Statutory privilege

This case involves the President’s constitutional power to control and review the acts and decisions of department secretaries and other policy-making or regulatory agencies of the government.

This is about the Board of Investments (BOI) that has regulatory functions in the processing of applications for registration, cancellation of registration or suspension of the enjoyment of certain incentives, as well as the resolution of controversies arising from the implementation of E. O. 226 or the Omnibus Investments Act. Are all decisions or actions of the BOI appealable to the President?

The case concerns a domestic corporation engaged in the export of processed crabmeat and other seafood products (PSPC) registered with the BOI on a non-pioneer status under Certificate of Registration (CR) EP 93-219. It was granted a six year Income Tax Holiday (ITH) beginning July 1993 to July 1999 for locating in a less developed area which was later extended up to August 2000.

On July 21, 1997, PSPC acquired the right to use the canning facilities of its affiliate corporation PSPI due to the temporary suspension of the latter’s operations. Eventually it also acquired the title to the plant, facilities, equipment and other assets of PSPI including its picking facilities in Cebu City. So PSPC relocated its plant and office in Bacolod City and applied for BOI registration of its new plant having an expanded capacity of 155,205 kilograms per year. BOI granted its application (CR VI EP 2000-02) and ITH for 4 years beginning January 2000.

But in a subsequent letter dated September 25, 2003 BOI informed PSPC that the ITH previously granted would be applicable only to the period from August 13, 1999 to October 21 1999 or before its transfer to a “not less developed area”. When PSPC’s letter of reconsideration of said order of BOI was denied, PSPC elevated the matter to the Office of the President (OP).

But on September 22, 2004 the OP denied the appeal on the ground of lack of jurisdiction. When OP denied PSPC’s motion for reconsideration, the latter filed a petition for review before the Court of Appeals (CA) on April 5, 2005 questioning the dismissal of its appeal by the OP.

The CA however dismissed PSPC’s petition for review for having been filed out of time as it opted to appeal to the OP instead of immediately filing a petition for review directly to it under Rule 43 of the Rules of Court.

PSPC questioned this ruling of the CA. It argued that the review by the OP of the BOI decisions must be allowed; otherwise the President’s constitutional power to review the decisions of the department secretaries will be rendered illusory if said decisions may be reviewed only by the CA. Was PSPC correct?

No. the right to appeal is not a constitutional, natural or inherent right—it is a statutory privilege and of statutory origin and, therefore, available only if granted by the statute.

The BOI was created by E.O. 226 which laid down its policy making and regulatory functions. There is no doubt that the granting of the ITH calls for the exercise of BOI’s regulatory functions. E.O. 226 allows two avenues of appeal from an action or decision of the BOI depending on the nature of the controversy. One mode is to elevate an appeal to the OP under Articles 7 and 36 of the E.O which covers controversies between a registered enterprise and a government agency and decisions concerning the registration of an enterprise respectively; and the other is to elevate the matter directly to judicial tribunals like in Articles 50 and 82.

E.O. 226 contains no provision specifically governing the remedy of a party whose application for an ITH has been denied by the BOI. Nevertheless, Article 82 of said E.O. allows appeal to the courts from “all other decisions” of BOI involving other provisions of E.O. 226 not covered by specific provisions setting forth the two modes of appeal. Hence the intendment of the law is undoubtedly to afford immediate judicial relief from the decision of the BOI save in cases mentioned in Articles 7 and 36.

Thus PSPC should have immediately elevated to the CA the BOI’s denial of its application for ITH. This will not render the power of executive control illusory. Executive control is not absolute. It may be effectively limited by the Constitution, by law or by judicial decisions; all the more in the matter of appellate procedure as in the instant case. Appeals are remedial in nature; hence, constitutionally subject to the rule making power of the Supreme Court pursuant to Section 5, Article VIII of the Constitution. In the instant case the enabling law of BOI explicitly allows for immediate judicial relief from its decision involving applications for an ITH (Phillips Seafood Corp. vs. BOI, G.R. 175787, February 4, 2009).

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