PLMC6: RETAIL TRADE LAWS AND CONSUMER ACT— Assignment # 2

Read the following laws:

1. Retail Trade Liberalization Law

REPUBLIC ACT NO. 8762

AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS, REPEALING FOR THE PURPOSE REALING FOR THE PURPOSE
REPUBLIC ACT NO. 1180, AS AMENDED, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines of Representatives of the Philippines in Congress
assembled:

Section 1. Title – This Act shall be known as the "Retail Trade Liberalization Act of 2000."

Section 2. Declaration of Policy. – It is the policy of the State to promote consumer welfare in attracting promoting and welcoming
productive investment that will bring down price for the Filipino consumer, create more jobs, promote tourism, assist small
manufacturers, stimulate economic growth and enable Philippine goods and services to become globally competitive through the
liberalization of the retail trade sector.

Pursuant to this policy, the Philippine retail industry is hereby liberalized to encourage Filipino and competitive retail trade sector in
the interest of empower the Filipino consumer through lower prices, higher quality goods, better services and wider choices.

Section 3. Definition. - As used in this Act.

(1) "Retail trade" shall mean any act, occupation or calling of habitually selling direct to the general public merchandise,
commodities or good for consumption, but the restriction of this law shall not apply to the following:

(a) Sales by manufacturer, processor, laborer, or worker, to the general public the products manufactured, processed or products
by him if his capital dose not exceed One hundred thousand pesos(100,000.00);

(b) Sales by a farmer or agriculturist selling the products of his farm;

(c) Sales in restaurant operations by a hotel owner or inn-keeper irrespective of the amount capital: provided, that the restaurant is
incidental to the hotel business; and

(d) Sales which are limited only to products manufactured, processed or assembled by a manufactured, processed or assembled
by a manufacturer though a single outlet, irrespective of capitalization.

(2) "High-end or luxury goods" shall refer to goods which are not necessary for life maintenance and whose demand is generated in
large part by the higher income groups. Luxury goods shall include, but are not limited to products such as; jewelry, branded or
designer clothing and footwear, wearing apparel, leisure and sporting goods, electronics and other personal effects.

Section 4. Treatment of Natural Born Citizen Who Has Lost His Philippine Citizenship. - A natural-born citizen of the
Philippines who resides in the Philippines shall be granted the same rights as Filipino citizens for purposes of this Act.

Section 5. Foreign Equity Participation. - Foreign-owned partnerships, associations and corporation formed and organized under
the laws of the Philippines may, upon registration with the Securities and Exchange Commission (SEC) and the Department of
Trade and Industry (DTI), or in case of foreign owned single proprietorships, with the DTI, Engage or invest in the retail trade
business, subject to the following categories.

Category A – Enterprises with paid-up capital of the equivalent in Philippine Peso of the than Two million five hundred thousand US
dollars (US$2,500,000.00) shall be reserved exclusively for Filipino citizens and corporations wholly owned by Filipino citizens.

Category B – Enterprises with a minimum paid-up capital of the equivalent in Philippine Pesos of two million five hundred thousand
US dollar (US$2,500,000.00) but less than Seven million five hundred thousand US dollars (US$7,500,000.00) may be wholly
owned by foreigners except for the first two (2) years after the effectivity of this Act wherein foreign participation shall be limited to
not more than sixty percent (60%) of total equity.

Category C – Enterprises with a paid-up capital of the equivalent in Philippine Pesos of Seven million five hundred thousand US
dollars (US$7,500,000.00), or more may be wholly owned by foreigners: Provided, however, That in no case shall the investments
for establishing a store in vestments for establishing a store in Categories B and C be less than the equivalent in Philippine pesos
of Eight hundred thirty thousand US dollars (US$830,000.00).

Category D – Enterprises specializing in high-end or luxury products with a paid-up capital of the equivalent in Philippine Pesos of
Two hundred fifty thousand US dollars (US$250,000.00) per store may be wholly owned by foreigners.
The foreign investor shall be required to maintain in the Philippines the full amount of the prescribed minimum capital unless the
foreign investor has notified the SEC and the DTI of its intention to repatriate its capital and cease operations in the Philippines.
The actual use in Philippine operations of the inwardly remitted minimum capital requirement shall be monitored by the SEC.

Failure to maintain the full amount of the prescribed minimum capital prior to notification of the SEC and the DTI, shall subject the
foreign investor to penalties or restrictions on any future trading activities/business in the Philippines.

Foreign retail stores shall secure a certification from the Bangko Sentral ng Pilipinas (BSP) and the DTI, which will verify or confirm
inward remittance of the minimum required capital investments.

Section 6. Foreign Investors Acquiring Shares of Stock of Local Retailers. - Foreign investors acquiring shares from existing
retail stores whether or not publicly listed whose net worth is in the excess of the peso equivalent of Two million five hundred
thousand US dollars (US$2,500,000.00) may purchase only up to a maximum of sixty percent (60%) of the equity thereof within the
first two (2) years from the effectivity of this Act and thereafter, they may acquire the remaining percentage consistent with the
allowable foreign participation as herein provided.

Section 7. Public Offering of Shares of Stock. – All retail trade enterprises under Categories B and C in which foreign ownership
exceeds eighty percent (80%) of equity shall offer a minimum of thirty percent (30%) of their equity to the public through any stock
exchange in the Philippine within eight (8) years from their start of operations.

Section 8. Qualification of Foreign Retailers. - No foreign retailer shall be allowed to engage in retail trade in the Philippine
unless all the following qualifications are met:

(a) A minimum of Two hundred million US dollar (US$200,000,000.00) net worth in its parent corporation for Categories B and C,
and Fifty million US dollar (US$50,000,000.00) net worth in its parent corporation for category D;

(b) (5) retailing branches or franchises in operation anywhere around the word unless such retailer has at least one (1) store
capitalized at a minimum of Twenty-five million US dollars (US$25,000,000.00);

(c) Five (5)-year track record in retailing; and

(d) Only nationals from, or juridical entities formed or incorporated in Countries which allow the entry of Filipino retailers shall be
allowed to engage in retail trade in the Philippines.

The DTI is hereby authorized to pre-qualify all foreign retailers, subject to the provisions of this Act, before they are allowed to
conduct business in the Philippine.

The DTI shall keep a record of Qualified foreign retailers who may, upon compliance with law, establish retail stores in the
Philippine. It shall ensure that parent retail trading company of the foreign investor complies with the qualifications on capitalization
and track record prescribed in this section

The Inter- Agency Committee on Tariff and Related Matters Authority (NEDA) Board shall formulate and regularly update a list of
foreign retailers of high-end or luxury goods and render an annual report on the same to Congress.

Section 9. Promotion of Locally Manufactured Products. - For ten (10) year after the effectivity of this Act, at least thirty percent
(30%) of the aggregate cost of the stock inventory of foreign retailers falling under Categories B and C and ten percent (10%) for
category D shall be made in the Philippines.

Section 10. Prohibited Activities of Qualified Foreign Retailers. – Qualified foreign retailers shall not be allowed to engage in
certain retailing activities outside their accredited stores through the use of mobile or rolling stores or carts, the use of sales
representatives, door-to-door selling, restaurants and sari-sari stores and such other similar retailing activities: Provided, That a
detailed list of prohibited activities shall hereafter be formulated by the DTI

Section 11. Implementing Agency: Rule and Regulations. – The monitoring and regulation of foreign sole proprietorships,
partnerships, associations or corporations allowed to engage in retail trade shall be the responsibility of the DTI. This shall include
resolution of conflicts.

The DTI, in coordination with the SEC, the NEDA and the BSP, shall formulate and issue the implementing rules and regulation
necessary to implement this Act within ninety (90) days after its approval.

Section 12. Penalty Clause. - Any person who shall be Found guilty of Violation of any provision of this Act shall be punished by
imprisonment of not less that six (2) years and one (1) day but not more than eight (8) years, and a fine of not less than One million
pesos

(P1,000,000.00) but not more that Twenty million pesos (P20,000,000.00) In the case of associations, partnerships or corporations,
the penalty shall be imposed upon its partners, president, directors, manager and other officers responsible for the violation. If the
offender is not a citizen of the Philippines he shall be deported immediately after service of sentence. If the Filipino of fender is a
public officer or employee, he shall, in addition to the penalty prescribed herein, suffer dismissal and permanent disqualification
from public office

Section 13. Repealing Clause. – Republic Act No. 1180, as amended, is hereby repealed. Republic Act No. 3018, as amended,
and all other laws, executive orders, rules and regulations or parts thereof inconsistent with this Act are repealed or modified
accordingly.
Section 14. Separability Clause. – If any provisions of this Act shall be held unconstitutional, the other provisions not otherwise
affected thereby shall remain in force and effect.

Section 15. Effectivity. – This act shall take effect fifteen (150 days after its approval and publication in at least two (2)
newspapers of general circulation in the Philippines.

Approved: March 07, 2000

(SGD.) JOSEPH E. ESTRADA

President of the Philippines

2. Foreign Investments Act with IRR

Eighth Congress

Republic Act No. 7042             June 13, 1991

AN ACT TO PROMOTE FOREIGN INVESTMENTS, PRESCRIBE THE PROCEDURES FOR REGISTERING ENTERPRISES
DOING BUSINESS IN THE PHILIPPINES, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

Section 1. Title. - This Act shall be known as the, "Foreign Investments Act of 1991".

Section 2. Declaration of Policy. - It is the policy of the State to attract, promote and welcome productive investments from
foreign individuals, partnerships, corporations, and governments, including their political subdivisions, in activities which
significantly contribute to national industrialization and socioeconomic development to the extent that foreign investment is allowed
in such activity by the Constitution and relevant laws. Foreign investments shall be encouraged in enterprises that significantly
expand livelihood and employment opportunities for Filipinos; enhance economic value of farm products; promote the welfare of
Filipino consumers; expand the scope, quality and volume of exports and their access to foreign markets; and/or transfer relevant
technologies in agriculture, industry and support services. Foreign investments shall be welcome as a supplement to Filipino capital
and technology in those enterprises serving mainly the domestic market.

As a general rule, there are no restrictions on extent of foreign ownership of export enterprises. In domestic market enterprises,
foreigners can invest as much as one hundred percent (100%) equity except in areas included in the negative list. Foreign owned
firms catering mainly to the domestic market shall be encouraged to undertake measures that will gradually increase Filipino
participation in their businesses by taking in Filipino partners, electing Filipinos to the board of directors, implementing transfer of
technology to Filipinos, generating more employment for the economy and enhancing skills of Filipino workers.

Section 3. Definitions. - As used in this Act:

a) The term "Philippine national" shall mean a citizen of the Philippines or a domestic partnership or association wholly
owned by citizens of the Philippines; or a corporation organized under the laws of the Philippines of which at least sixty
percent (60%) of the capital stock outstanding and entitled to vote is owned and held by citizens of the Philippines; or a
trustee of funds for pension or other employee retirement or separation benefits, where the trustee is a Philippine national
and at least sixty (60%) of the fund will accrue to the benefit of the Philippine nationals: Provided, That where a
corporation and its non-Filipino stockholders own stocks in a Securities and Exchange Commission (SEC) registered
enterprise, at least sixty percent (60%) of the capital stocks outstanding and entitled to vote of both corporations must be
owned and held by citizens of the Philippines and at least sixty percent (60%) of the members of the Board of Directors of
both corporations must be citizens of the Philippines, in order that the corporations shall be considered a Philippine
national;

b) The term "investment" shall mean equity participation in any enterprise organized or existing under the laws of the
Philippines;
 c) The term "foreign investment" shall mean as equity investment made by a non-Philippine national in the form of foreign
exchange and/or other assets actually transferred to the Philippines and duly registered with the Central Bank which shall
assess and appraise the value of such assets other than foreign exchange;

d) The praise "doing business" shall include soliciting orders, service contracts, opening offices, whether called "liaison"
offices or branches; appointing representatives or distributors domiciled in the Philippines or who in any calendar year stay
in the country for a period or periods totalling one hundred eighty (180) days or more; participating in the management,
supervision or control of any domestic business, firm, entity or corporation in the Philippines; and any other act or acts that
imply a continuity of commercial dealings or arrangements, and contemplate to that extent the performance of acts or
works, or the exercise of some of the functions normally incident to, and in progressive prosecution of, commercial gain or
of the purpose and object of the business organization: Provided, however, That the phrase "doing business: shall not be
deemed to include mere investment as a shareholder by a foreign entity in domestic corporations duly registered to do
business, and/or the exercise of rights as such investor; nor having a nominee director or officer to represent its interests
in such corporation; nor appointing a representative or distributor domiciled in the Philippines which transacts business in
its own name and for its own account;

e) The term "export enterprise" shall mean an enterprise which produces goods for sale, or renders services to the
domestic market entirely or if exporting a portion of its output fails to consistently export at least sixty percent (60%)
thereof; and

g) The term "Foreign Investments Negative List" or "Negative List" shall mean a list of areas of economic activity whose
foreign ownership is limited to a maximum of forty ownership is limited to a maximum of forty percent (40%) of the equity
capital of the enterprise engaged therein.

