CHAPTER 4

MANAGEMENT AND LEGAL STUDY

The management aspect implies a clear and precise identification of duties and

responsibilities of the owners and employees, the flow of authority and manpower level

requirement. It also includes business policies, rules and regulations implemented in the

duration of business operation, organizational structure, training development and other

information needed in management.

The main idea of creating a management is to have a central body to work on

achieving the companys goals. They will be the one who will use the businesss

resources to reach the desired outcome.

The management will formulate policies and standards for the employees of the

company. The management will also follow the law provided by the government. This

will bring a harmonious relationship between the management and the employees as

well as the government.

A. Form of Ownership

The form of organization of Hydro Berry Bliss will be partnership. There will be

four (4) general partners. The agreement will be in the form of writing and will be

register in the Office of Securities and Exchange Commission. They will form a contract

among the group which is the Article of Partnership. In this case, misunderstandings

and argument among the partners may be avoided or minimize. There will be four (4)

general partners who take part in the management of the business, and also take

responsibility for the liabilities of the business. They are going to divide the provide
depending on partners share of capital. If our total project cost is less than our capital

contribution, we will put it in the bank in case of emergency reasons.

B. Vision, Mission, Core Values and Objectives

Vision

To be the most successful and respected unseasonal strawberry producer. A

very diligent, vertically integrated company diversifying the seasonality of strawberries

into an atypical one.

Mission statement

To attract and attain customers with high value, good quality, and the incredible

manufacture of the product.

Core Values

The business will be guided by the following values and principles:

Constant Improvement- We acknowledge our success but not contented.

We always try to be the best version of ourselves.

Customer Focus- We treat our customers as our BOSS. We always keep

in mind the demands of the customers.

Love and Respect of Life- We are farming bio-dynamically, ensuring the

sustainability of the farm, in social, cultural, spiritual, and economic terms.

Community Based- We are fostering a mutually supportive and caring

community, on and off the farm.

Continuous Education- We are a centre for cultural activity including

education, training and research in biodynamic agriculture.

 Value of People- We are working associatively with other people and

businesses.

Objectives

To develop a sustainable agriculture system for guaranteed adequate food

production in the foreseeable future.

To develop self-sufficient agriculture system which would rely as much as

possible upon resources from within its own resources.

To develop an alternative strategy over chemical farming which would be

a guideline for the working of biological processes in natural eco-systems

To ensure that our customers are served with the highest quality, while

maintaining affordability for consumers.

To lead the agriculture industry in embracing the very latest in

technologies to deliver the very best products for domestic and,

increasingly, international customers.

To create mentoring support and help to facilitate farm and food-related

innovation and diversification in partnership with government and non-

government organizations.

C. Capital Contribution

The pre-operating capital for this business will be 1,000,000 each capitalist

partners and capitalist-industrial partner, with a total of 4,000,000.

GENERAL PARTNERS CAPITAL CONTRIBUTION SOURCE OF CAPITAL

A 1,000,000 Personal Savings

B 1,000,000 Personal Savings

C 1,000,000 Personal Savings

D 1,000,000 Personal Savings

Total 4,000,000

TABLE 42

PARTNERS CAPITAL CONTRIBUTION

D. Organizational Chart

The organizational chart is a chart that outlines the responsibilities and

accountabilities of each person in an organization. It is essential for employees to know

their position in the organization which can be determined in the organizational

structure.

As seen in our organizational chart, Hydro Berry Bliss line of authority starts with

the partners who provided the necessary capital needed for our farm to be operational.

Then, directly accountable to the partners is the general manager, who supervises the

overall operations in the plant. In order for the work of the general manager to be as

efficient and effective as possible, there is an assistant manager to assist her in

performing her job. Under the direct supervision of the general manager, there is an

accounting clerk, an office employee, six hydroponic farmers, four hydroponic

maintenance personnel, five packaging staff, three storage staff personnel, four delivery

staff personnel and three security guards.

 Each and every one of them, while performing their functions in the organization

as efficient and effective as possible, contributes to the achievement of the

organizational goals and the overall success of the business

FIGURE 4.1

Organizational Chart

E. Manpower Requirements

It is very essential in all business organizations to know their manpower

requirements to operate systematically and effectively. Manpower requirements are set

as the organizations standards with regards to employees capacity fitted in various

positions. Setting forth such requirements would help business organizations achieve

their overall goals through efficient business operations.

 To effectively and efficiently operate business, establishment and proper

assignment of responsibilities must be done. Hydro Berry Bliss will employ one (1)

General Manager, one (1) Assistant Manager, one (1) Accounting Clerk, one (1) Office

Employee, six (6) hydroponic farmers, two (2) hydroponic maintenance personnel in the

morning, two (2) hydroponic maintenance personnel in the evening, five (5) packaging

staff, three (3) storage staff personnel, four (4) delivery staff personnel, and two (2)

security guards in the morning and one (1) in the evening. In addition, there will be three

(3) partners which makes a total of 32 persons performing all the functions in achieving

the objectives and success of the business organization.

