CASE ANALYSIS

Case Summary and Outcome

The Supreme Court of the Philippines ruled that a foreign investment group’s
applications to build a petrochemical plant had to be disclosed, but any trade secrets
and other confidential information could be redacted. The Bataan Petrochemical
Corporation (BPC) applied to invest into Bataan State, but later amended its
application to invest in a different region of Batangas. This angered a Bataan
congressman who requested a copy of BPC’s original and amended application
documents, which was denied, leading to a lawsuit. The Court reasoned that the
inhabitants of Bataan had an interest in the establishment of a petrochemical plant
because it would affect their economic life and health, and that BPC’s amended
application required a new public notice to be filed and a new hearing to be held.

This case analysis was contributed by Right2Info.org

Facts

The Bataan Petrochemical Corporation (BPC), a Taiwanese private corporation,

applied for registration with the Board of Investments (BOI) in February 1988 as a
new domestic producer of petrochemicals in the Philippines. It originally specified
the province of Bataan as the site for the proposed investment but later submitted
an amended application to change the site to Batangas. Unhappy with the change of
the site, Congressman Enrique Garcia of the Second District of Bataan requested a
copy of BPC’s original and amended application documents.

The BOI denied the request on the basis that the investors in BPC had declined to
give their consent to the release of the documents requested, and that Article 81 of
the Omnibus Investments Code protected the confidentiality of those documents
absent consent to disclose.

The BOI subsequently approved the amended application without holding a second
hearing or publishing notice of the amended application. Garcia filed a petition
before the Supreme Court.

Decision Overview

The Court ruled that the BOI violated Garcia’s Constitutional right to have access to
information on matters of public concern under Article III, Section 7 of the
Constitution. The Court found that the inhabitants of Bataan had an “interest in the
establishment of the petrochemical plant in their midst [that] is actual, real, and vital
because it will affect not only their economic life, but even the air they breathe”. [p.
4] The Court also ruled that BPC’s amended application was in fact a second
application that required a new public notice to be filed and a new hearing to be
held.

Although Article 81 of the Omnibus Investments Code provides that “all applications
and their supporting documents filed under this code shall be confidential and shall
not be disclosed to any person, except with the consent of the applicant,” the Court
emphasized that Article 81 provides for disclosure “on the orders of a court of
competent jurisdiction”. [p. 4] The Court ruled that it had jurisdiction to order
disclosure of the application, amended application, and supporting documents filed
with the BOI under Article 81, with certain exceptions.

The Court went on to note that despite the right to access information, “the
Constitution does not open every door to any and all information” because “the law
may exempt certain types of information from public scrutiny”. [p. 4] Thus it
excluded “the trade secrets and confidential, commercial, and financial information
of the applicant BPC, and matters affecting national security” from its order. [p. 4]
The Court did not provide a test for what information is excluded from the
Constitutional privilege to access public information, nor did it specify the kinds of
information that BPC could withhold under its ruling.

Case Significance
The decision establishes a binding or persuasive precedent within its jurisdiction.

