Case Summary (G.R. No. 219927)
Procedural Posture and Applicable Law
The case arose from respondent’s application for registration as a new producer of beneficiated nickel silicate ore under non-pioneer status, with the corresponding grant of an Income Tax Holiday (ITH) incentive per the Omnibus Investment Code (Executive Order No. 226). The BOI later withdrew this incentive, prompting respondent to file a Petition for Review with the Court of Appeals (CA), which ruled in favor of the respondent. The BOI then elevated the case to the Supreme Court under Rule 45 of the Rules of Court, invoking the 1987 Philippine Constitution as the basis for the decision since the case was decided in 2018.
Factual Background
Respondent filed its application for registration on April 3, 2008, which BOI approved on June 4, 2008, granting the ITH incentive for 2008-2012. Subsequently, on August 31, 2010, the Sangguniang Bayan of Tubay requested cancellation of respondent’s registration, alleging that respondent was not operating a beneficiation plant as represented but instead directly shipping unprocessed ore via open-cut mining, contrary to its Certificate of Registration. Certifications from local government offices confirmed the alleged lack of industrial buildings or processing plants registered under respondent’s name.
BOI’s Action on Withdrawal of Incentive
On April 11, 2011, BOI notified respondent of the cancellation request and directed submission of a reply. Respondent responded asserting compliance with its registration terms, clarifying it was registered as a producer of beneficiated ore—not as a beneficiation plant itself—and that local government consultation was not required under the 2007 Investment Priorities Plan (IPP). On February 12, 2012, BOI resolved to withdraw the ITH incentive on grounds of non-compliance with the 2007 IPP and specific project conditions, including failure to establish another line or beneficiation plant and failure to infuse new investment in fixed assets. Respondent’s motion for reconsideration was denied by BOI on July 30, 2013, citing late filing and insufficient grounds.
Court of Appeals’ Ruling
The CA ruled on December 4, 2014, that respondent was entitled to the ITH incentive. It found:
- The 2007 IPP did not require constructing a beneficiation plant for incentive qualification.
- Respondent had infused new investments in fixed assets, submitted progress reports, and adhered to the project timetable.
- BOI’s withdrawal was therefore without basis.
- Respondent was denied due process as BOI failed to (a) inform respondent of a formal investigation, (b) base the withdrawal on the grounds in the Sangguniang Bayan Resolution, and (c) properly consider respondent’s motion for reconsideration. The CA annulled and set aside BOI’s withdrawal of incentives. Its denial of BOI’s motion for reconsideration was affirmed on August 11, 2015.
Petitioner’s Arguments on Appeal to the Supreme Court
BOI claimed:
- ITH is a privilege requiring compliance with IPP conditions.
- Respondent failed to fulfill commitments to build a beneficiation plant and invest heavily in fixed assets.
- Respondent’s actual operations differed from its application representations.
- Respondent was afforded due process through notices and the opportunity to present evidence.
Respondent’s Counterarguments
Respondent challenged:
- The authority of the BOI Officer-in-Charge to sign the petition’s verification and certification of non-forum shopping.
- BOI’s failure to attach certain pleadings from the CA proceedings.
- The substantive withdrawal of the ITH incentive was baseless, citing compliance with the IPP, including substantial investment and project reporting.
- The absence of a requirement to physically construct a beneficiation plant; the equipment assembled sufficed.
- The withdrawal violated due process under BOI’s Revised Rules of Procedure on Cancellation.
Supreme Court’s Ruling on Procedural Issues
- The authority of BOI’s Officer-in-Charge (OIC Halili-Dichosa) to file the petition and sign the verification was upheld, reasoning that such authority should be resolved in favor of government service efficiency, especially since she acted in an official capacity.
- The failure to attach all pleadings filed before the CA did not warrant dismissal; the Court determined that material portions were sufficiently included and the entire record was elevated later, consistent with Rule 45 procedural provisions.
- Respondent was afforded due process as it was informed of allegations via letter, given time to reply and submit evidence, and allowed to seek reconsideration; strict formalities in administrative procedural rules were relaxed in favor of substantial justice.
Supreme Court’s Ruling on the Merits
- Respondent’s application described itself as a new producer of beneficiated nickel silicate ore based on a newly adopted beneficiation process but did not explicitly represent building a beneficiation plant.
