G.R. No. 217590, March 10, 2020,
♦ Decision, Gesmundo, [J]
♦ Concurring Opinion, Perlas-Bernabe, [J]
♦ Dissenting Opinion, Leonen, [J]

[ G.R. No. 217590, March 10, 2020 ]

PHILIPPINE CONTRACTORS ACCREDITATION BOARD, PETITIONER, V. MANILA WATER COMPANY, INC., RESPONDENT.

DISSENTING OPINION

LEONEN, J.:

Central to the resolution of this case is the validity of Rule 3, Section 3.1 of the Implementing Rules and Regulations of Republic Act No. 4566, or the Contractors' License Law.

The Implementing Rules and Regulations were crafted by the Philippine Contractors Accreditation Board, which had been created to carry out the objectives of Republic Act No. 4566. Among its powers include the "authority to issue, suspend[,] and revoke"1 contractors' licenses.

Moreover, Section 17 of the law gives the Philippine Contractors Accreditation Board the power to classify contractors. The provision states:

SECTION 17. Power to classify and limit operations. — The Board may adopt reasonably necessary rules and regulations to effect the classification of contractors in a manner consistent with established usage and procedure as found in the construction business, and may limit the field and scope of the operations of a licensed contractor to those in which he is classified to engage, as respectively defined in section nine. A licensee may make application for classification and be thus classified in more than one classification if the licensee meets the qualifications prescribed by the Board for such additional classification or classifications. No additional application or license fee shall be charged for qualifying or classifying a licensee in additional classifications.

Pursuant to these provisions, the Philippine Contractors Accreditation Board, in crafting the Implementing Rules and Regulations, classified two (2) types of licenses that may be granted to contractors. In particular, Rule 3, Section 3.1 states:

Rule 3
CONTRACTOR'S LICENSE

Section 3.1. License Types

Two types of licenses are hereby instituted and designated as follows:

a) The Regular License

"Regular License" means a license of the type issued to a domestic construction firm which shall authorize the licensee to engage in construction contracting within the field and scope of his license classification(s) for as long as the license validity is maintained through annual renewal; unless renewal is denied or the license is suspended, cancelled or revoked for cause(s).

The Regular License shall be reserved for and issued only to constructor-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.

b) The Special License "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 construction of a single specific undertaking/project. In case the licensee is a foreign firm, 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 construction contracting in the Philippines. Annual renewal shall be required for as long as the 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:

a) A joint venture, consortium or any such similar association organized for a single specific undertaking/project;

b) A foreign firm legally allowed by the proper Philippine government authority to undertake construction activities in the Philippines;

c) A project owner undertaking by himself, sans the service of a constructor, the construction of a project intended for sale, lease, commercial/industrial use or any other income generating purpose.2

In this case, Manila Water Company, Inc. (Manila Water) had initially applied for a regular license of its foreign contractors for the construction of waterworks and sewerage system. However, the Philippine Contractors. Accreditation Board denied the application, reasoning that regular licenses were only granted to local contractors under Rule 3, Section 3.1.3

As such, Manila Water filed a Petition for Declaratory Relief before the Regional Trial Court, seeking a determination of whether Section 3.1 was valid. It claimed that the provision was unconstitutional for going beyond the law in that it imposed restrictions on foreign investments that are not found in Republic Act No. 4566 or the Constitution.4

In its ruling, the trial court agreed with Manila Water. It held that while Section 17 of the law allowed classifications, Section 3.1 was unreasonable for its added restrictions on foreign investments.5

The Philippine Contractors Accreditation Board moved for reconsideration, to no avail. Hence, it filed this Petition for Review.6

Before this Court, petitioner mainly contended that Section 3.1 was consistent with the Constitution and existing laws. It argued that the implementing rules did not impose a nationality requirement on construction investment, but merely regulated the issuance of licenses with respect to foreign contractors. Petitioner also maintained that it was within its duty and authority to adopt necessary rules to effect contractors' classifications.7

The majority denied the Petition. It ruled that Section 3.1 was void for unduly discriminating against foreign contractors.8

The majority held that the nationality-based restriction on professionals was not applicable to industries.9 It also ruled that nothing in Republic Act No. 4566 authorized petitioner to set an equity limit for contractors.10

Moreover, the majority, citing Tañada v. Angara11 and Espina v. Zamora, Jr.,12 reasoned that allowing foreign contractors would lead to economic benefits,13 consistent with the constitutional protection of the people's economic rights.14 For that, it relied on the Philippine Competition Commission's opinion that allowing foreign contractors would encourage healthy competition. The majority also cited statistics showing the minuscule number of foreign contractors due to the regulation's deterring effect.15

I register my dissent.

