REPUBLIC OF THE PHILIPPINES

REGIONAL TRIAL COURT

NATIONAL CAPITAL JUDICIAL REGION

Makati City, Branch _____

ASSOCIATION OF CPAs IN

PUBLIC PRACTICE, INC.,

Petitioner

-versus- Case No. ___________

For: Declaratory Relief with

Application for Temporary

Restraining Order and/or Writ of

Preliminary Injunction

PROFESSIONAL REGULATION

COMMISSION and BOARD OF

ACCOUNTANCY,

Respondents.

x-------------------------------------------x

PETITION FOR DECLARATORY RELIEF WITH

APPLICATION FOR THE ISSUANCE OF

A TEMPORARY RESTRAINING ORDER AND/OR

WRIT OF PRELIMINARY INJUNCTION

Petitioner Association of CPAs in Public Practice, Inc. (“ACPAPP”),

by counsel, respectfully states:

I

PREFATORY STATEMENT

1.01 Respondent Board of Accountancy (“BOA”), a professional

regulatory board under respondent Professional Regulation Commission

(“PRC”), was established to exercise administrative, quasi-legislative, and

quasi-judicial powers over the practice of accountancy in the Philippines.

While granted with such powers, the BOA was never granted the power to

issue resolutions inconsistent with the law sought to be implemented, as

administrative issuances cannot override, supplant or modify the law, but

must remain consistent with the law they intend to carry out.

1.02 In the instant case, the fundamental issue before the Honorable

Court is whether BOA Resolution No. 295-2015 entitled “Enforcing the

Registration and Accreditation Requirement for All Partners and Certified

2

Public Accountant (CPA) Staff Members in Partnerships and Firms

Engaged in the Public Practice of Accountancy” (the “Subject Resolution”),

which requires the partners and Certified Public Accountant (“CPA”) staff

members of accounting partnerships or firms to separately and individually

apply for accreditation, is invalid as it creates a legal obligation or legal

burden that was never contemplated or intended by Section 31 of Republic

Act No. 9298 or the Philippine Accountancy Act of 2004 (“RA 9298”) and

clearly disregards the distinct concept of a general professional partnership

being a collection of individuals entitled to engage in the practice of their

profession as a group. A certified true copy of the Subject Resolution is

attached to the original of this petition as Annex “A,” while true copies

thereof are similarly attached to the other copies of the Petition.

II

NATURE OF THE PETITION

2.01 This is a Petition for Declaratory Relief with Application for

the Issuance of a Temporary Restraining Order and/or Preliminary

Injunction (the “Petition”) under Rule 63 of the Rules of Court seeking a

determination by the Honorable Court of questions of construction or

validity of the Subject Resolution and a determination of the rights of

ACPAPP and the individual and institutional members it represents.

III

TIMELINESS AND JURISDICTIONAL ALLEGATIONS

3.01 As provided in the Rules of Court, the requisites for a petition

for declaratory relief are as follows: (a) the subject matter of the controversy

must be a deed, will, contract, or other written instrument, statute, executive

order or regulation, ordinance, or any other governmental regulation;1 (b)

the terms of the said documents and the validity thereof are doubtful and

require judicial construction;2 (c) there must have been no breach of the

document/s in question;3 (d) there must be an actual justiciable controversy

or the “ripening seeds” of one between persons whose interests are adverse;4

(e) the issue must be ripe for judicial determination;5 and (f) adequate relief

is not available through other means or other forms of actions or

proceedings.6

3.02 In this case, all of the foregoing requisites are present.

1 Rule 63, Section 1, Rules of Court. 2 Santos vs. Aquino et al, G.R. No. L-5101, 28 November 1953. 3 Teodoro vs. Mirasol, G.R. No. L-8934, 18 May 1956. 4 Edades vs. Edades, G.R. No. L-8964, 31 July 1956. 5 Tolentino vs. Board of Accountancy, et al, G.R. No. L-3062, 28 September 1951. 6 Ollada vs. Central Bank, L-11357, 31 May 1962.

3

3.03 The subject matter of the controversy in the instant Petition is

the validity of the Subject Resolution, a governmental regulation issued by

the BOA. For reasons to be discussed in detail below, the terms and validity

of the Subject Resolution are doubtful and require judicial construction

by the Honorable Court considering that the BOA, in issuing the Subject

Resolution, created a legal obligation or legal burden that was never

contemplated or intended by Section 31 of Republic Act No. 9298 (“RA

9298”) and disregarded the distinct concept of a general professional

partnership being a collection of individuals entitled to engage in the

practice of their profession as a group.

3.04 There has been no breach of the Subject Resolution in question

by ACPAPP as of the date of filing of the instant Petition.

3.05 There is also a need for judicial intervention declaring the

respective rights and obligations of the parties which shall depend on the

validity of the Subject Resolution issued by the BOA.

3.06 The validity of the Subject Resolution is ripe for judicial

determination considering that the Subject Resolution was published in the

Official Gazette on 4 April 2016 and is scheduled to take effect on 19 April

2016. Moreover, since the BOA is intent on implementing the Subject

Regulation, ACPAPP has no other adequate relief available or other forms

of action or proceeding aside from the instant Petition that would enable

ACPAPP to effectively assail the Subject Resolution.

3.07 The Office of the Solicitor General is hereby given notice of the

instant Petition and is included as a necessary party herein in accordance

with Section 3, Rule 63 of the Rules of Court.

IV

THE PARTIES

4.01 ACPAPP is a Philippine corporation, with office address at

Unit 2308 Cityland 10, Tower 1, H.V. dela Costa Street, Salcedo Village,

Makati City. For purposes of this proceeding, the petitioner may be served

with all pleadings, motions, orders, notices and other papers relative to the

instant proceeding through the undersigned counsel at the address provided

below.

