G.R. No. 219927, October 3, 2018
BOARD OF INVESTMENTS, PETITIONER, VS. SR METALS, INC., RESPONDENT.

FACTS

The Board of Investments (BOI) approved SR Metals, Inc.’s (SRMI) application for registration as a new producer of beneficiated nickel ore, granting it an Income Tax Holiday (ITH) incentive for 2008-2012. In 2010, the Sangguniang Bayan of Tubay requested the cancellation of SRMI’s registration, alleging it was directly shipping unprocessed ore without a beneficiation plant, contrary to its registration. The BOI directed SRMI to comment. Subsequently, the BOI, in a 2012 letter, withdrew the ITH incentive, citing SRMI’s failure to comply with the 2007 Investment Priorities Plan (IPP) requirements—specifically, the establishment of a beneficiation plant and infusion of new fixed asset investments—and for violating specific terms in its Certificate of Registration regarding progress reports and project timetables.
SRMI moved for reconsideration, submitting equipment lists and proofs of ownership to demonstrate compliance. The BOI denied the motion, citing late filing and failure to present new grounds. SRMI then petitioned the Court of Appeals (CA), which annulled the BOI’s resolutions. The CA ruled that the 2007 IPP did not explicitly require a beneficiation plant, that SRMI had infused new investments and submitted reports, and that the BOI violated due process by withdrawing the incentive on grounds not originally raised by the Sangguniang Bayan and by penalizing a late reconsideration motion that was nonetheless considered on the merits. The BOI elevated the case to the Supreme Court.

ISSUE

The core issue is whether the Court of Appeals erred in annulling the BOI’s withdrawal of SRMI’s ITH incentive.

RULING

The Supreme Court denied the BOI’s petition and affirmed the CA’s decision. The Court emphasized that administrative decisions must be based on substantial evidence and that due process requires notice of the specific charges. The BOI’s withdrawal was primarily based on SRMI’s alleged failure to establish a beneficiation plant. However, the Court scrutinized the 2007 IPP and SRMI’s Certificate of Registration and found no explicit condition mandating the construction of a separate beneficiation plant. The approved activity was “production of beneficiated nickel ore,” which could be accomplished through methods not necessarily requiring a dedicated plant structure. The BOI failed to substantiate its claim that such a plant was an indispensable requirement under the governing rules.
Furthermore, the Court found a denial of due process. The initial complaint from the Sangguniang Bayan alleged direct shipping of unprocessed ore. The BOI, however, withdrew the incentive based on different grounds—non-establishment of a plant and lack of new investments—without formally notifying SRMI that these new issues were the subject of the administrative case. SRMI was not given a meaningful opportunity to address these specific charges before the withdrawal. Additionally, while the BOI denied the motion for reconsideration for late filing, it proceeded to rule on the merits, which was inconsistent and arbitrary. The grant of an incentive, once approved, carries a property interest that cannot be revoked without both factual basis and procedural fairness. The BOI’s action lacked the requisite evidentiary support and violated SRMI’s right to be heard on the specific causes for withdrawal.