G.R. No. 2460271ACCOUNTANT PARTY-LIST, INC., represented by its President, CHRISTIAN JAY D. LIM, ET AL.,
REPUBLIC OF THE PHILIPPINES SUPREME COURT EN BANC Manila SECURITIES AND EXCHANGE COMMISSION Office of the Chairperson 2025 -03- 2 8
COMMISSION, SECURITIES AND EXCHANGE By: RECEIVED K.yaeev Time: 9:46AM
Petitioner,
versus - G.R. No. 246027
INC., represented by its President, CHRISTIAN JAY D. LIM, ET AL., 1ACCOUNTANT PARTY-LIST,
Respondents. X A
NOTICE OF JUDGMENT
Sirs/Mesdames:
attached herewith, was rendered by the Supreme Court in the above-titled case, the original of which was received by this Office on Please take notice that on January 28, 2025 March 27, 2025 at 2:04 p.m. a Resolution, copy
Very truly yours,
MARIFE M. LQMIBAO-CUEVAS Clerk of-Court
Makati City Securities and Exchange Commission Salcedo Village, 7907 Makati Avenue (Civil Case No. R-DVO-15-02294-SC) THE SOLICITOR GENERAL (x) Office of the Solicitor General 134 Amorsolo St., Legaspi Village THE CHAIRPERSON (x) Makati City THE PRESIDING JUDGE (reg) 8000 Davao City Regional Trial Court, Branch 15 JUDICIAL RECORDS OFFICE (x) CUNANAN LAW OFFICE (reg) Roxas Avenue corner #381 P. Gomez Street 8000 Davao City LIBRARY (x) Supreme Court, Manila Counsel for Respondents PUBLIC INFORMATION OFFICE (x) OFFICE OF THE COURT ADMINISTRATOR (x) OFFICE OF THE CHIEF ATTORNEY (x) PHILIPPINE JUDICIAL ACADEMY (x)
Kepublic ot the Philippines
Supreme Court
Alanila
EN BANC
SECURITIES AND EXCHANGE COMMISSION, Petitioner, Present: G.R. No. 246027
GESMUNDO, C.J. LEONEN,
-versus- CAGUIOA. HERNANDO LAZARO-JAVIER.
INC., represented by its President. personal FROILAN G. AMPIL, ALLAN M. BASARTE, MASCARINAS, 1ACCOUNTANTS PARTY-LIST. CHRISTIAN CHRISTIAN JAY D.LIM in his AGUNOD, capacity and JAY VIRGILIO JONAS Respondents. D. as LM. CPA. F P. LOPEZ, M., ROSARIO, SINGH,** JJ. LOPEZ, J.. KHO, JR., and INTING, ZALAMEDA. GAERLAN, DIMAAMPAO, MARQUEZ. Promulgated: January 28, 2025 NrC
RESOLUTION
ROSARIO, J.:
precedence over the privilege of practicing the same. The right of the State to regulate the practice of professions takes
On official business but left a concurring vote. On leave.
Resolution G.R. No. 246027
Having earlier granted petitioner Securities and Exchange Commission (SEC)'s Motion for Leave of Court to File Second Motion for Reconsideration' (MR) in Our January 30, 2024 Resolution,2 We now resolve the SEC's second MR3 of our June 27, 2023 Resolution4 denying with finality its first MR of our June 21, 2022 Decision5 denying the Petition for Review on Certiorari and affirming the Regional Trial Court (RTC) Decision declaring null and void Rule 68, paragraph 3 of the Implementing Rules and Regulations (IRR) of Republic Act o. 8799 or the Securities Regulation Code (SRC). as amended. and SF Memorandum Circular (MC) No. 13. Series of 2009 (collectively, "the assailed regulations") for being contrary tc Republic Act No. 9298 or the Philippine Accountancy Act of 2004 (Accountancy Act), unconstitutional, and ultra vires insofar as they required
auditors of corporations issuing registered securities and possessing the accreditation of certified public accountants (CPAs) acting as external secondary licenses ("covered entities").
In its second MR, the SEC avers that the assailed regulations carry out the State's policy of promoting the development of the capital market, protecting investors, ensuring full and fair disclosure about securities, and minimizing, if not completely eliminating, insider trading and other fraudulent or manipulative devices and practices which create distortions in the free market. Hence, any doubt or conflict in the interpretation of the SRC and its IRR must be resolved in a manner that will carry out the foregoing policy and principles.7
The SEC contends that the accreditation of external auditors does not curtail the practice of accountancy since it is optional on the part of CPAs. With accreditation, relevant stakeholders are assured that crucial functions
and reliable professionals, which generates trust and confidence in the quality of the infrastructure. Further, several laws manifest the State's policy of allowing regulators of the financial sector to accredit external auditors.8 and services in the community are performed and provided only by competent
accreditation of external auditors in the financial sector, the SEC, the Bangko Sentral ng Pilipinas (BSP), the Insurance Commission (IC), and the Philippine To facilitate the implementation of the legislative intent regarding the
Deposit Insurance Corporation (PDIC) (collectively,"financial sector regulators") and the Professional Regulatory Board of Accountancy (BOA)
Id. at 58-62. The March 20, 2018 Decision in Civil Case No. R-DVO-15-02294-SC was penned by Rollo, pp. 725--737. Id. at 781--782 Id. at 715.-716. Id. at 738-739 Id. at 741--744. Id. at 738-780 Id. at 577--591 Presiding Judge Mario C. Duaves of Branch 15, Regional Trial Court, Davao City
Resolution G.R. No. 24627
entered a Memorandum of Agreement (MOA) on the Implementation of the Centralized System for Accreditation/Selection of External Auditors in the Financial Sector. According to the SEC, it would be absurd if it could not accredit external auditors when the BSP, IC, and PDIC wield such authority
the accreditation process for the BSP, IC, and PDIC. The accreditation process for the very same purpose, even more so since the SEC presently undertakes of external auditors undertaken by the financial sector regulators is different but complementary to the licensure process of the BOA. While licensure deals
focuses on continuous improvement strategies and achievement of optimal with compliance with the minimum standards set by law, accreditation quality standards. While licensure aims to determine whether a candidate
accreditation aims to ensure quality and adherence to international standards possesses the eligibility and competency requirements prescribed by law,
and best practices. Hence, accreditation is not intended to supplant the BOA's licensure process but to match the competence of external auditors with the specific requirements of a regulated industry.
the SEC's specific authority to accredit external auditors, it posits that a specific provision therefor is unnecessary because the Legislature had long recognized that its accreditation of external auditors is incidental to the While the SRC and the Old Corporation Code were seemingly silent on
accountable under the SRC. The SEC points to instances in the past where companies at one point was the failure of regulations concerning audits.1o Priority Development Assistance Fund (PDAF) scam in 2013. Thus, to safeguard public interests, the SEC has been requiring certain foundation performance of its mandate as the primary regulator of corporations in the country. The SRC empowers the SEC to regulate, investigate or supervise the activities of persons, which includes both juridical and natural persons. Otherwise, the SEC will have no means to hold unscrupulous individuals external auditors were complicit in schemes to defraud the public, such as the Similarly, one of the major factors that contributed to the downfall of preneed companies to engage the services of SEC-accredited external auditors.
activities of external auditors." Further, as a member of various international mechanism over external auditors through the process of accreditation.12 gatekeepers. Therefore, the SEC asserts that it is authorized to supervise the associations of organizations of financial regulators, the SEC is expected to protect investors from misleading, manipulative, or fraudulent practices. Thus, it becomes imperative for the SEC to establish an effective oversight In auditing financial statements, external auditors act as the SEC's
than 3% of registered corporations. Out of over 600,000 registered Finally, the SEC avers that the assailed regulations only apply to less
1 Id. at 770. Id. at 774-775 Id. at 762--767. Id. at 756759
Resolution G.R. No. 246027
corporations, only around 17,000 are required to engage the services of SEC- accredited external auditors. Those who do not wish to apply for accreditation can still be engaged by the remaining 97%, which belies the claim that said regulations restrain CPAs from practicing their profession.
President, Christian Jay D. Lim, Christian Jay D. Lim in his personal capacity Respondents 1Accountants Party-List, Inc., represented by its
as a certified public accountant, Froilan G. Ampil, Allan M. Basarte, Virgilio F. Agunod, and Jonas P. Mascarinas (1Accountants Party-List, et al.), on the other hand, retort in their Comment14 that through the Accountancy Act, the Legislature has delegated the supervision, control and regulation of the accountancy profession solely to the BOA, and that the SEC went beyond its
impose an additional licensing requirement in the form of mandatory mandate by acting as a co-regulator when it issued the assailed regulations. At accreditation of CPAs engaged as external auditors.15 1Accountants Party- List, et al. posit that the SEC's authority under the SRC does not go beyond the letter of the law to the extent that the exercise thereof encroaches into the any rate, neither the SRC nor the Corporation Code allows petitioner to
to individual CPAs.17 Finally, 1Accountants Party-List, et al. posit that since from the SEC's jurisdiction over corporations, and cannot be made to apply it is the management of the reporting entity that is made responsible for the authority of other agencies,1 and that the powers granted by the SRC flow
preparation and fair presentation of financial statements under the Statement
auditors.18 statements or the corporate chief financial officers, not upon external paragraph 2(b) of the SRC IRR, as amended, the assailed mandatory accreditation should have been imposed on the preparers of the financial of Management's Responsibility for Financial Statements in Rule 68.
into consideration the far-reaching implications of the assailed Decision, the Court finds it necessary to reverse its previous finding that petitioner is not authorized to require accreditation of external auditors of covered entities. After careful consideration of the arguments of the parties and taking
the objectives and purposes of the law which may be implied from or which are necessary or incidental to carry The SEC is authorized to exercise not only express powers but also those out of such express powcrs to achieve
Id. at 784 Id. at 788. Id. at 790. Id. at 791. Id. at 783---800. Id. at 761.
Resolution G.R. No. 246027
administrative control of the Professional Regulation Commission (PRC), to While the Accountancy Act created the BOA, under the supervision and
regulate the practice of accountancy, neither the law nor the policyl9 of the State limit the establishment of regulatory measures through the BOA or the PRC. Thus, other government agencies like the SEC are not precluded from participating in the task of implementing the policy of the State for as long as the express or implied powers granted to them by law allow them to do so.
