What Congress has delegated can no longer be further delegated or redelegated by the original delegate to another.
“Delegata potestas non potest delegari.”
On Feb. 1, 2023, the Supreme Court released its rulings in G.R. No. 246027, June 21, 2022 (SEC vs. 1Accountant Party-list Inc. et.al.) voiding the Securities and Exchange Commission (SEC) rules mandating the accreditation of Certified Public Accountants (CPAs). Penned by SC Associate Justice Ricardo Rosario, the court voided the directives of the SEC, which required the accreditation of Certified Public Accountants (CPAs) who act as external auditors of companies that issue registered securities and possess secondary licenses.
The petition stemmed from the case filed by Christian Jay Lim, President of the 1Accountants Party List, Inc., as well as other CPAs—for declaratory relief with prayer for preliminary injunction and temporary restraining order against the SEC circulars. Among the reliefs sought was the declaration of nullity of the accreditation requirements imposed by the SEC issuances which curtailed the right of CPAs to practice their profession.
This landmark decision of the Supreme Court has explicitly and categorically provided guidance and instructions for stakeholders regarding their future actions regarding the practice of accountancy in the Philippines. Supreme Court decisions applying or interpreting the law, after all, form part of the country’s legal system and have the force and effect of a law.
Salient legal issues resolved by the Supreme Court in this instant case were as follows:
The power to supervise the accounting profession and to impose regulations on CPAs is exclusively delegated to the Professional Regulatory Board of Accountancy. Yet this exclusive delegation is contravened by the provisions in SEC MC No. 13-2009, in particular clauses such as the scale of fines and the suspension or delisting of accreditation.
Petitioner (SEC) further argues that it executed a Memorandum of Agreement (MOA) with the PRBOA, the SC reminded the petitioner of another legal maxim, “delegata potestas non potest delegari” or what has been delegated by Congress can no longer be further delegated or redelegated by the original delegate to another:
X x x having been reposed by law exclusively with the Respondent Board, it has no choice but to exercise the same as mandated by law, i.e. as a collegial body, and not to transfer it elsewhere or discharge said power through the intervening mind of another. Delegata potestas non potest delegari – a delegated power cannot be redelegated.
A private agreement such as MOA cannot operate to validate a transgression of a provision of law. Thus, the MOA is void and cannot serve as authorization for the petitioner (SEC) to make the assailed issuances.
In her concurring opinion, Associate Justice Amy Nazario – Javier eloquently expounded the Supreme Court’s rulings. In her concurrence with the ponencia, she stated that the regulation of the practice of accountancy is statute-based. Congress creates or identifies the public office to which it delegates this power.
In resolving this issue, the instructions of Congress are paramount. The starting point is Republic Act (RA) No. 9298, otherwise known as the Philippine Accountancy Act of 2004. Through this statute, Congress created and empowered PRBOA, "to supervise the registration, licensure and practice of accountancy in the Philippines”. Per RA 9298, PRBOA is the gatekeeper for the supply of authorized external auditors.
Since the PRBOA cannot delegate the power to regulate the practice of accountancy, the SEC must be able to show an independent grant of power, not one that the PRBOA could have delegated, invalidly that is, to it. The MOA is inconsequential. Even if it were a party to this MOA with the SEC, BSP, IC, the PRBOA cannot delegate its power to regulate any or all aspects of the practice of accountancy to any other government entity.
Congress entrusted the mandate to PRBOA, so it must and by no other.
Atty. Randy B. Blanza, CPA, is the immediate past national president of the Philippine Institute of Certified Public Accountants (PICPA).