SEMINAR ON TRADE & INDUSTRY LAWS

COVERAGE:

Creation of CIAP (PD 1746) Contractors Licensing (RA 4566) Other Construction Laws on Consumer Welfare

(IRR of PD1594) Constructors Blacklisting (IRR of PD1594) Construction Arbitration (EO 1008)

Contructor Performance Evaluation System

MANDATE To promote, accelerate and regulate the growth and development of the construction industry in conformity with national goals (PD1746)

CIAP & Its Implementing Boards

CIAP

Construction Industry Arbitration Commission Constructio n Contract Dispute Resolution

Philippine Domestic Construction Board Construction Quality & Efficiency Improvemen t

Philippine Contractors Accreditation Board Contractors Licensing & Registratio n

Philippine Overseas Construction Board Overseas Contractors Registration & Development

PCAB MANDATE To issue, deny, suspend or revoke contractors license (R.A. 4566) To register license contractors for government projects (IB 1.5 IRR of P.D. 1594)

Types of Licenses Regular License reserved for and issued only to constructor-firms of Filipino sole proprietorship, or partnership/ corporation with at least 60% Filipino equity participation and duly organized and existing under and by virtue of the laws of the Philippines. Special License issued to a joint venture, a consortium, a foreign constructor or a project owner* which shall authorize the licensee to engage only in the construction of a single specific project;only for BOT or Government ICB projects. *Project Owner one who undertakes by himself, sans the service of a constructor, the construction of a project intended for sale, lease, commercial/ industrial use or any other income generating purpose

Contractors License License Validity Regular License: CFY (July1- Jun30) unless suspended, invalidated, or revoked by the PCAB & renewed annually Special License: valid until completion of the Single specific project; renewed yearly, as applicable

Contractors Licensing & Registration Licensing Categorization (Trade to AAA) Classification (GE, GB & Specialty) Government Registration & Classification Classification (per project type/kind) Size range (Small A to Large B)

Project Kinds General Engineering Construction GE1 - Road highway, pavement & bridges GE2 - Irrigation and flood control GE3 - Dam, reservoir and tunneling GE4 - Water supply GE5 - Port, harbor & offshore engineering General Building Construction GB1 - Building & industrial plant GB2 - Sewerage & sewerage treatment/ disposal plant & system GB3 - Water treatment plant & system GB4 - Park, playground & recreational work Specialty Construction SP1 - Foundation work SP2 - Structural steel work SP3 - Concrete pre-casting & pre-stressing SP4 - Plumbing & sanitary work SP5 - Electrical work SP6 - Mechanical work SP7 - Airconditioning or refrigeration SP8 - Elevator or escalator SP9 - Fire protection work SP10 - Waterproofing work SP11 - Painting SP12 - Well drilling work

SP13 - Navigation facilities SP14 - Communication facilities

PCAB CLASSIFICATION CRITERIA & ALLOWABLE RANGE OF CONSTRUCTION COST

License & Registration Criteria/Requirements Nationality Regular License (60% min. Filipino equity) Registration (75% min. Filipino equity) Technical personnel (employment of regular and full time STE with adequate relevant experience) Equipment Financial capabilities (meets minimum networth requirements) Track Record (for Government Registration) Construction Contractor undertakes or offers to undertake or purports to have the capacity to undertake, or submits a bid to, or does himself or by or through others construct, alter, repair, add to, subtract from, improve, move, wreck or demolish any building, highway, road, railroad, excavation or other structure, projects, development or improvement, or any part thereof, including erection of scaffolding or other structures or works in connection therewith. NOTE: The term contractor is synonymous with the term builder. A contractor may be an individual, firm, partnership, corporations, association or other organization or any combination thereof. It includes the principal contractor, subcontractor and specialty contractor.

Categorization Table For GENERAL ENGINEERING Classification* C FINANCIAL STE RELEVANT CONST. OVERAL A CAPACITY EXPERIENCE** L CREDIT T NETWORTH CREDIT INDIVID AGGREG CREDITPOINTS E / POINTS UAL ATE POINTSREQUIRED*** G STOCKHOL REQUIRED (years) (manREQUIRED O DERS EQUITY (1 point years) (5 points R (PhP) /P100,000) /year of actual Y const experience) AAA 10,000,000 100 10 60 300 1,150.00 AA A B C D 5,000,000 1,000,000 500,000 300,000 100,000 50 10 5 3 1 10 7 5 3 3 50 21 10 3 3 250 105 50 15 15 515.00 185.00 82.50 39.50 16.00

* Minimum Qualification Requirements For Principal Classification ** For Other Classification/s, Minimum Of 3 Years Actual Construction Experience *** Overall credit points-inclusive of Equipment Capacity (1 point/ P100Th), Experience of Firm (10 points/ year of active existence & 1 point/ P100Th of 3 year Average Annual Volume of Work Accomplished)

Categorization Table For GENERAL BUILDING Classification* C FINANCIAL CAPACITY STE RELEVANT CONST. OVERALL A EXPERIENCE** CREDIT POINTS T NETWORTH/ CREDIT INDIVIDU AGGREGA CREDIT REQUIRED*** E STOCKHOLDE POINTS AL TE POINTS GRS EQUITY REQUIRED (years) (man-years) REQUIRED O (PhP) (1 point (5 points R /P100,000) /year of actual Y const experience) AA 10,000,000 100 10 60 300 1,110.0 A AA A B C D 5,000,000 1,000,000 500,000 300,000 100,000 50 10 5 3 1 10 7 5 3 3 50 21 10 3 3 250 105 50 15 15 495.0 181.0 80.5 38.5 16.0