In this regard, the Sections 5 and 72 of the SRC lay down the powers and functions of the SEC as follows:
functions provided by this code, Presidential Decree No. 902-A, the Act and other existing laws. Pursuant thereto the Commission shall have. among others, the following powers and functions: commission shall act with transparency and shall have the powers and Corporation Code, the Investment Houses law, the Financing Company Section 5. Powers and Functions of the Commission.- 5.1. The
ensure compliance; (d) Regulate, investigate or supervise the activities of persons to
well as those which may be implied from, or which are necessary or incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws. (n) Exercise such other powers as may be provided by law as
shall be self-executory. To effect the provisions and purposes of this Code, the Commission may issue, amend, and rescind such rules and regulations and orders necessary or appropriate, including rules and regulations defining accounting, technical, and trade terms used in this Code[.] (Emphasis supplied) Section 72. Rules and Regulations; Effectivity. -- 72.1. This Code
SEC to "regulate, investigate or supervise the activities of persons." Since the precluded from regulating or supervising the activities of natural persons such as individual auditors insofar as the auditing of the annual financial statement (AFS) of covered entities is concerned. Further, Section 72 authorizes the SEC law does not distinguish between natural and juridical persons, the SEC is not In order to ensure compliance, Section 5(d) of the SRC empowers the
Republic Act No. 9298 (2004), sec. 2 states: Sec. 2. Declaration of Policy. - The State recognizes the importance of accountants in nation building and development. Hence, it shall develop and nurture honest, effective, and credible ticensure examinations and through regulatory measures, programs and activities that foster their professional growth and development. (Emphasis supplied) competent, virtuous, productive and well rounded professional accountants whose standard of practice and service shall be excellent, qualitative, world class and globally competitive through inviolable,
Resolution G.R. No. 246027
to issue such rules and regulations to effect not only the provisions of the SRC but also its purposes as declared in Section 2 thereof, to wit:
Section. 2. Declaration of State Policy. -- The State shall establish a socially conscious, free market that regulates itself, encourage the widest participation of ownership in enterprises, enhance the democratization of wealth, promote the development of the capital market, protect investors, ensure full and fair disclosure about securities, minimize if not totally and practices which create distortions in the free market. (Emphasis eliminate insider trading and other fraudulent or manipulative devices
supplied)
Under Rule 68 of the SRC IRR, as amended, the accreditation requirement applies only to CPAs who are independent auditors of the financial statements of covered entities, thus showing that it is not a regulation on the accountancy profession per se but on the specific activity of auditing. The relevant portion of Rule 68 states:
GENERAL FINANCIAL REPORTING REQUIREMENTS
3 QUALIFICATIONS AND REPORTS OFINDEPENDENT
AUDITORS
A. Audit of Financial Statements by Independent Auditors
auditors who are duly registered and licensed with the [BOA] of the [PRC] in accordance with the rules and regulations of said professional regulatory bodies[.] All registered corporations covered by this Rule shall have independent
B. Additional Requirements for Independent Auditors of SEC- Regulated Entities and Other Entities
(i) Accreditation Categories
The accreditation of independent auditors serves as a quality control
work of the accredited external auditors. mechanism or quality assurance review by the Commission on the
supplied) the Commission under the appropriate category[.] (Emphasis The following entities shall have independent auditors accredited by
Similarly, SEC MC No. 13, s. 2009 requires accreditation 0nly for CPAs engaged to perform statutory audit of the financial statements of covered entities and not CPAs engaged to perform non-audit work, to wit:
Resolution G.R. No. 246027
Section. 4. Scope and Limitations of Accreditation
4.1 Only an external auditor and his auditing firm (if applicable) who is accredited by the Commission shall be engaged by corporations covered by this Circular for the statutory audit of their financial statements. (Emphasis supplied)
services related to the accounting records or financial statements of a covered independent audit of its AFS shows that it is not the accountancy profession as a quality control mechanism or quality assurance review by the entity are not required to be accredited by the SEC. However, CPAs engaged accredited. The fact that CPAs may still work for a covered entity without that is regulated by the SEC but only the activity of statutory audit of financial to perform statutory audit of the AFS of a covered entity are required to be undergoing accreditation as long as they are not engaged to perform an statements. This is bolstered by the statement in Rule 68, paragraph 3(B)(i) of the SRC IRR, as amended, that "accreditation of independent auditors serves Commission on the work of the accredited external auditors." To illustrate, CPAs engaged merely for bookkeeping or other non-audit
that since external auditors are 'not responsible for preparing the AFS. Respondents seemingly entertain the idea that petitioner is not entirely latter who are deemed the gatekeepers. As the ones responsible for examining to possess a more profound understanding of the intricacies of financial statements than those from whom they originate and thus, must be held to a higher standard. This, of course, holds all the more true with respect to external auditors of covered entities. accreditation may rather serve its purpose if the same is instead required of CPAs who prepare such statements and not of CPAs who audit them unjustified in requiring accreditation, but that it is imposing the same on the wrong CPAs. However, we fail to the CPAs who prepare the AFS instead of the external auditors since it is the the AFS and expressing their opinion thereon, external auditors are expected Interestingly, in their Comment, 1Accountants Party-List, et al. aver the logic in requiring accreditation of
states that the SEC shall also have the powers and functions provided by the Corporation Code. Republic Act No. 11232 or the Revised Corporation Code (RCC) grants the SEC the following powers: Aside froin.the powers granted by the SRC, Section 5 of the same law
Commission. -- The Commission shall have the power and authority to: Section. 179.Powers, Functions, and Jurisdiction of the
minority investors, through, among others, the issuance of rules and regulations consistent with international best practices; . (d) Promote corporate governance and the protection of
Resolution G.R. No. 246027
and regulations to carry out the provisions of this Code; and (o) Formulate and enforee standards, guidelines, policies, rules
granted to the Commission. (Emphasis supplied) may be necessary or incidental to carrying out the powers expressly (p) Exercise such other powers provided by law or those which
consistent with international best practices such as those laid down in the Cooperation and Development (OECD), Principles of Securities Regulation21 Section 179(d) of the RCC empowers the SEC to issue rules and regulations Principles of Corporate Governance20 of the Organization for Economic Core Principles for Independent Audit Regulators22 of the International Forum of the International Organization of Securities Commissions (IOSCO), and of Independent Audit Regulators (IFIAR), among others. Unlike in non- To promote corporate governance and protect minority investors,
covered entities where it is sufficient that the external auditor be independent. the audit of covered entities requires that the CPA not only be independent but also competent and qualified ATC e with international auditing. ethical and independence standards words. while the BOA, as the main regulatory agency for the intanc ensures that the minimum standards for the pr rofession in the Philippines are met, which standards are presume AcCGaTe or the audit of non-covered entities, the audit of covered entities certainly requires more than the minimum. The SEC accreditation serves this purpose by complementing rather than replacing the regulatory measures put in place by the BOA. While the BOA bears the primary role of supervising the registration, licensure and practice of accountancy in the Philippines, nothing in the law precludes an additional layer of supervision and regulation to comply with the more stringent requirements demanded of regulated entities. In requiring
Organization for Economic Cooperation and Development, G20/OECD Principles of Corporate 23,2024). Under Principle 1, "Audit regulators should have a clear regulatory mandate to work in Governance, September 11, 2023, available at https://www.oecd-ilibrary.org/docserver/ed750b30- en.pdf (last accessed on July 23, 2024). Paragraph IV.C provides that " An annual external audit should be conducted by an independent, competent and qualified auditor in accordance with internationally recognised auditing, ethical and independence standards in order to provide at a minimum, conducts recurring inspections of auditors undertaking audits of public interest entities International Organization of' Securities Commissions, Objectives and Principles of Securities accessed on July 23, 2024). IOSCO Principles 19, 20 and 21 on securities regulation provide that auditors should be subject to adequate levels of oversight, independent of the issuing entity they audit, and audit standards should be of high and internationally acceptable quality. p. 9. International Forum of Independent Audit Regulators, Core Principles for Independent Audit should, at a minimum, require independent oversight of the audits of public interest entities, an area reasonable assurance to the board and shareholders on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework... Further, a system of audit oversight and audit regulation plays an important role in enhancing auditor independence and Regulators (IFIAR), the designation of an audit regulator, independent from the profession, and who, contributes to ensuring high quality audits that serve the public interest." p. 32. (Emphasis supplied) Regulation, May 2017, available at https://www.iosco.org/library/pubdocs/pdf/IOSCOPD561.pdf (last Regulators, April 27, 2022. available at https://www.ifiar.org/?wpdmdl-=14848 (last accessed on July the public interest, including that of investors, rather than the interests of the audit profession or audited entities by seeking to enhance audit quality. The responsibilities and powers of audit regulators audit quality. Consistent with the Core Principles of the International Forum of Independent Audit where self-regulation by the audit profession is no longer acceptable." (Emphasis supplied)
0
Resolution G.R. No. 246027
accreditation of external auditors of regulated entities, the SEC by no means removes or diminishes the BOA's power to supervise the registration, to the Board's power of supervision. licensure and practice of accountancy as such auditors always remain subject
explicitly provide that its powers are not limited to those expressly granted but also include those powers which may be implied from, or which are the SEC's express power to regulate or supervise the activities of persons to ensure compliance, or at the very least, is necessary or incidental to carrying RCC. Otherwise stated, an express grant of authority is not a condition sine granted to the SEC, Section 5(n) of the SRC and Section 179(p) of the RCC necessary or incidental to the carrying out of such express powers to achieve the objectives and purposes of said laws. It cannot be denied that the power to accredit external auditors of regulated entities can be reasonably implied from qua non for the SEC to impose an accreditation requirement. out such express power to achieve the objectives and purposes of the SRC and Finally, while the power to accredit external auditors is not expressly
the powers expressly granted to the Commission."25 Since the SEC's implied RCC, there is no need to point to any specific gap or omission in the law. One empowers the SEC to "[e]xercise such other powers as may be provided by incidental to the carrying out of, the express powers granted the Commission to achieve the objectives and purposes of these laws23 and to "issue, amend. and rescind such rules and regulations and orders necessary or appropriate"" to effect the provisions and purposes of the SRC.24 Similarly, the Revised Corporation Code (RCC) empowers it to "[e]xercise such other powers powers to achieve the objectives and purposes of these laws. CPAs, which includes external auditors of covered entities, is expressly vested by the Accountancy Act, then there is no gap or omission in the law which the ponencia did not even have to rely on said doctrine because the SRC itself power to accredit external auditors of covered entities does not stem from the doctrine of necessary implication but from the very wordings of the SRC and only needs to inquire whether the power sought to be exercised may be implied from or is necessary or incidental to carrying out the SEC's express would justify the operation of the doctrine of necessary implication. However. law as well as those which may be implied from, or which are necessary or provided by law or those which may be necessary or incidental to carrying out The dissenting opinion posits that since the accreditation of individual
and carry out its principles such as self-regulation, promotion of capital market development, protection of investors, ensuring full and fair disclosure on securities, and minimization, if not total elimination, of insider trading and its IRR should be interpreted in such a way that will breathe life into the law As We declared in Palanca IV v. RCBC Securities, Inc., 26 the SRC and
SECURITIES CODE (2000); sec. 5(n) REV. CORP. CODE (2019), sec. 179 (p). 872 Phil. 1086 (2020) [Per J. Reyes, Jr., Second Division]. SECURITIES CODE (2000), sec. 72.
