G.R. No.

219927, October 03, 2018

BOARD OF INVESTMENTS, Petitioner, v. SR METALS, INC., Respondent.

DECISION

DEL CASTILLO, J.:

"The cardinal rule is that any decision or ruling promulgated by an administrative

body must have something to support itself."1

Before the Court is a Petition for Review on Certiorari2 filed under Rule 45 of the
Rules of Court assailing the December 4, 2014 Decision3 and the August 11, 2015
Resolution4 of the Court of Appeals (CA), in CA-G.R. SP No. 131511.

Factual Antecedents

Petitioner Board of Investments (BOI) is a government agency created under

Republic Act (RA) No. 5186.5 It is an attached agency of the Department of Trade
and Industry (DTI) and is the lead government agency responsible for the promotion
of investments in the Philippines.6 Respondent SR Metals, Inc., on the other hand, is
a corporation engaged in the business of mining in Tubay, Agusan Del Norte.7

On April 3, 2008, respondent filed with petitioner an Application for Registration8 as

a new producer of beneficiated nickel ore on a non-pioneer status in relation to its
proposed Nickel Project.9

On June 4, 2008, petitioner approved the application and issued Certificate of

Registration No. 2008-11310 in favor of respondent as a new producer of beneficiated
nickel silicate ore/lateritic nickel ore on a non-pioneer status. Accordingly,
respondent was granted an Income Tax Holiday (ITH) incentive under the Omnibus
Investment Code for the period 2008 to 2012.11

On August 31,2010, the Sangguniang Bayan of the Municipality of Tubay issued

Resolution No. 2010-090,12 requesting the cancellation of respondent's BOI
registration on the following grounds:

(1) [that respondent was] not a manufacturer or product processor or a

beneficiation plant;

(2) [that respondent] was engaged in the direct shipping of unprocessed ore which
employed the method of open-cut mining contrary to what [was] stated in its
[Certificate of] Registration as a new producer of beneficiated nickel silicate
ore/lateritic nickel ore; and

(3) [that respondent] applied for tax exemption x x x without informing or

consulting the [M]unicipality of Tubay and the immediate stakeholders.13
To prove its claims, the Sangguniang Bayan submitted to petitioner
Certifications14 from the Municipal Engineer's Office, the Municipal Assessor's Office,
and the Municipal Planning and Development Office attesting that respondent had no
industrial building or processing plant declared under its name.15

On April 11, 2011, petitioner issued a letter16 to respondent informing it of

the Sangguniang Bayan's Resolution requesting for the cancellation of respondent's
BOI registration. In the same letter, petitioner directed respondent to submit a reply
within 15 days from receipt of the said letter.

In its Reply,17 respondent explained that it was a producer of beneficiated

nickel/lateritic nickel ore; that it was registered as a new producer of beneficiated
nickel silicate ore/lateritic nickel ore, and not as a beneficiation plant; and that
consultation with the concerned local government was not required under the 2007
Investment Properties Plan (IPP).

Ruling of the Board of Investments

On May 24, 2012, petitioner issued a letter18 informing respondent that, during the
February 12, 2012 Board Meeting, the Board resolved to withdraw respondent's ITH
incentive for failure to comply with:
(1) the requirements on new projects under the 2007 IPP, specifically the
establishment of another line (beneficiation plant) and the infusion of new
investment in fixed assets; and

(2) the Specific Terms and Conditions attached to respondent's Project Approval
Sheet and Certificate of Registration, requiring respondent to submit a progress
report on the implementation of the registered project and to adhere to a project
timetable on the acquisition of machinery/equipment.
Respondent sought reconsideration, submitting a summary of the major equipment
composing the beneficiation plant as well as a summary of machineries and
equipment and the individual proofs of ownership of the machineries and equipment
it had acquired.19

On August 12, 2013, petitioner issued a letter20 informing respondent that the

Board, during its July 30, 2013 Meeting, resolved to deny respondent's motion for
reconsideration for the following reasons:
(1) late filing;

(2) failure to raise new grounds or information that would warrant a reversal of the
Board's Resolution withdrawing respondent's ITH incentive; and

(3) absence of another line and new investment in fixed assets.

