Case Summary (G.R. No. L-7995)
Key Dates
Cutoff for exceptions: May 15, 1954
Approval of RA 1180: June 19, 1954
Decision date: May 31, 1957
Applicable Law
Republic Act No. 1180 (“An Act to Regulate the Retail Business”)
Philippine Constitution of 1935 (police power, due process, equal protection)
I. Legislative Provisions of RA 1180
- Prohibits non-citizens and entities not wholly owned by Filipino citizens from retail trade.
- Grandfathers aliens engaged as of May 15, 1954: natural persons until death/retirement; juridical persons for ten years or until corporate term expiry.
- Exempts U.S. citizens and U.S. entities.
- Forfeitures of licenses for violations of nationalization, economic control, weights and measures, labor, and related laws.
- Bars existing alien retailers from establishing additional branches.
- Requires registration by alien retailers: nature of business, assets/liabilities, offices.
- Permits heirs of deceased aliens to continue retail operations for six months for liquidation.
II. Grounds of Challenge and Government Response
Petitioner’s Contentions
• Denial of equal protection; deprivation of liberty and property without due process.
• Title does not express subject matter.
• Violation of international and treaty obligations.
• Conflict with Sections 1 & 5, Article XIII and Section 8, Article XIV of the Constitution.
Respondents’ Answers
• Valid exercise of police power for national economic survival.
• Single subject appropriately stated in title.
• No infringement of treaties.
• Inheritance rules affect form but not property value; corporation capitalization rules are constitutional.
III. Police Power and Constitutional Limits
Scope
– Intrinsically broad; essential for State survival and welfare.
Limitations
• Due Process Clause (Art. III, Sec. 1, 1935 Const.) demands laws be reasonable, non-arbitrary, and substantially related to public welfare.
• Equal Protection Clause requires reasonable classification, applying alike to all within the class, with a rational basis for distinctions.
IV. Factual Basis for Nationalization
Official statistics (1941–1951) demonstrate increasing alien share in retail assets and sales.
Aliens, though fewer in number, invested more capital and generated higher gross sales than Filipinos.
1953–1935 Constitutional Convention records express explicit concern over alien economic control.
V. Threats from Alien Dominance
– Potential concerted manipulation of prices, hoarding of essentials (rice, corn), and market cornering.
– Public dependence on alien retailers for daily necessities.
– Risk of economic coercion, especially in emergencies, given aliens’ lack of permanent allegiance.
VI. Equal Protection Analysis
Classification by citizenship is a recognized basis under police power.
Courts defer to legislature where classification is real, reasonable, and uniformly applied (e.g., Smith Bell & Co. v. Natividad).
Alienage distinction here is supported by factual findings of divergent objectives, loyalty, and business practices.
VII. Due Process Analysis
RA 1180’s measures are reasonably necessary to achieve national economic independence.
Prospective operation and grandfather clauses respect vested rights.
Legislative determination of necessity and means is conclusive absent clear arbitrariness.
VIII. Title Sufficiency
The title’s use of “regulate” encompasses prohibition and nationalization as regulatory tools.
General terms in titles