g.r. 119775 john hay people's alternative coalition et al v. victor lim et al

7/18/2019 G.R. 119775 John Hay People's Alternative Coalition et al v. Victor Lim et al

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John Hay Peoples Alternative Coalition

vs.

Victor Lim

Cecille Carmela T. de los ReyesPhilippine Christian University

Taxation Law

Professor: Atty. Antonio Bonilla

G.R. 119775 (2003)

Penned by: J. Carpio-Morales



Petitioners in this case ASSAIL the

constitutionality of Presidential

Proclamation 420 s. of 1994

Creating and Designating a

Portion of the area covered by

the former Camp John Hay as

The John Hay SpecialEconomic Zone pursuant to

RA 7227

RA 7227 or the Bases Conversion and

Development Act of 1992, set out the policy for

the government to accelerate the sound and

balanced conversion int o alternative

produ ctive uses of the former mil i tary bases

under th e 1947 Phil ippines-United States of

America Mil i tary Bases Agreement —

namely,the Clark and Subic military reservations as well as

their extensions including the Camp John Hay

Station in Baguio.

special economic zone = designated areas in countries

that possess special economic zone regulations that are

different from other areas in the same country.

The RA 7227 created public respondent Bases

Conversion and Development Authority—

vesting it with powers pertaining to the multifarious

aspects of carrying out the ultimate objective of

utilizing the base areas in accordance with the

declared government policy.



R.A. 7227

BASES CONVERSION

AND DEVELOPMENT

ACT OF 1992

Created the Bases

Conversion Development

Authority (BCDA)

Created the Subic Special

Economic (and Freeport

Zone) = SEZ the metes and

bounds of which were to be

delineated in a proclamation

issued by the President

Expressly gave the President the authorit

through executive proclamation, subjec

concurrence of the local government uni

affected; other Special Economic Zones (S

areas covered respectively by the Clark

reservation, the Wallace Air Station in San F

Union; and the Camp John Hay



Bases Conversion Development Authority

(BCDA) entered into a Memorandum of

Agreement and Escrow Agreement with

private respondents TUNTEX and

ASIAWORLD—private corporations registered

under the laws of British Virgin Islands,preparatory to the formation of a joint venture

for the development of Poro Point in La Union

and Camp John Hay as premier tourist

destination and recreation centers.

Four months later, BCDA, TUNTEX and

ASIAWORLD executed a Joint Venture Agreement—whereby they bound themselves

to put up a joint venture company known as the:

Baguio International Development and

Management Corporation

which would lease areas with the Camp John

Hay and Poro Point, for the purpose of turning

such places into principal tourist and recreation

spots—

as originally envisioned by the partiesunder their Memorandum of Agreement.

Baguio City Government

meanwhile passed no. of

resolutions in response to

the actions taken by BCDA

as the owner andadministrator of Camp John

Hay.

1. The Sangguniang

Panlungsod of Baguio City

officially asked BCDA to

exclude all barangays

totally or partially located

within Camp John Hay

from the reach or

coverage of any plan or

program for its

development.

2. The sanggunian sought

from BCDA an abdication,

waiver or quitclaim of its

ownership over the home lots

being occupied by residents of

9 barangays surrounding themilitary reservation.

3. By another re

Sanggunian adopted

to BCDA a 15-point c

development of Camp

The Sanggunians visa kind of development

protection to the en

family-oriented

destination,

priority in

opportunities f

residents and

free access to the b

guaranteed particicity governmen

management and

the camp

exclusion of previo

barangays from

development

liability of loca

businesses to be

within the camp.



BCDA, TUNTEX AND

ASIAWORLD agreed to

some, but rejected or

modified the other

proposals of thesanggunian.

They stressed that they

need to declare Camp

John Hay as SEZ as a

condition precedent to its

full development inaccordance with the

mandate of RA 7227.



The Sanggunian passed another resolution,

requesting:

1. The Mayor to order the determination of realty taxes

which may otherwise be collected from real properties

of Camp John Hay.

The resolution was intended to guide the Sanggunian indetermining its position on whether Camp John Hay be

declared a SEZ—being of the view that such

declarat ion would exempt th e camp s

proper ty and the econom ic act iv i ty

therein from loc al or nat ional taxat ion.

