ACT No.
3952
THE BULK SALES LAW (as amended)
AN ACT TO REGULATE THE SALE, TRANSFER, MORTGAGE OR
ASSIGNMENT OF GOODS, WARES, MERCHANDISE, PROVISIONS OR
MATERIALS, IN BULK, AND PRESCRIBING PENALTIES FOR THE
VIOLATION OF THE PROVISIONS THEREOF
Section 1. This Act shall be known as "The Bulk Sales Law."
Sec. 2. Sale and transfer in bulk. Any sale, transfer, mortgage or assignment of a stock
of goods, wares, merchandise, provisions, or materials otherwise than in the ordinary course
of trade and the regular prosecution of the business of the vendor, mortgagor, transferor, or
assignor, or sale, transfer, mortgage or assignment of all, or substantially all, of the business
or trade theretofore conducted by the vendor, mortgagor, transferor, or assignor, or of all, or
substantially all, of the fixtures and equipment used in and about the business of the vendor,
mortgagor, transferor, or assignor, shall be deemed to be a sale and transfer in bulk, in
contemplation of this Act: Provided, however, That if such vendor, mortgagor, transferor or
assignor, produces and delivers a written waiver of the provisions of this Act from his
creditors as shown by verified statements, then, and in that case, the provisions of this
section shall not apply.
Sec. 3. Statement of creditors. It shall be the duty of every person who shall sell,
mortgage, transfer, or assign any stock of goods, wares, merchandise, provisions or
materials in bulk, for cash or on credit, before receiving from the vendee, mortgagee, or his,
or its agent or representative any part of the purchase price thereof, or any promissory note,
memorandum, or other evidence therefor, to deliver to such vendee, mortgagee, or agent, or
if the vendee, mortgagee, or agent be a corporation, then to the president, vice-president,
treasurer, secretary or manager of said corporation, or, if such vendee or mortgagee be a
partnership firm, then to a member thereof, a written statement, sworn to substantially as
hereinafter provided, of the names and addresses of all creditors to whom said vendor or
mortgagor may be indebted, together with the amount of indebtedness due or owing, or to
become due or owing by said vendor or mortgagor to each of said creditors, which
statement shall be verified by an oath to the following effect:
PHILIPPINE ISLANDS
PROVINCE OR CITY OF _________________}
Before me, the undersigned authority, personally appeared __________________
(vendor, mortgagor, agent or representative, as the case may be), bearing cedula
No. ____________ issued at ___________ on the day of _____________ who, by
me being first duly sworn, upon his oath, deposes and states that the foregoing
statement contains the names of all of the creditors of ________________
(vendor, or mortgagor) together with their addresses, and that the amount set
opposite each of said respective names, is the amount now due and owing, and
which shall become due and owing by _____________ (vendor or mortgagor) to
such creditors, and that there are no creditors holding claims due or which shall
become due, for or on account of goods, wares, merchandise, provisions or
materials purchased upon credit or on account of money borrowed, to carry on the
business of which said goods, wares, merchandise, provisions or materials are a
part, other than as set forth in said statement.
______________________
Subscribed and sworn to before me this _______ day of ______, 19___, at
________
Sec. 4. Fraudulent and void sale, transfer or mortgage. Whenever any person shall sell,
mortgage, transfer, or assign any stock of goods, wares, merchandise, provisions or
materials, in bulk, for cash or on credit, and shall receive any part of the purchase price, or
any promissory note, or other evidence of indebtedness for said purchase price or advance
upon mortgage, without having first delivered to the vendee or mortgagee or to his or its
agent or representative, the sworn statement provided for in section three hereof, and
without applying the purchase or mortgage money of the said property to the pro rata
payment of the bona fide claim or claims of the creditors of the vendor or mortgagor, as
shown upon such sworn statement, he shall be deemed to have violated this Act, and any
such sale, transfer or mortgage shall be fraudulent and void.
Sec. 5. Inventory. It shall be the duty of every vendor, transferor, mortgagor, or assignor,
at least ten days before the sale, transfer or execution of a mortgage upon any stock of
goods, wares, merchandise, provisions or materials, in bulk, to make a full detailed
inventory thereof and to preserve the same showing the quantity and, so far as is possible
with the exercise of reasonable diligence, the cost price to the vendor, transferor, mortgagor
or assignor of each article to be included in the sale, transfer or mortgage, and notify every
creditor whose name and address is set forth in the verified statement of the vendor,
transferor, mortgagor, or assignor, at least ten days before transferring possession thereof,
personally or by registered mail, of the price, terms conditions of the sale, transfer,
mortgage, or assignment.
