G.R. No. 246027, June 21, 2022
SECURITIES AND EXCHANGE COMMISSION, PETITIONER, VS. 1ACCOUNTANTS PARTY-LIST, INC., REPRESENTED BY ITS PRESIDENT, CHRISTIAN JAY D. LIM, CHRISTIAN JAY D. LIM IN HIS CAPACITY AS CPA, FROILAN G. AMPIL, ALLAN M. BASARTE, VIRGILIO F. AGUNOD, AND JONAS P. MASCARIÑAS, RESPONDENTS.

FACTS

The case stems from a Petition for Declaratory Relief filed by 1Accountants Party List, Inc., its President Christian Jay D. Lim (also in his personal capacity as a CPA), and other CPAs against the Securities and Exchange Commission (SEC). The petition assailed the SEC’s regulations, specifically Paragraph 3 of Rule 68 of the Amended Implementing Rules and Regulations of the Securities Regulation Code (SRC) and SEC Memorandum Circular (MC) No. 13-2009, which require the accreditation of Certified Public Accountants acting as external auditors for corporations issuing registered securities and possessing secondary licenses. The respondents argued these issuances were issued without authority (ultra vires), contravened Republic Act No. 9298 (the Philippine Accountancy Act of 2004), restricted the right of CPAs to practice accountancy, and that MC No. 13-2009 violated due process and equal protection. The SEC countered that it was authorized under the SRC and the Corporation Code to issue such regulations, that they did not contravene RA 9298, and that the circular was properly published and based on a valid classification. The Regional Trial Court declared the assailed issuances null and void for being contrary to RA 9298, unconstitutional, and issued ultra vires. The SEC filed a Petition for Review before the Supreme Court.

ISSUE

Whether the Securities and Exchange Commission acted within its statutory authority in issuing Rule 68, paragraph 3 of the Amended IRR of the SRC and SEC MC No. 13-2009, which require the accreditation of CPAs acting as external auditors for certain corporations.

RULING

The Supreme Court DENIED the petition and AFFIRMED the Regional Trial Court’s Decision. The Court held that the SEC’s accreditation requirement for CPAs serving as external auditors to specific corporations was issued without authority and constituted an encroachment on the professional regulatory powers expressly vested by law in the Professional Regulatory Board of Accountancy under Republic Act No. 9298. The power to regulate the practice of accountancy, including the registration and accreditation of CPAs engaged in public practice, is specifically lodged with the Board of Accountancy. While the SEC possesses general rule-making powers under the SRC and the Corporation Code to ensure corporate governance and protect investors, these powers cannot be interpreted to extend to the regulation of a profession already governed by a specific and comprehensive regulatory statute. The accreditation requirement, being a regulatory measure on the practice of the accounting profession, is ultra vires. The Court found it unnecessary to rule on the constitutional issues of due process and equal protection.