Resolution 10 G.R. No. 246027
other fraudulent or manipulative devices and practices that create distortions
investors.27 Indeed, We have recognized that even if the law does not in the free market, with the unifying principle being the protection of expressly authorize the performance of an act, there are instances when such
principle that where the end is required the appropriate means are given.28 authority may be implied and must be liberally construed, consistent with the
SEC accreditation is justified insofar as the law allows the SEC to issue rules in relation to corporate reportorial requirements
Under the Old Corporation Code,29 which was the law prevailing at the time the RTC rendered its Decision declaring the assailed regulations null and void, any independent CPA may certify the AFS of corporations, to wit:
Section. 141. Annual report of corporations. Every corporation, domestic or foreign, lawfully doing business in the Philippines shall submit to the Securities
financial statement of its assets and liabilities, certified by any independent and such other requirements as the Securities and Exchange Commission may certified public accountant in appropriate cases, covering the preceding fiscal year require. (Emphasis supplied) and Exchange Commission an annual report of its operations, together with a
Hence, under the old law, while the SEC may require "such other requirements" aside from the AFS for purposes of the annual report of corporations, it did not qualify who could certify such AFS as the only requirement being that the certifier be any independent CPA. However, only a few days after the RTC promulgated its assailed February 20, 2019 Order denying petitioner's MR, the RCC took effect, Section 177(a) of which reads:
Commission, every corporation, domestic or foreign, doing business in the as otherwise provided in this Code or in the rules issued by the Philippines shall submit to the Commission: Section. 177. Reportorial Requirements of Corporations. -- Except
public accountant[.] (Emphasis supplied) (a) Annual financial statements audited by an independent certified
While the general rule in Section 177 is that the auditor of the AFS of a corporation need only be an independent CPA, the addition of the phrase "Except as otherwise provided in this Code or in the rules issued by the Commission"" manifests the Legislature's intent to allow the SEC to formulate
when the entity is covered by the assailed regulations, in which case, the exceptions to such general rule. One such exception formulated by the SEC is
21 8 Id. at 1110-1111. Gomez v. Palomar, 134 Phil. 771, 786 (1968) [Per J. Castro, En Banc].
Batas Pambansa BIg. 68 (1980).
J
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external auditor of such entity's AFS, aside from being an independent CPA. must also be accredited by the SEC. In fact, the legislative history of Section 177 reveals the Legislature's desire to allow for such other accreditation as the SEC may require. A review of pertinent provisions of the RCC's precursor
bills to form House Bill No. 837432) and House Bill No. 8374, is a propos: bills, House Bills Nos. 5283 and 87731 (which were consolidated with other
SECTION 73. ... doing business in the Philippines shall submit to the Commission, .. REQUIREMENTS of corporations. - EXCEPT AS OTHERWISE PROVIDED IN THIS CODE every corporation, domestic or foreign, [lawfully] House Bills Nos. 528 and 877 "Sec. [141] 180. ... REPORTORIAL in the Philippines shall submit to the SEC. 177. Reportorial requirements otherwise provided in this Code or in the rules issued by the domestic or foreign, doing business Commission: Commission, every corporation, of corporations. - Except as House Bill No. 8374
1 Annual financial statements
1. ANNUAL FINANCIAL STATEMENTS DULY AUDITED BY THE CORPORA. TION'S INTERNAL AUDITOR AND BY ACCOUNTANT WHO IS ACCREDITED BY THE BOARD OF ACCOUNTANCY COMMISSION (Emphasis supplied) AND WHO POSSESSES SUCH OTHER ACCREDITATION AN INDEPENDENT CERTIFIED PUBLIC MAY AS REQUIRE[.] THE or total officer[.] (Emphasis supplied) audited [PHP 600,000.00] the financial statements shall be certified certified Provided, That if the total assets corporation under oath by the corporation's treasurer or by liabilitiesofthe public an chief financial are independent less than. accountant:
independent CPA "accredited by the Commission.33 audits the AFS should be one "who is accredited by the Board of Accountancy and who possesses such other accreditation as the Commission may reguire. Further, Senate Bill No. 2180 requires the submission of AFS audited by an House Bills Nos. 528 and 877 provide that the independent CPA who
to be SEC-accredited as well. However, the fact that the Congress appended over to the final versions of the House and Senate bills, the only logical conclusion is that the Legislature did not intend to require independent CPAs to the phrase "Except as otherwise provided in this Code " the phrase "or in it fit to leave this to the technical expertise of the SEC which may, in its the rules issued by the Commission" shows that it still granted the SEC the leeway to issue rules requiring such other accreditation. Rather than require SEC accreditation for external auditors of all corporations, the Legislature saw The dissent argues that since said phrases were ostensibly not carried
30 House Bill No. 528 (2016), 17th Cong., 1st Session. 3 House Bill No. 877 (2016), 17th Cong., 1st Session.
33 House Bill No. 8374 (2018), 17th Cong., 3rd Session Senate Bill No. 1280 (2016), 17th Cong., 1st Session, sec. 66.
Resolution 12 G.R. No. 246027
wisdom, require accreditation only for auditors of certain entities, which indeed it has done, or even not at all. After all, it is the SEC that will be dealing with all the financial statements and other reports submitted by corporations and not the Legislature.
Contrary to the dissent's interpretation that the proviso "Except as otherwise provided in this Code or in the rules issued by the Commission qualifies only the phrase "every corporation, domestic or foreign, doing
pertains to the enumeration of items to be submitted to the SEC in Section 177 business in the Philippines shall submit to the Commission, " said proviso also
of the RCC since the phrase "Except as otherwise provided in this Code or in the rules issued by the Commission, every corporation, domestic or foreign. doing business in the Philippines shall submit to the Commission" is not an independent clause and is only completed by the enumeration that follows. Thus, the SEC rules may further qualify who may audit financial statements or even require submission of other reports not enumerated in Section 177
Several laws manifest the State's policy of authorizing financial sector regulators to accredit auditors
As observed by petitioners, current pieces of legislation manifest the State's policy of allowing various regulators to accredit external auditors, viz:
a Republic Act No. 8791 or the General Banking Law of 2000
chosen from a list of CPAs acceptable to the Monetary Board.34 provides that the BSP Monetary Board may require a bank, quasi-bank, or trust entity to engage the services of an auditor
Presidential Decree No. 612, as amended by Republic Act No. 10607 or the Insurance Code, requires supervised persons and
accredited by the Insurance Commissioner.35 entities to engage only the services of external auditors
C Republic Act No. 6938, as amended by Republic Act No. 9520
or the Philippine Cooperative Code of 2008, limits the conduct
Presidential Decree No. 612, as amended by Republic Act No. 10607, sec. 347 states. Sec. 347. Republic Act No. 8791, sec. 58 states: Sec. 58. Independent Auditor. -- The Monetary Board may require a bank, quasi-bank or trust entity to engage the services of an independent auditor to be chosen by the bank, quasi-bank or trust entity concerned from a list of certified public accountants acceptable to the Monetary Board. (Emphasis supplied)
December 31 of the third year from issuance unless it is revoked or suspended. The Commissioner shall issue rules and regulations to govern the accreditation of the external auditor and the revocation or suspension of the accreditation. (Emphasis supplied) an accreditation certificate by the Commissioner. The accreditation certificate shall be valid until No external auditor shall be engaged by supervised persons or entities unless it has been issued
Resolution 13 G.R. No. 246027
Cooperative Development Authority.3 of financial and social audit to those who are accredited by the
d Republic Act No. 8424 or the National Internal Revenue Code of
1997 authorizes the Commissioner of Internal Revenue to
representation before the Bureau of Internal Revenue.37 accredit and register tax agents with respect to their practice and
practices aimed at promoting consistency, efficiency, and financial integrity across different sectors. Centralizing the accreditation process under the auspices of the SEC will enhance regulatory oversight, streamline compliance ecosystem. If other financial sector regulators have the express authority to accredit external auditors within their respective domains, it is certainly not unreasonable to read the law as granting, at the very least, an implied authority to the SEC to likewise accredit external auditors within its domain. from an express or implied power, is a logical extension of existing regulatory requirements, and reinforce investor protection within the securities market Hence, the SEC's accreditation of external auditors, whether it stems
Airlift Asia is not on all fours with this case and must be distinguished
nullified a Customs Administrative Order (CAO) requiring the accreditation practice of their profession. However, this case must be distinguished from of customs brokers intending to practice before the Bureau of Customs (BOC) because it amounted to an additional licensing requirement that restricted the Airlift Asia. True, in Airlift Asia Customs Brokerage, Inc. v. Court of Appeals,38 We
expressly provides. that those who pass the licensure examination shall be allowed to practice the customs broker profession in any collection district First, unlike the Accountancy Act, the Customs Brokers Act of 2004
Republic Act No. 6938, as amended by Republic Act No. 9520, art. 80 states: Art 80. Annual Audit. Republic Act No. 8424 (1997), sec. 6(Gi) states: Sec. 6. Power of the Commissioner to Make assessments and Prescribe additional Requiremens for Tax Administration and Enforcement. -- Cooperatives registered under this Code shall be subject to an annual financial, performance and social audit. The financial audit shall be conducted by an external auditor who satisfies all the following (PICPA) and is accredited by both the Board and Accountancy and the Authority. qualifications Authority. (Emphasis supplied) (2) He[/she] is a member in good standing of the Philippine Institute of Certified Public Accountants The social audit shall be conducted by an independent social auditor accredited by the (1) He[/she] is independent of the cooperativ Dr any of its subsidiary that he[/she] is auditing; and
Resolution 14 G.R. No. 246027
"without the need of securing another license from the BOC."39 Hence, the subject CAO in Airlift Asia contravened an express provision of law whereas the assailed regulations here did not contravene any express provision of law.