4

4.02 PRC is the government agency responsible for the

administration, implementation and enforcement of regulatory policies on

the regulation and licensing of various professions and occupations under its

jurisdiction. For purposes of this proceeding, the respondent may be served

with all pleadings, motions, orders, notices and other papers relative to the

instant proceeding at the office address of the respondent at the Professional

Regulation Commission, P. Paredes Street corner Morayta Street, Sampaloc,

Manila.

4.03 BOA is a professional regulatory board under the PRC which

exercises administrative, quasi-legislative, and quasi-judicial powers over

the practice of accountancy in the Philippines. For purposes of this

proceeding, the respondent may be served with all pleadings, motions,

orders, notices and other papers relative to the instant proceeding at the

office address of the respondent at the Professional Regulation Commission,

P. Paredes Street corner Morayta Street, Sampaloc, Manila.

4.04 The Office of the Solicitor General with address at 104

Amorsolo Street, Legaspi Village, Makati City is being impleaded as a

necessary party pursuant to Section 3, Rule 63 of the Rules of Court.

V

STATEMENT OF FACTS

5.01 ACPAPP was founded in 1980 as an organization of CPAs in

public practice. It was established primarily to strengthen the position of

CPAs in public practice and to preserve the unity of the combined strength

of all CPA professionals. Its activities are directed towards the fulfillment of

four areas of service such as concern for members, professional development

and increased capabilities for practice, high standards of professional

services to clients and society, and harmony and cooperation. Currently,

ACPAPP has 278 institutional members and 705 individual members

engaged in the practice of the accountancy profession.

5.02 BOA was created way back in 1923 through Act No. 3105.

Pursuant to RA 9298, the BOA is placed under the supervision and

administrative control of the PRC as a professional regulatory board. As

such professional regulatory board, the BOA has supervision and control

over the practice of accountancy.

5.03 Purportedly in accordance with its power of supervision and

control over the practice of accountancy, the BOA on 29 December 2015

issued the Subject Resolution to supposedly “strictly enforce the registration

and accreditation requirement for all CPAs engaged in public practice

without exception.” Specifically, the Subject Resolution requires partners

and CPA staff members of accounting partnerships or firms to separately

and individually apply for accreditation by submitting “duly-accomplished

5

Accreditation Forms.” The pertinent provisions of the Subject Resolution

provide:

WHEREAS Section 31 of Republic Act No. 9298, also known as the

Philippine Accountancy Act of 2004, provides that individual certified

public accountants (CPAs), firms and partnerships of CPAs engaged in

the practice of public accountancy, including the partners and staff

members thereof, shall register with the Commission and the Board,

such registration to be renewed every three (3) years.xxx

WHEREAS as presently implemented, the partners and CPA staff

members of partnerships and firms are not being registered or

accredited.

WHEREAS, as a matter of effective regulation of the standards in

public practice of the accountancy profession, it is necessary to strictly

enforce the registration and accreditation requirement for all CPAs

engaged in public practice without exception;

NOW, IT IS HEREBY RESOLVED, that all CPAs in public practice,

including the partners and CPA staff members in partnerships and

firms, shall comply with the requirements under R.A. No. 9298 and its

Implementing Rules and Regulations on the registration and

accreditation of CPAs in public practice.

FURTHER RESOLVED, that for this purpose, all covered partners

and CPA staff members in partnerships and firms in the public practice

of accountancy shall accomplish and submit the corresponding

Accreditation Form (BACC Form No. 02) and complete the

requirements prescribed in the checklist as shown in “Annex A” of this

Resolution.

FURTHER RESOLVED, that the partners and CPA staff members in

partnerships and firms shall have until February 29, 2016 to file their

duly-accomplished Accreditation Forms and to complete the

Continuing Professional Development (CPD) requirements as provided

for in the checklist until June 30, 2016.

FURTHERMORE RESOLVED, that the partners and CPA staff

members in partnerships and firms who are unable to complete the

CPD requirements at the time of the filing of the application shall

execute an Affidavit of Undertaking (“Annex B”) to complete the

same until June 30, 2016.

FINALLY RESOLVED, that failure to so comply with the

undertaking as herein provided shall cause the automatic revocation or

withdrawal of the grant of accreditation by the Board and the

Commission.

5.04 It should be stressed that prior to the issuance by the BOA of

the Subject Resolution, only partnerships or firms were required by the PRC

and BOA to submit an application for accreditation. The partners and CPA

staff members of accounting partnerships or firms were not required by the

6

PRC and/or the BOA to separately and individually submit an application

for accreditation.

5.05 While the Subject Resolution states that “the partners and CPA

staff members in partnerships and firms shall have until February 29, 2016

to file their duly-accomplished Accreditation Forms,” the Subject

Resolution was only published on 4 April 2016. Therefore, it follows that

the 29 February 2016 deadline is of no force and effect. The Subject

Resolution was not even effective yet on the said date.

5.06 On 1 March 2016, the BOA publicly announced through its

Facebook account7 that the “deadline” for filing of application for

accreditation of “Partners and CPA Professional Staff of Accounting

Firms/Partnership (pursuant to Resolution 295-205) (sic)” is on 30 April

2016. Thus:

DEADLINES EXTENDED

Due to the requests of various stakeholders and the need to issue

clarificatory and implementing guidelines, the deadlines for the following

have been or will be extended or retained:

> For filing of application of accreditation of CPAS in Commerce and

Industry pursuant to Resolution 03-2016); Partners and CPA Professional

Staff of Accounting Firms/Partnership (pursuant to Resolution 295-205)

(sic); Accounting teachers (pursuant to Resolution 01-2016) --------------

Deadline is April 30, 2016

A copy of the screenshot of the said 1 March 2016 Facebook

post/announcement of the BOA is attached herewith as Annex “B.”

5.07 On 25 March 2016, the BOA publicly announced, again

through its Facebook account, that the “deadline” for filing of application for

accreditation of “Partners and CPA professional staff of Partnerships and

accounting firms required to be accredited pursuant to BoA Resolution No.

