National Federation of Hog Farmers, Inc. vs. Board of Investments

A petition for certiorari filed directly with the Supreme Court is not the proper remedy to challenge the Board of Investments' quasi-judicial approval of applications for registration under the Investment Priorities Plan; the correct and adequate remedy is an appeal to the Office of the President under Article 36 of Executive Order No. 226, and the doctrine of primary administrative jurisdiction precludes the Supreme Court from taking original cognizance of such administrative actions.

The Board of Investments was created under Republic Act No. 5186 (the Investment Incentives Act) and operates under Executive Order No. 226 (the Omnibus Investments Code of 1987), exercising both quasi-legislative and quasi-judicial functions, including the preparation of the annual Investment Priorities Plan and the processing and approval of applications for registration of enterprises. Under Republic Act No. 7042 (the Foreign Investments Act of 1991), up to 100% foreign ownership in domestic enterprises is permitted except in areas listed on the Foreign Investment Negative List. Agriculture/agribusiness and fishery were included in the Board of Investments' Investment Priorities Plans for 2010, 2011, and 2012, and were never included in any Foreign Investment Negative List. Charoen Pokphand Foods Philippines Corporation is a 100% foreign-owned company from Thailand, registered with the Securities and Exchange Commission on May 24, 2007.

Charoen Pokphand Foods Philippines Corporation, a 100% foreign-owned company from Thailand, was registered with the Securities and Exchange Commission on May 24, 2007. On three separate occasions, Charoen submitted to the Board of Investments applications for registration as a new producer of different products and services, each undergoing a two-step process of check-listing and assessment by the Resource-Based Industries Department before publication and official filing.

Charoen's first application was submitted on October 6, 2011, seeking registration as a new producer of aqua feeds on pioneer status. On December 28, 2011, the Philippine Star published a notice of the application, directing any person with objections to file a sworn statement with the Board of Investments within three days. Charoen officially filed the application on February 2, 2012, by paying the requisite fees. On February 28, 2012, the Board of Governors approved the application under Board Resolution No. 8-3 S'2012, registering Charoen as a new producer of aqua feeds at an annual capacity of 114,000 MT on pioneer status. Charoen's second application, submitted on October 14, 2011, sought registration as a new producer of hog parent stocks and slaughter hogs. The Philippine Star published the notice on January 5, 2012. After Charoen paid the application fees on March 28, 2012, the Board of Governors approved the application on April 24, 2012, under Board Resolution No. 13-6 S'2012. The third application, submitted on October 11, 2012, was for an Integrated Broiler Project. After publication on October 24, 2012, and payment of fees on October 23, 2012, the Board of Governors approved the application on November 6, 2012, under Board Resolution No. 35-10 S'2012.

On November 20, 2012, counsel for members of the local swine, poultry, and aquaculture industries wrote the Board of Investments requesting copies of documents Charoen submitted in support of its three applications. On December 17, 2012, the Board of Investments denied the request, citing confidentiality. On March 7, 2013, the National Federation of Hog Farmers, Abono Party-list, Alyansa ng mga Grupong Haligi ng Agham at Teknolohiya Para sa Mamamayan, Inc., Agricultural Sector Alliance of the Philippines, Inc., Pork Producers Federation of the Philippines, Inc., Sorosoro Ibaba Development Cooperative, and Association of Philippine Aqua Feeds Millers, Inc. jointly filed before the Supreme Court a Petition for Certiorari with prayer for a temporary restraining order, claiming that the three Board Resolutions were issued with grave abuse of discretion. Petitioners alleged that the resolutions violated their constitutional right to be protected against unfair foreign competition, that the Board of Investments deliberately deprived them of the chance to appeal by refusing to provide copies of the resolutions, that the resolutions were issued without prior consultation with the Department of Agriculture, and that Charoen was wrongly classified as a new producer when it had been operating in the Philippines as early as 2009. The records further showed that on November 28, 2012, petitioner Palmones filed House Resolution No. 2921 calling for an investigation of the fiscal incentives granted to Charoen, and that on December 4, 2012, public respondent informed the Joint Congressional Hearing, which Palmones attended, of the exact dates of promulgation of the assailed Board Resolutions.