Second, We held in Airlift Asia that the mandate of the BOC Commissioner to enforce tariff laws and prevent smuggling does not necessarily include the power to regulate and supervise the customs broker profession. Here, the express power of the SEC to regulate and supervise the
incidentally, includes the power to regulate and supervise the activities of activities of persons to ensure compliance necessarily, if not impliedly or
external auditors of covered entities.
power gives way to the specific grant of power applies only in instances of general power as compared to the specific power granted by the Accountancy Act to the BOA to promulgate rules involving the regulation of the practice of accountancy, the rule of statutory construction that general rule-making conflict between the two. Respondents have not shown any conflict between Third, while the SEC's power to issue rules may be considered a
the SEC's accreditation of external auditors and the BOA's specific power to supervise their practice. Au contraire, the fact that the country's financial sector regulators were able to ink a multilateral MOA with the BOA on the accreditation of external auditors, aimed at promoting ease of doing business and adherence to internationally recognized standards in auditing, is a clear
the specific power of the BOA, the former being complementary to the latter indication that there is no conflict between the general power of the SEC and
Finally, unlike in Airlift Asia where we observed that a large part of a customs broker's work involves practice before the BOC, thus, compelling practically all customs brokers to comply with the accreditation requirement
CPA's work involves practice before the covered entities. In fact, as aptly for them to practice their profession, it could not be said that a large part of a
can still be engaged by the remaining 97%. CPAs are not even prevented from observed by petitioner, the assailed regulations apply to less than 3% of registered corporations and those who do not wish to apply for accreditation
working for entities covered by the assailed regulations for as long as they are not engaged to do statutory audit of financial statements. Hence, BOC accreditation of customs brokers cannot be reasonably compared with SEC accreditation of external auditors.
the accreditation of external auditors The practice of accountancy being a mere privilege, no right is curtailed by
Republic Act No. 9280 (2004), sec. 19
Resolution 15 G.R. No. 246027
While the Court in Airlift Asia declared that the BOC accreditation of
mean "license." While the professional license itself is a property right insofar as the licensee cannot be deprived thereof without due process,40 the practice the form of an additional licensing requirement proscribed by the Customs Brokers Act, the word "right" as used in that context must be understood to customs brokers curtails their "right" to practice their profession since it takes of a profession is not a right but a privilege burdened by conditions.41 The
part of another of an absolute right to exercise such privilege.42 power to grant a privilege to one is inconsistent with the possession on the
and CPAs,44 respectively, who are registered at the time said laws took effect. There being no right to practice accountancy, there could be no curtailment of accreditation requirement on CPAs who wish to audit the AFS of covered entities is not a curtailment of a right but a condition on a mere privilege. such right to speak of. Thus, any additional burden imposed by the Accountancy Act is the right to automatic registration of customs brokers43 The only right expressly granted by the Customs Brokers Act and the
financial sector regulators does not constitute an undue delegation of The MOA between the BOA and legislative power
cannot further delegate this power to any other body or authority.45 The power cannot be further delegated. To rephrase Locke, since the people have already delegated to the Legislature the power to make laws, the Legislature recognized exceptions to this rule are (1) Delegation of tariff powers to the of emergency powers to the President under Article VI, Section 23(2) of the Constitution; (3) Delegation to the people at large; (4) Delegation to local President under Article VI, Section 28(2) of the Constitution; (2) Delegation governments; and (5) Delegation to administrative bodies.4 The maxim delegata potestas non potest delegari means that delegated
in accrediting external auditors of certain entities, and that such powers are not in conflict with those of the BOA, it necessarily follows that the MOA executed between the BOA and the financial sector regulators does not delegate to petitioner the power to regulate the profession of accountancy constitute an undue delegation of legislative power. The BOA did not thereby Having ruled that the SEC is justified by its express and implied powers
People v. Vera, 65 Phil. 56, 112--113 (1937) [Per J. Laurel, En Banc]. Republic Act No. 8981 (2000), sec. 9(g), PRC Modernization Act of 2000. Imbong v. Ochoa, 732 Phil. 1 (2014) [Per J. Mendoza, En Banc]. Republic Act No. 9280 (2004), sec. 33, Customs Brokers Act of 2004. Republic Act No. 9298 (2004), sec. 27, Philippine Accountancy Act of 2004. Santiago v. Commission on Elections, 336 Phil. 848, 897-898 (1997) [Per J. Davide, Jr., En Banc]. People ex Rel. Schwah v. Grani, 126 N.Y. 473 (1891), cited in People ex Rel. Fellows v. Early, 106 App. Div. 269, 94 N.Y.S. 640 (N.Y. App. Div. 1905) and Matter of Barresi v. Biggs, 203 App. Div. 2, 196 N.Y.S. 376 (N.Y. App.Div. 1922)
Resolution 16 G.R. No. 246027
since, as previously discussed, petitioner's accreditation regulates only the activities of persons and not the profession itself.
the adherence to internationally recognized standards in auditing. The SEC The main goal of the MOA is to promote the ease of doing business and
and the BOA are both regulatory bodies with specialized knowledge and expertise in their respective domains, the former regulating the corporate sector, and the latter regulating the accountancy profession. By collaborating.
of covered entities. As long as such collaboration aligns with the policy of the they leverage their expertise to ensure the integrity of the financial reporting
State and does not contravene statute, it is a valid exercise of administrative discretion rather than an undue delegation of legislative power.
second Motion for Reconsideration is GRANTED. The Court's June 21, 2022 ACCORDINGLY, petitioner Securities and Exchange Commission's
On the grounds raised in the pleadings, Rule 68, paragraph 3 of the Implementing Rules and Regulations of Republic Act No. 8799, as amended Decision and June 27, 2023 Resolution are REVERSED and SET ASIDE
and Securities and Exchange Commission Memorandum Circular No. 13. series of 2009 are declared VALID and NOT UNCONSTITUTIONAL
SO ORDERED.
RICARDO R. ROSARIO
Associate Justice
WE CONCUR:
ALEXANERA (Chef Justice GESMUNDO
C
Resolution 17 G.R. No. 246027
MARVIC MARIO VICTOR F. LEONEN BUTLEFT AOONCURRING VOTE Senior Associate Justice ON OFFIC L BUSINESS MLFREDO BENJAMIN S. CAGUIOA ssociate Julstice
Ols see Dua
RAMONPAUL L. HERNANDO QM AMY C. LAZARO-JAVIER X
Associate Justice AsSociate Justice
X HENRY JEAN PAUL B. INTING Associate Justice RODII/V/ZALAMEDA Assodiate Justice
MPFZ SAMUEL H. GAERLAN ciate Justid Associate Justice
JHOSEPY ALOPEZ JAPAR B. DIMAAMPAO
Associate Justice Associate Justice
JOSE MIDAS P. MARQUEZ Associate Justice ANTONIO T. KHO, JR. Associate Justice
MARIA FILOMENA D. SINGH Associate Justice ON LEAVE
Resolution 18 G.R. No. 246027
CERTIFICATION
Pursuant to Article VIII, Section 13 of the Constitution, I certify that the conclusions in the above Resolution had been reached in consultation before the case was assigned to the writer of the opinion of the Court.
ALEXANDER'G. GESMUNDO CChief Justice
CERTIFIED TRUE COPY
MARVA LUISA M.SANTY Occ-En Banc,Supreme Court Deputy Clerk of Court
2
EN BANC
President, CHRISTIAN JAY D. LIM, CHRISTIAN JAY D. LIM in his capacity as CPA, FROILAN G. AMPIL, ALLAN M. BASARTE, Petitioner, v. 1ACCOUNTANTS PARTY-LIST, INC., represented by its VIRGILIO F. AGUNOD, and JONAS P. MASCARINAS, Respondents. G.R. No. 246027 - SECURITIES AND EXCHANGE COMMISSION.
Promulgated:
January 28, 2025 Antr DISSENTING OPINION
CAGUIOA, J.:
as valid Rule 68, paragraph 3 of the Implementing Rules and Regulations Certified Public Accountants (CPAs) acting as external auditors of corporations issuing registered securities and possessing secondary licenses (otherwise referred to as covered entities). Securities and Exchange Commission (SEC), the ponencia reconsiders its Decision' dated June 21, 2022 (main decision). The ponencia now declares (SRC), as amended, and SEC Memorandum Circular No. 13, s. 2009, thereby holding that the SEC is authorized to require the accreditation of (IRR) of Republic Act (R.A.) No. 8799 or the Securities Regulation Code In this present second Motion for Reconsideration of petitioner
my concurrence in the main decision and submit that Rule 68, paragraph 3 of the IRR of R.A. No. 8799, as amended, and SEC Memorandum Circular No. 13, s. 2009 are null and void. With due respect, I disagree with this complete turnabout. I maintain
including rules and regulations defining accounting, technical, and trade regulate, investigate or supervise the activities of persons to ensure authorized to exercise not only express powers but also those which may be terms used in the SRC. The ponencia then reads these provisions together with Section 5(d) of the SRC, which provides the SEC with the power to implied from, or which are necessary or incidental to carry out, the express powers granted to it in order to achieve the objectives and purposes of the law. Section 72 also provides in part that the SEC may issue, amend, and rescind such rules and regulations and orders necessary or appropriate, compliance. The ponencia posits that under Section 5(n) of the SRC, the SEC is
Securities and Exchange Commission v. 1Accountants Party-List Inc., 923 Phil. 590 (2022) [Per J. Rosario, En Banc.