295-2015” is extended to 30 June 2016. The said Facebook

post/announcement was accompanied by a note that the “February 29, 2016

original deadline will be extended by a resolution that will be issued for this

purpose).” Thus:

DEADLINES FOR FILING APPLICATION OF ACCREDITATION OF

CPAs (PUBLIC PRACTICE, ACADEME, COMMERCE AND

INDUSTRY, PARTNERS AND CPA PROFESSIONAL STAFF)

xxx

June 30, 2016 ----------------------------------------------------------- For

Partners and CPA professional staff of Partnerships and accounting firms

required to be accredited pursuant to BoA Resolution No. 295-2015

7 The Facebook page of the BOA is “Professional Regulatory Board of Accountancy.”

7

(NOTE: February 29, 2016 original deadline will be extended by a

resolution that will be issued for this purpose)

xxx

A copy of the screenshot of the said 25 March 2016 Facebook

post/announcement of the BOA is attached herewith as Annex “C.”

5.08 ACPAPP is not aware of any published and effective resolution

“extending” said “29 February 2016 deadline,” which, as noted above, has

no force and effect because the Subject Resolution was not yet even

effective on the said date.

5.09 On 6 April 2016, ACPAPP sent its Letter dated 5 April 2016 to

the PRC requesting the PRC to exercise its power of supervision and

administrative control over the BOA and to recall the Subject Resolution on

the ground that the same is “unreasonable, excessive and contrary to law.”

However, the PRC took no action on the Letter dated 5 April 2016 of

ACPAPP. A copy of the Letter dated 5 April 2016 of ACPAPP is attached

herewith as Annex “D.”

5.10 In view of the foregoing, ACPAPP now comes before the

Honorable Court via the instant Petition.

VI

ISSUE AND GROUNDS FOR THE ALLOWANCE

OF THE PETITION

6.01 ACPAPP submits the following issues for the resolution of the

Honorable Court and grounds for allowance of the Petition:

Whether the Subject Resolution is unreasonable, outside the

scope allowed by the legislature, and, therefore, void because

it:

(a) creates a legal obligation or legal burden that was never

contemplated or intended by RA 9298;

(b) amounts to an arbitrary and unjust interpretation of RA

9298;

(c) imposes onerous requirements not contemplated or intended

by RA 9298; and

(d) imposes undue hardship upon CPAs engaged in public

practice and negates all efforts to improve “ease of doing

business” in the Philippines, particularly in the accounting

profession.

8

VII

DISCUSSION

7.01 For an administrative issuance, such as resolutions issued by

the BOA, to be valid, the following requirements must be complied with: (a)

the promulgation of the administrative issuance must be authorized by the

legislature; (b) the promulgation must be in accordance with the prescribed

procedure; (c) the issuance must be reasonable; and (d) the issuance must be

within the scope given by the legislature.8

7.02 In this regard, the Supreme Court has held that administrative

rules and regulations must be reasonable and fairly adapted to the end in

view. Furthermore, these rules and regulations must have reasonable relation

to the purposes for which they were authorized to be issued.9

7.03 Resolution No. 295-2015 does not meet the foregoing

requirements and hence, it is invalid.

7.04 As will be explained in detail below, Resolution No. 295-2015

is unreasonable, outside the scope allowed by the legislature, and,

therefore, void because it: (a) creates a legal obligation or legal burden that

was never contemplated or intended by RA 9298; (b) amounts to an arbitrary

and unjust interpretation of RA 9298; (c) imposes onerous requirements not

contemplated or intended by RA 9298; and (d) imposes undue hardship upon

CPAs engaged in public practice and negates all efforts to improve “ease of

doing business” in the Philippines, particularly in the accounting profession.

The Subject Resolution creates a legal

obligation or legal burden that was never

contemplated or intended by Section 31 of

RA 9298. The BOA’s interpretation of

Section 31 of RA 9298, which has the

inevitable effect of unduly expanding the

scope of the said legal provision, is

arbitrary and unjust.

8.01 The Subject Resolution creates a legal obligation or legal

burden that was never contemplated or intended by Section 31 of RA 9298.

8.02 Section 31 of the RA 9298 provides:

8 Hon. Executive Secretary, et al., vs. Southwing Heavy Industries, G.R. No. 164171, 20 February 2006;

Dagan, et al., vs. Philippine Racing Commission, G.R. No. 175220, 12 February 2009; and Lokin, Jr. vs.

Commission on Elections, G.R. Nos. 179431-32, 22 June 2010. 9 Lupangco vs. Court of Appeals, G.R. No. 77372, 29 April 1998.

9

Certified public accountants, firms and partnerships of certified

public accountants, engaged in the practice of public accountancy,

including partners and staff members thereof, shall register with

the Commission and the Board, such registration to be renewed

every three (3) years: Provided, That subject to the approval of the

Commission, the Board shall promulgate rules and regulations for

the implementation of registration requirements including the fees

and penalties for violation thereof.

8.03 The above-quoted Section 31 of RA 9298 was practically lifted

from its predecessor-law, Presidential Decree No. 692 (“PD 692”), dated 5

May 1975, or the Revised RA 9298. Section 27 of PD 692 provides:

Certified Public Accountants and firms or partnerships of certified

public accountants, including partners and staff members thereof

shall register with the Professional Regulation Commission and the

Board of Accountancy, such registration to be renewed annually on

or before September 30 of each year following the date of

issuance. Subject to the approval of the Professional Regulation

Commission, the Board of Accountancy shall promulgate rules and

regulations for the implementation of registration requirements,

including the fees and penalties for violation thereof.

