Coconut Oil Refiners v. Torres GR 132527 July 29, 2005

Fact: This is a Petition for Prohibition and Injunction seeking to enjoin and prohibit the Executive Branch, through the public respondents, and to declare the following issuances as unconstitutional, illegal, and void:

  1. Section 5 of Executive Order No. 80,1 dated April 3, 1993, regarding the CSEZ.
  2. Executive Order No. 97-A, dated June 19, 1993, pertaining to the SSEZ.
  3. Section 4 of BCDA Board Resolution No. 93-05-034,2 dated May 18, 1993, pertaining to the CSEZ.

Petitioners contend that the aforecited issuances are unconstitutional and void as they constitute executive lawmaking, and that they are contrary to Republic Act No. 72273 and in violation of the Constitution, particularly Section 1, Article III (equal protection clause)

Issue: Whether EO 97-a, section 5 of EO. 80, and section 4 of BCDA Resolution no. 93-05-034 are unconstitutional for being violative of the equal protection clause.

Held: No, Petitioners’ contention cannot be sustained. It is an established principle of constitutional law that the guaranty of the equal protection of the laws is not violated by a legislation based on a reasonable classification. Classification, to be valid, must (1) rest on substantial distinction, (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. Applying the foregoing test to the present case, the finds no violation of the right to equal protection of the laws. First, contrary to petitioners’ claim, substantial distinctions lie between the establishments inside and outside the zone, justifying the difference in their treatment. The Court found substantial differences between the retailers inside and outside the secured area, thereby justifying a valid and reasonable classification. Certainly, 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. 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 R.A. 7227. It is well-settled that 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. And of course, anyone, including the petitioners, 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.

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