Republic of the Philippines

Polytechnic University of the Philippines

GRADUATE SCHOOL
MASTER IN BUSINESS ADMINISTRATION
M.H. del Pilar Campus, Sta. Mesa, Manila

SEAPAC, PHILIPPINES, INC. (SPI)

A Case Study
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In Partial Fulfillment of the Requirements for the Subject

MBA 654 Financial Controllership
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Submitted to:
Dr. Carmela S. Perez

Submitted by:
Irish Arevalo
Lilian Banawa
Mark C. Centeno
Liwanag F. Roldan
Karren Cassandra R. Palileo
Lailanie H. Pesuelo
Christine C. Sagritalo
I. EXECUTIVE SUMMARY

Seapac Philippines, Inc. (SPI) is a privately owned company which started

on September 1998 that specializes in design, supply and installation of

aluminum and glass facades, window walls, doors and windows. It is a family

owned business and the owner handles mostly all of the financial matters of the

company. Today, the construction of condominiums, high rise buildings, etc. in

every part of the country started to build up. As the business continues to grow,

the management saw the need for additional workforce, expansion of

production, warehouse and its head office. So, the management deciced to hire

a Chief Financial Officer, a new position being opened in the company, after 17

years of existence in the business, in order to help them with planning more

complex financial plans. It was in October 2015 when the new CFO, Mr. Hernan

Bariring joined SPI.

Before the employment of the CFO, the following findings were

observed:

a. The staff/members of the Accounting department have no specific duties and

responsibilities assigned to them. In addition, they perform work that was not

related to the department functions.

b. The overtime rendered by employees is just based on the clock-in and clock-

out that is minimum of one hour. Also, the overtime and holiday pay are tax-

free (it is the company who shoulders/pay for it).

c. Their office building located in Taguig City were not feasible now to

accommodate the employees/staff as well as the additional workforce

needed, expansion of production, warehouse and its head office.

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 Since the CFO entered the company, many processes have been

changed:

a. The actual roles and responsibilities of the employees were established.

He also took away and gave to the rightful departments some of the

works being performed by the Accounting Department that he knew was

not supposed to be an accounting function.

b. The CFO proposed to the management that there should be a separate

Finance Department in the company, as it is only the Accounting

Department that perform the all-around duties.

The responsibility for payroll and timekeeping was transferred little by

little to the Human Resources Department.

c. Policy on filing for overtime were created.

d. The taxes shouldered/payed by the employers for the employees

overtime and holiday pay were abolished.

e. The CFO was able to close a deal for the new office, warehouse and

production.

The group concluded that the newly appointed CFO has been able to

make a significant contribution since joining SPI, supporting the delivery of key

projects including cost evaluation and savings analysis, the development and

management of business controls. He has developed and implemented a more

strategic and proactive approach to financial leadership with improved

organization and planning.

We recommend that management and employees should give their

cooperation to the CFO to maximize his full potential.

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 On the other hand, the CFO should possess the ability to establish

rapport with employees to realign and motivate them to support the companys

aggressive growth initiatives.

II. FINDINGS

SPI is a privately owned company based in Taguig City which started on

September 1998 that specializes in design, supply and installation of aluminum

and glass facades, window walls, doors and windows.

Its managing director is Mr. Christopher Shearer, a New Zealander who

has over 25 years of experience in the aluminum and curtain wall industry in

Australia, Sri Lanka, Vietnam and Philippines. Together with him is Mr. James

Chant, Chairman of SPI, who primarily assisted in getting and closing deals

from pioneer clients. Mr. Mathew Shearer, General Manager is Mr. Chris

Shearers son.

SPI is able to provide an aluminium window product to suit any budget

or design a window or faade to meet any specification, no matter how

stringent. It uses the latest technology available through industry associations

and associated consultants both local and overseas. Their knowledge and their

associations enable SPI to provide access to specialized building products,

methods and technologies, which will add prestige and cost benefits to our

client's buildings (See Annex A for more information on their services and

projects).

As the seemingly endless construction of condominiums, high rise

buildings, etc. in every part of the country, especially in Manila, SPI saw itself

growing fast. Growing in terms of projects awarded, as well as its manpower.

