G.R. No. 117680 - 1st Lepanto Ceramics, Inc. vs. Court of Appeals

First Lepanto Ceramics, Inc. (petitioner) is a registered “non-pioneer enterprise” under Executive Order No. 226 (the Omnibus Investments Code of 1987) with Certificate of Registration No. EP 89-452, originally approved for the manufacture of glazed floor tiles.
Mariwasa Manufacturing, Inc. (respondent), a competitor and registered with its own BOI certificate (No. 89-427) for ceramic tiles, opposed First Lepanto's application for a product amendment.

Based on its registration, First Lepanto benefitted from non-fiscal and fiscal incentives, including tax exemptions on raw materials and duty-free importation of capital equipment.

On 10 August 1991, First Lepanto requested the BOI to amend its certificate to change the registered product from “glazed floor tiles” to “ceramic tiles,” which would allow it to manufacture ceramic wall tiles in addition to floor tiles.
Before the BOI could act on this amendment request, competing respondents (Mariwasa and Fil-Hispano Ceramics, Inc.) had already filed complaints alleging that First Lepanto was violating its registration terms by using its tax and duty-free equipment to produce ceramic wall tiles.

On 30 April 1992, the BOI rendered a decision finding First Lepanto guilty of the alleged violation, imposing a fine of ₱797,950.40.

The decision was issued without prejudice to the imposition of additional penalties should the violation continue.
The decision did not preclude the BOI from subsequently considering the application for amendment of the certificate.

First Lepanto paid the fine and on 20 June 1992 formally filed its application with the BOI (docketed as BOI Case No. 92-005) seeking the amendment of its registered product.
On 6 August 1992, Mariwasa filed a verified complaint (docketed as BOI Case No. 92-004) asserting that First Lepanto continued unauthorized production of ceramic wall tiles, despite the earlier BOI finding.

First Lepanto published a notice in the Manila Bulletin on 24 September 1992 regarding the filing of its amendment application.
Mariwasa opposed the application, prompting the BOI to render a decision approving the amendment on 10 December 1992.
Mariwasa, dissatisfied with the BOI decision, sought relief from the Court of Appeals through a petition for review along with an application for a writ of preliminary injunction or temporary restraining order.
On 17 February 1992, the Court of Appeals issued a temporary restraining order enjoining both the BOI and First Lepanto from enforcing the approval.
First Lepanto's motion requesting dismissal of the petition and the lifting of the restraining order was denied, leading up to the eventual issuance of the appellate decision on 13 August 1993 annulling the BOI decision.

First Lepanto moved for reconsideration of the Court of Appeals’ decision but was denied.
The core dispute centers on whether the BOI should have awaited the final resolution of BOI Case No. 92-004 before acting on the amendment application.
The Supreme Court granted the petition for certiorari, ultimately reversing the annulment by the Court of Appeals and reinstating the BOI decision.

Whether the BOI properly exercised its administrative discretion in approving First Lepanto’s application for amending its Certificate of Registration despite the pending complaint (BOI Case No. 92-004) alleging violation of registration terms.
Whether the Court of Appeals erred in annulling the BOI decision on the ground that the action was “premature” and an “exercise in futility” based on a mere conjecture regarding the pending adverse ruling in BOI Case No. 92-004.
Whether it is within the purview of the judiciary to second-guess the BOI’s administrative decision, which involves specialized technical knowledge and policy considerations in the field of investments and industrial development.