Philippine Contractors Accreditation Board v. Manila Water Co., Inc.

EN BANC

[G.R. No. 217590. October 5, 2021.]

PHILIPPINE CONTRACTORS ACCREDITATION BOARD, petitioner, vs.MANILA WATER COMPANY, INC., respondent.

NOTICE

Sirs/Mesdames :

Please take notice that the Court en banc issued a Resolution datedOCTOBER 5, 2021, which reads as follows:

"G.R. No. 217590 (Philippine Contractors Accreditation Board v. Manila Water Company, Inc.). — Before the Court are the Motion for Reconsideration 1 filed by petitioner Philippine Contractors Accreditation Board (PCAB) assailing the Decision 2 of the Court dated March 10, 2020, and the petitions and motions for third-party intervention of the following parties:

1. National Constructors Association of the Philippines, Inc. (NACAP); 3

2. PCA Pampanga, Contractors Association of Negros Oriental, Inc., Association of Carrier & Equipment Lessors Davao Chapter, Inc., Los Contratistas de la Ciudad de Zamboanga, Inc. and Davao Constructors Association Center, Inc. (hereinafter referred to as PCA Pampanga, et al.); 4

3. C.M. Pancho Construction, Inc., EEI Corporation, DATEM, Inc., D.M. Consunji, Inc., Will Decena and Associates, Inc., DDT Konstract, Inc., IPM Construction and Development Corporation, First Balfour, Inc., TRM Construction and Development Corporation and New Kanloan Construction, Inc., as represented by Philippine Constructors Association, Inc. (hereinafter referred to as PCA); 5 and DETACa

4. Cebu Contractors Association, Inc., Engineer Francis Gerard S. Cañedo (Engr. Cañedo), and Engineer Avelino A. Masong (Engr. Masong), doing business under the name and style AA Masong Construction (hereinafter referred to as Engr. Cañedo, et al.). 6

In compliance with the Court's Resolution 7 dated October 6, 2020, respondent Manila Water Company, Inc. (MWC) filed a Consolidated Comment and Opposition, 8 while the Philippine Competition Commission (PCC) filed its Amicus Curiae Brief (Amicus Brief) on PCAB's Motion for Reconsideration and the movants' Motions for Reconsideration-in-Intervention. 9

Thereafter, PCA and PCA Pampanga, et al., filed their respective Motions for Leave to File Consolidated Reply and Consolidated Replies to MWC's Consolidated Comment and Opposition and to the PCC's Amicus Brief.

In its Decision dated March 10, 2020, the Court affirmed with modification the lower court's order and resolution and declared void Section 3.1 (a) paragraph 2, Rule 3; Sec. 3.1 subparagraph (bb), Rule 3; and Sec. 12.7, Rule 12 of the 1989 Revised Rules and Regulations Governing Licensing and Accreditation of Constructors in the Philippines, implementing Republic Act (R.A.) No. 4566 or Contractors' License Law. The Court held that these regulations defining nationality-based licensing categories were adopted by PCAB in excess of its authority.

The Court applied Sec. 10, Article XII of the Constitution as the governing framework. Sec. 10 authorizes the reservation of certain areas of investment for Filipino citizens and corporations, provided that the reserved area of investment is defined by law on the basis of a pronounced executive policy. The Court ruled that PCAB's reliance on Sec. 14, Art. XII of the Constitution is misplaced as it pertains to the regulation of the practice of profession by natural persons based on nationality rather than to the business of construction by juridical entities, whether corporations, partnerships or sole enterprises.

Executive policy on reserved areas for investment is usually embodied in negative lists, such as Executive Order (E.O.) No. 98, as amended, 10 which limits foreign equity to 25% in defense-related projects and locally-funded projects except infrastructure and development projects covered by R.A. No. 7718 and foreign-funded or foreign-assisted projects that require international competitive bidding. The negative list does not prescribe the reservation of waterworks and sewerage infrastructure projects, such as that of MWC. Notably, the Court did not find the construction industry as one which the laws designate as a reserved area for investment. While Secs. 16 and 17 of R.A. No. 4566 authorize PCAB to formulate licensing classification based on the construction branch, it does not allow for nationality-based classification for contractors.