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 From closing projects that amount to only 50-100 million pesos a year in

the 2000s, it eventually found itself closing 100 million to as high as 500 million

pesos for a single project. It then became a solid partner of general contractors

like DMCI Project Developers Inc., Megawide Construction Corporation,

Megaworld, Century Properties, Federal Land, Makati Development

Corporation, etc.

As the business continues to grow, the management saw the need for

additional workforce, expansion of production, warehouse and its head office.

This is when the management found itself to decide in hiring a Chief Financial

Officer, a new position to be opened in the company, in order to help them with

planning more complex financial plans. It was October 2015 when the new

CFO, Mr. Hernan Bariring joined SPI.

The following are the findings observed:

a. The staff/members of the Accounting Department have no specific

roles, duties and responsibilities assigned to them. In addition, they

perform work that was not related to the department functions.

b. Accounting Department handles other transactions such as that of the

Finance Department and the Human Resource Department. Treasury,

accounts payables and accounts receivables, as well as the

timekeeping and payroll were all handled by one department. Such

setting is prone to jeopardize check and balance.

c. Overtime was based purely on the time in and out of employees. Proper

checking of pre-approved overtime forms and accomplishments were

not practiced. An employee may apply for an overtime work, and get

paid for it, even if he only stays in the company to wait for the shuttle.

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In the Philippines, overtime pay and overtime work made clear in the

Labor Code, to wit, Book III Conditions of Employment, Rule I, Hours

of Work, Sections 8, 9, and 10:

SECTION 8. Overtime pay. Any employee covered by this Rule who

is permitted or required to work beyond eight (8) hours on ordinary

working days shall be paid an additional compensation for the overtime

work in the amount equivalent to his regular wage plus at least twenty-

five percent (25%)

SECTION 9. Premium and overtime pay for holiday and rest day work.

(a) Except employees referred to under Section 2 of this Rule, an

employee who is permitted or suffered to work on special holidays or

on his designated rest days not falling on regular holidays, shall be paid

with an additional compensation as premium pay of not less than thirty

percent (30%) of his regular wage. For work performed in excess of

eight (8) hours on special holidays and rest days not falling on regular

holidays, an employee shall be paid an additional compensation for the

overtime work equivalent to his rate for the first eight hours on a special

holiday or rest day plus at least thirty percent (30%)

(b) Employees of public utility enterprises as well as those employed in

non-profit institutions and organizations shall be entitled to the premium

and overtime pay provided herein, unless they are specifically excluded

from the coverage of this Rule as provided in Section 2 hereof.cralaw

(c) The payment of additional compensation for work performed on

regular holidays shall be governed by Rule IV, Book Three, of these

Rules

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SECTION 10. Compulsory overtime work. In any of the following

cases, an employer may require any of his employees to work beyond

eight (8) hours a day, provided that the employee required to render

overtime work is paid the additional compensation required by these

regulations:

(a) When the country is at war or when any other national or local

emergency has been declared by Congress or the Chief Executive;

(b) When overtime work is necessary to prevent loss of life or property,

or in case of imminent danger to public safety due to actual or

impending emergency in the locality caused by serious accident, fire,

floods, typhoons, earthquake, epidemic or other disaster or calamities;

(c) When there is urgent work to be performed on machines,

installations, or equipment, in order to avoid serious loss or damage to

the employer or some other causes of similar nature;

(d) When the work is necessary to prevent loss or damage to perishable

goods;

(e) When the completion or continuation of work started before the 8th

hour is necessary to prevent serious obstruction or prejudice to the

business or operations of the employer; or

(f) When overtime work is necessary to avail of favorable weather or

environmental conditions where performance or quality of work is

dependent thereon.

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 In cases not falling within any of these enumerated in this Section, no

employee may be made to work beyond eight hours a day against his

will.

d. The overtime and holiday pay are tax-free (it is the company who

shoulders/pays for it). As a rule, any amount that the employer gives

his employees are taxable compensation, unless otherwise exempted

by express provision of laws, rules, and regulation (e.g. de minimis

benefits, minimum wage, separation fees, etc.), or that other tax types

apply such as fringe benefits subject to fringe benefits tax in the

Philippines.

e. As the seemingly endless construction of condominiums, high rise

buildings, etc. in every part of the country, especially in Manila, SPI saw

itself growing fast; growing in terms of projects awarded, as well as its

manpower. Their office building located in Taguig City were not feasible

now to accommodate the employees/staff as well as the additional

workforce needed, expansion of production, warehouse and its head

office. In the workplace, the way their office is set up plays an important

part in how productive theirr employees are.

