EN BANC GR. No, 217590 — PHILIPPINE CONTRACTORS ACCREDITATION BOARD, Petitioner, v. MANILA WATER COMPANY, INC., Respondent DISSENTING OPINION LEONEN, J: Central tothe resolution ofthis case is the validity of Rule 3, Section 3.1 ofthe Implementing Rules and Regulations of Republic Act No. 4566, or the Contractors" License Law. ‘The Implementing Rules and Regulations were crafted by the Philippine Contractors Accreditation Board, which had been created to carry cut the objectives of Republic Act No. 4566. Among its powers include the “authority to issue, suspend[,] and revoke" contractors’ licenses. Moreover, Section 17 of the law gives the Philippine Contactors Accreditation Board the power to classify contractors. The provision states: SECTION 17, Power classify and limit operations. —The Board ‘may apt reasonably nevesary rales and regulations to effec the ‘laseifleaion of contactor in a manner consent with etblshed usage land procedure as Tod inthe comstrution busines, i ay iit he eld and scope ofthe operations ofa liceased contactor to thas in which he is ‘lassifiod wo engage, as espectvly deine in ston nine. license may ‘make aplication for clasfication a he thease in more than one lasiieation ifthe Tceases meets the qualifications presrbed by the Board for such addonalslassifeaion or cassifetions No additonal pplication or lcense fee shall be charged for qualiying o clasiyng & Tense in atonal lassifiations ‘SECTION Rowe an Dr the are. — The Bart td wit borin tise, ‘cum secure pean of winesses i eannetion wih the charges presets the Boar 0d 0 ‘ichge cer powers an erent conssan ay ie Pls. Jie Bord ay apo Peso te Flips, ur has ad esa au hes eal cal wanna eee comesDissenting Opinion 2 GR.No. 217590 Pursuant to these provisions, the Philippine Contractors Accreditation Board, in erafting the Implementing Rules and Regulations, classified two (2) types of licenses that may be granted to contractors. In particular, Rule 3, Section 3.1 states: Rules CONTRACTOR'S LICENSE. Section 31. License Types » ‘Two types of licenses are hereby’ insted and designated as fallows ‘The Regular Lense ‘Regular License” means license of the type isu to a domestic ‘onsiction firm which shall athorie te heense to engage ia onsnition contracting within the Reid and spe of is Heease stasifcation(s) for as long asthe license validity is maintained ‘hugh anal renewal unless renewal i denied or te licease is "speed, canceled or evoked fr cael). ‘The Regular License shall be reserved for and issued only to enstntorfiens of Filipino sole peopieorhip, ot Parmershiporportion with atleast 60% "Tilipina equity Plan nd daly ong dein underway vie the laws ofthe Phlppines “The Special License “Special License” means a Hoense of the cp iswod co a joint ‘venture, a consortium, @ foreign coastuctor ota pejort oWnar ‘which shall utovize the icensce o engage onlin he constuction ‘of single specific uaderaking/pojet in eae the licensee is & orsign finn the iensesthoration shal be ft subjct to ‘ondtion() 2s may have been imposed by the prope Pilippine bovernmentauloey in the grat ofthe pevlege for him to so ‘ngage ip constuction comacting i the Philippines. Ann ‘ene sal be requited fora ong as the undertaking project sn ogres, bt shall be esticted to only as many ies ab necesary Foreompltion ofthe same, “The following can qualify only forthe Special License 8) A joint vente, consort or any such similar association ‘xpanized fora single speiic undeaking/projet ») Av foreign im tegaly allowed by the proper Philippine {govermnt authority to undrakeconsretion activites nthe Philippines, ©) A project owner underaking by himself san the service of 3 ‘eonsrtr, the consireton af aprojet intended forse, ease,Dissenting Opinion 3 GR.No. 217390 commerciabindusal use or any other income generating purpose In this ease, Manila Water Company, Inc. (Manila Water) had initially applied for a regular license ofits foreign contractors for the construction of ‘waterworks and sewerage system, However, the Philippine Contractors Accreditation Board denied the application, reasoning that regular licenses ‘were only granted to local contractors under Rule 3, Seetion 3.1.) As such, Manila Water filed a Petition for Declaratory Relief before the Regional Trial Cour, seeking a determination of whether Section 3.1 was valid, It claimed thatthe provision was unconstitutional for going beyond the lar in that it imposed restrictions on foreign investments that are not found in Republic Act No. 4566 or the Constitution * nits ruling, the tial court agreed with Manila Water. Itheld that while Section 17 of the law allowed classifications, Section 3.1 was unreasonable for its added restrictions on foreign investments.