EN BANC
[ G.R. No. 246027, January 28, 2025 ]
SECURITIES AND EXCHANGE COMMISSION, PETITIONER, VS. 1ACCOUNTANTS PARTY-LIST, INC., REPRESENTED BY ITS PRESIDENT, CHRISTIAN JAY D. LIM, CHRISTIAN JAY D. LIM IN HIS PERSONAL CAPACITY AS CPA, FROILAN G. AMPIL, ALLAN M. BASARTE, VIRGILIO F. AGUNOD, AND JONAS P. MASCARIÑAS, RESPONDENTS.
DISSENT
LAZARO-JAVIER, J.:
I respectfully differ from the ruling of the Majority, granting the second motion for reconsideration of the Securities and Exchange Commission (SEC).
I respectfully emphasize that granting a second motion for reconsideration, a prohibited pleading, should be within the parameters of Section 3, Rule 15 of A.M. No. 10-4-20-SC,1 viz.:
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 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 erroneous, but is likewise patently unjust and potentially capable of causing unwarranted and irremediable injury or damage to the parties. A second motion for reconsideration can only be entertained before the ruling sought to be reconsidered becomes final by operation of law or by the Court's declaration.2
In Fortune Life Insurance v. COA,3 the Court ruled that a second motion for reconsideration, albeit prohibited, may be entertained in the higher interest of justice, such as when the assailed decision is not only legally erroneous but also patently unjust and potentially capable of causing unwarranted and irremediable injury or damage to the moving party.
For liberality could not be extended in second motion for reconsideration as a matter of course. Only matters of life, liberty, honor, or property may warrant the suspension of the rules of the most mandatory character. It is also true that other justifications may be considered, like: (1) the existence of special or 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 and dilatory; and (5) the other party will not be unjustly prejudiced thereby.4
More so because the grounds relied upon are mere reiteration of the arguments in the petition or the first motion for reconsideration, albeit worded or expounded differently:
| First Motion for Reconsideration |
Second Motion for Reconsideration |
|
1. Current legislations manifest the State policy that allows regulators of the financial sector to accredit external auditors;
2. The accreditation process is incidental to petitioner's mandate as the primary regulator of corporations; and
3. The MOA with PRBOA does not constitute an invalid delegation.
|
1. Petitioner's 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 services in the community are performed and provided only by competent and reliable professionals, which generates trust and confidence in the quality of the infrastructure as a whole. Current pieces of legislation manifest the State's policy of allowing regulators of the financial sector to accredit external auditors.
2. To facilitate the implementation of the legislative intent regarding the accreditation of external auditors in the financial sector, petitioner, the BSP, and the IC adopted a
3. "One-Stop Shop" that streamlined the accreditation process for said regulators.
4. The accreditation process of external auditors undertaken by financial sector regulators is different-but complementary-to the licensure process in the BOA. 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.
5. The assailed regulations only apply to 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 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.
6. Petitioner accredits external auditors to promote public interests. There have been past instances where external auditors were complicit in schemes to defraud the public, such as the PDAF scam in 2013.
7. While the SRC and the Old Corporation Code were seemingly silent on petitioner's specific authority to accredit external auditors, a specific provision therefore is unnecessary because the Legislature had long recognized that its accreditation of external auditors is incidental to the performance of its mandate as the primary regulator of corporations in the country.
8. In the conduct of the audit of the audited financial statements, external auditors are acting as petitioner's gatekeepers. It follows, therefore, that petitioner has the authority to supervise-which may include accreditation of-these external auditors.
|
These arguments have all been discussed in the main decision. Rule 68, paragraph 3 of the Implementing Rules and Regulations of the Securities 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 external auditors of corporations issuing registered securities. It amounts to a 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) between the SEC and PRBOA which allows accreditation of CPAs is likewise void as delegated power cannot be further delegated.
Neither does Section 177 of the Revised Corporation Code on reportorial requirements for corporation (which the SEC did not even point out) tip the scale in favor of the SEC, viz.:
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
(a) Annual financial statements audited by an independent certified public accountant: Provided, That if the total assets or total liabilities of the corporation are less than Six hundred thousand pesos (₱600,000.00), the financial statements shall be certified under oath by the corporation's treasurer or chief financial officer; and
. . . .
Respectfully, the phrase "or in the rules issued by the Commission" cannot 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 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 regulate the practice of accountancy.
The SEC simply did not meet the threshold criteria to further relitigate 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. l 0-4-20-SC.
Indeed, regulation of the practice of accountancy is statute-based. 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 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 starting points are the statutes that make more or less probably invalid the SEC's regulation of that specific practice of accountancy assailed by respondents.
