CASE DIGEST
PHILIPPINE CONTRACTORS ACCREDITATION BOARD v. CENTRAL MINDANAO CONSTRUCTION MULTI-PURPOSE COOPERATIVE
[G.R. No. 242296, July 31, 2024]
FIRST DIVISION, ZALAMEDA, J.
Administrative Rule-Making;
Subordinate Legislation; Ultra Vires Issuances; Republic Act No. 4566
(Contractors' License Law); Presidential Approval of PCAB Rules; Service
Cooperatives; Republic Act No. 9520; Constitutional Policy Favoring
Cooperatives; Questions of Law
Where a
statute delegates rule-making power subject
to a condition — such as the requirement that rules and regulations issued
by an administrative board be approved by the President — an issuance adopted
without satisfying that condition is invalid
and unenforceable, whatever the agency chooses to call it; the statutory
language governs over the agency's own characterization. Administrative
agencies exercising the power of subordinate legislation may not enlarge, alter, or restrict the provisions of the law they
administer, and an issuance that adds a substantive requirement Congress never
imposed is ultra vires and will be struck down. Separately, the constitutional
policy favoring cooperatives as instruments of social justice and economic
development, taken with the Cooperative Code's broad and non-exclusive enumeration of permissible cooperative
services, protects a duly registered service cooperative's capacity to engage
in activities such as construction contracting; an administrative requirement
compelling such a cooperative to incorporate
as a stock corporation as a precondition to continued licensure, imposed
without legal basis, cannot be sustained.
Petitioner Philippine Contractors Accreditation Board (PCAB) is charged with licensing and accrediting construction contractors under Republic Act No. 4566, the Contractors' License Law. Respondent Central Mindanao Construction Multi-Purpose Cooperative is a service cooperative registered with the Cooperative Development Authority since November 11, 1996, which held a valid PCAB contractor's license and engaged in the construction of low-cost housing and other projects.
On December 6, 2011, PCAB adopted Board Resolution No. 915, Series of 2011, resolving to continue the non-acceptance of new license applications and amendments from cooperatives, and to set a deadline for licensed cooperatives to incorporate for the continued grant of a license. The resolution allowed a grace period for renewal for CFY 2012-2013, but required that the cooperative be converted into a corporation as a requirement for the renewal of its license for CFY 2013-2014.
Facing the loss of its construction business and of its existing license, the cooperative brought an action before the Regional Trial Court of Kidapawan City, contending that Resolution No. 915 conflicted with the constitutional protection accorded cooperatives and with the Philippine Cooperative Code of 2008 (Republic Act No. 9520), and that it lacked the presidential approval required for PCAB issuances under Republic Act No. 4566.
The Regional Trial Court ruled for the cooperative, finding that Resolution No. 915 lacked the presidential approval mandated by Section 5 of Republic Act No. 4566, declaring its implementation premature, and enjoining PCAB from denying accreditation solely on account of the respondent's being a cooperative rather than a corporation.
The Court
of Appeals dismissed PCAB's appeal on the ground that it raised only pure
questions of law, reviewable not by ordinary appeal but by petition for review
on certiorari to the Supreme Court. PCAB then elevated the case to the Supreme
Court.
Whether
the Court of Appeals correctly dismissed PCAB's appeal on the ground that it
raised only pure questions of law.
YES. An appeal taken from the Regional Trial Court to
the Court of Appeals raising only questions of law shall be dismissed, issues purely of law not being reviewable by
that court. PCAB's appeal turned solely on the legal question whether
presidential approval was required for its resolution; the appellate court
therefore correctly refused to take cognizance of it, PCAB's proper remedy
being a direct petition for review on
certiorari to the Supreme Court.
Whether
Board Resolution No. 915 was validly issued despite the absence of approval by
the President of the Philippines.
NO. Section 5 of Republic Act No. 4566 provides 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 the Act. The Court held that
the provision draws no distinction among
types of PCAB issuances — its wording, as it stands, encompasses all rules
and regulations deemed necessary to carry out the statute. Resolution No. 915
having never been submitted to or approved by the President, it was invalid and could not be implemented
against the respondent cooperative.
Whether
PCAB acted beyond its delegated authority in adopting Resolution No. 915.
YES. The Court reiterated that administrative
agencies, in the exercise of the power of subordinate legislation, should not enlarge, alter, or restrict the
provisions of the law they administer, and that administrative issuances
must not override, supplant, or modify the law but must remain consistent with
it. Republic Act No. 4566 does not
condition licensure on corporate form. By imposing mandatory incorporation
as a precondition to the continued licensing of cooperatives, PCAB added a
substantive requirement Congress never enacted, rendering that portion of the
resolution an invalid, ultra vires act.
Whether
a duly registered service cooperative may lawfully engage in construction
contracting.
YES. Republic Act No. 9520 defines a service cooperative as one engaging in,
among others, housing “and other services.” By including that catch-all phrase, the Cooperative Code does not limit the kinds of services
which a cooperative may render. Read together with the constitutional policy
encouraging cooperatives as instruments for broadening ownership and promoting
social justice and economic development, the Court concluded that Resolution
No. 915, insofar as it curtailed the cooperative's freedom to engage in
construction contracting services, runs
counter to the constitutional protection granted to cooperatives. The
cooperative could not be compelled to abandon its cooperative structure in
order to retain its contractor's license.
DISPOSITION: The Petition was DENIED and the Decision of the Court of Appeals AFFIRMED, sustaining the trial court's
ruling enjoining the implementation of PCAB Board Resolution No. 915, Series of
2011 for want of approval by the President of the Philippines.
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