> ‘The Philippine Contractors Accreditation Board moved for reconsideration, to no avail. Hence, i filed this Petition for Review." Before this Court, petitioner mainly contended that Section 3.1 was consistent with the Constitution and existing laws. Tt argued that the implementing rules did not impose a nationality requirement on construction investment, but merely regulated the issuance of licenses with respect to foreign contractors. Petitioner also maintained that it was within its duty and authority to adopt necessary rules to effect contractors’ classifications.” ‘The majority denied the Petition, Itruled that Section 3.1 was void for unduly discriminating against foreign contractors." ‘The majority held that the nationality-based restriction on professionals ‘as not applicable to industries” It also ruled that nothing in Republic Act No. 4566 authorized petitioner to set an equity limit for contractors.” pei Res od Regn Repl Ast No. 466196586, 31 Wale, > delsDisentng Opinion 4 GR.No 217500 Moreover, the majority, citing Taiiada v. Angara!! and Bspina ». Zamora, Jr! reasoned that allowing foreign contractors would lead to feeonomic benefits,” consistent with the constitutional protection of the people’s economic rights." For that, it relied on the Philippine Competition Commission's opinion that allowing foreign contractors would encourage healthy competition, The majority also cited statistics showing the minuscule number of foreign contractors due tothe regulation's deterring effect." T register my dissent. ‘The assailed classification under Section 3.1 does not run afoul of the Constitution, Respondent argued that petitioner exceeded its jurisdiction in making the classification, claiming thatthe power to impose nationality requirements in areas of investment is exclusively vested on Congress.” It cited Article XII, Section 10 ofthe Constitution, whieh reads: SECTION 10, The Congres shal, upon recommendation of the economic and planning agency, when the sto iteret deat, reserve ‘oelzens ofthe Phlppines oto corporations oF asocations alas sty (per cent of whose capt is anne by ruc elzens, ot such highee percentage at Congress may press, ceviain area of nesters The Congress shall ent menses that will encourage te formation and ‘operation of enterprises whose capital is wholly owned by Filipinos. Inthe grat of right, privileges, and concessions covering the ‘atonal economy anpatrnony th State shall give preference to qualified Pilipinas The Slate shall repute and exercise authority over focign investments within its national jussiction and in accordance wih ss satoal goal and prorites. (Emphasis supplied) Contrary to respondent's claim, the classification of licenses does not create a nationality requirement. Section 3.1 is not an absolute restriction, against foreign contractor, but i merely a licensing regulation, / 338 Pu se 107). Pei, ae), {Sh G1 NE a 3 aan,Disseating Opinion 5 GR.No. 217390 A reading of the provision, as well asthe entirety of Republic Act No, 4566, will show that foreign contractors are not prohibited from engaging in ‘the construction industry. Section 3.1 simply classifies two (2) types of licenses that may be ‘applied for, which will then determine the documentary requirements," plein ks Repo Roe 60 4. ‘espe fr ear ier sal comes oe ei {Toul econ span terms preset by be Bord SJOROANIZATION i) Literate ects and ocx partes (or Coron Paetip on, 22) of Reoewpeees bree say as me pe an ‘ojo of epima wi Buca of Domest Trae Fors props 0): 0 Gomfene of Rertenton wit the Secs and ExGuage Common et Ares, of trea ac pio 0 Nomanon Athos Nani Of Selo ite Ad gO Poi: 2) ian ute acl tng on ch and vey pgs by 8 Ce abe econ ‘opr sped cere te Bure ona een, 4) Suppor sare of essed faci Senet of the apc ore mea preccag tute yar cep nen ofa