The Court further enunciated that while the Constitution does not encourage unbridled entry of foreign goods and services, it similarly did not intend to pursue an isolationist policy or to shut out foreign investments, goods or services. Thus, the Court concluded that there is nothing in the Constitution or in existing laws and executive issuances that authorizes PCAB to adopt the questioned regulations. It held: aDSIHc

WHEREFORE, the petition is DENIED. Accordingly, the February 24, 2014 Resolution and the February 10, 2015 Order of the Regional Trial Court. Quezon City, Branch 83 (RTC) are AFFIRMED with MODIFICATION, [insofar] as Rule 3, [Section 3.1(a)] paragraph 2, [Section 3.1(b)] subparagraph (bb), and Rule 12, Section 12.7 of the Revised Rules and Regulations Governing Licensing and Accreditation of Constructors, implementing Republic Act No. 4566, otherwise known as the Contractors' License Law in the Philippines, are hereby declared VOID.

SO ORDERED. 11

Hence, these motion for reconsideration and petitions and motions for third-party intervention.

Grounds for Intervention

Four groups sought to intervene claiming that the Decision directly and materially prejudice their interests.

NACAP avers that it represents small local contractors that will suffer business losses if the Decision removing restrictions on foreign competition attains finality. 12 NACAP further argues that its intervention is timely for the Decision is still under reconsideration. 13

PCA Pampanga, et al. claim that they are small-to-medium-sized local contractors that had no opportunity to intervene prior to the Decision for they are based in the provisions that were unaware of the proceedings between the PCAB and MWC. 14 As the Decision paves the way for foreign contractors of "comparatively unlimited resources" to bid for public and private projects, such foreign competition will displace local contractors. They argue that economic displacement is a direct and material loss that justifies their intervention through their associations. 15

Similar to PCA Pampanga, et al., PCA alleges lack of notice of the proceedings. 16 For PCA, the Decision nullifying the regulations will impair its members' "ability to bid for or continue with x x x ongoing construction projects." 17 Their members are micro, small, and medium (MSME) local enterprises whose limited minimum net worth, ranging from P45,000[.00] — P100,000[.00] through P45 million — P90 million, qualify them for licensing under categories AA through E 18 and for projects of limited contract range. 19 Being MSME local contractors with limited technological and financial competitiveness, they enjoy, under the law, certain protections and preferences vis-à-vis foreign contractors with access to extensive technological and capital resources. 20 The Decision removes these protections and preferences and paves the way for the influx of foreign contractors into small-to-medium-scale projects. The Decision exposes the interest of PCA members to immediate and direct jeopardy: they will not only lose out to foreign competition in terms of projects, they will also suffer disruption in their ongoing joint venture projects with foreign partners that would now have to undergo application for regular licensing. 21 Thus, PCA argues that while technically belated, its intervention is legally imperative. ETHIDa

Eng. Cañedo, et al. state that the Decision has a substantial and immediate effect on their businesses and jobs. 22 In particular, the employment of Filipinos as engineers like Engr. Cañedo will be prejudiced if foreign contractors are given regular licenses and allowed to "bring in their own technical people." 23 On the part of Engr. Masong, the survival of his construction company, a Category B license-holder, is in jeopardy, as it will have to compete with foreign contractors for not only small-scale construction projects but also local bank financing. 24 Meanwhile, Cebu Contractors Association, Inc. (CCA) itself claims standing based on its members' interests. 25 Similar to PCA Pampanga, et al., Engr. Cañedo, et al. explain that they had no knowledge of the proceedings between PCAB and MWC. 26

The foregoing applications for interventions are resolved along with the merits of the motion for reconsideration.

Grounds for Reconsideration

PCAB raised two main grounds for reconsideration of the Decision:

I. Supervening events and prevailing circumstances that may have national repercussion[s] necessitate a reexamination and reconsideration of the subject resolution.

a. Subsequent to the filing of the petition for review, Section 3.1 has been amended, which now allows the issuance of Regular license (with annotation) to foreign entities.

b. Allowing the issuance of Regular license to foreign contractors would result to unbridled influx of foreign contractors to the detriment of local contractors in Micro, Small, and Medium enterprises, including the concerned professionals and Filipino workers, among others.

c. Based on actual current data on foreign participation, the assailed regulation is not a deterrent to the entry of foreign players in the construction industry.

d. The existence of proposed legislative amendments to R.A. No. 4566, which seeks to address existing government restriction on foreign participation in the construction industry, should restrain the Honorable Court from maintaining the nullification of Section 3.1 of the IRR of R.A. No. 4566.

