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WHEREAS, Section 149 of Republic Act No. 8424, otherwise known as the Tax Reform Act of 1997 provides that:

Sec. 149.            Automobiles. . .

"Automobiles acquired for use by persons or entities operating within the freeport zone shall be exempt from excise tax; Provided, that utility vehicles of registered zones enterprises, which are indispensable in the conduct and operations of their business, such as delivery trucks and cargo vans with gross vehicle weight above three (3) metric tons may be allowed unrestricted use outside the freeport zone; provided, further, that vehicles owned by tourist-oriented enterprises, such as tourist buses and cars with yellow plates, color-coded and utilized exclusively for the purpose of transporting tourists in tourism-related activities, and service vehicles of freeport registered enterprises and executives, such as company service cars and expatriates' and investors' automobiles, brought in the name of such enterprises, may be used outside the freeport zone for such periods as may be prescribed by the Departments of Finance, and Trade and Industry, the Bureau of Customs and the freeport authorities concerned, which in no case shall exceed fourteen (14) days per month.

In case such tourist buses and cars, service vehicles of registered freeport enterprises and company service cars are used for more than an aggregate period of fourteen (14) days per month outside of the freeport zone, the owner or importer shall pay the corresponding customs duties, taxes and charges.

In the case of personally-owned vehicles of residents, including leaseholders of residences inside the freeport zone, the use of such vehicles outside of the freeport zone shall be deemed an introduction into the Philippine customs territory, and such introduction shall be deemed an importation into the Philippines and shall subject such vehicles to customs duties, taxes and charges, including excise tax due on such vehicle.

The Secretaries of Finance, and Trade and Industry, together with the Commissioner of Customs and the administrators of the freeports concerned, shall promulgate rules and regulations for the proper identification and control of said automobiles."

WHEREAS, pursuant to Proclamation No. 420 series of 1994, the President of the Republic of the Philippines declared and designated the lands consisting of Two Hundred Eighty Eight and one-tenth (288.1) hectares, more or less, of the total of Six Hundred Seventy Seven (677) hectares of the John Hay reservation as the John Hay Special Economic Zone (JHSEZ).

WHEREAS, pursuant to said Section 149 of Republic Act No. 8424 and Proclamation 420, the Department of Finance, the Department of Trade and Industry, the Bureau of Customs, the Bases Conversion Development Authority and its implementing arm for the John Hay Special Economic Zone, the John Hay Poro Point Development Corporation, have agreed to jointly promulgate rules and regulations for the proper identification, control and use of vehicles imported duty-free into JHSEZ.

NOW, THEREFORE, by virtue of the powers vested under Section 149 of Republic Act No. 8424, the Department of Finance, the Department of Trade and Industry, the Bureau of Customs, the Bases Conversion Development Authority and the John Hay Poro Point Development Corporation, hereby issue the following rules and regulations:

SECTION 1.       Scope . — All vehicles, whether imported or purchased locally, entered tax and duty free into the JHSEZ pursuant to Section 149 of R.A. 8424 and Republic Act No. 7227 for use by the JHSEZ registered enterprise and/or its expatriates/investors shall be covered by and subject to these rules and regulations with respect to their use outside the JHSEZ, proper identification and control; provided, however, that the importation or bringing into the JHSEZ of used vehicles shall be governed by existing rules and regulations.

SECTION 2.       Definitions. — As used herein, these terms shall have the following definitions:

a.         Automobile — shall be as defined in Revenue Regulations 14-97 dated November 5, 1997 as the same may be amended from time to time.

b.         Tax Exempt Vehicles — vehicles, whether imported or purchased locally, entered tax and duty free into the JHSEZ pursuant to R.A. 7227 and Proclamation No. 420 series of 1994, and Section 149 of the NIRC classified as follows:

(1)     Utility Vehicles — vehicles that are indispensable in the conduct and operations of the JHSEZ registered enterprises' authorized business activities, such as delivery trucks and cargo vans, designed and used exclusively for transport of cargo; provided, that vehicles with gross vehicle weight above three (3) metric tons shall be subject to the provisions of Section 5 (3) and (4). provided, finally, that vehicles with gross vehicle weight not exceeding three (3) metric tons shall be subject to the restrictions imposed on Tourist Vehicles, Company Vehicles, or Personally-Owned Vehicles as the case may be.

(2)     Tourist Vehicles — vehicles which are owned by tourist-oriented JHSEZ registered enterprises and with yellow plates, color-coded and utilized exclusively for the purpose of transporting tourists in tourism-related activities.

(3)     Company Vehicles — vehicles such as company service cars and expatriates' or investors' automobiles brought in the name of JHSEZ registered enterprises for use by such enterprises or its executives.