cay emed carn sper (2) sr ax Rear ote lca othe mney pede ale et ory stars ‘Sted tind he orn contin noe Ha sp ce aay {2} Bank Semen of Aca ath a ened pce ate or cei Hebi Menge fh mie Cnt oT dine ‘equanacent Capac " {hy Eire cure ons 18) Dee Ser tne couple ao ed a cl it aed ye ena feueee he ep ey owen 4) Catia af egaraion wr sro of ecg of BLT region fs pal coting ‘TEKPERIENCE OF SUSTAINING TECHNICAL EMPLOYEES eal posontel mpl bn ca ra Satins enc Eagle ‘)Cameton vir of Sul Teta Ele Betacam eal ge) ‘ehly dcrnine equate ogee [SECTION 6 Spr Lies Appel Somes — ‘evppenn ee Spal ita sal cp, ae cbt oth allowing ip osing payment ofa tof SA ton Comer Agpston oper a 1 Ginetta Se {Sate ners ei ln res ne ip a ei Sete Me ca Bard Renin Spain luo he Fine Res Agena sp mons ‘hep procs nea a ees Diarra enema try ty sepia enc yn me uty ot sae ee crc eed yh hoe even ‘ cataton on beware Tener Agee Mt, Bat Os) he ei ‘reign tance ned nth nal dng aed epicDissenting Opinion 6 GR.No,217590 ‘expiry ofthe license, and numberof projects licensee may undertake under ‘single license.” It does not prohibit foreign contractors from applying fora license. ‘in td a a Anne ca te Pie {S.C sn ye Ba of cme loin, es mW dee SyCopy orion Bidar nsrtinv Bde” or Notice Bien” sawing he eof ‘cas Dt of comple onan po) a Pilipie vndeaen by hcompany ding te ine tice 6) Jews shown ewig Tele f Pj Coenen Tendering Agent (OPI MivSS-NAse) Leng Istana UBRD, ADB, OBC) Date Sra wah se, eo ‘usta gang nmaraion poeple ye congny ong {ie oning Tae of rec, Coon, tensng gee, Leng Item, Dae Cann ms ‘ped shehled of colin, Lan Agere ‘SS Ate Feil Sams ring te pti es snd ) Pipe com To Ret rig eps Yr, apple ipa Pagesomocr Iya ropa See hes Alam rpudin See Ashe | "Telemeting esd Regis fg ar No 8561969, 6 32 provi: SECTION 33 Leen aly ‘Rep Lote ate i one yr mt so ly 3 oe oe ets unes senses ae ceed wr revoked carer bythe Doar and sal be reseed ‘aly ice eed or a fy Sal valiant cl er 1) Spent ewe 1 Spc lena, all be cic by the Real spon comin of se sige pie nit mb ene inched ea Mp Rus Regions of Rp Ast AS66196, sc. 1. an 102 provide SCTION 101 Rep iene Autvaaton ‘eset eds Repel Lis fod aS 3.1 he aoe megs ‘tn ec Fp, i de ape hia ‘Schau stal besa an icons may pad ye Bead SECTION 102 Spal UseneAmeeztee i ‘cae concn un» Sell Ute o defend in Sec 3.1) arin ang oy Sane sii le crac aniaingoect te Pippen. Inne» provny sccm eeh sn lb er bt os cn mayb ps heDissenting Opinion 7 GR No. 217590 "Notably, there is no distinction between regular and special licenses as to the terms and conditions.” qualifications for licensing,” and license application processing More important, Republic Act No. 4566 and its F Waeaing Roa Rogol of Rep At No, 4566965 063. proves SECTION 15 Tom ind Cds of Coeenoes Leewe 2) The Lae omer 1). Liou a rng cna Fl yea ty 1 ae 30 wih was id ‘onl wo see anced ered by te Bor tks omar coneoneeay ‘ioc ire th snes reneed re the esac al be ciel be epee ‘Moto conacor' Leas andl te haba sper hpi scbn nd py son row Se i mcg ny cnn et ih mt iin ap [Tr Le galtiaton lene vow aay ne ments Ge oat lg, eee ctf ad eae hLce {coe cg oy toned nd sien ig et ee pon ra fhe conse nso Bane wing gen omen fy a Sang "eee Employee wet eps eal ple wtp fey ay tm eae ‘ptm orden ‘Vth Lt ma abet he Bud woot reps hay be gue om in in 1} Lean ae wl sy rs fee A agen by fi en at aise tee op ff ‘kay tprematon or fe infrmaon smite othe Bd shal bjt Lome © Ne ny wha ee pen of el ss pe NY SA Lecce win ting fom hecansrton snes ms hie eer iting a mst 4 may sree be hess Bor fr cameo 2 meg Rss Repos Rep et SCR) so 4.1 pois SECTION 41 Questo fr Leeming ‘Tobetligie ass cache eens an pan sal eh flowing minum liens emanate ar pa ‘Dismay ita fi Sung ec Ele ry hn isle propo teat ens @) yar" of comusoe ipimertn experince, sn nome of apps ‘Sntin- bing oe nl arms ober ne coer neta pie eoreon erion, sett the oa etre pve rus Seton | area. ‘ica irr of he urn Naming Oca oy ima elec splint, rast ee cfexpinre concn cnr bs mga cat oman Ses ater nae enna eanement Psd fr Sion 3 tection’ gy eater fut la haat equa ual fc saree a {Sta pmenhp or coperion, he aptint Gna stall ne, ia ts Ae of Faentpacorn cine sry pap sin tne pred ‘Thetreging mining te cigbiy ofan appa sal be ire cng ps 0 se of 5 te ucts pts Hom staan a Se Ilene nc Realaton of opi Act No. S495). 