II. Section 3.1 of the IRR of R.A. No. 4566 is within the authority of the PCAB in the discharge of its powers and duties affecting the construction industry in the Philippines, and consistent with Article 12 of the Constitution.

a. Under R.A. No. 4566, PCAB has the authority to classify the licenses that may be issued to foreign and local contractors.

b. Section 3.1 of the IRR of R.A. No. 4566 is consistent with the Constitutional mandate of preference to Filipinos and does not override the power of Congress to reserve certain areas of investment to Filipinos.

c. Section 3.1 of the IRR of R.A. No. 4566 is sanctioned under Section 14 of Article XII of the Constitution, which limits the practice of profession in the Philippines to Filipinos, save in cases prescribed by law. 27 cSEDTC

The grounds invoked by PCAB in its petition for review and motion for reconsideration are reiterated by movants NACAP, 28 PCA Pampanga, et al., 29 PCA, 30 and Engr. Cañedo, et al.31 PCA Pampanga, et al. suggest a Solomonic solution: the Court shall reinstate the subject regulations and order PCAB to issue MWC's foreign contractor a special license upon proof of qualification. 32 For PCA, as R.A. No. 4566 was adopted in the context of the Filipino First Policy, the rights and privileges granted therein are intended solely for legal contractors. 33 Foreign contractors do not deserve the benefits of the law, especially as they "have a history of bribing government officials to win projects." 34

Opposition and Comment

Respondent MWC opposes the third-party intervention for being based on speculative and contingent interests, and for having been filed beyond the period prescribed under Rule 19 of the Rules of Court, specifically four (4) years after the RTC resolution on the petition for declaratory relief. 35

MWC comments that the grounds invoked under I.b, I.c, and II in the motion for reconsideration are a reiteration of the grounds cited in the petition for review. 36 Addressing the new points raised under I.a and I.d, MWC argues that the purported amendments do not correct the regulations for they retain the classification of licenses based on nationality, which PCAB and CIAP have no authority to adopt. 37 The proposed legislation on nationality-based licensing reinforces the Decision that, it is not PCAB, CIAP or this Court, but Congress that has authority to adopt such nationality-based classification. 38

PCC's Amicus Brief

In its Amicus Brief, the PCC posits that Implementing Rules and Regulations (IRR) of R.A. No. 4566, despite the amendments to the same issued after the subject Decision was promulgated by this Court, still remain a significant barrier to entry for foreign contractors to the domestic construction market. The PCC specifically notes the P1 Billion-peso equity requirement for the issuance of a Regular License with Annotation, and foreign contractors' exclusion from participating in government projects under a Quadruple A Gold License, may be classified as a nationality-based barrier to entry. This is apparent from PCAB's own licensing data which shows that out of twenty-three (23) Quadruple A licenses, only three (3) were issued to foreign contractors in Contracting Fiscal Year (CFY) 2018-2019, while out of twenty-five (25), only four (4) in CFY 2019-2020. 39

The PCC argues that these foreign equity restrictions and nationality-based licensing schemes "hinder the potential growth in the Philippine construction industry, as indicated by the low levels of Foreign Direct Investment (FDI) inflow[s]." Notwithstanding the amendments, the Philippines remains to draw the lowest Construction FDI among ASEAN countries and lags behind countries like Vietnam, Malaysia, Cambodia, and Singapore, where barriers to entry were relaxed. 40 Licensing data from the PCAB show that movants' position that the subject Decision will harm the business of MSMEs has no basis. The PCC observes that the alleged influx of foreign contractors in the market did not hamper the entry of smaller domestic firms — as they are expected to serve different segments of the market. 41 The PCC likewise argued that relaxing the restrictions for foreign firms is expected to incentivize them to bring in investments to the Philippines, usher in technology and knowledge transfers and promote better quality of service and innovation in the market, to the benefit of the Filipino consumer. 42

Replies to MWC's Opposition and Comment

In response to MWC's Opposition and Comment, PCA reiterates its arguments in its Motion for Reconsideration-in-Intervention, arguing that should the subject Decision be given effect, the movant-contractors would suffer loss and injury as the removal of the PCAB's protectionists measures would facilitate the influx of foreign contractors and reduce the availability of construction projects for domestic contractors. 43 PCA further justifies the difference in treatment between holders of regular and special licenses by arguing that the industry's preference for Filipino contractors over foreign contracts is evident from an examination of the prevailing government policy at the time of the enactment of R.A. No. 4566 and other laws which gave preferential treatment to Filipino citizens, corporations, industries, and businesses. 44 PCA likewise reiterates PCAB's arguments in its Motion for Reconsideration as regards the latter's authority to develop and implement a credible system for licensing and registration, 45 and argues that regulations that give preference to Filipinos over foreigners do not necessarily violate the Constitution's provisions against monopolies and combinations in restraint of trade. 46 Lastly, PCA questions MWC's legal standing to assail the constitutionality of the PCAB regulations for MWC's interests are allegedly merely incidental: "that of a potential client of a potential foreign contractor." 47 As regards the PCC's Amicus Brief, PCA mainly argues that there is no evidence to prove that entry of foreign players would mitigate construction costs and solve the shortage in the domestic industry, 48 and contrary to the PCC claims that the removal of the nationality requirement in the PCAB regulations, there is existing literature that finds merit in more "protectionist measures" by developing countries in order to foster the development of the local construction industry. 49