Section 4. Scope. - This Act shall not apply to banking and other financial institutions which are governed and regulated by the
General Banking Act and other laws under the supervision of the Central Bank.

Section 5. Registration of Investments of Non-Philippine Nationals. - Without need of prior approval, a non-Philippine national,
as that term is defined in Section 3 a), and not otherwise disqualified by law may upon registration with the Securities and
Exchange Commission (SEC), or with the Bureau of Trade Regulation and Consumer Protection (BTRCP) of the Department of
Trade and Industry in the case of single proprietorships, do business as defined in Section 3 (d) of this Act or invest in a domestic
enterprise up to one hundred percent (100%) of its capital, unless participation of non-Philippine nationals in the enterprise is
prohibited or limited to a smaller percentage by existing law and/or limited to a smaller percentage by existing law and/or under the
provisions of this Act. The SEC or BTRCP, as the case may be, shall not impose any limitations on the extent of foreign ownership
in an enterprise additional to those provided in this Act: Provided, however, That any enterprise seeking to avail of incentives under
the Omnibus Investment Code of 1987 must apply for registration with the Board of Investments (BOI), which shall process such
application for registration in accordance with the criteria for evaluation prescribed in said Code: Provided, finally, That a non-
Philippine national intending to engage in the same line of business as an existing joint venture in his application for registration
with SEC. During the transitory period as provided in Section 15 hereof, SEC shall disallow registration of the applying non-
Philippine national if the existing joint venture enterprise, particularly the Filipino partners therein, can reasonably prove they are
capable to make the investment needed for they are competing applicant. Upon effectivity of this Act, SEC shall effect registration
of any enterprise applying under this Act within fifteen (15) days upon submission of completed requirements.

Section 6. Foreign Investments in Export Enterprises. - Foreign investment in export enterprises whose products and services
do not fall within Lists A and B of the Foreign Investment Negative List provided under Section 8 hereof is allowed up to one
hundred percent (100%) ownership.

Export enterprises which are non-Philippine nationals shall register with BOI and submit the reports that may be required to ensure
continuing compliance of the export enterprise with its export requirement. BOI shall advise SEC or BTRCP, as the case may be, of
any export enterprise that fails to meet the export ratio requirement. The SEC or BTRCP shall thereupon order the non-complying
export enterprise to reduce its sales to the domestic market to not more than forty percent (40%) of its total production; failure to
comply with such SEC or BTRCP order, without justifiable reason, shall subject the enterprise to cancellation of SEC or BTRCP
registration, and/or the penalties provided in Section 14 hereof.

Section 7. Foreign Investments in Domestic Market Enterprises. - Non-Philippine nationals may own up to one hundred
percent (100%) of domestic market enterprises unless foreign ownership therein is prohibited or limited by existing law or the
Foreign Investment Negative List under Section 8 hereof.

A domestic market enterprise may change its status to export enterprise if over a three (3) year period it consistently exports in
each year thereof sixty per cent (60%) or more of its output.

Section 8. List of Investment Areas Reserved to Philippine Nationals (Foreign Investment Negative List). - The Foreign
Investment Negative List shall have three (3) component lists: A, B, and C:

a) List A shall enumerate the areas of activities reserved to Philippine nationals by mandate of the Constitution and
specific laws.

b) List B shall contain the areas of activities and enterprises pursuant to law:
 1) Which are defense-related activities, requiring prior clearance and authorization from Department of National
Defense (DND) to engage in such activity, such as the manufacture, repair, storage and/or distribution of
firearms, ammunition, lethal weapons, military ordnance, explosives, pyrotechnics and similar materials; unless
such manufacturing or repair activity is specifically authorized, with a substantial export component, to a non-
Philippine national by the Secretary of National Defense; or

2) Which have implications on public health and morals, such as the manufacture and distribution of dangerous
drugs; all forms of gambling; nightclubs, bars, beerhouses, dance halls; sauna and steambath houses and
massage clinics.

Small and medium-sized domestic market enterprises with paid-in equity capital less than the equivalent of five
hundred thousand US dollars (US$500,000) are reserved to Philippine nationals, unless they involve advanced
technology as determined by the Department of Science and Technology. Export enterprises which utilize raw
materials from depleting natural resources, with paid-in equity capital of less than the equivalent of five hundred
thousand US dollars (US$500,000) are likewise reserved to Philippine nationals.

Amendments to List B may be made upon recommendation of the Secretary of National Defense, or the Secretary of
Health, or the Secretary of Education, Culture and Sports, indorsed by the NEDA, or upon recommendation motu propio of
NEDA, approved by the President, and promulgated by Presidential Proclamation.

c) List C shall contain the areas of investment in which existing enterprises already serve adequately the needs of the
economy and the consumer and do not require further foreign investments, as determined by NEDA applying the criteria
provided in Section 9 of this Act, approved by the President and promulgated in a Presidential Proclamation.

The Transitory Foreign Investment Negative List established in Sec. 15 hereof shall be replaced at the end of the
transitory period by the first Regular Negative List to the formulated and recommended by the NEDA, following the
process and criteria provided in Section 8 and 9 of this Act. The first Regular Negative List shall be published not later
than sixty (60) days before the end of the transitory period provided in said section, and shall become immediately
effective at the end of the transitory period. Subsequent Foreign Investment Negative Lists shall become effective fifteen
(15) days after publication in two (2) newspapers of general circulation in the Philippines: Provided, however, That each
Foreign Investment Negative List shall be prospective in operation and shall in no way affect foreign investments existing
on the date of its publication.

Amendments to List B and C after promulgation and publication of the first Regular Foreign Investment Negative List at
the end of the transitory period shall not be made more often than once every two (2) years.

Section 9. Determination of Areas of Investment for Inclusion in List C of the Foreign Investment Negative List. - Upon
petition by a Philippine national engage therein, an area of investment may be recommended by NEDA for inclusion in List C of the
Foreign Investment Negative List upon determining that it complies with all the following criteria:

a) The industry is controlled by firms owned at least sixty percent (60%) by Filipinos;

b) Industry capacity is ample to meet domestic demand;

c) Sufficient competition exists within the industry;

d) Industry products comply with Philippine standards of health and safety or, in the absence of such, with international
standards, and are reasonably competitive in quality with similar products in the same price range imported into the
country;

e) Quantitative restrictions are not applied on imports of directly competing products;

f) The leading firms of the industry substantially comply with environmental standards; and

g) The prices of industry products are reasonable.

The petition shall be subjected to a public hearing at which affected parties will have the opportunity to show whether the petitioner
industry adequately serves the economy and the consumer, in general, and meets the above stated criteria in particular. NEDA
may delegate evaluation of the petition and conduct of the public hearing to any government agency having cognizance of the
petitioner industry. The delegated agency shall make its evaluation report and recommendations to NEDA which retains the right
and sole responsibility to determine whether to recommend to the President to promulgate the area of investment in List C of the
Negative List. An industry or area of investment included in List C of the Negative List by Presidential Proclamation shall remain in
the said List C for two (2) years, without prejudice to re-inclusion upon new petition, and due process.

Section 10. Strategic Industries. - Within eighteen (18) months after the effectivity of this Act, the NEDA Board shall formulate
and publish a list of industries strategic to the development of the economy. The list shall specify, as a matter of policy and not as a
legal requirement, the desired equity participation by Government and/or private Filipino investors in each strategic industry. Said
list of strategic industries, as well as the corresponding desired equity participation of government and/or private Filipino investors,
may be amended by NEDA to reflect changes in economic needs and policy directions of Government. The amended list of
strategic industries shall be published concurrently with publication of the Foreign Investment Negative List.

The term "strategic industries" shall mean industries that are characterized by all of the following:

a) Crucial to the accelerated industrialization of the country,

b) Require massive capital investments to achieve economies of scale for efficient operations;

c) Require highly specialized or advanced technology which necessitates technology transfer and proven production
techniques in operations;

d) Characterized by strong backward and forward linkages with most industries existing in the country, and

e) Generate substantial foreign exchange savings through import substitution and collateral foreign exchange earnings
through export of part of the output that will result with the establishment, expansion or development of the industry.

Section 11. Compliance with Environmental Standards. - All industrial enterprises regardless of nationality of ownership shall
comply with existing rules and regulations to protect and conserve the environment and meet applicable environmental standards.

Section 12. Consistent Government Action. - No agency, instrumentality or political subdivision of the Government shall take
any action on conflict with or which will nullify the provisions of this Act, or any certificate or authority granted hereunder.

Section 13. Implementing Rules and Regulations. - NEDA, in consultation with BOI, SEC and other government agencies
concerned, shall issue the rules and regulations to implement this Act within one hundred and twenty (120) days after its effectivity.
A copy of such rules and regulations shall be furnished the Congress of the Republic of the Philippines.

Section 14. Administrative Sanctions. - A person who violates any provision of this Act or of the terms and conditions of
registration or of the rules and regulations issued pursuant thereto, or aids or abets in any manner any violation shall be subject to
a fine not exceeding One hundred thousand pesos (P100,000).

If the offense is committed by a juridical entity, it shall be subject to a fine in an amount not exceeding ½ of 1% of total paid-in
capital but not more than Five million pesos (P5,000,000). The president and/or officials responsible therefor shall also be subject
to a fine not exceeding Two hundred thousand pesos (P200,000).

In addition to the foregoing, any person, firm or juridical entity involved shall be subject to forfeiture of all benefits granted under this
Act.

SEC shall have the power to impose administrative sanctions as provided herein for any violation of this Act or its implementing
rules and regulations.

Section 15. Transitory Provisions. - Prior to effectivity of the implementing rules and regulations of this Act, the provisions of
Book II of Executive Order 226 and its implementing rules and regulations shall remain in force.

During the initial transitory period of thirty-six (36) months after issuance of the Rules and Regulations to implement this Act, the
Transitory Foreign Investment Negative List shall consist of the following:

A. List A:

1. All areas of investment in which foreign ownership is limited by mandate of Constitution and specific laws.

B. List B:

1. Manufacture, repair, storage and/or distribution of firearms, ammunitions, lethal weapons, military ordinance,
explosives, pyrotechnics and similar materials required by law to be licensed by and under the continuing
regulation of the Department of National Defense; unless such manufacturing or repair activity is specifically
authorized with a substantial export component, to a non-Philippine national by the Secretary of National
Defense;

2. Manufacture and distribution of dangerous drugs; all forms of gambling; nightclubs, bars, beerhouses, dance
halls; sauna and steam bathhouses, massage clinic and other like activities regulated by law because of risks
they may pose to public health and morals;

3. Small and medium-size domestic market enterprises with paid-in equity capital or less than the equivalent of
US$500,000, unless they involve advanced technology as determined by the Department of Science and
Technology, and
 4. Export enterprises which utilize raw materials from depleting natural resources, and with paid-in equity capital
of less than the equivalent US$500,000.

