September 9, 2020

Regular PCAB License May Now Be Granted To Foreign Contractors​

By: Kathia Kierstin Chanyee

In the March 10, 2020 Decision of the Supreme Court in the case of Philippine Contractors Accreditation Board (PCAB) vs. Manila Water Company, Inc. (Manila Water), G.R. No. 217590, it finally put to rest the issue of whether or not foreign contractors are eligible only to special PCAB license as provided under Rule 3 of the Implementing Rules and Regulations (IRR) of Republic Act No. 4566 (RA 4566).

In the said case, Manila Water initially applied for regular PCAB license for its foreign contractors for the construction of waterworks and sewage system. However, PCAB denied their application on the ground that regular PCAB licenses were granted only to local contractors under Rule 3, Section 3.1 of the IRR of RA 4566. Not satisfied with the decision of the PCAB, Manila Water filed a Petition for Declaratory Relief before the Regional Trial Court (RTC) seeking clarity on whether Rule 3 Section 3.1 of RA 4566 is valid. It argues that the said provision is unconstitutional for going beyond RA 4566. The RTC agreed with Manila Water and in its Resolution and Order, the RTC declared the questioned provision of the IRR as unconstitutional. Hence, PCAB filed a Petition for Review before the Supreme Court praying for the reversal of the Resolution and Order of the RTC.
The Supreme Court affirmed with modification the Resolution and Order of the RTC. And quoted below, one of the bases for such affirmation of the Supreme Court:

“We agree with respondent (Manila Waters) that a scrutiny of R.A. No. 4566 reveals that there is nothing which would indicate that petitioner (PCAB) is authorized to set an equity limit for a contractor ‘s license. It is Congress, which has the power to determine certain areas of investments which must be reserved to Filipinos, upon recommendation of the National Economic Development Authority (NEDA), and when national interest requires. Again, we do not find any basis in any law enacted by Congress for the equity requirement set by petitioner in the assailed regulation. This power is not even impliedly delegated to petitioner under R.A. No. 4566 from which it anchors its existence and authority.

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.”

As such Decision of the Supreme Court, foreign contractors now may apply and be granted with regular PCAB license. Regular PCAB license is valid for one fiscal year, from the 1st of July to the 30th of June of the ensuing year, unless suspended, invalidated, cancelled or revoked earlier by the PCAB, and shall be renewed annually. A license issued after the 1st of July shall be valid for the remaining part of the fiscal year. For inquiries or in need of assistance in obtaining PCAB license, Contact Us.