8.04 Both Section 27 of PD 692 and Section 31 of RA 9298 use the

phrase “including partners and staff members thereof,” but under both legal

regimes, only the accounting partnerships or firms (and not their partners

and CPA staff members) have been required by the PRC and BOA to apply

for accreditation, this is of course until the current BOA issued the Subject

Resolution on 29 December 2015. In other words, between 1975 and 29

December 2015 (or practically for a period 40 years), the PRC and BOA,

applying the language of Section 27 of PD 692 and eventually Section 31 of

RA 9298, have been requiring only the accounting partnerships or firms (and

not their partners and CPA staff members) to apply for accreditation.

8.05 The Whereas Clauses of the Subject Resolution suggest that its

purpose is to supposedly “strictly enforce” Section 31 of RA 9298, which

uses the phrase “including the partners and staff members thereof.” The

very premise of the Subject Resolution is, however, wrong because the

phrase “including the partners and staff members thereof” has been present

since 1975 through PD 692. For 40 years, no one has said that that

accreditation requirement should be “strictly enforced” by requiring even the

partners and CPA staff members of partnerships and firms to apply for

accreditation. This factual circumstance serves to highlight the arbitrariness

of the current BOA’s seemingly newly found interpretation of Section 31 of

RA 9298.

8.06 Again, prior to the issuance of the Subject Resolution, for those

CPAs who are partners and/or employed in partnerships or firms engaged in

10

the practice of public accountancy -- only the partnerships or firms have

been required by the PRC and the BOA to obtain accreditation.

8.07 The issuance of the Subject Resolution, therefore, is contrary to

the well-established and long-standing policy, practice and accepted

construction and implementation of Section 31 of the RA 9298 of requiring

accreditation only for partnerships or firms.

8.08 Based on its newly found interpretation of Section 31 of the RA

9298, however, the BOA issued the Subject Resolution, which imposes the

additional requirement that partners and CPA staff members of partnerships

or firms engaged in the practice of public accountancy must also apply for

accreditation. The Subject Resolution creates a legal obligation or legal

burden that was never contemplated or intended by Section 31 of the RA

9298. The BOA’s interpretation of Section 31 of the RA 9298, which has the

inevitable effect of unduly expanding the scope of the said legal provision, is

arbitrary and unjust.

8.09 The BOA cannot justify the issuance of the Subject Resolution

by stating that it is merely strictly enforcing an alleged legal requirement

that has been in existence for a long time. This is so because there is no

requirement under the RA 9298 that partners and CPA staff members of

partnerships or firms should separately and individually apply for

accreditation. The BOA has unilaterally expanded the scope of Section 31 of

the RA 9298.

8.10 The established rule is that statutes, like the RA 9298, should

not be given a meaning that would lead to absurdities. If the words of a

statute are subject of more than one meaning, the absurdity of the result of

one construction is a strong argument against its adoption and in favor of

such sensible interpretation as will avoid such result.10 The law does not

intend that an absurd consequence shall flow from its enactment.

Interpretatio talis in ambuguis simper frienda est, ut evitatur inconveniens et

absurdum - Where there is ambiguity, such interpretation as will avoid

inconvenience and absurdity is to be adopted.

8.11 In Republic vs. Honorable Presiding Judge of Lanao del Norte,

et al.,11 the Supreme Court, in affirming the decision of the lower court in

construing a memorandum circular issued by Division Superintendent of the

then Bureau of Public Schools, upheld the finding of the lower court that to

interpret the memorandum circular as all-encompassing would lead to

absurdity. The Supreme Court therein quoted the following ruling of the

lower court, to wit:

xxx To interpret the memorandum as to be all embracing would

lead to absurdity because instead of helping all government

10 Belo vs. Philippine National Bank, et al., G.R. No. 134330, 1 March 2001. 11 G.R. No. L-36740, 30 January 1976.

11

employees in resorting to duly licensed financing institutions in

case of urgent need of cash a very restrictive interpretation thereof

would drive said employees to loan sharks who work beyond the

pale of the law. As in the case of laws, administrative memoranda,

circulars, etc. must be interpreted in such a manner as to breathe

into them life, logic and reason.

8.12 The presumption is that the legislature, in enacting a law, did

not intend to work a hardship or an oppressive result or act of oppression,

arming one person with a weapon to impose hardship on the other.12 In

many cases involving the construction of statutes, the Supreme Court has

always cautioned against narrowly interpreting a statute that would lead to

unjust results.13 It is presumed that undesirable consequences were never

intended by a legislative measure, and that a construction of which a statute

is fairly susceptible is favored, which will avoid all objectionable,

mischievous, indefensible, wrongful and injurious consequences.14

8.13 Relevantly, a statutory grant of powers should not be extended

by implication beyond what may be necessary for their just and reasonable

execution. To emphasize, a rule or regulation must bear upon, and be

consistent with, the provisions of the enabling statute if such rule or

regulation is to be valid.15 Administrative regulations adopted under

legislative authority by a particular department must be in harmony with the

provisions of the law, and should be for the sole purpose of carrying into

effect its general provisions. The law itself cannot be expanded by such

regulations.16

8.14 Clearly, to interpret Section 31 of the RA 9298 as requiring the

separate and additional accreditation of partners and CPA staff members

of partnership and firms engaged in the practice of public accountancy

amounts to an unjust, absurd and undue expansion of the scope and

application of Section 31 of the RA 9298.

The Subject Resolution disregards the

distinct concept of a general professional

partnership being a collection of individuals

entitled to engage in the practice of their

profession as a group. –

____________________________________

9.01 Requiring individual partners and CPA staff members to secure

separate accreditation effectively disregards the concept of a general

professional partnership as a collection of individuals entitled to engage in

the practice of their profession as a group. Partnerships and firms engaged

12 Agpalo, R. Statutory Construction, 112 (Law Publishing House, 1986) 13 Bello et al., vs. Court of Appeals, G.R. No. L-38161, 29 March 1974. 14 People vs. Purisima, G.R. No. 42050, 20 November 1978. 15 United BF Homeowners Association vs. BF Homes, Inc., G.R. No. 124873, 14 July 1999. 16 Cebu Oxygen & Acetylene Co. Inc. vs. Drilon, G.R. No. 82849, 9 August 1989.