• Constitutional Right to Protection Against Unfair Foreign Competition: Petitioners alleged that the assailed Board Resolutions violated their constitutional right to be protected against unfair foreign competition and trade practices, stressing that they would sustain injury because they do not enjoy incentives similar to those granted to Charoen, which gave the latter undue advantage to significantly lower its prices.
• Deprivation of Right to Appeal: Petitioners accused public respondent of deliberately depriving them of the chance to appeal by refusing to provide copies of the pertinent resolutions, making a timely appeal to the Office of the President impossible.
• Lack of Prior Consultation with the Department of Agriculture: Petitioners maintained that the assailed Board Resolutions were issued without prior consultation with the Department of Agriculture, as required by Executive Order No. 226, and were contrary to public policy.
• Misclassification as New Producer: Petitioners asserted that public respondent wrongly classified Charoen as a new producer when it had been operating in the Philippines as early as 2009, raising shrimps and hogs, as shown in its audited financial statements.
• Misrepresentations in Applications: Petitioners pointed out that Charoen alleged it spent ₱2,330,892,000 for construction works in its three new projects for 2011, yet its financial statement that year showed property and equipment valued at only ₱334,014,644, and argued that public respondent turned a blind eye to these misrepresentations.
• Violation of Implementing Rules: Petitioners claimed Charoen violated Rule III, Section 4 of Executive Order No. 226's Implementing Rules and Regulations because the date of publication preceded the Board's official acceptance of the application.
• Grave Abuse of Discretion Rendering Resolutions Void: Petitioners contended that because public respondent gravely abused its discretion, the assailed Board Resolutions are void, making the case an exception to the general rule of immutability of judgment.

• Failure to Exhaust Administrative Remedies (BOI): Public respondent argued that petitioners should have first appealed to the Office of the President, which is the available remedy from its decisions on applications for registration under Article 36 of Executive Order No. 226, and faulted petitioners for filing directly before the Supreme Court instead of the Court of Appeals as required under Rules 43 and 65.
• Lack of Authority and Improper Parties (BOI): Public respondent claimed petitioners were not properly authorized to file the Petition, as the special powers of attorney did not include filing an original action before the Supreme Court, and that its Executive Directors were not proper parties as they were not members of the Board of Governors who signed the assailed resolutions.
• No Withholding of Resolutions (BOI): Public respondent denied petitioners' claim that it withheld copies of the assailed Board Resolutions, averring that petitioners only asked for copies of the supporting documents and not the resolutions themselves.
• Resolutions Within Powers (BOI): Public respondent emphasized that it issued the assailed Board Resolutions within its powers under Executive Order No. 226 and the Investment Priorities Plan then in effect, which was formulated through consultations with the Department of Agriculture and other stakeholders, and that the applications were approved to bridge the gap between local production and local demand.
• No Automatic Mantle of Protection (BOI): Public respondent asserted that the Constitution does not bestow an automatic mantle of protection against foreign competition, that agribusiness is not among areas requiring at least 60% Filipino capitalization, and that 100% foreign equity participation is allowed in agribusiness.
• Belated Filing (BOI): Public respondent posited that the Petition was belatedly filed, claiming the 60-day period for certiorari should be counted from December 4, 2012, when petitioners learned of the exact dates of promulgation, meaning they only had until February 2, 2013.
• Economic Nationalism Does Not Proscribe Foreign Investments (Charoen): Private respondent asserted that while the Constitution is guided by economic nationalism, Filipino monopoly of the economy is proscribed and foreign investments are encouraged to boost the Philippine economy, as evidenced by numerous laws enacted to attract foreign investments.
• Finality of Resolutions (Charoen): Private respondent maintained that the assailed Board Resolutions had long attained finality and that public respondent did not gravely abuse its discretion in approving the applications, having carefully assessed that they adhered to existing rules and regulations.
• Deference to BOI Findings (Charoen): Private respondent averred that the findings of fact of public respondent, as a specialized government agency tasked with the preparation of the Investment Priorities Plan and registration of pioneer new products, should be respected.