Sec. 6. Any vendor, transferor, mortgagor or assignor of any stock of goods, wares,
merchandise, provisions or materials, in bulk, or any person acting for, or on behalf of any
such vendor, transferor, mortgagor, or assignor, who shall knowingly or willfully make, or
deliver or cause to be made or delivered, a statement, as provided for in section three
hereof, which shall not include the names of all such creditors, with the correct amount due
and to become due to each of them, or shall contain any false or untrue statement, shall be
deemed to have violated the provisions of this Act.
Sec. 7. It shall be unlawful for any person, firm or corporation, as owner of any stock of
goods, wares, merchandise, provisions or materials, in bulk, to transfer title to the same
without consideration or for a nominal consideration only.
Sec. 8. Nothing in this Act contained shall apply to executors, administrators, receivers,
assignees in insolvency, or public officers, acting under judicial process.
Sec. 9. The sworn statement containing the names and addresses of all creditors of the
vendor or mortgagor provided for in section three of this Act, shall be registered in the
Bureau of Commerce. For the registration of each such sworn statement a fee of five pesos
shall be charged to the vendor or mortgagor of the stock of goods, wares, merchandise,
provisions or materials, in bulk.
Sec. 10. The provisions of this Act shall be administered by the Director of the Bureau of
Commerce and Industry, who is hereby empowered, with the approval of the Department
Head, to prescribe and adopt from time to time such rules and regulations as may be
deemed necessary for the proper and efficient enforcement of the provisions of this Act.
Sec. 11. Any person violating any provision of this Act shall, upon conviction thereof, be
punished by imprisonment not less than six months, nor more than five years, or fined in
sum not exceeding five thousand pesos, or both such imprisonment and fine, in the
discretion of the court.
Sec. 12. This Act shall take effect on its approval.
Approved: 01 December 1972
REPUBLIC ACT NO. 8762
AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS, REPEALING FOR
THE PURPOSE REALING FOR THE PURPOSE REPUBLIC ACT NO. 1180, AS
AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines of
Representatives of the Philippines in Congress assembled:
Section 1. Title This Act shall be known as the "Retail Trade Liberalization Act of 2000."
Section 2. Declaration of Policy. It is the policy of the State to promote consumer welfare
in attracting promoting and welcoming productive investment that will bring down price for
the Filipino consumer, create more jobs, promote tourism, assist small manufacturers,
stimulate economic growth and enable Philippine goods and services to become globally
competitive through the liberalization of the retail trade sector.
Pursuant to this policy, the Philippine retail industry is hereby liberalized to encourage
Filipino and competitive retail trade sector in the interest of empower the Filipino consumer
through lower prices, higher quality goods, better services and wider choices.
Section 3. Definition. - As used in this Act.
(1) "Retail trade" shall mean any act, occupation or calling of habitually selling
direct to the general public merchandise, commodities or good for consumption,
but the restriction of this law shall not apply to the following:
(a) Sales by manufacturer, processor, laborer, or worker, to the general
public the products manufactured, processed or products by him if his
capital dose not exceed One hundred thousand pesos(100,000.00);
(b) Sales by a farmer or agriculturist selling the products of his farm;
(c) Sales in restaurant operations by a hotel owner or inn-keeper
irrespective of the amount capital: provided, that the restaurant is
incidental to the hotel business; and
(d) Sales which are limited only to products manufactured, processed or
assembled by a manufactured, processed or assembled by a
manufacturer though a single outlet, irrespective of capitalization.
(2) "High-end or luxury goods" shall refer to goods which are not necessary for
life maintenance and whose demand is generated in large part by the higher
income groups. Luxury goods shall include, but are not limited to products such
as; jewelry, branded or designer clothing and footwear, wearing apparel, leisure
and sporting goods, electronics and other personal effects.
Section 4. Treatment of Natural Born Citizen Who Has Lost His Philippine Citizenship. - A
natural-born citizen of the Philippines who resides in the Philippines shall be granted the
same rights as Filipino citizens for purposes of this Act.