I

The assailed classification under Section 3.1 does not run afoul of the Constitution.

Respondent argued that petitioner exceeded its jurisdiction in making the classification, claiming that the power to impose nationality requirements in areas of investment is exclusively vested on Congress.16 It cited Article XII, Section 10 of the Constitution, which reads:

SECTION 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates, reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its national goals and priorities. (Emphasis supplied)

Contrary to respondent's claim, the classification of licenses does not create a nationality requirement. Section 3.1 is not an absolute restriction against foreign contractors, but is merely a licensing regulation.

A reading of the provision, as well as the entirety of Republic Act No. 4566, will show that foreign contractors are not prohibited from engaging in the construction industry.

Section 3.1 simply classifies two (2) types of licenses that may be applied for, which will then determine the documentary requirements,17 expiry of the license,18 and number of projects a licensee may undertake under a single license.19 It does not prohibit foreign contractors from applying for a license.

Notably, there is no distinction between regular and special licenses as to the terms and conditions,20 qualifications for licensing,21 and license application processing.22 More important, Republic Act No. 4566 and its Implementing Rules and Regulations do not state restrictions against foreign contractors as to the type of projects they may apply for.

The classification appears to have only been meant to facilitate the grant of licenses. The documentary requirements for a special license, it would seem, aid petitioner in processing a foreign contractor's application. For example, the special license requires a board resolution authorizing a resident alien representative in the country and a certification that the project is foreign-financed. These requirements set special licenses apart from regular licenses, and are necessary given that foreign contractors may at times be beyond the government's reach.23

Clearly, Section 3.1 neither precludes foreign entities from applying for a license, nor does it impose an equity requirement.

I agree with the opinion of Justice Estela Perlas-Bernabe that Section 3.1 does not prohibit foreign entities from engaging in the Philippine construction industry, but only imposes a more stringent regulation. In no way does it usurp the legislative power to create nationality requirements under Article XII, Section 10 of the Constitution.24

Similarly, the classification under Section 3.1 does not contradict the doctrines laid down in Tañada and Espina.

In Tañada, this Court held that the World Trade Organization Agreement signed by then President Fidel V. Ramos does not run against the constitutional provisions on economic nationalism.25 It ruled that our economic policy is not isolationist in character. While the Constitution mandates a bias in favor of the domestic market, this should be balanced with the growing need for business integration with the rest of the world. Thus, the limit placed is only intended to protect Filipino enterprises against unfair foreign competition and trade practices.26 This Court held:

Furthermore, 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 WTO reliance on "most favored nation," "national treatment," and "trade without discrimination" cannot be struck down as unconstitutional as in fact they are rules of equality and reciprocity that apply to all WTO members. Aside from envisioning a trade policy based on "equality and reciprocity," the fundamental law encourages industries that are "competitive in both domestic and foreign markets," thereby demonstrating a clear policy against a sheltered domestic trade environment, but one in favor of the gradual development of robust industries that can compete with the best in the foreign markets. Indeed, Filipino managers and Filipino enterprises have shown capability and tenacity to compete internationally. And given a free trade environment, Filipino entrepreneurs and managers in Hongkong have demonstrated the Filipino capacity to grow and to prosper against the best offered under a policy of laissez faire.27 (Citations omitted)

Meanwhile, in Espina, this Court ruled on the constitutionality of the Retail Trade Liberalization Act of 2000. The law had expressly repealed Republic Act No. 1180, "which absolutely prohibited foreign nationals from engaging in the retail trade business."28

In upholding the law's constitutionality, this Court reiterated the doctrine in Tañada:

The Court further explained in Tañada that Article XII of the 1987 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 1987 Constitution 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.29 (Citation omitted)

Furthermore, this Court held that allowing foreigners to engage in business is not tantamount to a denial of Filipinos' right to property and due process of law. It found nothing that showed that the law would eventually lead to alien control of the retail trade business.30

Section 3.1 does not run counter to the rulings in these cases. In no way does the license classification restrict foreign contractors from doing business and obtaining licenses in the Philippines. The license types—regular and special—only differ as to the documentary requirements and expiry of licenses. Section 3.1 neither prohibits nor limits the number of foreign contractors that want to engage in construction in the country. It is consistent with the policy of global integration and openness to foreign investment.