Unfazed, respondent elevated the matter before the CA via a Petition under Rule 43
of the Rules of Court.

Ruling of the Court of Appeals

On December 4, 2014, the CA rendered the assailed Decision finding respondent

entitled to the ITH incentive under the Omnibus Investment Code. The CA ruled that
there was nothing in the 2007 IPP requiring respondent to construct a beneficiation
plant in order to avail of the ITH incentive.21 The CA also found that, contrary to the
findings of petitioner, respondent infused new investments in fixed assets, submitted
progress reports, and complied with the project timetable.22 Thus, there was no
reason for petitioner to withdraw the ITH incentive in favor of respondent. The CA
further said that respondent was denied due process when petitioner (1) failed to
inform respondent that a formal administrative investigation had already been
initiated against it; (2) withdrew respondent's ITH incentive on grounds other than
those raised in the Resolution issued by the Sangguniang Bayan; and (3) denied
respondent's motion for reconsideration for late filing.23 The dispositive portion of
the CA Decision reads:
WHEREFORE, premises considered, the instant Petition for Review is Granted. The
assailed resolutions of the [BOI] embodied in its letters dated May 24, 2012 and
August 12, 2013 withdrawing the ITH entitlement of [respondent] are hereby
ANNULLED and SET ASIDE.

SO ORDERED.24
Petitioner moved for reconsideration but the CA denied the same in its August 11,
2015 Resolution.25

Hence, petitioner filed the instant Petition, interposing the following issues:
I.

WHETHER X X X THE TERMS AND CONDITIONS OF RESPONDENT'S X X X PROJECT

APPROVAL SHEET AND BOI [CERTIFICATE OF REGISTRATION] INCLUDE THE
COMMITMENT TO ESTABLISH A BENEFICIATION PLANT.

II.

WHETHER X X X THE GRANT OF [ITH] INCENTIVE IS A MATTER OF RIGHT UPON

APPROVAL OF RESPONDENT'S X X X [APPLICATION FOR] REGISTRATION AND
DESPITE ITS FAILURE TO ABIDE BY THE TERMS AND CONDITIONS OF ITS
[CERTIFICATE OF] REGISTRATION

III.

WHETHER X X X PETITIONER OBSERVED DUE PROCESS IN WITHDRAWING

RESPONDENT'S X X X [ITH] INCENTIVE.26
Petitioner's Arguments

Petitioner contends that the grant of ITH incentive is not a right but a privilege and
that it is premised on the enterprise's compliance with the requirements of the 2007
IPP.27 In this case, petitioner claims that, upon evaluation of respondent's
compliance with the terms and condition of its ITH incentive entitlement, it found
that respondent was not entitled to an ITH incentive as it failed to fulfill its
commitment to infuse huge capital investments and construct a beneficiation
plant.28 Petitioner likewise points out that the ore processing activity of respondent
was different from what was described in its application for registration as a new
producer.29 Thus, petitioner maintains that it did not err in cancelling respondent's
entitlement to an ITH incentive.

As to the issue of due process, petitioner avers that respondent was accorded due
process as it was informed of its violations and was given ample opportunity to
explain its side and present evidence.30

Respondent's Arguments

Respondent, on the other hand, puts in issue the lack of authority of the Officer-in-
Charge (OIC), BOI Managing Head, Ma. Corazon Halili-Dichosa (OIC Halili-Dichosa),
to sign the verification and certification of non-form shopping31 as well as the failure
of petitioner to attach material portions of the records of the case.32 Respondent
argues that there was nothing in Memorandum Order No. 2015-080, series of2015,
dated October 9, 2015 to indicate that the OIC is authorized to sign the verification
and certification of non-forum shopping as it is not among the list of official
documents mentioned in Department Order No. 14-39, series of 2014.33