C. List C:

1. Import and wholesale activities not integrated with production or manufacture of goods;

2. Services requiring a license or specific authorization, and subject to continuing regulations by national
government agencies other than BOI and SEC which at the time of effectivity of this Act are restricted to
Philippine nationals by existing administrative regulations and practice of the regulatory agencies concerned:
Provided, That after effectivity of this Act, no other services shall be additionally subjected to such restrictions on
nationality of ownership by the corresponding regulatory agencies, and such restrictions once removed shall not
be reimposed; and

3. Enterprises owned in the majority by a foreign licensor and/or its affiliates for the assembly, processing or
manufacture of goods for the domestic market which are being produced by a Philippine national as of the date
of effectivity of this Act under a technology, know-how and/or brand name license from such licensor during the
term of the license agreement: Provided, That, the license is duly registered with the Central Bank and/or the
Technology Transfer Board and is operatively in force as of the date of effectivity of this Act.

NEDA shall make the enumeration as appropriate of the areas of the investment covered in this Transitory Foreign Investment
Negative List and publish the Negative List in full at the same time as, or prior to, the publication of the rules and regulations to
implement this Act.

The areas of investment contained in List C above shall be reserved to Philippine nationals only during the transitory period. The
inclusion of any of them in the regular Negative List will require determination by NEDA after due public hearings that such
inclusion is warranted under the criteria set forth in Section 8 and 9 hereof.

Section 16. Repealing Clause. - Articles forty-four (44) to fifty-six (56) of Book II of Executive Order No. 226 are hereby repealed.

All other laws or parts of laws inconsistent with the provisions of this Act are hereby repealed or modified accordingly.

Section 17. Separability. - If any part or section of this Act is declared unconstitutional for any reason whatsoever, such
declaration shall not in any way affect the other parts or sections of this Act.

Section 18. Effectivity. - This Act shall take effect fifteen (15) days after approval and publication in two (2) newspaper of general
circulation in the Philippines.

Approved: June 13, 1991

3. Anti-Dummy Law

MALACAÑANG
Manila

PRESIDENTIAL DECREE No. 715 May 28, 1975

AMENDING COMMONWEALTH ACT NO. 108, AS AMENDED, OTHERWISE KNOWN AS "THE ANTI-DUMMY LAW"

WHEREAS, there have been conflicting interpretations as to whether Section 2-A of Commonwealth Act No. 108, as amended,
otherwise known as the Anti-Dummy Law, allows aliens to become members of the board of directors or governing body of
corporations or associations engaging in partially nationalized activities;

WHEREAS, it is fair and equitable and in line with the constitutional policy expressed in Article XIV, Section 5 of the Constitution,
that foreign investors be allowed limited representation in the governing board or body of corporations or associations in proportion
to their allowable participation in the equity of the said entities;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested in me by the
Constitution, do hereby order and decree:

Section 1. Section 2-A of Commonwealth Act No. 108, as amended, is hereby further amended to read as follows:

"Section 2-A. Any person, corporation, or association, which, having in its name or under its control, a right, franchise, privilege,
property or business, the exercise or enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the
Philippines or of any other specific country, or to corporations or associations at least sixty per centum of the capital of which is
owned by such citizens, permits or allows the use, exploitation or enjoyment thereof by a person, corporation or association not
possessing the requisites prescribed by the Constitution or the laws of the Philippines; or leases, or in any other way, transfers or
conveys said right, franchise, privilege, property or business to a person, corporation or association not otherwise qualified under
the Constitution, or the provisions of the existing laws; or in any manner permits or allows any person, not possessing the
qualifications required by the Constitution, or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or
business, the exercise and enjoyment of which are expressly reserved by the Constitution or existing laws to citizens of the
Philippines or of any other specific country, to intervene in the management, operation, administration or control thereof, whether
as an officer, employee or laborer therein with or without remuneration except technical personnel whose employment may be
specifically authorized by the Secretary of Justice, and any person who knowingly aids, assists, or abets in the planning,
consummation or perpetration of any of the acts herein above enumerated shall be punished by imprisonment for not less than five
nor more than fifteen years and by a fine of not less than the value of the right, franchise or privilege enjoyed or acquired in
violation of the provisions hereof but in no case less than five thousand pesos: Provided, however, that the president, managers or
persons in violating the provisions of this section shall be criminally liable in lieu thereof: Provided, further, That any person,
corporation or association shall, in addition to the penalty imposed herein, forfeit such right, franchise, privilege and the property
provisions of this Act; and Provided, finally, That the election of aliens as members of the board of directors or governing body of
corporations or associations engaging in partially nationalized activities shall be allowed in proportion to their allowable participation
or share in the capital of such entities.

Section 2. This Decree shall take effect immediately.

DONE in the City of Manila, this 28th day of May, in the year of Our Lord, nineteen hundred and seventy-five.

4. Foreign Investment Negative List

Read the following cases:

1. RT Nationalization Law: Inciong v. Hernandez, G.R. No.L-7995 May 31, 1957

2. Espina et. al v. Zamora et. al G.R. No. 143855 September 21, 2010
Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. L-7995             May 31, 1957

LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships adversely
affected. by Republic Act No. 1180, petitioner,
vs.
JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of Manila, respondents.

Ozaeta, Lichauco and Picazo and Sycip, Quisumbing, Salazar and Associates for petitioner.
Office of the Solicitor General Ambrosio Padilla and Solicitor Pacifico P. de Castro for respondent Secretary of Finance.
City Fiscal Eugenio Angeles and Assistant City Fiscal Eulogio S. Serrano for respondent City Treasurer.
Dionisio Reyes as Amicus Curiae.
Marcial G. Mendiola as Amicus Curiae.
Emiliano R. Navarro as Amicus Curiae.

LABRADOR, J.:

I. The case and issue, in general

This Court has before it the delicate task of passing upon the validity and constitutionality of a legislative enactment, fundamental
and far-reaching in significance. The enactment poses questions of due process, police power and equal protection of the laws. It
also poses an important issue of fact, that is whether the conditions which the disputed law purports to remedy really or actually
exist. Admittedly springing from a deep, militant, and positive nationalistic impulse, the law purports to protect citizen and country
from the alien retailer. Through it, and within the field of economy it regulates, Congress attempts to translate national aspirations
for economic independence and national security, rooted in the drive and urge for national survival and welfare, into a concrete and
tangible measures designed to free the national retailer from the competing dominance of the alien, so that the country and the
nation may be free from a supposed economic dependence and bondage. Do the facts and circumstances justify the enactment?

II. Pertinent provisions of Republic Act No. 1180

Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it nationalizes the retail trade business. The
main provisions of the Act are: (1) a prohibition against persons, not citizens of the Philippines, and against associations,
partnerships, or corporations the capital of which are not wholly owned by citizens of the Philippines, from engaging directly or
indirectly in the retail trade; (2) an exception from the above prohibition in favor of aliens actually engaged in said business on May
15, 1954, who are allowed to continue to engaged therein, unless their licenses are forfeited in accordance with the law, until their
death or voluntary retirement in case of natural persons, and for ten years after the approval of the Act or until the expiration of term
in case of juridical persons; (3) an exception therefrom in favor of citizens and juridical entities of the United States; (4) a provision
for the forfeiture of licenses (to engage in the retail business) for violation of the laws on nationalization, control weights and
measures and labor and other laws relating to trade, commerce and industry; (5) a prohibition against the establishment or opening
by aliens actually engaged in the retail business of additional stores or branches of retail business, (6) a provision requiring aliens
actually engaged in the retail business to present for registration with the proper authorities a verified statement concerning their
businesses, giving, among other matters, the nature of the business, their assets and liabilities and their offices and principal
offices of judicial entities; and (7) a provision allowing the heirs of aliens now engaged in the retail business who die, to continue
such business for a period of six months for purposes of liquidation.

III. Grounds upon which petition is based-Answer thereto

Petitioner, for and in his own behalf and on behalf of other alien residents corporations and partnerships adversely affected by the
provisions of Republic Act. No. 1180, brought this action to obtain a judicial declaration that said Act is unconstitutional, and to
enjoin the Secretary of Finance and all other persons acting under him, particularly city and municipal treasurers, from enforcing its
provisions. Petitioner attacks the constitutionality of the Act, contending that: (1) it denies to alien residents the equal protection of
the laws and deprives of their liberty and property without due process of law ; (2) the subject of the Act is not expressed or
comprehended in the title thereof; (3) the Act violates international and treaty obligations of the Republic of the Philippines; (4) the
provisions of the Act against the transmission by aliens of their retail business thru hereditary succession, and those requiring
100% Filipino capitalization for a corporation or entity to entitle it to engage in the retail business, violate the spirit of Sections 1 and
5, Article XIII and Section 8 of Article XIV of the Constitution.

In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the Act was passed in the valid exercise of the
police power of the State, which exercise is authorized in the Constitution in the interest of national economic survival; (2) the Act
has only one subject embraced in the title; (3) no treaty or international obligations are infringed; (4) as regards hereditary
succession, only the form is affected but the value of the property is not impaired, and the institution of inheritance is only of
statutory origin.

IV. Preliminary consideration of legal principles involved

a. The police power. —

There is no question that the Act was approved in the exercise of the police power, but petitioner claims that its exercise in this
instance is attended by a violation of the constitutional requirements of due process and equal protection of the laws. But before
proceeding to the consideration and resolution of the ultimate issue involved, it would be well to bear in mind certain basic and
fundamental, albeit preliminary, considerations in the determination of the ever recurrent conflict between police power and the
guarantees of due process and equal protection of the laws. What is the scope of police power, and how are the due process and
equal protection clauses related to it? What is the province and power of the legislature, and what is the function and duty of the
courts? These consideration must be clearly and correctly understood that their application to the facts of the case may be brought
forth with clarity and the issue accordingly resolved.

It has been said the police power is so far - reaching in scope, that it has become almost impossible to limit its sweep. As it derives
its existence from the very existence of the State itself, it does not need to be expressed or defined in its scope; it is said to be co-
extensive with self-protection and survival, and as such it is the most positive and active of all governmental processes, the most
essential, insistent and illimitable. Especially is it so under a modern democratic framework where the demands of society and of
nations have multiplied to almost unimaginable proportions; the field and scope of police power has become almost boundless, just
as the fields of public interest and public welfare have become almost all-embracing and have transcended human foresight.
Otherwise stated, as we cannot foresee the needs and demands of public interest and welfare in this constantly changing and
progressive world, so we cannot delimit beforehand the extent or scope of police power by which and through which the State
seeks to attain or achieve interest or welfare. So it is that Constitutions do not define the scope or extent of the police power of the
State; what they do is to set forth the limitations thereof. The most important of these are the due process clause and the equal
protection clause.

b. Limitations on police power. —

The basic limitations of due process and equal protection are found in the following provisions of our Constitution:

SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor any person be
denied the equal protection of the laws. (Article III, Phil. Constitution)

These constitutional guarantees which embody the essence of individual liberty and freedom in democracies, are not limited to
citizens alone but are admittedly universal in their application, without regard to any differences of race, of color, or of nationality.
(Yick Wo vs. Hopkins, 30, L. ed. 220, 226.)

c. The, equal protection clause. —

The equal protection of the law clause is against undue favor and individual or class privilege, as well as hostile discrimination or
the oppression of inequality. It is not intended to prohibit legislation, which is limited either in the object to which it is directed or by
territory within which is to operate. It does not demand absolute equality among residents; it merely requires that all persons shall
be treated alike, under like circumstances and conditions both as to privileges conferred and liabilities enforced. The equal
protection clause is not infringed by legislation which applies only to those persons falling within a specified class, if it applies alike
to all persons within such class, and reasonable grounds exists for making a distinction between those who fall within such class
and those who do not. (2 Cooley, Constitutional Limitations, 824-825.)

d. The due process clause. —

The due process clause has to do with the reasonableness of legislation enacted in pursuance of the police power. Is there public
interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for the accomplishment of the legislature's
purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or reason in connection with the matter
involved; or has there not been a capricious use of the legislative power? Can the aims conceived be achieved by the means used,
or is it not merely an unjustified interference with private interest? These are the questions that we ask when the due process test is
applied.

