  2. Project-related Professional associations (accredited by Professional Regulation Commission or Supreme Court) (They are non-voting members) Observers - Commission on Audit (COA) of the concerned agency III. CONTRACT IMPLEMENTATION ADVANCE PAYMENT - The Government shall make an advance payment to the contractor in an amount equal to fifteen percent (15%) of the total contract price. CONTRACT COMPLETION - Once the project reaches an accomplishment of 95% of the total contract amount, the government may create an inspectorate team to make preliminary inspection and submit a punch-list to the contractor in preparation of the final turnover of the project. Punch-list - Remaining works - Work deficiencies for necessary corrections - Specific time to fully complete the project, considering the approved remaining contract time as of the date of contract suspension Suspension of work 1. The Government shall have the authority to suspend work wholly or partly due to any fortuitous events (force majeure). 2. The contractor shall have the right to suspend work operation on any or all projects along the critical path of activities after 15 calendar days from date of receipt of written notice from the contractor to the district engineer/regional director/consultant, due to the following: - Existence of right-of-way problems - Requisite construction plans are not issued to the contractor - Peace and order conditions - Government failure to deliver government-furnished materials and equipment as stipulated in the contract - Delay in the payment of contractor's claim for progress billing EXTENSION OF CONTRACT TIME The Government shall determine the amount of extension that a contractor is fairly entitled to, provided that the Government is not bound to take into account any claim for an extension of time No extension of contract time shall be granted to the contractor due to: 1. Ordinary unfavorable weather conditions 2. Inexcusable failure or negligence of the contractor to provide the required equipment, supplies or materials Other causes for which the Government is not directly responsible IV. EVALUATION OF CONTRACTORS PERFORMANCE SUBJECT AND SCOPE - All contractors undertaking projects with the government shall have their performance evaluated by offices concerned. - This evaluation shall be done during construction and upon completion of each government project. EVALUATION GUIDELINES - All offices concerned are mandated to adopt the CPES Implementing Guidelines as approved by the NEDA Infracom. Implementation Mechanism for CPES Each agency shall establish a CPES Implementing Unit (IU) which shall be responsible for CPES guidelines implementation, including but not limited to the supervision of performance evaluators accredited by the CIAP. SUBMISSION OF EVALUATION RESULTS All offices concerned shall submit the results of their performance evaluation to the CIAP within one week after the conduct of final evaluation Utilization of Evaluation Results The CIAP shall consolidate all of the evaluation results received and shall disseminate the same to all offices concerned. Such data shall be used in: - Pre-qualification and blacklisting of construction firms - Adopting measure to further improve performance of contractors in the prosecution of government projects LECTURE #7 BILL OF MATERIALS AND LABOR ESTIMATES CONTRACT DOCUMENTS The contract is defined by the contract documents, which are developed from the tender documents. The complete contract agreement usually consists of the following documents: AGREEMENT The most important document from the legal point of view is the agreement. It is sometimes called the contract. Since so many documents are included as contract documents, the agreement is the better term for this particular one. The form of the agreement can be standardized and used for many projects, or a unique document can be prepared for each project. Information usually included in the agreement is composed of three parts. The first part is a short introductory paragraph which defines the parties, gives the date of the agreement, and state that each party agrees to what follows. The second part contains the elements of contract and defines the work to be undertaken. The final paragraph confirms the agreement and provides space for signatures of the parties. QUANTITY TAKE-OFF The quantity "takeoff" is an important part of the cost estimate. It must be as accurate as possible and should be based on all available engineering and design data. Use of appropriate automation tools is highly recommended. Accuracy and completeness are critical factors in all cost estimates. An accurate and complete estimate establishes accountability and credibility of the cost engineer, therefore, providing greater confidence in the cost estimate. The estimate contingencies for programming purposes reflect the estimate confidence. BILL OF QUANTITIES The Bill Of Quantities (sometimes referred to as 'BoQ' or 'BQ') is a document prepared by the cost consultant (often a quantity surveyor) that provides project specific measured quantities of the items of work identified by the drawings and specifications in the tender documentation. The quantities may be measured in number, length, area, volume, weight or time. Preparing a bill of quantities requires that the design is complete and a specification has been prepared. The Bill of Quantities is issued to tenderers for them to prepare a price for carrying out the works. The bill of quantities assists tenderers in the calculation of construction costs for their tender, and, as it means all tendering contractors will be pricing the same quantities (rather than taking off quantities from the drawings and specifications themselves), it also provides a fair and accurate system for tendering. The contractor tenders against the bill of quantities, stating their price for each item. This priced bill of quantities constitutes the tenderer's offer. STANDARDS FOR BILL OF QUANTITIES It is very important that bills of quantities are prepared according to a standard, widely recognised methodology. This helps avoid any ambiguities or misunderstandings and so helps avoid disputes arising through different interpretations of what has been priced. Bills of quantities for general construction works were until recently most commonly prepared in accordance with the Standard Method of Measurement. In the Philippines, The Philippine Standard Method of Measurement of Building Works has been utilized on a number of major construction and development projects throughout the country and to that extent has become an industry stan