The classification of licenses does not restrict, but only regulates the contractors' application. By imposing additional requirements on foreign contractors, petitioner can address licensing concerns. As it had explained, foreign contractors are treated differently from local ones in that those additional requirements are imposed for monitoring and regulation.

II

Furthermore, the classification under Section 3.1 does not exceed the bounds of Republic Act No. 4566.

It is settled that administrative agencies delegated with legislative power may enact implementing rules and regulations of a law. However, for these rules to be valid, they must be within the bounds of the statute's provisions. In Conte v. Commission on Audit:31

A rule or regulation must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid. The rule-making power of a public administrative body is a delegated legislative power, which it may not use either to abridge the authority given it by the Congress or the Constitution or to enlarge its power beyond the scope intended. Constitutional and statutory provisions control with respect to what rules and regulations may be promulgated by such a body, as well as with respect to what fields are subject to regulation by it. It may not make rules and regulations which are inconsistent with the provisions of the Constitution or a statute, particularly the statute it is administering or which created it, or which are in derogation of, or defeat, the purpose of a statute.32 (Citations omitted)

To recall, Section 17 of Republic Act No. 4566 gives petitioner a wide discretion to adopt necessary rules to effect classifications, consistent with the established practice and procedure in the construction business.

To effectively issue licenses, petitioner can demand various requirements as it deems fit. Additionally, it appears that the contractor's nationality only has an effect on licensing requirements, but it does not limit the operations a contractor may undertake. Nothing in Section 3.1 suggests that a foreign contractor's projects would be limited to general engineering contracting or specialty contracting only.33

Indeed, the text of Section 17 remains clear: a contractor may qualify for any or all categories of contracting business, regardless of the license type they hold.

III

Finally, the Philippine Competition Commission, as amicus curiae, opined that the supposed nationality-based restriction under Section 3.1 is an example of barriers to entry, which, it claimed, violate the constitutional policy against unfair competition. With this, the majority agreed, ruling that "the assailed regulation is a deterrent on entry of foreign players in the construction industry."34

The Philippine Competition Act, however, does not apply here.

The Philippine Competition Act has a universal objective: to "[e]nhance economic efficiency and promote free and fair competition in trade, industry[,] and all commercial economic activities[.]"35 It seeks to reinforce measures that "safeguard competitive conditions"36 in the market.

A competitive market is fostered when individual entities "try to outdo each other in terms of price and/or the quality of their product."37 This translates to market players producing the best quality of products at the least price; otherwise, consumers will go to competitors who offer better products at a lower price.38 Thus, in a competitive market, individual entities have no market power—that is, the ability to dictate a product or service's price. To facilitate this, however, there must be an open entry and exit of entities to make room for a sufficient number of competing players.39

Barriers to entry are factors that prevent firms from joining the market, and these may be structural, firm behavior, or government policy-induced.40 Among them, structural barriers to entry are natural barriers in entering the market. For example, an entity that wishes to enter an industry must consider sunk costs, or investments that cannot be recuperated. Should the entity fail, they increase losses and make the entry to the market less attractive.41 Sunk costs may be in the form of physical and human investments, startup losses, and advertising costs. Large capital requirements, such as investment in equipment, are other examples of a natural barrier to entry.42

Barriers to entry foil the competitive market because they give market power to incumbent entities, allowing them to control the supply and price.43 For instance, in a monopoly, only one (1) supplier persists because "there are barriers to entry that make it impossible for competing firms to appear."44 Monopolies can be found in public utilities such as local water, telecommunications, cable, and power companies, where structural barriers such as large investment costs for building a facility or obtaining access to natural resources are present.45

However, competition policy and law only ensure that firms in the market play fair.1âшphi1 Fair, in this context, means that an entity becomes dominant in the market because it is more efficient than its competitors, such that it is able to produce goods or services at the lowest cost.46

Prohibited acts under the Philippine Competition Act are laid out in its Chapter III. Particularly, Sections 14 and 15 flag anti-competitive agreements and entities that abuse their dominant position.47

Our competition law does not per se outlaw market imperfections. It only prohibits abusive behaviors that substantially prevent, restrict, or lessen competition.48 It does not preclude natural or structural market failures, such as barriers to entry and market dominance.