• Propriety of Remedy: Whether the Petition for Certiorari filed directly before the Supreme Court is the correct remedy.
• Grave Abuse of Discretion: Whether the Board of Investments committed grave abuse of discretion when it approved the applications for registration of Charoen Pokphand Foods Philippines Corporation.

• Propriety of Remedy: No. The petition is not the correct remedy. Jurisdiction over the approval of applications for registration lies exclusively with the Board of Investments under the doctrine of primary administrative jurisdiction, subject to appeal to the Office of the President under Article 36 of Executive Order No. 226. The petition was also not justiciable, was filed beyond the 60-day reglementary period, and petitioners lacked standing.
• Grave Abuse of Discretion: No. The Board of Investments committed no grave abuse of discretion. Agribusiness is not a nationalized industry, 100% foreign equity is permitted, the applications went through the required process under Executive Order No. 226, and the Board's findings of fact are entitled to respect and deference as they were supported by substantial evidence.

• Propriety of Remedy: The Board of Investments exercises quasi-judicial power when it processes and approves applications for registration under Article 7(3) of Executive Order No. 226. This quasi-judicial power was bestowed exclusively on the Board of Governors owing to its expertise over which industries need investments and its in-depth knowledge of registration requirements. Under the doctrine of primary administrative jurisdiction, jurisdiction over the approval of applications for registration lies exclusively with the Board of Investments, subject to appeal to the Office of the President under Article 36. The Supreme Court is precluded from taking cognizance of the petition. The case is also not justiciable: petitioners-organizations failed to show that they suffered or stood to suffer direct injury from Charoen's registration, and failed to show that their members were hindered from personally asserting their interests, thus lacking third-party standing. The claim of unfair competition is primarily factual in nature, requiring a definition of the relevant market through reasonable interchangeability of offerings and significant cross-elasticity of demand — a factual finding the petition does not support, rendering it premature. Petitioners could have objected to the applications during the publication period, which would have entitled them to copies of the resolutions and a timely appeal. They had notice of the resolutions by November 28, 2012, and learned the exact dates by December 4, 2012, yet filed the petition only on March 7, 2013 — 99 days after first having notice, well beyond the 60-day reglementary period under Rule 65, Section 4.

• Grave Abuse of Discretion: The Constitution mandates that the State develop a self-reliant economy but does not proscribe the entry of foreign investments. Article II, Section 20 recognizes the indispensable role of the private sector and provides incentives to needed investments. Article XII, Section 13 tasks the State to pursue a trade policy utilizing all forms of exchange on the basis of equality and reciprocity. Article XII, Section 1 implies that foreign investments may participate in the local market while shielding domestic ventures from unfair foreign competition. Article XII, Section 10 empowers Congress to reserve certain areas of investment to Filipinos but also to regulate foreign investments within national jurisdiction. Agriculture/agribusiness and fishery were included in the Investment Priorities Plans for 2010, 2011, and 2012, and were not included in any Foreign Investment Negative List. The Department of Agriculture itself recommended the retention of feeds in the IPP list. Charoen's status as a 100% foreign-owned corporation would not cause denial of its applications. The applications went through the required process, and the Board evaluated them based on compliance with the IPP, net value-added, job generation, multiplier effect, and measured capacity, considering data on the discrepancy between local production and local demand. An administrative agency's findings of fact are entitled to respect and deference, and the issuance of the assailed Board Resolutions was amply supported by substantial evidence.

• Doctrine of Primary Administrative Jurisdiction — When a case falls within the exclusive jurisdiction of an administrative agency by virtue of its specialized expertise, courts are without jurisdiction and must dismiss the case. Unlike the doctrine of exhaustion of administrative remedies (which is a form of courtesy where the court has jurisdiction but defers to the agency), primary administrative jurisdiction means jurisdiction lies exclusively with the agency and the court has no alternative but to dismiss. Applied here: the Board of Investments' quasi-judicial power to assess and approve applications for registration was bestowed exclusively on the Board of Governors, precluding the Supreme Court from taking cognizance of the petition.