PCA Pampanga, et al.'s Reply to MWC's Comment and Opposition, as well as to the PCC's Amicus Brief mostly echoes that of PCA's. However, it also argues that its intervention is a matter of transcendental importance 50 and was timely filed in order to protect public interest, considering that the instant case is their last and final venue to convey their respective positions. 51

As regards the PCC's Amicus Brief, PCA Pampanga, et al., argues that this Honorable Court relied heavily on the PCC's opinion; it should lend credence to the Construction Industry Authority of the Philippines' (CIAP) expertise on the construction industry. 52 It further stressed that the matters raised by the PCC in its Amicus Brief are better discussed before the Congress together with the CIAP and market stakeholders, as economic policy is "a legislative matter best left in the hands and in the wisdom of Congress. 53

The Court's Ruling

The motions for leave to intervene are denied. The motions for reconsideration-in-intervention and petition-in-intervention are not admitted into the records of this case. The motion for reconsideration is likewise denied. AaCTcI

Denial of the motions for

It is well-settled in jurisprudence that intervention is not a matter of right, but one which is addressed to the sound discretion of the courts and in accordance with the requirements of the applicable statute — Rule 19 of the Rules of Court. 54 The principle underlying Rule 19 is that a third-party intervention is not an independent action, but a mere ancillary and supplemental one. 55 As such, the third party must establish a legal interest in the main action; that is, a concrete and immediate gain or loss as a direct result of whatever may be the judgment in the main action. 56 It follows then, that the third party must initiate the intervention at the earliest opportunity, before judgment is rendered by the trial court in the main and original action. 57 Thus, when the case is resolved or otherwise terminated, the right to intervene likewise expires. 58 To allow a contrary position would reward those who slept on their lawfully granted privilege, while unduly prejudicing the original parties. 59

Engr. Cañedo, et al. initiated a petition-in-intervention seeking a "new judgment" rather than a reconsideration of the Decision. It is as though their petition-in-intervention is parallel to and consolidated with the petition for review originally filed by PCAB. In its technical form, this particular petition-in-intervention is improper. Moreover, the petition-in-intervention of Engr. Cañedo, et al., as with the motions for leave to intervene of NACAP, PCA and PCA Pampanga, et al., do not meet the requirements enumerated in Rule 19 of the Rules of Court.

First requirement: legal interest

1) Association of contractors

An association has legal standing as an original party if 1) it is a duly incorporated juridical entity with capacity to sue and be sued; 60 and 2) has a direct and material interest in the issue of the case, such that it stands to sustain a real injury or obtain a concrete gain from the outcome. 61 If it sues on the basis of the interest of its members, the association must further establish 3) its authorization to act for its members, as well as 4) its own direct and material interest in the case. 62 There is no reason why these requirements should not apply more strictly to associations as mere third-party intervenors.

Based on their allegations, NACAP, PCA, PCA Pampanga, et al., and CCA seek to intervene in the instant case as representatives of their respective members. While they meet the first three requirements for standing, they do not allege, much less establish, that they have interests, separate and distinct from those of their members. A reading of the movants' own allegations reveal that those who stand to be injured by the Decision are their respective members, and not the movants themselves. In Holy Spirit Homeowners Association, Inc. v. Defensor, 63 the Court recognized the standing of an association for "it has sustained direct injury arising from the enforcement of the [questioned] IRR in that they have been disqualified and eliminated from the selection process [of beneficiaries and lot allocation]." 64 No such injury, direct and distinct to the movants as associations, has been identified.

