G.R. No. L-14859 - King vs. Hernaez

On January 1, 1957, Macario King, a naturalized Filipino citizen, acquired the business establishment known as "Import Meat and Produce," a grocery wholesale and retail business.
The business was previously owned by the Philippine Cold Stores, Inc.
At the time of acquisition, the business employed 15 persons: 12 Filipinos and 3 Chinese employees. The three Chinese employees had been working for the previous owner as purchaser and salesmen.

Three weeks after acquiring the business, King requested permission from the President of the Philippines to retain the three Chinese employees pursuant to Section 2-A of Commonwealth Act No. 108 (Anti-Dummy Law), via the Secretary of Commerce and Industry.
The Secretary recommended disapproval on the ground that aliens may not be appointed to operate or administer a retail business under Section 1 of Republic Act No. 1180 (Retail Trade Law), which mandates that capital must be wholly owned by Filipino citizens. The only exception is the employment of technical personnel authorized by the President.
The President approved the recommendation, ruling that the positions of purchaser and salesmen were not technical and therefore not exempt.

In response to the President’s disapproval, Macario King and the three Chinese employees filed a petition for declaratory relief, injunction, and mandamus with the Court of First Instance of Manila on August 25, 1958.
The petitioners alleged uncertainty about their rights under Republic Act No. 1180 and Commonwealth Act No. 108, as amended by Republic Act No. 134, given the rulings by the Department of Commerce and Industry and the Executive Secretary.
They claimed the rulings were illegal in light of:

Their respective situations and positions in the retail establishment.
The language and purposes of the laws cited.
The constitutional guarantee of employers' rights to hire and employees’ rights to work, regardless of citizenship.

The Court issued a writ of preliminary injunction ex parte upon the filing of a P5,000.00 bond by petitioners.
Respondents filed an answer arguing:

The petition did not state sufficient facts to constitute a cause of action.
The employment of the three Chinese employees violated Section 1 of the Retail Trade Act and Section 2-A of the Anti-Dummy Law.
The employees were not technical and lacked Presidential authorization.
The injunction requisites were not fulfilled.
Petitioners failed to demonstrate respondents had unlawfully neglected any duty justifying mandamus relief.

Petitioners filed a reply, followed by rejoinder and surrejoinder, debating these arguments.
A motion to dismiss by respondents was denied. Trial proceeded.

Macario King could employ any person (including non-Filipino persons) in any position not involving participation or intervention in the management, operation, administration, or control of the business.
The three Chinese employees were entitled to continue as purchaser and salesmen.
The writ of preliminary injunction shall be final, restraining respondents from interfering with petitioners' rights.
Respondents were ordered to allow petitioners to exercise their rights accordingly.

Respondents appealed the ruling to the Supreme Court.
The legal question turned on the interpretation of Section 1 of Republic Act No. 1180 and Section 2-A of Commonwealth Act No. 108, as amended.

Whether the employment of the three Chinese employees (aliens) in non-control positions such as purchaser and salesmen in a Filipino-owned retail establishment violates the Retail Trade Law (Republic Act No. 1180) and the Anti-Dummy Law (Commonwealth Act No. 108, as amended by Republic Act No. 134).

Whether the Anti-Dummy Law prohibits the employment of aliens not only in managerial or controlling positions but also in non-control or clerical positions in the retail business.

Whether the employment of non-technical aliens in a Filipino-owned retail trade is allowed without prior authorization from the President.

Whether the petition for declaratory relief, injunction, and mandamus by petitioners is proper despite the alleged breach of the Anti-Dummy Law.

Whether the trial court erred in issuing a writ of preliminary injunction allowing the continued employment of the three Chinese employees.