III. Discussion

Being a family-owned business for more than 17 years, the

organizational structure of the company were not very clear. The roles, duties

and responsibilities of the employees were not clearly defined. The CFO saw

this flaws of the company and decided to take action. The following are some

changes made by the new CFO:

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a. The staff/members of the Accounting Department have no specific roles,

duties and responsibilities assigned to them. In addition, they perform

work that was not related to the department functions. So the CFO look

into each staff/member of the Accounting Department, their roles, duties

and responsibilities. He took away and gave to the rightful departments

some of the works being performed by the Accounting Department that

he knew was not supposed to be an accounting function.

Upon entry of the CFO, the first department he looked into was the

Accounting department. One of the first changes he made was to

separate accounting from finance transactions. Job descriptions of

accounting employees were put into place and alignment on the proper

work load and responsibilities were made. Point persons were properly

identified. A clear division between the accounting and finance functions

were put into practice. Finance and Accounting are two separate

disciples that often are lumped together (as we obviously have done). At

a high level, Finance is the science of planning the distribution of a

business assets. It has a broader scope and is responsible for initiating

transactions to aid in cash, investment and all other capital management.

Accounting is the art of the recording and reporting financial transactions.

People tend to group Finance and Accounting because both functions

deal with the administration of a business assets.

b. When the CFO implemented the No pre-approved overtime form, and no

valid reason for overtime no overtime pay policy, an uproar arose in the

head office. This was because employees were used to getting paid for

a minimum of 5 hours a week, even without the proper filing of overtime.

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 The CFO required a pre-approved OT form signed both by the immediate

supervisor and the employee, indicating what activities would be

performed in rendering the overtime. A month after the proper

implementation of the OT, a 30% decline in payroll expense was

recorded.

c. The overtime and holiday pay are tax-free (it is the company who

shoulders/pays for it). This was eventually abolished by the CFO. This

new policy was implemented without the knowledge of the employees.

The employees only discovered deduction of taxes from their overtime

and holiday pay when their payslips were given. Theyve found out that

the tax deducted to them were higher from their previous taxes. The CFO

eventually passed a memorandum to employees that this was done to

correct and comply with the BIR rules. However, most of the employees

in the company sparked and had an outrage hate for the CFO.

Employees still cant accept the reason for abolishing the tax-free

inspite of clarifying the reasons for doing so.

d. Their head office, production and warehouse were all located in one

compound in Taguig City. The increase in the projects awarded to SPI

resulted to increase in manpower and their production. So, their place

were not feasible now to accomodate everything. There were times that

their stocks of the glass doors and windows were accidentally bumped

by their delivery trucks whenever they maneuvered. The damaged

imported glasses cost a total of almost Php 10 million from 2016 to 2nd

quarter of 2017 which prompted the CFO to propose a new location for

a bigger warehouse and production. On September 2016, he was able

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 to close the deal for the new office building located in Makati City as well

as the new location for the companys warehouse and production

somewhere in Cavite. Transferring to their new office in Makati will be on

the last quarter of 2017 since the building was renovated. Warehouse

and production in Cavite will also be moved late this year (2017).

IV. Conclusion

SPI is experiencing rapid growth and its executive management came

to realize that, to achieve its goals theres a need for additional workforce,

expansion of production, warehouse and its head office. This is when the

management found itself to decide in hiring a Chief Financial Officer, a new

position to be opened in the company, in order to help them with planning more

complex financial plans.

The newly appointed CFO has been able to make a significant

contribution since joining, supporting the delivery of key projects including cost

evaluation and savings analysis, the development and management of

business controls.

He has developed and implemented a more strategic and proactive

approach to financial leadership with improved organization and planning.

When he entered the company, and after implementing the new set of

rules and policies, the organizational structure of the company becomes clearly

defined. The duties and responsibilities of the departments were properly

distributed.

