Title
Universal Corn Products, Inc. vs. Rice and Cord Board
Case
G.R. No. L-21013
Decision Date
Aug 17, 1967
A Filipino-owned corporation challenged the retroactive application of a law prohibiting alien employment in the rice and corn industry, claiming it violated due process and equal protection. The Supreme Court upheld the law, ruling it applied prospectively and was a valid exercise of police power to protect national interests.
universal corn products
rice and corn board
petition for declaratory relief

Case Summary (G.R. No. L-21013)

Statutory and Regulatory Framework

The amended petition anchored its allegations on the power vested in the National Rice and Corn Board by Section 6 of Republic Act No. 3018, under which the Board promulgated Resolution No. 10 on November 21, 1960. Resolution No. 10 contained a regulation stating that no person who is not a citizen of the Philippines shall be employed in any capacity in any Filipino-owned establishment engaged in any of the lines of activity in the rice and/or corn industry, except technical personnel whose employment may be authorized by the President upon recommendation of the Board.

The petition further alleged that Universal Corn Products, Inc. was a corporation wholly owned by citizens of the Philippines and that it engaged in lines of activity covered by Republic Act No. 3018 and Resolution No. 10. It also alleged that the corporation’s workforce numbered over 200, consisting of Filipinos except for the alien co-petitioners occupying positions such as executive vice-president, comptroller, sales manager, chief warehouseman, assistant plant superintendent, cashier, and sales supervisor. The petition contended that the alien employees had been employed “long before the enactment” of Republic Act No. 3018 and the promulgation of Resolution No. 10.

Amended Petition and the Relief Sought

The amended petition sought a judicial declaration that the construction placed by respondents on Resolution No. 10, together with Section 2-A of Commonwealth Act No. 108, was improper. The petitioners argued that if the regulation were construed so as to require dismissal of their alien employment on the basis of their continued employment after the law and regulation, such dismissal would effectively give the regulation a retroactive and, under the circumstances, unconstitutional effect. They alleged that the application of the regulation would deprive the aliens of livelihood without due process of law and would deny equal protection of the law, particularly to those similarly situated.

The amended petition stressed the purported propriety of declaratory relief to settle the correct interpretation that would avoid both retroactivity and constitutional infirmity.

Respondents’ Answer and Defenses

In their answer of March 9, 1961, respondents in effect admitted the factual allegations but denied the legal conclusions asserted by petitioners. Respondents disputed the claim of retroactivity. Their position was that upon the passage of Republic Act No. 3018 and the promulgation of the questioned regulation—which respondents described as a mere reproduction of the statutory command in Section 2-A of Commonwealth Act No. 108, as amended by Republic Act No. 134—employment of aliens in the regulated industry had become unlawful, rendering prior employment contracts legally impossible of performance.

Respondents likewise denied the allegations of unconstitutionality. They maintained that the statutory and regulatory measure was a valid police power regulation and, therefore, did not violate due process or equal protection. They further raised the propriety of the action for declaratory relief and the existence of a cause of action as additional procedural and substantive defenses. They ultimately prayed for dismissal with costs.

Decision of the Trial Court

Judge Guillermo Torres dismissed the amended petition. The judgment became the subject of the appeal, with petitioners alleging that the trial court erred in dismissing the request for declaratory relief and in refusing to declare the respondents’ construction illegal and unconstitutional.

Issues on Appeal

The Supreme Court framed the controversy around two connected legal questions: first, whether respondents’ interpretation and application of Resolution No. 10 in relation to Section 2-A of Commonwealth Act No. 108 should be considered retroactive in a manner that would justify judicial relief; and second, whether that construction and enforcement were unconstitutional, particularly for violation of due process and equal protection.

A further underlying issue was whether petitioners’ apprehension of an unconstitutional outcome was well founded, given the nature of the legislative and regulatory framework.

Ruling of the Supreme Court

The Supreme Court affirmed the judgment dismissing the petition. It held that there was no valid ground for reversal and ruled that the petitioners’ contention—namely, that respondents’ interpretation suffered from retroactivity and was tainted by unconstitutionality—was unpersuasive.

Legal Basis and Reasoning on Retroactivity

On the first issue, the Court invoked the established rule that statutes are construed as operating prospectively unless legislative intent for retrospective effect is expressly declared or necessarily implied from their language. It cited Montilla v. Augustinian Corp. (1913) and Segovia v. Noel (1925) for the doctrine that in cases of doubt, the doubt must be resolved against retroactivity and that courts should not hold a statute retroactive when the legislature has not said so.

The Court then emphasized the timing and effectivity provisions of Republic Act No. 3018. The Act was approved on August 2, 1960 and took effect on January 1, 1961, except for provisions with specifically designated exceptions. For rules and regulations, the Court noted that the Act allowed the Rice and Corn Board thirty days from approval to issue regulations. It further referred to the provision that rules and regulations necessary to carry out the Act were to take effect fifteen days after publication in a newspaper of general circulation printed in Manila, and it cited Section 6, Republic Act No. 3018 to underscore how the regulatory framework was designed to take effect as contemplated by the statute rather than to reach past effects.

To reinforce the distinction between retroactive application and legislation that simply becomes effective after its approval, the Court cited Central Azucarera de Don Pedro v. Court (May 31, 1967) in which the Court sustained the conclusion that an amendment was not being applied retroactively because its operation was from the effectivity of the applicable law, even though assessments and nonpayment preceded that date. The Court also cited Salcedo and Ignacio v. Carpio (1951) for the proposition that applying a law to affect the continuance in office, not before but after the law’s approval, does not constitute retroactivity merely because the appointment or relevant act occurred earlier.

The Court further referenced decisions in which constitutional objections premised on ex post facto or retroactive principles were rejected because the penalized acts or operative facts occurred after the law’s effectivity. It cited People v. Yu Bao and People v. Ong Tin. for the proposition that criminalization does not make a statute ex post facto when what is punished is conduct after effectivity, not conduct done earlier that was legal at the time.

On the facts alleged by petitioners, the Court’s analysis treated the operation of Resolution No. 10 as prospective in effect. It viewed the petitioners’ fear as essentially an argument against applying a newly effective prohibition to employment continued after the law and regulation took effect.

Reasoning on Alleged Unconstitutionality

On the second issue, the Court rejected petitioners’ constitutional attack. It stated that petitioners’ doubts and misgivings were unjustified, and it relied on the Court’s earlier ruling in King v. Hernaez (March 31, 1962) as controlling.

In King v. Hernaez, the Court had explained that nationalization of employment in the Philippines did not run counter to constitutional provisions because its aim was not to deprive citizens of rights but to promote and protect rights expressly accorded to citizens, including those encompassed in the right to life, liberty, and the pursuit of happiness. The Court in King v. Hernaez held that a nationalization policy founded on grounds of public policy could not

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