The Supreme Court (SC) has affirmed its 2020 decision that effectively allowed foreign construction firms to obtain regular licenses to engage in public or private projects in the country.

In a resolution made public last March 3, the SC denied the motion for reconsideration filed by the Philippine Contractors Accreditation Board (PCAB) and various petitions and motions filed by several construction associations and privately-owned construction firms.

The resolution was issued on the petition filed by PCAB against Manila Water Company, Inc. which was docketed as GR No. 217590.

The case involved the petition of Manila Water for PCAB to accredit its foreign contractors to undertake its contracts for the construction of necessary facilities for its waterworks and sewerage system.

When PCAB denied Manila Water’s plea, the water firm elevated the issue before the trial court which ruled in its favor. PCAB appealed to the SC.

In the March 10, 2020 decision, the SC affirmed with modification the trial court’s order and resolution.

The SC declared “void Section 3.1 (a) paragraph 2, Rule 3; Section 3.1 subparagraph (bb), Rule 3; and Section 12.7, Rule 12 of the 1989 Revised Rules and Regulations Governing Licensing and Accreditation of Contractors in the Philippines, implementing Republic Act No. 4566 or Contractors’ License Law.”

It held that “these regulations defining nationality-based licensing categories were adopted by PCAB in excess of its authority.”

It also held that “PCAB’s reliance on Section 14, Article XII of the Constitution is misplaced as it pertains to the regulation of 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.”

PCAB filed a motion in behalf of PCAB to reconsider the 2020 decision.

The OSG told the SC that that the limitations on the participation of foreign firms in construction projects should be retained.

The OSG said: “The entry of foreign contractors with their undue advantage will not only displace current professionals and workers in the industry, but will reduce employment opportunities for returning Overseas Filipino Workers (OFWs).”

“Undeniably, the micro small medium enterprises comprising of 97 per cent of the registered contractors who are reeling from debilitating effects of the pandemic (Covid-19) will further be subjected to foreign competitors whose wider supply chain networks and support from their respective governments will put them at a disadvantage,” the OSG said.

The OSG also pointed out that the decision was untimely because of the effect of the Covid-19 pandemic in the country, particularly on the unemployment rate.

It pointed out that foreign contractors normally bring their own nationals to work in their projects and, thus, denying Filipinos the employment opportunities.

At the same time, the OSG said in its motion that the law mandates the issuance of special license to address the current demands for the Philippines to be globally competitive and balance the participation of foreign contractors.

The OSG’s motion was supported by the Philippine Constructors Association, Inc. (PCA), Cebu Contractors Association, Inc., and Davao Constructors Association Center, Inc.

In denying the motion and the other pleadings, the SC said:

“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 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 (PCAB) 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 executive.

“It might be true that reviving the Philippine construction industry would require restrictions on foreign participation. But then again restriction must be posited into law and implemented through regulations.

“As they presently stand, the Constitution and RA 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....

“WHEREFORE, the motions for Leave to Intervene are DENIED and the admission of the Motions for Reconsideration-in-Intervention and Petitions-in Intervention are DECLINED. The Motion for Reconsideration is likewise DENIED.”