47 provides SECTION 43 LigeseApiatee roc ‘Tppteing of ice spins sl ins 0 ony hs, The Bord shal ter Apron or dngeon cach opiatan nba oat upon he Ay The Bd ‘ison al becomsanatl msg sth ppt win 10) ays he ie sh Sein a. ery Hae tc a Pp eeDissenting Opinion 5 GR No.217550, Implementing Rules and Regulations do not state restrictions against foreign ‘contractors a t the type of projects they may apply for. The classification appears to have only been meant to feiitate the grant of licenses. The documentary requirements for 2 special license, it would seem, aid petitioner in processing a foreign contractor's application. For example, the special license requires aboard resolution authorizing a resident alien representative in the country and a cortiieation that the project is foceign-financed. These requirements set special licenses apart from regul licenses, and are necessary given that foreign contractors may at times be ‘beyond the government's reach Clearly, Seetion 3.1 neither precludes foreign entities from applying for a license, nr does it impose an equity requirement. agree with the opinion of Justice Estela Perlas-Bernabe that Section 3.1 does not prokibit foreign entities from engaging in the Philippine ‘onstruction industry, but only imposes a more stringent regulation. In no way does it usurp the legislative power to create nationality requirements under Amticle XIE, Section 10 of the Constitution * Similarly, the classification under Section 3.1 does not contradict the doctrines laid down in Tafiada and Expina. In Tanada, this Cour held that the World Trade Organization ‘Agreement signed by then President Fidel V. Ramos does not run against the constitutional provisions on economic nationalism2* It ruled that our economic policy is not isolationist in character. While the Constitution ‘mandates a bias in favor of the domestic market, this should be balanced with the growing need for business integration with the rest ofthe world. Thus, the limit placed is only intended to protect Filipino enterprises against unfair foreign competition and trade practices.» This Court held: Furthermore, the constitutional policy of @ “slfxeiant and independent national eeonomy” doesnot necessarily rule out te ety of foreign investments, goods apd services. Iecontemplates nether “economic sceluson” nor "mendianey in he nerationa somsnuniy.” ‘ay ci a wt isd wh he os sono pln my witen ‘inti 0) rom ese of me n.d sol ep re Bad oto conta sch ag led bean presi ey 0) pers. Implement lero Repns oF Rasa Na 168 (93) 8 [Pete Comuring Opin pot ‘Sur Covst a ted et Ue and 12. % Toad ga 38 Phi 4611997 far. Oa fDissenting Opinion ° GR. No. 217390 The WTO reliance oa “most fared nation,” “national treatment and “ade without dsciminuton”™ cannot "be stick down a8 tnconsitaonal atin ft they ae rules of equality and recieoity that {ply fo all WTO member. Aside fom envisoning trae pliy based fon "equity and reciprocity” the Fundamental law encourages ndusies that re “competitive in batt domestic and foreign makes,” thereby lemonsiraing clear policy against a. sheltered domewic trade fvionment, but one is lvor of the gradual development of robust ingusces that can compete with the best te Frelgn markets. Indewd, Filipino managers and Filipina enterprises have shown capability and tenacity to compete interatioally” And given # Re trade environment Flipio enreprenours and managers in Hongkong have demonstated the Flipin capacity to gow ad to prosper agains the best ofered under 2 polly of oses fie” (Citations omited) ‘Meanwhile, in Espina, this Court ruled on the constitutionality of the Retail Trade Liberalization Act of 2000, The law had expressly repealed Republic Act No. 1180, “which absolutely prohibited foreign nationals from engaging in the retail trade business." In upholding the law's constitutionality, this Court reiterated the octvine in Tara: ‘The Court further explained in Taha hat Antic XH ofthe 1987 CConsiton lays down the ideals of economic mtinalisms (1) by texpresing proference in favor of uid Filipinos i the grant of prvleges and concessions covering the tational economy and patrimony and inthe use of Filipino labor, domestic matrals and oclly-produced ‘00d; (2) by mandating the State to