2) Individual contractors and engineers

Without question, the individual contractors and engineers seeking third-party intervention have demonstrated a stake in the Decision. This interest is not merely aligned with the regulatory interest of PCAB; it is also peculiar and direct to them, for they stand to sustain business and income losses as a consequence of unrestricted foreign competition. EcTCAD

Second requirement: timeliness

Nonetheless, the third-party intervention of the individual contractors and engineers was belatedly initiated. Agan v. Philippine International Air Terminals Co., Inc.65(PIATCO) was a petition directly filed with this Court. After a decision was rendered nullifying the PIATCO contract, third-party intervention was sought by airport employees who stood to lose their jobs as a consequence of the decision. The Court disallowed the intervention for having been filed out of time. In this case, intervention was sought not just after this Court rendered its Decision in 2020, but also four (4) years after the RTC issued its Resolution in 2014.

By way of justifying their belated motions for intervention, the movants claim that they have no knowledge of the proceedings before the RTC and this Court — however, this is hardly plausible. In 2015, CIAP issued Board Resolution No. 08 endorsing to the Office of the President (OP) the proposed amendments to the regulations on nationality-based licensing classifications. The resolution cited the outcome of the public forum conducted among PCA members on September 11, 2014, as well as the position paper that PCA had submitted to CIAP in relation thereto. 66 After all, under Sec. 1 of Presidential Decree (P.D.) No. 1746, PCA and a private sector representative are also members of the CIAP Board. Vigilance in the exercise and protection of one's rights should have prompted an intervention, if not prior to the RTC judgment, then during the appeal raised by PCAB before this Court. The Rules cannot be relaxed to await litigants who repeatedly sleep on their rights. 67

It is true that this Court has allowed third-party interventions after judgment, but in those exceptional circumstances, the third party was indispensable to the complete resolution of the case, 68 or it was allowed to participate by the original parties; 69 or raised not just a real interest, but also a novel argument. 70 None of these conditions obtain in this case. A perusal of the movants' motions for reconsideration-in-intervention and petition-in-intervention show that movants mostly constitute rehashing of arguments that the Court has already resolved in the subject Decision.

Ultimately, the third-party interventions do not meet the requirements of Sec. 2, Rule 19 of the Rules of Court.

Denial of the motion for reconsideration

PCAB reiterates the arguments in its petition for review. 71 At the same time, it informs the Court that the emergence of supervening events necessitate a reconsideration of the subject Decision. Such supervening event is allegedly in the form of CIAP Board Resolution No. 08 dated May 29, 2015, endorsing PCAB's "proposed amendments to the IRR of R.A. No. 4566 to the Office of the President for approval." 72 Under the amendment to Sec. 3.1 (a), Rule 3, PCAB argues that regular licensing is now available to foreign contractors, including those that are 100% foreign-owned. The amendment reads:

"Regular License" means a license of the type issued to a domestic construction firm which shall authorize the Licensee to engage in construction contracting within the field and scope of his license classification(s) for as long as the license validity is maintained through annual renewal; unless renewal is denied or the license is suspended, cancelled or revoked for cause(s).

A Regular License shall be reserved for and issued only to constructor-firms of Filipino sole proprietorship, or partnership/corporation with at least sixty percent (60%) Filipino equity participation and duly organized and existing under and by virtue of the laws of the Philippines.

While a Regular License with Annotation shall be issued to a domestic corporation, irrespective of equity ownership, with a capitalization of at least One Billion Pesos ([P1,000,000,000.00]) in cash and shall be legally authorized to undertake only those projects enumerated in Section 4.8 of these rules. 73 (underscoring supplied) HSAcaE

According to PCAB, under the foregoing amendment, foreign contractors would no longer be prohibited from participating in the Philippine construction industry. Rather, their participation will be merely regulated: they can compete against Filipino contractors having similar technical and financial capabilities, and logistical resources, for projects that are capital and technologically intensive. However, these foreign contractors shall not be allowed to compete against MSME Filipino contractors or bid on small-ticket government projects through a Regular license. 74

In a Memorandum dated November 13, 2015 addressed to the DTI Secretary, the Executive Secretary informed CIAP that the OP has approved the foregoing amendments. 75

PCAB likewise urges the Court to take into account that, in the wake of the COVID-19 pandemic, it is imperative to reserve construction jobs for Filipinos, rather than open the industry to foreign contractors that bring in foreign engineers and workers. 76

The amendments to the IRR of

PCAB has not alleged nor shown that the amendments were published and have taken effect. CIAP Board Resolution No. 11, Series of 2017 states:

WHEREAS, on 15 January 2016, the approved amendments to the IRR of RA [No.] 4566 were filed with the U.P. Law Center-Office of the National Administrative Register (ONAR) and became effective fifteen (15) days from the date of filing, that is, January 30, 2016.