As to the merits of the case, respondent insists that the CA correctly ruled that the
withdrawal of respondent's ITH incentive was without any basis since respondent
was able to comply with the requirements under the 2007 IPP by making substantial
investments in fixed assets and by submitting progress reports on the
implementation of its new project.34 Respondent also echoes the view of the CA that
there was nothing in the 2007 IPP to suggest that an actual physical structure or
building must be erected to be registered as a new project as the same could refer
to an equipment such as a conveyor belt.35 In fact, respondent was registered as a
new project because of its newly adopted beneficiation process, not because of any
alleged representation to construct a beneficiation plant.36 In any case, respondent
claims that it has an assemblage of equipment and machineries which comprise its
beneficiation plant.37 Finally, respondent likewise asserts that the withdrawal of its
ITH incentive was without due process as petitioner failed to comply with the
procedure laid down in the 2004 Revised Rules of Procedure on the Cancellation of
Registration under Republic Act No. 5135, Presidential Decree No. 1789, Batas
Pambansa Blg. 391 and Executive Order No. 226 (2004 BOI Revised Rules).38

The Court's Ruling

The Petition must be denied.

The Officer-in-Charge is authorized to sign the verification and certification

of non-forum shopping.

Respondent questions the authority of OIC Halili-Dichosa to sign the verification and
certification of non-forum shopping. Respondent claims that Memorandum Order No.
2015-080 only authorized OIC Halili-Dichosa to sign and approve vouchers,
contracts, orders, and other official documents included in Department Order No.
14-39. And since the verification and certification of non-forum shopping of the
instant Petition is not included in the list of official documents, OIC Halili-Dichosa
had no authority to file the instant Petition and sign the verification and certification
of non-forum shopping of the same.

Although it appears that the verification and certification of non-forum shopping was
not among the list of official documents mentioned in Department Order No. 14-39,
series of 2014, the Court is still inclined to uphold the authority of OIC Halili-Dichosa
to sign the same. In Memorandum Order No. 2015-080, Supervising Director Halili-
Dichosa was designated OIC of petitioner in the interest of service as the
Undersecretary/Managing Head was on an official trip. Considering the rationale of
the said Memorandum, the Court finds that any doubt as to the authority of OIC
Halili-Dichosa to file the instant case and to sign the verification and certification of
non-forum shopping should be resolved in favor of the government. Obviously, OIC
Halili-Dichosa caused the filing of the instant Petition in the performance of her
duties and in order to protect the interests of the government. Thus, it is more
prudent for the Court to decide the instant Petition on the merits rather than to
dismiss it on a mere technicality.

Besides, in recent cases, the Court has allowed certain officials and employees to
sign the verification and certification of non-forum shopping on behalf of the
company without need of a board resolution. These are the chairperson of the board
of directors, the president of a corporation, the general manager or acting general
manager, the personnel officer, the employment specialist in a labor case, and other
officials and employees who are "in a position to verify the truthfulness and
correctness of the allegations in the petition."39 In this case, the Court considers OIC
Halili-Dichosa to be in a position to verify the truthfulness and correctness of the
allegations stated in the instant Petition.40

Petitioner attached the material portions of the records as would support

the Petition.

Respondent contends that the failure of petitioner to attach copies of the pleadings
filed before the CA, namely: (1) respondent's Petition for Review; (2) petitioner's
Comment; (3) respondent's Reply to Comment; (4) the Memoranda of the parties;
(5) petitioner's Motion for Reconsideration; and (6) respondent's
Comment/Opposition, is a ground for the dismissal of the instant case under
Sections 4(d)41 and 5,42 of Rule 45 of the Rules of Court.

The Court does not agree.

The determination of what pleadings are material to the Petition is up to the

Court.43 In this case, the Court finds that the pleadings filed before the CA were not
material considering that most of the attachments to these pleadings were already
attached to the instant Petition. What is important is that the assailed Decision and
Resolution, the letters and issuances of petitioner as well as the documents
submitted by respondent to petitioner were all attached to the Petition. Besides,
such failure has been cured as the CA records have been elevated before the Court.

