Court allows JG Summit to move plant

BY PAUL C.H. HOW, BusinessWorld Reporter The Supreme Court has allowed Gokongwei- owned JG Summit Petrochemical Corp. (JGSPC) to move its plant from Bataan to Batangas City, settling a 10-year dispute on the legality of the transfer. The high court’s second division affirmed a Court of Appeals ruling that denied the petition of Bataan Gov. Enrique T. Garcia, who had earlier claimed two presidential decrees during the Marcos regime had provided that the plant should be located in the municipality of Limay. In the decision penned by Associate Justice Conchita Carpio Morales, the high court said Presidential Decrees no. 949 and 1803 did not specify where the plant, which makes polyethylene and polypropylene resins, should be established. "The law reserved an area for a petrochemical industrial zone in Bataan and that PNOC (Philippine National Oil Co.) was to operate, manage and develop it," the court said. "There is, however, nothing further in the law to indicate that the choice of Limay, Bataan, as a petrochemical zone was exclusive," it added. The tribunal cited Sec. 2 of PD 949, dated June 17, 1976, which provided that the PNOC "may lease, sell and/or convey such portions of the petrochemical industrial zone to private entities or persons locating their plants therein." The use of the word "may" in the provision, the high court said, "runs counter to the exclusivity of the Bataan site because it makes it merely directory, rather than mandatory" for the state firm to enter into a joint venture with private entities. The PNOC entered into a joint venture with JG Summit Petrochemical. PD 1803, dated Jan. 16, 1981, had amended PD 949, enlarging by 188 hectares the area reserved for the petrochemical industrial zone. Although this decree mentioned the site of Limay, Bataan, by name, the high court pointed out that it did not express any intent to make the site exclusive. "It sought simply to amend PD 949," it said. The high court also upheld the Board of Investments’ (BoI) May 24, 1996 decision finding that the country could sustain the establishment of new petrochemical facilities, including the Batangas plant, from 1996 to 2012. JG Summit Petrochemical is 80%-owned by Gokongwei firm JG Summit Holdings, Inc., with Japan-based Marubeni Corp. holding a minority stake. The petrochemical firm was registered on May 24, 1994 by the BoI, which had required it to submit the exact location of its plant within 90 days from the date of approval of its application. On May 11, 1994, JG Summit Petrochemical informed the investments board that its plant would be located in Barangay Alangilanan, Manjuyod, Negros Oriental. However, on Jan. 29, 1996, it advised the BoI that its plant site was moved to Barangay Simlong, Batangas City. After the newspaper publication of JG Summit Petrochemical’s application for registration in February 1996, Mr. Garcia wrote the BoI to oppose the move. On May 24, 1996 the investments board decided in favor of JGSPC. The case was taken to the appellate court, which dismissed the petition on Jan. 21, 1997.