adopt measures tat help make therm Competing; and (3) by regurng the Ste to develop sellin! sod ‘independent national economy effectively contoled by Filipinos. nether wots, while Section 18, Anil I f th 1987 Constiation requires the development of 2 slfscliant and independent national sconomy effectively conteled by Filipino cauepreners, st docs not !inpose «policy of Filipino monopoly ofthe economic environment. The objective issimply to prohibit foreign powers or interest fom manew ering fur econo policies and ene that Filipinos are given preference inal teas of development (Citation omited) Furthermore, this Court held that allowing foreigners to engage in business is not tantamount to 2 denial of Filipinos” right o property and due process of law. It found nothing that showed thatthe law would eventually lead to alien control ofthe real rade business." pin Zan ASP 2.27 010 Ab Bah.Dissenting Opinion 0 GR.No.217590 Section 3.1 does not run counter tothe rulings in these cases. In no way does the license classification restrict foreign contractors from doing business land obtaining licenses in the Philippines. The license types—regular and special—only differ as to the documentary requirements and expiry of licenses, Section 3.1 neither prohibits nor limits the number of Foreign contractors that want to engage in construction in the country. Ttis consistent ‘with the policy of global integration and openness to foreign investment. ‘The classification of licenses does not restrict, but only regulates the ‘contractors? application. By imposing additional requirements on foreign ‘contractors, petitioner can address licensing concerns. As it had explained, foreign contractors are treated differently from local ones in that those ‘additional requirements are imposed for monitoring and regulation. 0 Furthermore, the classification under Section 3.1 does not exceed the bounds of Republic Act No. 4566, 11 ig settled that administrative agencies delegated with legistative power may enact implementing rules and regulations ofa law. However, for these rules to be valid, they must be within the bounds of the statute's provisions. In Comte v. Commission on Audit" Aral o egulation mus conforms to and be consistent withthe provisions ofthe enabling saute in oder for such ul or regulation tobe valid. The rule-making poser ofa publi administrative body isa delegated lessative power, which it may not se ether to abridge the authority given iby the ‘Congress or the Constitution orto enlarge its power beyond the Scope intended. Constutonal and sunuorypeovsion convol with respect to ‘wha ules and repulsion may be promulgated by sucha body, as well Wit respect to what is are subject o regulation by it tay net make rules and regulations which are Inconsistet withthe provisions of the ‘Constision ora sat, priuley the saute is dminstering or bi seated itor wbich are in derogation of, or delet the parpose of state (Cains mites) ‘To recall, Section 17 of Republic Act No. 4566 gives petitioner a wide iscretion to adopt necessary rules to effect classifications, consistent with the established practice and procedure in the construction business To effectively issue licenses, petitioner can demand various requirements as it deems fit. Additionally, it appears that the contractor's 2 ERA (96 FP EBDissenting Opinion u GR.No.217890 nationality only has an effect on licensing requirement, but it does not limit the operations a contractor may undertake. Nothing in Seetion 3.1 suggests that a foreign contractor's projets would be limited to general engineering contracting or specialty contracting only.”> Indeed, the text of Section 17 remains clear: a contractor may qualify {or any or all categories of contracting business, regardless ofthe license type they hold, m Finally, the Philippine Competition Commission, as amicus curiae, ‘opined tha the supposed nationality-based restriction under Section 3.1 is an example of barriers to entry, which, it claimed, violate the constitutional policy against unfair competition, With tis, the majority agreed, ruling that “the assailed regulation is a deterrent on entry of foreign players in the construction industy."