Department / Position Number of Employees

General Manager 1

Assistant Manager 1

Accounting Clerk 1

Office Employee 1

Hydroponic Farmers 6

Hydroponic Farm Maintenance Personnel

Day shift 2

Night shift 2

Packaging Staff 5

Storage Staff 3

Delivery Staff 4

Security Guards

Day shift 2
 Night shift 1

TABLE 43

NUMBER OF EMPLOYEES

E.1 Management and Employee Duties and Responsibilities

Job Title: General Manager

Duties and Responsibilities

Directs and coordinates worker activities, such as planting, irrigation,

chemical application, harvesting, grading, payroll, and recordkeeping.

Contracts with farmers or independent owners for raising of crops or

for management of crop production.

Coordinates growing activities with those of engineering, equipment

maintenance, packing houses, and other related departments.

Analyzes market conditions to determine acreage allocations.

Confers with purchasers and arranges for sale of crops.

Records information, such as production, and farm management

practices, and prepares financial and operational reports.

Determines procedural changes in drying, grading, storage, and

shipment for greater efficiency and accuracy.

Inspects equipment to ensure proper functioning.

Skills and Specifications

 Must possess at least a Bachelors/ College Degree, Post Graduate

Diploma/ Masters Degree, Professional License (Passed

Board/Bar/Professional License Exam), Post Graduate Diploma/

Masters Degree in management or other formal education in business

related field

Excellent interpersonal, verbal and written communication skills

Excellent management skills

Proven ability to cope with conflict, stress and crisis situations

Job Title: Assistant Manager

Duties and Responsibilities

Maintains accurate records and propagation journals

Orders necessary equipment and seeds

Skills and Specifications

With at least 1 year of experience in farming

Excellent communication skills

Excellent decision-making skills

Job Title: Accounting Clerk

Duties and Responsibilities

Project and compile an annual budget and potential income report for

the greenhouse

Records business transactions

Compiles all business documents

Reconciles bank accounts

 Presents financial statements

Skills and Specifications

Have a Bachelors Degree in Accountancy

Excellent computer proficiency

Excellent skills in analysis

Job Title: Office Employee

Duties and Responsibilities

Collect, count, and disburse money, do basic bookkeeping and

complete banking transactions

Communicate with customers, employees, and other individuals to

answer questions, disseminate or explain information, take orders and

address complaints

Answer telephones, direct calls and take messages

Compile, copy, sort, and file records of office activities, business

transactions, and other activities

Complete and mail bills, contracts, policies, invoices, or checks

Skills and Specifications

Must have a minimum high school diploma

Must have a variety of general office skills

Has the ability to adapt to daily changes in their responsibilities

Job Title: Hydroponic Farmers

Duties and Responsibilities

 Chooses plants to be planted for each growing season that can be

grown cost effectively hydroponically

Responsible for preparing the area for planting, caring for the crops

and harvesting

Must keep plants watered, fertilized and free of weeds that compete

with the crops

Find ways to make hydroponic systems more efficient

Skills and Specifications

Have a Bachelors Degree in Agriculture.

With at least 1 year of experience in farming.

Excellent communication skills.

Excellent decision-making skills.

Job Title: Maintenance Personnel

Duties and Responsibilities

Oversees the maintenance of hydroponic equipment and greenhouse

Test and maintain water quality for growing

Skills and Specifications

With at least 1 year of experience in farming.

Job Title: Packaging Staff

Duties and Responsibilities

Mark and label packs using marking tools

Measure, weigh, and count products and materials

 Examine and inspect packs in order to ensure that packing

specifications are met

Record product, packaging, and order information on specified forms

and records

Remove completed or defective products or materials

Skills and Specifications

Has the ability of manual handling

Has knowledge of fruit and vegetables

Has the ability to work as part of a team and under pressure

Ability to work on own initiative

Flexible, reliable and enthusiastic

Job Title: Storage Staff

Duties and Responsibilities

Receive and count stock items, and record data manually or using

computer

Pack and unpack items to be stocked on shelves in stockrooms,

warehouses, or storage yards

Verify inventory computations by comparing them to physical counts of

stock, and investigate discrepancies or adjust errors

Store items in an orderly and accessible manner in tool rooms, supply

rooms, or other areas

Mark stock items using identification tags, stamps, electric marking

tools, or other labeling equipment

Skills and Specifications

Supply chain management expertise

Has leadership, communication and interpersonal skills

Has problem-solving abilities

Computer literate

Job Title: Delivery Staff

Duties and Responsibilities

Drives safely to their destination

Helps with the loading and unloading of the products

Keeps logs of their activities

Makes sure their vehicles are maintained in good working order

Skills and Specifications

Must have a driving license

Has good eyesight, hearing and physical condition

Job Title: Security Guards

Duties and Responsibilities

Secure the place or store from any act of emergency or violence

Patrol the place and observe each person who will enter the store

Call police or fire department in case of emergency

Greet customers who will enter the laundry shop

Skills and Specifications

At least college level

 Must have at least 1-2 years of experience

Must be at least 55 in height and has a strong structure

E.2 Employment Process

E.2.1 Requirements:

1. Must have an experience in the position they are applying

2. Must be of good moral character

3. Must have an excellent communication and coordination

skills with subordinates and customers

4. Must be physically fit

5. Must have the following:

a. Resume with picture

b. NBI clearance

c. Medical certificate

Interview

The manager will screen applications and resumes prior to

scheduling interviews. Initial and final interviews are generally conducted

by the manager.

F. Organizational Policies and Procedures

F.1 Different Employee Types and Their Rights

Regular Employees- A regular employee is similar to an

indispensable cog in the corporate machine. Under the law, regular

employees are those hired for activities which are necessary or

 desirable in the usual business of the employer. Therefore, a regular

employee enjoys the benefit of security of tenure as guaranteed by the

Constitution.

Probationary Employees- This category pertains to workers which

placed on a probationary status for 6 months, as is customary with the

general practice. Here, the employee is in the evaluating or qualifying

stage, and he may be converted to regular status if his performance is

up to par with the company standard. Such reasonable standards must

be made known to the employee at the time of hiring.

Term Employees- Also known as fixed-term work, term employees

are those who are hired for a specific period only. There are two

elements that should be considered so that term employment will not

circumvent security of tenure: First, the fixed period of employment

should be knowingly and voluntarily agreed upon by the parties,

without any force or pressure affecting his consent. Second, it should

appear that the employer and employee dealt with each other on more

or less equal terms, with no moral dominance exerted by the employer

at the disadvantage of the employee.

Seasonal Employees- Hired for activities which are called to work

from time to time.

Casual Employees- These workers are hired for work or activities

which are merely incidental to the business. Casual workers who have

rendered at least one year of service, whether continuous or not, are

 deemed to be regular employees with respect to the work for which

they are employed, for as long as the activity exists.

F.2 Orientation

Orientation is necessary for the new employees. They are introduced to their

co-workers and is given information such as working hours, place of work,

performance standards, benefits and facilities, and names of the immediate and

other officers.

F. 3 Employee Records

Employee records are maintained to monitor and define employees

eligibility for employment, promotion, compensation, transfer, termination,

disciplinary or other adverse action.

Personnel File

Employment Application

Family Emergency Contact Form

Documented Disciplinary Action History

Resume

Periodic Appraisal

Job Evaluation

Performance Development Plan

Training Certificates and Attendance Evidence

Current Personal Contact Information

Payroll Files

History of the Employees Job

 Departments Compensation Changes

Loans

Employee Medical File

Doctors Notes

Drug Test Information

Required Physical Information

F.4 Contracts of Employment

An agreement is signed by the employer and the employee through the

Contracts of Employment. This serves as the sign of the employer-employee

relationship.

Working Hours

The office workers will be working from 8am to 5pm including the noon

break. Plant employees will work for 16hours in shifting system. First shift will be

from 8am to 5pm while the second shift will start at 5pm up to 2am, including the

delivery process. Security guards will be working for 24hours in shifting system.

First shift is from 8am to 5pm, second shift is from 5pm to 2am, and the third shift

will be from 2am to 8am.

Sick Leave

To acquire the sick leave benefit, employees need to have a certification

from a physician regarding their illness or injury. Notification to the office must

be made the soonest possible they can.

Absences
 Absences with leave is recognized only when there is an

application submitted to the office. This will take effect only upon approval of an

officer.

Absences without leave is automatically without pay and

considered a delinquency. This can be a ground for termination.

Tardiness and Penalty

Any employee shall be considered habitually tardy if he/she incurs

tardiness regardless of minutes per day, ten times a month or two consecutive

months or two months in a semester during the year. He is subject to disciplinary

action: 1st offense is reprimand, 2nd offense is suspension for 1 day to 30 days

and 3rd offense is dismissal.

Standard Penalties

Any employees found guilty of violating any of the business rules and

regulations shall undergo disciplinary action. They shall be sanctioned depending

on the intensity of their violation, it could be reprimand, suspension, or dismissal.

F.5 General Policy

Employee Conduct

The employees must adhere to their duties and responsibilities as a

condition of employment. Employees must not violate policies relating to their

appropriate behavior, proper dress code, work place safety procedures,

harassment policies, and policies regarding computer and internet usage.

Equal Opportunity
 The organization promotes fair treatment in the work place. We

discourage inappropriate behavior from employees, supervisors, and

independent contractor in regard to the race, gender, sexual orientation or

religious and cultural beliefs of another person within the organization.