Publication is a prerequisite to the effectivity of administrative rules and regulations that touch upon substantive rights and obligations. 77 Publication must be in the Official Gazette or in a newspaper of general circulation or in a form required by the law being implemented. 78 While the filing of a copy of the issuance with Office of the National Administrative Register is also required, 79 it is no substitute to the actual publication of the issuance. 80

As there is no allegation or record that the amendments cited by PCAB have been published in the Official Gazette or in a newspaper of general circulation or special form of publication, said amendments are of doubtful effect, much less a supervening effect.

However, even assuming that the amendments have come into force, they remain afflicted with the same vice that rendered the original regulations invalid.

The amendment retains the

While PCAB cited the amendments to Rule 3 of the IRR of R.A. No. 4566 in its Motion, the issuance of the Department of Trade and Industry regarding the amendments as approved by the OP reveals that Rules 4 and 5 were likewise revised as follows:

II. Section 4.8 is hereby added to the Implementing Rules and Regulations and shall read as follows[:]

"Projects that may be undertaken by a holder of Regular License with Annotation"

A. Vertical Projects — include Buildings such as office or residential condominiums, hotels, malls, hospitals, schools, warehouses and the like; Airport [T]erminals, [M]arine [T]erminals, [I]nternational [T]ransport [T]erminals, Power [G]eneration [P]lants, Manufacturing and [A]ssembly [F]acilities and Tourism [R]esorts, [C]ountry [C]lubs and [G]olf [C]ourses.

B. Horizontal Projects — include Roads, [E]xpressways and Toll Road Systems, Light Rail Systems, Heavy Rail Systems, Monorail System [and] Bay Area Rapid Transit (BART); Water Distribution System; Bulk Water Systems; Sewage and Sewerage System; Power Transmission System [and] Power Distribution System; Telecommunications Distribution System; Bridges, [F]lyovers, [V]iaducts, [O]verhead [C]arriageways, Piers, Wharves [and] Interchanges; Tunnels, [U]nderground Carriageways [and] Storm Cisterns; Dams, Dikes Seawalls [and] Breakwater System; and Reclamation.

Minimum Value of Each Project Contract

The Minimum Contract Value per single Project that may be undertaken by a holder of a Regular License with Annotation is set forth below:

[a] For Vertical Projects — Five Billion Pesos ([P]5,000,000,000.00) x x x; and

[b] For Horizontal Projects — Three Billion Pesos ([P]3,000,000,000.00) x x x.

III. Section 5.6 is hereby amended to read as follows:

"Sec. 5.6 Constructor Categories"

Every constructor shall be graded and assigned a category as an adjunct to his license. General Engineering and General Building constructors shall be categorized in a scale of seven, namely: AAAA (quadruple A), AAA, AA, A, B, C, and D. Specialty constructors shall be categorized in a scale of seven, namely: AAA, AA, A, B, C, D and Trade. 81 AcICHD

By virtue of the foregoing provisions, Filipino contractors and foreign contractors holding a regular license with AAA annotation would be subject to the same capitalization requirements and project limitations.

However, in 2017, PCAB issued Board Resolution No. 079, Series of 2017, adopting the Guidelines for the Licensing of Category Quadruple A Contractors (2017 Guidelines on Licensing), approved by the CIAP through Board Resolution No. 11, Series of 2017. The 2017 Guidelines on Licensing refer to the license of local contractors as Quadruple A Platinum and to that of foreign contractors as Quadruple A Gold. The Guidelines allow foreign contractors with Quadruple A Gold Licenses to engage in only certain types of projects:

Quadruple A Gold contractors may undertake private projects under the following contract cost:

• For vertical projects — minimum contract cost of Php5 Billion

• For horizontal projects — minimum contract cost of Php3 Billion

Quadruple A Platinum contractors may undertake government and private projects of any contract cost. 82

A reading of the foregoing amendments clearly reveals a difference in classification of licensing between domestic and foreign contractors. Thus, even if the Court were to take into account the 2015 amendment, it remains doubtful to this Court that the defects that originally plagued Rule 3 of the IRR of R.A. No. 4566 have been cured. It is evident that nationality-based licensing classifications are still present in the PCAB rules currently in place.

As emphasized in the March 10, 2020 Decision of the Court:

In accordance thereto, the phrase "to effect the classification of contractors" under Section 17 should be read in relation to Section 16 of R.A. No. 4566 which provides for an enumeration of the statutorily-mandated classifications for the contracting business, viz.:

Section 16. Classification. — For the purpose of classification, the contracting business includes any or all of the following branches.

