G.R. No. 127410 January 20, 1999
CONRADO L. TIU, JUAN T. MONTELIBANO JR. and ISAGANI M. JUNGCO, petitioners,
vs.
COURT OF APPEALS, HON. TEOFISTO T. GUINGONA JR., BASES CONVERSION AND DEVELOPMENT AUTHORITY, SUBIC BAY METROPOLITAN AUTHORITY, BUREAU OF INTERNAL REVENUE, CITY TREASURER OF OLONGAPO and MUNICIPAL TREASURER OF SUBIC, ZAMBALES, respondents.
PANGANIBAN, J.:
Facts:
On 13 March 1992, Republic Act 7227 (“An Act Accelerating the Conversion of Military Reservations Into Other Productive Uses, Creating the Bases Conversion and Development Authority for this Purpose, Providing Funds Therefor and for Other Purposes.”) was passed into law. Under Section 12 thereof, created the Subic Special Economic Zone and granted thereto special privileges, such as tax exemptions and duty-free importation of raw materials, capital and equipment to business enterprises and residents located and residing in the said zones.
On 10 June 1993, President Ramos issued Executive Order (EO) 97 clarifying the application of the tax and duty incentives. On 19 June 1993, the President issued EO 97-A, specifying the area within which the tax-and-duty-free privilege was operative (i.e. the secured area consisting of the presently fenced-in former Subic Naval Base).
On 26 October 1994, Conrado L. Tiu, et. al., challenged before the Supreme Court the constitutionality of EO 97-A for allegedly being violative of their right to equal protection of the laws, inasmuch as the order granted tax and duty incentives only to businesses and residents within the “secured area” of the Subic Special Economic Zone and denying them to those who live within the Zone but outside such “fenced-in” territory.
In a Resolution dated 27 June 1995, the Supreme Court referred the matter to the Court of Appeals, pursuant to Revised Administrative Circular 1-95. Incidentally, on 1 February 1995, Proclamation 532 was issued by President Ramos, delineating the exact metes and bounds of the Subic Special Economic and Free Port Zone, pursuant to Section 12 of RA 7227. The Court of Appeals denied the petition as there is no substantial difference between the provisions of EO 97-A and Section 12 of RA 7227, holding that EO 97-A cannot be claimed to be unconstitutional while maintaining the validity of RA 7227;
that the intention of Congress to confine the coverage of the SSEZ to the secured area and not to include the entire Olongapo City and other areas rely on the deliberations in the Senate; and that the limited application of the tax incentives is within the prerogative of the legislature, pursuant to its “avowed purpose [of serving] some public benefit or interest.
Tiu, et. al.’s motion for reconsideration was denied, and hence, they filed a petition for review with the Supreme Court.
Issue:
Whether there was a violation of the equal protection of the laws when EO 97-A granted tax and duty incentives only to businesses and residents within the “secured area” of the Subic Special Economic Zone and denied such to those who live within the Zone but outside such “fenced-in” territory.
Held:
No. The EO 97-A is not violative of the equal protection clause; neither is it discriminatory. The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable classification. The classification occasioned by EO 97-A was not unreasonable, capricious or unfounded. It was based, rather, on fair and substantive considerations that were germane to the legislative purpose.
There are substantial differences between the big investors who are being lured to establish and operate their industries in the so-called “secured area” and the present business operators outside the area. On the one hand, we are talking of billion-peso investments and thousands of new jobs, and on the other hand, definitely none of such magnitude. In the first, the economic impact will be national; in the second, only local. Even more important, at this time the business activities outside the “secured area” are not likely to have any impact in achieving the purpose of the law, which is to turn the former military base to productive use for the benefit of the Philippine economy. There is, then, hardly any reasonable basis to extend to them the benefits and incentives accorded in RA 7227.
Additionally, it will be easier to manage and monitor the activities within the “secured area,” which is already fenced off, to prevent “fraudulent importation of merchandise” or smuggling. The classification applies equally to all the resident individuals and businesses within the “secured area.” The residents, being in like circumstances or contributing directly to the achievement of the end purpose of the law, are not categorized further. Instead, they are all similarly treated, both in privileges granted and in obligations required. The equal-protection guarantee does not require territorial uniformity of laws. As long as there are actual and material differences between territories, there is no violation of the constitutional clause.
Herein, anyone possessing the requisite investment capital can always avail of the same benefits by channeling his or her resources or business operations into the fenced-off free port zone.
The constitutional rights to equal protection of the law is not violated by an executive order, issued pursuant to law, granting tax and duty incentives only to the business and residents within the “secured area” of the Subic Special Economic Zone and denying them to those who live within the Zone but outside such “fenced-in” territory. The Constitution does not require absolute equality among residents. It is enough that all persons under like circumstances or conditions are given the same privileges and required to follow the same obligations. In short, a classification based on valid and reasonable standards does not violate the equal protection clause.