Normandy vs. Cabailo

The Philippine Contractors Accreditation Board, not the Department of Trade and Industry, has jurisdiction over a complaint for engaging in the business of contracting without first securing a PCAB license because Republic Act No. 4566 and its IRR vest the PCAB with jurisdiction over "any contractor," licensed or unlicensed, and DTI DAO No. 07-06 cannot prevail over the statute.

Cabailo engaged Normandy, the owner of Valkyrie Construction, to construct the second floor of her house. The Contractors' License Law, Republic Act No. 4566, requires contractors to secure a license from the PCAB, and its IRR vests the PCAB with jurisdiction over certain violations. DTI Department Administrative Order No. 07-06, however, treats cases involving persons or entities engaging in construction without a valid PCAB license as violations of a Trade and Industry Law subject to DTI adjudication. These regulatory provisions frame the jurisdictional dispute.

Mary Ann Cabailo hired Chris Art L. Normandy, the owner of Valkyrie Construction, to construct the second floor of her house in Estanzia Subdivision, Barangay Mandalagan, Bacolod City, for a contract price of PHP 1.2 million. Construction began on May 3, 2016. In November 2017, Normandy stopped the works, contending that the construction was already completed. Cabailo was taken aback because the construction was allegedly defective and incomplete, and she refused to make full payment until Normandy rectified the defects. Cabailo then engaged Engineer William S. Ibardo II, a civil engineer, to inspect her house and reassess the works done by Normandy. Engr. Ibardo's assessment revealed the use of substandard construction materials, poor and defective workmanship, and incomplete construction. Cabailo also discovered that Normandy was, at the time of his engagement, not a duly licensed contractor under the Philippine Construction Accreditation Board (PCAB). She claimed that Normandy misled her that his DTI business registration authorized him to engage in the construction business, and that his work as a contractor was illegal due to the lack of a PCAB license.

Normandy, for his part, claimed that when Cabailo engaged his services, she was fully aware that he was still in the process of applying for his license before the PCAB. On June 14, 2018, the Office of the Building Official of Bacolod City issued a Certificate of Completion, which Cabailo conformed to. Subsequently, a Certificate of Occupancy dated January 24, 2017, was issued. Despite the completion, Cabailo refused to pay the balance of PHP 581,500.00. Normandy further alleged that it was the parties' understanding that the project would be financed by the proceeds of a loan in the amount of PHP 1,459,600.00 that Cabailo would obtain from the Home Mutual Development Fund (HMDF). However, Normandy discovered that despite the release of the loan by the HMDF, and despite verbal and written demands, no payment was made by Cabailo. Normandy then filed a Complaint for Recovery of Sum of Money against Cabailo before the Regional Trial Court (RTC).

The case before the RTC was dismissed after the parties entered into a compromise agreement. Normandy was surprised to find out that during their negotiations for the amicable settlement before the RTC, Cabailo had already filed the Complaint before the DTI. Cabailo's DTI Complaint, filed before the DTI Regional Office VI, alleged a violation of Section 35 of Republic Act No. 4566. In a Decision dated August 3, 2018, the DTI's Office of the Adjudication Officer ruled that Normandy was not guilty of violating the provisions of deceptive, unfair, and unconscionable sales act or practices of the Consumer Act of the Philippines for Cabailo's failure to provide evidence showing that Normandy was involved in the alleged misrepresentation regarding the PCAB license of Valkyrie. However, Normandy was held guilty of violating Republic Act No. 4566 for engaging in the business of contracting without first having secured a PCAB license.

• Lack of Jurisdiction: Petitioner argued that the DTI has no jurisdiction over the complaint filed against him.
• Prescription: Petitioner argued that the action had already prescribed.

• Jurisdiction: Whether the CA erred in affirming that the DTI has jurisdiction over the complaint filed against Normandy.

• Jurisdiction: No. The CA erred in affirming DTI jurisdiction. The Contractors' License Law and its IRR vest the PCAB with jurisdiction over the act complained of, and DTI DAO No. 07-06 cannot prevail over the statute. The complaint against Normandy was dismissed.