- Neither the BOI Project Approval Sheet, Certificate of Registration, nor the 2007 IPP imposed a requirement for physical construction of a beneficiation plant or any new physical structure as a condition precedent to ITH entitlement.
- Even assuming a commitment to build a beneficiation plant, this did not necessitate a building but could refer to an assemblage of equipment performing beneficiation processes.
- Respondent proved ownership and use of substantial machinery and equipment (e.g., mobile process screen, power screen, mobile crusher, loaders, backhoe, trucks) forming a beneficiation plant operation.
- Evidence showed significant investments amounting to over Php1.15 billion in equipment and facilities.
- Respondent submitted progress reports and was issued a Certificate of Good Standing by BOI.
- The BOI’s withdrawal was therefore unsupported by substantial evidence and contrary to factual findings.
Legal Principles Affirmed
- Factual findings of administrative agencies are respected but may be overturned when unsupported by substantial evidence.
- Due process in administrative cancellations emphasizes the opportunity to be heard and to present evidence rather than stringent procedural technicalities.
- The interpretation of terms and conditions of fiscal incentives by the administering agency must be guided by clear stipulations, not by su
...continue reading
Case Syllabus (G.R. No. 219927)
Nature and Background of the Case
- The case involves a Petition for Review on Certiorari under Rule 45 assailing the December 4, 2014 Decision and August 11, 2015 Resolution of the Court of Appeals (CA) in CA-G.R. SP No. 131511.
- Petitioner, the Board of Investments (BOI), is a government agency under RA No. 5186 tasked with promoting investments in the Philippines.
- Respondent, SR Metals, Inc., is a mining corporation in Tubay, Agusan Del Norte.
- Respondent filed an application with petitioner on April 3, 2008, for registration as a new producer of beneficiated nickel ore on a non-pioneer status for its Nickel Project.
- BOI approved the application on June 4, 2008, issuing Certificate of Registration No. 2008-113, granting respondent an Income Tax Holiday (ITH) from 2008 to 2012.
- In 2010, the Sangguniang Bayan of Tubay sought cancellation of respondent’s registration on grounds of misrepresentation and failure to consult local government. Certifications from municipal offices supported claims that respondent had no industrial building or processing plant.
Proceedings Before the Board of Investments
- On April 11, 2011, BOI informed respondent of the cancellation request and required a reply within 15 days.
- Respondent contended it was a producer of beneficiated nickel ore, registered as such, and that consultation with local government was not required under the 2007 Investment Priorities Plan (IPP).
- On May 24, 2012, BOI resolved to withdraw respondent's ITH incentive for failure to: (1) establish a beneficiation plant and infuse new investment in fixed assets as per 2007 IPP requirements; and (2) comply with terms and conditions in the Project Approval Sheet and Registration Certificate, namely submission of project progress reports and adherence to machinery acquisition timetable.
- Respondent sought reconsideration, submitting equipment inventories and proofs of ownership.
- BOI denied reconsideration on August 12, 2013, for late filing, absence of new grounds, and non-fulfillment of terms, particularly the establishment of another line and new investment in fixed assets.
Court of Appeals' Decision and Reasoning
- The CA rendered a decision in favor of respondent on December 4, 2014, reinstating the ITH incentive.
- The CA found no requirement in the 2007 IPP necessitating construction of a beneficiation plant to qualify for ITH.
- The CA concluded respondent had infused new investments in fixed assets, submitted progress reports, and complied with the project timetable, contrary to BOI’s findings.
- Additionally, CA ruled that respondent was denied due process because:
- Respondent was not formally informed of an administrative investigation.
- BOI withdrew the ITH based on grounds not covered in the Sangguniang Bayan resolution.
- Respondent’s motion for reconsideration was denied for late filing without proper basis.
- The CA annulled and set aside BOI’s letters withdrawing ITH, and denied the motion for reconsideration filed by BOI.
Petitioner's Issues and Arguments Before the Supreme Court
- Petitioner raised three main issues:
- Whether respondent's Project Approval Sheet and BOI Certificate of Registration included a commitment to establish a beneficiation plant.
- Whether the grant of ITH is an automatic right upon registration approval, despite respondent allegedly failing to abide by registration terms.
- Whether petitioner observed due process in withdrawing respondent’s ITH incentive.
- BOI argued that the ITH is a privilege, not a right, conditioned on compliance with 2007 IPP requirements.
- BOI claimed respondent failed to infuse investments and construct a ben