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V. Recommendations

Due to the vastly increased interaction with other departments, the CFO

must be highly skilled in interdepartmental dealings. The controller must now

have top-notch interpersonal and management skillsthe former to deal with

other departments and the latter to oversee the changes needed by the other

departments. In addition, the controller must govern the employees and give

constant attention to the professional progress of each person in the

department, which requires goal setting, mutual discussion of each person in

the department, and continuous feedback regarding employee performance.

The CFO should possess the ability to establish rapport with employees to

realign and motivate them to support the companys aggressive growth

initiatives.

On the other hand, management and employees should give their

cooperation to the CFO to maximize his full potential.

VI. Implementation

The CFO along with the management openly address issues with the

employees/staff with regards to the changes in the whole organization brought

about by the entry of the CFO.

The management should developed his trust and confidence to the CFO

in order for them to entrust to the CFO the tasks theyre doing until now which

are highly financial in nature.

The CFO must be open for discussions even with the rank and file

employees.

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 Also, he should make sure that the newly purchased office building and

warehouse and production will be maximized to fasttrack the Return of

Investment (ROI) of the capital outlay since the company borrowed a large

amount for the said purchase.

VII. References

Bragg, S. M. (2009). Controllership: The Work of the Managerial Accountat 8th

edition. John Wiley & Sons, Inc.

http://www.seapac-philippines.com

Inside Information from SPI employees

Labor Code of the Philippines

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 Annex A

A. Services

Seapac Philippines Inc. is able to provide an aluminium window

product to suit any budget or design a window or faade to meet any

specification, no matter how stringent.

1. Design supply and installation of aluminium and glass windows

and doors - Seapac can supply every type of aluminium window

and all types of aluminium and frameless glass doors to suit any

application.

2. Supply and Installation of all types of

Acoustic glazing - Seapac can supply and

install all types of acoustic glazing depending

upon the client requirements. Seapac can

design a window to reduce sound by up to

50db if required.

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3. Supply and installation of all

types of Bullet and intruder

Resistant Glazing - Seapac

can supply and install bullet

and intruder resistant glazing

to suit any client application.

4. Design and supply of Curtain wall facades for low, medium and

high-rise projects - Seapac can design and supply a fully unitized

system with structural glazing as used on the Burgundy Corporate

Tower in Makati. This curtain wall was specifically designed for

this project and after 3 years has proved to be leak proof. The

system employs the drained joint and pressure equalized

principle in the design. Seapac can also supply a double glazed

stick system for your curtain wall requirements as used for a low-

rise project for Analog Devices in Cavite Philippines.

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5. Supply and Installation of Aluminium Composite Panels - The
panels can be curved to suit concrete or steel columns to add that
finished touch to your project

6. Aluminium and Glass Skylights - A large commercial skylight

completed by Seapac was for the Shangri La Corporation at

Shangri La Edsa Plaza. This type of construction adds a very

prestigious look to any project.

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 7. Frameless Glass Assemblies

8. Interior Fit outs and Architectural Glass work

Some projects include:

Specialized slim line partition framing. Australian and Canadian

Embassies Makati

Interior sliding glass partition doors Australian Embassy Makati

Stainless steel entry doors Australian and Canadian Embassies

Makati

Partition panels with glass motifs. Chinese restaurant. Edsa Plaza

Hotel

Glass panels with applied films in any design American Express

Makati

Purpose manufactured store fronts for designer shops. Prada,

Guicci, Ives St Laurent, Green Belt Plaza Makati

Purpose made door handles to any design Bowling Alley, Rockwell

Power Plant

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 Steel and glass water features Shangri La Edsa Plaza
Board Room Bars and Display cabinets ABS CBN.

9. Consultancy Services

Seapac in conjunction with our associations have been employed

to supply consultancy services on a variety of projects. Some of these are:

10. Testing

Seapac can supply detailed testing services for windows and door

systems. These test carried out to international standards can be carried

out both on site and off site.

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B. Projects

Project Name: Shang Grand Tower

Description: The design testing and supply of specialized window

system with multi point blocking to meet a stringent design brief.

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Project Name: Burgundy Corporate Tower

Project Description: it involved the design and engineering of a unitised

curtain wall for this prestigious project in Manila Philippines. The design

was engineered to withstand the high wind pressures occurring in

Tropical Philippines. The glass was a high performance heat

strengthened glass 2 sided structurally glazed.

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 Project Name:

St. Francis Square

Project Name: Solaire

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