Camp John Hay businesses asked to get permits from Baguio gov’t
BAGUIO CITY—All businesses operating inside Camp John Hay, which has now been taken over by the Bases Conversion and Development Authority (BCDA), are expected to secure their business permits and pay other regulatory fees of Baguio City beginning this month.
For the first time since 1996, a team deployed by Baguio Treasurer Alex Cabarubbias has been conducting an inventory of John Hay businesses and has so far identified and assessed 88 business operations there, which make up 70 percent of enterprises inside the former American base land turned special economic zone, said Budget Officer Leticia Clemente.
The Baguio treasury never had access to businesses inside the 247-hectare lease area of its developer, Camp John Hay Development Corp. (CJHDevco), because permits there have been processed annually by BCDA estate manager John Hay Management Corp. (JHMC), she explained.
The leased property inside the more than 600-ha John Hay forest reservation falls within the John Hay Special Economic Zone which was established through Proclamation No. 420 in 1994 by the late President Fidel Ramos.
Taxes
Businesses within economic zones are entitled to incentives provided by the Philippine Economic Zone Authority (Peza), among them exemptions from traditional taxes.
But not all John Hay entrepreneurs are listed as Peza-registered businesses nor are qualified for economic zone benefits.
In a Feb. 22, 2023 decision, the Supreme Court’s Second Division backed a 2010 Baguio Regional Trial Court ruling that “all business enterprises within the John Hay Special Economic Zone [which are not registered as Peza locators] shall pay all relevant national and local taxes, duties, and fees as may be imposable under national and local laws.”
Penned by Senior Associate Justice Marvic Leonen, the high court decision said, “Only business enterprises within the John Hay Special Economic Zone that are registered with [Peza] shall enjoy the tax and duty exemption privileges under Republic Act No. 7916 (the Special Economic Zone Act of 1995) and Republic Act No. 9400 (which incorporated tax incentives for BCDA-administered special zones, including John Hay’s, in 2006).
BCDA last week assumed control over the leased property at the John Hay Reservation after the Supreme Court reinstated a 2015 arbiter’s decision that voided CJHDevco’s lease contract with BCDA. The decision required CJHDevco to release all of its developed John Hay properties to BCDA, which, in turn, was directed to reimburse the developer’s P1.42-billion investments.
New applicants
BCDA has signed new management deals that allow new companies to manage some of the reacquired properties, such as businessman Manny Pangilinan’s group of companies, which has interim management contracts over John Hay’s top hotels—The Manor and Forest Lodge.
Clemente said some of the new companies operating in John Hay have applied for business licenses with the city government but she did not identify them.
Unless BCDA releases detailed information about John Hay businesses soon, City Hall will need to complete its inventory before it can establish how many John Hay businesses are compelled to transact with the local government this year, as well as determine how much they owe Baguio, according to Clemente.
The summer capital’s economy continued to grow after 2,216 new businesses secured their licenses in 2024, boosting the number from 25,250 in 2023 to 27,992 last year and generating P550.3 million in business taxes and fees, the City Public Information Office said.
Clemente said Mayor Benjamin Magalong had also been discussing with BCDA the impact of its John Hay takeover, such as the 19 conditions set by the local government in 1994 before the city council endorsed John Hay’s commercialization.
In 2023, the Supreme Court upheld Baguio’s right to regulate businesses at John Hay by recognizing the legitimacy of the 19 conditions enumerated in Resolution No. 362 approved in 1994.
Among others, Condition 9 of Resolution 362 provided for an “equitable sharing agreement” between BCDA and the city government “from the gross income of operations within the John Hay Special Economic Zone.”
Condition 10, meanwhile, states that [BCDA] shall also allocate 25 percent of [JHMC’s predecessor] the John Hay Poro Point Development Corp.’s lease rentals or 30 percent of its net income from operations within the special economic zone, whichever is higher, to be used for development projects,” the court said.
It said BCDA complied with these requirements in the past, so therefore “it is deemed to have voluntarily entered into the agreement.”
