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

Case Summary (G.R. No. L-14859)

Petition for Declaratory Relief and Relief Sought

Following the presidential denial, King and the three Chinese employees filed a petition for declaratory relief, injunction, and mandamus, seeking clarification and protection of their legal rights under Republic Act No. 1180 (Retail Trade Act) and Commonwealth Act No. 108 as amended by Republic Act No. 134 (Anti-Dummy Law). They alleged the disapproval was illegal, contending the constitutional rights of the employer and employees to engage and work were being infringed.

Responses and Lower Court Rulings

Respondents, representing the government, opposed the petition, asserting that employing aliens in the retail business without presidential authorization violated pertinent laws, including prohibitions against alien participation in retail trade and management, even in non-control positions. The Court of First Instance issued a preliminary injunction in favor of petitioners and eventually ruled that Macario King could employ the three Chinese employees in non-control positions, upholding their right to continue working and restraining respondents from interference.

Issues Before the Supreme Court

The central legal question was the interpretation of Section 1 of Republic Act No. 1180 in relation to Section 2-A of Commonwealth Act No. 108, as amended. Specifically, whether aliens may be employed in non-control positions within Filipino-owned retail establishments without violating the Anti-Dummy Law and the Retail Trade Law.

Applicable Laws and Legislative Intent

Republic Act No. 1180 (Retail Trade Act): Prohibits persons not citizens of the Philippines or corporations not wholly owned by Filipinos from engaging directly or indirectly in retail trade, aiming at complete nationalization of retail business.
Commonwealth Act No. 108, as amended by Republic Act No. 134 (Anti-Dummy Law): Prohibits alien intervention in the management, operation, administration, or control of business reserved by law to Filipinos, including retail trade, with limited exceptions for technical personnel authorized by the President.

The Court reiterated that the laws seek to ensure both ownership and management of retail business remain Filipino to prevent economic domination by aliens and protect national security and welfare. Alien participation has historically involved abuses detrimental to the national economy and security.

Supreme Court’s Legal Analysis on Employment of Aliens in Retail Trade

The Court acknowledged the petitioners’ argument distinguishing ownership from management and control, suggesting that non-control alien employees were permissible. However, the Court rejected this narrow interpretation, agreeing with respondents that the words "management, operation, administration, or control," coupled with "officer, employee, or laborer," should be read distributively and comprehensively to include all alien employees regardless of position.

This expansive reading precludes employment of aliens in any capacity within Filipino-owned retail establishments, except for technical personnel who have prior presidential authorization. This interpretation prevents circumvention of laws intended to nationalize retail trade by exploiting non-control positions as loopholes.

Constitutional Considerations

The Court addressed concerns that prohibiting aliens from employment in retail trade might infringe on a Filipino citizen’s constitutional right to choose whom to employ and associate with. It emphasized that the right to associate protected under the Constitution pertains to voluntary associations for lawful purposes and does not extend to overriding legislated economic nationalization policies.

The nationalization of employment in retail trade is a valid exercise of police power, consonant with constitutional guarantees of life, liberty, and pursuit of happiness by promoting general welfare and protecting national interests. The Court ruled that limiting employment to Filipino citizens aligns with public policy to prevent economic domination harmful to national security.

Precedents and Analogous Jurisprudence

The Court referenced its prior decision affirming the constitutionality of the Retail Trade Law, highlighting the serious economic and security dangers posed by alien control over retail trade. It also cited United States and Philippine authorities upholding similar nationalization statutes to underscore that such restrictions are within the valid scope of state police power.

Procedural Aspects of the D

Case Syllabus (G.R. No. L-14859)

Factual Background and Procedural Posture

Macario King, a naturalized Filipino citizen, acquired on January 1, 1957, a business known as "Import Meat and Produce," previously owned by Philippine Cold Stores, Inc.
The business employed 15 persons: 12 Filipinos and 3 Chinese nationals who were retained from the previous owner.
King requested presidential permission to retain the three Chinese employees (a purchaser and two salesmen) pursuant to Section 2-A of Commonwealth Act 108.
The Secretary of Commerce and Industry recommended disapproval based on Republic Act No. 1180 barring aliens from engaging in retail trade except for technical personnel authorized by the President.
The President approved the recommendation, ruling that the three Chinese employees' positions were not technical and therefore could not be retained.
In response, King and the three Chinese employees filed a petition for declaratory relief, injunction, and mandamus before the Court of First Instance of Manila.
They claimed uncertainty and doubt as to their rights under Republic Act No. 1180 and Commonwealth Act No. 108 as amended by Republic Act No. 134.
The lower court issued an ex parte preliminary injunction in favor of the petitioners.
Respondents filed an answer challenging sufficiency of cause of action, asserting petitioners were in breach of law by employing aliens in prohibited positions.
The trial court ultimately ruled in favor of petitioners, allowing the employment of the three Chinese employees in non-management roles.
Respondents appealed to the Supreme Court.

Issues Presented

Whether the employment of aliens in non-control positions in a retail establishment is prohibited under Section 1 of Republic Act No. 1180 (Retail Trade Law) in relation to Section 2-A of Commonwealth Act No. 108, as amended by Republic Act No. 134 (Anti-Dummy Law).
Whether the Anti-Dummy Law prohibits the employment of aliens in any capacity, including non-management or non-control positions.
Whether the petition for declaratory relief is barred due to alleged breach of law by the petitioners prior to filing the complaint.
The constitutional validity of restricting employment of aliens in retail trade.

Legal Provisions Involved

Republic Act No. 1180, Section 1: Prohibits persons not Philippine citizens, or entities not wholly Filipino-owned, from engaging directly or indirectly in retail trade.
Commonwealth Act No. 108, Section 2-A (as amended by RA 134): Prohibits aliens from holding any position involving management, operation, administration, or control of businesses reserved for Filipinos, except technical personnel authorized by the President.
The law frames employment restrictions to ensure nationalization of retail trade and prevent evasion by alien intervention.

Court's Interpretation of the Retail Trade Law and Anti-Dummy Law

The Retail Trade Law aims to nationalize retail trade by confining ownership to Filipino citizens or Filipin