CONGRESSMAN ENRIQUE T. GARCIA v. BOARD OF INVESTMENTS, GR No. 92024,

1990-11-09
Facts:
This is a petition to annul and set aside the decision of the Board of Investments
(BOI)/Department of Trade and Industry (DTI) approving the transfer of the site of
the proposed petrochemical plant from Bataan to Batangas and the shift of
feedstock... for that plant from naphtha only to naphtha and/or liquefied petroleum
gas (LPG).
This petition is a sequel to the petition in G.R. No. 88637 entitled "Congressman
Enrique T. Garcia v. the Board of Investments", September 7, 1989, where this Court
issued a decision, ordering the BOI as follows:
"WHEREFORE, the petition for certiorari is granted.  The Board of Investments is
ordered:  (1) to publish the amended application for registration of the Bataan
Petrochemical Corporation, (2) to... allow the petitioner to have access to its records
on the original and amended applications for registration, as a petrochemical
manufacturer, of the respondent Bataan Petrochemical Corporation, excluding,
however, privileged papers containing its trade secrets and... other business and
financial information, and (3) to set for hearing the petitioner's opposition to the
amended application in order that he may present at such hearing all the evidence in
his possession in support of his opposition to the transfer of the site of the BPC...
petrochemical plant to Batangas province.  The hearing shall not exceed a period of
ten (10) days from the date fixed by the BOI, notice of which should be served by
personal service to the petitioner through counsel, at least three (3) days in...
advance.  The hearings may be held from day to day for a period of ten (10) days
without postponements.  The petition for a writ of prohibition or preliminary
injunction is denied.  No costs."
Our resolution skirted the issue of whether the investor given the initial inducements
and other circumstances surrounding its first choice of plant site may change it
simply because it has the final choice on the matter.  The Court merely ruled that
the... petitioner appears to have lost interest in the case by his failure to appear at
the hearing that was set by the BOl after receipt of the decision, so he may be
deemed to have waived the fruit of the... judgment.  On this ground, the motion for
partial reconsideration was denied.
Taiwanese investors in a petrochemical project formed the Bataan Petrochemical
Corporation (BPC) and applied with BOI for registration as a new domestic producer
of petrochemicals.  Its application specified Bataan as the plant... site.  One of the
terms and conditions for registration of the project was the use of "naphtha cracker"
and "naphtha" as feedstock or fuel for its petrochemical plant.  The petrochemical
plant was to be a joint venture with
PNOC.  BPC was issued a certificate of registration on February 24, 1988 by BOI.
BPC was given pioneer status and accorded fiscal and other incentives by BOI, like,
(1) exemption from taxes on raw materials, (2) repatriation of the entire proceeds of
liquidation investments in currency originally made and at the exchange rate
obtaining at the... time of repatriation; and (3) remittance of earnings on
investments.  As additional incentive, the House of Representatives approved a bill
introduced by the petitioner eliminating the 48% ad valorem tax on naphtha if and...
when it is used as raw materials in the petrochemical plant.
However, in February, 1989, A.T. Chong, chairman of USI Far East Corporation, the
major investor in BPC, personally delivered to Trade Secretary Jose Concepcion a
letter dated January 25, 1989 advising him of BPC's desire to... amend the original
registration certificate of its project by changing the job site from Limay, Bataan, to
Batangas.  The reason adduced for the transfer was the insurgency and unstable
labor situation, and the presence in
Batangas of a huge liquefied petroleum gas (LPG) depot owned by the Philippine
Shell Corporation.
The petitioner vigorously opposed the proposal and no less than President Aquino
expressed her preference that the plant be established in Bataan in a conference
with the Taiwanese investors, the Secretary of National Defense and The Chief of
Staff... of the Armed Forces.
Despite speeches in the Senate and House opposing the transfer of the project to
Batangas, BPC filed on April 11, 1989 its request for approval of the amendments.  Its
application is as follows:  "(1) increasing the investment... amount from US$220
million to US$320 million; (2) increasing the production capacity of its naphtha
cracker, polythylene plant and polypropylene plant; (3) changing the feedstock from
naphtha only to "naphtha and/or liquefied petroleum gas;" and (4) transferring the...
job site from Limay, Bataan, to Batangas.
BOI Vice-Chairman Tomas I. Alcantara testifying before the Committee on Ways and
Means of the Senate asserted that:... the
BOI or the government for that matter could only recommend as to where the
project should be located.  The BOI... recognizes and respects the principle that the
final choice is still with the proponent who would in the final analysis... provide the
funding or risk capital for the project.
Issues:
whether or not the foreign investor has the right of... final choice of plant site; that
the non-attendance of the petitioner at the hearing was because the decision was
