Presidential Decree No. 173




M a n i l a

PRESIDENTIAL DECREE No. 173 April 12, 1973


WHEREAS, a need exists for the optimum exploitation of employment generating measures currently available to the Government so that their potentials for contributing to the solution of the country's unemployment problem may be fully realized;

WHEREAS, the economic growth of this country also depends to a large extent upon the availability of a labor-force that is both well-trained and adequate in number to meet the manpower requirements of the various levels of employment;

WHEREAS, apprenticeship, being both a training and employment generating device, is among the existing measures which could contribute to the attainment of the foregoing objectives if the law on apprenticeship could be liberalized and freed from its traditionalist and restrictive provisions;

WHEREAS, it is accordingly in the national interest, pursuant to Sec. 9, Article II of the New Constitution, to align apprenticeship as an instrument of employment generation and manpower development to the overall manpower policy of the New Society as well as the reforms introduced by the Integrated Reorganization Plan as adopted by and under Presidential Decree No. 1;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution as Commander-in-Chief of all the Armed Forces of the Philippines, and pursuant to Proclamation No. 1081 dated September 21, 1972, and General Order No. 1, dated September 22, 1972, as amended, and in order to effect the desired changes and reforms in the economic and social structures of our society, do hereby order and decree the further amendment of Republic Act No. 1826, as amended, as follows:

Section 1. Section one of Republic Act Numbered One Thousand eight hundred and twenty-six is hereby amended to read as follows:

"Section 1. This Act shall be known as the "National Apprenticeship Act."

Sec. 2. Section two of the same Act is hereby amended to read as follows:

"Sec. 2. In order to assist in meeting the progressively increasing demand for trained labor necessary for the economic and social development of the Philippines and to increase productivity, it is hereby declared to be the policy of the Government, (1) to establish a national apprenticeship system through the participation of employers and workers and interested governmental and non-governmental agencies; (2) to provide for the establishment and furtherance of apprenticeship standards to safeguard and promote the welfare of apprentices; and (3) to extend apprenticeship to and make it available for the training of needed manpower in the widest possible range of trades, occupations as well as levels of employment, subject to the criteria prescribed under this Act for apprenticeable trades and occupations."

Sec. 3. Section two-A of the same Act is hereby repealed.

Sec. 4. Section three of the same Act is hereby repealed and in lieu thereof the following provision shall be substituted:

"Sec. 3. Pursuant to the integrated reorganization plan and such implementing orders as may be promulgated thereunder, there is hereby created in the Department of Labor a "Bureau of Apprenticeship," hereinafter referred to as the Bureau, under a Director, who at the time of his appointment by the President should have had specialized training in apprenticeship administration, planning, programming and adequate experience in apprenticeship legislation for not less than five years.

"The Secretary of Labor shall appoint such clerical, technical and professional assistants as may be necessary to the proper operation of this Bureau, and no person shall be appointed technical or professional assistant unless he has had adequate training for the performance of his duties."

Sec. 5. Section three-A of the same Act is hereby repealed.

Sec. 6. Section four of the same Act is hereby amended to read as follows:

"Sec. 4. The Bureau of Apprenticeship shall perform the following duties and functions, subject to the integrated reorganization plan, aside from such other responsibilities as are assigned to it under this Act:

"(a) Evaluate trades, occupations and jobs under the following general categories: (1) crafts, (2) operative activities, (3) technical, (4) nautical, (5) commercial, (6) clerical, administrative and other semi-professional work, (7) technological, (8) supervisory, and (9) managerial, to determine their apprenticeability and issue from time to time an updated list of those activities that meet the criteria prescribed in this Act: Provided, That such lists shall be submitted to the Secretary of Labor for approval before release;

"(b) Implement and supervise duly approved apprenticeship standards and carry out the apprenticeship methods envisioned by this Act. The Bureau shall in this connection formulate model training standards for all trades, occupations and jobs that are accorded recognition as apprenticeable to serve as guides in the organization of appropriate apprenticeship programs. The Bureau may require any industry, firm, trade or professional association, or other entities public or private to extend technical assistance, cooperation and advice in the preparation of such standards;

"(c) Develop and formulate apprenticeship policies, rules, regulations and plans;