Section 5. Foreign Equity Participation. - Foreign-owned partnerships, associations and
corporation formed and organized under the laws of the Philippines may, upon registration
with the Securities and Exchange Commission (SEC) and the Department of Trade and
Industry (DTI), or in case of foreign owned single proprietorships, with the DTI, Engage or
invest in the retail trade business, subject to the following categories.
Category A Enterprises with paid-up capital of the equivalent in
Philippine Peso of the than Two million five hundred thousand US
 dollars (US$2,500,000.00) shall be reserved exclusively for Filipino thereafter, they may acquire the remaining percentage consistent with the allowable foreign
citizens and corporations wholly owned by Filipino citizens. participation as herein provided.

Category B Enterprises with a minimum paid-up capital of the
equivalent in Philippine Pesos of two million five hundred thousand US
dollar (US$2,500,000.00) but less than Seven million five hundred
thousand US dollars (US$7,500,000.00) may be wholly owned by
foreigners except for the first two (2) years after the effectivity of this
Act wherein foreign participation shall be limited to not more than sixty
percent (60%) of total equity.
Section 7. Public Offering of Shares of Stock. All retail trade enterprises under Categories
B and C in which foreign ownership exceeds eighty percent (80%) of equity shall offer a
minimum of thirty percent (30%) of their equity to the public through any stock exchange in
the Philippine within eight (8) years from their start of operations.
Section 8. Qualification of Foreign Retailers. - No foreign retailer shall be allowed to
engage in retail trade in the Philippine unless all the following qualifications are met:

Category C Enterprises with a paid-up capital of the equivalent in
Philippine Pesos of Seven million five hundred thousand US dollars
(US$7,500,000.00), or more may be wholly owned by foreigners:
Provided, however, That in no case shall the investments for
establishing a store in vestments for establishing a store in Categories B
and C be less than the equivalent in Philippine pesos of Eight hundred
thirty thousand US dollars (US$830,000.00).
(a) A minimum of Two hundred million US dollar (US$200,000,000.00) net worth
in its parent corporation for Categories B and C, and Fifty million US dollar
(US$50,000,000.00) net worth in its parent corporation for category D;
(b) (5) retailing branches or franchises in operation anywhere around the word
unless such retailer has at least one (1) store capitalized at a minimum of Twenty-
five million US dollars (US$25,000,000.00);

Category D Enterprises specializing in high-end or luxury products (c) Five (5)-year track record in retailing; and
with a paid-up capital of the equivalent in Philippine Pesos of Two
hundred fifty thousand US dollars (US$250,000.00) per store may be
(d) Only nationals from, or juridical entities formed or incorporated in Countries
wholly owned by foreigners.
which allow the entry of Filipino retailers shall be allowed to engage in retail
trade in the Philippines.
The foreign investor shall be required to maintain in the Philippines the full amount of the
prescribed minimum capital unless the foreign investor has notified the SEC and the DTI of
The DTI is hereby authorized to pre-qualify all foreign retailers, subject to the provisions of
its intention to repatriate its capital and cease operations in the Philippines. The actual use in
this Act, before they are allowed to conduct business in the Philippine.
Philippine operations of the inwardly remitted minimum capital requirement shall be
monitored by the SEC.
The DTI shall keep a record of Qualified foreign retailers who may, upon compliance with
law, establish retail stores in the Philippine. It shall ensure that parent retail trading
Failure to maintain the full amount of the prescribed minimum capital prior to notification
company of the foreign investor complies with the qualifications on capitalization and track
of the SEC and the DTI, shall subject the foreign investor to penalties or restrictions on any
record prescribed in this section
future trading activities/business in the Philippines.

The Inter- Agency Committee on Tariff and Related Matters Authority (NEDA) Board shall
Foreign retail stores shall secure a certification from the Bangko Sentral ng Pilipinas (BSP)
formulate and regularly update a list of foreign retailers of high-end or luxury goods and
and the DTI, which will verify or confirm inward remittance of the minimum required
render an annual report on the same to Congress.
capital investments.

