Case Summary (G.R. No. 27701)
Key Dates
• March 7, 2000 – President Estrada signs RA 8762 into law.
• October 11, 2000 – Petition filed before the Supreme Court.
• September 21, 2010 – En Banc decision rendered.
Applicable Law
• 1987 Philippine Constitution, Article II (Sections 9, 19, 20) and Article XII (Sections 10, 12, 13).
• Republic Act No. 8762 (Retail Trade Liberalization Act of 2000).
• Republic Act No. 1180 (Retail Trade Nationalization Act, repealed).
• Relevant jurisprudence on standing and economic regulation (e.g., Ta Aada v. Angara; Ichong v. Hernandez).
Legislative Background and Provisions of RA 8762
RA 8762 repealed the absolute prohibition on foreign engagement in retail trade under RA 1180, instead creating four investment categories:
• Category A (<US$2.5 M): exclusively Filipino.
• Category B (US$2.5 M–<US$7.5 M): up to 60% foreign equity for two years, then 100%.
• Category C (≥US$7.5 M): up to 100% foreign ownership, with a minimum investment of US$830,000 (or peso equivalent) for store establishment.
• Category D (≥US$250,000 per store of luxury goods): wholly foreign-owned.
The law also restored retail rights to natural-born Filipinos who had lost citizenship and subsequently reacquired it.
Petitioners’ Contentions
- RA 8762 contravenes Article II, Sections 9, 19 and 20 by failing to place the economy under Filipino control.
- Alien entry into retail would erode effective Filipino control of the national economy.
- Large foreign retailers would unfairly compete with small local vendors, threaten self-employment, and increase unemployment.
- RA 8762 resulted from undue influence by the World Bank–IMF as a loan condition.
- The law poses a clear and present danger of monopolies or restraints of trade.
Respondents’ Arguments
- Petitioners lack legal standing: no specific injury as taxpayers or legislators.
- No justiciable controversy: petitioners do not allege infringement of specific rights of their constituents.
- Presumption of constitutionality not overcome; cited provisions are non-self-executing.
- Constitution allows Congress discretion to open non-reserved industries to foreign investments upon NEDA recommendation.
Issues Presented
- Whether petitioners possess standing to challenge RA 8762.
- Whether RA 8762 violates the 1987 Constitution’s economic nationalist mandates.
Court’s Ruling on Standing
The Court affirmed that a challenger must show personal and substantial interest, typically via direct injury. Although petitioners did not demonstrate particularized harm, the Court invoked its discretion to relax standing requirements in matters of “transcendental importance” and proceeded to address the constitutional issues.
Interpretation of Constitutional Provisions
• Article II declarations (Sections 9, 19, 20) are non-self-executing and do not confer judicially enforceable rights.
• Article XII outlines economic nationalist principles—preference to Filipino enterprises, promotion of competitiveness, and regulation of foreign investments—but does not mandate a Filipino monopoly.
• The Constitution balances domestic preference with equality and reciprocity in trade, proscribing only unfair foreign competition.
Constitutionality of RA 8762
Congress exercised its discretion under Article XII, Section 10, to open specified retail segments to foreign investors. This regulation falls within the State’s police power and is neither arbitrary nor violative of due process, since it reduces previous restraints rather than imposes new ones on
Case Syllabus (G.R. No. 27701)
Facts and Procedural History
- On March 7, 2000, President Joseph E. Estrada signed Republic Act No. 8762, the Retail Trade Liberalization Act of 2000, repealing R.A. 1180’s absolute prohibition on foreign participation in retail trade.
- R.A. 8762 classifies retail enterprises into four investment-based categories:
• Category A: Investments below US$2,500,000, exclusively Filipino-owned.
• Category B: Investments between US$2,500,000 and US$7,500,000, 60% foreign equity for two years, thereafter 100% foreign equity.
• Category C: Investments of US$7,500,000 or more, allowing full foreign ownership, subject to a minimum of US$830,000 per store in Categories B and C.
• Category D: High-end or luxury goods enterprises with foreign investment of at least US$250,000 per store, fully foreign-owned. - The statute also extends equal retail rights to former natural-born Filipinos who have reacquired Philippine residence.
- On October 11, 2000, twenty members of the House of Representatives filed a petition challenging the constitutionality of R.A. 8762 on multiple grounds.
Petitioners’ Alleged Grounds
- R.A. 8762 violates Sections 9, 19, and 20, Article II, 1987 Constitution, which mandate a self-reliant, Filipino-controlled economy and protection against unfair competition.
- The law will lead to alien control of retail trade, compounding foreign dominance in other economic sectors.
- Entry of foreign giants (e.g., Walmart, K-Mart) threatens Filipino retailers and sari-sari store operators, increasing unemployment and destroying self-employment.
- The World Bank and IMF improperly conditioned loan releases on the passage of R.A. 8762.
- The statute poses a clear and