Garcia vs. BOI Garcia vs. BOI GR No.

92024/11-09-90/J Gutierrez Nature: petition to review decision of BOI Facts:

576 hectare of public domain located in Lamao, Limay, Bataan were reserved for the Petrochemical Industrial Zone
under admin, management and ownership of PNOC. Bataan Refining Corp (BRC) is a govt owned corporation in
Bataan. Taiwanese investors involved in a petrochemical project formed BRC and applied for registration as a new
domestic producer of petrochemicals with BOI, specifying Bataan as a plant site. The terms agreed upon the use of
naptha cracker and naptha as fuel for the said plant. It was to be a joint venture w/PNOC. They were issued a
certificate of registration. They were given incentives by BOI like exemption from taxes, repatriation of proceeds of
liquidation investments in currency at the exchange rate at time of repatriation, remittance of earnings on investment,
elimination of 48% ad valorem tax on naptha if and when it is used as raw materials In 2/89, the major investor of
BPC decided to change the site from Bataan to Batangas, due to: insurgency and unstable labor situation, presence
in batangas of huge LPG depot owned by Shell. Garcia opposed the proposal and even Pres. Aquino expressed
preference that the plant 21 be in Bataan. Despite opposition, BPC filed request for approval 4/11/89 with the
following terms: increasing investment from $220 to $320 million, increasing production capacity of naptha cracker,
polyethylene and polypropylene plant, changing feedstock from naptha only to naptha and/or LPG and shifting job site
to Batangas. BOI approved, claiming better distribution of industries and the fact that BOI/govt can only
RECOMMEND but respects principle that FINAL CHOICE IS WITH INVESTOR. 09/07/89, Garcia filed petition for
prohibition and injunction. DENIED. Petition for certiorari, meaning that Garcia can air his oppositions via a hearing
GRANTED. However, Garcia did not show up for said hearing. 10/24/89, Garcia questioned the Court for not
deciding if investor does indeed have the final choice of plant site. The Court, due to Garcias not showing up for the
hearing, ruled that Garcia may have lost interest and waived fruit of whatever judgment they would have made
regarding the issue. Petition was, therefore, DENIED. 01/17/90. Garcia filed for motion for reconsideration, stating
that non-attendance due to the courts decision not being final and executory. He is still interested in rescheduling the
hearing and has not waived fruit of judgment. DENIED. A minority in court, however, wanted to grant the petition
because Garcia needed to be heard in order that the court might rule on the issue of who has final choice and also,
BOI should hear Garcia so they may take a second look at their decision to approve investors decision to switch sites.
(Note: BPC changed name to LPC Luzon Petrochemical Corporation) HENCE THIS PETITION. Issue/Held: W/N
BOI exercised a grave abuse in discretion in treating investor as having the final say on the matter of where to put the
petrochemical plant YES Due to BOIs overstepping its limit (abuse of discretion), the Court has the right to step in
and determine the paramount issue. Bataan was original choice as plant site of the BOI to which the BPC agreed
(Kaya nga the name is BATAAN Petrochemical Corp). It is useless to buy new land in Batangas when there is already
land in Bataan waiting to be used. BPC is planning to use not only naptha cracker for fuel but LPG in the
amendment. There is a shortage of LPG and would have to be exported when needed. BRC produces naptha which
can be used for BPCs needs and would be enough. Naptha has been exempted from tax while LPG is not. It is
the duty of the state to regulate and exercise authority over foreign investments w/in national jurisdiction and in
accordance w/its national goal and priorities (Sec 10, Art XII). Investor will raise greater portion of capital FROM
LOCAL SOURCES BY WAY OF LOAN. Capital requirements would be greatly minimized if LPC did not have to buy
new land and if they did not have to use LPG. If plant is maintained in Bataan, PNOC will be a partner in the venture
which, in turn, would benefit the government. Therefore, the advantages clearly outweigh the disadvantages of
transferring to Batangas. Ruling: Petition GRANTED. BOIs decision to approve LPCs transfer is set aside as NULL
AND VOID. AQUINO dissent: It is significant that petitioner has not led outcry for disapproval and cancellation of
project on this score (scandalously liberal financial accommodations that local banks are willing to grant to LPC to
help raise major part of capital requirements from local sources, when people think that foreign investors will bring in
foreign exchange to finance projects 22 in this country), as long as they set up the petrochemical plant in

Bataan. Decision of BOI may be unwise but the court has no right to rule on the wisdom of such decisions. They
should only rule on legality and constitutionality. She wishes to deny petition. Melencio-Herrera dissent: It (the Court)
has made a sweeping policy determination and has unwittingly transformed itself into what might be termed a
government by the judiciary something never intended by framers of the Const when they provided for separation of
powers.