Dissenting Opinion 2 G.R. No. 246027
Code of the Philippines (RCC) to support the above position. According to the ponencia, Section 179(p) of the RCC similarly grants the SEC the power to exercise such other powers provided by law or those which may be necessary or incidental to carrying out the powers expressly granted to it. As well, to promote corporate governance and protect minority investors Section 179(d) of the RCC allegedly empowers the SEC to issue rules and The ponencia further cites R.A. No. 11232 or the Revised Corporation
regulations consistent with international best practices.
implied in a statute is as much a part thereof as that which is expressed.? This is in recognition of the fact that no statute can be enacted that can provide all the details involved in its application. There is always an omission that may not meet a particular situation and there may be so-called To be sure, the doctrine of necessary implication provides that what is
begin with. In this case, however, there is actually no gap or omission to external auditors of covered entities, is expressly vested by R.A. No. 9298 or the Philippine Accountancy Act of 2004 to the Professional Regulatory Board of Accountancy(BOA) and.the Professional there must be a gap or omission that justifies the operation of the doctrine to speak of, as in fact, the accreditation of individual CPAs, which includes Regulation Commission of the Philippines (PRC).4 As likewise observed gaps in the law that develop as it is enforced.3 The premise, therefore, is that
order to comply with the more stringent requirements demanded of regulated just an additional layer of supervision and regulation to that of the BOA's in by the ponencia, the accreditation by the SEC is merely complementary or is
entities.
accredit CPAs resides in another agency. The ruling in Gatchalian v. mayor to appoint officialsand employees of the sangguniang panlungsod carries with it the power to discipline the same officials and cannot validly claim to be vested with a supposed implied power to accredit external auditors of covered entities in light of the fact that the power to Urrutia, by analogy, is instructive. In ruling whether the power of the vice- employees, the Court elaborated in this wise: The above laudable objectives of the SEC, notwithstanding, the SEC
456(a)(2) of the Local Government Code of 1991, stating that the vice- Urrutia invokes the doctrine of implication in relation to Section
See Department of Environment and Natural Resources (DENR) v. United Planners Consultants, Inc. (UPCI), 754 Phil."513, 530 (2015) [Per J. Perlas-Bernabe, First Division]. d
Dissenting Opinion G.R. No. 246027
mayor's power to appoint officials and employees of the sangguniang panlungsod carries with it the power to discipline the same officials and employees, absent any contrary statutory provision. This doctrine was also used as basis by the CSC and CA for its rulings. Section 456(a)(2) reads:
Section 456. Powers, Duties and Compensation.
(a) The city vice-mayor shall:
X X X X
those whose manner of appointment is specifically provided in this all officials and employees of the sangguniang panlungsod, except Code: (2) Subject to civil service law, rules and regulations, appoint
XXXX
the case at bar. doctrine of implication expressed in the phrase "absent any contrary statutory provision. " The power to remove is impliedly included in the power to appoint except when such power to remove is expressly vested by law in an office or authority other than the appointing power. In short, the general rule is that power to appoint carries with it the power to discipline. The exception is when the power to discipline or to remove is expressly vested in another office or authority. The exception applies to Second, the Court highlights that there is an exception to the
supplied, citations omitted). 8(b)(1)(ij) of RA 8526 or the Charter of Valenzuela City.7 (Emphasis There is a clear contrary statutory provision expressed in Section
relation to corporate reportorial requirements. According to the ponencia, while the general rule in Section 177 of the RCC is that the auditor of the to allow the SEC to formulate exceptions to such general rule, such as requiring the independent CPA to also be SEC-accredited. the financial statements of certain entities should be audited by SEC- accredited CPAs is justified, since the RCC allows the SEC to issue rules in annual financial statement of a corporation only needs to be an independent CPA, the addition of the phrase "[e]xcept as otherwise provided in this Code or in the rules issued by the Commission"8 manifests the Legislature's intent The ponencia further points out, however, that the requirement that
Again, I respectfully beg to differ.
Section 177 of the RCC reads in part:
Id. at 106--108. Emphasis supplied.
Dissenting Opinion G.R. No. 246027
otherwise provided in this Code or in the rules issued by the Commission, every corporation, domestic or foreign, doing business in the Philippines shall submit to the Commission: SEc. 177. Reportorial Requirements of Corporations. Except as
the financial statements shall be certified under oath by the corporation's public accountant: Provided, That if the total assets or total liabilities of treasurer or chief financial officer; and the corporation are less than Six hundred thousand pesos (P600,000.00). (a) Annual financial statements audited by an independent certified
(b) A general information sheet. (Emphasis supplied)
shall submit to the Commission.1o What it simply means, therefore, is that the rules issued by the Commission" precedes and modifies the phrase as a general rule, every corporation, whether domestic or foreign but doing business in the Philippines, is obliged to submit annual financial statements RCC or the SEC may exempt a corporation from this submission and a general information sheet to the SEC. However, as an exception, the requirement. "every corporation, domestic or foreign, doing business in the Philippines Clearly, the phrase "[e]xcept as otherwise provided in this Code or in
the RCC, House Bills Nos. 528 and 877, suggested that Section 177 be amended to include that the annual financial statements to be submitted by Quite tellingly, as the ponencia itself discusses," the precursor bills of
adopted in the final bill, House Bill No. 8374. BOA and who_possesses such other accreditation as the Commission may require. This last phrase, however, was ostensibly not carried over or corporations be audited by an independent CPA who is accredited by the
provided in its Committee Report version that the annual financial statements to be submitted by corporations be audited by an independent CPA accredited by the Commission.12 However, as with its counterpart the Commission was also left out in the final version of the bill.t before the House of Representatives the requirement of accreditation by Similarly, the Senate version, Senate Bill No. l280, originally
shown earlier, is only a requirement that the annual financial statements be audited by an independent CPA--and nothing more. Hence, what has been finally crafted in Section 177 of the RCC, as
Section 177 of the RCC is that the Legislature deliberately did not include an accreditation by the SEC as an additional requirement for an independent What is abundantly clear from the foregoing legislative history of
Republic Act No. 11232 (2019), sec. 177. (Emphasis supplied)
Senate Bill No. 1280 (2016), 17t Congress, 1st Session, sec. 66. Senate Bill No. 1280 (2018), 17th Congress, 3rd Session, sec.178(1). Ponencia, p. I1
Dissenting Opinion 5 G.R. No. 246027
additional requirement in Section 177 of the RCC, but it clearly did not do so. The only logical conclusion from this is that the Legislature did not former Corporation Code. It could have facilely retained the draft of an intend to require independent CPAs to be SEC-accredited as well. CPA who audits a corporation's annual financial statement. The Legislature contemplated it when it crafted the amendment of then Section 141 of the
regulators to accredit external auditors.14 The fact still remains that no piece of legislation allows the same at present, insofar as external auditors of matter if there are current pieces of legislation governing the banking and insurance industries, cooperatives, and tax agents that allow various RCC and the SRC a requirement that the Legislature obviously chose not to incorporate. covered entities are concerned. The Court cannot simply impute into the Given the language of Section 177 of RCC, therefore, it does not
assailed issuances to carry out the express legislative purpose of the SRC, or by the SEC of CPAs acting as external auditors of covered entities, are null and void for being ultra vires. While the authority of the SEC to issue these to effect its operation and enforcement is recognized,15 it is imperative that contrary to any other existing statutes.1 Well-settled is the rule that the putting it into effect. It can neither extend the law and amend a legislative not contemplated by the Legislature.17 Thus, here, that Rule 68, paragraph 3 Memorandum Circular No. 13, s. 2009, which both require the accreditation the administrative issuances it issues must not subvert the SRC or be power of administrative agencies is confined to implementing the law or enactment, nor even engraft additional n of the IRR of the SRC and SEC Memorandum intended to aid the SEC in realizing its mandate only begs the question. that the assailed issuances have enlarged the administers and enforces.19 Simply put, the best intentions of the SEC in The purpose, no matter how commendabl Verily, Rule 68, paragraph 3 of the IRR of the SRC and SEC ion-contradictory requirements should not detract from the fact Circular No. 13, s. 2009 are provisions theJaw
> Ponencia, pp. 12-13. See Lokin, Jr. v. COMELEC, 635 Phil. 372, 392 (2010) [Per J. Bersamin, En Banc]. Id. Id. at 392, 394.
See Genuino v. De Lima, 829 Phil. 691, 728 (2018) [Per J. Reyes, Jr., En Banc], where the Court Id stated The DOJ is confined to filling in the gaps and the necessary details in carrying into effect the law as enacted. Without a clear mandate of an existing iaw, an administrative issuance is No. 41 must derive its life. Unfortunately, all of the supposed statutory authorities relied upon by the DOJ did not pass the completeness test and sufficient standard test. The DOJ miserably failed to establish the existence of the enabling law that will justify the issuance of only begs the question. The purpose, no matter how commendable, will not obliterate the lack of authority of the DOJ to issue the said issuance. Surely, the DOJ must have the best intentions in promulgating DOJ Circular No. 41, but the end' will not justify the means. the questioned circular. ultra vires (Citation omitted) Consistent with the foregoing, there must be an enabling law from which DOJ Circular That DOJ Circular No. 41 was intended to aid the department in realizing its mandate
Dissenting Opinion 6 G.R. No. 246027
justify the means .20 promulgating the assailed issuances cannot be denied, but this end will not
decision and ruling that the case does not apply, the ponencia thus held: fours with the present case after all. In reversing its finding in the main Customs Brokerage, Inc. v. Court of Appeals2i (Airlift Asia) is not on all Moreover, I disagree with the ponencia's new finding that Airlift Asia
shall be allowed to practice the customs broker profession in any 2004 expressly provides that those who pass the licensure examination collection district "without the need of securing another license from the BOC." Hence, the subject CAO in Airlift Asia contravened an express provision of law whereas the assailed regulations here did not contravene any express provision of law. First, unlike the Accountancy Act, the Customs Brokers Act of
or incidentally, includes the power to regulate and supervise the activities of external auditors of covered entities. Commissioner to enforce tariff laws and prevent smuggling does not necessarily include the power to regulate and supervise the customs broker profession. Here, the express power of the SEC to regulate and supervise the activities of persons to ensure compliance necessarily, if not impliedly Second, We held in Airlift Asia that the mandate of the BOC
of the practice of accountancy, the rule of statutory construction that applies only in instances of conflict between the two. Respondents have auditors and the BOA's specific power to supervise their practice. Au contraire, the fact that the country's financial sector regulators were able to ink a multilateral MOA with the BOA on the accreditation of external auditors, aimed at promoting ease of doing business and adherence to general power as compared to the specific power granted by the general rule-making power gives way to the specific grant of power not shown any conflict between the SEC's accreditation of external internationally recognized standards in auditing, is a clear indication that there is no conflict between the general power of the SEC and the specific power of the BOA, the former being complementary to the latter. Accountancy Act to the BOA to promulgate rules involving the regulation Third, while the SEC's power to issue rules may be considered a
compelling practically all customs brokers to comply with the be said that a large part of a CPA's work involves practice before the do not wish to apply for accreditation can still be engaged by the covered by the assailed regulations for as long as they are not engaged to do statutory audit of financial statements. Hence, BOC accreditation of of a customs broker's work involves practice before the BOC, thus, covered entities. In fact, as aptly observed by petitioner, the assailed regulations apply to less than 3% of registered corporations and those who remaining 97%. CPAs are not even prevented from working for entities accreditation requirement for them to practice their profession, it could not Finally, unlike in Airlift Asia where we observed that a large part
G 739 Phil. 718 (2014) [Per J. Brion, Second Division].
