Coconut Oil Refiners Association vs Torres G.R. No. 132527.

July 29, 2 5

of the SSE), to the exclusion of those outside but are, nevertheless, still 'ithin the econo"ic ?one, @pholding the constitutionality of Executive .rder /o, 57(#, this ourt therein found substantial differences bet'een the retailers inside and outside the secured area, thereby justifying a valid and reasonable classification* ertainly, there are substantial differences bet'een the big investors 'ho are being lured to establish and operate their industries in the so(called Asecured areaB and the present business operators outside the area, .n the one hand, 'e are talking of billion(peso invest"ents and thousands of new jobs, .n the other hand, definitely none of such "agnitude, In the first, the econo"ic i"pact 'ill be nationalC in the second, only local, Even "ore i"portant, at this ti"e the business activities outside the Asecured areaB are not likely to have any i"pact in achieving the purpose of the la', 'hich is to turn the for"er "ilitary base to productive use for the benefit of the Philippine econo"y, There is, then, hardly any reasonable basis to extend to the" the benefits and incentives accorded in R,#, 7667, #dditionally, as the ourt of #ppeals pointed out, it 'ill be easier to "anage and "onitor the activities 'ithin the Asecured area,B 'hich is already fenced off, to prevent Afraudulent i"portation of "erchandiseB or s"uggling, It is 'ell(settled that the e:ual(protection guarantee does not re:uire territorial unifor"ity of la's, #s long as there are actual and "aterial differences bet'een territories, there is no violation of the constitutional clause, #nd of course, anyone, including the petitioners, possessing the re:uisite invest"ent capital can al'ays avail of the sa"e benefits by channeling his or her resources or business operations into the fenced(off free port ?one, The ourt in Tiu found real and substantial distinctions bet'een residents 'ithin the secured area and those living 'ithin the econo"ic ?one but outside the fenced(off area, Si"ilarly, real and substantial differences exist bet'een the establish"ents herein involved, # significant distinction bet'een the t'o groups is that enterprises outside the ?ones "aintain their businesses 'ithin Philippine custo"s territory, 'hile private respondents and the other duly(registered ?one enterprises operate 'ithin the so(called Aseparate custo"s territory,B To grant the sa"e tax incentives given to enterprises 'ithin the ?ones to businesses operating outside the ?ones, as petitioners insist, 'ould clearly defeat the statute>s intent to carve a territory out of the "ilitary reservations in Subic Bay 'here free flo' of goods and capital is "aintained, The classification is ger"ane to the purpose of Republic #ct /o, 7667, #s held in Tiu, the real concern of Republic #ct /o, 7667 is to convert the lands for"erly occupied by the @S "ilitary bases into econo"ic or industrial areas, In furtherance of such objective, ongress dee"ed it necessary to extend econo"ic incentives to the establish"ents 'ithin the ?one to attract and encourage foreign and local investors, This is the very

!acts" This is a Petition for Prohibition and Injunction seeking to enjoin and prohibit the Executive Branch, through the public respondents Ruben Torres in his capacity as Executive Secretary, the Bases onversion !evelop"ent #uthority $B !#%, the lark !evelop"ent orporation $ ! % and the Subic Bay &etropolitan #uthority $SB&#%, fro" allo'ing, and the private respondents fro" continuing 'ith, the operation of tax and duty( free shops located at the Subic Special Econo"ic )one $SSE)% and the lark Special Econo"ic )one $ SE)%, and to declare the follo'ing issuances as unconstitutional, illegal, and void* +, Section - of Executive .rder /o, 01, 2+3 dated #pril 4, +554, regarding the SE), 6, Executive .rder /o, 57(#, dated 8une +5, +554, pertaining to the SSE), 4, Section 9 of B !# Board Resolution /o, 54(1-(149,263 dated &ay +0, +554, pertaining to the SE), Petitioners contend that the aforecited issuances are unconstitutional and void as they constitute executive la'"aking, and that they are contrary to Republic #ct /o, 7667243 and in violation of the onstitution, particularly Section +, #rticle III $e:ual protection clause%, Section +5, #rticle ;II $prohibition of unfair co"petition and co"binations in restraint of trade%, and Section +6, #rticle ;II $preferential use of <ilipino labor, do"estic "aterials and locally produced goods%, #ssue" =hether the issuances are unconstitutional for supposedly violating the e:ual protection clause $el%" /o, It is an established principle of constitutional la' that the guaranty of the e:ual protection of the la's is not violated by a legislation based on a reasonable classification, lassification, to be valid, "ust $+% rest on substantial distinction, $6% be ger"ane to the purpose of the la', $4% not be li"ited to existing conditions only, and $9% apply e:ually to all "e"bers of the sa"e class, #pplying the foregoing test to the present case, this ourt finds no violation of the right to e:ual protection of the la's, First, contrary to petitioners> clai", substantial distinctions lie bet'een the establish"ents inside and outside the ?one, justifying the difference in their treat"ent, In Tiu v. Court of Appeals, the constitutionality of Executive .rder /o, 57(# 'as challenged for being violative of the e:ual protection clause, In that case, petitioners clai"ed that Executive .rder /o, 57(# 'as discri"inatory in confining the application of Republic #ct /o, 7667 'ithin a secured area

rationale behind Republic #ct /o, 7667 and other si"ilar special econo"ic ?one la's 'hich grant a co"plete package of tax incentives and other benefits, The classification, "oreover, is not li"ited to the existing conditions 'hen the la' 'as pro"ulgated, but to future conditions as 'ell, inas"uch as the la' envisioned the for"er "ilitary reservation to ulti"ately develop into a self(sustaining invest"ent center, #nd, lastly, the classification applies e:ually to all retailers found 'ithin the Asecured area,B #s ruled in Tiu, the individuals and businesses 'ithin the Asecured area,B being in like circu"stances or contributing directly to the achieve"ent of the end purpose of the la', are not categori?ed further, They are all si"ilarly treated, both in privileges granted and in obligations re:uired, =ith all the four re:uisites for a reasonable classification present, there is no ground to invalidate Executive .rder /o, 57(# for being violative of the e:ual protection clause, &$'R'!OR', the petition is P#RTDE FR#/TE!, Section - of Executive .rder /o, 01 and Section 9 of B !# Board Resolution /o, 54(1-(149 are hereby declared /@DD and G.I! and are accordingly declared of no legal force and effect, Respondents are hereby enjoined fro" i"ple"enting the aforesaid void provisions, #ll portions of Executive .rder /o, 57(# are valid and effective, except the second sentences in paragraphs +,6 and +,4 of said Executive .rder, 'hich are hereby declared I/G#DI!, E/ B#/

(G.R. No. 132527. July 29, 2

5)

