PHILIPPINE CONTRACTORS ACCREDITATION BOARD vs.

MANILA WATER COMPANY, INC

GR No. 217590

Facts

On July 9, 2012, respondent wrote petitioner seeking accreditation of its foreign contractors to
undertake its contracts for the construction of necessary facilities for its waterworks and sewerage
system. Petitioner replied stating that under Section 3.1 of the IRR, regular licenses are reserved for, and
issued only to, contractor-firms of Filipino sole proprietorship or partnership/corporation with at least
60% Filipino equity participation and duly organized and existing, under and by virtue of the laws of the
Philippines . Respondent filed a Petition for Declaratory Relief. Respondent claimed that the said
provision is unconstitutional since it creates restrictions on foreign investments, a power exclusively
vested on Congress by the Constitution.

Petitioner contended that the IRR does not restrict the construction industry to Filipinos, but merely
regulates the issuance of licenses to foreign contractors, subject to reasonable regulatory measures
pertinent to their nature of being based outside the Philippines. Petitioner insists that the regulation
was formed consistent with Section 14, Article XII of the 1987 Constitution, which mandates the practice
of all professions in the Philippines be limited to Filipino citizens. In addition, petitioner considers
construction as a profession by including contractors in the list of professionals under R.A. No. 465, as
amended by R.A. No. 6511. Respondent contended that petitioner exceeded its jurisdiction by issuing
Section 3.1, Rule 3 of the IRR, as the power to impose nationality requirements in areas of investment is
exclusively vested on Congress under Section 10, Article XII of the Constitution and not to a mere
administrative agency. The RTC ruled in favor of respondent and declared Section 3.1, Rule 3 of the IRR
void . It held that it creates an entirely new restriction that is not found in the law. Petitioner filed a
motion for reconsideration but was denied. Hence, this petition.

Issue

Whether the assailed provision is contrary to the Constitution and if the same constitutes unfair
competition.

Ruling

We find the petition without merit. The Constitution provides safeguards to protect the Filipino industry
against domination of foreigners; thus, laws were enacted to secure this state policy, particularly in
areas where national economy and patrimony must be protected in our own jurisdiction. Section 14,
Article XII of the Constitution refers to the privilege of a natural person to exercise his profession in the
Philippines. On the other hand, under Article IV of R.A. No. 4566, even partnerships, corporations and
organizations can qualify for a contractor's license through its responsible office

The "profession" under the aforesaid provision refers to the practice of natural persons of a certain field
in which they are trained, certified, and licensed. Being a licensed contractor does not automatically
qualify within the ambit of the Constitution as a "profession" per se. Suffice it to say that a corporation
or juridical person, in this case a construction firm, cannot be considered a "professional" that is being
exclusively restricted by the Constitution and our laws to Filipino citizens. Professionalizing the
construction business is different from the exercise of profession which the Constitution exclusively
restricts to Filipino citizens. Accordingly, this Court finds 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. Thus, we find that setting the equity limit for a certain type of contractor's license has
no basis.

Evidently, respondent's argument of alleged unfair competition does not apply in this case. Tañada v.
Angara is instructive. The Court has ruled that "the constitutional policy of a 'self-reliant and
independent national economy' does not necessarily rule out the entry of foreign investments, goods
and services. It contemplates neither 'economic seclusion' nor 'mendicancy in the international
community”. The Constitution did not intend to pursue an isolationist policy. It did not shut out foreign
investments, goods and services in the development of the Philippine economy. While the Constitution
does not encourage the unlimited entry of foreign goods, services and investments into the country, it
does not prohibit them either. In fact, itallows an exchange on the basis of equality and reciprocity,
frowning only on foreign competition that is unfair . In "Espina v. Zamora, Jr., the Court further
explained in Tañada that Article XII of the1987 Constitution lays down the ideals of economic
nationalism: (1)by expressing preference in favor of qualified Filipinos in the grant of rights, privileges
and concessions covering the national economy and patrimony and in the use of Filipino labor, domestic
materials and locally-produced goods; (2) by mandating the State to adopt measures that help make
them competitive; and (3) by requiring the State to develop a self-reliant and independent national
economy effectively controlled by Filipinos. In other words, while Section 19, Article II of the
1987Constitution requires the development of a self-reliant and independent national economy
effectively controlled by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the
economic environment. The objective is simply to prohibit foreign powers or interests from
maneuvering our economic policies and ensure that Filipinos are given preference in all areas of
development.

As a consequence, this Court finds the assailed regulation inconsistent with the intent of the
Constitution in no less than one aspect. The Constitution mandates this Court to be the guardian not
only of the people's political rights but their economic rights as well. The evil sought to be prevented by
petitioner, that a contractor's warranty cannot be imposed as foreign contractors are beyond reach of
the government and the genuine intent of protecting the Filipino consumers by ensuring continuous and
updated monitoring and regulation of foreign contractors, may be addressed with some form of
regulation other than restricting the contractor's license which leads to deprivation of economic growth
and advancement of the construction industry.

The petition is DENIED.