not yet final and executory; and that the petitioner had not... therefor waived the
right to a hearing before the BOI... whether the petrochemical plant should remain
in Bataan or should be transferred to Batangas, and whether its feedstock originally
of naphtha only should be changed to naphtha and/or liquefied petroleum gas as...
the approved amended application of the BPC, now Luzon Petrochemical
Corporation (LPC), shows.
whether... or not it constitutes a grave abuse of discretion for the BOI to yield to the
wishes of the investor, national interest notwithstanding.
Ruling:
We rule that the Court has a constitutional duty to step into this controversy and
determine the paramount issue.  We grant the petition.
First, Bataan was the original choice as the plant site of the BOI to which the BPC
agreed.  That is why it organized itself into a corporation bearing the name Bataan. 
There is available 576... hectares of public land precisely reserved as the
petrochemical zone in Limay, Bataan under P.D. No. 1803.  There is no need to buy
expensive real estate for the site unlike in the proposed transfer to
Batangas.  The site is the result of careful study long before any covetous interests
intruded into the choice.  The site is ideal.  It is not unduly constricted and allows...
for expansion.  The respondents have not shown nor reiterated that the alleged
peace and order situation in Bataan or unstable labor situation warrant a transfer of
the plant site to
Batangas.
Second, the BRC, a government owned Filipino corporation, located in Bataan
produces 60% of the national output of naphtha which can be used as feedstock for
the plant in
Bataan.  It can provide the feedstock requirement of the plant.  On the other hand,
the country is short of LPG and there is need to import the same for use of the plant
in Batangas.  The local... production thereof by Shell can hardly supply the needs of
the consumers for cooking purposes.  Scarce dollars will be diverted, unnecessarily,
from vitally essential projects in order to feed the furnaces of the... transferred
petrochemical plant.
Third, naphtha as feedstock has been exempted by law from the ad valorem tax by
the approval of Republic Act No. 6767 by President Aquino but excluding LPG from
exemption from ad... valorem tax.  The law was enacted specifically for the
petrochemical industry.  The policy determination by both Congress and the
President is clear.
Fourth, under Section 10, Article XII of the 1987 Constitution, it is the duty of the
State to "regulate and exercise authority over foreign investments within its national
jurisdiction and in accordance with its national... goals and priorities."
Fifth, with the admitted fact that the investor is raising the greater portion of the
capital for the project from local sources by way of loan which led to the so-called
"petroscam scandal", the capital requirements would be greatly... minimized if LPC
does not have to buy the land for the project and its feedstock shall be limited to
naphtha which is certainly more economical, more readily available than LPG, and
does not have to be imported.
Sixth, if the plant site is maintained in Bataan, the PNOC shall be a partner in the
venture to the great benefit and advantage of the government which shall have a
participation in the management of the... project instead of a firm which is a huge
multinational corporation.
Section 1, Article XII of the Constitution provides that:... xxx                xxx                   xxx
"The State shall promote industrialization and full employment based on sound
agricultural development and agrarian reform, through industries that make full and
efficient use of human and natural resources, and which are competitive in both
domestic and foreign... markets.  However, the State shall protect Filipino
enterprises against unfair foreign competition and trade practices."
A petrochemical industry is not an ordinary investment opportunity.  It should not be
treated like a garment or embroidery firm, a shoe-making venture, or even an
assembler of cars or manufacturer of computer chips, where the BOl reasoning
may... be accorded fuller faith and credit.  The petrochemical industry is essential to
the national interest.  In other ASEAN countries like Indonesia and Malaysia, the
government superintends the industry by controlling the upstream or cracker...
facility.
In this particular BPC venture, not only has the Government given unprecedented
favors,... but through its regulatory agency, the BOI, it surrenders even the power to
make a company abide by its initial choice, a choice free from any suspicion of
unscrupulous machinations and a... choice which is undoubtedly in the best interests
of the Filipino people.
The Court, therefore, holds and finds that the BOI committed a grave abuse of
discretion in approving the transfer of the petrochemical plant from Bataan to
Batangas and authorizing the change of feedstock from naphtha only to naphtha...
and/or LPG for the main reason that the final say is in the investor all other
circumstances to the contrary notwithstanding.
WHEREFORE, the petition is hereby 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 under its Resolution No.
193, Series of 1989, (Annex F to the Petition) 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, therefore,... ordered maintained.
Principles:

Garcia v. The Board of Investments, et al., G.R. No.88637, 07 September 1989

05MAR
[GRINO-AQUINO, J.]
FACTS
Congressman Garcia assails the approval by the Board of Investments (BOI) and the
Department of Trade and Industry (DTI) of the amended application for registration
of the Bataan Petrochemical Corporation (BPC), which seeks to transfer the site of its
petrochemical complex from Bataan, the original situs of choice, to the province of
Batangas. The BPC’s original application for registration was published in Philippine
Daily Inquirer but the amended application, changing the site from Bataan to
Batangas, was not.
ISSUE
Is there still a need to publish the amended application in a newspaper of general
circulation?
 
HELD
YES. The law requires the “publication of applications for registration,” hence, the
payment of publication and other necessary fees … prior to the processing and
approval of such applications (Art. 7, subpar. 3, Omnibus Investments Code).Since
the BPC’s amended application (particularly the change of location from Bataan to
Batangas) was in effect a new application, it should have been published so that
whoever may have any objection to the transfer may be heard. The BOI’s failure to
publish such notice and to hold a hearing on the amended application deprived the
oppositors, like the petitioner, of due process and amounted to a grave abuse of
discretion on the part of the BOI.

 
RODRIGUEZ, ALPHIA MAY R.Assignment 1

Garcia v. Board of Investments (G.R. No. 88637)

177 SCRA 374
September 7, 1989
Petitioner: Congressman Enrique T. Garcia, Second District of Bataan
Respondents: Board of Investments, Department of Trade and Industry, Bataan
Petrochemical
Corporation, and Pilipinas Shell Corporation
Griño-Aquino, J.
Facts:
Given the mandate in P.D. No. 1803 that a 576-hectare parcel of land be reserved in
Limay,
Bataan for “industrial estate purposes”, Taiwanese investors formed the Bataan
Petrochemical
Corporation (BPC) and applied with BOI for its registration as a petrochemical
producer which
would be sited in the said area and would feed on naphtha.
Upon its approval in February 24, 1988, BPC was granted various incentives such as
tax
exemption on raw materials, repatriation of liquidation of investments, and
remittance of
earnings for its status as a pioneer project.
In February of the following year, amendments to the application were proposed by
its major
investor Chairman A.T. Chiong of USI Far East concerning increase of investment
amount,
change of fuel feedstock, and more notably the transfer of site from Bataan to
Batangas.
Opposing the transfer, the petitioner requested for a copy of the proposed
amendment as well
as BPC’s original application with BOI for review, which the foreign investors
declined to do. The
amended application was later approved by BOI on May 25, 1989 with limited
parties knowing
and amended applications for registration. It also ordered the respondents to set a
hearing for the opposition of the petitioner on the amendments made in the
application.
Garcia v. Board of Investments (G.R. No. 92024)
191 SCRA 288
November 9, 1990
Petitioner: Congressman Enrique T. Garcia, Second District of Bataan
Respondents: Board of Investments, Department of Trade and Industry, Luzon
Petrochemical
Corporation, and Pilipinas Shell Corporation
Gutierrez, Jr., J.
Facts:
As the court ordered in G.R. No. 88637 entitled “Garcia v. Board of Investments”, the
Board of
Investments set a hearing for the petitioner concerning his opposition to the
amendments made
in the application for registration of Luzon Petrochemical Corporation (formerly
known as the
Bataan Petrochemical Corporation) specifically the transfer of the site from Bataan
to Batangas
and the change of feedstock fuel from naphtha only to naptha and liquefied gas
petroleum
which BOI approved. On January 1990, a resolution was made that the BOI has the
final word
on prospective projects based on Art. 7 Section II of the Omnibus Investments Code.
The motion for reconsideration filed by the petitioner was initially denied as the
court deemed
his absence in the hearing as a sign of disinterest. However, a minority composed of
Justices
Melencio-Herrera, Gancayo, Sarmiento, and this ponente voted for the motion of
reconsideration to be granted again to the petitioner stating that the prior hearing
was premature
as the resolution was not yet final and executory
country. BOI should not have yielded to the preference of LPC’s Taiwanese investors
as
it could have properly managed LPC along with PNOC, another government entity, in
Bataan given the latter’s role as custodian of the petrochemical zone.
Garcia v. Executive Secretary (G.R. No. 100883)
204 SCRA 516
December 2, 1991
Petitioner: Congressman Enrique T. Garcia, Second District of Bataan
Respondents: The Executive Secretary, National Economic and Development
Authority, The
Board of Investments, The Securities and Exchange Commission, and The
Bureau of Trade Regulation and Consumer Protection Commission
Intervenors: Senator Vicente T. Paterno and Philippine Association of Battery
Manufacturers
Cruz, J.
Facts:
Given his prior lawsuit with BOI, the petitioner challenges the legal purpose of R.A.
No. 7042.
Supporting his claim that the Act does not promote the development and protection
of Filipino
enterprises, the petitioner argues that (1) Section 5 circumvents bureaucracy as it
allows foreign
investments of up to 100% of its capital without need of prior approval, (2) Section 7
may be
interpreted differently by foreign investors due to the vague categorization of List C
as “existing
enterprises”, (3) Section 9 puts the burden of proof on a Filipino who is interested in
updating
the Negative List, and (4) the Transitory Foreign Investment Negative List endangers
Filipino
enterprises in their own country as it does not set a limit for foreign investments for
three years.
Opposing the claims of the petitioner, the Solicitor General contends that the Act (1)
upholds
bureaucracy because all foreign investors are required to register with SEC and BOI
before
was deemed that the judiciary may only be consulted to settle actual controversies
involving
rights which are legaIly demandable and enforceable, and that the legislation has the
power to
rewrite the Act