COCON*T O#+ R'!#N'R, A,,OC#AT#ON, #NC. re-resente% .y its /resi%ent, J',*, +. ARRAN0A, /$#+#//#N' A,,OC#AT#ON O! 1'AT /ROC',,OR,, #NC. 2/A1/#3, re-resente% .y its ,ecretary, RO1'O G. $#4A+GO, !'4'RAT#ON O! !R'' !AR1'R, 2!!!3, re-resente% .y its /resi%ent, J'R'1#A, *. 1ONT'1A5OR, an% 6*7+*RAN NG 1ANGGAGA&ANG /#+#/#NO 261/3, re-resente% .y its C8air-erson, !'+#1ON C. +AG1AN, petitioners, vs. $ON. R*6'N TORR',, in 8is ca-acity as '9ecutive ,ecretary: 6A,', CON;'R,#ON AN4 4';'+O/1'NT A*T$OR#T5, C+AR7 4';'+O/1'NT COR/ORAT#ON, ,*6#C 6A5 1'TRO/O+#TAN A*T$OR#T5, << 1ART 4*T5 !R'', !R''/ORT TRA4'R,, /= C+*6, A1'R#CAN $AR4&AR', RO5A+ 4*T5 !R'' ,$O/,, #NC., 4!, ,/ORT,, A,#A /AC#!#C, 1C# 4*T5 !R'' 4#,TR#6*TOR COR/. 2for>erly 1C# R',O*RC',, COR/.3, /AR7 ? ,$O/, 4*T5 !R'' CO11O4#T#',, +. !*RN#,$#NG, ,$A16*RG$, ,*6#C 4!,, ARGAN TRA4#NG COR/., A,#/#N' COR/., 6',T 6*5, #NC., /= C+*6, C+AR7 TRA4#NG, 4'1AG*, TRA4#NG COR/., 4.!.,. ,/ORT, *N+#1#T'4, #NC., 4*T5 !R'' !#R,T ,*/'R,TOR', #NC., !R''/ORT, JC 1A++ 4*T5 !R'' #NC. 2for>erly << 1art (Clar@) 4uty !ree Cor-.3, +#++5 $#++ COR/., 1AR,$A++, /*R'GO+4 4*T5 !R'', #NC., RO5A+ 4!, an% 0A==ON /$#+#//#N',, #NC., respondents. 4'C#,#ON A0C*NA, J."

This is a Petition for Prohibition and Injunction seeking to enjoin and prohibit the Executive Branch, through the public respondents Ruben Torres in his capacity as Executive Secretary, the Bases onversion !evelop"ent #uthority $B !#%, the lark !evelop"ent orporation $ ! % and the Subic Bay &etropolitan #uthority $SB&#%, fro" allo'ing, and the private respondents fro" continuing 'ith, the operation of tax and duty( free shops located at the Subic Special Econo"ic )one $SSE)% and the lark Special Econo"ic )one $ SE)%, and to declare the follo'ing issuances as unconstitutional, illegal, and void* +, Section - of Executive .rder /o, 01, regarding the SE),
2+3

capital 'ithin, into and exported out of the Subic Special Econo"ic )one, as 'ell as provide incentives such as tax and duty(free i"portations of ra' "aterials, capital and e:uip"ent, Io'ever, exportation or re"oval of goods fro" the territory of the Subic Special Econo"ic )one to the other parts of the Philippine territory shall be subject to custo"s duties and taxes under the usto"s and Tariff ode and other relevant tax la's of the PhilippinesC293 $c% The provision of existing la's, rules and regulations to the contrary not'ithstanding, no taxes, local and national, shall be i"posed 'ithin the Subic Special Econo"ic )one, In lieu of paying taxes, three percent $4J% of the gross inco"e earned by all businesses and enterprises 'ithin the Subic Special Ecoo"ic )one shall be re"itted to the /ational Fovern"ent, one percent $+J% each to the local govern"ent units affected by the declaration of the ?one in proportion to their population area, and other factors, In addition, there is hereby established a develop"ent fund of one percent $+J% of the gross inco"e earned by all businesses and enterprises 'ithin the Subic Special Econo"ic )one to be utili?ed for the develop"ent of "unicipalities outside the ity of .langapo and the &unicipality of Subic, and other "unicipalities contiguous to the base areas, ,,, SE TI./ +-, Clark and Other Special Economic Zones , H Subject to the concurrence by resolution of the local govern"ent units directly affected, the President is hereby authori?ed to create by executive procla"ation a Special Econo"ic )one covering the lands occupied by the lark "ilitary reservations and its contiguous extensions as e"braced, covered and defined by the +597 &ilitary Bases #gree"ent bet'een the Philippines and the @nited States of #"erica, as a"ended, located 'ithin the territorial jurisdiction of #ngeles ity, &unicipalities of &abalacat and Porac, Province of Pa"panga and the &unicipality of apas, Province of Tarlac, in accordance 'ith the policies as herein provided insofar as applicable to the lark "ilitary reservations, The governing body of the lark Special Econo"ic )one shall like'ise be established by executive procla"ation 'ith such po'ers and functions exercised by the Export Processing )one #uthority pursuant to Presidential !ecree /o, KK as a"ended, The policies to govern and regulate the lark Special Econo"ic )one shall be deter"ined upon consultation 'ith the inhabitants of the local govern"ent units directly affected 'hich shall be conducted 'ithin six $K% "onths upon approval of this #ct, Si"ilarly, subject to the concurrence by resolution of the local govern"ent units directly affected, the President shall create other Special Econo"ic )ones, in the base areas of =allace #ir Station in San <ernando, Da @nion $excluding areas designated for co""unications, advance 'arning and

dated #pril 4, +554,

6, Executive .rder /o, 57(#, dated 8une +5, +554, pertaining to the SSE), 4, Section 9 of B !# Board Resolution /o, 54(1-(149,263 dated &ay +0, +554, pertaining to the SE), Petitioners contend that the aforecited issuances are unconstitutional and void as they constitute executive la'"aking, and that they are contrary to Republic #ct /o, 7667243 and in violation of the onstitution, particularly Section +, #rticle III $e:ual protection clause%, Section +5, #rticle ;II $prohibition of unfair co"petition and co"binations in restraint of trade%, and Section +6, #rticle ;II $preferential use of <ilipino labor, do"estic "aterials and locally produced goods%, The facts are as follo's* .n &arch +4, +556, Republic #ct /o, 7667 'as enacted, providing for, a"ong other things, the sound and balanced conversion of the lark and Subic "ilitary reservations and their extensions into alternative productive uses in the for" of special econo"ic ?ones in order to pro"ote the econo"ic and social develop"ent of entral Du?on in particular and the country in general, #"ong the salient provisions are as follo's* SE TI./ +6, Subic Special Economic Zone, H ,,, The above"entioned ?one shall be subject to the follo'ing policies* $a% =ithin the fra"e'ork and subject to the "andate and li"itations of the onstitution and the pertinent provisions of the Docal Fovern"ent ode, the Subic Special Econo"ic )one shall be developed into a self( sustaining, industrial, co""ercial, financial and invest"ent center to generate e"ploy"ent opportunities in and around the ?one and to attract and pro"ote productive foreign invest"entsC $b% The Subic Special Econo"ic )one shall be operated and "anaged as a separate custo"s territory ensuring free flo' or "ove"ent of goods and