Dissenting Opinion G.R. No. 246027
customs brokers cannot be reasonably compared with SEC accreditation of external auditors.22 (Citation omitted)
the SRC and SEC Memorandum Circular No. 13, s. 2009 are ultra vires, and the SEC cannot validly claim justification for issuing the same on the basis addressed in the earlier discussion that Rule 68, paragraph 3 of the IRR of of the doctrine of necessary The first two arguments in the ponencia have been sufficiently mplica AT10K The fact that R.A. No. 9298 or the Philippine Accountanc AT essly mirror the language
could have included such authority when it amended the RCC in 2019, yet, it ultimately opted not to need of securin. BOA's exclusive expressly vests such a similarly vests the of R.A. No. 9280 or d neither the SRC nor the RCC Act of 2004, i.e., "without the earlier, as well, Congress eiterate, R.A. No. 9298 does not negate the
supervise the activities of persons to ensure compliance"24 under Section interpreted to pertain to the regulation of certain activities of the "thinking heads or managers"25 of corporations or similar bodies that are clearly under the jurisdiction of the SEC. The regulation and supervision of activities provided for in Section 5(d) cannot be interpreted to extend to just about any person and any activity, including CPAs and the practice of accountancy. 5(d) of the SRC does not necessarily, impliedly, or incidentally, include the power to regulate and supervise the activities of external auditors of covered entities. Following Associate Justice Amy C. Lazaro-Javier's (Justice Lazaro-Javier) accurate observation in her Concurring Opinion in the main decision, Section 5(d) must be read together with the other provisions of the SRC and the related relevant provisions of the RCC. The regulation and supervision of activities of persons adverted to in Section 5(d) should be Additionally, the supposed express power of the SEC "to regulate and
SEC, does not dispel the conflict between the authority of the BOA and the executed with the BOA, which allows the accreditation of the CPAs with the assailed issuances to accredit CPAs. The fact that the assailed issuances cannot cure the defects of the assailed issuances. More importantly, as declared in the main decision more cogently: directly contravene R.A. No. 9298 and enlarge the provisions of the SRC should settle the validity of the subject MOA. In other words, the MOA Furthermore, the Memorandum of Agreement (MOA) the SEC
petitioner of another legal maxim, "delegata potestas non potest delegari" which allows for such accreditation with the SEC. However, We remind Petitioner further argues that it executed a MOA with the Board
Ponencia, pp. 13-14 Id. at 14.(Emphasis supplied) List, Inc., supra note I, at 612. Id., citing Republic Act No. 9280 (2004), sec. 19. J. Lazaro-Javier, Concurring Opinion in Securities and Exchange Commission Peounta
Dissenting Opinion 8 G.R. No. 246027
or what has been delegated by Congress can no longer be further delegated or redelegated by the original delegate to another:
x x x having been reposed by law exclusively with the same as mandated by law, i.e., as a collegial body, and not transfer it elsewhere or discharge said power through the intervening mind of another. Delegata potestas non potest delegari --- a delegated power cannot be delegated." respondent Board, it has no choice but to exercise the
validate a transgression of a provision of law. Thus, the MOA is void and issuances.2 (Emphasis in the original, citations omitted) cannot serve as authorization for the petitioner to make the assailed Moreover, a private agreement such as the MOA cannot operate to
only a small number of CPAs. The reach of a law or administrative issuance Finally, it should be of no moment that the assailed issuances affect
issuances here are null and void and have no place, therefore, in the annals of legislation and jurisprudence. Indeed, the right to practice a profession is is not determinative of the validity thereof. The fact remains that the assailed
only a privilege and a mere property right that holds the least weight in the scale of values. This does not mean, however, that the right does not deserve
score, the Court's discussion in Airlift Asia is illuminating: protection at all and must always give way to regulation easily. On this
his profession before the BOC, the accreditation takes the form of a practice their profession. Under RA 9280, a successful examinee of the customs brokers examinations acquires a Certificate of Registration, which 3-2006's accreditation requirement is not a form of license. A license is a licensing requirement proscribed by the law. It amounts to an additional burden on PRC-certified customs brokers and curtails their right to benefits and privileges appurtenant thereto.27 (Emphasis in the original. citations omitted) carry on a particular business or to pursue a certain occupation." Since it is only by complying with CAO 3-2006 that a customs broker can practice entitles him to practice the profession as a customs broker with all the 'permission to do a particular thing, to exercise a certain privilege or to We are unconvinced by the BOC Commissioner's claim that CAO
practice their profession as external auditors of corporations issuing registered securities and possessing secondary licenses. This imposes an additional burden on CPAs who are already certified, registered, and accredited by the BOA and the PRC, and curtails their right to practice as an of license since it is only by complying with the same that CPAs can external auditor of said Here, the assailed issuances' accreditation requirement is also a form covered entities, which, as aptly noted by Justice Lazaro-Javier, is part and parcel of the practice of accountancy.28 As with
Securities and Exchange Commission v. I Accountants Party-List, Inc., supra note 1, at 605. Airlift Asia Customs Brokerage, Inc. v. Court of Appeals, supra note 21, at 730. See J. Lazaro-Javier, Concurring Opinion in Securities and Exchange Commission v. lAcc Party-List, Inc., supra note I, at 611
Dissenting Opinion 9 G.R. No. 246027
with all the benefits and privileges appurtenant thereto.29 For the practice of same to the BOA and the PRC.30 Airlift Asia, as well, R.A. No. 9298 likewise provides that successful examinees of the licensure examinations for accountants acquire a of accreditation and R.A. No. 9298 expressly vests the authority to issue the Certificate of Registration, which entitles them to practice the profession public accountancy, in particular, CPAs must also be a holder of a certificate
paragraph 3, of the IRR of R.A. No. 8799, as amended, and SEC Memorandum Circular No. 13, s. 2009 null and void. In view of the foregoing, I maintain my vote to declare Rule 68,
For the ponente's consideration.
LFREDO BENJAMIN S. CAGUIOA Associate\ustice
CERTIFIED TRUE COPY
30 Republic Act No. 9298 (2004), sec. 20, states: Republic Act No. 9298 (2004), secs. 28, 31, viz. examination subject to payment of fees prescribed by the Commission. The Certificate of Registration shall bear the signature of the chairperson of the Commission and the chairman Board, indicating that the person named therein is entitled to the practice of the profession effect until withdrawn, suspended or revoked in accordance with this Act. (Emphasis in the Card. -- A certificate of registration shall be issued to examinees who pass the licensure and members of the Board, stamped with the official seal of the Commission and of the with all the privileges appurtenant thereto. The said certificate shall remain in full force and original) SEC. 20. Issuance of Certificates of Registration and Professional Identification OCc-En Banc, Supreme Court MARIA LUISA M.SANTILLA Deputy Clerk of Court
certificate of accreditation shall be issued to certified public accountants in public practice only upon showing, in accordance with rules and regulations promulgated by the Board and approved by the Commission, that such registrant has acquired a minimum of three (3) years meaningful experience in any of the areas of public practice including taxation[.] and partnerships organized for the practice of public accountancy shall be registered certified public accountants in the Philippines; Provided, That from the effectivity of this Act, a SEC. 28. Limitation of the Practice of Public Accountancy. - Single practitioners
accountants, firms and partnerships of certified public accountants engaged in the practice of regulations for the implementation of registration requirements including the fees and penalties for violation thereof. (Emphasis in the original) public accountancy, including partners and staff members thereof, shall register with the That subject to the approval of the Commission, the Board shall promulgate rules and Commission and the Board, such registration to be renewed every three (3) years, Provided. SEC. 31. Accreditation to Practice Public Accountancy. -- Certified public
EN BANC
Allan M. Basarte, Virgilio F. Agunod, and Jonas F. Mascarinas. 1Accountants Party-List Inc., rep. by its President, Christian Jay D. Lim, Christian Jay D. Lim in his personal capacity as CPA, Froilan G. Ampil. G.R. No. 246027 - Securities and Exchange Commission v.
Promulgated: _January 28,_2025
d0e
LAZARO-JAVIER J.
DISSENT
motion for reconsideration of the Securities and Exchange Commission (SEC). I respectfully differ from the ruling of the Majority, granting the second
a prohibited pleading, should be within the parameters of Section 3, Rule 15 of A.M. No. 10-4-20-SC,1 viz.: I respectfully emphasize that granting a second motion for reconsideration
SEC. 3. Second motion for reconsideration. - The Court shall not entertain a second motion for reconsideration, and any exception to this rule can only be erroneous, but is likewise patently unjust and potentially capable of causing for reconsideration can only be entertained before the ruling sought to be granted in the higher interest of justice by the Court En Banc upon a vote of at least two-thirds of its actual membership. There is reconsideration "in the higher interest of justice" when the assailed decision is not only legally reconsidered becomes final by operation of law or by the Court's declaration.? unwarranted and irremediable injury or damage to the parties. A second motion
justice, such as when the assailed decision is not only legally erroneous but also injury or damage to the moving party. for reconsideration, albeit prohibited, may be entertained in the higher interest of patently unjust and potentially capable of causing unwarranted and irremediable In Fortune Life Insurance v. COA,3 the Court ruled that a second motion
as a matter of course. Only matters of life, liberty, honor, or property may warrant other justifications may be considered, like: (1) the existence of special or the suspension of the rules of the most mandatory character. It is also true that For liberality could not be extended in second motion for reconsideration
A.M. No. 10-4-20-SC, The Internal Rules of The Supreme Court. 821 Phil. 159 (2017) [Per CJ Bersamin, En Banc].
