NCR-CITC points out disparity in DOLE DO 174-17

A disparity in the newly promulgated DOLE DO 174-17 (DOLE Department Order 174, series of 2017) which replaces DOLE DO 18A was pointed out during the April Quarterly Meeting of the NCR Construction Industry Tripartite Council (NCR-CITC). The disparity concerns the differing tests for Corporations, Partnerships and Cooperatives on the one hand and Sole Proprietorships on the other.

Atty. Marissa Garcia of the Bureau of Labor Relations (BLR) presented DOLE DO 174-17 during the NCR-CITC Quarterly meeting held on 20 April 2017. The said Department Order replaces DO 18A which regulates contracting and subcontracting. DOLE DO 174-17 puts stricter rules in the regulation of contracting and subcontracting. The said Department Order requires the contractor to have “Substantial Capital” and defines it as paid-up capital stock/shares of at lease Five Million Pesos in the case of corporations, partnerships and cooperatives and, in the case of single proprietors, a net worth of at least Five Million Pesos. Members of the NCR-CITC pointed out a disparity in the definition of “Substantial Capital”.

The disparity lies in the differing tests for “Substantial Capital”. Paid-up capital of at least Five Million Pesos does not necessarily equate to a minimum net worth of Five Million Pesos. As an example, a corporation with a Five Million Peso paid-up capital can have liabilities far exceeding the paid-up capital resulting in a net worth of far less than Five Million Pesos. Paid-up capital does not guarantee that a corporation, partnership or cooperative is solvent and an insolvent concern would conceivably be able to register under this Department Order. This defeats the entire objective of the Department Order.

The test for corporations, partnerships, cooperatives and single proprietors should be the same and based on net worth. PCAB (Philippine Contractors Accreditation Board) uses this test very successfully in its Categorization of contractors.

The NCR-CITC comments have been referred to the Bureau of Labor Relations (BLR) for action.