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Monday, August 15, 2005
Clark firm barred from tax, duty-free benefits
THE Supreme Court (SC) has declared that the Clark Special Economic Zone (CSEZ) is not entitled to tax and duty-free incentives in the absence of an express grant of such privileges under Republic Act (RA) 7227 or the Bases Conversion and Development Act of 1992.
RA 7227 was enacted on Mar. 13, 1992 for the conversion of the Clark and Subic military reservations and their extensions into special economic zones to promote economic and social development in Central Luzon.
In a decision penned by Justice Adolfo Azcuna, the high court partly granted the petition of local retailers and suppliers like the Coconut Oil Refiners Association, Incorporated and the Philippine Association of Meat Processors, Incorporated and some farmers groups in declaring null and void certain state rulings.
The rulings include sec. 5 of Executive Order (EO) No. 80 signed by former President Fidel Ramos in 1993 that granted tax and duty-free incentives to CSEZ and sec. 4 of the Bases Conversion and Development Authority's (BCDA) board resolution enumerating specific incentives in the CSEZ main zone.
The court however declared all portions of EO 97-A, issued to further clarify the tax and duty-free privileges within the Subic Special Economic Zone (SSEZ), valid and effective except the second sentences in paragraphs 1.2 and 1.3 of the EO granting US$100 monthly and US$200 yearly tax-free shopping privileges to SSEZ residents living outside the SSEZ's secured area and to Filipinos aged 15 and over residing outside the SSEZ, respectively.
It said that while sec. 12 of RA 7227 provides for the grant of incentives to the SSEZ, it failed to make similar grants in favor of other economic zones, including the CSEZ.
"In the absence of any express grant of tax and duty-free privileges to the CSEZ in RA 7227, there would be no legal basis to uphold sec. 5 of EO 80 and sec. 4 of the BCDA board resolution," the SC ruled.
The high court said that allowing tax and duty-free removal of goods to certain individuals, even in a limited amount, from the secured area of the SSEZ would be contrary to sec. 12 of RA 7227.
This specific provision states that "exportation or removal of goods from the territory of the SSEZ to other parts of the Philippine territory shall be subject to customs duties and taxes under the Customs and Tariff Code and other relevant tax laws of the Philippines."
The court further ruled that EO 97-A did not violate the equal protection clause of the Constitution since it had specifically made a distinction between the petitioners and private respondents, which maintain businesses within so-called "special customs territory," while the petitioners are within Philippine customs territory.
"The mere fact that incentives and privileges are granted to certain enterprises to the exclusion of others does not render the issuance unconstitutional for espousing unfair competition," the court said. (ECV)
(August 15, 2005 issue)
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