By Atty. Julius Gregory B. Delgado
PHILIPPINE CONTRACTORS ACCREDITATION BOARD (PCAB) VS. CENTRAL MINDANAO CONSTRUCTION MULTI-PURPOSE COOPERATIVE, G.R. NO. 242296 (JULY 31, 2024): SUPREME COURT NULLIFIES REGULATION FOR CONSTRUCTION COOPERATIVES TO CONVERT TO CONSTRUCTION CORPORATIONS
Respondent Central Mindanao Construction Multi-Purpose Cooperative (“CMCM Cooperative”) filed a Complaint before the Regional Trial Court of Kidapawan City assailing Resolution No. 915, Series of 2011, of the Philippine Contractors Accreditation Board (PCAB) which directs construction cooperatives to convert to regular construction business corporations starting Fiscal Year 2013-2014 in order to obtain or renew their PCAB accreditation. CMCM Cooperative was given accreditations from July 1, 2011 to June 30, 2012 and from July 1, 2012 to June 30, 2013 but by virtue of the said new regulation, could no longer renew its contractor’s license as it needs to convert first into a corporation.
The trial court ruled in favor of CMCM Cooperative ruling that while Republic Act No. 4566 empowers PCAB to issue rules and regulations, it must be approved by the President of the Philippines. Petitioner PCAB filed an appeal before the Court of Appeals but was dismissed on technicality. The Court of Appeals held that PCAB resorted to a wrong mode of appeal as the issue is purely on question of law, hence, should be through a Petition for Review on Certiorari before the Supreme Court under Rule 45 and not under Rule 41 of the Rules of Court.
The Supreme Court affirmed the ruling of the trial and appellate courts. On the procedural aspect, the Court held that Section 2, Rule 50 of the Rules of Court mandates outright dismissal of appeals made under Rule 41, if they only raise pure questions of law, as in this case. Considering that the appeal filed by PCAB before the Court of Appeal raises only question of law, then the court a quo did not err in dismissing the appeal.
On the substantive aspect, the Supreme Court ruled in favor of CMCM Cooperative. Under Section 5 of RA 4566, it is provided that “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.” The Court held that the said provision does not distinguish whether it is the Implementing Rules and Regulations of the law or subsequent regulation. Under the statutory principle “ubi lex distinguit, nec nos debemos distinguere debemus” or “when the law does not distinguish, neither should the courts”, it does not matter if the assailed Resolution No. 915, Series of 2011 of the PCAB is not the IRR of the law itself but a subsequent regulation on contractors’ accreditation. The said regulation falls under the “rules and regulations as may be deemed necessary to carry out” RA 4566. The Court held, “Notably, under the same provision, the law vested PCAB with the ‘authority to issue, suspend and revoke licenses of contractors.’ When PCAB thus issued Board Resolution No. 915, which, in essence, is a regulation on the qualification of applicants for renewal of their contractor’s license, it was carrying out its duty as mandated under Republic Act No. 4566.”
The Supreme Court also held that it does not matter if the subject regulation is through a Board Resolution as the caption of the document containing the regulation is not controlling as it is the substance and not the title which should be of primordial consideration. Considering that this new regulation issued by the PCAB did not bear the approval or imprimatur of the President, then the same is null and void for being ultra vires.
Finally, on the argument of PCAB that the law does not allow cooperatives to engage in construction services, the Supreme Court held that Article 23 of Republic Act No. 9520, or the Philippine Cooperative Code of 2008, defines what is a “Service Cooperative” and it has a catch-all phrase “and other services” which may include construction services. The Court held that this interpretation is consistent with the constitutional policy to promote and protect cooperatives. The Court held that Resolution No. 915, Series of 2911, insofar as it curtails SMCM Cooperative’s freedom to engage in construction contracting services, runs counter to the constitutional protection clearly granted to cooperatives.