Section 9. Promotion of Locally Manufactured Products. - For ten (10) year after the
Section 6. Foreign Investors Acquiring Shares of Stock of Local Retailers. - Foreign
effectivity of this Act, at least thirty percent (30%) of the aggregate cost of the stock
investors acquiring shares from existing retail stores whether or not publicly listed whose
inventory of foreign retailers falling under Categories B and C and ten percent (10%) for
net worth is in the excess of the peso equivalent of Two million five hundred thousand US
category D shall be made in the Philippines.
dollars (US$2,500,000.00) may purchase only up to a maximum of sixty percent (60%) of
the equity thereof within the first two (2) years from the effectivity of this Act and
Section 10. Prohibited Activities of Qualified Foreign Retailers. Qualified foreign
retailers shall not be allowed to engage in certain retailing activities outside their accredited
stores through the use of mobile or rolling stores or carts, the use of sales representatives,
door-to-door selling, restaurants and sari-sari stores and such other similar retailing
activities: Provided, That a detailed list of prohibited activities shall hereafter be formulated
by the DTI
Section 11. Implementing Agency: Rule and Regulations. The monitoring and regulation
of foreign sole proprietorships, partnerships, associations or corporations allowed to engage
in retail trade shall be the responsibility of the DTI. This shall include resolution of
conflicts.
The DTI, in coordination with the SEC, the NEDA and the BSP, shall formulate and issue
the implementing rules and regulation necessary to implement this Act within ninety (90)
days after its approval.
Section 12. Penalty Clause. - Any person who shall be Found guilty of Violation of any
provision of this Act shall be punished by imprisonment of not less that six (2) years and
one (1) day but not more than eight (8) years, and a fine of not less than One million pesos
(P1,000,000.00) but not more that Twenty million pesos (P20,000,000.00) In the case of
associations, partnerships or corporations, the penalty shall be imposed upon its partners,
president, directors, manager and other officers responsible for the violation. If the offender
is not a citizen of the Philippines he shall be deported immediately after service of sentence.
If the Filipino of fender is a public officer or employee, he shall, in addition to the penalty
prescribed herein, suffer dismissal and permanent disqualification from public office
Section 13. Repealing Clause. Republic Act No. 1180, as amended, is hereby repealed.
Republic Act No. 3018, as amended, and all other laws, executive orders, rules and
regulations or parts thereof inconsistent with this Act are repealed or modified accordingly.
Section 14. Separability Clause. If any provisions of this Act shall be held
unconstitutional, the other provisions not otherwise affected thereby shall remain in force
and effect.
Section 15. Effectivity. This act shall take effect fifteen (150 days after its approval and
publication in at least two (2) newspapers of general circulation in the Philippines.
Approved: March 07, 2000
COMMONWEALTH ACT No. 108
AN ACT TO PUNISH ACTS OF EVASION OF THE LAWS ON THE
NATIONALIZATION OF CERTAIN RIGHTS, FRANCHISES OR PRIVILEGES
Be it enacted by the National Assembly of the Philippines
Section 1. Penalty In all cases in which any constitutional or legal provisions requires
Philippine or any other specific citizenship as a requisite for the exercise or enjoyment of a
right, franchise or privilege, any citizen of the Philippines or of any other specific country
who allows his name or citizenship to be used for the purpose of evading such provision,
and any alien or foreigner profiting thereby, shall be punished by imprisonment for not less
than five nor more than fifteen years, and by a fine of not less than the value of the right
franchise or privilege, which is enjoyed or acquired in violation of the provisions hereof but
in no case less than five thousand pesos.
