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    G12 - Coconut Oil Refiners v. Torres

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    Chou Takahiro
    This case involves a dispute over tax exemptions granted to businesses operating within special economic zones established on former US military bases. The petitioners, businesses operating outside these zones, argued the tax exemptions for businesses inside the zones violated their equal protection rights. However, the court found the tax exemption classification was valid because: (1) there was a substantial distinction between investments inside versus outside the zones; (2) the classification was germane to converting the bases into economic areas to attract investors; and (3) the classification applied equally to all businesses within the zones. Therefore, the court ruled the tax exemptions did not violate equal protection rights.

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    G12 - Coconut Oil Refiners v. Torres

    Uploaded by

    Chou Takahiro
    36 views2 pages
    This case involves a dispute over tax exemptions granted to businesses operating within special economic zones established on former US military bases. The petitioners, businesses operating outside these zones, argued the tax exemptions for businesses inside the zones violated their equal protection rights. However, the court found the tax exemption classification was valid because: (1) there was a substantial distinction between investments inside versus outside the zones; (2) the classification was germane to converting the bases into economic areas to attract investors; and (3) the classification applied equally to all businesses within the zones. Therefore, the court ruled the tax exemptions did not violate equal protection rights.

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    Coconut Refiners v. Torres

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    This case involves a dispute over tax exemptions granted to businesses operating within special economic zones established on former US military bases. The petitioners, businesses operating outside these zones, argued the tax exemptions for businesses inside the zones violated their equal protection rights. However, the court found the tax exemption classification was valid because: (1) there was a substantial distinction between investments inside versus outside the zones; (2) the classification was germane to converting the bases into economic areas to attract investors; and (3) the classification applied equally to all businesses within the zones. Therefore, the court ruled the tax exemptions did not violate equal protection rights.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    36 views2 pages

    G12 - Coconut Oil Refiners v. Torres

    Uploaded by

    Chou Takahiro
    This case involves a dispute over tax exemptions granted to businesses operating within special economic zones established on former US military bases. The petitioners, businesses operating outside these zones, argued the tax exemptions for businesses inside the zones violated their equal protection rights. However, the court found the tax exemption classification was valid because: (1) there was a substantial distinction between investments inside versus outside the zones; (2) the classification was germane to converting the bases into economic areas to attract investors; and (3) the classification applied equally to all businesses within the zones. Therefore, the court ruled the tax exemptions did not violate equal protection rights.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 2

    Coconut Oil Refiners v.

    Torres
    G.R. No. 132527 July 29, 2005

    Facts: On March 13, 1992, Republic Act No. 7227 was enacted for the conversion of
    Clark and Subic military reservations and their extensions into alternative productive uses
    in the form of special economic zones in other to promote the economic and social
    development of Central Luzon and the country, in general. Section 15 of the Republic Act
    provides for the creation of the Clark Special Economic Zone.

    Executive Order No. 80, issued by President Fidel V. Ramos, declared that Clark shall all
    the incentives granted in export processing zones, the Omnibus Investments Code of
    1987, Foreign Investments Act of 1991 and new investments laws that may be enacted.

    The Bases Conversion Development Authority passed the Board Resolution No.
    93-05-034, allowing the tax and duty free sale at retail of consumer goods imported via
    Clark for consumption outside the CSEZ. Then Executive Order No. 97-A was issued
    “Further Clarifying the Tax and Duty-Free Privilege Within the Subic Special Economic
    Zone and Free Port Zone.”

    Petitioners argued that Executive Order No. 97 is violative of their right to equal protection
    of laws, as enshrined in Section 1, Article 3 of the Constitution. They asserted that private
    respondents operating inside the SSEZ are nor different from the retail establishments
    located outside, the products sold being essentially the same. They claim that the source
    and variety of the products and the fact that the private respondents import their items
    tax-free are the only difference between them.

    Issue: Whether or not Executive Order No. 97 is violative of the right to equal protection of
    the laws of the petitioners.

    Held: No. The guaranty of the equal protection of the law is not violated by a legislation
    based on a reasonable classification. For such classification to be valid, it must (1) rest on
    the 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.

    Contrary to the claims of the petitioner, there is a substantial distinction between the
    establishments inside and outside the zone, in justification of the difference in their
    treatment. There is a big difference between big investors who are being lured to
    establish and operate their industries in the so-called “secured-area” and the present
    business operators outside. In the former, we are talking of billion-peso investments and
    thousands of new jobs; while there is no such magnitude in the latter. In the first, the
    economic impact will be national; in the second, only local. Further, the business activities
    outside the “secured are”are not likely to have any impact in achieving the purpose of the
    law, which is turning the former military base to productive use for the benefit of the
    Philippine economy. Hence, there is hardly any reasonable basis to extend to them the
    benefits and incentives accorded by R.A. 7227.

    The classification is germane to the purpose of Republic Act No. 7227. The real concern
    of Republic Act No. 7227 is to convert the lands formerly occupied by the US military
    bases into economic or industrial areas. The Congress deemed the extension of
    economic incentives to the establishments within the zone to attract and encourage
    foreign and local investors as necessary to the furtherance of the objective of the Act. The
    is the very rationale behind the Republic Act No. 7227 and other similar special economic
    zone laws which grant of tax incentives and other benefits.

    The classification is not limited to the existing conditions when the law was promulgated,
    but to future conditions, as the law envisioned the former military reservation to ultimately
    develop into a self-sustaining investment center.

    And lastly, it applies equally to all retailers in the “secured area” being in like
    circumstances or contributing directly to the achievement of the end purpose of the law.
    They are similarly treated, both in privileges granted and obligations required.

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