OSG asks SC to reverse decision allowing foreign contractors to work in private, gov’t projects

MANILA, Philippines — The Office of the Solicitor General (OSG) has asked the Supreme Court to reverse its decision which allows foreign contractors to obtain licenses and participate in government or private projects in the country.

In a statement on Sunday, the OSG said that it filed a 29-page motion for reconsideration, where it argued that the limitations on the participation of foreigners in the contracting industry must be retained “to protect the interests of Filipino contractors and workers.”

The motion was signed by Solicitor General Jose Calida, Assistant Solicitor General Ma. Antonia Edita Dizon and State Solicitor II Perfecto Adelfo Chua Chen.

“Allowing the issuance of regular license to foreign contractors would result to unbridled influx of foreign contractors to the detriment of local contractors in micro, small and medium enterprises (MSMEs), including the concerned professionals and Filipino workers, among others,” the OSG said in the motion, which was filed on behalf of the Philippine Contractors Accreditation Board (PCAB).

The motion comes after the High Court, in a decision promulgated March 10 but released only on Aug. 26, upheld a lower court resolution that declared void a provision of Republic Act 4566 or the  Contractors Licensing Law’s Implementing Rules and Regulations (IRR), which classifies the licenses that may be issued by the PCAB  to contractors into regular and special license.

Under Section 3.1 of the IRR, companies with at least 60 percent Filipino equity participation can be granted a regular license, which gives them continuing authority to engage in many contracting activities throughout a one-year period. Foreign firms can only be granted a special license, and they need to have a separate license for each contracting activity.

This regulation, according to the SC, is “a deterrent to the foreign players in the construction industry.”

According to the OSG, the PCAB “welcomes” the entry of foreign contractors into the country, which means the IRR “recognizes the issuance of special license to address the current demands for the Philippines to be globally competitive and balance the participation of foreign contractors.”

The OSG added that Section 3.1 of the IRR was subsequently amended to allow the issuance of “regular license with annotation” to foreign firms with a capitalization of at least P1 billion.

Foreign contractors, the OSG said, should compete with the local industry as per the “proper regulatory measures provided by the PCAB” and that locally funded low-cost projects that require no technical expertise or new technology should be reserved for local MSMEs, which comprises 97 percent or 15,061 of all 15,533 licensed contractors in the country.

“Should the assailed provision in the IRR be nullified, the easier entry of foreign contractors will allow foreign contractors to compete with local MSME contractors in relatively smaller projects,” the OSG warned.

The OSG also contradicted the contention that the regulation was a deterrent to the entry of foreign players in the country, saying that according to PCAB records, there was actually a “significant number” of foreign companies allowed to participate in domestic government and private construction projects.

“Plainly, actual foreign participation belies the conclusion that Section 3.1 of the IRR of RA 4566 is effectively restrictive rather than purely regulatory. Such conclusion is merely based on incomplete or outdated information presented by the PCC to show that the assailed regulation tends to deter the entry of foreign players in the construction industry,” the OSG said.

The OSG further argued that the assailed IRR provision “is sanctioned under Section 14, Article XII of the Constitution, which limits the practice of profession in the Philippines to Filipinos, save in cases prescribed by law.”

Aside from this, 10 members of the Philippine Constructors Association Inc. (PCA) also filed a motion for consideration-in-intervention before the  High Court to reverse its ruling on the matter.


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