• Doctrine of Exhaustion of Administrative Remedies — A form of courtesy where the court defers to the administrative agency's expertise and waits for its resolution before hearing the case; it assumes the matter is within the court's jurisdiction but the court in its discretion deems the case not justiciable. Distinguished from primary administrative jurisdiction, where jurisdiction lies exclusively with the administrative agency.

• Standing (Locus Standi) — A personal and substantial interest in the case such that the party has sustained or will sustain a direct injury as a result of the challenged governmental act. For organizations to bring suit on behalf of third parties, three criteria must be met: (1) the party bringing suit must have suffered an injury-in-fact giving a sufficiently concrete interest; (2) the party must have a close relation to the third party; and (3) there must exist some hindrance to the third party's ability to protect his or her own interests. Applied here: petitioners-organizations failed to show direct injury or hindrance to their members, thus lacking third-party standing.

• Justiciability — A controversy is justiciable if the following requisites are present: (1) an actual case or controversy over legal rights requiring the exercise of judicial power; (2) standing or locus standi; (3) the constitutionality was raised at the earliest opportunity; and (4) the constitutionality is essential to the disposition of the case or its lis mota. Applied here: the petition failed the justiciability threshold because petitioners lacked standing and their unfair-competition claim required factual findings not before the Court.

• Deference to Administrative Agency Findings of Fact — An administrative agency's findings of fact are entitled to respect and deference, as the recognized specialist in its assigned field can resolve issues with more expertise and dispatch than the legislature or courts. Applied here: the Board of Investments' issuance of the assailed resolutions was amply supported by substantial evidence, negating petitioners' claim of grave abuse of discretion.

• "Nationalism is not a mindless ideal. It should not unreasonably exclude people of a different citizenship from participating in our economy. If it were so, nationalism will not foster social justice; rather, it will sponsor a kind of racism quite like what our ancestors had suffered from in our colonial past." — The opening passage frames the decision's philosophical approach to economic nationalism and foreign investment, distinguishing principled nationalism from exclusionary protectionism.

• "The constitutional line demarcating privileges for our citizens over foreigners is a delicate one. We must adjudicate where such line is drawn only with a grounded consciousness of the facts of an actual case rather than through fiery passions of general advocacy." — This passage articulates the Court's adjudicative philosophy: constitutional questions of economic nationalism must be resolved on concrete facts, not abstract advocacy.

• "Thus, under the doctrine of primary administrative jurisdiction, jurisdiction over the approval of applications for registration lies exclusively with the Board of Investments, subject to appeal to the Office of the President. Hence, this Court is precluded from taking cognizance of the present Petition." — This is the ratio decidendi on the first issue, stating the controlling rule that bars the Supreme Court from taking original jurisdiction over the Board's quasi-judicial act.

• "[T]he constitutional policy of a 'self-reliant and independent national economy' does not necessarily rule out the entry of foreign investments, goods and services. It contemplates neither 'economic seclusion' nor 'mendicancy in the international community.'" — Quoted from Tañada vs. Angara, this passage defines the constitutional framework for foreign investment, clarifying that economic nationalism is not isolationism.

• Tañada vs. Angara, 338 Phil. 546 (1997) — Controlling precedent on the constitutionality of foreign economic participation. The Court sustained the validity of the WTO Agreement, ruling that Article II, Section 19 of the Constitution is not self-executing and that the Constitution does not pursue an isolationist policy. The Court noted that statements in Tañada regarding Filipino First policies were abstractly made without real parties in interest and should be revisited in a proper case.

• Phillips Seafood (Philippines) Corp. vs. The Board of Investments, 597 Phil. 650 (2009) — Followed for its summary of the remedies available under Executive Order No. 226, distinguishing between appeals to the Office of the President (under Articles 7 and 36) and direct judicial review (under Articles 50 and 82).

