Court suspends service fee issued to Subic port locators

SUBIC BAY FREEPORT—A judge has ordered the Subic Bay Metropolitan Authority (SBMA) to suspend the collection of a controversial fee meant to recover its expenses for services, such as street cleaning, street lighting, fire fighting and law enforcement inside the economic zone.

Judge Richard Paradeza of the Olongapo regional trial court issued a writ of preliminary injunction last month against the SBMA in favor of a group of Japanese locators and other firms that filed a similar suit.

Under the Common Use Service Area (Cusa) fee scheme, the SBMA will collect from locators 2 percent of the appraised values of their lands. The amount, however, should not exceed 20 percent of the monthly rental.

In his decision, Paradeza cited the testimony of Ichiro Tsuji, general manager of Subic Techno Park, who said the fee was a “revenue-raising mechanism in the nature of a tax that cannot be imposed by the respondent (SBMA) under Republic Act No. 7227 (Bases Conversion and Development Act of 1992).”

Subic Techno Park is a direct lessee of a 55-hectare property inside the free port, where Japanese firms operate.

Tsuji said: “The penalties for the nonpayment of Cusa fee are excessive, oppressive and confiscatory as the penalty… on the third month is already cancellation of the certificate of registration and tax exemption.”

Lawyer Ramon Agregado, SBMA senior deputy administrator, said locators should pay up considering that the SBMA has been operating at a net loss.

Agregado said the SBMA has been “subsidizing in full almost all municipal services that benefit its locators and residents in addition to independently servicing all of SBMA’s foreign loan obligations that were obtained to finance needed infrastructure projects at [the free port] during its initial years.”

He said locators should also pay the Cusa fee “due to the unfortunate outlook that the SBMA will be unable to sustain its operations if it continues to subsidize the full cost of almost all municipal services.”

The Cusa fee collection was based on Section 13 (b) of RA 7227, and Section 10 (c) and (k) of the law’s implementing rules and regulations, where the imposition of fees, like garbage collection and road user’s fees, is based, he said.

SBMA Chair Roberto Garcia said it was the right of the locators to seek remedy from the courts. “That’s their right, of course,” he said.

But Paradeza, in granting relief to another locator, Philippine Coastal Storage and Pipeline Corp., said the rights and obligations of the parties are defined in the lease agreements.

“[The SBMA] is obliged to maintain the lessee in the peaceful and adequate enjoyment of the lease for the entire duration of the contract,” he said.

On Oct. 25, the judge issued a temporary restraining order against the SBMA for the Cusa fee implementation. After hearings on Nov. 6 and 12 and after receiving the position papers of all parties in the case, he issued the writ of preliminary injunction in the last week of November.

Paradeza said the imposition of the fee requires relief because “the unilateral imposition of the policy on the Cusa fee by [the SBMA on Subic locators] may amount to a material and substantive invasion of [their] rights under its lease agreements with [the SBMA].”

He, however, did not rule on the legality of the fee’s imposition.