Purina Philippines v. Flores
REITERATIONFacts
The Antecedents: Purina Philippines, Inc. (Purina), a domestic corporation with 100% foreign equity, was granted authority by the Board of Investments to manufacture animal feeds. A key component in this manufacturing process is corn, which Purina either purchases from local suppliers or imports when local supply is insufficient. The National Food Authority (NFA) required Purina to obtain a warehouse license for storing corn. However, the NFA denied Purina's application for this license, citing Purina's foreign equity as a legal impediment. Procedural History: Purina's application for a warehouse license was denied by the NFA in 1996. The NFA subsequently issued a provisional authority for Purina to continue its corn-related activities, conditioned on Purina submitting a divestment plan to comply with the 40% foreign equity limitation for those engaged in the corn industry, as stipulated by Presidential Decree No. 194 and List A of the Foreign Investment Negative List. Purina appealed this decision, and after administrative jurisdiction over the NFA transferred to the Office of the President (OP), the OP took cognizance of the appeal. The OP dismissed Purina's appeal, affirming the NFA's finding that Purina was engaged in the corn industry. Purina's motion for reconsideration was denied by the OP. Subsequently, Purina appealed to the Court of Appeals (CA), which upheld the OP's decision. The CA also denied Purina's motion for reconsideration, leading to the present petition. The Petition: Purina filed a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the Court of Appeals' decision and resolution. The core issue presented to the Supreme Court is whether Purina is engaged in the corn industry. Purina argues that its acquisition and storage of corn are solely for use as raw material in manufacturing animal feeds, not for the purpose of trade as defined under Republic Act No. 3018, and that corn is not the principal ingredient in its animal feed product. Purina contends that Presidential Decree No. 194 should be interpreted in light of the original intent of Republic Act No. 3018, which Purina believes requires the ability to create artificial scarcity of the grain. The petition seeks to overturn the rulings of the lower courts and the Office of the President.
Issue(s)
Whether petitioner is engaged in the corn industry. Whether petitioner's activities of purchasing, importing, and storing corn for use as raw material in the manufacture of animal feeds fall within the definition of the "rice and/or corn industry" under Republic Act No. 3018 and Presidential Decree No. 194. Whether the interpretation of Presidential Decree No. 194 should be limited by the legislative intent of Republic Act No. 3018, specifically regarding the principal ingredient and ability to create artificial scarcity.
Ruling
The petition is DENIED. The Court of Appeals Decision dated 4 July 2007 and Resolution dated 24 October 2007 in CA-G.R. SP No. 91619 are AFFIRMED.
Ratio Decidendi
On whether petitioner is engaged in the corn industry: The Supreme Court affirmed the rulings of the OP and CA, holding that petitioner is indeed engaged in the corn industry. The Court emphasized that Republic Act No. (R.A.) 3018 nationalized the rice and corn industry, prohibiting foreign participation unless otherwise allowed by law. Petitioner's admission of buying or importing corn and storing it in its warehouse, and using corn as a raw material for animal feed manufacture, squarely places it within the definition of the "rice and/or corn industry" as defined under R.A. 3018 and P.D. 194. The Court reiterated that the law must be applied according to its express terms when clear and unambiguous. On the definition of "rice and/or corn industry" under R.A. 3018 and P.D. 194: The Court clarified that R.A. 3018 defines the "rice and/or corn industry" to include "culture, milling, warehousing, transporting, exportation, importation, handling the distribution, either in wholesale or retail, or the acquisition for the purpose of trade of rice (husked or unhusked) or corn and the by-products thereof." The phrase "for the purpose of trade" was held to qualify only the term "acquisition," distinguishing it from other motives. However, activities like importation and warehousing of corn, even if not strictly "for the purpose of trade" in the sense of reselling the corn itself, are still covered. Furthermore, P.D. 194 explicitly includes "acquiring by barter, purchase or otherwise, rice and corn and/or the by-products thereof, to the extent of their raw material requirements when these are used as raw materials in the manufacture or processing of their finished products" within the definition of the "rice and/or corn industry." On the interpretation of P.D. 194 in relation to R.A. 3018: The Court rejected petitioner's argument that P.D. 194 should be interpreted strictly according to the legislative intent of R.A. 3018, particularly the requirement that the entity must be able to create artificial scarcity and that rice or corn must be the principal ingredient. The Court explained that P.D. 194 was a departure from R.A. 3018, enacted to attract foreign investments by allowing limited foreign participation in the rice and corn industry, specifically when grains are used as raw materials. The Court cited Quijano v. Development Bank of the Philippines to emphasize that when a law's wording is clear and unambiguous, interpretation is unnecessary, and the law must be applied as written. P.D. 194 explicitly covers the acquisition of corn for use as raw material, making petitioner subject to its provisions regardless of whether corn is the principal ingredient or if it can corner the market.
Main Doctrine
A domestic corporation with 100% foreign equity, which purchases, imports, and stores corn for use as raw material in the manufacture of animal feeds, is considered engaged in the corn industry and is therefore subject to foreign equity limitations under Republic Act No. 3018 and Presidential Decree No. 194.