Tiu vs. Court of Appeals, G.R. No. 127410, Jan. 20, 1999

Tiu vs. Court of Appeals, G.R. No. 127410, Jan. 20, 1999

Nature:Before us is a petition for review under Rule 45 of the Rules of Court, seeking the reversal of the Court of Appeals Decision promulgated on August 29, 1996, and Resolution dated November13, 1996, in CA-GR SP No. 37788.

The challenged Decision upheld the constitutionality and validity of Executive Order No. 97-A (EO 97-A), according to which the grant and enjoyment of the tax and duty incentives authorized under Republic Act No. 7227 (RA 7227) were limited to the business enterprises and residents within the fenced-in area of the Subic Special Economic Zone (SSEZ). MR was denied.

Keywords: Equal Protection Clause,

Summary:The constitutionality and validity of EO 97-A, that provides that the grant and enjoyment of the tax and duty incentives authorized under RA 7227 were limited to the business enterprises and residents within the fenced-in area of the Subic Special Economic Zone (SSEZ), was questioned.

Facts:The petitioners assail the constitutionality of the said Order claiming that they are excluded from the benefits provided by RA 7227 without any reasonable standards and thus violated the equal protection clause of the Constitution. The Court of Appeals upheld the validity and constitutionality and denied the motion for reconsideration. Hence, this petition was filed.

Petitioners contend that the SSEZ encompasses (1) the City of Olongapo, (2) the Municipality of Subic in Zambales, and (3) the area formerly occupied by the Subic Naval Base.  However, EO 97-A, according to them, narrowed down the area within which the special privileges granted to the entire zone would apply to the present “fenced-in former Subic Naval Base” only.  It has thereby excluded the residents of the first two components of the zone from enjoying the benefits granted by the law.  It has effectively discriminated against them, without reasonable or valid standards, in contravention(breach) of the equal protection guarantee.

The solicitor general defends the validity of EO 97-A, arguing that Section 12 of RA 7227 clearly vests in the President the authority to delineate (define) the metes and bounds of the SSEZ.  He adds that the issuance fully complies with the requirements of a valid classification.

Issue: W/N E.O. 97 - A violates the equal protection clause of the Constitution

Ratio: NO. Petition denied. The challenge decision and resolution were affirmed.

Ruling:The Court held that the classification was based on valid and reasonable standards and does not violate the equal protection clause.

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(relevant)  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 germaneto the purpose of the law, (3) not be limited to existing conditions only, and (4) apply equally to all members of the same class.