The conflict, therefore, between police power and the guarantees of due process and equal protection of the laws is more apparent
than real. Properly related, the power and the guarantees are supposed to coexist. The balancing is the essence or, shall it be said,
the indispensable means for the attainment of legitimate aspirations of any democratic society. There can be no absolute power,
whoever exercise it, for that would be tyranny. Yet there can neither be absolute liberty, for that would mean license and anarchy.
So the State can deprive persons of life, liberty and property, provided there is due process of law; and persons may be classified
into classes and groups, provided everyone is given the equal protection of the law. The test or standard, as always, is reason. The
police power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must exist between
purposes and means. And if distinction and classification has been made, there must be a reasonable basis for said distinction.

e. Legislative discretion not subject to judicial review. —

Now, in this matter of equitable balancing, what is the proper place and role of the courts? It must not be overlooked, in the first
place, that the legislature, which is the constitutional repository of police power and exercises the prerogative of determining the
policy of the State, is by force of circumstances primarily the judge of necessity, adequacy or reasonableness and wisdom, of any
law promulgated in the exercise of the police power, or of the measures adopted to implement the public policy or to achieve public
interest. On the other hand, courts, although zealous guardians of individual liberty and right, have nevertheless evinced a
reluctance to interfere with the exercise of the legislative prerogative. They have done so early where there has been a clear,
patent or palpable arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are not supposed to override
legitimate policy, and courts never inquire into the wisdom of the law.

V. Economic problems sought to be remedied

With the above considerations in mind, we will now proceed to delve directly into the issue involved. If the disputed legislation were
merely a regulation, as its title indicates, there would be no question that it falls within the legitimate scope of legislative power. But
it goes further and prohibits a group of residents, the aliens, from engaging therein. The problem becomes more complex because
its subject is a common, trade or occupation, as old as society itself, which from the immemorial has always been open to
residents, irrespective of race, color or citizenship.

a. Importance of retail trade in the economy of the nation. —

In a primitive economy where families produce all that they consume and consume all that they produce, the dealer, of course, is
unknown. But as group life develops and families begin to live in communities producing more than what they consume and
needing an infinite number of things they do not produce, the dealer comes into existence. As villages develop into big communities
and specialization in production begins, the dealer's importance is enhanced. Under modern conditions and standards of living, in
which man's needs have multiplied and diversified to unlimited extents and proportions, the retailer comes as essential as the
producer, because thru him the infinite variety of articles, goods and needed for daily life are placed within the easy reach of
consumers. Retail dealers perform the functions of capillaries in the human body, thru which all the needed food and supplies are
ministered to members of the communities comprising the nation.

There cannot be any question about the importance of the retailer in the life of the community. He ministers to the resident's daily
needs, food in all its increasing forms, and the various little gadgets and things needed for home and daily life. He provides his
customers around his store with the rice or corn, the fish, the salt, the vinegar, the spices needed for the daily cooking. He has
cloths to sell, even the needle and the thread to sew them or darn the clothes that wear out. The retailer, therefore, from the lowly
peddler, the owner of a small sari-sari store, to the operator of a department store or, a supermarket is so much a part of day-to-
day existence.

b. The alien retailer's trait. —

The alien retailer must have started plying his trades in this country in the bigger centers of population (Time there was when he
was unknown in provincial towns and villages). Slowly but gradually be invaded towns and villages; now he predominates in the
cities and big centers of population. He even pioneers, in far away nooks where the beginnings of community life appear,
ministering to the daily needs of the residents and purchasing their agricultural produce for sale in the towns. It is an undeniable
fact that in many communities the alien has replaced the native retailer. He has shown in this trade, industry without limit, and the
patience and forbearance of a slave.

Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-bred and insolent neighbors and
customers are made in his face, but he heeds them not, and he forgets and forgives. The community takes note of him, as he
appears to be harmless and extremely useful.

c. Alleged alien control and dominance. —

There is a general feeling on the part of the public, which appears to be true to fact, about the controlling and dominant position that
the alien retailer holds in the nation's economy. Food and other essentials, clothing, almost all articles of daily life reach the
residents mostly through him. In big cities and centers of population he has acquired not only predominance, but apparent control
over distribution of almost all kinds of goods, such as lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of
other goods and articles. And were it not for some national corporations like the Naric, the Namarco, the Facomas and the Acefa,
his control over principal foods and products would easily become full and complete.

Petitioner denies that there is alien predominance and control in the retail trade. In one breath it is said that the fear is unfounded
and the threat is imagined; in another, it is charged that the law is merely the result of radicalism and pure and unabashed
nationalism. Alienage, it is said, is not an element of control; also so many unmanageable factors in the retail business make
control virtually impossible. The first argument which brings up an issue of fact merits serious consideration. The others are matters
of opinion within the exclusive competence of the legislature and beyond our prerogative to pass upon and decide.
The best evidence are the statistics on the retail trade, which put down the figures in black and white. Between the constitutional
convention year (1935), when the fear of alien domination and control of the retail trade already filled the minds of our leaders with
fears and misgivings, and the year of the enactment of the nationalization of the retail trade act (1954), official statistics
unmistakably point out to the ever-increasing dominance and control by the alien of the retail trade, as witness the following tables:

Assets Gross Sales

No.- Per cent
Year and Retailers Per cent
Establishment Pesos Distributio Pesos
Nationality Distribution
s n
1941:
Filipino .......... 106,671 200,323,138 55.82 174,181,924 51.74
Chinese ........... 15,356 118,348,692 32.98 148,813,239 44.21
Others ............ 1,646 40,187,090 11.20 13,630,239 4.05
1947:
Filipino .......... 111,107 208,658,946 65.05 279,583,333 57.03
Chinese ........... 13,774 106,156,218 33.56 205,701,134 41.96
Others ........... 354 8,761,260 .49 4,927,168 1.01
1948: (Census)
Filipino .......... 113,631 213,342,264 67.30 467,161,667 60.51
Chinese .......... 12,087 93,155,459 29.38 294,894,227 38.20
Others .......... 422 10,514,675 3.32 9,995,402 1.29
1949:
Filipino .......... 113,659 213,451,602 60.89 462,532,901 53.47
Chinese .......... 16,248 125,223,336 35.72 392,414,875 45.36
Others .......... 486 12,056,365 3.39 10,078,364 1.17
1951:
Filipino ......... 119,352 224,053,620 61.09 466,058,052 53.07
Chinese .......... 17,429 134,325,303 36.60 404,481,384 46.06
Others .......... 347 8,614,025 2.31 7,645,327 87

AVERAGE
ASSETS AND GROSS SALES PER ESTABLISHMENT

Item Gross
Year and Retailer's
Assets Sales
Nationality
(Pesos) (Pesos)

1941:

Filipino ............................................. 1,878 1,633

Chinese .............................................. 7,707 9,691

Others ............................................... 24,415 8,281

1947:

Filipino ............................................. 1,878 2,516

Chinese ........................................... 7,707 14,934

Others .............................................. 24,749 13,919

1948: (Census)

Filipino ............................................. 1,878 4,111

Chinese ............................................. 7,707 24,398

Others .............................................. 24,916 23,686

 1949:

Filipino ............................................. 1,878 4,069

Chinese .............................................. 7,707 24,152

Others .............................................. 24,807 20,737

1951:

Filipino ............................................. 1,877 3,905

Chinese ............................................. 7,707 33,207

Others ............................................... 24,824 22,033

(Estimated Assets and Gross Sales of Retail Establishments, By Year and Nationality of Owners, Benchmark: 1948
Census, issued by the Bureau of Census and Statistics, Department of Commerce and Industry; pp. 18-19 of Answer.)

The above statistics do not include corporations and partnerships, while the figures on Filipino establishments already include mere
market vendors, whose capital is necessarily small..

The above figures reveal that in percentage distribution of assests and gross sales, alien participation has steadily increased during
the years. It is true, of course, that Filipinos have the edge in the number of retailers, but aliens more than make up for the
numerical gap through their assests and gross sales which average between six and seven times those of the very many Filipino
retailers. Numbers in retailers, here, do not imply superiority; the alien invests more capital, buys and sells six to seven times more,
and gains much more. The same official report, pointing out to the known predominance of foreign elements in the retail trade,
remarks that the Filipino retailers were largely engaged in minor retailer enterprises. As observed by respondents, the native
investment is thinly spread, and the Filipino retailer is practically helpless in matters of capital, credit, price and supply.

d. Alien control and threat, subject of apprehension in Constitutional convention. —

It is this domination and control, which we believe has been sufficiently shown to exist, that is the legislature's target in the
enactment of the disputed nationalization would never have been adopted. The framers of our Constitution also believed in the
existence of this alien dominance and control when they approved a resolution categorically declaring among other things, that "it is
the sense of the Convention that the public interest requires the nationalization of the retail trade; . . . ." (II Aruego, The Framing of
the Philippine Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-two years ago; and the events since then
have not been either pleasant or comforting. Dean Sinco of the University of the Philippines College of Law, commenting on the
patrimony clause of the Preamble opines that the fathers of our Constitution were merely translating the general preoccupation of
Filipinos "of the dangers from alien interests that had already brought under their control the commercial and other economic
activities of the country" (Sinco, Phil. Political Law, 10th ed., p. 114); and analyzing the concern of the members of the
constitutional convention for the economic life of the citizens, in connection with the nationalistic provisions of the Constitution, he
says:

But there has been a general feeling that alien dominance over the economic life of the country is not desirable and that if
such a situation should remain, political independence alone is no guarantee to national stability and strength. Filipino
private capital is not big enough to wrest from alien hands the control of the national economy. Moreover, it is but of recent
formation and hence, largely inexperienced, timid and hesitant. Under such conditions, the government as the
instrumentality of the national will, has to step in and assume the initiative, if not the leadership, in the struggle for the
economic freedom of the nation in somewhat the same way that it did in the crusade for political freedom. Thus . . . it (the
Constitution) envisages an organized movement for the protection of the nation not only against the possibilities of armed
invasion but also against its economic subjugation by alien interests in the economic field. (Phil. Political Law by Sinco,
10th ed., p. 476.)

Belief in the existence of alien control and predominance is felt in other quarters. Filipino businessmen, manufacturers and
producers believe so; they fear the dangers coming from alien control, and they express sentiments of economic independence.
Witness thereto is Resolution No. 1, approved on July 18, 1953, of the Fifth National convention of Filipino Businessmen, and a
similar resolution, approved on March 20, 1954, of the Second National Convention of Manufacturers and Producers. The man in
the street also believes, and fears, alien predominance and control; so our newspapers, which have editorially pointed out not only
to control but to alien stranglehold. We, therefore, find alien domination and control to be a fact, a reality proved by official statistics,
and felt by all the sections and groups that compose the Filipino community.

e. Dangers of alien control and dominance in retail. —

But the dangers arising from alien participation in the retail trade does not seem to lie in the predominance alone; there is a
prevailing feeling that such predominance may truly endanger the national interest. With ample capital, unity of purpose and action
and thorough organization, alien retailers and merchants can act in such complete unison and concert on such vital matters as the
fixing of prices, the determination of the amount of goods or articles to be made available in the market, and even the choice of the
goods or articles they would or would not patronize or distribute, that fears of dislocation of the national economy and of the
complete subservience of national economy and of the consuming public are not entirely unfounded. Nationals, producers and
consumers alike can be placed completely at their mercy. This is easily illustrated. Suppose an article of daily use is desired to be
prescribed by the aliens, because the producer or importer does not offer them sufficient profits, or because a new competing
article offers bigger profits for its introduction. All that aliens would do is to agree to refuse to sell the first article, eliminating it from
their stocks, offering the new one as a substitute. Hence, the producers or importers of the prescribed article, or its consumers, find
the article suddenly out of the prescribed article, or its consumers, find the article suddenly out of circulation. Freedom of trade is
thus curtailed and free enterprise correspondingly suppressed.