A month later, Sanggunian passed another

resolution seeking and supporting—subject to

its concurrence, the issuance of Pres. Ramos of

a Presidential Proclamation declaring an area of

288.1 hectares of the camp as SEZ in accordance

with the RA 7227 provisions.

Together with this resolution was submitted a draft of

the proposed proclamation for consideration by the

President.

President Ramos issued:

Proclamation 420 which

established SEZ on a portion of

Camp John Hay



Petitioners filed a

petition against PP

420 on the grounds

that:

1. PP 420 insofar as it grants

tax exemption is invalid and

illegal—as it is an

unconstitutional exercise bythe President of a power

granted only to the

legislature.

2. PP 420—insofar as it

limits the powers and

interferes with the autonomy

of the City of Baguio is

invalid, illegal and

unconstitutional.

3. PP 420—is

unconstitutional because it

violates the rule that all taxes

should be uniform andequitable

4. The Memorandum of

Agreement entered into by

and between private and

public respondent BCDA

having been entered only as

direct negotiation is illegal.

A TRO/ writ of

injunction is praye

BCDA, John Hay

Development Corpo

city governme

implementing PP 4

AsiaWorld from pro

their plan respecting

Hays development

their Joint Venture A

BCDA.



In maintaining the

validity of PP 420,

respondents claim

that:

By extending to the John Hay

SEZ, the proclamation is

merely implementing the

legislative intent of the said

law to turn the US military

bases into hubs of business

activity or investment.

They underscore the point that

the governments policy of

bases convention can not be

achieved without extending

the same tax exemptions

granted by RA 7227 to Subic

SEZ to other SEZ.



ISSUES and COURT RULING

1. Whether present petition

complies with the requirements for

this Courts exercise of jurisdiction

over constitutional issues?

The grant by law on local govern

of the right of concurrence on

convention is equivalent to vest

standing on them—for it is i

recognition of the real intecommunities nearby or surro

particular base area have it its utl

The interests of petitioners, being

of Baguio; in assailing the leg

420—is personal and substantial.

Requisites for judicial review on assailing the

constitutionality of a law:

The existence of actual case

Personal and substantial interest of theparty raising the constitutional question

The exercise of judicial review is pleaded

at the earliest opportunity

The constitutional question is the lis mota

of the case (or the cause of suit or action)

2. Does the grant of tax exemption

to the John Hay SEZ contravenes

Article VI Sec. 28 of the

Constitution which provides that:

No law granting any tax

exemption shall be passed without

the concurrence of a majority of all

the members of the Congress?

It is clear that under Sec. 12, RA 7227—

it isonly Subic SEZ which was granted by the

Congress with tax exemption, investments

and incentives and the like.

There is no express intention of the

aforesaid benefits to other SEZ still to be

created at that time via PP.

Also, the deliberations of the Senate confirm

the exclusivity to Subic SEZ of the tax andinvestment privileges accorded it under the

law

While the grant of econ

incentives may be esse

to the creation and suc

of SEZ—the incen

under RA 7227 are excl

only to Subic SEZ



ISSUES and COURT RULING

2. Does the grant of tax exemptionto the John Hay SEZ contravenes

Article VI Sec. 28 of the

Constitution which provides that:

No law granting any tax

exemption shall be passed without

the concurrence of a majority of all

the members of the Congress?

The nature of the assailed privilege is

one of tax exemption. It is the

legislature, unless granted by a

provision in the Constitution—that has

the power to tax any person,corporation or class from taxation.

Other than the Congress, the

Constitution itself may provide specific

tax exemptions, or local governments

may pass ordinances on tax exemption

only from local taxes.

Contrary to respondents

suggestions, the claimed

statutory exemption of John Hay

SEZ from taxation should be

manifest and unmistakeable

from the language of the law on

which it is based—

it must beexpressly granted in a statute

stated in a language too clear to

be mistaken.

Grant of tax exemption and

under privileges to the John Hay

SEZ in PP 420 is void for being

violative of the Constitution.

3. Does PP 420 violate the

autonomy of the local

governments?

NO— According to RA 7227, BCDA

has ownership and administration

rights over the Camp John Hay

subject to certain limitations

provided by the law.

The delineation and declaration of a

portion of the area covered by Camp

John Hay as a SEZ was well within

the powers of the President to do so

by means of a proclamation.

g.r. 119775 john hay people's alternative coalition et al v. victor lim et al

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