Businesses at CJHSEZ to pay taxes to city gov’t
A decision has been made after 19 years of endless debate about whether locators within the Camp John Hay Special Economic Zone (CJHEZ) are exempt from paying taxes levied by the local government.
In a decision promulgated on Feb. 22 but which was only uploaded on its website on April 23, the SC Second Division said locators at the CJHSEZ must still pay taxes imposed by the city government of Baguio.
The SC has affirmed the decision of a court in Baguio in May 2010 that said locators within Camp John Hay, while exempt from duties and taxes granted under the Special Economic Zone Act, are still bound to pay local taxes.
The Bases Conversion and Development Authority and its local arm, the John Hay Management Corporation, has filed a motion for reconsideration but in June 2010 was denied and which they raised before the SC by filing a petition for certiorari.
In their petition, the BCDA-JHMC invoked the Special Economic Zone Act which grants privileges to locators within special economic zones such as exemption from payment of taxes. They also argued that regulation of the operation of ecozones is with the PEZA, not the local government.
The SC denied the petition and affirmed the decision of the lower court.
“No statute authorizes petitioners (BCDA-JHMC) to issue permits or regulate businesses inside the John Hay Special Economic Zone. Neither can they invoke the powers granted only to the Philippine Economic Zone Authority. Without an express grant by law, respondent’s (city government of Baguio) police power prevails. Thus, locators within the John Hay Special Economic Zone not duly registered with the Philippine Economic Zone Authority are liable to pay business permit fees to respondent,” stated the decision penned by Senior Associate Justice Marvic Leonen and concurred by Associate Justices Amy Lazaro-Javier; Mario Lopez; Jhosep Lopez; and Antonio Kho, Jr.
The case started in 2004, when then mayor Braulio Yaranon, citing Condition 10 of Resolution 362-1994, which set the 19 conditions governing the development of CJH, issued a memorandum to the City Treasurer’s Office to hold in abeyance the processing of business permits of the locators, unless the BCDA remits the city’s lease rental share from the earnings of CJH.
In response, the BCDA-JHMC formed a one-stop action center to accredit and process the permits of locators.
But the city government issued notices of closure to the locators that did not acquire business permits from the LGU, prompting the BCDA-JHMC to file before the RTC a petition for declaratory relief and writ of preliminary mandatory injunction.
The RTC denied the petition and its corresponding motion for reconsideration. The BCDA-JHMC brought the case to the SC and 13 years after, the SC rendered a favorable decision to the LGU of Baguio. – Rimaliza A. Opiña