We can even go farther than theoretical illustrations to show the pernicious influences of alien domination. Grave abuses have
characterized the exercise of the retail trade by aliens. It is a fact within judicial notice, which courts of justice may not properly
overlook or ignore in the interests of truth and justice, that there exists a general feeling on the part of the public that alien
participation in the retail trade has been attended by a pernicious and intolerable practices, the mention of a few of which would
suffice for our purposes; that at some time or other they have cornered the market of essential commodities, like corn and rice,
creating artificial scarcities to justify and enhance profits to unreasonable proportions; that they have hoarded essential foods to the
inconvenience and prejudice of the consuming public, so much so that the Government has had to establish the National Rice and
Corn Corporation to save the public from their continuous hoarding practices and tendencies; that they have violated price control
laws, especially on foods and essential commodities, such that the legislature had to enact a law (Sec. 9, Republic Act No. 1168),
authorizing their immediate and automatic deportation for price control convictions; that they have secret combinations among
themselves to control prices, cheating the operation of the law of supply and demand; that they have connived to boycott honest
merchants and traders who would not cater or yield to their demands, in unlawful restraint of freedom of trade and enterprise. They
are believed by the public to have evaded tax laws, smuggled goods and money into and out of the land, violated import and export
prohibitions, control laws and the like, in derision and contempt of lawful authority. It is also believed that they have engaged in
corrupting public officials with fabulous bribes, indirectly causing the prevalence of graft and corruption in the Government. As a
matter of fact appeals to unscrupulous aliens have been made both by the Government and by their own lawful diplomatic
representatives, action which impliedly admits a prevailing feeling about the existence of many of the above practices.

The circumstances above set forth create well founded fears that worse things may come in the future. The present dominance of
the alien retailer, especially in the big centers of population, therefore, becomes a potential source of danger on occasions of war or
other calamity. We do not have here in this country isolated groups of harmless aliens retailing goods among nationals; what we
have are well organized and powerful groups that dominate the distribution of goods and commodities in the communities and big
centers of population. They owe no allegiance or loyalty to the State, and the State cannot rely upon them in times of crisis or
emergency. While the national holds his life, his person and his property subject to the needs of his country, the alien may even
become the potential enemy of the State.

f. Law enacted in interest of national economic survival and security. —

We are fully satisfied upon a consideration of all the facts and circumstances that the disputed law is not the product of racial
hostility, prejudice or discrimination, but the expression of the legitimate desire and determination of the people, thru their
authorized representatives, to free the nation from the economic situation that has unfortunately been saddled upon it rightly or
wrongly, to its disadvantage. The law is clearly in the interest of the public, nay of the national security itself, and indisputably falls
within the scope of police power, thru which and by which the State insures its existence and security and the supreme welfare of
its citizens.

VI. The Equal Protection Limitation

a. Objections to alien participation in retail trade. — The next question that now poses solution is, Does the law deny the equal
protection of the laws? As pointed out above, the mere fact of alienage is the root and cause of the distinction between the alien
and the national as a trader. The alien resident owes allegiance to the country of his birth or his adopted country; his stay here is
for personal convenience; he is attracted by the lure of gain and profit. His aim or purpose of stay, we admit, is neither illegitimate
nor immoral, but he is naturally lacking in that spirit of loyalty and enthusiasm for this country where he temporarily stays and
makes his living, or of that spirit of regard, sympathy and consideration for his Filipino customers as would prevent him from taking
advantage of their weakness and exploiting them. The faster he makes his pile, the earlier can the alien go back to his beloved
country and his beloved kin and countrymen. The experience of the country is that the alien retailer has shown such utter disregard
for his customers and the people on whom he makes his profit, that it has been found necessary to adopt the legislation, radical as
it may seem.

Another objection to the alien retailer in this country is that he never really makes a genuine contribution to national income and
wealth. He undoubtedly contributes to general distribution, but the gains and profits he makes are not invested in industries that
would help the country's economy and increase national wealth. The alien's interest in this country being merely transient and
temporary, it would indeed be ill-advised to continue entrusting the very important function of retail distribution to his hands.

The practices resorted to by aliens in the control of distribution, as already pointed out above, their secret manipulations of stocks
of commodities and prices, their utter disregard of the welfare of their customers and of the ultimate happiness of the people of the
nation of which they are mere guests, which practices, manipulations and disregard do not attend the exercise of the trade by the
nationals, show the existence of real and actual, positive and fundamental differences between an alien and a national which fully
justify the legislative classification adopted in the retail trade measure. These differences are certainly a valid reason for the State
to prefer the national over the alien in the retail trade. We would be doing violence to fact and reality were we to hold that no reason
or ground for a legitimate distinction can be found between one and the other.

b. Difference in alien aims and purposes sufficient basis for distinction. —

The above objectionable characteristics of the exercise of the retail trade by the aliens, which are actual and real, furnish sufficient
grounds for legislative classification of retail traders into nationals and aliens. Some may disagree with the wisdom of the
legislature's classification. To this we answer, that this is the prerogative of the law-making power. Since the Court finds that the
classification is actual, real and reasonable, and all persons of one class are treated alike, and as it cannot be said that the
classification is patently unreasonable and unfounded, it is in duty bound to declare that the legislature acted within its legitimate
prerogative and it can not declare that the act transcends the limit of equal protection established by the Constitution.

Broadly speaking, the power of the legislature to make distinctions and classifications among persons is not curtailed or denied by
the equal protection of the laws clause. The legislative power admits of a wide scope of discretion, and a law can be violative of the
constitutional limitation only when the classification is without reasonable basis. In addition to the authorities we have earlier cited,
we can also refer to the case of Linsey vs. Natural Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the
application of equal protection clause to a law sought to be voided as contrary thereto:

. . . . "1. The equal protection clause of the Fourteenth Amendment does not take from the state the power to classify in
the adoption of police laws, but admits of the exercise of the wide scope of discretion in that regard, and avoids what is
done only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A classification having some
reasonable basis does not offend against that clause merely because it is not made with mathematical nicety, or because
in practice it results in some inequality. 3. When the classification in such a law is called in question, if any state of facts
reasonably can be conceived that would sustain it, the existence of that state of facts at the time the law was enacted
must be assumed. 4. One who assails the classification in such a law must carry the burden of showing that it does not
rest upon any reasonable basis but is essentially arbitrary."

c. Authorities recognizing citizenship as basis for classification. —

The question as to whether or not citizenship is a legal and valid ground for classification has already been affirmatively decided in
this jurisdiction as well as in various courts in the United States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where
the validity of Act No. 2761 of the Philippine Legislature was in issue, because of a condition therein limiting the ownership of
vessels engaged in coastwise trade to corporations formed by citizens of the Philippine Islands or the United States, thus denying
the right to aliens, it was held that the Philippine Legislature did not violate the equal protection clause of the Philippine Bill of
Rights. The legislature in enacting the law had as ultimate purpose the encouragement of Philippine shipbuilding and the safety for
these Islands from foreign interlopers. We held that this was a valid exercise of the police power, and all presumptions are in favor
of its constitutionality. In substance, we held that the limitation of domestic ownership of vessels engaged in coastwise trade to
citizens of the Philippines does not violate the equal protection of the law and due process or law clauses of the Philippine Bill of
Rights. In rendering said decision we quoted with approval the concurring opinion of Justice Johnson in the case of Gibbons vs.
Ogden, 9 Wheat., I, as follows:

"Licensing acts, in fact, in legislation, are universally restraining acts; as, for example, acts licensing gaming houses,
retailers of spirituous liquors, etc. The act, in this instance, is distinctly of that character, and forms part of an extensive
system, the object of which is to encourage American shipping, and place them on an equal footing with the shipping of
other nations. Almost every commercial nation reserves to its own subjects a monopoly of its coasting trade; and a
countervailing privilege in favor of American shipping is contemplated, in the whole legislation of the United States on this
subject. It is not to give the vessel an American character, that the license is granted; that effect has been correctly
attributed to the act of her enrollment. But it is to confer on her American privileges, as contra distinguished from foreign;
and to preserve the Government from fraud by foreigners; in surreptitiously intruding themselves into the American
commercial marine, as well as frauds upon the revenue in the trade coastwise, that this whole system is projected."

The rule in general is as follows:

Aliens are under no special constitutional protection which forbids a classification otherwise justified simply because the
limitation of the class falls along the lines of nationality. That would be requiring a higher degree of protection for aliens as
a class than for similar classes than for similar classes of American citizens. Broadly speaking, the difference in status
between citizens and aliens constitutes a basis for reasonable classification in the exercise of police power. (2 Am., Jur.
468-469.)

In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing of hawkers and peddlers, which
provided that no one can obtain a license unless he is, or has declared his intention, to become a citizen of the United States, was
held valid, for the following reason: It may seem wise to the legislature to limit the business of those who are supposed to have
regard for the welfare, good order and happiness of the community, and the court cannot question this judgment and conclusion.
In Bloomfield vs. State, 99 N. E. 309 (Ohio, 1912), a statute which prevented certain persons, among them aliens, from engaging in
the traffic of liquors, was found not to be the result of race hatred, or in hospitality, or a deliberate purpose to discriminate, but was
based on the belief that an alien cannot be sufficiently acquainted with "our institutions and our life as to enable him to appreciate
the relation of this particular business to our entire social fabric", and was not, therefore, invalid. In Ohio ex rel. Clarke vs.
Deckebach, 274 U. S. 392, 71 L. ed. 115 (1926), the U.S. Supreme Court had under consideration an ordinance of the city of
Cincinnati prohibiting the issuance of licenses (pools and billiard rooms) to aliens. It held that plainly irrational discrimination against
aliens is prohibited, but it does not follow that alien race and allegiance may not bear in some instances such a relation to a
legitimate object of legislation as to be made the basis of permitted classification, and that it could not state that the legislation is
clearly wrong; and that latitude must be allowed for the legislative appraisement of local conditions and for the legislative choice of
methods for controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is a parallel case to the one
at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington, 1922), the business of pawn brooking was considered as having
tendencies injuring public interest, and limiting it to citizens is within the scope of police power. A similar statute denying aliens the
right to engage in auctioneering was also sustained in Wright vs. May, L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs.
Van Winkle, 297 F. 340 (Oregon, 1924), the court said that aliens are judicially known to have different interests, knowledge,
attitude, psychology and loyalty, hence the prohibitions of issuance of licenses to them for the business of pawnbroker, pool,
billiard, card room, dance hall, is not an infringement of constitutional rights. In Templar vs. Michigan State Board of Examiners, 90
N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of aliens as barbers was held void, but the reason for the decision was
the court's findings that the exercise of the business by the aliens does not in any way affect the morals, the health, or even the
convenience of the community. In Takahashi vs. Fish and Game Commission, 92 L. ed. 1479 (1947), a California statute banning
the issuance of commercial fishing licenses to person ineligible to citizenship was held void, because the law conflicts with Federal
power over immigration, and because there is no public interest in the mere claim of ownership of the waters and the fish in them,
so there was no adequate justification for the discrimination. It further added that the law was the outgrowth of antagonism toward
the persons of Japanese ancestry. However, two Justices dissented on the theory that fishing rights have been treated traditionally
as natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257 (Pennsylvania, 1897), a state law which imposed a tax on
every employer of foreign-born unnaturalized male persons over 21 years of age, was declared void because the court found that
there was no reason for the classification and the tax was an arbitrary deduction from the daily wage of an employee.

d. Authorities contra explained. —

It is true that some decisions of the Federal court and of the State courts in the United States hold that the distinction between
aliens and citizens is not a valid ground for classification. But in this decision the laws declared invalid were found to be either
arbitrary, unreasonable or capricious, or were the result or product of racial antagonism and hostility, and there was no question of
public interest involved or pursued. In Yu Cong Eng vs. Trinidad, 70 L. ed. 1059 (1925), the United States Supreme Court declared
invalid a Philippine law making unlawful the keeping of books of account in any language other than English, Spanish or any other
local dialect, but the main reasons for the decisions are: (1) that if Chinese were driven out of business there would be no other
system of distribution, and (2) that the Chinese would fall prey to all kinds of fraud, because they would be deprived of their right to
be advised of their business and to direct its conduct. The real reason for the decision, therefore, is the court's belief that no public
benefit would be derived from the operations of the law and on the other hand it would deprive Chinese of something indispensable
for carrying on their business. In Yick Wo vs. Hopkins, 30 L. ed 220 (1885) an ordinance conferring powers on officials to withhold
consent in the operation of laundries both as to persons and place, was declared invalid, but the court said that the power granted
was arbitrary, that there was no reason for the discrimination which attended the administration and implementation of the law, and
that the motive thereof was mere racial hostility. In State vs. Montgomery, 47 A. 165 (Maine, 1900), a law prohibiting aliens to
engage as hawkers and peddlers was declared void, because the discrimination bore no reasonable and just relation to the act in
respect to which the classification was proposed.