Attendance and Time Off

The employees must adhere to work schedules.

Substance Abuse

The organization prohibits the use of drugs, alcohol, ad tobacco products

during work hours, on company property or during company functions. The

company also conduct surprise drug test to its employees.

F.6 Company Benefits

Salaries and Wages

Monthly salaries of Hydro Berry Bliss employees will be divided into two

payroll periods on the 15th and 30th of the month.

Daily and Monthly Salary of Employees per Department

POSITION NUMBER OF NUMBER DAILY MONTHLY

EMPLOYEES OF DAYS SALARY PER SALARY OF

OF WORK EMPLOYEES EMPLOYEES

General Manager 1 26 1,700.00 44,200.00

Assistant 1 26 1,400.00 36,400.00

Manager

Accounting Clerk 1 26 600.00 15,600.00

Office Employee 1 26 400.00 10,040.00

Hydroponic 6 26 250.00 39,000.00

Farmers

Hydroponic

Maintenance

Personnel

Day Shift 2 26 350.00 18,200.00

Night Shift 2 26 365.56 19,009.12

Packaging Staff 5 26 300.00 39,000.00

Storage Staff 3 26 300.00 23,400.00

Personnel

Delivery Staff 4 26 350.00 36,400.00

Security Guard

Day Shift 2 30 500.00 30,000.00

Night Shift 1 30 522.22 15,666.60

Total 326,915.72

TABLE 44

SALARIES AND WAGES

Cancelled Day-off/ Holiday

Every employee shall be provided with a rest period of 24 consecutive

hours after every six (6) consecutive normal working days.

 Rules for pay of daily paid employees during regular holiday and special

holiday.

Condition Regular Holiday Special Holiday

Did not Work Basic Wage + COLA No Work, No Pay

Did Work (Basic Wage + COLA) x [(Daily Rate x 1.3) +

2 COLA]

Overtime Work [(Basic Wage + COLA) x [(Daily Rate x 1.3) +

2] + (Basic Hourly Rate COLA] + (Daily Rate x

x No. of excess hours x 1.69 x No. of excess

2.6) hours)

Worked on a Rest Day [(Basic Wage + COLA) x [(Daily Rate x 1.5) +

2] + [(Basic Wage x 2) x COLA]

.30]

Worked Overtime on a [(Basic Wage + COLA) x [(Daily Rate x 1.5) +

Rest Day 2] + [(Basic Wage x 2) x COLA] + (Daily Rate x

.30] + [(Basic Hourly 1.95 x No. of excess

Rate x 2.6) x No. of hours)

excess hours x 1.3]

TABLE 45

WAGES

List of Regular Holidays

January 1 New Year's Day

 April 9 Araw ng Kagitingan

Maundy Thursday Movable date

Good Friday Movable Date

May 1 Labor Day

June 12 Independence Day

June 26 Eid'l Fitr

August 28 National Heroes' Day

November 30 Bonifacio Day

December 25 Christmas Day

December 30 Rizal Day

Eidl Fitr (to be proclaimed)

Eidul Adha (to be proclaimed)

List of Special Holiday

January 2- based on Proclamation No. 117

January 28 Chinese New Year

February 25 EDSA Revolution Anniversary

April 15 Movable Date

August 21 Ninoy Aquino Day

October 31 additional special (non-working) day

November 1 All Saints' Day

December 31 last day of the year

13th Month Pay

 The 13th month pay is a labor standard provision of the law that the

Department of Labor and Employment (DOLE) does not compromise as to its

payment. It is defined as 1/12 of the basic salary of an employee within a

calendar year. Basic salary include remunerations paid by an employer to an

employee for services rendered but may not include cost-of-living-allowances

(COLA) granted pursuant to President Decree No. 525 or Letter of Instructions

no. 174.

Paternity and Maternity Leave

Paternity Leave refers to the benefits granted to a married male employee

allowing him not to report for work for seven (7) days but continues to earn the

compensation therefor, on the condition that his spouse has delivered a child or

suffered a miscarriage for purposes of enabling him to effectively lend support to

his wife in her period of recovery and/or in the nursing of the newly-born child.

For the maternity leave, a covered female employee who has paid at least

three monthly maternity contributions in the twelve-month period preceding the

semester of her childbirth, abortion or miscarriage and who is currently employed

shall be paid a daily maternity benefit equivalent to one hundred percent (100%)

of her present basic salary, allowances and other benefits or the cash equivalent

of such benefits for sixty (60) days

Paternity and maternity leave benefits as provided by law shall be given to

every employee entitled thereto, upon complying with all the requirements of the

company and upon proper verification by the Companys duly authorized

representatives.
 SSS/PHIC/HDMF Benefits

a. Social Security System (SSS)

Republic Act No. 1161, as amended, was established on September 1,

1957. Its purpose is to render assistance to workers and their families in case the

source of their income is terminated, reduced or interrupted because of sickness,

disability, death or old age. The law provides for the compulsory coverage of all

employees in private firms up to the age of 16 with a minimum average of 1000

monthly salary. Funds for the payment of various benefits provided for in the act

came from all premium payments equal to 6% of the employees monthly

compensation shared as follows 2.5% contributed by employee and 3.5%

contribution by the employer.