In Gios-Samar, Inc. v. Department of Transportation and Communications,49 this Court clarified that under the Philippine Competition Act, "an entity is not prohibited from, or held liable for prosecution and punishment for, simply securing a dominant position in the relevant market in which it operates. It is only when that entity engages in conduct in abuse of its dominant position that it will be exposed to prosecution and possible punishment."50

Similarly, Section 15(b) of the Philippine Competition Act makes an important distinction: entities that impose barriers to entry or commit acts "that prevent competitors from growing within the market in an anti-competitive manner" are deemed as abusing their dominant position; however, if the barriers imposed "develop in the market as a result of on arising from a superior product or process, business acumen, or legal rights or laws[,]" they are not proscribed.

Structural barriers to entry are common in construction industries. The amount of investment needed in place and the sunk costs it will entail are structural barriers to entry on new contractors. In this context, foreign contractors are expected to be burdened with additional requirements and more stringent conditions given their substantial difference from domestic contractors. Certainly, this does not constitute an unfair entity behavior that competition law guards against.

Thus, to conclude that all barriers to entry are illegal is inaccurate. The Philippine Competition Act will only operate in instances of unfair abusive behavior that are intended to substantially prevent, restrict, or lessen competition.

Besides, while the majority pointed out that the classification under Section 3.1 results in adverse market consequences such as fewer foreign contractors, this is a policy issue that is not within the province of this Court. This should be addressed to our lawmakers, in whose hands rest determining the best policy for our economy.

ACCORDINGLY, I vote to GRANT the Petition.



Footnotes

1 Republic Act No. 4566 (1965), sec. 5 provides:

SECTION 5. Powers and Duties of the Board. — The Board is vested with authority to issue, suspend and revoke licenses of contractors, to investigate such violations of this Act and the regulations thereunder as may come to its knowledge and, for this purpose, issue subpoena and subpoena duces tecum to secure appearance of witnesses in connection with the charges presented to the Board, and to discharge such other powers and duties affecting the construction industry in the Philippines.

The Board may, with the approval of the President of the Philippines, issue such rules and regulations as may be deemed necessary to carry out the provisions of this Act, to adopt a code of ethics for contractors and to have an official seal to authenticate its official documents.

2 Implementing Rules and Regulations of Republic Act. No. 4566 (1965), sec. 3.1.

3 Ponencia, p. 3.

4 Id.

5 Id. at 4. Filed under Rule 45 of the Rules of Court.

6 Id.

7 Id. at 4-5.

8 Id. at 11.

9 Id. at 12-14.

10 Id. at 15.

11 338 Phil. 546 (1997) [Per J . Panganiban, En Banc].

12 645 Phil. 269 (2010) [Per J. Abad, En Banc].

13 Ponencia, p. 16.

14 Id. at 16-18.

15 Id. at 18-19.

16 Id. at 5.

17 Implementing Rules and Regulations of Republic Act No. 4566 (1965), secs. 4.5. and 4.6 provide:

SECTION 4.5 Regular License Application Documents. —

An application for a Regular License shall comprise of the following:

a) Duly accomplished application form as prescribed by the Board;

b) ORGANIZATION

ba) List of corporate directors and officers/partners (for Corporation/Partnership only);

bb) List of stockholders/partners and their respective equity holdings in the applicant firm (for Corporation/Partnership only);

bc) Certificate of Registration with the Bureau of Domestic Trade (for sole proprietorship only);

bd) Certificate of Registration with the Securities and Exchange Commission and Articles of Incorporation and By-Laws (for corporation/partnership only);

be) SSS Certificate of Membership of the Company;

bf) Nomination of Authorize Managing Officer;

bg) Curriculum Vitae of Authorized Managing Officer/Proprietor;