"(d) Promote the purposes of this Act by bringing employers and workers together and assisting them in working out appropriate apprenticeship programs;

"(e) Conduct research and evaluate statistics on matters affecting apprenticeship and compile and disseminate such research currently;

"(f) Provided technical and advisory services to apprenticeship committees, employers, association of employers, employees, associations of employees, and other interested parties, in the development, maintenance and operation of apprenticeship programs;

"(g) Provide services for the review and appraisal of proposed apprenticeship programs and apprenticeship agreement;

"(h) Maintain a register of apprentices, apprenticeship agreements, and apprenticeship programs;

"(i) Maintain currently a record of all apprenticeship committees and training committees and all employers operating under approved apprenticeship programs;

"(j) Approve, disapprove, suspend, revoke or terminate plant apprenticeship programs and apprenticeship agreements, and issue certificates of completion of apprenticeship;

"(k) Act as a clearing house for the operation of apprenticeship programs in different areas, industries and occupations;

"(l) Disseminate such information regarding apprenticeship as may be necessary to bring about a better understanding of the purposes of this Act and to arouse public interest in apprentice training; and

"(m) Protect and promote the welfare of apprentices.

Sec. 7. Section four-A of the same Act is hereby amended to read as follows:

"Sec. 4-A. It shall be unlawful for an employer to enter into an apprenticeship agreement or otherwise employ at Subminimum wages a worker as an apprentice unless he has an apprenticeship program approved by, and registered with, the Bureau, as evidenced by a certificate of registration.

"Any violation of the provisions of this Section shall be punished by a fine of not less than three hundred pesos nor more than two thousand pesos, or by imprisonment of not less than thirty days nor more than one year, or both such fine and imprisonment, in the discretion of the court.

"If the violation is committed by a firm, association, or corporation, the penalty shall be imposed on the officer or officers thereof who responsible for the violation."

Sec. 8. The same Act is hereby amended by adding the following Sections immediately after Section four-A thereof, which read as follows:

"Sec. 4-B. 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 its apprentices:

"(a) Apprenticeship conducted entirely by and within the sponsoring firm, establishment or entity;

"(b) Apprenticeship entirely within a Department of Labor training center or other public training institution duly approved by the Bureau; or

"(c) Initial broad 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."

"Sec. 4-C. Any of the apprenticeship schemes recognized in Sec. 4-B hereof 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 Training Center or other public training institution duly approved by the Bureau.

"The employer concerned shall not be responsible for injury or illness sustained by the apprentice when training is conducted outside his premises, he shall however share in the enforcement of discipline and proper attendance of the apprentice regardless of the actual situs of training."

Sec. 9. Section five of the same Act is hereby amended to read as follows:

"Sec. 5. Any employer or other entity with an approved apprenticeship program may enter into an apprenticeship agreement with a qualified apprentice-applicant. An apprenticeship agreement shall contain:

"(a) The full names of the contracting parties;

"(b) The date of birth of the apprentice;

"(c) A statement of the trade, occupation or job in which apprenticeship will be undertaken, and the dates on which apprenticeship will begin and end, respectively;

"(d) A statement showing the approximate number of hours to be spent by the apprentice in work and the number of hours to be spent in supplementary theoretical instruction; Provided, That the hours of work of the apprentice shall not exceed the maximum number of hours of work prescribed by law for a worker of the age and sex of the apprentice; Provided, further, That overtime work for apprentices may be permitted by the Bureau if hours thus spend shall be credited towards earlier completion of training;

"(e) A schedule of the work processes of the trade or occupation in which the apprentice shall be trained and the approximate time to be spent on the job in each process;

"(f) A graduated scale of wages to be paid the apprentice, subject to the provisions of Sec. 6-A hereof, and a statement of whether or not the required school time shall be compensated;

"(g) A statement fixing a period probation of not more than the first five hundred hours of work and of the supplementary theoretical instruction involved during the same period during which time the apprenticeship agreement may, at the request of either party in writing, be terminated without inquiry by the Bureau for cause that is prima facie valid;

"(h) A provision that an employer who is unable to fulfill his obligation under the agreement, may, with the consent of the apprentice and with the approval of the Bureau, transfer such contract to any other employer who is willing to assume the said obligation;

"(i) Such additional terms and conditions not contrary to law which the parties may mutually agree upon or the Bureau determines are necessary and proper to effectuate the purposes of this Act; and

"(j) A clause providing that there shall be no liability on the part of the employer for an injury or illness sustained by an apprentice if his training is being conducted outside of the premises of the employer.