Employees Compensation (EC) Program aims to assist those who suffer

from work-connected sickness or injury resulting in disability or death. Starting

June 1984, the benefits under the EC Program may be enjoyed simultaneously

with benefits under the Social Security Program, thus, allowing double

compensation for covered members who suffer work-related contingencies. All

SSS-registered employers and their employees are compulsorily covered under

the EC Program and need not register again under the EC.

b. PhilHealth Membership

All government and private sector employers are required to register with

PhilHealth to enable them to provide social health insurance coverage to their

employees. Private sector employers (including those of household helps) who

 have registered with the SSS prior to July 1, 1999 are automatically registered

but are required to update their records with PhilHealth.

Employers may register through the Philippine Business Registry (PBR).

Once registered in this system, they will no longer be required to submit

documents. However, if the employer fails to register through the PBR, additional

documents are required. For partnership like Hydro Berry Bliss, Securities and

Exchange Commission (SEC) Registration is required.

There are unified Medicare benefits offered by PhilHealth like: room and

board, drug and medicines, x-ray lab and other laboratory tests, doctors fee,

Hospital Fee, Surgical Family Planning, Outpatient services and etc.

Pag-IBIG Membership

The Home Development Mutual Fund, more popularly known as PAG-

IBIG Fund created on June 11, 1978virtue of Presidential Decree 1530, later

amended by Presidential Decree 1572 and Republic Act 7742.

A PAGIBIG members savings enjoy the following features: Double or

Triple monthly savings, Annual Dividend Earnings Portable, Tax-free and

Government guaranteed. Members can also enjoy their Short-Term Loan benefit

and etc.

G. Code of Ethics

It is the policy of Hydro Berry Bliss to provide our Code of Ethics that will serve

as a guide to proper business conduct for all employees. We have a commitment to

work within the boundaries of what is a reasonable industry expectation. During agreed
work hours, we expect that most of the efforts of people on the farm will be put towards

the operations of the business.

Our beliefs in high ethical standards are carried through in our commitments to

compliance, integrity, team work, respect, quality, punctuality, efficiency, training and

environmental awareness.

Compliance

We conduct business in compliance with all applicable laws and regulations that

relate to the Company's worldwide business interests.

Integrity

We are honest, have strong moral principles; moral uprightness and

forthright in all dealings with others: co-workers, customers, suppliers,

shareholders, competitors and the community. We act willingly and consistently

in accordance with social standards or moral values of society.

Teamwork

Teamwork is essential for us to achieve our goals and perform well under

pressure or in stressful circumstances. We expect all staff to establish effective

collaborative relationships with other people in the business and interact

appropriately and successfully with people of all different types and at different

levels.

Respect
All staff are treated courteously and with respect. We recognize the significant

benefits that come from the diversity of individuals and ideas.

Quality

We are committed to providing products and services that meet or exceed

customers' expectations through the continuous improvement of our core

processes and the active involvement of our employees to comply with

requirements.

Punctuality

We value our people being prepared to start work as agreed. We understand that

there may be occasions where people may need to make other arrangements if

they are unavailable to ensure the necessary farm operations actually happen. It

is a requirement to take appropriate action to inform others of the inability to meet

a time commitment.

Efficiency

We ensure that work is performed in an efficient, economical and effective

manner and to a standard acceptable to the business. We are conscientious in

carrying out our duties and make the most productive use of our time while on

duty. We work co-operatively and effectively within the team environment.

Training
 The business has a policy of inducting and training all staff into new tasks and

skills. It also strives to give people an opportunity to pursue career development

in farming through training and education within the business.

Environmental awareness

This business respects and complies with all relevant environmental legislation,

regulations and Government policies. It adheres to all approved environmental

guidelines and standards applicable to the area of work and minimises pollution

and environmental impacts as a result of any activities.

H. Project Schedule
 FIGURE 4.2

GANTT CHART

(WEEKS)

I. Internal Controls

Administrative Controls

a. Proper allocation of work load to employees

b. Establishment of standard hours in performing a task.

c. Regular inspection of farm equipment.

d. Place farm tools in a safe cabinet.

 e. Properly display warning and information signposts throughout the area.

Properly label tools and supplies.

f. Implement proper farming attire.

Accounting Controls

a. Separate bookkeeping, deposits and reporting duties. Only authorized

personnel can make cash deposits. All deposits must be presented for

deposit within the day.

b. Keep the cash on hand on a safe locker to prevent theft. Only allow an

accountable officer to access the cash on hand.

c. Establishment of an imprest petty cash fund.

d. Maintain documents such as invoices, inventory receipts, purchase

order in a timely and consistent manner. These documents shall serve

as evidences in the occurrence of losses or discrepancies.

e. Apply physical and electronic measures to protect financial information.

