SYNOPSIS This is a petition for review under Rule 45 of the Revised Rules of Court, seeking the reversal of the

Court of Appeals Decision upholding the constitutionality and validity of Executive Order No. 97-A. Under the said Executive Order, the grant and enjoyment of the tax and duty incentives authorized under Republic Act No. 7227 were limited to the business enterprises and residents within the fenced-in area of the Subic Special Economic Zone. Petitioners challenged the constitutionally of EO 97-A for allegedly being violative of their right to equal protection of the laws. Petitioners contended that the provisions of EO 97-A confining the application of R.A. 7227 within the secured area and excluding the residents of the zone outside of the secured area is discriminatory. The Supreme Court ruled in favor of the constitutionality and validity of the assailed EO. Said Order is not violative of the equal protection clause; neither is it discriminatory. Rather, the Court found real and substantive distinctions between the circumstances obtaining inside and those outside the Subic Naval Base, thereby justifying a valid and reasonable for the President to have delimited the application of some incentives to the confines of the former Subic military base. It is the specific area which the government intends to transform and develop from itsstatus quo ante as an abandoned naval facility into a self-sustaining industrial and commercial zone. Moreover, the equal protection guarantee does not require territorial uniformity of laws. 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. The Court also believed that the classification set forth by the executive issuance does not apply merely to existing conditions. As laid down in RA 7227, the objective is to establish a self-sustaining, industrial, commercial, financial and investment center in the area. There will, therefore, be a long-term difference between such investment center and the areas outside it. Lastly, the classification applies equally to all the resident individuals and business 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. No undue favor or privilege was therefore extended. Thus, the Court held that 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. The Court therefore affirmed the assailed Decision and Resolution. SYLLABUS
1. CONSTITUTIONAL LAW; BILL OF RIGHTS; EQUAL PROTECTION CLAUSE; NOT ABSOLUTE BUT SUBJECT TO REASONABLE CLASSIFICATION; REQUISITES FOR VALIDITY OF CLASSIFICATION, ENUMERATED. The fundamental right of equal protection of the laws is not absolute, but is subject to reasonable classification. If the groupings are characterized by substantial distinctions that make real differences, one class may be treated and regulated differently from another. The classification must also be germane to the purpose of the law and must apply to all those belonging to the same class. 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. 2. ID.; ID.; ID.; DOES NOT REQUIRE TERRITORIAL UNIFORMITY OF LAWS. 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. 3. ID.; ID.; ID.; NOT VIOLATED BY AN EXECUTIVE ORDER GRANTING TAX AND DUTY INCENTIVES ONLY TO BUSINESSES AND RESIDENTS WITHIN THE SECURED AREA OF THE SUBIC SPECIAL ECONOMIC ZONE. The constitutional right to equal protection of the law is not violated by an executive order, issued pursuant to law, granting 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. 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. 4. ID.; ID.; EXECUTIVE ORDER 97-A; NEITHER VIOLATIVE OF EQUAL PROTECTION CLAUSE NOR CONSIDERED DISCRIMINATORY. We rule in favor of the constitutionality and validity of the assailed EO 97-A. Said Order is not violative of the equal protection clause; neither is it discriminatory. Rather, we find real and substantive distinctions between the circumstances obtaining inside and those outside the Subic Naval Base, thereby justifying a valid and reasonable classification. 5. ID.; ID.; ID.; LIMITATION OF THE APPLICATION OF INCENTIVES TO THE CONFINES OF THE FORMER SUBIC MILITARY BASE, CONSIDERED REASONABLE, IN CASE AT BAR; CLASSIFICATION IS GERMANE TO THE PURPOSES OF THE LAW. We believe it was reasonable for the President to have delimited the application of some incentives to the confines of the former Subic military base. It is this specific area which the government intends to transform and develop from its status quo ante as an abandoned naval facility into a self-sustaining industrial and commercial zone, particularly for big foreign and local investors to use as operational bases for their businesses and industries. Why the seeming bias for big investors? Undeniably, they are the ones who can pour huge investments to spur economic growth in the country and to generate employment opportunities for the Filipinos, the ultimate goals of the government for such conversion. The classification is, therefore, germane to the purposes of the law. And as the legal maxim goes, The intent of a statute is the law. 6. ID.; ID.; ID.; ID.; REASONS. 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 RA 7227. Additionally, as the Court of Appeals pointed out, 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. 7. ID.; ID.; ID.; CLASSIFICATION SET FORTH THEREIN, DOES NOT APPLY MERELY TO EXISTING CONDITIONS. We believe that the classification set forth by the executive issuance does not apply merely to existing conditions. As laid down in RA 7227, the objective is to establish a selfsustaining, industrial, commercial, financial and investment center in the area. There will, therefore, be a long-term difference between such investment center and the areas outside it.

8. ID.; ID.; ID.; CLASSIFICATION SET FORTH THEREIN, NOT UNREASONABLE, CAPRICIOUS OR UNFOUNDED; APPLIES EQUALLY TO ALL RESIDENT INDIVIDUALS AND BUSINESSES WITHIN THE SECURED AREA. 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. All told, the Court holds that no undue favor or privilege was extended. The classification occasioned by EO 97-A was not unreasonable, capricious or unfounded. To repeat, it was based, rather, on fair and substantive considerations that were germane to the legislative purpose.