The fact that the citizen of the Philippines or of any specific country charged with a
violation of this Act had, at the time of the acquisition of his holdings in the corporations or
associations referred to in section two of this Act, no real or personal property, credit or
other assets the value of which shall at least be equivalent to said holdings, shall be
evidence of a violation of this Act.1
Section 2. Simulation of minimum capital stock In all cases in which a constitutional or
legal provision requires that, in order that a corporation or association may exercise or enjoy
a right, franchise or privilege, not less than a certain per centum of its capital must be
owned by citizens of the Philippines or of any other specific country, it shall be unlawful to
falsely simulate the existence of such minimum stock or capital as owned by such citizens,
for the purpose of evading said provision. The president or managers and directors or
trustees of corporations or associations convicted of a violation of this section shall be
punished by imprisonment of not less than five nor more than fifteen years, and by a fine
not less than the value of the right, franchise or privilege, enjoyed or acquired in violation of
the provisions hereof but in no case less than five thousand pesos. 2
Section 2-A. Unlawful use, Exploitation or enjoyment Any person, corporation, or
association which, having in its name or under its control, a right, franchise, privilege,
property or business, the exercise or enjoyment of which is expressly reserved by the
Constitution or the laws to citizens of the Philippines or of any other specific country, or to
corporations or associations at least sixty per centum of the capital of which is owned by
such citizens, permits or allows the use, exploitation or enjoyment thereof by a person,
corporation or association not possessing the requisites prescribed by a the Constitution or
the laws of the Philippines; or leases, or in any other way, transfers or conveys said right,
franchise, privilege, property or business to a person, corporation or association not
otherwise qualified under the Constitution, or the provisions of the existing laws; or in any
manner permits or allows any person, not possessing the qualifications required by the
Constitution, or existing laws to acquire, use, exploit or enjoy a right, franchise, privilege,
property or business, the exercise and enjoyment of which are expressly reserved by the
Constitution or existing laws to citizens of the Philippines or of any other specific country,
to intervene in the management, operation, administration or control thereof, whether as an
officer, employee or laborer therein with or without remuneration except technical
personnel whose employment may be specifically authorized by the Secretary of Justice,
and any person who knowingly aids, assists or abets in the planning consummation or
perpetration of any of the acts herein above enumerated shall be punished by imprisonment
for not less than five nor more than fifteen years and by a fine of not less than the value of
the right, franchise or privilege enjoyed or acquired in violation of the provisions hereof but
in no case less than five thousand pesos: Provided, however, That the president, managers
or persons in charge of corporations, associations or partnerships violating the provisions of
this section shall be criminally liable in lieu thereof: Provided, further, That any person,
corporation or association shall, in addition to the penalty imposed herein, forfeit such right,
franchise, privilege, and the property or business enjoyed or acquired in violation of the
provisions of this Act: And provided, finally, That the election of aliens as members of the
board of directors or governing body of corporations or associations engaging in partially
nationalized activities shall be allowed in proportion to their allowable participation or share
in the capital of such entities.3
Section 2-B. Any violation of the provisions of this Act by the spouse of any public official,
if both live together, shall be cause for the dismissal of such public official. 4itc@lawphil
Section 2-C. The exercise, possession or control by a Filipino citizen having a common-law
relationship with an alien of a right, privilege, property or business, the exercise or
enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the
Philippines, shall constitute a prima facie evidence of violation of the provisions of Section
2-A hereof.5
Section 3. Any corporation or association violating any of the provisions of this Act shall,
upon proper court proceedings, be dissolved.
Section 3-A. Reward to informer. In case of conviction under the provisions of this Act,
twenty-five per centum of any fine imposed shall accrue to the benefit of the informer who
furnishes to the Government original information leading to said conviction and who shall
be ascertained and named in the judgment of the court. If the informer is a dummy, who
shall voluntarily take the initiative of reporting to the proper authorities any violation of the
provisions of this Act and assist in the prosecution, resulting in the conviction of any person
or corporation profiting thereby or involved therein, he shall be entitled to the reward hereof
in the sum equivalent to twenty-five per centum of the fine actually paid to or received by
the Government, and shall be exempted from the penal liabilities provided for in this Act. 6
Section 4. This Act shall take effect upon its approval.
itc-alfApproved, October 30, 1936.
G.R. No. L-51377 June 27, 1988
INVESTMENT & DEVELOPMENT, INC., petitioner,
vs.
COURT OF APPEALS, RAYMUNDO GATPAYAT, AGENCIA DE EMPENOS DE
AGUIRRE, and AGUIRRE INCORPORATED, respondents.
This petition seeks a modification of the decision of the Court of Appeals which affirmed in
toto that of the Court of Agrarian Relations, Seventh Regional District, Branch I, Pasig,
Rizal insofar as the complaint against Raymundo Gatpayat was ordered dismissed.
The facts of the case are not disputed.