(a) General engineering contracting;

(b) General building contracting; and

(c) Specialty contracting.

These terms are then correspondingly defined in subsections (c), (d), and (e), Section 9 of R.A. No. 4566.

Pursuant to the directive under Section 17 of R.A. No. 4566 of PCAB to "effect the classification of contractors," Section 5.1 of the IRR on "License Classification and Categorization" sub-classified the three (3) main contracting classifications as defined in Section 9 of R.A. No. 4566 by areas of specialization. However, PCAB went beyond the prescribed classifications under Section 16 of R.A. No. 4566 and proceeded to create the nationality-based license types under Section 3.1. Additionally, while Section 5 of R.A. No. 4566 authorizes PCAB to "issue, suspend, and revoke licenses of contractors," this general authority to issue licenses must be read in conjunction with Sections 16 and 17 of R.A. No. 4566 if the licensing power of the PCAB is to be exercised to the extent that the PCAB would be effectively creating substantial classifications between certain types of contractors.

In fine, PCAB exceeded the confines of the delegating statute when it created the nationality-based license types under Section 3.1. Basic is the rule that "the clear letter of the law is controlling and cannot be amended by a mere administrative rule issued for its implementation." 83 (emphases supplied) TAIaHE

Indeed, R.A. No. 4566 only authorized PCAB to classify contracting business into general engineering contracting; general building contracting; and specialty contracting. The law did not sanction PCAB to impose a nationality-based license classification. It was likewise underscored by the Court that the construction industry is not one which the Constitution has reserved exclusively for Filipinos. Neither do the laws enacted by Congress show any indication that foreigners are proscribed from entering into the same projects as Filipinos in the field of construction. 84 As the alleged amendments and 2017 Guidelines on Licensing still retain the unauthorized and restrictive classification between domestic and foreign contractors, then it cannot cure the defect under Rule 3 of the IRR of R.A. No. 4566.

Economic exigency as a

There is no question that, as everywhere else in the world today, the Philippines must face the economic repercussions of the COVID-19 pandemic and adopt transitory measures to protect local businesses and jobs. However, those measures are for the executive and the legislative departments to formulate and adopt rather than for this Court to conjecture out of thin air. The Court cannot engage in policy-making.

The petitioner and petitioners-in-intervention raise various arguments that are matters of policy. Whether or not those ratiocinations are valid, it must be reiterated that the power of this Court is limited to the interpretation of the law. Judicial power does not include the determination of the wisdom, fairness, soundness, or expediency of a statute. Otherwise, the Court may be accused of engaging in judicial legislation. As it is the Congress that is empowered by the Constitution to determine state policies and to enact laws, petitioner's reasoning would be best addressed by the legislature, and those policies are implemented by the executives. 85

It might be true that reviving the Philippine construction industry would require restrictions on foreign participation. But then again, those restrictions must be posited into law and implemented through regulations. As they presently stand, the Constitution and R.A. No. 4566 do not authorize restrictions in the form of nationality-based licensing. Thus, the Court can only declare that PCAB acted beyond what the Constitution and the law allow when it issued Sec. 3.1 (a) paragraph 2, Sec. 3.1 (b) subparagraph (bb), Rule 3, and Sec. 12.7, Rule 12 of the IRR of R.A. No. 4566. The power of this Court is to apply the law as it exists (lex lata) and not how the law ought to be (lex ferenda).

Reiteration of previous arguments

PCAB reiterated arguments that have been traversed by the decisions of this Court and the RTC. Apart from raising the specter of the collapse of the construction industry in the aftermath of the COVID-19 pandemic, PCAB has not cited any new argument that has legal authority to issue the questioned regulations. Rather, as correctly pointed out by MWC, PCAB acknowledged that Congress has yet to pass a law allowing such classifications. cDHAES

WHEREFORE, the Motions for Leave to Intervene are DENIED and the admission of the Motions of Reconsideration-in-Intervention and Petitions-in-Intervention are DECLINED. The Motion for Reconsideration is likewise DENIED." Leonen, J., on official leave. (6)

By authority of the Court:

(SGD.) MARIFE M. LOMIBAO-CUEVASClerk of Court

 

Footnotes

1.Rollo, pp. 595-625.

2.Id. at 518-540.

3.Id. at 563.

4.Id. at 661-677.

5.Id. at 747-761.

6.Id. at 1027-1069.

7.Id. at 976-978.

8.Id. at 1113-1153.

9.Id. at 1164-1200.

10. Note E.O. No. 65 (2018).

11.Rollo, p. 538.

12.Id. at 564.