In F.A.T. Kee Computer Systems, Inc. v. Online Networks International, Inc.,44 the

Court explained that:
Rule 45, Section 4 of the Rules of Court indeed requires the attachment to the
petition for review on certiorari 'such material portions of the record as would
support the petition.' However, such a requirement was not meant to be an ironclad
rule such that the failure to follow the same would merit the outright dismissal of the
petition. In accordance with Section 7 of Rule 45, 'the Supreme Court may require
or allow the filing of such pleadings, briefs, memoranda or documents as it may
deem necessary within such periods and under such conditions as it may consider
appropriate.' More importantly, Section 8 of Rule 45 declares that '[i]f the petition is
given due course, the Supreme Court may require the elevation of the complete
record of the case or specified parts thereof within fifteen (15) days from notice.'
Given that the TSN of the proceedings before the RTC forms part of the records of
the instant case, the failure of FAT KEE to attach the relevant portions of the TSN
was already cured by the subsequent elevation of the case records to this Court.
This pronouncement is likewise in keeping with the doctrine that procedural rules
should be liberally construed in order to promote their objective and assist the
parties in obtaining just, speedy and inexpensive determination of every action or
proceeding.45
Having disposed of the procedural matters, the Court shall proceed to the
substantive issues.

Respondent was afforded due process.

Petitioner imputes error on the CA in finding that respondent was not afforded due
process. Petitioner insists that respondent was informed in the letter dated April 11,
2011 of its violation and was given several opportunities to refute the same.
Respondent, however, highlights the failure of petitioner to follow the procedure for
the Cancellation of Registration provided in Sections 1 to 4, Rule II of the 2004 BOI
Revised Rules, which reads:
RULE II
Cancellation of Registration

SECTION 1. Initiate Cancellation Proceedings. - The 'Department' concerned shall

initiate cancellation procedures against BOI-registered enterprises. It shall prepare a
Memorandum for the cancellation of the BOI registration based on any of the
ground/s so enumerated in Rule I, Section 2, par. (a) to (k). The same shall be
supported by substantial evidence on record.

At the instance of any interested party and upon finding of reasonable basis to prove
that the registered enterprise has committed any of the grounds for the cancellation
of registration under Section 2 of these rules, the Department concerned shall
prepare a 'show-cause letter of cancellation of registration' addressed to the subject
BOI registered enterprise requiring it to explain in writing why its registration should
not be cancelled.

SECTION 2. Memorandum; Contents. - The Memorandum for the cancellation of

registration shall contain the following:

a.) The status of registration of the enterprise;

b.) The grounds for the cancellation of registration, a statement of the acts or
omissions constituting the same, a statement of facts to establish compliance by the
Board with the due notice requirement mandated under Article 7 of E.O. 226, the
law and evidence in support of its findings and a recommendation for the
cancellation of registration including:

(i) The imposition of fines and penalties, including the payment of interest, with
basis therefor;

(ii) A recommendation for an order of refund, if warranted by the facts/evidence at

hand;

SECTION 3. Complaint by an Interested Party; Contents. - Any interested party may

file a verified complaint for the cancellation of the registration of any BOI registered
enterprise. It shall contain the following:

a.) Name and address of the Complainant and his legal capacity to file the
complaint;

b.) Name and address of the registered enterprise complained of;

c.) Ground/s for the cancellation of registration and the acts or omissions
complained of as constituting the same; and

SECTION 4. Show-Cause Letter of Cancellation; Contents. - The 'show-cause letter'

shall be addressed to the registered enterprise concerned and shall contain the
following:

a) Ground/s for the cancellation of the registration;

b) Acts and/or omissions constituting the same;

c) Imposition of fines and/or penalties, whenever applicable;

d) Order of refund of incentives, whenever applicable;

e) Order for the registered enterprise to file its 'Reply' within fifteen (15) days from
receipt of the 'show-cause' letter with a proviso that failure or inability to reply
within such period will constrain the Office to immediately recommend the
cancellation of the registration of the subject enterprise by way of a Memorandum.
Respondent claims that the Resolution of the Sangguniang Bayan of the Municipality
of Tubay cannot be considered as a verified complaint nor can the letter dated April
11, 2011 be deemed as a show-cause letter. Petitioner likewise cannot claim that it
initiated motu proprio proceedings against respondent considering that it failed to
prepare a memorandum as required under Section 1 of the BOI Revised Rules.