(4)     Personally-Owned Vehicles — vehicles owned by residents of the JHSEZ including leaseholders of residences inside the JHSEZ.

c.         JHSEZ Registered Enterprise — enterprises and companies which are duly registered by John Hay Poro Point Development Corporation (JPDC) to engage in business or operate project(s) in the JHSEZ.

d.         JHSEZ Registered Resident — refers to any natural person granted residency status and certificate of tax exemption by the JPDC for purposes of availing the benefits of a JHSEZ resident, subject to the qualifications below:

(1)   Must be eighteen (18) years old and above; and
(2)   Must, by virtue of domicile or employment, actually reside on a permanent basis within the JHSEZ.

SECTION 3.       Who Are Entitled To Import or Bring into the JHSEZ Tax-Exempt Vehicles . — Only JHSEZ Registered Enterprises and JHSEZ Registered Residents with Certificates of Tax Exemption are entitled to import or bring into the JHSEZ Tax-Exempt Vehicles, subject to the limitations set forth below; provided, that JPDC has the right to limit the importation or bringing in of Tax-Exempt Vehicles into the JHSEZ by any party when in its reasonable judgment it becomes necessary to avert a violation of law.

a.       Importation or Bringing into the JHSEZ of Tax-Exempt Vehicle by JHSEZ Registered Enterprise - JHSEZ Registered Enterprises with Certificate of Tax Exemption may import or bring into the JHSEZ a reasonable number of Tax-Exempt Vehicles for the legitimate use of the enterprise. For purposes of determining the reasonableness of the -number of Tax-Exempt Vehicles imported or brought into the JHSEZ, the JPDC shall consider the number of employees, and the size and nature of the business of the JHSEZ Registered Enterprise.

b.       Importation or Bringing into the JHSEZ of Tax-Exempt Vehicle by JHSEZ Registered Resident - JHSEZ Registered Residents with Certificate of Tax Exemption may import or bring into the JHSEZ Tax-Exempt Vehicles; provided, that such privilege shall be limited to two (2) automobiles for every JHSEZ Registered Resident every three (3) years.

SECTION 4.       Admission Requirements. —

a.       Permits and Declarations - When applicable, Tax Exempt Vehicles shall be covered by import permits issued by the JPDC and by import entry declaration duly processed by the Bureau of Customs (BOC).

b.       Registration with LTO - Tax-Exempt Vehicles must be registered with the Land Transportation Office (LTO) and must have been issued LTO Certificates of Registration and appropriate LTO plates and/or conduction stickers; provided, that Tourist Vehicles must be registered with yellow plates only.

c.       Registration with JPDC - Tax Exempt Vehicles must also be registered with the JPDC and must have been issued JPDC stickers and markings indicating that the Tax Exempt Vehicles are imported or brought into the JHSEZ tax and duty free pursuant to RA 7227 and further indicating that the use outside the JHSEZ is restricted.

The JPDC stickers shall be affixed by the authorized JPDC personnel and must be visibly displayed at all times on the front and back windshields and on the sides of the Tax Exempt Vehicles.

The Tax-Exempt Vehicles shall be issued JPDC stickers annually upon renewal of its registration. At any time considered necessary, JPDC may require their replacement.

JPDC shall devise a system to monitor the use of the Tax-Exempt Vehicles outside the JHSEZ. JPDC shall furnish the BOC a monthly report of all stickers and marking issued by JPDC and the number of days each such vehicle had been used outside the JHSEZ for the past month.

d.         BOC Approved Bond - Each Tax-Exempt Vehicle must be posted with a bond acceptable to the BOC which may be in cash, irrevocable stand-by letter of credit, bank guarantee or surety bond equivalent to 100% of the amount of duties, taxes and other charges due on the subject vehicle and conditioned to the use of the subject vehicle in accordance with these rules.

SECTION 5.       Conditions for the Use of Tax-Exempt Vehicles.

a.         Use within the JHSEZ - Tax-Exempt Vehicles may be used within the JHSEZ.

b.         Use outside the JHSEZ - Tax-Exempt Vehicles allowed to be used outside the JHSEZ shall be subject to the following conditions:

(1)     Tourist Vehicle or Company Vehicle may be used outside the JHSEZ for not more than an aggregate period of three hundred thirty six (336) hours or fourteen (14) days in one (1) month. If, after the lapse of the aforementioned period, the Tourist Vehicle or Company Vehicle is not returned to the JHSEZ or the same cannot be accounted for, the Collector of Customs shall institute forfeiture and collection proceedings against the BOC approved bond posted by the registered owner thereof, without prejudice to the cancellation or temporary suspension by JPDC of the privileges of the registered owner of such vehicle as a JHSEZ Registered Enterprise or JHSEZ Registered Resident.