• Espina vs. Zamora, Jr., 645 Phil. 269 (2010) — Followed for its explication that the Constitution does not bar foreign investors but empowers Congress to determine which areas to reserve to Filipinos and which to open to foreigners, and that the key is to strike a balance between protecting local businesses and allowing foreign investment.

• Katon vs. Palanca, 481 Phil. 168 (2004) — Cited for the doctrine that when a court is faced with a case under an administrative agency's exclusive jurisdiction, it must dismiss for lack of jurisdiction, and any action rendered would be void.

• White Light Corp. vs. City of Manila, 596 Phil. 444 (2009) — Discussed on third-party standing, where hotel and motel operators were allowed to represent their clients based on close relationship and hindrance; distinguished here because petitioners-organizations failed to show direct injury or hindrance to their members.

• Smart Communications, Inc. vs. National Telecommunications Commission, 456 Phil. 145 (2003) — Cited for the definition of quasi-judicial power of administrative agencies and the distinction between quasi-legislative and quasi-judicial administrative action for purposes of determining when judicial remedies may be availed of.

• Article VIII, Section 1, 1987 Constitution — Defines judicial power as including the duty to settle actual controversies involving legally demandable and enforceable rights and to determine grave abuse of discretion. Applied as the constitutional basis for the Court's power of judicial review and the justiciability requirement.

• Article VIII, Section 5(1) and (2), 1987 Constitution — Defines the Supreme Court's original and appellate jurisdiction. The Court noted that while it has original jurisdiction over petitions for certiorari, jurisdiction over the subject matter of administrative quasi-judicial actions is conferred by statute, and the statute here (EO 226) vests such jurisdiction in the Board of Investments with appeal to the Office of the President.

• Article II, Section 19, 1987 Constitution — Mandates the State to develop a self-reliant and independent national economy effectively controlled by Filipinos. Discussed as not self-executing per Tañada vs. Angara, and thus noncompliance does not give rise to a cause of action.

• Article XII, Section 1, 1987 Constitution — Directs the State to protect Filipino enterprises against unfair foreign competition and trade practices. The Court read this alongside Sections 10, 12, and 13 of Article XII to show that the Constitution allows foreign participation while shielding domestic ventures from unfair competition.

• Article XII, Section 10, 1987 Constitution — Empowers Congress to reserve certain areas of investment to Filipinos and to regulate foreign investments within national jurisdiction. Applied to show that Congress has not reserved agribusiness to Filipinos.

• Executive Order No. 226 (Omnibus Investments Code of 1987), Article 7(3) — Empowers the Board of Governors to process and approve applications for registration. Applied as the statutory basis for the Board's quasi-judicial power over registration applications.

• Executive Order No. 226, Article 36 — Provides that any order or decision of the Board over applications for registration is appealable to the Office of the President within 30 days of promulgation. Applied as the correct and adequate remedy petitioners failed to avail of.

• Executive Order No. 226, Article 82 — Authorizes direct appeal to the Supreme Court from any order or decision of the Board involving provisions of the Code. Discussed but distinguished, as the proper remedy for registration applications is the specific appeal under Article 36 to the Office of the President.

• Republic Act No. 7042 (Foreign Investments Act of 1991) — Declares that up to 100% foreign ownership in domestic enterprises is allowed except for areas in the Negative List. Applied to confirm that agribusiness, not being on any Negative List, is open to full foreign equity.

• Rule 65, Section 4, Rules of Court — Requires that a petition for certiorari be filed within 60 days from notice of the judgment, order, or resolution. Applied to hold that the petition, filed 99 days after petitioners first had notice, was filed well beyond the reglementary period.

Peralta, C.J., Perlas-Bernabe, Caguioa, Gesmundo, Reyes, J., Jr., Hernando, Carandang, Lazaro-Javier, Inting, Zalameda, and Delos Santos, JJ., concur. Gaerlan, J., on leave.