The case at bar is radically different, and the facts make them so. As we already have said, aliens do not naturally possess the
sympathetic consideration and regard for the customers with whom they come in daily contact, nor the patriotic desire to help
bolster the nation's economy, except in so far as it enhances their profit, nor the loyalty and allegiance which the national owes to
the land. These limitations on the qualifications of the aliens have been shown on many occasions and instances, especially in
times of crisis and emergency. We can do no better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive
home the reality and significance of the distinction between the alien and the national, thus:

. . . . It may be judicially known, however, that alien coming into this country are without the intimate knowledge of our
laws, customs, and usages that our own people have. So it is likewise known that certain classes of aliens are of different
psychology from our fellow countrymen. Furthermore, it is natural and reasonable to suppose that the foreign born, whose
allegiance is first to their own country, and whose ideals of governmental environment and control have been engendered
and formed under entirely different regimes and political systems, have not the same inspiration for the public weal, nor
are they as well disposed toward the United States, as those who by citizenship, are a part of the government itself.
Further enlargement, is unnecessary. I have said enough so that obviously it cannot be affirmed with absolute confidence
that the Legislature was without plausible reason for making the classification, and therefore appropriate discriminations
against aliens as it relates to the subject of legislation. . . . .

VII. The Due Process of Law Limitation.

a. Reasonability, the test of the limitation; determination by legislature decisive. —

We now come to due process as a limitation on the exercise of the police power. It has been stated by the highest authority in the
United States that:

. . . . And the guaranty of due process, as has often been held, demands only that the law shall not be unreasonable,
arbitrary or capricious, and that the means selected shall have a real and substantial relation to the subject sought to be
attained. . . . .

xxx     xxx     xxx

So far as the requirement of due process is concerned and in the absence of other constitutional restriction a state is free
to adopt whatever economic policy may reasonably be deemed to promote public welfare, and to enforce that policy by
legislation adapted to its purpose. The courts are without authority either to declare such policy, or, when it is declared by
the legislature, to override it. If the laws passed are seen to have a reasonable relation to a proper legislative purpose, and
are neither arbitrary nor discriminatory, the requirements of due process are satisfied, and judicial determination to that
effect renders a court  functus officio. . . . (Nebbia vs. New York, 78 L. ed. 940, 950, 957.)

Another authority states the principle thus:

 . . . . Too much significance cannot be given to the word "reasonable" in considering the scope of the police power in a
constitutional sense, for the test used to determine the constitutionality of the means employed by the legislature is to
inquire whether the restriction it imposes on rights secured to individuals by the Bill of Rights are unreasonable, and not
whether it imposes any restrictions on such rights. . . .

xxx     xxx     xxx

. . . . A statute to be within this power must also be reasonable in its operation upon the persons whom it affects, must not
be for the annoyance of a particular class, and must not be unduly oppressive. (11 Am. Jur. Sec. 302., 1:1)- 1074-1075.)

In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:

. . . . To justify the state in thus interposing its authority in behalf of the public, it must appear, first, that the interests of the
public generally, as distinguished from those of a particular class, require such interference; and second, that the means
are reasonably necessary for the accomplishment of the purpose, and not unduly oppressive upon individuals. . . .

Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of constitutionality:

In determining whether a given act of the Legislature, passed in the exercise of the police power to regulate the operation
of a business, is or is not constitutional, one of the first questions to be considered by the court is whether the power as
exercised has a sufficient foundation in reason in connection with the matter involved, or is an arbitrary, oppressive, and
capricious use of that power, without substantial relation to the health, safety, morals, comfort, and general welfare of the
public.

b. Petitioner's argument considered. —

Petitioner's main argument is that retail is a common, ordinary occupation, one of those privileges long ago recognized as essential
to the orderly pursuant of happiness by free men; that it is a gainful and honest occupation and therefore beyond the power of the
legislature to prohibit and penalized. This arguments overlooks fact and reality and rests on an incorrect assumption and premise,
i.e., that in this country where the occupation is engaged in by petitioner, it has been so engaged by him, by the alien in an honest
creditable and unimpeachable manner, without harm or injury to the citizens and without ultimate danger to their economic peace,
tranquility and welfare. But the Legislature has found, as we have also found and indicated, that the privilege has been so grossly
abused by the alien, thru the illegitimate use of pernicious designs and practices, that he now enjoys a monopolistic control of the
occupation and threatens a deadly stranglehold on the nation's economy endangering the national security in times of crisis and
emergency.

The real question at issue, therefore, is not that posed by petitioner, which overlooks and ignores the facts and circumstances, but
this, Is the exclusion in the future of aliens from the retail trade unreasonable. Arbitrary capricious, taking into account the
illegitimate and pernicious form and manner in which the aliens have heretofore engaged therein? As thus correctly stated the
answer is clear. The law in question is deemed absolutely necessary to bring about the desired legislative objective, i.e., to free
national economy from alien control and dominance. It is not necessarily unreasonable because it affects private rights and
privileges (11 Am. Jur. pp. 1080-1081.) The test of reasonableness of a law is the appropriateness or adequacy under all
circumstances of the means adopted to carry out its purpose into effect (Id.) Judged by this test, disputed legislation, which is not
merely reasonable but actually necessary, must be considered not to have infringed the constitutional limitation of reasonableness.

The necessity of the law in question is explained in the explanatory note that accompanied the bill, which later was enacted into
law:

This bill proposes to regulate the retail business. Its purpose is to prevent persons who are not citizens of the Philippines
from having a strangle hold upon our economic life. If the persons who control this vital artery of our economic life are the
ones who owe no allegiance to this Republic, who have no profound devotion to our free institutions, and who have no
permanent stake in our people's welfare, we are not really the masters of our destiny. All aspects of our life, even our
national security, will be at the mercy of other people.

In seeking to accomplish the foregoing purpose, we do not propose to deprive persons who are not citizens of the
Philippines of their means of livelihood. While this bill seeks to take away from the hands of persons who are not citizens
of the Philippines a power that can be wielded to paralyze all aspects of our national life and endanger our national
security it respects existing rights.

The approval of this bill is necessary for our national survival.

If political independence is a legitimate aspiration of a people, then economic independence is none the less legitimate. Freedom
and liberty are not real and positive if the people are subject to the economic control and domination of others, especially if not of
their own race or country. The removal and eradication of the shackles of foreign economic control and domination, is one of the
noblest motives that a national legislature may pursue. It is impossible to conceive that legislation that seeks to bring it about can
infringe the constitutional limitation of due process. The attainment of a legitimate aspiration of a people can never be beyond the
limits of legislative authority.

c. Law expressly held by Constitutional Convention to be within the sphere of legislative action. —
The framers of the Constitution could not have intended to impose the constitutional restrictions of due process on the attainment of
such a noble motive as freedom from economic control and domination, thru the exercise of the police power. The fathers of the
Constitution must have given to the legislature full authority and power to enact legislation that would promote the supreme
happiness of the people, their freedom and liberty. On the precise issue now before us, they expressly made their voice clear; they
adopted a resolution expressing their belief that the legislation in question is within the scope of the legislative power. Thus they
declared the their Resolution:

That it is the sense of the Convention that the public interest requires the nationalization of retail trade; but it abstain from
approving the amendment introduced by the Delegate for Manila, Mr. Araneta, and others on this matter because it is
convinced that the National Assembly is authorized to promulgate a law which limits to Filipino and American citizens the
privilege to engage in the retail trade. (11 Aruego, The Framing of the Philippine Constitution, quoted on pages 66 and 67
of the Memorandum for the Petitioner.)

It would do well to refer to the nationalistic tendency manifested in various provisions of the Constitution. Thus in the preamble, a
principle objective is the conservation of the patrimony of the nation and as corollary the provision limiting to citizens of the
Philippines the exploitation, development and utilization of its natural resources. And in Section 8 of Article XIV, it is provided that
"no franchise, certificate, or any other form of authorization for the operation of the public utility shall be granted except to citizens
of the Philippines." The nationalization of the retail trade is only a continuance of the nationalistic protective policy laid down as a
primary objective of the Constitution. Can it be said that a law imbued with the same purpose and spirit underlying many of the
provisions of the Constitution is unreasonable, invalid and unconstitutional?

The seriousness of the Legislature's concern for the plight of the nationals as manifested in the approval of the radical measures is,
therefore, fully justified. It would have been recreant to its duties towards the country and its people would it view the sorry plight of
the nationals with the complacency and refuse or neglect to adopt a remedy commensurate with the demands of public interest and
national survival. As the repository of the sovereign power of legislation, the Legislature was in duty bound to face the problem and
meet, through adequate measures, the danger and threat that alien domination of retail trade poses to national economy.

d. Provisions of law not unreasonable. —

A cursory study of the provisions of the law immediately reveals how tolerant, how reasonable the Legislature has been. The law is
made prospective and recognizes the right and privilege of those already engaged in the occupation to continue therein during the
rest of their lives; and similar recognition of the right to continue is accorded associations of aliens. The right or privilege is denied
to those only upon conviction of certain offenses. In the deliberations of the Court on this case, attention was called to the fact that
the privilege should not have been denied to children and heirs of aliens now engaged in the retail trade. Such provision would
defeat the law itself, its aims and purposes. Beside, the exercise of legislative discretion is not subject to judicial review. It is well
settled that the Court will not inquire into the motives of the Legislature, nor pass upon general matters of legislative judgment. The
Legislature is primarily the judge of the necessity of an enactment or of any of its provisions, and every presumption is in favor of its
validity, and though the Court may hold views inconsistent with the wisdom of the law, it may not annul the legislation if not palpably
in excess of the legislative power. Furthermore, the test of the validity of a law attacked as a violation of due process, is not its
reasonableness, but its unreasonableness, and we find the provisions are not unreasonable. These principles also answer various
other arguments raised against the law, some of which are: that the law does not promote general welfare; that thousands of aliens
would be thrown out of employment; that prices will increase because of the elimination of competition; that there is no need for the
legislation; that adequate replacement is problematical; that there may be general breakdown; that there would be repercussions
from foreigners; etc. Many of these arguments are directed against the supposed wisdom of the law which lies solely within the
legislative prerogative; they do not import invalidity.

VIII. Alleged defect in the title of the law

A subordinate ground or reason for the alleged invalidity of the law is the claim that the title thereof is misleading or deceptive, as it
conceals the real purpose of the bill which is to nationalize the retail business and prohibit aliens from engaging therein. The
constitutional provision which is claimed to be violated in Section 21 (1) of Article VI, which reads:

No bill which may be enacted in the law shall embrace more than one subject which shall be expressed in the title of the
bill.