12

in the practice of public accountancy are in the nature of general

professional partnerships. When a client deals with the partner or CPA staff

member of an accounting partnership or firm, such client is, in reality,

dealing with the partnership or firm. This is the precise point of joining an

accounting partnership. A partner or CPA staff member does not practice

public accountancy under his or her name, but under the name of the

partnership or firm of which he or she is a partner or employee. The

accreditation of the partnership or firm necessarily includes or covers the

partners and CPA staff members thereof. This has been the consistent

interpretation and application of the law by the PRC and the BOA, until the

current BOA decided to apply its newly found interpretation.

9.02 Although the Subject Resolution does not expressly provide for

the effect of the separate accreditation of the partners and CPA staff

members to the accreditation of the partnership or firm, it appears that by

requiring the separate accreditation of the partners and CPA staff members,

the capacity of the partnership or firm to practice public accountancy is

affected by, if not effectively made subject to, the separate accreditation of

its partners and CPA staff members. By way of illustration, should one of

the partners and CPA staff members of a previously accredited partnership

or firm fail, for some reason, to comply with the accreditation requirements

applicable to him or her, this may adversely affect the accreditation of the

partnership or firm itself, to the extent of the revocation of its accreditation,

considering that the non-compliant partner and/or staff member was already

previously included in the list of partners or employees of the accredited

partnership or firm. And since the accreditation of the partnership or firm is

affected, necessarily, all the other partners and CPA staff members who are

practicing their profession under the name of the partnership are also

adversely affected. In other words, everybody suffers (by virtue merely of

the failure of one partner or CPA staff member to comply with the

accreditation requirements). Surely, such absurd effect of the interpretation

of Section 31 under The Subject Resolution was never contemplated or

intended by the legislature.

9.03 That the accreditation obtained by the partnership or firm itself

already covers or includes the partners and CPA staff members can likewise

be gleaned if the requirement of securing a business permit is applied by

analogy. It must be noted that there is nothing in the law which requires that

separate business permits should likewise be secured by the partners or

individual staff members of professional partnerships from the local

government having jurisdiction over the place where they are exercising

their profession. Only the partnership itself is required to obtain a business

permit. This is consistent with the concept of a general professional

partnership as a collection of individuals entitled to engage in the practice of

their profession as a group. ACPAPP therefore does not see why the BOA

must require each of the partners and CPA staff members to separately apply

for accreditation.

13

The separate and express mention of

partnerships and firms under Section 31 of

the RA 9298 means that they should be

accorded a different treatment from

individual CPAs who are practicing on their

own. –

____________________________________

10.01 Moreover, the fact that partnerships and firms are expressly

mentioned under Section 31 of the RA 9298 would show that they are to be

accorded a different treatment from individual CPAs who are practicing on

their own. If each and every partner and CPA staff member of partnerships

or firms is required to apply for accreditation even if their partnership or

firm already has its own accreditation, then the law could have easily just

mentioned that all CPAs are required to apply for accreditation. In other

words, logic and reason dictate that the phrase “including partners and staff

members thereof” simply means that partnerships and firms seeking

accreditation must include a list of the names of their partners and CPA staff

members when they apply for accreditation, and that the accreditation of the

partnerships or firms will accordingly include or cover also their partners

and CPA staff members. This has always been the intention of the law and

the practice of the PRC and the BOA, until the current BOA decided to

apply its newly found interpretation of Section 31 of the RA 9298. Again, if

it was the intention of Section 31 of the RA 9298 to require individual

partners and CPA staff members to secure accreditation, then it would have

been useless to compartmentalize or to mention partnerships and firms as the

law could have easily just mentioned that all CPAs are required to apply for

accreditation. The mention by the law of the broader “partnerships” or

“firms” indubitably means that the accreditation of such partnerships or

firms covers or includes the accreditation of their partners and CPA staff

members.

10.02 Perusal of the Congressional deliberations on the RA 9298

reveal that there is nothing in said deliberations that would suggest, even

remotely, that the legislature had the intent of requiring partners and CPA

staff members to additionally and separately comply with the requirement of

accreditation. Again, Section 31 of the RA 9298 was merely lifted from its

predecessor-law, PD 692. Clearly, Section 31 of the RA 9298 was meant

merely to continue the separate treatment accorded to partnerships or firms

vis-à-vis individual CPAs engaged in public accountancy, i.e., the

accreditation of partnerships or firms already covers or includes the

accreditation of their partners and CPA staff members.

10.03 Accordingly, it cannot be said, at all, that The Subject

Resolution was meant as a corrective measure on the current practice of not

requiring the accreditation of partners and CPA staff members, as there is no

such requirement under Section 31 of the RA 9298 to begin with. Put in

another way, to require partners and CPA staff members to secure

14

accreditations distinct from that of their partnership or firm amounts to an

onerous expansion of the coverage and application of Section 31 of the RA

9298.

Section 31 of RA 9298 must be read together

with Section 28 of the said law.

------------------------------------------------------

11.01 Section 31 of RA 9298 must be read together with Section 28

of the said law. Section 28 of RA 9298 provides, as a mandatory

requirement, that a certificate of accreditation shall be issued to CPAs in

public practice only upon showing that they have acquired a minimum of

three (3) years of meaningful experience in any of the areas of public

practice including taxation.”17 To say that CPA staff members of

partnerships or firms are separately and individually required to apply for

accreditation and are, therefore, covered by such a requirement of having a

minimum of three (3) years of meaningful experience will surely result to

an unjust, oppressive, and absurd situation where such CPA staff

members will be required to have three (3) years of meaningful

experience BEFORE they even get their first employment in a

partnership or firm engaged in public practice.