On January 14,1965, private respondent Raymundo Gatpayat sold the land subject matter of
this case to petitioner Investment and Development, Inc. (IDI) for P122,769.50 payable in
three installments of P36,830.85, P24,533.90 and P61,384.75, the last amount to be paid
within one year from and after the date of issuance of the Original Certificate of Title over
the property which respondent Gatpayat obligated himself to secure. On February 20, 1966,
Original Certificate of Title No. 5019 was issued in the name of respondent Gatpayat. On
January 30,1967, Transfer Certificate of Title No. 180376 was issued in Investment and
Development, Inc.'s name.
The subject land is agricultural with an area of three-and-a-half hectares, more or less,
located in Talon, Las Pias Rizal. Originally, the land was owned by one Francisca
Tolentino. It had Sotero Domingo Ramirez as tenant. When old age ensued, Sotero asked
for his replacement in the person of his son, Jose Ramirez.
In 1964, respondent Gatpayat bought the land from the original owner on the condition that
the annual rental of ten cavans of palay given by tenant Ramirez would pertain to Gatpayat
only after full payment of the purchase price. Subsequently, respondent Gatpayat completed
his payments for the land and entered into an agreement with tenant Ramirez that the latter
shall sell the ten cavans of palay and give the proceeds to him.
On March 8, 1971, the petitioner sold the land to respondent Agencia de Empenos de A.
Aguirre, Inc. for the amount of P456,001.60. As a result thereof, Transfer Certificate of Title
No. 317815 was issued in the vendee's name. On April 6,1973, Transfer Certificate of Title
No. 403109 was issued in the name of the present owner, respondent A. Aguirre, Inc.
In April 1972, tenant Ramirez was forced to stop cultivating the land in question because of
the bulldozing caused by respondent A. Aguirre, Inc.
In a complaint filed by tenant Ramirez against the petitioner and the private respondent,
payment for disturbance compensation was prayed for as a consequence of the bulldozing
of the land. The petitioner, in turn filed a crossclaim against respondent Gatpayat in case of
a judgment adverse to it while respondents Agencia and Aguirre, Inc. filed a cross-claim
against the petitioner.
After the case was submitted for decision, the agrarian court rendered a decision in favor of
tenant Ramirez with the following dispositive portion, to wit:
FOR ALL THE FOREGOING CONSIDERATIONS judgment is hereby
rendered in the tenor the disposition herein below provided:
 1. Declaring plaintiff Jose Ramirez as the true and lawful agricultural
tenant of Raymundo Gatpayat over the landholding in question with an
approximate area of 35,077 square meters situated at Talon, Las Pias
Metro Manila and presently owned by defendant A. Aguirre, Inc.;
2. Ordering defendant A. Aguirre, Inc. to pay and deliver plaintiff the
amount of P24,500.00 as payment for disturbance compensation;
3. Ordering A. Aguirre, Inc. to pay plaintiff P2,000.00 as attorney's fees;
4. Ordering Investment and Development Inc. to pay A. Aguirre, Inc.
the amount of P24,000.00 as damages;
5. Ordering Investment and Development Inc. to pay A. Aguirre, Inc.
P2,000.00 as attorney's fees;
6. Dismissing the complaint against defendant Raymundo Gatpayat;
7. Dismissing plaintiffs claim for moral and exemplary damages for
insufficiency of evidence; and
8. Dismissing the claim of A. Aguirre, Inc. for moral and exemplary
damages against Investment and Development, Inc.
IT IS SO ORDERED. (pp. 11-12, Rollo)
From the above decision, only the petitioner appealed to the Court of Appeals alleging,
among others, that respondent Gatpayat should have been liable to it considering that he
violated his warranty "that the land is free from all liens and encumbrances;" that the
agrarian court erred in declaring that tenant Ramirez was an agricultural lessee of petitioner;
and that the court's ruling was contrary to law, equity and fair play in that it caused unjust
enrichment on the part of respondent Gatpayat by ordering the payment of disturbance
compensation at petitioner's expense.