Section 10. Section six of the same Act is hereby amended to read as follows:

"Sec. 6. Every apprenticeship agreement shall be signed by the employer or his agent, or by an authorized representative of any of the organizations, associations, or groups recognized under Sec. 4-B hereof, and by the apprentice; and, if the apprentice is a minor, by the minor's parent or guardian: Provided, That a contract signed in behalf of a minor shall be binding up to its stipulated date of termination: Provided, further, That every apprenticeship agreement entered into under this Act shall be ratified by the appropriate apprenticeship committee, if any, and by the Bureau, and a copy each thereof, shall be furnished both the employer and the apprentice.

Section 11. The same Act is hereby amended by adding the following Sections immediately after Sec. 6 thereof, which read as follows:

"Sec. 6-A. The wage rate for apprentices at the initial stage shall be seventy-five per cent of the statutory minimum wage and their graduated wage scales or progressive wage increases shall take off therefrom. However, if there are serious considerations why an employer cannot meet the above requirements and upon presentation of adequate proof to this effect, the Secretary of Labor, upon recommendation of the Bureau, may authorize a lower initial rate for the particular program, but such rate should not be less than fifty percent of the legal minimum wage: Provided, That periodic wage increases for apprentices should be uniform but scaled in a manner which at its later stages would not surpass or otherwise disturb wage structure fixed by collective bargaining agreements or otherwise in effect in the firm for journeymen or regular workers in the same occupational classification as the apprentice: Provided, further, That a reduced rate to the extent allowed in this Section, shall be permitted upon petition by any employer whose apprenticeship program is being carried on through an approved training institution under Sec. 4-B, Paragraphs (b) and (c) hereof: Provided, finally, That the employer who has not been authorized to pay a reduced initial wage rate may pay his apprentices a wage of not less than fifty per cent of the statutory minimum during the first month of employment, the same being a period of orientation, and the seventy-five per cent initial rate fixed in this Section shall follow thereafter.

"Sec. 6-B. Any person who pays his apprentices wages at less than the sub-minimum rates fixed for them in their apprenticeship agreements shall be penalized with a fine of not less than five hundred pesos nor more than three thousand pesos, with subsidiary imprisonment in case of insolvency."

Section 12. Section seven of the same Act is hereby amended to read as follows:

"Sec. 7. Upon the complaint of any interested person or upon its own initiative, the appropriate agency of the Department of Labor or its authorized representatives shall investigate any violation of the terms of an apprenticeship agreement made under this Act, and for such purpose shall hold hearings, inquiries, and other proceedings necessary to such investigation and issue subpoena and subpoena duces tecum. The parties to such agreement shall, upon reasonable notice thereof, be given a fair and impartial hearing. All such hearing and investigations shall be made pursuant to such rules and procedures as may be prescribed by the Bureau with the approval of the Secretary of Labor.

The decision of the authorized agency of the Department of Labor shall be filed with the Secretary of Labor and copy thereof shall be sent to the parties. Any person aggrieved by such decision or action may appeal therefrom to the Secretary of Labor within fifteen (15) days from notice of the decision otherwise such decision shall become final and binding on the parties."

Section 13. Section eight of the same Act is hereby amended to read as follows:

"Sec. 8. The appellate decision of the Secretary of Labor shall be conclusive and final, if action thereon is not filed in court within thirty days after the date of notice of such decision.

"No person shall institute any action for the enforcement of any apprenticeship agreement, or damages for the breach of any such agreement, made under this Act unless he shall first have exhausted all administrative remedies provided by this Act."

Section 14. Section nine of the same Act is hereby amended to read as follows:

"Sec. 9. To ensure the effective implementation of the policy laid down in Section two hereof:

"(A) Employers or entities with duly approved apprenticeship programs shall have primary responsibility for providing appropriate aptitude tests in the selection of apprentices. However, if they do not have adequate facilities for the purpose, the Department of Labor, through its authorized agency, shall perform the service free of charge.