• Jurisdiction: Jurisdiction is the power and authority of a court to hear, try, and decide a case; to dispose of a case on the merits, the court or adjudicative body must acquire jurisdiction over the subject matter. The Contractors' License Law vests the PCAB with jurisdiction to investigate the action of any contractor under Section 29, and Section 9(b) defines a contractor as "any person" who undertakes or offers to undertake construction work. Because the law uses "any person," the CA erred in ruling that the person complained of must be a licensee for the PCAB to exercise jurisdiction; where the law does not distinguish, courts should not distinguish. Section 35 likewise penalizes "any contractor" who contracts or undertakes to construct without first securing a license, which shows that the term "contractor" includes both licensed and unlicensed individuals or entities. Section 5 empowers the PCAB to investigate violations of the Act and its regulations, and Section 11.3(bb) of the IRR expressly grants the PCAB jurisdiction over entering into a contract or undertaking to construct without first securing a license. The PCAB therefore has jurisdiction over Cabailo's complaint. Because the DTI lacked subject matter jurisdiction, its actions in relation to the complaint are null and void. Moreover, in case of conflict between a statute and an administrative order, the statute prevails; a rule or regulation must conform to and be consistent with the enabling statute. DTI DAO No. 07-06 cannot enlarge the DTI's jurisdiction or abridge the PCAB's statutory authority, so the CA's reliance on it was misplaced. The complaint must be dismissed for lack of jurisdiction on the part of the DTI.

• Subject matter jurisdiction — The power and authority of a court or adjudicative body to hear, try, and decide a case; it must be acquired for the body to dispose of the case on the merits. In this case, the DTI never acquired subject matter jurisdiction over Cabailo's complaint, so its proceedings and orders were null and void and the complaint was dismissed.
• PCAB jurisdiction over licensed and unlicensed contractors — Under the Contractors' License Law, the PCAB has jurisdiction to investigate the action of "any contractor," and "contractor" is defined as "any person" who undertakes or offers to undertake construction work. Section 35 penalizes "any contractor" who contracts or undertakes to construct without first securing a license, and the IRR expressly grants the PCAB jurisdiction over such acts. This doctrine was applied to hold that the PCAB, not the DTI, has jurisdiction over a complaint for engaging in contracting without a PCAB license.
• Where the law does not distinguish, courts should not distinguish — A rule of statutory construction that prohibits courts from introducing exceptions or conditions not provided by law when the law is clear and unambiguous. The ruling applied it to reject the CA's ruling that the PCAB's jurisdiction required the person complained of to be a licensee, because the law used "any contractor" and "any person."
• Administrative regulations must conform to the enabling statute — A valid administrative rule or regulation must align with and not contradict the statute it implements; the rule-making power cannot be used to abridge or enlarge the authority delegated by Congress. This principle was applied to hold that DTI DAO No. 07-06 could not confer jurisdiction on the DTI over a matter already placed by statute within the PCAB's jurisdiction.
• Conflict between statute and administrative order — In case of conflict, the statute prevails. The ruling applied this to reject the CA's reliance on DTI DAO No. 07-06, which conflicted with the Contractors' License Law and its IRR.

• "The phrase "without first securing a license" clearly indicates that the law anticipates situations where individuals might be operating as contractors without having the required license. By using the term "any contractor" in this context, the law does not limit the jurisdiction of the PCAB to only those contractors who are already licensed. Instead, it broadly applies to anyone engaging in contracting activities, licensed or not." — This passage states the ratio for the PCAB's jurisdiction over unlicensed contractors and rejects the CA's licensee-only limitation.
• "Further, well-settled is the rule that in case of conflict between a statute and an administrative order, the former must prevail. A rule or regulation must conform to and be consistent with the provisions of the enabling statute in order for such rule or regulation to be valid." — This passage supplies the controlling rule for invalidating the CA's reliance on DTI DAO No. 07-06.
• "From the afore-quoted provisions of the Contractors' License Law and its IRR, it is clear that the PCAB indeed has jurisdiction over the act complained of by Cabailo." — This is the Court's direct holding on the jurisdictional issue.
• "The DTI's lack of subject matter jurisdiction over the case renders any action in relation to the complaint null and void and of no effect." — This states the consequence of the DTI's lack of jurisdiction and supports the dismissal of the complaint.