On June 14, 1979, the Court of Appeals promulgated a decision affirming the agrarian court
in all respects based on the following grounds:
The warranty made by IDI in the "Deed of Absolute Sale" in favor of
Agencia dated March 8, 1971, it provides among others that the
property is "free from all liens, adverse claim, encumbrances, claims of
any tenant and/or agricultural workers, either arising as compensation
for disturbance or from improvements" including compliance 'with all
the requirements for the provisions of the Tenancy Law, the Land
Reform Code and other pertinent laws of the Republic of the
Philippines ..." With the findings that plaintiff is a true and lawful tenant
and under the above-mentioned warranties, IDI should, therefore, be
held liable for the same. Hence, the counterclaim of Agencia and
Aguirre against IDI is proper and compensable." (pp. 15-16, Rollo)
The warranty made by Gatpayat in favor of the IdI, as contained in the
"Deed of Absolute Sale" duly executed on January 30, 1967 (Exhibit
"2," IDI; Exhibit "2," Gatpayat and Exhibit "5," Aguirre) states that the
property was 'free from all liens and encumbrances." In Civil law and as
used and understood in ordinary legal parlance, a lien and/or
encumbrance is synonymous to 'gravamen, "carga, "hypoteca" or
'Privilegium' and does not cover tenancy. In other words, unless so
specifically stated, tenancy cannot be considered a lien or encumbrance.
In the absence of such a showing, and inasmuch as Gatpayat did not
warrant the existence of tenancy, he cannot be held liable for violation
of his warranty. (p. 16, Rollo)
Since the leasehold relationship between the plaintiff and Gatpayat has
been established on the land in question, the same cannot be terminated
by the sale of the land to the appellant (IDI). ... This is the underlying
principle of security of tenure of the leaseholder enshrined in our
agrarian laws." (p. 18-19, Rollo)
The petitioner appealed to this Court by way of certiorari with a lone assignment of error
that reads:
THE HONORABLE COURT OF APPEALS ERRED IN NOT
HOLDING THAT RESPONDENT RAYMUNDO GATPAYAT WAS
LIABLE TO PETITIONER FOR BREACH OF SELLER'S
WARRANTY UNDER ARTICLE 1547 (2) IN RELATION TO
ARTICLE 18 OF THE CIVIL CODE. (p. 1, Petitioner's Brief)
The only issue presented in this petition is whether or not respondent Gatpayat as seller of
the land in question violated his warranty to the petitioner which bought the land "free from
all liens and encumbrances."
The petitioner no longer questions the finding of the appellate court that tenant Ramirez is
entitled to a disturbance compensation. It only maintains that reimbursement by respondent
Gatpayat of said compensation in its favor should be ordered because the tenancy
relationship between respondent Gatpayat and tenant Ramirez falls under the term "hidden
faults or defects" which respondent Gatpayat warranted against in the sale of the land to the
petitioner by virtue of Article 1547, sub-paragraph (2) of the Civil Code.
We find no merit in the petitioner's position.
It is axiomatic that factual findings of the Court of Appeals are conclusive on the parties and
reviewable by us only when the case falls within any of the recognized exceptions which is
not the situation obtaining in this petition (See Chua Giok Ong v. Court of Appeals, 149
SCRA 115; Dulos Realty and Development Corporation v. Court of Appeals, et al., G.R.
No. 76668 promulgated on January 28, 1988). The appellate court in affirming the lower
court's decision, has clearly dissected the facts and analyzed the phraseologies of the
warranties contained in the contract between respondent Gatpayat and petitioner petitioner,
on the one hand, and petitioner and respondent Agencia de Empenos de Aguirre, on the
other. We agree with the disparity in the terms used and its consequent effects as pointed out
in the questioned decision.
The petitioner does not dispute the fact that the Deed of Absolute Sale which it executed
with Gatpayat simply warranted that the subject land was "free from all liens and
encumbrances." Neither does the petitioner deny that to its buyer, respondent Agencia de
Empenos de Aquirre, it warranted that the land was "free from all liens, adverse claims,
encumbrances, claims of any tenant and/or agricultural workers, either arising as
compensation for disturbance or from improvements." The distinction in the phraseology is
not an idle one.
We have held in the case of Pilar Development Corporation v. Intermediate Appellate
Court (146 SCRA 215), that:
When the facts are undisputed, the question of whether or not the
conclusion drawn therefrom by the Court of Appeals is correct, is a
question of law cognizable by the Supreme Court (Comments on the
Rules of Court, Moran 1979 Edition, Vol. II, p. 474 citing the case of
Commissioner of Immigration v. Garcia, L-28082, June 28, 1974).
However, all doubts, as to the correctness of such conclusions will be
resolved in favor of the Court of Appeals (Id.), citing the case of Luna v.