What the above provision prohibits is duplicity, that is, if its title completely fails to appraise the legislators or the public of the
nature, scope and consequences of the law or its operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory
consideration of the title and the provisions of the bill fails to show the presence of duplicity. It is true that the term "regulate" does
not and may not readily and at first glance convey the idea of "nationalization" and "prohibition", which terms express the two main
purposes and objectives of the law. But "regulate" is a broader term than either prohibition or nationalization. Both of these have
always been included within the term regulation.

Under the title of an act to "regulate", the sale of intoxicating liquors, the Legislature may prohibit the sale of intoxicating
liquors. (Sweet vs. City of Wabash, 41 Ind., 7; quoted in page 41 of Answer.)

Within the meaning of the Constitution requiring that the subject of every act of the Legislature shall be stated in the tale,
the title to regulate the sale of intoxicating liquors, etc." sufficiently expresses the subject of an act  prohibiting the sale of
such liquors to minors and to persons in the habit of getting intoxicated; such matters being properly included within the
subject of regulating the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in p. 42 of Answer.)
 The word "regulate" is of broad import, and necessarily implies some degree of restraint and prohibition of acts usually
done in connection with the thing to be regulated. While word regulate does not ordinarily convey meaning of prohibit,
there is no absolute reason why it should not have such meaning when used in delegating police power in connection with
a thing the best or only efficacious regulation of which involves suppression. (State vs. Morton, 162 So. 718, 182 La. 887,
quoted in p. 42 of Answer.)

The general rule is for the use of general terms in the title of a bill; it has also been said that the title need not be an index to the
entire contents of the law (I Sutherland, Statutory Construction, See. 4803, p. 345.) The above rule was followed the title of the Act
in question adopted the more general term "regulate" instead of "nationalize" or "prohibit". Furthermore, the law also contains other
rules for the regulation of the retail trade which may not be included in the terms "nationalization" or "prohibition"; so were the title
changed from "regulate" to "nationalize" or "prohibit", there would have been many provisions not falling within the scope of the title
which would have made the Act invalid. The use of the term "regulate", therefore, is in accord with the principle governing the
drafting of statutes, under which a simple or general term should be adopted in the title, which would include all other provisions
found in the body of the Act.

One purpose of the constitutional directive that the subject of a bill should be embraced in its title is to apprise the legislators of the
purposes, the nature and scope of its provisions, and prevent the enactment into law of matters which have received the notice,
action and study of the legislators or of the public. In the case at bar it cannot be claimed that the legislators have been appraised
of the nature of the law, especially the nationalization and the prohibition provisions. The legislators took active interest in the
discussion of the law, and a great many of the persons affected by the prohibitions in the law conducted a campaign against its
approval. It cannot be claimed, therefore, that the reasons for declaring the law invalid ever existed. The objection must therefore,
be overruled.

IX. Alleged violation of international treaties and obligations

Another subordinate argument against the validity of the law is the supposed violation thereby of the Charter of the United Nations
and of the Declaration of the Human Rights adopted by the United Nations General Assembly. We find no merit in the Nations
Charter imposes no strict or legal obligations regarding the rights and freedom of their subjects (Hans Kelsen, The Law of the
United Nations, 1951 ed. pp. 29-32), and the Declaration of Human Rights contains nothing more than a mere recommendation or
a common standard of achievement for all peoples and all nations (Id. p. 39.) That such is the import of the United Nations Charter
aid of the Declaration of Human Rights can be inferred the fact that members of the United Nations Organizations, such as Norway
and Denmark, prohibit foreigners from engaging in retail trade, and in most nations of the world laws against foreigners engaged in
domestic trade are adopted.

The Treaty of Amity between the Republic of the Philippines and the Republic of China of April 18, 1947 is also claimed to be
violated by the law in question. All that the treaty guarantees is equality of treatment to the Chinese nationals "upon the same terms
as the nationals of any other country." But the nationals of China are not discriminating against because nationals of all other
countries, except those of the United States, who are granted special rights by the Constitution, are all prohibited from engaging in
the retail trade. But even supposing that the law infringes upon the said treaty, the treaty is always subject to qualification or
amendment by a subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260), and the same may never curtail or restrict the scope of
the police power of the State (plaston vs. Pennsylvania, 58 L. ed. 539.)

X. Conclusion

Resuming what we have set forth above we hold that the disputed law was enacted to remedy a real actual threat and danger to
national economy posed by alien dominance and control of the retail business and free citizens and country from dominance and
control; that the enactment clearly falls within the scope of the police power of the State, thru which and by which it protects its own
personality and insures its security and future; that the law does not violate the equal protection clause of the Constitution because
sufficient grounds exist for the distinction between alien and citizen in the exercise of the occupation regulated, nor the due process
of law clause, because the law is prospective in operation and recognizes the privilege of aliens already engaged in the occupation
and reasonably protects their privilege; that the wisdom and efficacy of the law to carry out its objectives appear to us to be plainly
evident — as a matter of fact it seems not only appropriate but actually necessary — and that in any case such matter falls within
the prerogative of the Legislature, with whose power and discretion the Judicial department of the Government may not interfere;
that the provisions of the law are clearly embraced in the title, and this suffers from no duplicity and has not misled the legislators or
the segment of the population affected; and that it cannot be said to be void for supposed conflict with treaty obligations because
no treaty has actually been entered into on the subject and the police power may not be curtailed or surrendered by any treaty or
any other conventional agreement.

Some members of the Court are of the opinion that the radical effects of the law could have been made less harsh in its impact on
the aliens. Thus it is stated that the more time should have been given in the law for the liquidation of existing businesses when the
time comes for them to close. Our legal duty, however, is merely to determine if the law falls within the scope of legislative authority
and does not transcend the limitations of due process and equal protection guaranteed in the Constitution. Remedies against the
harshness of the law should be addressed to the Legislature; they are beyond our power and jurisdiction.

The petition is hereby denied, with costs against petitioner.

Paras, C.J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, Reyes, J.B.L., Endencia and Felix, JJ., concur.
Separate Opinions

PADILLA, J.,  concurring and dissenting:

I agree to the proposition, principle or rule that courts may not inquire into the wisdom of an the Act passed by the Congress and
duly approved by the President of the Republic. But the rule does not preclude courts from inquiring and determining whether the
Act offends against a provision or provisions of the Constitution. I am satisfied that the Act assailed as violative of the due process
of law and the equal protection of the laws clauses of the Constitution does not infringe upon them, insofar as it affects
associations, partnership or corporations, the capital of which is not wholly owned by the citizens of the Philippines, and aliens, who
are not and have not been engaged in the retail business. I am, however, unable to persuade myself that it does not violate said
clauses insofar as the Act applies to associations and partnerships referred to in the Act and to aliens, who are and have heretofore
been engaged in said business. When they did engage in the retail business there was no prohibition on or against them to engage
in it. They assumed and believed in good faith they were entitled to engaged in the business. The Act allows aliens to continue in
business until their death or voluntary retirement from the business or forfeiture of their license; and corporations, associations or
partnership, the capital of which is not wholly owned by the citizens of the Philippines to continue in the business for a period of ten
years from the date of the approval of the Act (19 June 1954) or until the expiry of term of the existence of the association or
partnership or corporation, whichever event comes first. The prohibition on corporations, the capital of which is not wholly owned by
citizens of the Philippines, to engage in the retail business for a period of more than ten years from the date of the approval of the
Act or beyond the term of their corporate existence, whichever event comes first, is valid and lawful, because the continuance of
the existence of such corporations is subject to whatever the Congress may impose reasonably upon them by subsequent
legislation.1 But the prohibition to engage in the retail business by associations and partnerships, the capital of which is not wholly
owned by citizen of the Philippines, after ten years from the date of the approval of the Act, even before the end of the term of their
existence as agreed upon by the associates and partners, and by alien heirs to whom the retail business is transmitted by the
death of an alien engaged in the business, or by his executor or administrator, amounts to a deprivation of their property without
due process of law. To my mind, the ten-year period from the date of the approval of the Act or until the expiration of the term of the
existence of the association and partnership, whichever event comes first, and the six-month period granted to alien heirs of a
deceased alien, his executor or administrator, to liquidate the business, do not cure the defect of the law, because the effect of the
prohibition is to compel them to sell or dispose of their business. The price obtainable at such forced sale of the business would be
inadequate to reimburse and compensate the associates or partners of the associations or partnership, and the alien heirs of a
deceased alien, engaged in the retail business for the capital invested in it. The stock of merchandise bought and sold at retail does
not alone constitute the business. The goodwill that the association, partnership and the alien had built up during a long period of
effort, patience and perseverance forms part of such business. The constitutional provisions that no person shall be deprived of his
property without due process of law 2 and that no person shall be denied the equal protection of the laws 3 would have no meaning
as applied to associations or partnership and alien heirs of an alien engaged in the retail business if they were to be compelled to
sell or dispose of their business within ten years from the date of the approval of the Act and before the end of the term of the
existence of the associations and partnership as agreed upon by the associations and partners and within six months after the
death of their predecessor-in-interest.

The authors of the Constitution were vigilant, careful and zealous in the safeguard of the ownership of private agricultural lands
which together with the lands of the public domain constitute the priceless patrimony and mainstay of the nation; yet, they did not
deem it wise and prudent to deprive aliens and their heirs of such lands.4

For these reasons, I am of the opinion that section 1 of the Act, insofar as it compels associations and partnership referred to
therein to wind up their retail business within ten years from the date of the approval of the Act even before the expiry of the term of
their existence as agreed upon by the associates and partners and section 3 of the Act, insofar as it compels the aliens engaged in
the retail business in his lifetime his executor or administrator, to liquidate the business, are invalid, for they violate the due process
of law and the equal protection of the laws clauses of the Constitution.

Footnotes

1
 Section 76, Act No. 1459..

2
 Section 1 (1), Article III, of the Constitution..

3
 Ibid.

4
 Section 5, Article XIII, of the Constitution.
 Republic of the Philippines
SUPREME COURT
Manila

EN BANC

G.R. No. 143855               September 21, 2010

REPRESENTATIVES GERARDO S. ESPINA, ORLANDO FUA, JR., PROSPERO AMATONG, ROBERT ACE S. BARBERS,
RAUL M. GONZALES, PROSPERO PICHAY, JUAN MIGUEL ZUBIRI and FRANKLIN BAUTISTA, Petitioners,
vs.
HON. RONALDO ZAMORA, JR. (Executive Secretary), HON. MAR ROXAS (Secretary of Trade and Industry), HON. FELIPE
MEDALLA (Secretary of National Economic and Development Authority), GOV. RAFAEL BUENAVENTURA (Bangko
Sentral ng Pilipinas) and HON. LILIA BAUTISTA (Chairman, Securities and Exchange Commission), Respondents.

DECISION

ABAD, J.:

This case calls upon the Court to exercise its power of judicial review and determine the constitutionality of the Retail Trade
Liberalization Act of 2000, which has been assailed as in breach of the constitutional mandate for the development of a self-reliant
and independent national economy effectively controlled by Filipinos.

The Facts and the Case

On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.) 8762, also known as the Retail Trade
Liberalization Act of 2000. It expressly repealed R.A. 1180, which absolutely prohibited foreign nationals from engaging in the retail
trade business. R.A. 8762 now allows them to do so under four categories:

Category A Less than Exclusively for Filipino citizens and corporations wholly
US$2,500,000.00 owned by Filipino citizens.
Category B US$2,500,000.00 up but less than For the first two years of R.A. 8762’s effectivity, foreign
US$7,500,000.00 ownership is allowed up to 60%. After the two-year
period, 100% foreign equity shall be allowed.
Category C US$7,500,000.00 or more May be wholly owned by foreigners. Foreign
investments for establishing a store in Categories B
and C shall not be less than the equivalent in Philippine
Pesos of US$830,000.00.
Category D US$250,000.00 per store of May be wholly owned by foreigners.
foreign enterprises specializing in
high-end or luxury products

R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and now reside in the Philippines, to engage in
the retail trade business with the same rights as Filipino citizens.