Surely, the SEC cannot impose this accreditation requirement and impose penalties for non-compliance:
1. It is contrary to the instructions of Congress. Through Republic Act No. 9298, the Philippine Accountancy Act of 2004, Congress created and empowered PRBOA "[t]o supervise the registration, licensure and 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 practice of accountancy under said law. Thus, PRBOA, as a result of its power to regulate the practice of accountancy, that is empowered to supervise, register and license those who can act as external auditors of all corporations including those issuing registered securities and possessing secondary licenses. Per Republic Act No. 9298, PRBOA is the gatekeeper for the supply of authorized external auditors.
2.(awÞhi( SEC is duplicating the powers of PRBOA. The assailed SEC issuances requiring the added accreditation of CPAs, or those already supervised, registered, and licensed by the PRBOA, before they could act as external auditors of the subject corporations are akin to supervising, registering, and licensing persons to exercise such duties, and by virtue of the definition of the practice of accountancy, are a form of regulating the practice of this facet of accountancy itself, thus, duplicating the powers of PRBOA. SEC can require accreditation only if empowered by Congress. Otherwise, the added accreditation by SEC is superfluous, and its regulation of this aspect of accountancy is usurpation of authority.
3. What has been delegated cannot be further delegated. True, Republic Act No. 9298 does not expressly vest exclusive regulatory power in the PRBOA over the practice of accountancy. But Republic Act No. 9298 does not have to. For what has once been delegated by Congress can no longer be further delegated by the original delegate to 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 instrumentality of their own judgment acting immediately upon the matter of legislation and not through the intervening mind of another.6 This rule admits of recognized exceptions:
a. Delegation of tariff powers to the President under Section 28(2) of Article VI of the Constitution;
b. Delegation of emergency powers to the President under Section 23(2) of Article VI of the Constitution;
c. Delegation to the people at large;
d. Delegation to local governments; and,
e. Delegation to administrative agencies of rule-making power.7
But none of these has been invoked, much less apply here.
The legal doctrine does not apply either where Congress itself authorized further delegation by PRBOA as expressed by or necessarily 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. More, the grant to PRBOA of the power to regulate the practice of accountancy is deemed exclusive.
4. SEC does not have an independent grant of power to regulate the practice of accountancy. SEC must still point to a grant of jurisdiction to justify its requirement of accreditation. Since PRBOA cannot delegate the power to regulate the practice of accountancy, SEC must 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 of the SRC and Section 141 of the CC do not empower the SEC over the practice of accountancy. The MOA is similarly inconsequential. Even if it were a party to this MOA with the SEC, BSP, Insurance Commission (IC), the PRBOA cannot delegate its power to regulate any or all of aspects of the practice of accountancy to any other government entity. Potestas delegata non delegare potest. Congress entrusted the mandate to PRBOA, which alone must discharge the trust.
In Philippine Lawyer's Association v. Agrava,8 the Director of Patent Office (DPO) pursued a line of arguments similar to what SEC has echoed here.
In Agrava, the DPO issued a circular mandating lawyers, engineers and 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 to promulgate rules and regulations for the conduct of all business in the Patent Office.
The Court nullified this circular. It ruled that the Patent Office must first 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.:
Respondent Director concludes that Section 78 of Republic Act No. 165 being similar to the provisions of law just reproduced, then he is authorized to prescribe the rules and regulations requiring that persons desiring to practice before him should submit to and pass an examination. We reproduce said Section 78, Republic Act No. 165, for purposes of comparison:
SEC. 78. Rules and regulations. - The Director subject to the approval 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.
Section 78 certainly and by far, is different from the provisions of 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 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.
Section 551 of the Revised Administrative Code authorizes every chief of bureau to prescribe forms and make regulations or general orders not inconsistent with law, to secure the harmonious and efficient administration of his branch of the service and to carry into full effect the laws relating to matters 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 Head, makes all rules and regulations necessary to enforce the provisions of said code. Section 338 of the National Internal Revenue Code, Commonwealth Act No. 466 as amended, states that the Secretary of Finance, upon 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.
Were we to allow the Patent Office, in the absence of an express and 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 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 practising before them or otherwise transacting business with them on behalf of clients, shall first pass an examination to qualify.
In conclusion, we hold that under the present law, members of the Philippine Bar authorized by this Tribunal to practice law, and in good standing, may practice their profession before the Patent Office, for the reason that much of the business in said office involves the interpretation and determination of the scope and application of the Patent Law and other laws 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 the Supreme Court.9 (Emphasis supplied)
In Airlift Asia Customs Brokerage, Inc., et al. v. Court of Appeals,10 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 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:
Although we cannot deny that the BOC Commissioner has the mandate to enforce tariff laws and prevent smuggling, these powers do not necessarily include the power to regulate and supervise the customs broker profession through the issuance of CAO 3-2006.
