DOJ Opinion No. 170, s. 1982

DOJ OPINION NO. 170 , s. 1982 August 4, 1982 The Chairman Philippine Contractors Accreditation Board Ministry of Trade and Industry Trade and Industry Building 361 Buendia Avenue Extension Makati, Metro Manila Sir : This refers to your request for opinion regarding certain legal questions encountered by the Philippine Contractors Accreditation Board (PCAB)in the license of joint ventures in view of the provisions of section 28 and 38 of Republic Act No. 4566, otherwise known as "The Contractor License Law", which state: "Section 28. Causes for Disciplinary Action The following shall constitute causes for disciplinary action: "a) . . . xxx xxx xxx "d) Aiding or aborting as unlicensed person to evade the provisions of this act, or knowingly combining or conspiring with an unlicensed person, of allowing one's license to be used by an unlicensed person, or acting as agent or partner, or associate, or otherwise of an unlicensed person with the intent to evade the provision of this act. "Section 38. Joint Licenses "It is unlawful for any two or more licensees, each of whom has been issued a license to engage separately in the capacity of a contractor, to jointly submit a bid or otherwise act in the capacity of a contractor, to jointly submit a bid or otherwise act in the capacity of contractor without first having secured an additional license for acting in the capacity of such a joint venture or combination in accordance with the provisions of this act as provided for an individual, partnership or corporation." You state that the PCAB has been receiving applications for joint venture licensee between/among licensed contractor/contractors and non-licensed contractor/contractors, the latter to act as financiers of suppliers of material of equipment of the joint venture; but that as a matter of policy, PCAB has always required "that a joint venture must have as partners only licensed contractors". In this connection, you raise the following queries: LexLib "1. May a licensed contractor and a non-contractor tie-up, foreign or local, wherein the non-contractors acts in the capacity of financier/supplier, be licensed as a joint venture without violating Section 28(d) and Section 38 of Republic Act 4566? "2. May a Licensed contractor and a foreign contractor be licensed as a joint venture, even if the said foreign contractor has not previously secured a license to engage in the construction business in the Philippines?" Your queries may be consolidated in one question: whether or not in order that a joint venture may be licensed to engage in the contractor's business, it should be compost of partners who are all licensed contractors . Subject to the extended discussion hereunder set forth, we answer the aforestated question in the negative. We have carefully examined R.A. No. 4566 and we have been unable to find any provision which imposes as a condition for the licensing of a joint venture which shall engage in the contracting business, that all of its individual partners or members are contractors licensed under said Act. The provision of section 38 of the said Act, supra , merely prohibits two or more licensed contractors to act jointly as a contractor without first obtaining an additional separate license to act as a joint venture; it does not impose the requirement that a license may be issued to a joint venture only if it is composed of all licensed contractors . As a matter of fact, under Section 9(a) of R.A. No. 4566 the license to engage in the contracting business, whether for general engineering, general building, or specialty contracting, may be granted not only to natural persons as individuals, but also to juridical persons such as a firm, partnership, corporation, association or other organization, which would include a joint venture; and a contractor's license may be granted to any such juridical person by the PCAB pursuant to section 20 of the aforesaid Act which reads: "SECTION 20. Qualifications of applicants for contractors' license . The Board shall require an applicant to show at least two years of experience in the construction industry, and knowledge of the building, safety, health and lien laws of the Republic of the Philippines and the rudimentary administrative principles of the contracting business as the Board deems necessary for the safety of the contracting business of the public. "For purposes of this section, a partnership, corporation, or any other organization may qualify through its responsible managing officer appearing personally before the Board who shall prove that he is a bona fide responsible officer of such firm and that he exercises authority over the contracting business of his principal or employer in the following manner: (1) to make technical and administrative decisions; and, (2) to hire, superintend, promote, transfer, lay off, discipline or discharge employees." LexLib It is clear that under the foregoing provision, the juridical entity applying for a contractor's licensee may be granted such a license even if its members are not all licensed such a license even if its members are not all licensed contractors, as long as the qualifications and conditions prescribed therein are met. Concerning the foreign non-contractor or a foreign contractor desiring to engage in the business of contracting in the Philippines in joint venture with a domestic licensed contractor, there is the specific injunction found in Republic Act No. 5455 (entitled " AN ACT TO REQUIRE THAT THE MAKING OF INVESTMENTS AND THE DOING OF BUSINESS WITHIN THE PHILIPPINES BY FOREIGNERS OR BUSINESS ORGANIZATIONS OWNED IN WHOLE OR IN PART BY FOREIGNERS SHOULD CONTRIBUTE TO THE SOUND AND BALANCED DEVELOPMENT OF THE NATIONAL ECONOMY ON A SELF-SUSTAINING BASIS AND FOR OTHER PURPOSES ") that "no alien and no firm, association, partnership, corporation or any other form of business organization formed, organized or chartered or existing under any laws other that those of the Philippines . . . shall do business or engage in any economic activity in the Philippines, or be registered, licensed or permitted by the Securities and Exchange Commission of by any other bureau, office, agency, political subdivision or instrumentality of the government, to do business, or engage in any economic activity in the Philippines without first securing a written certificate from the Board of Investments " which will be issued only upon a determination by the Board of Investments on the existence of the following circumstances: 1. That the operation or activity of such alien, firm, association, partnership, corporation or other form of business organization is not inconsistent with the investments Priorities Plan; 2. That such business or economic activity will contribute to the sound and balanced development of the national economy on a self-sustaining basis; 3. That such business or economic activity by the applicant would not conflict with the Constitution or laws of the Philippines; 4. That the field of business or economic activity is not one that is being adequately exploited by Philippine nationals; and 5. That the entry of applicant therein will not pose a clear and present danger of promoting monopolies or combination in restraint of trade (Section 4). In addition to the foregoing, pursuant to the same provision of R.A. No. 5755 the foreign national is required to comply with certain undertakings designed to protect Filipino interests. LexLib In view of the foregoing, our aforestated reply to your queries is hereby reiterated. Very truly yours, (SGD.) RICARDO C. PUNO Minister of Justice