On October 11, 2000 petitioners ***Magtanggol T. Gunigundo I, Michael T. Defensor, Gerardo S. Espina, Benjamin S. Lim, Orlando
Fua, Jr., Prospero Amatong, Sergio Apostol, Robert Ace S. Barbers, Enrique Garcia, Jr., Raul M. Gonzales, Jaime Jacob,
Apolinario Lozada, Jr., Leonardo Montemayor, Ma. Elena Palma-Gil, Prospero Pichay, Juan Miguel Zubiri and Franklin Bautista, all
members of the House of Representatives, filed the present petition, assailing the constitutionality of R.A. 8762 on the following
grounds:
 First, the law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution which enjoins the State to place the
national economy under the control of Filipinos to achieve equal distribution of opportunities, promote industrialization and
full employment, and protect Filipino enterprise against unfair competition and trade policies.

Second, the implementation of R.A. 8762 would lead to alien control of the retail trade, which taken together with alien
dominance of other areas of business, would result in the loss of effective Filipino control of the economy.

Third, foreign retailers like Walmart and K-Mart would crush Filipino retailers and sari-sari store vendors, destroy self-
employment, and bring about more unemployment.

Fourth, the World Bank-International Monetary Fund had improperly imposed the passage of R.A. 8762 on the
government as a condition for the release of certain loans.

Fifth, there is a clear and present danger that the law would promote monopolies or combinations in restraint of trade.

Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary Mar Roxas, National Economic and
Development Authority (NEDA) Secretary Felipe Medalla, Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and Securities
and Exchange Commission Chairman Lilia Bautista countered that:

First, petitioners have no legal standing to file the petition. They cannot invoke the fact that they are taxpayers since R.A.
8762 does not involve the disbursement of public funds. Nor can they invoke the fact that they are members of Congress
since they made no claim that the law infringes on their right as legislators.

Second, the petition does not involve any justiciable controversy. Petitioners of course claim that, as members of
Congress, they represent the small retail vendors in their respective districts but the petition does not allege that the
subject law violates the rights of those vendors.

Third, petitioners have failed to overcome the presumption of constitutionality of R.A. 8762. Indeed, they could not specify
how the new law violates the constitutional provisions they cite. Sections 9, 19, and 20 of Article II of the Constitution are
not self-executing provisions that are judicially demandable.

Fourth, the Constitution mandates the regulation but not the prohibition of foreign investments. It directs Congress to
reserve to Filipino citizens certain areas of investments upon the recommendation of the NEDA and when the national
interest so dictates. But the Constitution leaves to the discretion of the Congress whether or not to make such reservation.
It does not prohibit Congress from enacting laws allowing the entry of foreigners into certain industries not reserved by the
Constitution to Filipino citizens.

The Issues Presented

Simplified, the case presents two issues:

1. Whether or not petitioner lawmakers have the legal standing to challenge the constitutionality of R.A. 8762; and

2. Whether or not R.A. 8762 is unconstitutional.

The Court’s Ruling

One. The long settled rule is that he who challenges the validity of a law must have a standing to do so.1 Legal standing
or locus standi refers to the right of a party to come to a court of justice and make such a challenge. More particularly, standing
refers to his personal and substantial interest in that he has suffered or will suffer direct injury as a result of the passage of that
law.2 To put it another way, he must show that he has been or is about to be denied some right or privilege to which he is lawfully
entitled or that he is about to be subjected to some burdens or penalties by reason of the law he complains of.3

Here, there is no clear showing that the implementation of the Retail Trade Liberalization Act prejudices petitioners or inflicts
damages on them, either as taxpayers4 or as legislators.5 Still the Court will resolve the question they raise since the rule on
standing can be relaxed for nontraditional plaintiffs like ordinary citizens, taxpayers, and legislators when as in this case the public
interest so requires or the matter is of transcendental importance, of overarching significance to society, or of paramount public
interest.6

Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987 Constitution for the State to develop a self-reliant
and independent national economy effectively controlled by Filipinos. They invoke the provisions of the Declaration of Principles
and State Policies under Article II of the 1987 Constitution, which read as follows:

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and independence of the nation
and free the people from poverty through policies that provide adequate social services, promote full employment, a rising standard
of living, and an improved quality of life for all.
xxxx

Section 19. The State shall develop a self-reliant and independent national economy effectively controlled by Filipinos.

Section 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides
incentives to needed investments.

Petitioners also invoke the provisions of the National Economy and Patrimony under Article XII of the 1987 Constitution, which
reads:

Section 10. The Congress shall, upon recommendation of the economic and planning agency, when the national interest dictates,
reserve to citizens of the Philippines or to corporations or associations at least sixty per centum of whose capital is owned by such
citizens, or such higher percentage as Congress may prescribe, certain areas of investments. The Congress shall enact measures
that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.

In the grant of rights, privileges, and concessions covering the national economy and patrimony, the State shall give preference to
qualified Filipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in accordance with its
national goals and priorities.

xxxx

Section 12. The State shall promote the preferential use of Filipino labor, domestic materials and locally produced goods, and
adopt measures that help make them competitive.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and arrangements of
exchange on the basis of equality and reciprocity.

But, as the Court explained in Tañada v. Angara,7 the provisions of Article II of the 1987 Constitution, the declarations of principles
and state policies, are not self-executing. Legislative failure to pursue such policies cannot give rise to a cause of action in the
courts.

The Court further explained in Tañada that Article XII of the 1987 Constitution lays down the ideals of economic nationalism: (1) by
expressing preference in favor of qualified Filipinos in the grant of rights, privileges and concessions covering the national economy
and patrimony and in the use of Filipino labor, domestic materials and locally-produced goods; (2) by mandating the State to adopt
measures that help make them competitive; and (3) by requiring the State to develop a self-reliant and independent national
economy effectively controlled by Filipinos.8ten.lihpwal

In other words, while Section 19, Article II of the 1987 Constitution requires the development of a self-reliant and independent
national economy effectively controlled by Filipino entrepreneurs, it does not impose a policy of Filipino monopoly of the economic
environment. The objective is simply to prohibit foreign powers or interests from maneuvering our economic policies and ensure
that Filipinos are given preference in all areas of development.

Indeed, the 1987 Constitution takes into account the realities of the outside world as it requires the pursuit of a trade policy that
serves the general welfare and utilizes all forms and arrangements of exchange on the basis of equality and reciprocity; and
speaks of industries which are competitive in both domestic and foreign markets as well as of the protection of Filipino enterprises
against unfair foreign competition and trade practices. Thus, while the Constitution mandates a bias in favor of Filipino goods,
services, labor and enterprises, it also 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.9

In other words, the 1987 Constitution does not rule out the entry of foreign investments, goods, and services. While it does not
encourage their unlimited entry 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.10 The key, as in all economies in the world, is to strike a
balance between protecting local businesses and allowing the entry of foreign investments and services.1avvphi1

More importantly, Section 10, Article XII of the 1987 Constitution gives Congress the discretion to reserve to Filipinos certain areas
of investments upon the recommendation of the NEDA and when the national interest requires. Thus, Congress can determine
what policy to pass and when to pass it depending on the economic exigencies. It can enact laws allowing the entry of foreigners
into certain industries not reserved by the Constitution to Filipino citizens. In this case, Congress has decided to open certain areas
of the retail trade business to foreign investments instead of reserving them exclusively to Filipino citizens. The NEDA has not
opposed such policy.

The control and regulation of trade in the interest of the public welfare is of course an exercise of the police power of the State. A
person’s right to property, whether he is a Filipino citizen or foreign national, cannot be taken from him without due process of law.
In 1954, Congress enacted the Retail Trade Nationalization Act or R.A. 1180 that restricts the retail business to Filipino citizens. In
denying the petition assailing the validity of such Act for violation of the foreigner’s right to substantive due process of law, the
Supreme Court held that the law constituted a valid exercise of police power.11 The State had an interest in preventing alien control
of the retail trade and R.A. 1180 was reasonably related to that purpose. That law is not arbitrary.

Here, to the extent that R.A. 8762, the Retail Trade Liberalization Act, lessens the restraint on the foreigners’ right to property or to
engage in an ordinarily lawful business, it cannot be said that the law amounts to a denial of the Filipinos’ right to property and to
due process of law. Filipinos continue to have the right to engage in the kinds of retail business to which the law in question has
permitted the entry of foreign investors.

Certainly, it is not within the province of the Court to inquire into the wisdom of R.A. 8762 save when it blatantly violates the
Constitution. But as the Court has said, there is no showing that the law has contravened any constitutional mandate. The Court is
not convinced that the implementation of R.A. 8762 would eventually lead to alien control of the retail trade business. Petitioners
have not mustered any concrete and strong argument to support its thesis. The law itself has provided strict safeguards on foreign
participation in that business. Thus –

First, aliens can only engage in retail trade business subject to the categories above-enumerated; Second, only nationals from, or
juridical entities formed or incorporated in countries which allow the entry of Filipino retailers shall be allowed to engage in retail
trade business; and Third, qualified foreign retailers shall not be allowed to engage in certain retailing activities outside their
accredited stores through the use of mobile or rolling stores or carts, the use of sales representatives, door-to-door selling,
restaurants and sari-sari stores and such other similar retailing activities.

In sum, petitioners have not shown how the retail trade liberalization has prejudiced and can prejudice the local small and medium
enterprises since its implementation about a decade ago.

WHEREFORE, the Court DISMISSES the petition for lack of merit. No costs.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR:

RENATO C. CORONA
Chief Justice

ANTONIO T. CARPIO CONCHITA CARPIO MORALES

Associate Justice Associate Justice

(On Official Leave) (On Official Leave)

PRESBITERO J. VELASCO, JR.* ANTONIO EDUARDO B. NACHURA*
Associate Justice Associate Justice

(On Official Leave) (On Official Leave)

TERESITA J. LEONARDO-DE CASTRO* ARTURO D. BRION*
Associate Justice Associate Justice

DIOSDADO M. PERALTA LUCAS P. BERSAMIN

Associate Justice Associate Justice

MARIANO C. DEL CASTILLO MARTIN S. VILLARAMA, JR.

Associate Justice Associate Justice

(On Official Leave)

JOSE PORTUGAL PEREZ
JOSE CATRAL MENDOZA*
Associate Justice
Associate Justice

(On Leave)
MARIA LOURDES P. A. SERENO**
Associate Justice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above Decision had been
reached in consultation before the case was assigned to the writer of the opinion of the Court.
RENATO C. CORONA
Chief Justice

Footnotes

* On official leave.

** On leave.

*** Ordered dropped as petitioners per Supreme Court En Banc Resolution dated August 2, 2005. Rollo, p. 170.

1
 Jumamil v. Cafe, G.R. No. 144570, September 21, 2005, 470 SCRA 475, 486-487.

2
 Abaya v. Ebdane, Jr., G.R. No. 167919, February 14, 2007, 515 SCRA 720, 756.

3
 BAYAN (Bagong Alyansang Makabayan) v. Executive Secretary Zamora, 396 Phil. 623, 646-647 (2000).

4
 Public Interest Center, Inc. v. Roxas, G.R. No. 125509, January 31, 2007, 513 SCRA 457, 470.

5
 Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on Ancestral Domain (GRP),
G.R. Nos. 183591, 183752, 183893, 183951 & 183962, October 14, 2008, 568 SCRA 402, 457; Bagatsing v. Committee
on Privatization, PN[O]C, 316 Phil. 404, 419 (1995).

6
 Automotive Industry Workers Alliance (AIWA) v. Hon. Romulo, 489 Phil. 710, 719 (2005).

7
 338 Phil. 546, 580-581 (1997).

8
 Id. at 584.

9
 Id. at 584-585.

10
 Id. at 585.

11
 Ichong v. Hernandez, 101 Phil. 1155, 1191 (1957).