DISSENT G.R. No. 246027
and dilatory; and (5) the other party will not be unjustly prejudiced thereby.4 compelling circumstances; (2) the merits of the case; (3) a cause not entirely attributable to the fault or negligence of the party favored by the suspension of the rules; (4) a lack of any showing that the review sought is merely frivolous
arguments in the petition or the first motion for reconsideration, albeit worded or expounded differently: More so because the grounds relied upon are mere reiteration of the
First Motion for Reconsideration Second Motion for Reconsideration
1 2 Current legislations manifest the State The accreditation process is incidental financial sector to accredit external auditors; policy that allows regulators of the Petitioner's accreditation of external auditors does not curtail the practice of part of CPAs. With accreditation, relevant stakeholders are assured that accountancy since it is optional on the
3. The MOA with PRBOA does not to petitioner's mandate as the primary constitute an invalid delegation. regulator of corporations; and 2 accredit external auditors. To facilitate the implementation of the crucial functions and services in the provided only by competent and quality of the infrastructure as a whole. Current pieces of legislation manifest the State's policy of allowing regulators of the financial sector to communityare generates trust and confidence in the reliable professionals, performed which and
4 3 The accreditation process of external "One- Stop Shop" that streamlined the accreditation accreditation of external auditors in the financial sector, petitioner, the BSP, and the IC adopted a legislative intent regulators. process regarding for said the
S The assailed regulations only apply to auditors undertaken by financial process in the BOA. Accreditation is sector regulators is different-but complementary-to not intended to supplant the BOA's licensure process but to match the thespecific regulated industry. competence of external auditors with requirementsofa the licensure
2.76% of registered corporations. Out of 621,804 registered corporations, only 17,173 are required to engage the services of SEC-accredited external auditors. Those who do not wish to apply for accreditation can still be
Id. citing, Ginete v. Court of Appeals, 357 Phil. 36 (1998) [Per J. Romero, Third Division].
DISSENT G.R. No. 246027
6. Petitioner accredits external auditors 8. In the conduct of the audit of the I to promote public interests. There have been past instances where external auditors were complicit in While the SRC and the Old because the Legislature had long recognized that its accreditation of performance of its mandate as the primary regulator of corporations in audited financial statements, external auditors are acting as petitioner's engaged by the remaining 97.24% of or 604,631 registered corporations, which belies the conclusion that the Assailed Regulations restrain CPAs from practicing their profession. schemes to defraud the public, such as the PDAF scam in 2013. Corporation Code were seemingly silent on petitioner's specific authority to accredit external auditors, a specific provision therefore is unnecessary external auditors is incidental to the gatekeepers. It follows, therefore, that petitioner has supervise-which auditors. the country accreditation theauthority of-these may external include 1
between the SEC and PRBOA which allows accreditation of CPAs is likewise Regulation Code and SEC MC No. 13-2009 were declared void as it they did not carry the SEC accreditation of Certified Public Accountants (CPAs) acting as license which curtails the right of CPAs to practice accountancy, as only the Professional Regulatory Board of Accountancy (PRBOA) has the power to supervise said profession. More, the Memorandum of Agreement (MOA) void as delegated power cannot be further delegated. paragraph 3 of the Implementing Rules and Regulations of the Securities external auditors of corporations issuing registered securities. It amounts to a These arguments have all been discussed in the main decision. Rule 68.
in favor of the SEC, viz.: requirements for corporation (which the SEC did not even point out) tip the scale Neither does Section 177 of the Revised Corporation Code on reportorial
SEC. 177. Reportorial Requirements of Corporations. -- Except as otherwise provided in this Code or in the rules issued by the Commission, every corporation, domestic or foreign, doing business in the Philippines shall submit to the Commission
DISSENT G.R. No. 246027
financial statements shall be certified under oath by the corporation's treasurer (a) Annual financial statements audited by an independent certified public or chief financial officer; and accountant: Provided, That if the total assets or total liabilities of the corporation are less than Six hundred thousand pesos (P600,000.00), the
accountancy. SEC must still point to a grant of jurisdiction to justify its requirement of accreditation. This phrase alone does not empower the SEC to be interpreted as a source of SEC power enough to blanketly remove the power of supervision by the PRBOA reportorial requirements for the practice of regulate the practice of accountancy. Respectfully, the phrase "or in the rules issued by the Commission" cannot
these issues nor did it allege any compelling reason for the Court to allow the second motion for reconsideration in accordance with Section 3, Rule 15 of A.M. No. 10-4-20-SC. The SEC simply did not meet the threshold criteria to further relitigate
starting points are the statutes that make more or less probably invalid the SEC's has textually committed to the Supreme Court the power of regulation. This case was thus resolved not by referring to the Constitution. Rather, the relevant regulation of that specific practice of accountancy assailed by respondents. Congress creates or identifies the public office to which it delegates this power. The practice of accountancy is unlike the practice of law where the Constitution Indeed, regulation of the practice of accountancy is statute-based.
penalties for non-compliance: Surely, the SEC cannot impose this accreditation requirement and impose
1. It is contrary to the instructions of Congress. Through Republic Act practice of accountancy under said law. Thus, PRBOA, as a result of its all corporations including those issuing registered securities and the gatekeeper for the supply of authorized external auditors. No. 9298, the Philippine Accountancy Act of 2004, Congress created practice of accountancy in the Philippines." The performance of the duties of an external auditor of corporations issuing registered securities and possessing secondary licenses is part and parcel of the power to regulate the practice of accountancy, that is empowered to supervise, register and license those who can act as external auditors of possessing secondary licenses. Per Republic Act No. 9298, PRBOA is and empowered PRBOA "[t]o supervise the registration, licensure and
2. SEC is duplicating the powers of PRBOA. The assailed SEC issuances requiring the added accreditation of CPAs, or those already
DISSENT G.R. No. 246027
if empowered by Congress. Otherwise, the added accreditation by SEC is superfluous, and its regulation of this aspect of accountancy is supervised, registered, and licensed by the PRBOA, before they could act as external auditors of the subject corporations are akin to of regulating the practice of this facet of accountancy itself, thus, duplicating the powers of PRBOA. SEC can require accreditation only usurpation of authority. supervising, registering, and licensing persons to exercise such duties, and by virtue of the definition of the practice of accountancy, are a form
3. What has been delegated cannot be further delegated. True, instrumentality of their own judgment acting immediately upon the matter of legislation and not through the intervening mind of another. Republic Act No. 9298 does not expressly vest exclusive regulatory power in the PRBOA over the practice of accountancy. But Republic another --potestas delegata non delegare potest.5 This legal doctrine is based upon the ethical principle that the delegated power constitutes not only a right but a duty to be performed by the delegate by the Congress can no longer be further delegated by the original delegate to This rule admits of recognized exceptions: Act No. 9298 does not have to. For what has once been delegated by
e. Delegation to administrative agencies of rule-making b. Delegation of emergency powers to the President under a. Delegation of tariff powers to the President under Section c. Delegation to the people at large; d. Delegation to local governments; and, power. 28(2) of Article VI of the Constitution; Section 23(2) of Article VI of the Constitution;
But none of these has been invoked, much less apply here.
More, the grant to PRBOA of the power to regulate the practice of implied from the statute. Unfortunately, nothing in Republic Act No. 9298 gives such directive expressly or even by necessary implication. Verily, PRBOA is not authorized to delegate or share this power to or with others. accountancy is deemed exclusive. authorized further delegation by PRBOA as expressed by or necessarily The legal doctrine does not apply either where Congress itself
Dagan v. Philippine Racing Commission, 598 Phil. 406, 416 (2009) [Per J. Tinga, En Banc] Id. at 417-418. United States v. Barrias, 11 Phil 327 (1908) [Per J. Tracey].
DSSENT G.R. No. 246027
4. SEC does not have an independent grant of power to regulate the Commission (IC), the PRBOA cannot delegate its power to regulate entrusted the mandate to PRBOA, which alone must discharge the trust. to justify its requirement of accreditation. Since PRBOA cannot be able to show an independent grant of power, not one that PRBOA could have delegated, invalidly that is, to it. As observed, SEC failed to show such independent grant of power. Section 5(a) and Section 68 the practice of accountancy. The MOA is similarly inconsequential. Even if it were a party to this MOA with the SEC, BSP, Insurance any or all of aspects of the practice of accountancy to any other practice of accountancy. SEC must still point to a grant of jurisdiction delegate the power to regulate the practice of accountancy, SEC must of the SRC and Section 141 of the CC do not empower the SEC over government entity. Potestas delegata non delegare potest. Congress
Office (DPO) pursued a line of arguments similar to what SEC has echoed here. In Philippine Lawyer's Association v. Agrava,8 the Director of Patent
to promulgate rules and regulations for the conduct of all business in the Patent other persons with sufficient scientific and technical training to pre-qualify as patent attorneys by passing the examinations to be administered by the Patent Office. The DPO referred to Section 78 of Republic Act No. 165 as allowing him Ofce In Agrava, the DPO issued a circular mandating lawyers, engineers and
have a precise, specific and express legislative authority to impose such pre- qualifying examination before requiring it from those wishing to practice before It, viZ.: The Court nullified this circular. It ruled that the Patent Office must first
being similar to the provisions of law just reproduced, then he is authorized to before him should submit to and pass an examination. We reproduce said Section 78, Republic Act No. 165, for purposes of comparison: prescribe the rules and regulations requiring that persons desiring to practice Respondent Director concludes that Section 78 of Republic Act No. 165
of the Secretary of Justice, shall promulgate the necessary rules and regulations. not inconsistent with law, for the conduct of all business in the Patent Office. SEC. 78. Rules and regulations. - The Director subject to the approval
the United States Patent Law as regards authority to hold examinations to determine the qualifications of those allowed to practice before the Patent Office. While the U.S. Patent Law authorizes the Commissioner of Patents to require attorneys to show that they possess the necessary qualifications Section 78 certainly and by far, is different from the provisions of
DISSENT G.R. No. 246027
and competence to render valuable service to and advise and assist their clients in patent cases, which showing may take the form of a test or examination to be held by the Commissioner, our Patent Law, Section 78, is silent on this important point. Our attention has not been called to any express provision of our Patent Law, giving such authority to determine the qualifications of persons allowed to practice before the Patent Office.