c) FINANCIAL

ca) Latest audited financial statements signed on each and every page by a Certified Public Accountant, and properly stamped-received by the Bureau of Internal Revenue;

cb) Supplementary schedules of the latest audited financial statements of the applicant for the immediately preceding taxable year, except in case of a newly formed corporation or partnership;

cc) Income Tax Return of the applicant for the immediately preceding taxable year properly stamped-received by BIR and the official receipt covering income tax paid, except in case of a newly formed Corporation/Partnership;

cd) Authorization to depository bank to release information to PCAB;

ce) Bank Statement of Account for the last month of the immediately preceding taxable year certified by, the Bank Manager;

cf) Transfer Certificate of Title, tax declaration, latest official receipt covering payment of realty tax of land and other real properties owned by the firm;

d) EQUIPMENT CAPACITY

da) List of equipment currently owned;

db) Deed of Sale or Invoice with complete address of vendor or official receipt issued by the vendor covering the equipment currently owned;

dc) Certificate of Registration with current official receipt of BLT registration fees paid covering transportation and delivery equipment owned by the firm;

e) EXPERIENCE OF SUSTAINING TECHNICAL EMPLOYEES

ea) List of technical personnel employed by the company;

eb) Affidavit of Sustaining Technical Employee(s);

ec) Curriculum vitae of Sustaining Technical Employee(s); and

ed) SSS Form R-1 to include the name of the Nominated Technical Employee(s)

The Board may require the submission of pertinent documents/information other than the above in order to fully determine the qualifications of an applicant.

SECTION 4.6 Special License Application Documents. —

An application for a Special License shall comprise, on a case to case basis, of the following:

. . . .

e) A foreign Constructor

ea) Application properly accomplished on form as prescribed by the Board;

eb) General Information Sheet;

ec) Board Resolution authorizing its Resident Alien Representative in the Philippines to act for and in behalf of the company. The Board Resolution must define the scope and/or limitations of the powers of the Resident Alien Representative;

ed) Board Resolution appointing and authorizing the Filipino Resident Agent to accept summons and other legal process in behalf of the applicant;

ee) Copy of Contractors License/ Permit/Authority issued by the appropriate government agency in the home country of the applicant foreign contractor, if required by the home government;

ef) Certification from the appropriate Tendering Agency (Ministry, Bureau, Office) that the project is foreign financed/internationally-funded and that international bidding is required, or the participation of foreign contractors is allowed under Bilateral Agreement entered into by and between the Philippine Government and the foreign/International Financing Institution; cd

eg) Certificate issued by the Board of Investments allowing the foreign contractor to undertake construction project in the Philippines;

eh) Copy of "Invitation to Bid" or "Instruction to Bidders" or "Notice to Bidders" showing the date of bidding;

ei) List of completed construction project(s) in the Philippines undertaken by the company during the last three (3) years showing the following: Title of Projects, Location, Tendering Agency (DPWH, MWSS, NIA, etc.) Lending Institution (IBRD, ADB, OECF), Date contract was signed, Date of completion, Loan Agreement No.;

ej) List of on-going construction project(s) in the Philippines being undertaken by the company showing the following: Title of Projects, Location, tendering Agency, Lending Institution, Date Contract was signed, scheduled date of completion, Loan Agreement No.;

ek) Audited Financial Statements during the preceding year; and

el) Philippine Income Tax Return during the preceding year, if applicable.

f) A Project Owner

fa) All documents required in Sec. 4.5 hereof

fb) Identification of the project by title owned and location.

18 Implementing Rules and Regulations of Republic Act No. 4566 (1965), sec. 3.2 provides:

SECTION 3.2 License Validity. —

a) Regular License

A Regular License shall be 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 Board, and shall be renewed annually. A license issued after the 1st of July shall be valid for the remaining part of the fiscal year.

b) Special License

A Special License, shall be cancelled by the Board upon completion of the single specific undertaking/project authorized by the license and to which it is, therefore, restricted, even though before expiry of the fiscal year.

19 Implementing Rules and Regulations of Republic Act No. 4566 (1965), secs. 10.1 and 10.2 provide:

SECTION 10.1 Regular License Authorization. —

A licensed constructor, issued a Regular License as defined in Sec. 3.1 (a) thereof, is authorized to engage in construction contracting in the Philippines, within the field and scope of his classification(s) in accordance with the provisions of Sec. 5.4 hereof. In case of a provisionally renewed License, however, such authorization shall be subject to any restriction as may be imposed by the Board.