Allow only authorized personnel to access financial records.

f. Conduct monthly bank reconciliation. Maintain the book records and

compare it with the monthly back statement.

g. Allow only certain types of transactions to be approved by the partners.

This will prevent employees to enter in to fraudulent transactions.

J. Legal Requirements

Before a corporation can operate legally, it has to comply first with certain

registration requirements which are summarized below:

PLACE OF REQUIREMENTS FOR CERTIFICATES ISSUED

 REGISTRATION REGISTRATION

Securities and Exchange Articles of Partnership SEC Certificate

Commission Filed SEC Registration

Form

City/ Municipal or Certification of Registration Mayors Permit/ Barangays

Barangays Office of Business Name Permit and License to

operate (renewable

annually)

Bureau of Internal Revenue SEC Registration BIR Registration No.

Articles of Partnership Partnerships Tax

Identification Number (TIN)

Registration of books,

invoices and official

receipts

Social Security System Filed SSS Application Form SSS Certificate of

List of Employees Membership

SSS Employer ID Number

Philippine Health Insurance SEC Registration PhilHealth Employer

Corporation Employer Data Record or Number (PEN) and the

ERI Form Certificate of Registration

Business Permit or License Identification Number (PIN)

and Member Data Record

 (MDR) for concerned

employees

Home Development Mutual SEC Registration PAGIBIG Fund Certificate

Fund Articles of Partnership of Membership

PAGIBIG Fund Employer

ID Number

See accompanying forms in the Appendix

TABLE 46

LEGAL REQUIREMENTS

II. Basic Legal Fees

SEC Registration Fee 2,730

BIR Registration 500

Barangay Clearance 500

Community Tax Certificate 500

Mayors Business Permit Fee 2,500

Fire Safety and Inspection Fee 1,340

Sanitary Permit 200

Total 8,270

TABLE 47

BASIC LEGAL FEES

K. Labor Laws for Employees

Employers may implement policies and impose terms and conditions of

employment as they deem fit given their operating and profitability requirements but

must be consistently aligned with the mandated labor requirements set forth in the

Labor Code of the Philippines.

Under the Labor Code, employees are entitled to compensation or wages,

overtime pay, holiday and premium pay, service charges and tips in service businesses,

SSS, EC and NHI remittances, service incentive leaves, and retirement pay.

Art. 82. Coverage. The provisions of this Title shall apply to employees in all

establishments and undertakings whether for profit or not, but not to government

employees, managerial employees, field personnel, members of the family of the

employer who are dependent on him for support, domestic helpers, persons in the

personal service of another, and workers who are paid by results as determined by the

Secretary of Labor in appropriate regulations. As used herein, "managerial employees"

refer to those whose primary duty consists of the management of the establishment in

which they are employed or of a department or subdivision thereof, and to other officers

or members of the managerial staff. "Field personnel" shall refer to non-agricultural

employees who regularly perform their duties away from the principal place of business

or branch office of the employer and whose actual hours of work in the field cannot be

determined with reasonable certainty.

Art. 83. Normal hours of work. The normal hours of work of any employee shall

not exceed eight (8) hours a day.

 Art. 84. Hours worked. Hours worked shall include (a) all time during which an

employee is required to be on duty or to be at a prescribed workplace; and (b) all time

during which an employee is suffered or permitted to work. Rest periods of short

duration during working hours shall be counted as hours worked.

Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may

prescribe, it shall be the duty of every employer to give his employees not less than

sixty (60) minutes time-off for their regular meals.

Art. 86. Night shift differential. Every employee shall be paid a night shift

differential of not less than ten percent (10%) of his regular wage for each hour of work

performed between ten oclock in the evening and six oclock in the morning.

Art. 87. Overtime work. Work may be performed beyond eight (8) hours a day

provided that the employee is paid for the overtime work, an additional compensation

equivalent to his regular wage plus at least twenty-five percent (25%) thereof. Work

performed beyond eight hours on a holiday or rest day shall be paid an additional

compensation equivalent to the rate of the first eight hours on a holiday or rest day plus

at least thirty percent (30%) thereof.

Art. 88. Under time not offset by overtime. Under time work on any particular day

shall not be offset by overtime work on any other day. Permission given to the employee

to go on leave on some other day of the week shall not exempt the employer from

paying the additional compensation required in this Chapter.

 Art. 90. Computation of additional compensation. For purposes of computing

overtime and other additional remuneration as required by this Chapter, the "regular

wage" of an employee shall include the cash wage only, without deduction on account

of facilities provided by the employer.

Art. 91. Right to weekly rest day.