radar re:uire"ents of the Philippine #ir <orce to be deter"ined by the onversion #uthority% and a"p 8ohn Iay in the ity of Baguio, @pon reco""endation of the onversion #uthority, the President is like'ise authori?ed to create Special Econo"ic )ones covering the &unicipalities of &orong, Ier"osa, !inalupihan, astillejos and San &arcelino, .n #pril 4, +554, President <idel G, Ra"os issued Executive .rder /o, 01, 'hich declared, a"ong others, that lark shall have all the applicable incentives granted to the Subic Special Econo"ic and <ree Port )one under Republic #ct /o, 7667, The pertinent provision assailed therein is as follo's* SE TI./ -, Invest"ents li"ate in the SE), H Pursuant to Section -$"% and Section +- of R# 7667, the B !# shall pro"ulgate all necessary policies, rules and regulations governing the SE), including invest"ent incentives, in consultation 'ith the local govern"ent units and pertinent govern"ent depart"ents for i"ple"entation by the ! , #"ong others, the SE) shall have all the applicable incentives in the Subic Special Econo"ic and <ree Port )one under R# 7667 and those applicable incentives granted in the Export Processing )ones, the ."nibus Invest"ents ode of +507, the <oreign Invest"ents #ct of +55+ and ne' invest"ents la's 'hich "ay hereinafter be enacted, The SE) &ain )one covering the lark #ir Base proper shall have all the aforecited invest"ent incentives, 'hile the SE) Sub()one covering the rest of the SE) shall have li"ited incentives, The full incentives in the lark SE) &ain )one and the li"ited incentives in the lark SE) Sub()one shall be deter"ined by the B !#, Pursuant to the directive under Executive .rder /o, 01, the B !# passed Board Resolution /o, 54(1-(149 on &ay +0, +554, allo'ing the tax and duty(free sale at retail of consu"er goods i"ported via lark for consu"ption outside the SE), The assailed provisions of said resolution read, as follo's* Section 9, SPE I<I I/ E/TIGES I/ TIE SE) &#I/ )./E, L The SE)( registered enterprisesMbusinesses shall be entitled to all the incentives available under R,#, /o, 7667, E,., /o, 66K and R,#, /o, 7196 'hich shall include, but not li"ited to, the follo'ing* I, #s in Subic Econo"ic and <ree Port )one* #, ,,, usto"s*

9,

Tax and duty(free purchase and consu"ption of goodsMarticles $duty free shopping% 'ithin the SE) &ain )one, <or individuals, duty(free consu"er goods "ay be brought out of the SE) &ain )one into the Philippine usto"s territory but not to exceed @SN611,11 per "onth per ! (registered person, si"ilar to the li"its i"posed in the Subic SE), This privilege shall be enjoyed only once a "onth, #ny excess shall be levied taxes and duties by the Bureau of usto"s,

-,

.n 8une +1, +554, the President issued Executive .rder /o, 57, A larifying the Tax and !uty <ree Incentive =ithin the Subic Special Econo"ic )one Pursuant to R,#, /o, 7667,B Said issuance in part states, thus* SE TI./ +, .n I"port Taxes and !uties L Tax and duty(free i"portations shall apply only to ra' "aterials, capital goods and e:uip"ent brought in by business enterprises into the SSE), Except for these ite"s, i"portations of other goods into the SSE), 'hether by business enterprises or resident individuals, are subject to taxes and duties under relevant Philippine la's, The exportation or re"oval of tax and duty(free goods fro" the territory of the SSE) to other parts of the Philippine territory shall be subject to duties and taxes under relevant Philippine la's, /ine days after, on 8une +5, +554, Executive .rder /o, 57(# 'as issued, A<urther larifying the Tax and !uty(<ree Privilege =ithin the Subic Special Econo"ic and <ree Port )one,B The relevant provisions read, as follo's* SE TI./ +, The follo'ing guidelines shall govern the tax and duty(free privilege 'ithin the Secured #rea of the Subic Special Econo"ic and <ree Port )one* +,+ The Secured #rea consisting of the presently fenced(in for"er Subic /aval Base shall be the only co"pletely tax and duty(free area in the SSE<P), Business enterprises and individuals $<ilipinos and foreigners% residing 'ithin the Secured #rea are free to i"port ra' "aterials, capital goods, e:uip"ent, and consu"er ite"s tax and duty(free, onsu"ption ite"s, ho'ever, "ust be consu"ed 'ithin the Secured #rea, Re"oval of ra' "aterials, capital goods, e:uip"ent and consu"er ite"s out of the Secured #rea for sale to non(SSE<P) registered enterprises shall be subject to the usual taxes and duties, except as "ay be provided herein, +,6, Residents of the SSE<P) living outside the Secured #rea can enter the Secured #rea and consu"e any :uantity of consu"ption ite"s in

hotels and restaurants 'ithin the Secured #rea, Io'ever, these residents can purchase and bring out of the Secured #rea to other parts of the Philippine territory consu"er ite"s 'orth not exceeding @SN+11 per "onth per person, .nly residents age +- and over are entitled to this privilege, +,4, <ilipinos not residing 'ithin the SSE<P) can enter the Secured #rea and consu"e any :uantity of consu"ption ite"s in hotels and restaurants 'ithin the Secured #rea, Io'ever, they can purchase and bring out 2of3 the Secured #rea to other parts of the Philippine territory consu"er ite"s 'orth not exceeding @SN611 per year per person, .nly <ilipinos age +- and over are entitled to this privilege, Petitioners assail the N+11 "onthly and N611 yearly tax(free shopping privileges granted by the aforecited provisions respectively to SSE) residents living outside the Secured #rea of the SSE) and to <ilipinos aged +- and over residing outside the SSE), .n <ebruary 64, +550, petitioners thus filed the instant petition, seeking the declaration of nullity of the assailed issuances on the follo'ing grounds* I, E;E @TIGE .R!ER /., 57(#, SE TI./ - .< E;E @TIGE .R!ER /., 01, #/! SE TI./ 9 .< B !# B.#R! RES.D@TI./ /., 54(1-(149 #RE /@DD #/! G.I! 2<.R3 BEI/F #/ E;ER ISE .< E;E @TIGE D#=&#OI/F, II, E;E @TIGE .R!ER /., 57(#, SE TI./ - .< E;E @TIGE .R!ER /., 01, #/! SE TI./ 9 .< B !# B.#R! RES.D@TI./ /., 54(1-(149 #RE @/ ./STIT@TI./#D <.R BEI/F GI.D#TIGE .< TIE EP@#D PR.TE TI./ D#@SE #/! TIE PR.IIBITI./ #F#I/ST @/<#IR .&PETITI./ #/! PR# TI ES I/ RESTR#I/T .< TR#!E, III, E;E @TIGE .R!ER /., 57(#, SE TI./ - .< E;E @TIGE .R!ER /., 01, #/! SE TI./ 9 .< B !# B.#R! RES.D@TI./ /., 54(1-(149 #RE /@DD #/! G.I! 2<.R3 BEI/F GI.D#TIGE .< REP@BDI # T /., 7667, IG, TIE ./TI/@E! I&PDE&E/T#TI./ .< TIE I#DDE/FE! ISS@#/ ES I< /.T RESTR#I/E! =IDD ./TI/@E T. #@SE PETITI./ERS T. S@<<ER FR#GE #/! IRREP#R#BDE I/8@RE,2-3

In their o""ents, respondents point out procedural issues, alleging lack of petitioners> legal standing, the unreasonable delay in the filing of the petition, laches, and the propriety of the re"edy of prohibition, #nent the clai" on lack of legal standing, respondents argue that petitioners, being "ere suppliers of the local retailers operating outside the special econo"ic ?ones, do not stand to sufferdirect injury in the enforce"ent of the issuances being assailed herein, #ssu"ing this is true, this ourt has nevertheless held that in cases of para"ount i"portance 'here serious constitutional :uestions are involved, the standing re:uire"ents "ay be relaxed and a suit "ay be allo'ed to prosper even 'here there is no direct injury to the party clai"ing the right of judicial revie',2K3 In the sa"e vein, 'ith respect to the other alleged procedural fla's, even assu"ing the existence of such defects, this ourt, in the exercise of its discretion, brushes aside these technicalities and takes cogni?ance of the petition considering the i"portance to the public of the present case and in keeping 'ith the duty to deter"ine 'hether the other branches of the govern"ent have kept the"selves 'ithin the li"its of the onstitution,
273

