Title
King vs. Hernaez
Case
G.R. No. L-14859
Decision Date
Mar 31, 1962
A Filipino business owner sought to retain Chinese employees post-acquisition, challenged under Republic Act 1180 and Commonwealth Act 108; Supreme Court ruled employment of aliens prohibited, upholding nationalization of retail trade.
employment of aliens
retail establishment
foreign economic control

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

Factual Background

King purchased the retail grocery business known as "Import Meat and Produce" from Philippine Cold Stores, Inc. The establishment employed fifteen persons, twelve of whom were Filipinos and three of whom were Chinese who had been long-term employees of the prior owner. The three Chinese occupied the positions of purchaser and salesmen. Within three weeks after acquisition, King petitioned the President through the Secretary of Commerce and Industry for permission to retain the three Chinese employees pursuant to Section 2-A of Commonwealth Act No. 108, as amended.

Administrative Ruling

The Secretary of Commerce and Industry recommended denial of King’s request on the ground that aliens may not be appointed to operate or administer a retail business under Republic Act No. 1180, which confines retail trade to persons whose capital is wholly owned by citizens of the Philippines, and that the exception for technical personnel required prior authorization from the President. The President approved the Secretary’s recommendation, concluding that the positions of purchaser and salesmen were not technical within the meaning of Section 2-A.

Trial Court Proceedings

Following the administrative denial, King and the three Chinese employees instituted an action for declaratory relief, injunction, and mandamus on August 25, 1958 against the Secretary of Commerce and Industry and the Executive Secretary in the Court of First Instance of Manila. The trial court granted an ex parte preliminary injunction upon a P5,000 bond. Respondents answered, contending among other defenses that the petition failed to state a cause of action because the employment of the Chinese persons violated Section 1 of Republic Act No. 1180 and Section 2-A of Commonwealth Act No. 108, as amended; respondents maintained that the three Chinese were not technical personnel and that, in any event, presidential authorization had not been obtained. The motion to dismiss was denied, the case proceeded to trial, and the trial court ultimately held that King could employ noncitizens in positions not involving participation in management, operation, administration, or control, declared the preliminary injunction final, and ordered respondents to desist from interference.

Issues Presented

The central question was the proper interpretation of Section 1 of Republic Act No. 1180 in relation to Section 2-A of Commonwealth Act No. 108, as amended: whether the Anti-Dummy Law prohibits the employment of aliens in non-control positions in a retail establishment owned by a Filipino so as to bar the continued employment of the three Chinese petitioners as purchaser and salesmen.

Parties’ Contentions

Petitioners argued that neither Republic Act No. 1180 nor the Anti-Dummy Law forbade the employment of aliens in non-control positions; the Chinese employees testified that they performed no managerial or controlling functions, received fixed monthly salaries, worked under King’s directions and price tags fixed by King, and had been employed prior to enactment of Republic Act No. 1180. Respondents argued that Section 2-A forbids alien employment in both control and non-control positions because the statute links the antecedent terms "management, operation, administration or control" with the consequents "officer, employee, or laborer," and thus, by the construction redendo singula singulis, the prohibition extends to the entire scale of personnel activity; respondents emphasized that only technical personnel, and then only upon prior presidential authorization, were exempt.

Ruling of the Supreme Court

The Court agreed with respondents’ construction and reversed the decision of the trial court. The Supreme Court held that the Anti-Dummy Law must be read to cover the entire range of employment in enterprises the exercise of which is reserved to Filipinos and that the employment of aliens in any position related to management, operation, administration, or control — "whether as an officer, employee, or laborer" — is prohibited unless such employment falls within the technical-personnel exception with prior presidential authorization. The preliminary injunction issued by the trial court on December 6, 1958 was lifted and the petition for mandamus was dismissed with costs against appellees.

Legal Basis and Reasoning

The Court examined the nationalizing purpose of Republic Act No. 1180 (the Retail Trade Law), as previously upheld in Lao H. Ichong vs. Hernandez, and recognized that the Retail Trade Law sought a complete nationalization of retail trade’s ownership in order to prevent alien dominance that threatened national economic security. The Court observed that although the Retail Trade Law primarily addresses ownership, the Anti-Dummy Law (Commonwealth Act No. 108, as amended by Republic Act No. 134) functions as its complement to prevent circumvention of that nationalization through alien participation in management or employment. Applying the textual linkage in Section 2-A and the construction principle redendo singula singulis, the Court concluded that the statutory phraseology demonstrated legislative intent to bar aliens from employment in the full spectrum of positions connected to the management, operation, administration, or control of reserved enterprises. The Court rejected the trial court’s apprehension that the statutory prohibition unduly impaired a citizen’s constitutional right to employ

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