On 10 March 2020, in Philippine Contractors Accreditation Board v. Manila Water Company, Inc., G.R. No. 217590 ("Decision"), the Supreme Court sitting En Banc invalidated Section 3.1, Rule 3 of the Implementing Rules and Regulations of Republic Act No. 4566 or the Contractor’s License Law ("IRR of RA 4566") promulgated by the Philippine Contractors Accreditation Board ("PCAB"). Section 3.1, Rule 3 limited the issuance of a contractor’s regular license only to those contractor-firms that are at least 60% Filipino-owned. The Supreme Court found that Section 3.1, Rule 3 is void because (i) RA 4566 did not itself provide for such restriction or discriminate against foreign contractors; (ii) there is also no constitutional prohibition against foreign entities engaging in the business of contracting/construction; and (iii) the construction industry is not among the investment areas or activities specifically reserved to Philippine nationals by executive policy as contained in the foreign investment negative list.
PCAB filed a Motion for Reconsideration on the ground that PCAB has amended Section 3.1(a), Rule 3 of the IRR of RA 4566 that made the regular license available to foreign contractors. In a Notice published on 3 March 2022, the Supreme Court nonetheless affirmed the Decision. The Supreme Court found that PCAB had not alleged or shown that the amendments to IRR of RA 4566 were published as required by law, or that they have taken effect.
In any case, the Supreme Court observed that the amendments still suffered from the same defect since the amendment still provides for different licenses for local contractors (Quadruple A Platinum) and foreign contractors (Quadruple A Gold, under which foreign contractors are only authorised to engage in certain types of projects). The Supreme Court reiterated that RA 4566 did not sanction PCAB to impose a nationality-based license classification.