/o', on the constitutional argu"ents raised* #s this ourt enters upon the task of passing on the validity of an act of a co(e:ual and coordinate branch of the Fovern"ent, it bears e"phasis that deeply ingrained in our jurisprudence is the ti"e(honored principle that a statute is presu"ed to be valid, 203 This presu"ption is rooted in the doctrine of separation of po'ers 'hich enjoins upon the three coordinate depart"ents of the Fovern"ent a beco"ing courtesy for each other>s acts,253 Ience, to doubt is to sustain, The theory is that before the act 'as done or the la' 'as enacted, earnest studies 'ere "ade by ongress, or the President, or both, to insure that the onstitution 'ould not be breached,2+13 This ourt, ho'ever, "ay declare a la', or portions thereof, unconstitutional 'here a petitioner has sho'n a clear and une:uivocal breach of the onstitution, not "erely a doubtful or argu"entative one, 2++3 In other 'ords, before a statute or a portion thereof "ay be declared unconstitutional, it "ust be sho'n that the statute or issuance violates the onstitution clearly, palpably and plainly, and in such a "anner as to leave no doubt or hesitation in the "ind of the ourt,2+63

The Issue on Executive Legislation Petitioners clai" that the assailed issuances $Executive .rder /o, 57( #C Section - of Executive .rder /o, 01C and Section 9 of B !# Board Resolution /o, 54(1-(149% constitute executive legislation, in violation of the rule on separation of po'ers, Petitioners argue that the Executive !epart"ent, by allo'ing through the :uestioned issuances the setting up of tax and duty(free shops and the re"oval of consu"er goods and ite"s

fro" the ?ones 'ithout pay"ent of corresponding duties and taxes, arbitrarily provided additional exe"ptions to the li"itations i"posed by Republic #ct /o, 7667, 'hich li"itations petitioners identify as follo's* $+% $6% 2Republic #ct /o, 76673 allo'ed only tax and duty(free i"portation of ra' "aterials, capital and e:uip"ent, It provides that any exportation or re"oval of goods fro" the territory of the Subic Special Econo"ic )one to other parts of the Philippine territory shall be subject to custo"s duties and taxes under the usto"s and Tariff ode and other relevant tax la's of the Philippines,

intent of the Degislature and to adopt that sense 'hich har"oni?es best 'ith the context and pro"otes in the fullest "anner the policy and objects of the Degislature,2+93 In the present case, there appears to be no logic in follo'ing the narro' interpretation petitioners urge, To li"it the tax(free i"portation privilege of enterprises located inside the special econo"ic ?one only to ra' "aterials, capital and e:uip"ent clearly runs counter to the intention of the Degislature to create a free port 'here the Afree flo' of oods or capital 'ithin, into, and out of the ?onesB is insured, The phrase Atax and duty(free i"portations of ra' "aterials, capital and e:uip"entB 'as "erely cited as an exa"ple of incentives that "ay be given to entities operating 'ithin the ?one, Public respondent SB&# correctly argued that the "axi" e!pressio unius est e!clusio alterius, on 'hich petitioners i"pliedly rely to support their restrictive interpretation, does not apply 'hen 'ords are "entioned by 'ay of exa"ple, 2+-3 It is obvious fro" the 'ording of Republic #ct /o, 7667, particularly the use of the phrase Asuch as,B that the enu"eration only "eant to illustrate incentives that the SSE) is authori?ed to grant, in line 'ith its being a free port ?one, <urther"ore, said legal "axi" should be applied only as a "eans of discovering legislative intent 'hich is not other'ise "anifest, and should not be per"itted to defeat the plainly indicated purpose of the Degislature,
2+K3

#nent the first alleged li"itation, petitioners contend that the 'ording of Republic #ct /o, 7667 clearly li"its the grant of tax incentives to the i"portation of ra' "aterials, capital and e:uip"ent only, Ience, they clai" that the assailed issuances constitute executive legislation for invalidly granting tax incentives in the i"portation of consu"er goods such as those being sold in the duty(free shops, in violation of the letter and intent of Republic #ct /o, 7667, # careful reading of Section +6 of Republic #ct /o, 7667, 'hich pertains to the SSE), 'ould sho' that it does not restrict the duty(free i"portation only to Ara' "aterials, capital and e:uip"ent,B Section +6 of the cited la' is partly reproduced, as follo's* SE TI./ +6, Subic Special Economic Zone, H ,,, The above"entioned ?one shall be subject to the follo'ing policies* ,,, $b% The Subic Special Econo"ic )one shall be operated and "anaged as a separate custo"s territory ensuring free flo' or "ove"ent of goods and capital 'ithin, into and exported out of the Subic Special Econo"ic )one, as 'ell as provide incentives such as tax and duty(free i"portations of ra' "aterials, capital and e:uip"ent, Io'ever, exportation or re"oval of goods fro" the territory of the Subic Special Econo"ic )one to the other parts of the Philippine territory shall be subject to custo"s duties and taxes under the usto"s and Tariff ode and other relevant tax la's of the Philippines,2+43

The records of the Senate containing the discussion of the concept of Aspecial econo"ic ?oneB in Section +6 $a% of Republic #ct /o, 7667 sho' the legislative intent that consu"er goods entering the SSE) A8ic8 satisfy t8e nee%s of t8e Bone an% are consu>e% t8ere are not subject to duties and taxes in accordance 'ith Philippine la's, thus* ,enator GuinCona, , , , The concept of Special Econo"ic )one is one that really includes the concept of a free port, but it is broader, =hile a free port is necessarily included in the Special Econo"ic )one, the reverse is not true that a free port 'ould include a special econo"ic ?one, Special Econo"ic )one, &r, President, 'ould include not only the inco"ing and outgoing of vessels, duty(free and tax(free, but it 'ould involve also touris", servicing, financing and all the appurtenances of an invest"ent center, So, that is the concept, &r, President, It is broader, It includes the free port concept and 'ould cater to the greater needs of .langapo ity, Subic Bay and the surrounding "unicipalities, ,enator 'nrile, &ay I kno' then if a factory located 'ithin the jurisdiction of &orong, Bataan that 'as originally a part of the Subic /aval reservation, be entitled to a free port treat"ent or just a special econo"ic ?one treat"entQ

=hile it is true that Section +6 $b% of Republic #ct /o, 7667 "entions only ra' "aterials, capital and e:uip"ent, this does not necessarily "ean that the tax and duty(free buying privilege is li"ited to these types of articles to the exclusion of consu"er goods, It "ust be re"e"bered that in construing statutes, the proper course is to start out and follo' the true

,enator GuinCona, #s far as the goods re:uired for "anufacture is concerned, &r, President, it 'ould have privileges of duty(free and tax( free, "ut in addition, the Special Economic Zone could embrace the needs of tourism, could embrace the needs of servicin , could embrace the needs of financin and other investment aspects , ,enator 'nrile, =hen a hotel is constructed, &r, President, in this geographical unit 'hich 'e call a special econo"ic ?one, 'ill the goods entering to be consu"ed by the custo"ers or guests of the hotel be subject to dutiesQ ,enator GuinCona, President, That is the concept that 'e are crafting, &r,