SECTION 10.2 Special License Authorization. —

A licensed constructor, issued a Special License as defined in Sec. 3.1 (b) is authorized to engage only in one single specific construction undertaking/project in the Philippines. In case of a provisionally renewed License, each authorization shall be further subject to any restriction as may be imposed by the Board.

20 Implementing Rules and Regulations of Republic Act No. 4566 (1965), sec. 3.3 provides:

SECTION 3.3 Terms and Conditions of a Contractor's License.—

a) The License is non-transferable.

b) The License is valid during the contracting fiscal year (July 1 to June 30) for which it was issued provided it has not been suspended, cancelled or revoked by the Board.

c) The license is to be renewed annually on or before the expiration of its validity

d) The Licensee must not submit any bid, or enter into any construction contract after the License has expired and before the same is renewed otherwise the constructor shall be deemed to be operating without a contractor's License and shall be liable to appropriate disciplinary action and payment of additional License fee.

e) The Licensee must not undertake/implement any construction project which is not within the scope of his License classification otherwise he shall be liable to appropriate disciplinary action and payment of additional licensing fee.

f) The Licensee's qualification is subject to review at any time to ascertain the constructor's eligibility to the present classification and category of his License.

g) License category may be upgraded and other classifications may be added to the license upon formal application by the Licensee together with all the necessary supporting documents

h) The Licensee must notify the Board in writing of resignation or disassociation of any of its Sustaining Technical Employee and must replace the said employee within a period of ninety days from the date of resignation or disassociation.

i) The Licensee must submit to the Board monitoring reports that may be required from time to time.

j) The Licensee must observe and abide by the provisions of Republic Act No. 4566, as amended by Presidential Decree No. 1746, its implementing Rules and Regulations, and other orders or instructions which the Board may issue from time to time pursuant to its power and authority under the Law.

k) The Licensee must at all times observe and adhere to the letters and spirit of the code of ethics for constructors.

l) Any misrepresentation or false information submitted to the Board shall subject the Licensee to administrative disciplinary action without prejudice to the imposition of penal sanctions provided by law.

m) A Licensee who is retiring from the construction business must advise the Board in writing and must immediately surrender the license to the Board for cancellation.

21 Implementing Rules and Regulations of Republic Act No. 4566(1965), sec. 4.1 provides:

SECTION 4. 1 Qualifications for Licensing. —

To be eligible as a candidate for licensing, an applicant shall have the following minimum qualifications deemed by the Board to be necessary for the safety of t he public and the interest of both the public and the construction industry;

a) He must, by virtue of his Sustaining Technical Employee or by himself, if sole-proprietor-applicant, have at least two (2) years * of construction implementation experience, and knowledge of Philippine construction-building codes and ordinances, labor safety codes and other laws applicable to construction operation, subject to the nomination requirement as provided for under Section 4.2 hereof.

b) He must, by virtue of his Authorized Managing Officer or by himself, if a sole-proprietor-applicant, have at least two (2) years of experience in construction contracting, business management and contract administration, and knowledge of Philippine laws on contracts, liens, taxation labor and other construction business matters, subject to the nomination requirement as provided for under Section 4.3 hereof.

c) He must have a stock holders'/owner's equity or networth of at least the amount required to qualify for the lowest constructor category; and

d) If a partnership or corporation, the applicant firm shall have, in its Articles of Partnership/Incorporation, construction as a primary purpose, or as a division or department separate and distinguishable from the overall organization of the firm.

The foregoing notwithstanding, the eligibility of an applicant shall be further contingent upon his non-possession of any of the disqualifications for or impediments to licensing as stipulated in Sec. 11.1 hereof.

22 Implementing Rules and Regulations of Republic Act No. 4566(1965), sec. 4.7 provides:

SECTION 4.7 License Application Processing. — The processing of License applications shall be made on a monthly batch basis. The Board shall either approve or disapprove each application subject to subsequent approval of the Authority. The Board's decision shall be communicated in writing to each applicant within ten (10) days from the date of such decision and, accordingly, the license certificates shall be prepared for and issued to those whose applications were duly approved.