• Berbano vs. Heirs of Tapulao, 855 Phil. 571, 576 (2019) — Cited for the definition of jurisdiction as the power and authority of a court to hear, try, and decide a case, and for the requirement that jurisdiction over the subject matter must be acquired.
• Ifurung vs. Ombudsman Carpio Morales, 831 Phil. 135, 184-185 (2018) — Cited for the rule of statutory construction that where the law does not distinguish, courts should not distinguish, and that courts may not introduce exceptions or conditions not provided by law.
• Department of Agrarian Reform vs. Carriedo, 778 Phil. 656, 682 (2016) — Cited for the rule that in case of conflict between a statute and an administrative order, the statute must prevail, and that a rule or regulation must conform to the enabling statute.
• Department of Agrarian Reform vs. Uy, 544 Phil. 308, 330 (2007) — Cited for the principle that the rule-making power of an administrative agency may not be used to abridge the authority given by Congress or the Constitution, nor to enlarge the agency's power beyond the scope intended.

• Section 35, Republic Act No. 4566 (Contractors' License Law) — Penalizes any contractor who, for a price, commission, fee, or wage, submits or attempts to submit a bid to construct, contracts or undertakes to construct, or assumes charge in a supervisory capacity of a construction work without first securing a license, and imposes a fine of not less than PHP 500.00 but not more than PHP 5,000.00. The Court held that the phrase "without first securing a license" shows the law covers unlicensed contractors and that the violation falls within the PCAB's jurisdiction.
• Section 29, Republic Act No. 4566 — Provides that the PCAB shall, upon its own motion or upon a verified complaint, investigate the action of any contractor and may suspend or revoke a license if the holder is guilty of acts or omissions constituting causes for disciplinary action. The Court relied on this to hold that the PCAB's jurisdiction extends to any contractor, not only licensees.
• Section 9(b), Republic Act No. 4566 — Defines a contractor as "any person" who undertakes or offers to undertake, or purports to have the capacity to undertake, or submits a bid to construct, alter, repair, add to, subtract from, improve, move, wreck, or demolish any building, structure, project, development, or improvement. The Court used the phrase "any person" to reject the CA's licensee-only requirement.
• Section 5, Republic Act No. 4566 — Vests the PCAB with authority to issue, suspend, and revoke licenses; to investigate violations of the Act and its regulations; and to issue subpoena and subpoena duces tecum. The Court cited this to confirm the PCAB's power to investigate the violation complained of.
• Section 11.3(bb), Implementing Rules and Regulations of Republic Act No. 4566 — Grants the PCAB jurisdiction over offenses of misdemeanor by any person, including entering into a contract or undertaking to construct, or assuming charge in a supervisory capacity of a construction work, without first securing a license. The Court held this provision expressly covers Cabailo's complaint.
• Rule III, Section 3, DTI Department Administrative Order No. 07-06 — Treats complaints involving persons or entities engaging in construction without a valid PCAB license as violations of a Trade and Industry Law subject to DTI adjudication. The Court held that this administrative issuance conflicts with the Contractors' License Law and cannot prevail.
• Rule XVII, Section 3, DTI Department Administrative Order No. 07-06 — Contains a repealing clause cited by the CA to argue that the PCAB jurisdiction provision in the IRR was no longer effective. The Court found the CA's reliance on DTI DAO No. 07-06 misplaced because the administrative order cannot override the statute.

Inting (Acting Chairperson), Gaerlan, and Dimaampao, JJ., concur. Caguioa (Chairperson), J., on official leave.