Section +6 of Republic #ct /o, 7667, provides in part, thus* SE , +6, Subic Special Econo"ic )one, (( , , , The above"entioned ?one shall be subject to the follo'ing policies* $a% =ithin the fra"e'ork and subject to the "andate and li"itations of the onstitution and the pertinent provisions of the Docal Fovern"ent ode, the Subic Special Econo"ic )one shall be developed into a self( sustaining, industrial, commercial, financial and invest"ent center to generate e"ploy"ent opportunities in and around the ?one and to attract and pro"ote productive foreign invest"ents, 2+53 The aforecited policy 'as "entioned as a basis for the issuance of Executive .rder /o, 57(#, thus* =IERE#S, Republic #ct /o, 7667 provides that 'ithin the fra"e'ork and subject to the "andate and li"itations of the onstitution and the pertinent provisions of the Docal Fovern"ent ode, the Subic Special Econo"ic and <ree Port )one $SSE<P)% shall be developed into a self( sustaining industrial, co""ercial, financial and invest"ent center to generate e"ploy"ent opportunities in and around the ?one and to attract and pro"ote productive foreign invest"entsC and =IERE#S, a special tax and duty(free privilege 'ithin a Secured #rea in the SSE<P) subject, to existing la's has been deter"ined necessary to attract local and foreign visitors to the ?one, Executive .rder /o, 57(# provides guidelines to govern the Atax and duty(free privileges 'ithin the Secured #rea of the Subic Special Econo"ic and <ree Port )one,B Paragraph +,K thereof states that A$t%he sale of tax and duty(free consu"er ite"s in the Secured #rea shall only be allo'ed in duly authori?ed duty(free shops,B The ourt finds that the setting up of such co""ercial establish"ents 'hich are the only ones duly authori?ed to sell consu"er ite"s tax and duty(free is still 'ell 'ithin the policy enunciated in Section +6 of Republic #ct /o, 7667 that A, , ,t8e ,u.ic ,-ecial 'cono>ic 0one s8all .e %evelo-e% into a selfDsustaininC, in%ustrial, co>>ercial, financial an% invest>ent center to Cenerate e>-loy>ent o--ortunities in an% aroun% t8e Bone an% to attract an% -ro>ote -ro%uctive foreiCn invest>ents,B $E"phasis supplied,% Io'ever, the ourt reiterates that the secon% sentences of -araCra-8s 1.2 an% 1.3 of '9ecutive Or%er No. 97DA, allo'ing tax and duty(free re>oval of Coo%s to certain individuals, even in a li"ited a"ount, fro" the Secured #rea of the SSE), are null an% voi% for .einC contrary to ,ection 12 of Re-u.lic Act No. 7227 , Said Section clearly provides that Aexportation or re"oval of goods fro" the territory of the

,enator 'nrile, /o, I a" asking 'hether those goods 'ill be duty(free, because it is constructed 'ithin a free port, ,enator GuinCona, For as lon Economic Zone, #es. as it services the needs of the Special

,enator 'nrile, For as lon as the oods remain within the $one, whether we call it an economic $one or a free port, for as lon as we sa# in this law that all oods enterin this particular territor# will be dut#%free and ta!% free, for as lon as the# remain there, consumed there or ree!ported or destro#ed in that place, then the# are not sub&ect to the duties and ta!es in accordance with the laws of the 'hilippines Q ,enator GuinCona, (es,2+73 Petitioners rely on o""ittee Report /o, +61K sub"itted by the #d Ioc .versight o""ittee on Bases onversion on 8une 6K, +55-, Petitioners put e"phasis on the report>s finding that the setting up of duty( free stores never figured in the "inds of the authors of Republic #ct /o, 7667 in attracting foreign investors to the for"er "ilitary baselands, They "aintain that said la' ai"ed to attract "anufacturing and service enterprises that 'ill e"ploy the dislocated for"er "ilitary base 'orkers, but not investors 'ho 'ould buy consu"er goods fro" duty(free stores, The ourt is not persuaded, Indeed, it is 'ell(established that opinions expressed in the debates and proceedings of the Degislature, steps taken in the enact"ent of a la', or the history of the passage of the la' through the Degislature, "ay be resorted to as aids in the interpretation of a statute 'ith a doubtful "eaning, 2+03 Petitioners> posture, ho'ever, overlooks the fact that the +55- o""ittee Report they are referring to ca"e into being 'ell after the enact"ent of Republic #ct /o, 7667 in +554, Ience, as pointed out by respondent Executive Secretary Torres, the afore"entioned report cannot be said to for" part of Republic #ct /o, 7667>s legislative history,

Subic Special Econo"ic )one to the other parts of the Philippine territory shall be subject to custo"s duties and taxes under the usto"s and Tariff ode and other relevant tax la's of the Philippines,B .n the other hand, insofar as the SE) is concerned, the case for an invalid exercise of executive legislation is tenable, In )ohn *a# 'eoples Alternative Coalition, et al. v. +ictor ,im, et al., this ourt resolved an issue, very "uch like the one herein, concerning the legality of the tax exe"ption benefits given to the 8ohn Iay Econo"ic )one under Presidential Procla"ation /o, 961, Series of +559, A RE#TI/F #/! !ESIF/#TI/F # P.RTI./ .< TIE #RE# .GERE! BE TIE <.R&ER #&P 8.I/ #S TIE 8.I/ I#E SPE I#D E ./.&I )./E P@RS@#/T T. REP@BDI # T /., 7667,B
2613

If it 'ere the intent of the legislature to grant to 8ohn Iay SE) the sa"e tax exe"ption and incentives given to the Subic SE), it 'ould have so expressly provided in R,#, /o, 7667,2663 In the present case, 'hile Section +6 of Republic #ct /o, 7667 expressly provides for the grant of incentives to the SSE), it fails to "ake any si"ilar grant in favor of other econo"ic ?ones, including the SE), Tax and duty(free incentives being in the nature of tax exe"ptions, the basis thereof should be categorically and un"istakably expressed fro" the language of the statute, onse:uently, in the absence of any express grant of tax and duty(free privileges to the SE) in Republic #ct /o, 7667, there 'ould be no legal basis to uphold the :uestioned portions of t'o issuances* Section - of Executive .rder /o, 01 and Section 9 of B !# Board Resolution /o, 54(1-(149, 'hich both pertain to the SE), Petitioners also contend that the :uestioned issuances constitute executive legislation for allo'ing the re"oval of consu"er goods and ite"s fro" the ?ones 'ithout pay"ent of corresponding duties and taxes in violation of Republic #ct /o, 7667 as Section +6 thereof provides for the taxation of goods that are exported or re"oved fro" the SSE) to other parts of the Philippine territory, .n Septe"ber 6K, +557, Executive .rder /o, 999 'as issued, curtailing the duty(free shopping privileges in the SSE) and the SE) Ato prevent abuse of duty(free privilege and to protect local industries fro" unfair co"petition,B The pertinent provisions of said issuance state, as follo's* SE TI./ 4, Special Shopping Privileges Franted !uring the Eear(round entennial #nniversary elebration in +550, H @pon effectivity of this .rder and up to the entennial Eear +550, in addition to the per"anent residents, locators and e"ployees of the fenced(in areas of the Subic Special Econo"ic and <reeport )one and the lark Special Econo"ic )one 'ho are allo'ed unli"ited duty free purchases, provided these are consu"ed 'ithin said fenced(in areas of the )ones, the residents of the "unicipalities adjacent to Subic and lark as respectively provided in R,#, 7667 $+556% and E,., 57(# s, +554 shall continue to be allo'ed .ne Iundred @S !ollars $@SN+11% "onthly shopping privilege until 4+ !ece"ber +550, !o"estic tourists visiting Subic and lark shall be allo'ed a shopping privilege of @SN6- for consu"able goods 'hich shall be consu"ed only in the fenced(in area during their visit therein, SE TI./ 9, Frant of !uty <ree Shopping Privileges Di"ited .nly To Individuals #llo'ed by Da', H Starting + 8anuary +555, only the follo'ing persons shall continue to be eligible to shop in duty free shopsMoutlets 'ith their corresponding purchase li"its* a, Tourists and <ilipinos traveling to or returning fro" foreign destinations under E,., 57(# s, +554 H .ne Thousand @S !ollars $@SN+,111% but not to exceed Ten Thousand @S !ollars $@SN+1,111% in any given yearC

