TITLE: Philippine Contractors Accreditation Board v. Manila Water

TITLE: Philippine Contractors Accreditation Board v.
Manila Water  Manila Water wrote PCAB seeking accreditation of its foreign
Company, Inc., G.R. No. 217590, March 10, 2020 contractors to undertake its contracts for the construction of
necessary facilities for its waterworks and sewerage system.
ISSUE:  PCAB replied stating that under Section 3.1 of the IRR, regular
 WON Sec. 3.1, Rule 31 of the IRR of R.A. No. 4566 is consistent with licenses are reserved for, and issued only to, contractor-firms of
the 1987 Constitution, and existing laws, rules, regulations and Filipino sole proprietorship or partnership/corporation with at least
policies. 60% Filipino equity participation.
 Manila Water filed a Petition for Declaratory Relief before the trial
HELD: court which sought for the determination of the validity of Section
 NO. Therefore Rule 3, Section 3.1 (a) paragraph 2, Section 3.1 (b) 3.1, Rule 3 of the IRR issued by petitioner. Respondent claimed that
subparagraph (bb), and Rule 12, Section 12.7 of the Revised Rules the said provision is unconstitutional since it creates restrictions on
and Regulations Governing Licensing and Accreditation of foreign investments, a power exclusively vested on Congress by the
Constructors, implementing the Contractors' License Law were Constitution. It also argued that the same provision adds restrictions
declared VOID. to R.A. No. 4566 which the latter does not provide.
FACTS: RATIO:
 Pursuant to the directive under Section 17 of the Contractors' License
1
Rule 3 CONTRACTOR'S LICENSE Law to "effect the classification of contractors," Section 5.1 of the IRR
Section 3.1. License Types. — on "License Classification and Categorization" sub-classified the
Two types of licenses are hereby instituted and designated as follows:
a) The Regular License
three (3) main contracting classifications. 2
"Regular License" means a license of the type issued to a domestic construction firm which shall  However, PCAB went beyond the prescribed classifications under Section
authorize the licensee to engage in construction contracting within the field and scope of his 16 of R.A. No. 4566 and proceeded to create the nationality-based license
license classification(s) for as long as the license validity is maintained through annual renewal; types under Section 3.1.
unless renewal is denied or the license is suspended, cancelled or revoked for cause(s).
 While Section 5 of R.A. No. 4566 authorizes PCAB to "issue, suspend,
The Regular License shall be reserved for and issued only to constructor-firms of Filipino sole and revoke licenses of contractors," this general authority to issue
proprietorship, or partnership/corporation with at least seventy percent (70)* Filipino equity licenses must be read in conjunction with Sections 16 and 17
participation and duly organized and existing under and by virtue of the laws of the
Philippines.
 A contractor under R.A. No. 4566 does not refer to a specific practice
* Adjusted to 60% under Art. 48 of Chapter III, Book II of the Omnibus Investment Code of 1987. of profession, i.e., architecture, engineering, medicine, accountancy
b) The Special License and the like.
"Special License" means a license of the type issued to a joint venture, a consortium, a foreign
constructor or a project owner which shall authorize the licensee to engage only in the  A corporation or juridical person cannot be considered a
construction of a single specific "professional" that is being exclusively restricted by the Constitution
undertaking/project. In case the licensee is a foreign firm, and our laws to Filipino citizens. The licensing of contractors is not
the license authorization shall be further subject to condition(s) as may have been imposed by
the proper Philippine government authority in the grant of the privilege for him to so engage in
to engage in the practice of a specific profession, but rather to engage
construction contracting in the Philippines. Annual renewal shall be required for as long as the in the business of contracting/construction.
undertaking/project is in progress but shall be restricted to only as many times as necessary for
completion of the same.
The following can qualify only for the Special License:

ba) A joint venture, consortium or any such similar association organized for a single specific
undertaking/project;
bb) A foreign firm legally allowed by the proper Philippine government authority to undertake
construction activities in the Philippines. 2
Section 16. Classification. — For the purpose of classification, the contracting business includes
bc) A project owner undertaking by himself, sans the service of a constructor, the construction of any or all of the following branches.
a project intended for sale, lease, commercial/industrial use or any other income generating (a) General engineering contracting;
purpose. (b) General building contracting; and
(c) Specialty contracting.

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The following can qualify only for the Special License:

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