The BOC Commissioner's power under Section 608 of the TCCP is a general grant of power to promulgate rules and regulations necessary to enforce the provisions of the TCCP. Under the rules of statutory construction, this general rule-making power gives way to the specific grant of power to promulgate rules and regulations on the practice of customs brokers profession to the CSC Commissioner under Section 3409 of the TCCP. Indeed, in the exercise of this specific power, the Board of Examiners (of which the 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 complement its supervisory and regulatory powers over customs brokers.11
In any event, the Majority posit that the PRBOA 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 in order to comply with the more stringent requirements demanded 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 any case.
With due respect, I disagree and reiterate that Congress has delegated the power to regulate the practice of accountancy exclusively to the Board of Accountancy. Besides, implied powers are those that can be inferred or are implicit in the wordings of the law or conferred by necessary or fair implication 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 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 has the authority to adopt any reasonable method to carry out its functions.12 Necessarily, therefore, there must be first an express grant of power before implied power can be ascertained. Here, the avowed policy of Republic Act No. 9298 is to recognize the importance of accountants in nation-building and development and to foster their professional growth and development through regulatory measures, programs, and activities, viz:
Section 2. Declaration of Policy. - The State recognizes the importance of accountants in nation building and development. Hence, it shall develop and nurture competent, virtuous, productive and well rounded professional accountants whose standard of practice and service shall be excellent, qualitative, world class and globally competitive though inviolable, honest, effective, and credible licensure examinations and though regulatory measures, programs and activities that foster their professional growth and development.
Further, the law has the following objectives:
Section 3. Objectives. - This Act shall provide and govern:
The standardization and regulation of accounting education;
The examination of registration of certified public accountants; and
The supervision, control, and regulation of the practice of accountancy in the Philippines. (Emphasis supplied)
Verily, the law is clearly intended to be the sole framework by which the practice of accounting shall be governed and regulated. Republic Act No. 9298 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 v. Philip Morris Philippines Manufacturing, Inc.,13 the Court ordained:
General legislation must give way to special legislation on the same 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 designed therefore should prevail.14 (Emphasis supplied)
So must it be.
The Majority likewise point to the prevailing policies allowing the accreditation of external auditors, thus:
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.
b) Section 34718 of Presidential Decree No. 612, as amended by R.A. No. 10607 or the Insurance Code, requires supervised persons and entities to engage only the services of external auditors accredited by the Insurance Commissioner.
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 1997 authorizes the Commissioner of Internal Revenue to accredit and register tax agents with respect to their practice and representation before the Bureau of Internal Revenue.
Yet, as keenly noted by Justice Caguioa, these provisions expressly granted such powers to the regulatory bodies concerned. There is no similar 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 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 prerogative, too.
If the Court recognizes such accreditation prerogative by the SEC, the same would amount to judicial legislation. On this score, Tanada v. Yulo15 teaches:
Counsel in effect urges us to adopt a liberal construction of the statute. That in this instance, as in the past, we aim to do. But counsel in his 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 Government desired was for the court to insert words and phrases in the law in 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, and the purposes of those framing them are able to find their true meaning. 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.16 (Emphasis supplied)
In fine, the second motion for reconsideration should be denied not only for being a prohibited pleading but also for utter lack of merit.
Footnotes
1 A.M. No. 10-4-20-SC, The Internal Rules of The Supreme Court.
2 Id.
3 821 Phil. 159 (2017) [Per CJ Bersamin, En Banc].
4 Id. citing, Ginete v. Court of Appeals, 357 Phil. 36 (1998) [Per J. Romero, Third Division].
5 United States v. Barrias, 11 Phil. 327 (1908) [Per J. Tracey].
6 Dagan v. Philippine Racing Commission, 598 Phil. 406, 416 (2009) [Per J. Tinga, En Banc].
7 Id. at 417-418.
8 105 Phil. 173 (1959) [Per J. Montemayor].
9 Id.
10 739 Phil. 718 (2014) [Per J. Brion, Second Division].
11 Id. at 727.
12 Hacienda Bautista, Inc. v. Presidential Agrarian Reform Council, 686 Phil. 377 (2011) [Per J. Velasco, Jr., En Banc].
13 757 Phil. 212 (2015) [Per J. Perlas-Bernabe, First Division].
14 Id.
15 G.R. No. L-43575 (1935) [Per J. Malcolm, En Banc].
16 Id.
The Lawphil Project - Arellano Law Foundation