* ‘The Philippine Competition Act, however, does not apply here. ‘The Philippine Compatiion Act hae a universal objective: to “{eJnhance economic efficiency and promote free and fair competition in trade, industry[,] and all commercial economic activites|.J"" It seeks 10 reinforce measures that “safeguard competitive conditions 3 Rape et No 456 195) 16 vies SECTION 1: Casianon Far he pope of casein. conracting bes inc ay (a) Gon angering conning, (©)! ung concn else Rape Rc, 10667 209). se 2 Regu et N07 GS) see 2 poles Sebnow 3 Dustatn of Pot The eens of mkt competitn ss» meso Gr locaing gods seis try asp pin The Ste gn i at meee "de hen ty vcs the cry mes Wb ed by meses at fea Enpitve cancion Te Sine nko recog hat he poison eq gen all ‘onan by lig the tec ul pt fs er gee and sera le Be sepprtantintrsn tna astcied cna ana ef gpa oo ea ty tet frthetent fhe pepe ancen cagunng psu eke oan ey tie tracey nd de ancl mane ie Sie tie, tr rit mnoots whee pile ores anda ecb ert fae tela conpeton al eve Sash {nce con fic td promot em i smpiion nny dl gs eens an coins Kael Can ai bpdDissenting Opinion 2 GR No. 217500 A competitive market is fostered when individual entities “try to outdo each other in terms of price andlor the quality of their product” This twanslates to market players producing the best quality of products a the least price; otherwise, consumers will go to competitors who offer better products ata lower price ® Thus, in a competitive market, individual entities have no ‘market power—that i, the ability to dictate a product or service's price. To facilitate this, however, there must be an open entry and exit of entities to ‘make room for a sufficient number of competing players.” Barriers to entry are factors that prevent firms from joining the markety and these may be structural, firm behavior, or government policy-induced.! ‘Among them, structural bariers to entry are natural barriers in entering the market, For example, an entity that wishes to enter an industry must consider sunk costs, oF investments that cannot be recuperated. Should the entity fail, they increase losses and make the entry to the market les attractive.” Sunk ‘costs may be in the form of physical and human investments, startup losses, land advertising costs. Large capital requirements, such as investment in, ‘equipment, are other examples of «natural barrier to entry. Barriers to entry fol the competitive market because they give market power wo incumbent emides, allowing them to control dhe supply a price: For instance, in a monopoly, only one (1) supplier persists because “there are barriers to entry that make it impossible for competing firms to appear." Monopolies canbe found in public utes such as local water, telecommunications, cable, and power companies, where structural barriers such as large investment costs for building a facility or obtaining access to natural resources are present." However, competition policy and law only ensure that firms in the market play fair. Fair, inthis context, means that an entity becomes dominant (@) Preven soneniesonceraon which wil contol te postin, disband, or yt wil nat ie compete, manu reese pn eas oom of acongeie agents, abe of dit positon ad ‘Sense al neato rie and cone delopae nn mas Mr Mec Cnarutntng now Philbpine Comeiion A Pipe Ite fo Sree Ss Dio Pope Sesh 3171307). Prion Mace ta What a Barr ory, The Amin cic Review, Anesian connie Aran 46 208) ‘© inde ML Meals Undstoning Yow Pine Compton Ac Pipe Iai «1 bot Se Os ops FN "ber Caer, Law and soni, 3h, 205,Dissenting Opinion 3 GR.No.219590 in the market because itis more efficient than its competitors, such that it is able to produce goods or services at the lowest cost. Prohibited acts under the Philippine Competition Act are laid out in its Chapter Il, Particularly, Sections 14 and 1S flag anti-competitive agreements ‘and entities that abuse their dominant position." na Wc Meda Ursin he Nw Pine Comet At Pine It fo Dosen Ses Drain Pape Sarr No. 20/714, 7 (007 Repub Act N, 867 (01S a, nd 3 pore SECTION 1 An-Conpetve Agwemen {G The lowiagapesmerstemen ceamoag compton, pas pois {Gy Rewsetng competi stp er cnponees oct or her ofa sus pets tne nn mel ng ag vein {eho sreeman bere oe mon competas wich av ost Fe of stay preven, ecg oes apn sal be ree (i) Satins rot proton ts eh ether vere {ier wag try eae