13.Id.

14.Id. at 832 (PCA Pampanga, et al.'s Motion for Leave to Intervene).

15.Id. at 830.

16.Id. at 754 (PCA's Motion for Leave to Intervene).

17.Id. at 749.

18.Id. at 751, citing statistical summary of PCAB-licensed contractors from Contracting Fiscal Years 2015-2016 to 2020-2021.

19.Id.

20.Id. at 751-752.

21.Id. at 752.

22.Id. at 1030.

23.Id.

24.Id.

25.Id. at 1028.

26.Id. at 1029.

27.Id. at 598-600 (PCAB's Motion for Reconsideration).

28.Id. at 575-584.

29.Id. at 682-707 (PCA Pampanga, et al.'s Motion for [Reconsideration-in-Intervention]).

30.Id. at 764-788 (PCA's Motion for Reconsideration-in-Intervention).

31.Id. at 1034.

32.Id. at 708 (PCA Pampanga, et al.'s Motion for [Reconsideration-in-Intervention]).

33.Id. at 684.

34.Id. at 787-788.

35.Id. at 1117. MWC manifested that it has not been served a copy of NACAP's intervention.

36.Id. at 1123.

37.Id. at 1123-1125.

38.Id. at 1124.

39.Id. at 1175-1179. (PCC's Amicus Brief).

40.Id. at 1185.

41.Id. at 1191-1194.

42.Id. at 1185-1187.

43.Id. at 1226-1227 (PCA's Consolidated Reply).

44.Id. at 1230-1234.

45.Id. at 1236-1238.

46.Id. at 1238.

47.Id. at 1239-1240.

48.Id. at 1241-1242.

49.Id. at 1245-1246.

50.Id. at 1260-1261 (PCA Pampanga, et al.'s Consolidated Reply).

51.Id. at 1261-1263.

52.Id. at 1277-1278.

53.Id. at 1281-1282.

54.Office of the Ombudsman v. Bongais, 836 Phil. 978, 987 (2018).

55.Manalo v. Court of Appeals, 419 Phil. 215, 234 (2001).

56.Neptune Metal Scrap Recycling, Inc. v. Manila Electric Company, 789 Phil. 30, 38 (2016).

57. See Agan, Jr. v. Philippine International Air Terminals, Co., Inc., 465 Phil. 545, 564 (2004).

58.Office of the Ombudsman v. Gutierrez, 811 Phil. 389, 408 (2017).

59.Ongco v. Dalisay, 691 Phil. 462, 472 (2012).

60.Dueñas v. Santos Subdivision Homeowners Association, 474 Phil. 834, 845 (2004).

61.Association of Flood Victims v. Commission on Elections, 740 Phil. 472, 481 (2014).

62.Private Hospitals Association of the Philippines, Inc. v. Medialdea, G.R. No. 234448, November 6, 2018 and Ormoc Sugarcane Planters' Association, Inc. v. Court of Appeals, 613 Phil. 240, 252 (2009).

63. 529 Phil. 573 (2006).

64.Id. at 584.

65.Supra note 57.

66. CIAP Board Resolution No. 08 (2015), 11th and 12th preambular clause.

67.Agan, Jr. v. Philippine International Air Terminals Co., Inc., supra note 57.

68.Land Bank of the Phils. v. Cacayuran, 750 Phil. 145, 152 (2015).

69.Lim v. Pacquing, 310 Phil. 722, 755 (1995).

70.Social Justice Society v. Atienza, Jr., 568 Phil. 658, 678 (2008).

71.Rollo, pp. 598-600.

72.Id. at 600-601.

73.Id. at 601-602.

74.Id. at 603.

75.Id. at 634.

76.Id. at 607.

77.Tañada v. Tuvera, 230 Phil. 528, 535 (1986).

78. E.O. No. 200 (1987), Sec. 1.

79.Securities and Exchange Commission v. GMA Network, Inc., 595 Phil. 721, 730 (2008).

80.Cawad v. Abad, 764 Phil. 705, 729-730 (2015).

81.Rollo, pp. 632-633, Amendments to Certain Provisions of the Implementing Rules and Regulations of Republic Act No. 4566.

82. PCAB Board Resolution No. 079 (2017), Guidelines for the Licensing of Category Quadruple A Contractors, March 27, 2017.

83.Philippine Contractors Accreditation Board v. Manila Water Co., Inc., G.R. No. 217590, March 10, 2020.

84.Id.

85. See Giron v. COMELEC, 702 Phil. 30, 39 (2013).