Any applicant who was not satisfied with the Board's decision on its application may file a written request for reconsideration and to present appropriate documents to the Board in support of such request within thirty (30) days from receipt of notice thereof. Failure to do so shall be a ground for the Board not to entertain such request if filed beyond the prescribed thirty (30) day period.

23 Implementing Rules and Regulations of Republic Act No. 4566 (1965), sec. 4.6.

24 J. Perlas-Bernabe, Concurring Opinion, pp. 3-4.

25 See CONST., art. II, sec. 19, and art. XII, secs. 10 and 12.

26 Tañada v. Angara, 338 Phil. 546 (1997) [Per J. Panganiban, En Banc].

27 Id. at 588-589.

28 Espina v. Zamora, Jr., 645 Phil. 269, 273 (2010) [Per J. Abad, En Banc].

29 Id. at 279.

30 Id.

31 332 Phil. 20 (1996) [Per J. Panganiban, En Banc].

32 Id. at 36.

33 Republic Act N o. 4566 (1965), sec. 16 provides:

SECTION 16. Classification. - For the purpose of classification, the contracting business includes any or all of the following branches.

(a) General engineering contracting;

(b) General building contracting; and

(c) Specialty contracting.

34 Ponencia, p. 19.

35 Republic Act No. 10667 (2015), sec. 2.

36 Republic Act No. 10667 (2015), sec. 2 provides:

SECTION 2. Declaration of Policy. — The efficiency of market competition as a mechanism for allocating goods and services is a generally accepted precept. The State recognizes that past measures undertaken to liberalize key sectors in the economy need to be reinforced by measures that safeguard competitive conditions. The State also recognizes that the provision of equal opportunities to all promotes entrepreneurial spirit, encourages private investments, facilitates technology development and transfer and enhances resource productivity. Unencumbered market competition also serves the interest of consumers by allowing them to exercise their right of choice over goods and services offered in the market.

Pursuant to the constitutional goals for the national economy to attain a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key to raising the quality of life for all, especially the underprivileged and the constitutional mandate that the State shall regulate or prohibit monopolies when the public interest so requires and that no combinations in restraint of trade or unfair competition shall be allowed, the State shall:

(a) Enhance economic efficiency and promote free and fair competition in trade, industry and all commercial economic activities, as well as establish a National Competition Policy to be implemented by the Government of the Republic of the Philippines and all of its political agencies as a whole;

(b) Prevent economic concentration which will control the production, distribution, trade, or industry that will unduly stifle competition, lessen, manipulate or constrict the discipline of free markets; and

(c) Penalize all forms of anti-competitive agreements, abuse of dominant position and anti-competitive mergers and acquisitions, with the objective of protecting consumer welfare and advancing domestic and international trade and economic development.

37 Erlinda M. Medalla, Understanding the New Philippine Competition Act, Philippine Institute for Development Studies Discussion Paper Series No. 2017-14, 3 (2017).

38 Id.

39 Id.

40 Id. at 5.

41 R. Preston MacAfee, et al., What is a Barrier to Entry, The American Economic Review, 94 American Economic Association, 463 (2004).

42 Erlinda M. Medalla, Understanding the New Philippine Competition Act, Philippine Institute for Development Studies Discussion Paper Series No. 2017-14, 8 (2017).

43 Id.

44 1 Robert Cooter, Law and Economics, 35 (4th ed., 2003).

45 Id.

46 Erlinda M. Medalla, Understanding the New Philippine Competition Act, Philippine Institute for Development Studies Discussion Paper Series No. 2017-14, 7 (2017).

47 Republic Act No. 10667 (2015), secs. 14 and 15 provide:

SECTION 14. Anti-Competitive Agreements. —

(a) The following agreements, between or among competitors, are per se prohibited:

(1) Restricting competition as to price, or components thereof, or other terms of trade;

(2) Fixing price at an auction or in any form of bidding including cover bidding, bid suppression, bid rotation and market allocation and other analogous practices of bid manipulation;

(b) The following agreements, between or among competitors which have the object or effect of substantially preventing, restricting or lessening competition shall be prohibited:

(1) Setting, limiting, or controlling production, markets, technical development, or investment;

(2) Dividing or sharing the market, whether by volume of sales or purchases, territory, type of goods or services, buyers or sellers or any other means;

(c) Agreements other than those specified in (a) and (b) of this section which have the object or effect of substantially preventing, restricting or lessening competition shall also be prohibited: Provided, Those which contribute to improving the production or distribution of goods and services or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefits, may not necessarily be deemed a violation of this Act.