11.02 The Subject Resolution seeks to apply the above accreditation

requirement not only to partners, but even to all CPA staff members of the

firm and attempts to manage the mandatory requirement of having three (3)

years of meaningful experience by stating the following in its Annex “A,”

thus:

“Checklist of Requirements for BOA Accreditation of Partners and CPA

staff members of Partnership and Accounting Firms

xxx

Sworn statement by the sole proprietor of the Accounting Firm of

managing partner of the Partnership stating that the Partner(s) and/CPA

staff member(s), as the case may be, (Please notarized and affix metered

documentary stamp to the original copy).

xxx

*had at least three (3) years meaningful experience in any of the areas of

public practice including taxation as defined in Section 4 rule 4 of the IRR

(NOTE: In the case of junior CPA staff member/s, the three year

meaningful experience may be waived and indication of number of

months/years experience is sufficient)18

11.03 What is notable in the Subject Resolution is that it recognized

that it is not possible to apply the three (3) years prior meaningful public

17 See also Section 28, Rule IV of the Rules and Regulations Implementing RA 9298. 18 Please refer to Annex “A” of the Subject Resolution.

15

practice experience to CPA staff members. Yet, despite the law stating that

the three (3) years of meaningful experience is mandatory, the BOA

attempts to manage this by relaxing the requirement. In short, the BOA

unilaterally made it non-mandatory to suit its present objectives. This

resulted to an obvious forcing of the issue via administrative legislation. The

BOA made the above accreditation applicable to all CPA staff members.

Since those to be accredited must have three (3) years public practice

experience, and this is not possible for fresh graduates, the BOA unilaterally

relaxed that requirement.

11.04 The above combobulated rule embodied in the Subject

Resolution need not exist if the law is simply applied as it is worded. It

makes absolute sense for single practitioners and partnerships to be

accredited and for such single practitioners and the partners of partnerships

or firms to be required to have three (3) years of prior meaningful experience

before they can lead firms into public practice, to be knowledgeable and

credible. For CPA staff members however, it is not required, and it would

even be totally unfair for them to be required of the same things as their

employers.

The arbitrariness of the Subject Resolution

is further shown by the fact that it requires

partners and CPA staff members to submit

documents already required to be submitted

in the accreditation of the partnerships or

firms to which they belong. Also, when the

BOA reviews the accreditation requirements

of a partnership, among those that it reviews

or considers is the roster of partners and

CPA staff members of the partnership. –

____________________________________

12.01 To further illustrate the arbitrariness of the Subject Resolution,

it must be noted that the said resolution requires the submission of certain

documents which are already required to be submitted in the accreditation of

a partnership or firm.

12.02 The following requirements under the Subject Resolution are

also submitted by partnerships, pursuant to the rules promulgated by the

PRC and the BOA, in connection with their accreditation as such

partnerships: (a) Application Form or BACC Form No. 2 of the partnership;

(b) certificate of CPE units earned of partners and CPA staff; (c) copies of

NBI clearance of partners; (d) professional tax receipts of partners and CPA

staff; and (e) notarized and sworn statements regarding the adequate and

effective training and other related documents that are required in the

practice of pubic accountancy to ensure professional ethical and technical

standards. To require again the submission of these documents is a

16

redundant exercise which does not appear to have any purpose. It is

completely arbitrary.

12.03 Moreover, among the requirements for accreditation of a

partnership or firm is the submission of the list of its partners and CPA staff

members. Accordingly, from the list submitted, the BOA could already

create a register of the partners and CPA staff members of the partnership or

firm. Through such register and the documents mentioned in the preceding

paragraph, the BOA could already conduct a review of the qualifications of

the partners and CPA staff members to exercise public accountancy, thereby

dispensing with the need of separately and individually accrediting the

partners and CPA staff members.

12.04 Taking into consideration the concept of a general professional

partnership, once a partnership has already been accredited after complying

with the required submissions, this would necessarily mean that the BOA

has already found that the partners and CPA staff members of the

partnership or firm are qualified to undertake the services constituting the

exercise of public accountancy. Thus, to still require partners and CPA staff

members to separately submit applications for accreditation would be merely

redundant and amounts to a futile exercise.

The Subject Resolution imposes undue

hardship on the accounting profession

instead of contributing to the ease of doing

business. -

13.01 The imposition of the additional requirement of accreditation

on partners and CPA staff members of partnerships or firms appears to serve

no useful purpose. Instead of effectively regulating the practice of the

accounting profession to make it more competitive and easier for CPAs to

exercise their profession, the additional requirement under the Subject

Resolution actually stunts the growth of the accounting profession as it

imposes a useless requirement resulting in unwarranted costs to CPAs and to

partnerships or firms.

13.02 Requiring the separate accreditation of partners and CPA staff

results in the imposition of additional costs on partnerships or firms. This is

so because, in order to ensure that the accreditation of a partnership or firm

would not be unduly affected by the non-accreditation of any of its partners

and CPA staff members, the partnership or firm would be effectively

compelled to shoulder the additional expenses, if only to make sure that its

partners and CPA staff members comply with the accreditation requirements

(e.g., accreditation fees of partners and CPA staff members, the actual

submission of the documentary requirements of the partners and CPA staff

members, etc.).

17

13.03 Moreover, considering the publicly known heavy workload and

high pressure that the accounting practice entails, the turnover of staff in

accounting partnerships or firm is relatively high. In light of the requirement

under the Subject Resolution, accounting partnerships or firms would have

to regularly or constantly spend time and resources on the cumbersome

process of having its newly-hired CPAs accredited.

13.04 Relevantly, the Subject Resolution likewise fails to consider the

risk to the partnership that by requiring a separate accreditation of the

partners and CPA staff members, the public may be led to believe that the

CPA staff members may, on their own, practice public accountancy given

their respective individual accreditations.