"The giving of supplementary theoretical instruction to apprentices under Sec. 4-B, paragraph (a) hereof may be undertaken by the employer. However, if he is not prepared to assume this responsibility, the same may be delegated by the Bureau to the appropriate agency of the National Manpower and Youth Council or the Department of Education and Culture. For this purpose, the Bureau, with the approval of the Secretary of Labor, may enter into appropriate arrangements or working agreements with said government agencies."

Section 15. Section ten of the same Act is hereby amended to read as follows:

"Sec. 10. As used in this Act:

"(a) The term "apprentice" means a worker who is covered by a written apprenticeship agreement with an individual employer or any of the organizations, associations or groups recognized under Sec. 4-B of this Act, which contract is duly registered with the Bureau.

"No person shall work or be engaged as apprentice unless he is at least sixteen years of age; and shows his fitness for training by a demonstration of his capacities and aptitude, and presentation of a certificate of his physical fitness by a medical officer of the Department of Labor or Department of Health or such others as may be authorized by the Bureau. Completion of the high school course shall not be an absolute requirement for entry into apprenticeship. Adequacy of educational background shall be generally determined through the applicant's ability to comprehend and follow oral and written instructions. Trade and industry associations, with the concurrence of the Bureau, may however recommend to the Secretary of Labor higher educational background requirements for the more technically demanding occupations. Such recommendations, if approved by the Secretary of Labor, shall be the educational requirement for apprenticeship in such occupations. An employer may waive such requirement if the apprentice-applicant convincingly demonstrates exceptional ability.

"(b) The term "apprenticeship" means that system of training in an apprenticeable occupation which consists of practical training on the job supplemented by theoretical instruction.

"(c) The term "apprenticeable occupation" means any trade, form of employment or occupation which is found suitable for more than three months of practical training on the job in combination with supplementary theoretical instruction. Such occupations can be the basis of apprenticeship programs and the employment of apprentices.

"(d) The term "employ" includes to suffer or permit to work;

"(e) The term "employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee or apprentice;

"(f) The term "industry" includes any trade or business, enterprise or branch or branches thereof or any calling, service or employment in which individuals are gainfully employed.

"(g) The term "person" includes an individual partnership, association, corporation, business trust, legal representatives or any organized group of persons."

Section 16. Section eleven of the same Act is hereby amended to read as follows:

"Sec. 11. The organization of apprenticeship programs shall primarily be a voluntary undertaking of employers. However, when national security or the particular requirements of economic development so demand, the President of the Philippines may require compulsory training of apprentices in certain trades, occupations, jobs or employment levels where a shortage is deemed critical as determined by the Secretary of Labor. Appropriate rules in implementation of this emergency provision shall be promulgated when the need arises by the Department of Labor. The number of apprentices to be compulsorily employed, in the case of factories and other industrial enterprises, shall not exceed five per cent of the labor force or ten per cent of the total number of unskilled workers in the given establishment. A percentage of the training costs of any apprenticeship program, whether voluntarily or compulsorily undertaken, shall be deductible from the income tax of the person or enterprise concerned at a rate or rates to be determined and fixed by the appropriate government agencies if not covered by existing laws and regulations."

Section 17. The same Act is hereby amended by adding the following Sections immediately after Section eleven thereof, which read as follows:

"Sec. 11-A. In its nationwide promotion of apprenticeship under this Act, the Bureau shall exert exceptional efforts to secure the employment of the youth as apprentices in preference over other categories of workers.

"Sec. 11-B. The Bureau shall supervise closely on-going apprenticeship programs and have close liaison with the Bureau of employment service of the Department of Labor as well as employer associations, industry groups and other relevant organizations to assist in the more effective placement of those graduate apprentices who are not absorbed by their sponsoring firms upon completion of training."

Section 18. Rules of procedure as well as rules and regulations in implementation of this Decree shall be prepared by the Bureau and the same shall become effective upon approval by the Secretary of Labor.

Section 19. All provisions of existing laws, orders and regulations contrary to or inconsistent with this Decree are hereby repealed.

Done in the City of Manila, this 12th day of April, in the year of Our Lord, nineteen hundred and seventy-three.

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