1. It shall be the duty of every employer, whether operating for profit or not, to

provide each of his employees a rest period of not less than twenty-four (24)

consecutive hours after every six (6) consecutive normal work days.

2. The employer shall determine and schedule the weekly rest day of his

employees subject to collective bargaining agreement and to such rules and

regulations as the Secretary of Labor and Employment may provide. However,

the employer shall respect the preference of employees as to their weekly rest

day when such preference is based on religious grounds.

Art. 93. Compensation for rest day, Sunday or holiday work.

1. Where an employee is made or permitted to work on his scheduled rest day, he

shall be paid an additional compensation of at least thirty percent (30%) of his

regular wage. An employee shall be entitled to such additional compensation for

work performed on Sunday only when it is his established rest day.

2. When the nature of the work of the employee is such that he has no regular

workdays and no regular rest days can be scheduled, he shall be paid an

 additional compensation of at least thirty percent (30%) of his regular wage for

work performed on Sundays and holidays.

3. Work performed on any special holiday shall be paid an additional compensation

of at least thirty percent (30%) of the regular wage of the employee. Where such

holiday work falls on the employees scheduled rest day, he shall be entitled to

an additional compensation of at least fifty per cent (50%) of his regular wage.

4. Where 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.

Art. 94. Right to holiday pay.

1. Every worker shall be paid his regular daily wage during regular holidays, except

in retail and service establishments regularly employing less than ten (10)

workers;

2. The employer may require an employee to work on any holiday but such

employee shall be paid a compensation equivalent to twice his regular rate; and

3. As used in this Article, "holiday" includes: New Years Day, Maundy Thursday,

Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of

July, the thirtieth of November, the twenty-fifth and thirtieth of December and the

day designated by law for holding a general election.

Art. 95. Right to service incentive leave.

 1. Every employee who has rendered at least one year of service shall be entitled

to a yearly service incentive leave of five days with pay.

2. This provision shall not apply to those who are already enjoying the benefit

herein provided, those enjoying vacation leave with pay of at least five days and

those employed in establishments regularly employing less than ten employees

or in establishments exempted from granting this benefit by the Secretary of

Labor and Employment after considering the viability or financial condition of

such establishment.

3. The grant of benefit in excess of that provided herein shall not be made a subject

of arbitration or any court or administrative action.

Art. 99. Regional minimum wages. The minimum wage rates for agricultural and

non-agricultural employees and workers in each and every region of the country shall

be those prescribed by the Regional Tripartite Wages and Productivity Boards. (As

amended by Section 3, Republic Act No. 6727, June 9, 1989).

Art. 102. Forms of payment. No employer shall pay the wages of an employee by

means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object

other than legal tender, even when expressly requested by the employee. Payment of

wages by check or money order shall be allowed when such manner of payment is

customary on the date of effectivity of this Code, or is necessary because of special

circumstances as specified in appropriate regulations to be issued by the Secretary of

Labor and Employment or as stipulated in a collective bargaining agreement.

 Art. 103. Time of payment. Wages shall be paid at least once every two (2)

weeks or twice a month at intervals not exceeding sixteen (16) days. If on account of

force majeure or circumstances beyond the employers control, payment of wages on or

within the time herein provided cannot be made, the employer shall pay the wages

immediately after such force majeure or circumstances have ceased. No employer shall

make payment with less frequency than once a month. The payment of wages of

employees engaged to perform a task which cannot be completed in two (2) weeks

shall be subject to the following conditions, in the absence of a collective bargaining

agreement or arbitration award:

1. That payments are made at intervals not exceeding sixteen (16) days, in

proportion to the amount of work completed;

2. That final settlement is made upon completion of the work.

Art. 104. Place of payment. Payment of wages shall be made at or near the place

of undertaking, except as otherwise provided by such regulations as the Secretary of

Labor and Employment may prescribe under conditions to ensure greater protection of

wages.

Art. 105. Direct payment of wages. Wages shall be paid directly to the workers to

whom they are due, except:

1. In cases of force majeure rendering such payment impossible or under other

special circumstances to be determined by the Secretary of Labor and

Employment in appropriate regulations, in which case, the worker may be paid

 through another person under written authority given by the worker for the

purpose; or

2. Where the worker has died, in which case, the employer may pay the wages of

the deceased worker to the heirs of the latter without the necessity of intestate

proceedings.

Art. 113. Wage deduction. No employer, in his own behalf or in behalf of any

person, shall make any deduction from the wages of his employees, except:

1. In cases where the worker is insured with his consent by the employer, and the

deduction is to recompense the employer for the amount paid by him as premium

on the insurance;

2. For union dues, in cases where the right of the worker or his union to check-off

has been recognized by the employer or authorized in writing by the individual

worker concerned; and

3. In cases where the employer is authorized by law or regulations issued by the

Secretary of Labor and Employment.