In that case, a"ong the argu"ents raised 'as that the granting of tax exe"ptions to 8ohn Iay 'as an invalid and illegal exercise by the President of the po'ers granted only to the Degislature, Petitioners therein argued that Republic #ct /o, 7667 expressly granted tax exe"ption only to Subic and not to the other econo"ic ?ones yet to be established, Thus, the grant of tax exe"ption to 8ohn Iay by Presidential Procla"ation contravenes the constitutional "andate that A2n3o la' granting any tax exe"ption shall be passed 'ithout the concurrence of a "ajority of all the "e"bers of ongress,B26+3 This ourt sustained the argu"ent and ruled that the incentives under Republic #ct /o, 7667 are exclusive only to the SSE), The President, therefore, had no authority to extend their application to 8ohn Iay, To :uote fro" the !ecision* &ore i"portantly, the nature of "ost of the assailed privileges is one of tax exe"ption, It is the legislature, unless li"ited by a provision of a state constitution, that has full po'er to exe"pt any person or corporation or class of property fro" taxation, its po'er to exe"pt being as broad as its po'er to tax, .ther than ongress, the onstitution "ay itself provide for specific tax exe"ptions, or local govern"ents "ay pass ordinances on exe"ption only fro" local taxes, The challenged grant of tax exe"ption 'ould circu"vent the onstitution>s i"position that a la' granting any tax exe"ption "ust have the concurrence of a "ajority of all the "e"bers of ongress, In the sa"e vein, the other kinds of privileges extended to the 8ohn Iay SE) are by tradition and usage for ongress to legislate upon, ontrary to public respondents> suggestions, the clai"ed statutory exe"ption of the 8ohn Iay SE) fro" taxation should be "anifest and un"istakable fro" the language of the la' on 'hich it is basedC it "ust be expressly granted in a statute stated in a language too clear to be "istaken, Tax exe"ption cannot be i"plied as it "ust be categorically and un"istakably expressed,

b,

.verseas <ilipino =orkers $.<=s% and Balikbayans defined under R,#, K7K0 dated 4 /ove"ber +505 H T'o Thousand @S !ollars $@SN6,111%C Residents, eighteen $+0% years old and above, of the fenced(in areas of the freeports under R,#, 7667 $+556% and E,., 57(# s, +554 H @nli"ited purchase as long as these are for consu"ption 'ithin these freeports, The ter" RResidentsR "entioned in ite" c above shall refer to individuals 'ho, by virtue of do"icile or e"ploy"ent, reside on per"anent basis 'ithin the freeport area, The ter" excludes $+% non(residents 'ho have entered into short( or long(ter" property lease inside the freeport, $6% outsiders engaged in doing business 'ithin the freeport, and $4% "e"bers of private clubs $e,g,, yacht and golf clubs% based or located 'ithin the freeport, In this regard, duty free privileges granted to any of the above individuals $e,g,, unli"ited shopping privilege, tax(free i"portation of cars, etc,% are hereby revoked,2643 # perusal of the above provisions indicates that effective 8anuary +, +555, the grant of duty(free shopping privileges to do"estic tourists and to residents living adjacent to SSE) and the SE) had been revoked, Residents of the fenced(in area of the free port are still allo'ed unli"ited purchase of consu"er goods, Aas long as these are for consu"ption 'ithin these freeports,B Ience, the only individuals allo'ed by la' to shop in the duty(free outlets and re"ove consu"er goods out of the free ports tax(free are tourists and <ilipinos traveling to or returning fro" foreign destinations, and .verseas <ilipino =orkers and Balikbayans as defined under Republic #ct /o, K7K0,2693 Subse:uently, on .ctober 61, 6111, Executive .rder /o, 414 'as issued, a"ending Executive .rder /o, 999, Pursuant to the li"ited duration of the privileges granted under the preceding issuance, Section 6 of Executive .rder /o, 414 declared that A2a3ll special shopping privileges as granted under Section 4 of Executive .rder 999, s, +557, are hereby dee"ed ter"inated, The grant of duty free shopping privileges shall be restricted to :ualified individuals as provided by la',B It bears noting at this point that the shopping privileges currently being enjoyed by .verseas <ilipino =orkers, Balikbayans, and tourists traveling to and fro" foreign destinations, dra' authority not fro" the issuances being assailed herein, but fro" Executive .rder /o, 9K 26-3 and Republic #ct /o, K7K0, both enacted prior to the pro"ulgation of Republic #ct /o, 7667, <ro" the foregoing, it appears that petitioners> objection to the allo'ance of tax(free re"oval of goods fro" the special econo"ic ?ones as previously authori?ed by the :uestioned issuances has beco"e "oot and acade"ic, In any event, Republic #ct /o, 7667, specifically Section +6 $b% thereof, clearly provides that Aexportation or re"oval of goods fro" the territory of the Subic Special Econo"ic )one to the other parts of the

Philippine territory shall be subject to custo"s duties and taxes under the usto"s and Tariff ode and other relevant tax la's of the Philippines,B Thus, the re"oval of goods fro" the SSE) to other parts of the Philippine territory 'ithout pay"ent of said custo"s duties and taxes is not authori?ed by the #ct, onse:uently, the follo'ing italici?ed provisions found in the second sentences of paragraphs +,6 and +,4, Section + of Executive .rder /o, 57(# are null and void* +,6 Residents of the SSE<P) living outside the Secured #rea can enter and consu"e any :uantity of consu"ption ite"s in hotels and restaurants 'ithin the Secured #rea, *owever, these residents can purchase and brin out of the Secured Area to other parts of the 'hilippine territor# consumer items worth not e!ceedin -S ./00 per month per person , .nly residents age +and over are entitled to this privilege, <ilipinos not residing 'ithin the SSE<P) can enter the Secured #rea and consu"e any :uantity of consu"ption ite"s in hotels and restaurants 'ithin the Secured #rea, *owever, the# can purchase and brin out of the Secured Area to other parts of the 'hilippine territor# consumer items worth not e!ceedin -S .100 per #ear per person, .nly <ilipinos age +- and over are entitled to this privilege,26K3

c,

+,4

# si"ilar provision found in paragraph -, Section 9$#% of B !# Board Resolution /o, 54(1-(149 is also null and void, Said Resolution applied the incentives given to the SSE) under Republic #ct /o, 7667 to the SE), 'hich, as aforestated, is 'ithout legal basis, Iaving concluded earlier that the SE) is excluded fro" the tax and duty(free incentives provided under Republic #ct /o, 7667, this ourt 'ill resolve the re"aining argu"ents only 'ith regard to the operations of the SSE), Thus, the assailed issuance that 'ill be discussed is solely Executive .rder /o, 57(#, since it is the only one a"ong the three :uestioned issuances 'hich pertains to the SSE),