13.05 Arguably, the Philippines still has a long way to go in terms of

improving the way business is conducted in the country. Despite the

improvements in this aspect over the past few years, it is still lagging behind

its Southeast Asian neighbors. In a recent World Bank study, the Philippines

is ranked 103rd among 189 economies in terms of “ease of doing business.”19

Such ranking is a downgrade of last year’s where the Philippines placed 97th.

Among other factors, the said study measures the efficiency of measures

undertaken by the government in making the operation of businesses in the

country easier.

13.06 Through the years, the Philippines has seen measures on the

part of the government in its effort to encourage the growth of the business

sector by making the conduct of the same easier and more rewarding

through the grant of incentives, tax credits, exemptions from certain

governmental requirements and other forms of assistance. The requirement,

however, under the Subject Resolution runs contrary to such effort on the

part of the government. If the ranking of the Philippines in the World Bank

index further falls, then part of the blame would arguably be laid at the

BOA’s door.

The Subject Resolution does not promote the

creation of professional accounting

partnerships. -

14.01 Ideally, the formation of general professional partnerships is

viewed positively because of the benefits entailed by such a business entity.

Instead of practicing solely on their own, professionals normally form

partnerships in order to enhance their professional competence, abilities, and

over-all market value. Also, the public is better served by professional

partnerships in terms of quality of work, particularly in the accounting

profession which requires substantial man-hours and resources in view of

the magnitude of the accounting work that typically needs to be done.

19 Doing Business 2016, World Bank, available at

http://www.doingbusiness.org/data/exploreeconomies/philippines/ (last accessed 17 February 2016).

18

14.02 By forming general professional partnerships, professionals

achieve an economics of scale as they acquire the capacity to enter into more

worthwhile arrangements and to engage in bigger endeavors than that of a

solo practitioner. Moreover, general professional partnerships tend to

produce more benefits for the government and the economy as a whole, in

view of better efficiencies in conducting business.

14.03 Instead of encouraging CPAs to pool their resources and efforts

in the exercise of their profession (by joining or forming a partnership)

considering the advantage under Section 31 of the RA 9298 in granting a

sort of collective accreditation through a partnership vis-à-vis the need to

secure individual accreditation, such incentive has been removed with the

issuance of the Subject Resolution. Worse, the Subject Resolution provides

for the submission of onerous requirements resulting in waste of time and

resources on the part of the CPAs.

14.04 The edge of forming general professional partnerships for

professional accountants is diminished because of the Subject Resolution.

As a result of the added burden, an impression is created that forming

partnerships is now more tedious and disadvantageous than practicing on

one’s own. In a way, the Subject Resolution is unaccommodating and

unwelcoming to the idea of creating more partnerships practicing public

accountancy. Instead of serving the thrust to group and practice together, the

burden created by the Subject Resolution is an unwarranted disincentive to

CPAs in forming partnerships.

14.05 The accounting profession being vested with public interest, the

government should be more sensitive and helpful in pushing for its growth

rather than imposing requirements for no apparent rationale other than to

make matters more difficult for the profession.

The Subject Resolution does not bear a

reasonable relation to the purposes of RA

9298. -

15.01 Administrative issuances must bear a reasonable relation to the

purposes for which they are authorized to be issued.20 Thus, in cases wherein

the general policy of the rule seems unrelated to the policy of the statute and

the challenged rule produces burdensome and inequitable results, the rule

may be set aside because it produces a result which is out of harmony with

the statute.21

20 Lupangco vs. Court of Appeals, G.R. No. 77372, 29 April 1988. 21 Hector S. De Leon, Administrative Law: Text and Cases 102 (2010).

19

15.02 RA 9298 provides, among other policies, that the State “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.”22 Thus, the

rules and regulations issued by the professional regulatory body governing

accounting professionals must adhere to these standards prescribed by the

law.

15.03 In promulgating the Subject Resolution the BOA appears to

have arrogated unto itself a position that is beyond the mandate of the statute

creating it. Instead of providing a regulatory climate which is effective in

fostering virtuous and productive accountants, the consequences brought

about by the Subject Resolution smack of achieving the opposite of what

was envisioned by the law.

15.04 As discussed above, the Subject Resolution imposes undue

hardship instead of contributing to the professional growth and development

of accountants. The requirements set therein are unnecessary, superfluous,

and unduly burdensome. The alleged benefits sought to be achieved by the

Subject Resolution are inconsistent with the over-all policy of RA 9298.

Accordingly, the Subject Resolution must be struck down as invalid by the

Honorable Court and its implementation be enjoined permanently.

VIII

APPLICATION FOR THE ISSUANCE OF

A TEMPORARY RESTRAINING ORDER

AND/OR WRIT OF PRELIMINARY INJUNCTION

16.01 ACPAPP repleads the foregoing allegations in support of its

application for a temporary restraining order and/or a writ of preliminary

injunction.

16.02 Section 3, Rule 58 of the Rules of Court specifies the grounds

for the issuance of a preliminary injunction, including the following: (a) That the applicant is entitled to the relief demanded, and

the whole or part of such relief consists in restraining the commission or

continuance of the act of acts complained of, or in requiring the

performance of an act or acts, either for a limited period or perpetually;

(b) That the commission, continuance or non-performance of

the act or acts complained of during the litigation would probably work

injustice to the applicant; and

(c) That a party, court, agency, or person is doing, threatening,

or is attempting to do, or is procuring or suffering to be done, some act or

22 RA 9298, Sec. 2.

20

acts probably in violation of the rights of the applicant, respecting the

subject matter of the action or proceeding, and tending to render the

judgment ineffectual.

16.03 Based on the facts narrated and the applicable laws, there is no

doubt that ACPAPP is entitled to the relief demanded, which consists in

wholly restraining and enjoining the implementation of the Subject

Resolution.

