THE Supreme Court has ruled that only business establishments located within the John Hay Special Economic Zone (JHSEZ) and registered with the Philippine Export Processing Zone Authority (PEZA) can enjoy tax and duty privileges.
This as the High Court’s Second Division, in a ruling promulgated on February 22 but only made public on April 18, denied a petition filed by the Bases Conversion and Development Authority questioning a city council resolution requiring business establishments in John Hay to secure business permits and pay the corresponding fees for their continued operations.
The 45-page decision penned by Associate Justice Marvic Leonen also held that all unregistered businesses within the John Hay Special Economic Zone are mandated to pay national and local taxes, duties, and fees.
The SC ruling upheld the decision of the Baguio City Regional Trial Court dismissing the petition for declaratory relief, with a prayer for a writ of preliminary injunction filed by BCDA and JHSEZ on March 12, 2010 against the city council resolution.
The RTC held that business permits and the payment of fees to the local government unit are of a different character than that of taxes and duties, as revenue generation was not their sole purpose.
It further said the JHSEZ was not exempt from paying the requirements of business permits and that neither the BCDA nor the John Hay Management Corporation (JHMC) are exempted from coverage of local ordinances requiring business permits and regulatory fees for establishments located in their area.
This prompted the BCDA and JHMC to seek a reconsideration of the RTC order. When the trial court junked their plea, the BCDA and JHMC elevated the case to the SC. But the SC also ruled against them and affirmed the RTC’s order.
“No statute authorizes petitioners 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 police power prevails,” the SC ruling said.
