Garcia v. Board of Investments
NEW DOCTRINEFacts
The Antecedents: The underlying dispute concerns the approval by the Board of Investments (BOI) and Department of Trade and Industry (DTI) of amendments to the registration of a petrochemical project. These amendments allowed for the transfer of the plant site from Limay, Bataan, to Batangas, and the change of feedstock from naphtha exclusively to naphtha and/or liquefied petroleum gas (LPG). The petitioner, Congressman Enrique T. Garcia, opposed these changes, arguing they were detrimental to national interest and constituted a grave abuse of discretion by the BOI. Procedural History: This case is a sequel to G.R. No. 88637, where this Court previously ordered the BOI to publish the amended application, grant petitioner access to records (excluding trade secrets), and hold a hearing on his opposition. A subsequent resolution denied a motion for reconsideration, with the Court observing that the investor appeared to have lost interest. Further motions for reconsideration were denied, with a minority of justices voting to grant them and address the core issue of the investor's right to final site choice. The current petition arises from the Court's resolution of January 17, 1990, which stated that the investor does not have a right of final choice of plant site, as such choice is subject to BOI approval. The Petition: The petitioner seeks to annul and set aside the BOI's decision approving the transfer of the petrochemical plant site to Batangas and the change in feedstock. He argues, relying on the Court's prior resolution, that the investor has no right of final choice and that the BOI committed a grave abuse of discretion by yielding to the investor's wishes despite national interest considerations. The petition highlights the availability of a reserved petrochemical zone in Bataan, the local production of naphtha, the tax exemptions favoring naphtha, and the constitutional mandate to promote national economic development and regulate foreign investments. The petitioner contends that transferring the site and changing the feedstock to include LPG would unnecessarily divert scarce dollars for imports and contravene established national policy.
Issue(s)
Whether the Board of Investments (BOI) committed a grave abuse of discretion in approving the transfer of the petrochemical plant site from Bataan to Batangas and authorizing the change of feedstock from naphtha only to naphtha and/or LPG. Whether a foreign investor has the right of final choice regarding the plant site and feedstock for a project registered with the BOI.
Ruling
The petition is granted. The decision of the respondent Board of Investments approving the amendment of the certificate of registration of the Luzon Petrochemical Corporation on May 23, 1989, is SET ASIDE as NULL and VOID. The original certificate of registration of BPC (now LPC) of February 24, 1988, with Bataan as the plant site and naphtha as the feedstock, is ordered maintained.
Ratio Decidendi
On the issue of whether the BOI committed a grave abuse of discretion in approving the transfer of the plant site and change of feedstock: The Court ruled that the BOI committed a grave abuse of discretion. The original site in Bataan was designated under Presidential Decree No. 1803, with ample reserved land and proximity to the Bataan Refining Corporation (BRC), a government-owned entity producing 60% of the national naphtha output, which is the preferred feedstock. Transferring to Batangas would necessitate importing LPG, a scarce commodity, thus diverting scarce dollars. Furthermore, Congress had exempted naphtha from ad valorem tax for the petrochemical industry via Republic Act No. 6767, while LPG was not included, indicating a clear legislative policy favoring naphtha. The Court emphasized that under the Constitution, the State must regulate foreign investments according to national goals and priorities, aiming for a self-reliant economy. The BOI's admission that the investor has the 'final choice' was deemed a surrender of sovereign prerogative, especially given the project's strategic importance and the substantial government incentives provided. On the issue of whether a foreign investor has the right of final choice regarding the plant site and feedstock: The Court clarified that neither the 1987 Constitution nor the Omnibus Investments Code grants an investor a 'right of final choice.' The investor's choice is subject to processing, approval, or disapproval by the BOI, recognizing the government's sovereign prerogative. The BOI, not the investor, has the ultimate decision-making power. The Court noted that even an approved choice is not necessarily final, as supervening circumstances may necessitate changes for the project's success, but this does not equate to an investor's unilateral right. The BOI's position that the investor has the 'final choice' was found to be a grave abuse of discretion, as it contravened the constitutional mandate to regulate foreign investments in accordance with national goals and priorities and the principle of economic nationalism.
Main Doctrine
The Board of Investments (BOI) committed a grave abuse of discretion in approving the transfer of a petrochemical plant site and the change of feedstock, as such decisions must prioritize national interest and are subject to governmental regulation, not solely investor discretion.