(2)     Utility Vehicles of JHSEZ Registered Enterprises may be allowed unrestricted use outside the JHSEZ subject to the following:

i.        Utility Vehicles shall be used solely by the JHSEZ Registered Enterprise in the conduct and operations of their business and not for use by lease or otherwise of any other enterprise not registered with JPDC.

ii.       Utility Vehicles shall be issued JPDC Permit to Bring Out Utility Vehicle with a validity period of one (1) month. The Utility Vehicle shall be presented to the JPDC at every monthly renewal of the JPDC Permit to Bring Out Utility Vehicle. No permit shall be issued unless the Utility Vehicle is presented inside the JHSEZ.

iii.      A fine shall be imposed on the JHSEZ Registered Enterprise if the Utility Vehicle is used outside the JHSEZ beyond the one (1) month period prescribed herein, as follows:

First ten (10) hours — Two Hundred Fifty (Php 250.00) Philippine Pesos

Next ten (10) hours — Additional Three Hundred Fifty (Php 350.00) Philippine Pesos

Every succeeding hour — Five Hundred (Php 500.00) Philippine Pesos

(3)     Every time a Utility Vehicle is used outside the JHSEZ, the authorized driver of the vehicle shall secure a trip ticket or Permit to Bring-Out Utility Vehicle from the JPDC, which shall specify the following:

i.        the name of the JHSEZ Registered Enterprise and driver;
ii.       the plate number of the Utility Vehicle;
iii.      the date and time of departure.

The driver shall submit the trip ticket or permit duly accomplished to the JPDC sentry and BOC personnel at the gate for notation. The sentry shall log-in the time and date of return of the Utility Vehicle. The JPDC shall accumulate and/or age the trip tickets or permits to determine how long the Utility Vehicle has been used outside the JHSEZ.

c.         Prohibited use outside the JHSEZ . Personally-owned vehicles are absolutely prohibited from being used outside the JHSEZ.

SECTION 6.       Subsequent Sale/Purchase of Tax Exempt Vehicle . — The subsequent sale of Tax-Exempt Vehicles shall be subject to the following conditions:

a.         No sale, transfer or assignment of Tax-Exempt Vehicles shall be effected without prior approval from the JPDC.

b.         Subject to Section 6(a), a Tax-Exempt Vehicle may be sold, transferred or assigned to another JHSEZ Registered Enterprise with Certificate of Tax Exemption or JHSEZ Registered Resident and such sale shall also be considered tax and duty free; provided, that the vendee, transferee or assignee has not used up or availed of the privilege of importing Tax Exempt Vehicles; provided, further, that the vendee, transferee, or assignee shall be considered to have imported a motor vehicle into the JHSEZ under these rules; and provided, finally, that the vendor, transferor or assignor shall still be subject to the limitations imposed in these rules.

c.         Any sale, transfer or assignment of any Tax-Exempt Vehicle to any individual, corporation or association or entity not duly registered with JPDC and without a Certificate of Tax Exemption shall be subject to the payment of regular customs duties and taxes based on the value of the vehicle as follows:

Year	Import Value
0	100%
1	90%
2	80%
3	70%
4	60%
5	50%
6	40%
7	30%
8	20%
9 and over	10%

SECTION 7.       Option to Pay Customs Duties and Taxes . — Nothing in these rules shall prevent the owner of the motor vehicle from paying the appropriate customs duties and/or taxes due on the motor vehicle in order to exclude the same from the limitations and restrictions imposed in these rules.

SECTION 8.       Spot Inventory Inspection. — BOC, in coordination with JPDC may conduct periodic or spot inventory of any vehicle covered by these rules.

SECTION 9.       JPDC Procedures . — JPDC shall issue rules and regulations covering the issuance of import permits, the issuance and affixing of required JPDC stickers and markings and the issuance and monitoring of the Permit to Bring out the motor vehicles.

SECTION 10.    Penalty Clause. — Any Tax-Exempt Vehicle used in violation of these rules shall be impounded by JPDC and/or BOC for seizure/forfeiture! proceedings, without prejudice to other sanctions that may be imposed by BOC, such as forfeiture of the guarantee/bond posted pursuant to the rules herein and/or by JPDC.

JHSEZ Registered Enterprises, its members or officers, or residents, or other persons involved in the aforesaid violation, or in the violation of these rules, shall be subject to appropriate sanctions imposed by law.

SECTION 11.    Applicability of Other Regulations Outside the JHSEZ . All existing laws and/or rules and regulations of other government agencies concerning importation, utilization, and operation of vehicles shall be respected and complied with within the customs territory.

SECTION 12.    Separability Clause. — If any provision of this issuance is declared to be invalid, the part or parts thereof not affected thereby shall remain valid.

SECTION 13.    Effectivity. — This rules and regulations shall take effect fifteen (15) days after its publication in at least two (2) newspapers of general circulation.

(SGD.) ROGELIO L. SINGSON Chairman Bases Conversion Development Authority	(SGD.) PORFIRIO N. ZABLAN, JR President John Hay Poro Point Development Corp.
(SGD.) NELSON A. TAN Commissioner Bureau of Customs	(SGD.) JOSE T. PARDO Secretary Department of Trade and Industry
(SGD.) EDGARDO B. ESPIRITU Secretary Department of Finance