"Prompt payment policy: Rationalizing the need for expedient payment in" by Mary Rocelyn P. Lim

Prompt payment policy: Rationalizing the need for expedient payment in the construction industry

Date of Publication

3-2011

Document Type

Master's Thesis

Degree Name

Juris Doctor

Subject Categories

Construction Law

College

Ramon V. Del Rosario College of Business

Department/Unit

Business Management

Thesis Adviser

Michael G. Aguinaldo

Defense Panel Chair

Ernesto Perlas

Defense Panel Member

Fe Violeta Baluran
Lester Flores

Abstract/Summary

The delayed payment to contractors is a perennial problem of the construction industry. Since the 1960s, no solution has been found to compel developers and owners to fulfill their obligation to pay on time.

It is thus the quest of this research to find a law that will compel developers to promptly pay their obligations. Specifically, this study aimed to (1) discuss how a prompt payment law will be able to address payment delays in the industry, (2) determine the necessity, beneficiality, practicability and legality of the law, and (3) ultimately, to provide guidelines for a future prompt payment legislation.

Accordingly, the researcher found that a prompt payment law addresses the inadequacies of current stop gap measures to ensure collection and that such law was already tried and tested in foreign jurisdictions. A prompt payment law also reinforces effective financial management.

The findings of the research revealed that it is necessary and beneficial to enact such law because it favors all the parties involved in the industry. By expediting payments, experts agree that construction performance will be faster. This will benefit the contractor, developer, suppliers and laborers. In a bigger picture, this phenomenon makes the construction more competitive and more conforming to international practices.

The researcher acknowledges that a possible drawback of the law is its legality especially that it will impair contracts by requiring a maximum number of days within which to pay. Nevertheless, the impairment is justified given the overwhelming state interest in the development of this major industry. Likewise, the law conforms to the rational basis test making the future prompt payment law legal and constitutional.

Ultimately, the enactment of the law is found to be rational given the problem it seeks to address, benefits to be realized and its enforceability. It is thus recommended that the provisions of the law should contain as its main provisions (1) a maximum of 30 to 45 days of credit period, (2) additional interest for its violations, (3) provisions against waiver and (4) supporting provisions which include sanctions against unjustified disputes and a correlative duty for contractors to also promptly pay suppliers and laborers. All in all, the law promotes a culture of payment needed for the industry growth and progress.

Abstract Format

html

Language

English

Format

Electronic

Electronic File Format

MS WORD

Accession Number

CDTG004915

Shelf Location

Archives, The Learning Commons, 12F Henry Sy, Sr. Hall

Physical Description

1 computer optical disc ; 4 3/4 in.

Keywords

Construction industry—Law and legislation--Philippines

Upload Full Text

wf_no

Embargo Period

3-12-2024

This document is currently not available here.

Share

COinS