Equal Protection of the Laws Petitioners argue that the assailed issuance $Executive .rder /o, 57( #% is violative of their right to e:ual protection of the la's, as enshrined in Section +, #rticle III of the onstitution, To support this argu"ent, they assert that private respondents operating inside the SSE) are not different fro" the retail establish"ents located outside, the products sold being essentially the sa"e, The only distinction, they clai", lies in the products> variety and source, and the fact that private respondents i"port their ite"s tax(free, to the prejudice of the retailers and "anufacturers located outside the ?one,

Petitioners> contention cannot be sustained, It is an established principle of constitutional la' that the guaranty of the e:ual protection of the la's is not violated by a legislation based on a reasonable classification,2673 lassification, to be valid, "ust $+% rest on substantial distinction, $6% be ger"ane to the purpose of the la', $4% not be li"ited to existing conditions only, and $9% apply e:ually to all "e"bers of the sa"e class,2603 #pplying the foregoing test to the present case, this ourt finds no violation of the right to e:ual protection of the la's, First, contrary to petitioners> clai", substantial distinctions lie bet'een the establish"ents inside and outside the ?one, justifying the difference in their treat"ent, In Tiu v. Court of Appeals, 2653 the constitutionality of Executive .rder /o, 57(# 'as challenged for being violative of the e:ual protection clause, In that case, petitioners clai"ed that Executive .rder /o, 57(# 'as discri"inatory in confining the application of Republic #ct /o, 7667 'ithin a secured area of the SSE), to the exclusion of those outside but are, nevertheless, still 'ithin the econo"ic ?one, @pholding the constitutionality of Executive .rder /o, 57(#, this ourt therein found substantial differences bet'een the retailers inside and outside the secured area, thereby justifying a valid and reasonable classification* ertainly, there are substantial differences bet'een the big investors 'ho are being lured to establish and operate their industries in the so(called Asecured areaB and the present business operators outside the area, .n the one hand, 'e are talking of billion(peso invest"ents and thousands of new jobs, .n the other hand, definitely none of such "agnitude, In the first, the econo"ic i"pact 'ill be nationalC in the second, only local, Even "ore i"portant, at this ti"e the business activities outside the Asecured areaB are not likely to have any i"pact in achieving the purpose of the la', 'hich is to turn the for"er "ilitary base to productive use for the benefit of the Philippine econo"y, There is, then, hardly any reasonable basis to extend to the" the benefits and incentives accorded in R,#, 7667, #dditionally, as the ourt of #ppeals pointed out, it 'ill be easier to "anage and "onitor the activities 'ithin the Asecured area,B 'hich is already fenced off, to prevent Afraudulent i"portation of "erchandiseB or s"uggling, It is 'ell(settled that the e:ual(protection guarantee does not re:uire territorial unifor"ity of la's, #s long as there are actual and "aterial differences bet'een territories, there is no violation of the constitutional clause, #nd of course, anyone, including the petitioners, possessing the re:uisite invest"ent capital can al'ays avail of the sa"e benefits by channeling his or her resources or business operations into the fenced(off free port ?one,2413 The ourt in Tiu found real and substantial distinctions bet'een residents 'ithin the secured area and those living 'ithin the econo"ic ?one but outside the fenced(off area, Si"ilarly, real and substantial

differences exist bet'een the establish"ents herein involved, # significant distinction bet'een the t'o groups is that enterprises outside the ?ones "aintain their businesses 'ithin Philippine custo"s territory, 'hile private respondents and the other duly(registered ?one enterprises operate 'ithin the so(called Aseparate custo"s territory,B To grant the sa"e tax incentives given to enterprises 'ithin the ?ones to businesses operating outside the ?ones, as petitioners insist, 'ould clearly defeat the statute>s intent to carve a territory out of the "ilitary reservations in Subic Bay 'here free flo' of goods and capital is "aintained, The classification is ger"ane to the purpose of Republic #ct /o, 7667, #s held in Tiu, the real concern of Republic #ct /o, 7667 is to convert the lands for"erly occupied by the @S "ilitary bases into econo"ic or industrial areas, In furtherance of such objective, ongress dee"ed it necessary to extend econo"ic incentives to the establish"ents 'ithin the ?one to attract and encourage foreign and local investors, This is the very rationale behind Republic #ct /o, 7667 and other si"ilar special econo"ic ?one la's 'hich grant a co"plete package of tax incentives and other benefits, The classification, "oreover, is not li"ited to the existing conditions 'hen the la' 'as pro"ulgated, but to future conditions as 'ell, inas"uch as the la' envisioned the for"er "ilitary reservation to ulti"ately develop into a self(sustaining invest"ent center, #nd, lastly, the classification applies e:ually to all retailers found 'ithin the Asecured area,B #s ruled in Tiu, the individuals and businesses 'ithin the Asecured area,B being in like circu"stances or contributing directly to the achieve"ent of the end purpose of the la', are not categori?ed further, They are all si"ilarly treated, both in privileges granted and in obligations re:uired, =ith all the four re:uisites for a reasonable classification present, there is no ground to invalidate Executive .rder /o, 57(# for being violative of the e:ual protection clause,

Prohibition against Unfair o!petition and Practices in "estraint of Trade Petitioners next argue that the grant of special tax exe"ptions and privileges gave the private respondents undue advantage over local enterprises 'hich do not operate inside the SSE), thereby creating unfair co"petition in violation of the constitutional prohibition against unfair co"petition and practices in restraint of trade, The argu"ent is 'ithout "erit, 8ust ho' the assailed issuance is violative of the prohibition against unfair co"petition and practices in restraint of trade is not clearly explained in the petition, Republic #ct /o, 7667, and conse:uently Executive .rder /o, 57(#, cannot be said to be distinctively arbitrary against the 'elfare of businesses outside the ?ones,

The "ere fact that incentives and privileges are granted to certain enterprises to the exclusion of others does not render the issuance unconstitutional for espousing unfair co"petition, Said constitutional prohibition cannot hinder the Degislature fro" using tax incentives as a tool to pursue its policies, Suffice it to say that ongress had justifiable reasons in granting incentives to the private respondents, in accordance 'ith Republic #ct /o, 7667>s policy of developing the SSE) into a self(sustaining entity that 'ill generate e"ploy"ent and attract foreign and local invest"ent, If petitioners had 'anted to avoid any alleged unfavorable conse:uences on their profits, they should upgrade their standards of :uality so as to effectively co"pete in the "arket, In the alternative, if petitioners really 'anted the preferential treat"ent accorded to the private respondents, they could have opted to register 'ith SSE) in order to operate 'ithin the special econo"ic ?one,

onstitution did not intend to pursue an isolationist policy, It did not shut out foreign invest"ents, goods and services in the develop"ent of the Philippine econo"y, =hile the onstitution does not encourage the unli"ited entry of foreign goods, services and invest"ents into the country, it does not prohibit the" either, In fact, it allo's an exchange on the basis of e:uality and reciprocity, fro'ning only on foreign co"petition that is unfair,2493 This ourt notes that the Executive !epart"ent, 'ith its subse:uent issuance of Executive .rder /os, 999 and 414, has provided certain "easures to prevent unfair co"petition, In particular, Executive .rder /os, 999 and 414 have restricted the special shopping privileges to certain individuals,24-3 Executive .rder /o, 414 has li"ited the range of ite"s that "ay be sold in the duty(free outlets, 24K3 and i"posed sanctions to curb abuses of duty(free privileges,2473 =ith these "easures, this ourt finds no reason to strike do'n Executive .rder /o, 57(# for allegedly being prejudicial to <ilipino labor, do"estic "aterials and locally produced goods, &$'R'!OR', the petition is P#RTDE FR#/TE!, Section - of Executive .rder /o, 01 and Section 9 of B !# Board Resolution /o, 54(1-( 149 are hereby declared /@DD and G.I! and are accordingly declared of no legal force and effect, Respondents are hereby enjoined fro" i"ple"enting the aforesaid void provisions, #ll portions of Executive .rder /o, 57(# are valid and effective, except the second sentences in paragraphs +,6 and +,4 of said Executive .rder, 'hich are hereby declared I/G#DI!, /o costs, ,O OR4'R'4. 6avide, )r., C.)., 'uno, 'an aniban, 7uisumbin , (nares%Santia o, Sandoval%3utierre$, Austria%2artine$, Carpio%2orales, Calle&o, Sr., Tin a, Chico%8a$ario, and 3arcia, ))., concur. Carpio, )., no part, Corona, )., on official leave,

