Does the grant of special tax exemptions and privileges to enterprises within the Special Economic Zones give undue advantage over local enterprises which do not operate inside the said zone, thereby creating unfair competition?

The mere fact that incentives and privileges are granted to certain enterprises to the exclusion of others does not render the issuance unconstitutional for espousing unfair competition. It must be clearly explained and proven by competent evidence just exactly how such protective regulation would result in the restraint of trade. Said constitutional prohibition cannot hinder the Legislature from using tax incentives as a tool to pursue its policies.

The Congress had justifiable reasons in granting incentives to the private respondents, in accordance with Republic Act No. 7227's policy of developing the SSEZ into a self-sustaining entity that will generate employment and attract foreign and local investment. If petitioners had wanted to avoid any alleged unfavorable consequences on their profits, they should upgrade their standards of quality so as to effectively compete in the market. In the alternative, if petitioners really wanted the preferential treatment accorded to the private respondents, they could have opted to register with SSEZ in order to operate within the special economic zone. (Coconut Oil Refiners Association, Inc. vs. Torres, G.R. No. 132527, July 29, 2005; Pest Management Association of the Philippines v. Fertilizer and Pesticide Authority, G.R. No. 156041, February 21, 2007)