snore erp (pecan rn te pes (and (of isan which han he bjt ct bal ening reine eta carpet al aa ped Prove ‘Bertone epdn nn aane rioproen aha dt onl eiuleon osun cnn cna wi athe ye "SICTION se of Darna Pata lb aiid fr one oe mare emis tute emia pnt nating con tha wed obs pee ee eh ‘pn "ling sn aces non eh ts ing etic te {Ei en ch a ted ha at wh ‘ani 1 tmpcing rite camsning as ht roves compen om oming wit he ‘nuke a itconpeive tue kre os a vp thm out fen spor ros or poem unseen og ih er ws sang msc jt psy ese for is hb seine rico ser ee arto at ante nema eee ceo ot semi pos rss whe ul ene ecm a ot Sim mein, whe eect een oto abaya Ta {2} re tern heey or pony frien ih os of mana, SS erdlvery renting am dy eos al enon or gui whi goo Se aos to deed bee or (SFr ifr tems ose ed apo te compe po poe, sve ‘changes te lies ued yap (Gyre hing es cg mk con, may oft sis To imposing recto ont ar sl or of oso eve cose ht thm he ner nae tee ah ngs Elsie, whe te abject ro ef rats wo preven aio le seen ‘Stanly Poi, Tha ting tine na Ac al rah oe (Ghee retiong eng sche mrouig rei dat ees fathar de whch cack pry he rit mire te eegeeme (2)Apeemaus poten eect propery, oma rst esteDissenting Opinion 4 GR.No. 217890 ‘Our competition law does not per se outlaw market imperfections. It only prohibits abusive behaviors that substamially prevent, restrict or lessen competition.* It does not preclude natural or structural market failures, such as bariers to entry and market dominance. In GlosSamar, Ine. v. Departmen of Transportation and Communications,” this Caust clarified that under the Philippine Competition Act, “an entity is not prohibited from, or held lable for prosecution and ‘punishment for, simply securing a dominant position in the relevant market in Which it operates. It is only when that entity engages in conduct in abuse of its dominant position that it will be exposed to prosecution and possible punishment."* Similarly, Section 15(b) of the Philippine Competition Act makes an important distinction: entities that impose barriers to entry or commit acts “hat prevent competitors from growing within the market in an an competitive manner” are deemed as abusing their dominant postion; however, ifthe barriers imposed “develop in the market as a result of oF arising ftom a superior product or process, business acumen, or legal rights or laws)" they are nat proscribed ‘Structural barriers to entry are common in construction industries. The amount of investment needed in place and the sunk costs it will entail are structural bariers to entry on new contractors. In this context, forcign contractors are expected to be burdened with additional requirements and Making spy f pic pose seve pec upon the puch of ther god or i tr ehh Kem a asin wi amp Fences "e) ty riety impinge parce prices ore gas or sere si cates mild egal, Rita maces aaah, eel enoyar She maa sees pron ad occ neat ey ning he ting opt ‘ores i ie kl i eas halt eee nf ps (unin peoon maket rteanal eeopmentt te ruses cane roe ‘ut natn at coy ne rates oer eos pera cif pve, ln ‘Scone legal fut tn tA Roe nt tcl be ned ere a. obi bine st ens th oo estoy pv et ores coer Prove fr That 20 snd wih cn To pei oduct ediban of soda enna minh een rk grmng cea ad ssn ges whe ‘ining cme ro ing ey sy Scene an ae of re al Tht he freight in te Commson eh seve ee ning en we pr tempo mae compen od a eu ActNo. 1667 GOI. ss. 4d GEN AUS M220 iy pandaDisseting Opinion 15 GR. No, 217590 ‘more stringent conditions given their substantial difference ftom domestic contractors. Certainly, this does not constitute an unfair entity bebavior that ‘competition law guards against ‘Thus, to conclude that all barsiers to entry are illegal is inaccurate. The Philippine Competition Act will only operate in instances of unfair abusive behavior that are intended to substantially prevent, restrict, or lessen competition Besides, while the majority pointed out that the classification under Section 3.1 results in adverse market consequences such as fewer foreign contractor, this is a poliey issue that isnot within the province ofthis Cour. This should be addressed to our lawmakers, in whose hands rest determining, the best policy for our economy. ACCORDINGLY, I vote to GRANT the Petition. 1 Associate Justice