Due process in administrative proceedings is defined as "the opportunity to explain

one's side or the opportunity to seek a reconsideration of the action or ruling
complained of."46 Because of the nature of administrative proceedings,
administrative agencies are usually given a wide latitude or sufficient leeway in
applying technical rules of procedure.47

In this case, although there may have been infirmities or lapses in initiating the
cancellation process, the Court, nonetheless, finds that essentially respondent was
afforded due process since it was informed of the allegations against it and was
given ample opportunity to refute the same. Records show that respondent received
the letter dated April 11, 2011 informing it of the allegations made by
the Sangguniang Bayan and of the Sangguniang Bayan's request for the cancellation
of respondent's BOI registration; that the said letter required respondent to file a
reply within 15 days from receipt of the same; that respondent was allowed to
submit evidence to refute the allegations against it; and that respondent sought
reconsideration of the withdrawal of its ITH incentive. These clearly show that the
essence of due process was complied with.

It must be stressed though that in finding that respondent was afforded due
process, the Court is not implying that rules of procedures may be brushed aside or
trivialized. What the Court is saying is that the rigid application of the rules of
procedure should be avoided if it would result in delay or frustrate rather than
promote substantial justice.48

However, while respondent was not deprived of due process, the Court,
nevertheless, finds that, as aptly found by the CA, the withdrawal of the ITH
incentive was without any basis.

Respondent is entitled to an ITH incentive.

Petitioner claims that the CA erred m reversing and setting aside its resolutions
withdrawing respondent's ITH incentives. Petitioner maintains that respondent failed
to comply with the terms and conditions attached to its Certificate of Registration;
specifically, respondent failed to:
1) establish another line (beneficiation plant) contrary to its representations;

2) infuse new investment in fixed assets;

3) submit progress reports; and

4) adhere to its project timetable.

However, after a careful review of the records, the Court agrees with the findings of
the CA that the withdrawal of respondent's ITH incentive was not supported by the
law and the evidence.

In its Application for Registration,49 respondent asked that it "be considered as a

NEW PRODUCER OF BENEFICIATED SILICATE ORE on the basis of its newly granted
[Mineral Production Sharing Agreement] and newly adopted beneficiation
process."50 Clearly, respondent never made any representation that it would be
building a beneficiation plant. Moreover, there was nothing in the terms and
conditions of both the Project Approval Sheet51 and respondent's Certificate of
Registration52 as well as in the 2007 IPP to indicate that a construction of a new
plant was required for respondent to be registered as a "new project." The pertinent
provision of the General Guidelines of the 2007 IPP reads:
X. PROJECT TYPE AND STATUS

1. New Projects

Other than the normal definition of a new project, i.e., one to be undertaken by a
newly formed/incorporated enterprise, the following are deemed new projects:

a Project to be establish by an existing enterprise with existing business operation(s)

entirely distinct and different from the proposed project in terms of either final
product or service, production process, equipment or raw material.

b. Project to be established by an existing enterprise along the same line of business

as any of its existing operations provided it meets the following:

i. the new project will involve the establishment of another line that may be put up
in a site either outside or contiguous to its existing premises or compound.

'Another Line' refers to new facilities used in the production of the registered
product/service. This line may use a facility common to an existing line such as
warehouse, finishing, quality control or laboratory.

'New Facility' refer to the space or area, physical structure and equipment provided
for a particular purpose or segment of the production process/service activity.

ii. There is new investment in fixed assets and working capital.

xxxx
Since there was no such requirement under the terms and conditions of both the
Project Approval Sheet and respondent's Certificate of Registration as well as in the
2007 IPP, petitioner cannot use this as ground to withdraw respondent's ITH
incentive.