Art. 282. Termination by employer. An employer may terminate an employment

for any of the following causes:

1. Serious misconduct or wilful disobedience by the employee of the lawful orders

of his employer or representative in connection with his work;

2. Gross and habitual neglect by the employee of his duties;

 3. Fraud or wilful breach by the employee of the trust reposed in him by his

employer or duly authorized representative;

4. Commission of a crime or offense by the employee against the person of his

employer or any immediate member of his family or his duly authorized

representatives; and

5. Other causes analogous to the foregoing.

Art. 285. Termination by employee.

1. An employee may terminate without just cause the employee-employer

relationship by serving a written notice on the employer at least one (1) month in

advance. The employer upon whom no such notice was served may hold the

employee liable for damages.

2. An employee may put an end to the relationship without serving any notice on

the employer for any of the following just causes:

3. Serious insult by the employer or his representative on the honor and person of

the employee;

4. Inhuman and unbearable treatment accorded the employee by the employer or

his representative;

5. Commission of a crime or offense by the employer or his representative against

the person of the employee or any of the immediate members of his family; and

6. Other causes analogous to any of the foregoing.

L. Income Taxes
 Under the National Internal Revenue Code (NIRC), the business is considered as

a partnership, or in NIRC terms, as a corporation. From Section 27 of the NIRC, except

as otherwise provided in this Code, an income tax of thirty percent (30%), effective

January 1, 2009, is hereby imposed upon the taxable income derived during each

taxable year from all sources within and without the Philippines by every corporation.

The business will use a calendar year for tax purposes.

SEC. 145 Retirement of Business - A business subject to tax pursuant to the

preceding sections shall, upon termination thereof, submit a sworn statement of its

gross sales or receipts for the current year. If the tax paid during the year be less than

the tax due on said gross sales or receipts of the current year, the difference shall be

paid before the business is considered officially retired.

SEC. 146 Payment of Business Taxes - The taxes imposed under Section 143

shall be payable for every separate or distinct establishment or place where business

subject to the tax is conducted and one line of business does not become exempt by

being conducted with some other business for which such tax has been paid. The tax

on a business must be paid by the person conducting the same.

Annual income tax returns for corporations and partnerships provisions are as

follows:

Tax Form: BIR Form 1702 Annual Income Tax Return (For Corporations

and Partnerships)

For corporations, partnership and other non-individual taxpayers that will be filing

for BIR 1702, the new form already includes a section on taxpayers activity profile and

on Tax Relief Availment. Those who avail of any tax relief under the Tax Code and or
any prevailing special laws must completely fill-up Schedule 1 of the form showing the

details for each and every registered activity and or program.

Guidelines and instructions for filling-up the new forms are stated in the last page

of the forms.

Documentary Requirements:

1. Certificate of Income Payments not Subjected to Withholding Tax (BIR Form

2304), if applicable

2. Certificate of Creditable Tax Withheld at Source (BIR Form 2307), if applicable

3. Duly approved Tax Debit Memo, if applicable

4. Proof of Foreign Tax Credits, if applicable

5. Income tax return previously filed and proof of payment, if amended return is filed

for the same taxable year

6. Account Information Form (AIF) and/or the Certificate of the independent CPA

with Audited Financial Statements, if the gross quarterly sales, earnings, receipts

or output exceed 150,000

7. Proof of prior years excess tax credits, if applicable

NOTE: Pursuant to Revenue Memorandum Circular No. 6 2001, corporations,

companies or persons whose gross quarterly sales, earnings, receipts or output exceed

P 150,000.00 may not accomplish BIR Form 1702 Account Information Form (AIF). In

lieu thereof, they may file their annual income tax returns accompanied by balance

sheets, profit and loss statement, schedules listing income-producing properties and the

corresponding income therefrom, and other relevant statements duly certified by an

independent CPA.
Procedures:

1. Fill-up BIR Form 1702 in triplicate.

2. If there is payment:

Proceed to the nearest Authorized Agent Bank (AAB) of the Revenue

District Office where the company is registered and present the duly

accomplished BIR Form 1702, together with the required attachments and

your payment.

In places where there are no AABs, proceed to the Revenue Collection

Officer or duly Authorized City or Municipal Treasurer located within the

Revenue District Office where the company is registered and present the

duly accomplished BIR Form 1702 with the required attachments and your

payments.

Receive the copy of the duly stamped and validated form from the teller of

the AABs/Revenue Collection Officer/duly Authorized City or Municipal

Treasurer.

3. For "No Payment" Returns including refundable/creditable returns and returns

with excess tax credit carry over:

Proceed to the Revenue District Office where the company is registered or

to any Tax Filing Center established by BIR and present the duly

accomplished BIR Form 1702, together with the required attachments.

Receive the copy of the duly stamped and validated form from the

RDO/Tax Filing Center representative.

Deadline: Final Adjustment Return or Annual Income Tax Return On or before the

15th day of the fourth month following the close of the taxpayers taxable year.