* Minimum Qualification Requirements For Principal Classification ** For Other Classification/s, Minimum Of 3 Years Actual Construction Experience *** Overall credit points-inclusive of Equipment Capacity (1 point/ P100Th), Experience of Firm (10 points/ year of active existence & 1 point/ P100Th of 3 year Average Annual Volume of Work Accomplished)

Categorization Table For SPECIALTY Classification*

C FINANCIAL STE RELEVANT CONST. OVERAL A CAPACITY EXPERIENCE** L CREDIT T NETWORTH CREDI INDIVID AGGREG CREDITPOINTS E / T POINTS UAL ATE POINTSREQUIRED*** G STOCKHOL REQUIRED (years) (manREQUIRED O DERS EQUITY (1 point years) (5 points R (PhP) /P100,000) /year of actual Y const experience) AAA AA A B C D Trade 10,000,000 5,000,000 1,000,000 500,000 300,000 100,000 5,000 100 50 10 5 3 1 0.05 10 10 7 5 3 3 None 60 50 21 10 3 3 None 300 250 105 50 15 15 None 710.00 295.00 131.00 70.50 33.50 16.00 0.05

* Minimum Qualification Requirements For Principal Classification ** For Other Classification/s, Minimum Of 3 Years Actual Construction Experience *** Overall credit points-inclusive of Equipment Capacity (1 point/ P100Th), Experience of Firm (10 points/ year of active existence & 1 point/ P100Th of 3 year Average Annual Volume of Work Accomplished) Causes for Disciplinary Action STE misrepresentation Financial misrepresentation Track record misrepresentation License lending, abandonment etc. (3rd party) Use of spurious documents (licenses, etc.) E.O. 913 violations (engaging in construction without a license)

Causes for Disciplinary Action Malpractices (abandonment,substantial departure from/disregard of plans & specs, misrep,use of spurious docs,fraudulent acts) Failure to comply with the provisions of the law (operating in unauthorized classification, expired or lapsed license,etc) Willful misrepresentation of a material & substantial fact in obtaining his license Conviction by a court offense involving moral turpitude PENALTIES License Suspension (3 months to 2 years) Revocation with blacklisting of AMO (24 months to 60 months) Fine for violation of RA 4566 (not less than 500Php to 5,000 Php) Fine for violation of EO 913 (500 Php to 150,000 Php) CONSTRUCTORS PERFORMANCE EVALUATION SYSTEM (CPES) (IRR of PD 1594) CONSTRUCTORS PERFORMANCE EVALUATION SYSTEM (CPES) A system of grading the performance of a constructor for specific kinds of project using a set of criteria Workmanships Materials Time Facilities Environmental Safety and Health Resource Deployment Road & bridges; housing & building; irrigation and flood control; ports & harbor; telecommunications projects

Contractors Blacklisting (IRR of PD 1594) Industry-level: License suspended, revoked, cancelled by PCAB

Agency-level: Constructors blacklisted by various government tendering agencies based on CIAP Uniform Guidelines for Blacklisting.

Causes for Disciplinary Action Failure to complete the project Abandonment of contract Failure to comply with contractual obligations Intolerable negative slippage Falsification of public documents Materials non-complying with specs/ delivery of substandard materials Failure or refusal to do necessary works Departure from plans and specs Termination of the contract Collusion/Pre-arranged bidding

Construction Arbitration Requires an arbitration agreement; Compared to litigation: arbitrators have technical expertise; parties choose arbitrators & draft terms of reference; proceedings are simple, faster & less expensive & arbitrators decision is binding; CIAC accredits arbitrators & are not permanent employees of CIAC Disputes for CIAC Adjudication Violation of specs for materials & workmanship Violation of the terms of the agreement Interpretation &/or application of contractual provisions Amount of damages Commencement time & delays Maintenance & defects Payment default of employer or contractor Changes in contract cost Construction Arbitration Enforcement: CIAC decision becomes final & executory after the lapse of 15 days from receipt (Even If appeal is taken within the reglamentary period provided no TRO) A writ of execution is issued by arbitrators with the concurrence of CIAC addressed to the Sheriff on other proper officer to execute decision, order or award. Of the 262 resolved cases, time lapse: Filing to award: 5 months & 5 days (average) Start of proceedings to award: 15 days (earliest)

Consumer Education/ Advocacy/ Assistance Metro Manila Construction Material Prices & Indices http://www.gpis.gov.ph Constructors Blacklisting http://www.coa.gov.ph

Philippine Construction Industry Constitutes an important segment of the industrial sector of the economy

CIAP & Its Implementing Boards PCAB MANDATE To issue, deny, suspend or revoke contractors license (R.A. 4566) To register license contractors for government projects (IB 1.5 IRR of P.D. 1594)

CIAP

Construction Industry Arbitration Commission Constructio n Contract Dispute Resolution

Philippine Domestic Construction Board Construction Quality & Efficiency Improvemen t

Philippine Contractors Accreditation Board Contractors Licensing & Registratio n

Philippine Overseas Construction Board Overseas Contractors Registration & Development

Contractors Licensing & Registration To promote, accelerate and regulate the growth and development of the construction industry in conformity with national goals (PD1746)