his branch of the service and to carry into full effect the laws relating to matters Head, makes all rules and regulations necessary to enforce the provisions of said code. Section 338 of the National Internal Revenue Code, Commonwealth recommendation of the Collector of Internal Revenue, shall promulgate all needful rules and regulations for the effective enforcement of the provisions of the code. We understand that rules and regulations have been promulgated not only for the Bureau of Customs and Internal Revenue, but also for other bureaus of the Government, to govern the transaction of business in and to enforce the law for said bureaus. of bureau to prescribe forms and make regulations or general orders not inconsistent with law, to secure the harmonious and efficient administration of within the jurisdiction of his bureau. Section 608 of Republic Act 1937, known as the Tariff and Customs Code of the Philippines, provides that the Commissioner of Customs shall, subject to the approval of the Department Act No. 466 as amended, states that the Secretary of Finance, upon Section 551 of the Revised Administrative Code authorizes every chief
to practice before said Patent.Office, then there would be no reason why other bureaus specially the Bureau of Internal Revenue and Customs, where the business in the same area are more or less complicated, such as the presentation of books of accounts, balance sheets, etc., assessments exemptions, depreciation, these as regards the Bureau of Internal Revenue, and the classification of goods, imposition of customs duties, seizures, confiscation, etc., as regards the Bureau of Customs, may not also require that any lawyer behalf of clients, shall first pass an examination to qualify. clear provision of law giving the necessary sanction, to require lawyers to submit to and pass on examination prescribed by it before they are allowed practising before them or otherwise transacting business with them on Were we to allow the Patent Office, in the absence of an express and
Philippine Bar authorized by this Tribunal to practice law, and in good the Supreme Court. (Emphasis supplied) standing, may practice their profession before the Patent Office, for the reason that much of the business in said office involves the interpretation and applicable, as well as the presentation of evidence to establish facts involved: that part of the functions of the Patent director are judicial or quasi-judicial, so much so that appeals from his orders and decisions are, under the law, taken to determination of the scope and application of the Patent Law and other laws In conclusion, we hold that under the present law, members of the
Commissioner of Customs required the accreditation of customs brokers who intend to practice before the Bureau of Customs (BOC) through Customs Administrative Order (CAO) No. 3-2006. In Airlift Asia Customs Brokerage, Inc., et al. v. Court of Appeals,10 the
10 739 Phil. 718 (2014) [Per J. Brion, Second Division]. Id
DISSENT G.R. No. 246027
In nullifying the CAO, the Court ruled that the CAO amounted to a licensing requirement that restricted the practice of profession of customs brokers, a role which Congress had given to the Professional Regulatory Board for Customs Brokers under Section 5, Republic Act No. 9280, the Customs Brokers Act of 2004. Further, the Court also favored the specific provisions of Republic Act No. 9280 over the general grant of power to the Customs Commissioner to enforce the provisions of the Tariff and Customs Code of the Philippines:
profession through the issuance of CA0 3-2006. mandate to enforce tariff laws and prevent smuggling, these powers do not necessarily include the power to regulate and supervise the customs broker Although we cannot deny that the BOC Commissioner has the
enforce the provisions of the TCCP. Under the rules of statutory construction. in the exercise of this specific power, the Board of Examiners (of which the complement its supervisory and regulatory powers over customs brokers.1 a general grant of power to promulgate rules and regulations necessary to this general rule-making power gives way to the specific grant of power to promulgate rules and regulations on the practice of customs brokers BOC Commissioner serves as ex-officio chairman) was to perform only a recommendatory role. With the repeal of Section 3409 of the TCCP by RA 9280, this specific rule-making power was transferred to the PRBCB to profession to the CSC Commissioner under Section 3409 of the TCCP. Indeed. The BOC Commissioner's power under Section 608 of the TCCP is
supervising the registration, licensure and practice of accountancy in the Philippines, nothing in the law precludes an additional layer of supervision and In any event, the Majority posit that the PRBOA bears the primary role of
regulated entities. The SEC by no means, removes or diminishes the PRBOA's power to supervise the registration, licensure and practice of accountancy as such auditors remain subject to the Board's power of supervision at all times and in regulation in order to comply with the more stringent requirements demanded of
any case.
in the enabling act. When a general grant of power is conferred or duty enjoined. every particular power necessary for the exercise of the one or the performance has the authority to adopt any reasonable method to carry out its functions. power to regulate the practice of accountancy exclusively to the Board of implicit in the wordings of the law or conferred by necessary or fair implication of the other is also conferred by necessary implication. It was also explicated that when the statute does not specify the particular method to be followed or used by a government agency in the exercise of the power vested in it by law, said agency Accountancy. Besides, implied powers are those that can be inferred or are With due respect, I disagree and reiterate that Congress has delegated the
Hacienda Bautista, Inc. v. Presidential Agrarian Reform Council, 686 Phil. 377 (2011) [Per J. Velasco, Jr.. Id. at 727. En Banc].
DISSENT G.R. No. 246027
implied power can be ascertained. Here, the avowed policy of Republic Act No regulatory measures, programs, and activities, viz: Necessarily, therefore, there must be first an express grant of power before 9298 is to recognize the importance of accountants in nation-building and development and to foster their professional growth and development through
accountants whose standard of practice and service shall be excellent, programs and activities that foster their professional growth and development. of accountants in nation building and development. Hence, it shall develop and nurture competent, virtuous, productive and well rounded professional qualitative, world class and globally competitive though inviolable, honest, effective, and credible licensure examinations and though regulatory measures, Section 2. Declaration of Policy. - The State recognizes the importance
Further, the law has the following objectives:
Section 3. Objectives. - This Act shall provide and govern:
The supervision, control, and regulation of the practice of accountancy in the Philippines. (Emphasis supplied) The standardization and regulation of accounting education; The examination of registration of certified public accountants; and
practice of accounting shall be governed and regulated. Republic Act No. 9298 v. Philip Morris Philippines Manufacturing, Inc.,13 the Court ordained: is intended to supervise, control, and regulate the practice of accountancy in the Philippines. The doctrine of lex specialis of the practice of accounting. The doctrine of lex specialis derogat generali is explained in Department of Health Verily, the law is clearly intended to be the sole framework by which the
designed therefore should prevail.14 (Emphasis supplied) subject, and generally is so interpreted as to embrace only cases in which the special provisions are not applicable. In other words, where two statutes are of equal theoretical application to a particular case, the one specially General legislation must give way to special legislation on the same
So must it be.
accreditation of external auditors, thus: The Majority likewise point to the prevailing policies allowing the
a) Section 5817 of R.A. No. 8791 or the General Banking Law of 2000 provides that the BSP Monetary Board may require a bank, quasi-bank, or trust entity to engage the services of an auditor chosen from a list of CPAs acceptable to the Monetary Board.
1 757 Phil. 212 (2015) [Per J. Perlas-Benabe, First Division]. I
DISSENT 10 G.R. No. 246027
b) Section 34718 of Presidential Decree No. 612, as amended by R.A. No. Commissioner. 10607 or the Insurance Code, requires supervised persons and entities to engage only the services of external auditors accredited by the Insurance
c) Article 8019 of R.A. No. 6938, as amended by R.A. No. 9520 or the Philippine Cooperative Code of 2008, limits the conduct of financial and social audit to those who are accredited by the Cooperative Development Authority.
d) Section 6(G)20 of R.A. No. 8424 or the National Internal Revenue Code of register tax agents with respect to their practice and representation before the Bureau of Internal Revenue. 1997 authorizes the Commissioner of Internal Revenue to accredit and
granted such powers to the regulatory bodies concerned. There is no similar impliedly given to the SEC. Just because the Bangko Sentral ng Pilipinas, the Insurance Commissioner, the Cooperative Development Authority, and the Commissioner of Internal Revenue were expressly given accreditation prerogatives does not automatically mean that the SEC should have such identical provision in the Corporation Code or the Revised Corporation Code. Though accreditation of external auditors may be considered as a trend and aligns with international best practices, these powers still cannot be considered as prerogative, too. Yet, as keenly noted by Justice Caguioa, these provisions expressly
Same would amount to judicial legislation. On this score, Tanada v. Yulo's teaches: If the Court recognizes such accreditation prerogative by the SEC, the
memorandum concedes "that the language of the proviso in question is somewhat defective and does not clearly convey the legislative intent", and at the hearing in response to questions was finally forced to admit that what the order to supply an intention for the legislature. That we cannot do. By liberal construction of statutes, courts from the language use, the subject matter, There is a sharp distinction, however, between construction of this nature and the act of a court in engrafting upon a law something that has been omitted which someone believes ought to have been embraced. The former is liberal construction and is a legitimate exercise of judicial power. The latter is judicial legislation forbidden by the tripartite division of powers among the three departments of government, the executive, the legislative, and the judicial.1 (Emphasis supplied) That in this instance, as in the past, we aim to do. But counsel in his Government desired was for the court to insert words and phrases in the law in and the purposes of those framing them are able to find their true meaning. Counsel in effect urges us to adopt a liberal construction of the statute.
5 G.R.No.L-43575 (1935) [Per J.Malcolm, En Banc]. 6 Id.
DISSENT 11 G.R. No. 246027
for being a prohibited pleading but also for utter lack of merit. In fine, the second motion for reconsideration should be denied not only
AMY 'C.LANARO-JAVIER 04
CERTIFIED TRUE COPY
M X
OCC-En Banc, Supreme Court MARIO LUISA M. SANTILLA Deputy Clerk of Court
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