16.04 The case of Transfield Philippines, Inc. v. Luzon Hydro

Corporation23 is illuminating on the right of a party to injunctive relief:

Before a writ of preliminary injunction may be issued, there must be a

clear showing by the complaint that there exists a right to be protected and

that the acts against which the writ is to be directed are violative of the

said right. It must be shown that the invasion of the right sought to be

protected is material and substantial, that the right of complainant is clear

and unmistakable and that there is an urgent and paramount necessity for

the writ to prevent serious damage. Moreover, an injunctive remedy may

only be resorted to when there is a pressing necessity to avoid injurious

consequences which cannot be remedied under any standard

compensation.

16.05 A clear legal right means one clearly founded in or granted by

law or is enforceable as a matter of law.24 The Subject Resolution infringes

on the existing rights of ACPAPP and its individual and institutional

members granted under the terms of RA 9298, particularly the enjoyment of

the accreditation of the partnership or firm they belong to and, effectively,

the practice of their profession. The Subject Resolution unduly expands the

meaning of the requirements prescribed by law for the practice of public

accountancy, to the detriment of ACPAPP and all its members.

16.06 Further, the implementation of the Subject Resolution would

surely cause great and irreparable injury to ACPAPP and its individual and

institutional members who will be unduly and continually required to

separately and individually secure accreditation from the BOA based on an

erroneous interpretation of Section 31 of RA 9298. If the Subject Resolution

is not immediately restrained and eventually declared void by the Honorable

Court, it will effectively serve to bar partners and CPA staff members who

are unable to comply with its unreasonable requirements from practicing

their professions and earning a livelihood.

16.07 By irreparable injury is not meant such injury as is beyond the

possibility of repair or compensation in damages, or great injury or great

damage, but that kind of injury, whether great or small, that ought not to be

23 G.R. No. 146717, 22 November 2004. 24 Soriano v. People, G.R. No. 162336, 1 February 2010.

21

inflicted, of such constant and frequent recurrence that no fair or reasonable

redress can be had therefore in a court of law.25 Damages are irreparable

where there is no standard by which their amount can be measured with

reasonable accuracy.26

16.08 That the threat of implementation of the Subject Resolution is

imminent is shown by the fact that the BOA has already published the

Subject Resolution last 4 April 2016 and the Subject Resolution is set to take

effect on 19 April 2016. Worse, as noted above, the BOA has publicly

announced that it is treating 30 June 2016 as the deadline to comply with the

accreditation requirement under the Subject Resolution.27 Again, if the

Subject Resolution is not immediately restrained and eventually declared

void by the Honorable Court, it will effectively serve to bar partners and

CPA staff members who are unable to comply with its unreasonable

requirements from practicing their professions and earning a livelihood.

16.09 Finally, the threatened implementation of the Subject

Resolution pending this Petition will work injustice to ACPAPP considering

that the issues raised in this Petition are meritorious and that the BOA is

doing an act that is most probably in violation of the rights of ACPAPP

respecting the subject matter of the present Petition and would tend to render

the judgment by the Honorable Court ineffectual.

16.10 ACPAPP is ready, willing and able to post any bond in such

amount and under such terms and conditions as may be determined by the

Honorable Court to answer for whatever damages, if any, that the BOA may

incur by reason of the temporary restraining order and/or writ of preliminary

injunction in the event that this Honorable Court later determines that

ACPAPP is not entitled thereto. In support of this application for injunctive

relief, attached herewith as Annex “E” is the Judicial Affidavit of George V.

Villaluz, President of ACPAPP.

IX

RELIEF

WHEREFORE, premises considered, ACPAPP respectfully prays that

the Honorable Court:

a. upon filing of the instant Petition, grant the prayer for the

issuance of temporary restraining order and/or a writ of preliminary

injunction enjoining the PRC and/or the BOA from executing and/or

implementing or giving effect in any manner to the Subject Resolution; and

b. give due course to the instant Petition, and thereafter:

25 Ollendorff v. Abrahamson, G.R. No. 13228, 13 September 1918. 26 Social Security System v. Bayona, G.R. No. 13555, 30 May 1962. 27 Please refer to the abovecited Facebook post/announcement of the BOA.

22

(i) declare the Subject Resolution as invalid for having been

issued in violation or beyond the scope of RA 9298; and

(ii) permanently enjoin the PRC and/or BOA, and/or any other

persons acting pursuant to Subject Resolution from executing and/or

otherwise implementing or giving effect in any manner to said Subject

Resolution.

ACPAPP likewise prays for such other reliefs as may be just or

equitable and favorable to it under the premises.

Makati City, 18 April 2016.

PICAZO BUYCO TAN FIDER & SANTOS Counsel for petitioner Association of CPAs in Public Practice, Inc.

Penthouse, Liberty Center

104 H.V. dela Costa Street, Salcedo Village

1227 Makati City, Metro Manila

Tel. No. (+632) 888-0999

main@picazolaw.com

By:

ELON CRIS C. CULANGEN IBP No. LRN - 013058/01-05-15/Abra

PTR No. 5331124/01-07-2016/Makati City

Roll of Attorneys No. 52281

MCLE Compliance Cert. No. IV-0018514/04-23-2013

NINEZ C. MANINGAT

IBP No. 1015788/01-04-2016/Makati City

PTR No. 5331129/01-07-2016/Makati City

Roll of Attorneys No. 54015

MCLE Compliance Cert. No. V-0004065/10-08-2014

COPY FURNISHED:

PROFESSIONAL REGULATION COMMISSION

P. Paredes St. cor. Morayta St. Sampaloc, Manila

BOARD OF ACCOUNTANCY

Professional Regulation Commission

P. Paredes St. cor. Morayta St. Sampaloc, Manila

23

OFFICE OF THE SOLICITOR GENERAL

134 Amorsolo Street, Legaspi Village

Makati City