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127410, 37 SCRA 99, January 28, 1971)


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.

The classification based on a valid and reasonable standard does not violate the equal protection clause.


RA 7227 seeks to accelerate the conversion of military reservations into other productive uses. Section 12
thereof created the Subic Special Economic Zone (SSEZ), which includes the City of Olongapo, Municipality
of Subic and the lands occupied by the Subic Naval Base and granted special privileges.

Thereafter, EO 97 was issued to clarify the application of the incentives provided by RA 7227. Sec. 1 of EO
97 provides for the tax and duty-free importations shall only be applied raw materials, capital goods and
equipment brought in by business enterprises into the SSEZ. Except for these items, importations of other
goods into the SSEZ, whether by business enterprises, resident individuals are subject to the taxes and
duties under Philippine laws. The exportation or removal of tax and duty free goods from the territory of
the SSEZ to other parts of the Philippines shall be subject to duties and taxes under Philippine laws.

Section 1.1 thereof grants the enjoyment of the tax and duty incentives to the business and enterprises
and residents within the presently fenced-in former Subic Naval Base only. It excludes the the first two
component cities as provided for by Sec. 12 of RA 7227.


Whether EO 97-A violates the equal protection of the laws?


No, EO 97-A is not violative of the equal protection of the laws.

The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable

Classification, to be valid, must (1) rest on substantial distinctions, (2) be germane to the purpose of the
law, (3) not be limited to existing conditions only, and (4) apply equally to all members of the same class.

RA 7227 aims primarily to accelerate the conversion of military reservations into productive uses.

The Government provides enticements as to persuade and attract investors to pour in capital with the
said military bases. Among such enticements are: (1) a separate customs territory within the zone, (2) tax-
and-duty-free importations, (3) restructured income tax rates on business enterprises within the zone, (4)
no foreign exchange control, (5) liberalized regulations on banking and finance, and (6) the grant of
resident status to certain investors and of working visas to certain foreign executives and workers.

The purpose of the law is to convert former military base to productive use for the benefit of the Philippine
economy. Hence, there was no reasonable basis to extend the tax incentives in RA 7227.