Is E.O. 97-A which authorizes the importation and trade of foreign goods unconstitutional for being violative of the State policy of promoting the preferential use of Filipino labor, domestic materials and locally produced goods?

This Court notes that petitioners failed to substantiate their sweeping conclusion that the issuance has violated the State policy of giving preference to Filipino goods and labor. The mere fact that said issuance authorizes the importation and trade of foreign goods does not suffice to declare it unconstitutional on this ground.

While the Constitution indeed mandates a bias in favor of Filipino goods, services, labor and enterprises, at the same time, it recognizes the need for business exchange with the rest of the world on the bases of equality and reciprocity and limits protection of Filipino enterprises only against foreign competition and trade practices that are unfair. In other words, the Constitution did not intend to pursue an isolationist policy. It did not shut out foreign investments, goods and services in the development of the Philippine economy. While the Constitution does not encourage the unlimited entry of foreign goods, services and investments into the country, it does not prohibit them either. In fact, it allows an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.

This Court notes that the Executive Department, with its subsequent issuance of Executive Order Nos. 444 and 303, has provided certain measures to prevent unfair competition. In particular, Executive Order Nos. 444 and 303 have restricted the special shopping privileges to certain individuals. Executive Order No. 303 has limited the range of items that may be sold in the duty-free outlets, and imposed sanctions to curb abuses of duty-free privileges. With these measures, this Court finds no reason to strike down Executive Order No. 97-A for allegedly being prejudicial to Filipino labor, domestic materials and locally produced goods. (Coconut Oil Refiners Association, Inc. vs. Torres, G.R. No. 132527, July 29, 2005)

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)