Preferential Use of #ilipino Labor, $o!estic %aterials and Locall& Produced 'oods Dastly, petitioners clai" that the :uestioned issuance $Executive .rder /o, 57(#% openly violated the State policy of pro"oting the preferential use of <ilipino labor, do"estic "aterials and locally produced goods and adopting "easures to help "ake the" co"petitive, #gain, the argu"ent lacks "erit, This ourt notes that petitioners failed to substantiate their s'eeping conclusion that the issuance has violated the State policy of giving preference to <ilipino goods and labor. The "ere fact that said issuance authori?es the i"portation and trade of foreign goods does not suffice to declare it unconstitutional on this ground, Petitioners cite 2anila 'rince *otel v. 3S4S24+3 'hich, ho'ever, does not apply, That case dealt 'ith the policy enunciated under the second paragraph of Section +1, #rticle ;II of the onstitution, 2463 applicable to the grant of rights, privileges, and concessions Acovering the national econo"y and patri"ony,B 'hich is different fro" the policy invoked in this petition, specifically that of giving preference to <ilipino "aterials and labor found under Section +6 of the sa"e #rticle of the onstitution, $E"phasis supplied%, In Ta5ada v. An ara,2443 this ourt elaborated on the "eaning of Section +6, #rticle ;II of the onstitution in this 'ise* 2=3hile the onstitution indeed "andates a bias in favor of <ilipino goods, services, labor and enterprises, at the sa"e ti"e, it recogni?es the need for business exchange 'ith the rest of the 'orld on the bases of e:uality and reciprocity and li"its protection of <ilipino enterprises only against foreign co"petition and trade practices that are unfair, In other 'ords, the

2+3

Executive .rder /o, 01 is entitled, A#uthori?ing the Establish"ent of the lark !evelop"ent orporation as the I"ple"enting #r" of the Bases onversion and !evelop"ent #uthority for the lark Special Econo"ic )one, and !irecting all Ieads of !epart"ents, Bureaus, .ffices, #gencies and Instru"entalities of Fovern"ent to Support the Progra",B B !# Board Resolution /o, 54(1-(149 is entitled, APrescribing the Invest"ent li"ate in the lark Special Econo"ic )one for I"ple"entation by the lark !evelop"ent orporation,B onversion and !evelop"ent #ct of +556,

263

243 293

Bases

@nderscoring supplied,

2-3 2K3

Rollo, pp, +4, +-, +7, and +0, Bayan $Bagong #lyansang &akabayan% v, )a"ora , F,R, /o, +40-71, .ctober +1, 6111, 496 S R# 995, citin Oilosbayan v, Fuingona, 8r,, F,R, /o, ++447-, &ay -, +559, 646 S R# ++1, .s"eSa v, o""ission on Elections, F,R, /os, +114+0, +119+7, and +11961, 8uly 41, +55+, +55 S R# 7-1, Basco v, Phil, #"use"ents and Fa"ing &ay +9, +55+, +57 S R# -6, orporation, F,R, /o, 5+K95,
26K3 2673 2603

273

and tax free "erchandising syste" in the Philippines to aug"ent the service facilities for tourists and to generate foreign exchange and revenue for the govern"ent, @nder this syste", the Philippine Touris" #uthority shall have the exclusive authority to operate stores and shops that 'ould sell, a"ong others, tax and duty free "erchandise, goods and articles, in international airports and sea ports throughout the country in accordance 'ith the rules and regulations issued by the &inistry of Touris",B Italics supplied, People v, ayat, F,R, /o, 9-507, &ay -, +545, K0 Phil, +6,

203

253

a'aling, 8r, v, o""ission on Elections, F,R, /os, +9K4+5 and +9K496, .ctober 6K, 611+, 4K0 S R# 9-4, #ssociation of S"all Dando'ners in the Philippines,, Inc,, v, Secretary of #grarian Refor", F,R, /o, 70796, 8uly +9, +505, +7- S R# 494, a'aling, 8r,, v, o""ission on Elections , supra, note 5,

2+13

Tiu v, ourt of #ppeals, F,R, /o, +679+1, 8anuary 61, +555, 41+ S R# 670, 4bid. 4d, at 65+, F,R, /o, +66+-K, <ebruary 4, +557, 6K7 S R# 910, Sec, +1, #rt, ;II, provides that*

2653 2413 24+3 2463

2++3 2+63 2+43 2+93 2+-3

&isolas v, Panga, F,R, /o, 0449+, 8anuary 41, +551, +0+ S R# K90, @nderscoring supplied, Eugenio v, !rilon, F,R, /o, +15919, 8anuary 66, +55K, 6-6 S R# +1K, Fo"e? v, Gentura and Board of &edical Exa"iners, /o, 4699+, &arch 65, +541, -9 Phil, 76K, !i"aporo v, &itra, 8r,, F,R, /o, 5K0-5, .ctober +-, +55+, 616 S R# 775C Pri"ero v, ourt of #ppeals, F,R, /os, 909K0(K5, /ove"ber 66, +505, +75 S R# -96, E"phasis supplied, Esso Standard Eastern, Inc, v, o""issioner of Internal Revenue, F,R, /o, 60-10(5, 8uly 7, +505, +7- S R# +95, E"phasis supplied, F,R, /o, ++577-, .ctober 69, 6114, 9+9 S R# 4-K, Section 60$9%, #rticle GI of the Supra, note 61, at 477, @nderscoring supplied, Republic #ct /o, K7K0 entitled, A#/ # T I/STIT@TI/F # B#DIOB#E#/ PR.FR#&,B E,., /o, 9K, AFR#/TI/F TIE &I/ISTRE .< T.@RIS&, TIR.@FI TIE PIIDIPPI/E T.@RIS& #@TI.RITE $PT#%, #@TI.RITE T. EST#BDISI #/! .PER#TE # !@TE #/! T#; <REE &ER I#/!ISI/F SESE& I/ TIE PIIDIPPI/ESB , , , , ASE , +, The &inistry of Touris", through the Philippine Touris" #uthority $PT#% is hereby authori?ed to establish a duty onstitution,

,,, In the grant of rights, privileges, and concessions covering the national econo"y and patri"ony, the State shall give preference to :ualified <ilipinos, , , ,
2443 2493 24-3 24K3 2473

2+K3

F,R, /o, ++065-, &ay 6, +557, 676 S R# +0, 4d. at -0(-5, Executive .rder /o, 414, Section 4C Executive .rder /o, 999, Section 9, Executive .rder /o, 414, Section 4, Executive .rder /o, 414, Section -,

2+73 2+03

2+53 2613 26+3 2663 2643 2693

26-3