In any case, even if respondent did commit to build a beneficiation plant, the Court
agrees with respondent that a commitment to build a beneficiation plant does not
necessarily require the construction of an industrial building or structure, as a
beneficiation plant could also be an assemblage of equipment and machineries
where the beneficiation process could be done. In this case, respondent was able to
prove that it has a beneficiation plant, consisting of the following equipment and
machineries:
1) Kleeman Mobile Process Screen;

2) Commander Power Screen;

3) Commander Trommel Washer;

4) Terex Mobile Crusher;

5) CAT 950 Front Loader;

6) CAT 320 Backhoe; and

7) HM 350 Komatsu Articulated Trucks.53

As to petitioner's allegations that respondent failed (1) to infuse new investments in
fixed assets; (2) to submit progress reports; and (3) to adhere to its project
timetable, these are belied by the evidence. In fact, records show that respondent
has invested a total of P1,151,666,643.01 for equipment and machineries, which are
being used to produce beneficiated nickel silicate ore,54 and has submitted progress
reports to petitioner.55 Quoted below are the findings of the CA on these matters,
which the Court adopts as its own:
As for [respondent's] alleged failure to infuse new investments in fixed assets and
acquisition of machinery/equipment, We find that, based on the evidence submitted
by [respondent], which [petitioner] has not refuted or disputed, [respondent] has:

(a) already invested a total amount of One Billion One Hundred Fifty-One Million Six
Hundred Sixty-Six Thousand Six Hundred Forty-Three Pesos and 1/100
(Php1,151,666,643.01);

(b) acquired, developed and/or constructed new facilities such as mine structures
(i.e. ore stockyards and pier yards, dumpsites, haul roads, drainage canals, setting
ponds) and support facilities (i.e. office building, motor pool/ME shop, bunkhouses
and recreational facility, beaching areas or causeway); and

(c) acquired major equipment components of the beneficiation plant (i.e. 1 unit of
Kleeman Mobiscreen, 1 unit of Caterpillar Model 320 DL HE, 2 units of Komatsu
HM350-2, 1 unit of Commander Power Screen, 1 unit of Caterpillar 950H Wheel
Loader, 2 units of Komatsu HM 350-1, 1 unit of Terex Mobile Crusher and 1 unit of
Caterpillar Model 320 DL HE).

We cannot agree with [petitioner's] contention that [respondent] failed to comply

with the project time table incorporated in its BOI [Certificate of Registration]
because allegedly [respondent] purchased major equipment only in 2012. We find
that [respondent] has sufficiently explained and proved that the pieces of equipment
acquired in 2012 were merely a re-fleeting of old equipment and the acquisition of
Kleeman Mobiscreen (used in screening crushed material from sized material) by
[respondent] in 2012 is not evidence that before that, [respondent] has no existent
and fully functional beneficiation process, albeit sizing, prior to the acquisition of
Kleeman Mobiscreen in 2012, was done manually. We note [petitioner's]
unsupported contention is highlighted by [respondent's] unrebutted claim that
[petitioner] has not made any site inspection to be able to say that [respondent] has
no beneficiation plant or has not infused new investment in terms of fixed assets,
equipment and machineries.

We cannot likewise uphold [petitioner's] finding that [respondent] failed to submit

progress reports as required under its BOI [Certificate of Registration]. Documentary
evidence submitted by [respondent] includes such reports as filed negating BOI's
finding. WE also note that [respondent] has, in fact [been] issued a Certificate of
Good Standing by the Director of the Supervision and Monitoring Department of
BOI.56
All told, the Court finds that the withdrawal of respondent's ITH incentive was
without any basis, and thus, affirms the ruling of the CA reversing and setting aside
the resolutions embodied in petitioner's letters dated May 24, 2012 and August 12,
2013. As a general rule, factual findings of administrative agencies are not interfered
with; an exception, however, is when said findings are not supported by substantial
evidence, such as in the instant case.57

WHEREFORE, the Petition is hereby DENIED. The assailed December 4, 2014

Decision and the August 11, 2015 Resolution of the Court of Appeals, in CA-G.R SP
No. 131511 are hereby AFFIRMED.

SO ORDERED.