An entity that controls, is controlled by, or is under common control with another entity or entities, have common economic interests, and are not otherwise able to decide or act independently of each other, shall not be considered competitors for purposes of this section.

SECTION 15. Abuse of Dominant Position. — It shall be prohibited for one or more entities to abuse their dominant position by engaging in conduct that would substantially prevent, restrict or lessen competition:

(a) Selling goods or services below cost with the object of driving competition out of the relevant market: Provided, That in the Commission's evaluation of this fact, it shall consider whether the entity or entities have no such object and the price established was in good faith to meet or compete with the lower price of a competitor in the same market selling the same or comparable product or service of like quality;

(b) Imposing barriers to entry or committing acts that prevent competitors from growing within the market in an anti-competitive manner except those that develop in the market as a result of or arising from a superior product or process, business acumen, or legal rights or laws;

(c) Making a transaction subject to acceptance by the other parties of other obligations which, by their nature or according to commercial usage, have no connection with the transaction;

(d) Setting prices or other terms or conditions that discriminate unreasonably between customers or sellers of the same goods or services, where such customers or sellers are contemporaneously trading on similar terms and conditions, where the effect may be to lessen competition substantially: Provided, That the following shall be considered permissible price differentials:

(1) Socialized pricing for the less fortunate sector of the economy;

(2) Price differential which reasonably or approximately reflect differences in the cost of manufacture, sale, or delivery resulting from differing methods, technical conditions, or quantities in which the goods or services are sold or delivered to the buyers or sellers;

(3) Price differential or terms of sale offered in response to the competitive price of payments, services or changes in the facilities furnished by a competitor; and

(4) Price changes in response to changing market conditions, marketability of goods or services, or volume;

(e) Imposing restrictions on the lease or contract for sale or trade of goods or services concerning where, to whom, or in what forms goods or services may be sold or traded, such as fixing prices, giving preferential discounts or rebate upon such price, or imposing conditions not to deal with competing entities, where the object or effect of the restrictions is to prevent, restrict or lessen competition substantially: Provided, That nothing contained in this Act shall prohibit or render unlawful:

(1) Permissible franchising, licensing, exclusive merchandising or exclusive distributorship agreements such as those which give each party the right to unilaterally terminate the agreement; or

(2) Agreements protecting intellectual property rights, confidential information, or trade secrets;

(f) Making supply of particular goods or services dependent upon the purchase of other goods or services from the supplier which have no direct connection with the main goods or services to be supplied;

(g) Directly or indirectly imposing unfairly low purchase prices for the goods or services of, among others, marginalized agricultural producers, fisherfolk, micro-, small-, medium-scale enterprises, and other marginalized service providers and producers;

(h) Directly or indirectly imposing unfair purchase or selling price on their competitors, customers, suppliers or consumers, provided that prices that develop in the market as a result of or due to a superior, product or process, business acumen or legal rights or laws shall not be considered unfair prices; and

(i) Limiting production, markets or technical development to the prejudice of consumers, provided that limitations that develop in the market as a result of or due to a superior product or process, business acumen or legal rights or laws shall not be a violation of this Act:

Provided, That nothing in this Act shall be construed or interpreted as a prohibition on having a dominant position in a relevant market or on acquiring, maintaining and increasing market share through legitimate means that do not substantially prevent, restrict or lessen competition:

Provided, further, That any conduct which contributes to improving production or distribution of goods or services within the relevant market, or promoting technical and economic progress while allowing consumers a fair share of the resulting benefit may not necessarily be considered an abuse of dominant position:

Provided, finally, That the foregoing shall not constrain the Commission or the relevant regulator from pursuing measures that would promote fair competition or more competition as provided in this Act.

48 Republic Act No. 10667 (2015), secs. 14 and 15.

49 G.R. No. 217158, March 12, 2019, [Per J. Jardeleza, En Banc].

50 Id.


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