Linatoc, 74 Phil. 15.
The reimbursement of the payment for disturbance compensation by the petitioner to
respondent Agencia de Empenos de Aguirre is clearly based on an express warranty as can
be gleaned from the specific wordings of the contract between them. The petitioner cannot
claim reimbursement from its seller, respondent Gatpayat, on the basis of an implied
warranty against hidden faults or defects under Article 1547, sub-paragraph (2) inasmuch as
the term "hidden faults or defects" pertains only to those that make the object of the sale
unfit for the use for which it was intended at the time of the sale. In the case at bar, since the
object of the sale by Gatpayat to the petitioner is an agricultural land, the existing tenancy
relationship with respect to the land cannot be a "hidden fault or defect." It is not a lien or
encumbrance that the vendor warranted did not exist at the time of the sale. It is a relation-
ship which any buyer of agricultural land should reasonably expect to be present and which
it is its duty to specifically look into and provide for. Agenda saw to it that the warranty was
specific when it, in turn, purchased the land.
WHEREFORE, PREMISES CONSIDERED, the instant petition is DENIED for lack of
merit. The decision appealed from is hereby AFFIRMED. Costs against the petitioner.
SO ORDERED
I. The case and issue, in general
This Court has before it the delicate task of passing upon the validity and constitutionality
of a legislative enactment, fundamental and far-reaching in significance. The enactment
poses questions of due process, police power and equal protection of the laws. It also poses
an important issue of fact, that is whether the conditions which the disputed law purports to
remedy really or actually exist. Admittedly springing from a deep, militant, and positive
nationalistic impulse, the law purports to protect citizen and country from the alien retailer.
Through it, and within the field of economy it regulates, Congress attempts to translate
national aspirations for economic independence and national security, rooted in the drive
and urge for national survival and welfare, into a concrete and tangible measures designed
to free the national retailer from the competing dominance of the alien, so that the country
and the nation may be free from a supposed economic dependence and bondage. Do the
facts and circumstances justify the enactment?
II. Pertinent provisions of Republic Act No. 1180
Republic Act No. 1180 is entitled "An Act to Regulate the Retail Business." In effect it
nationalizes the retail trade business. The main provisions of the Act are: (1) a prohibition
against persons, not citizens of the Philippines, and against associations, partnerships, or
corporations the capital of which are not wholly owned by citizens of the Philippines, from
engaging directly or indirectly in the retail trade; (2) an exception from the above
prohibition in favor of aliens actually engaged in said business on May 15, 1954, who are
allowed to continue to engaged therein, unless their licenses are forfeited in accordance with
the law, until their death or voluntary retirement in case of natural persons, and for ten years
after the approval of the Act or until the expiration of term in case of juridical persons; (3)
an exception therefrom in favor of citizens and juridical entities of the United States; (4) a
provision for the forfeiture of licenses (to engage in the retail business) for violation of the
laws on nationalization, control weights and measures and labor and other laws relating to
trade, commerce and industry; (5) a prohibition against the establishment or opening by
aliens actually engaged in the retail business of additional stores or branches of retail
business, (6) a provision requiring aliens actually engaged in the retail business to present
for registration with the proper authorities a verified statement concerning their businesses,
giving, among other matters, the nature of the business, their assets and liabilities and their
offices and principal offices of judicial entities; and (7) a provision allowing the heirs of
aliens now engaged in the retail business who die, to continue such business for a period of
six months for purposes of liquidation.
III. Grounds upon which petition is based-Answer thereto
Petitioner, for and in his own behalf and on behalf of other alien residents corporations and
partnerships adversely affected by the provisions of Republic Act. No. 1180, brought this
action to obtain a judicial declaration that said Act is unconstitutional, and to enjoin the
Secretary of Finance and all other persons acting under him, particularly city and municipal
treasurers, from enforcing its provisions. Petitioner attacks the constitutionality of the Act,
contending that: (1) it denies to alien residents the equal protection of the laws and deprives
of their liberty and property without due process of law ; (2) the subject of the Act is not
expressed or comprehended in the title thereof; (3) the Act violates international and treaty
obligations of the Republic of the Philippines; (4) the provisions of the Act against the
transmission by aliens of their retail business thru hereditary succession, and those requiring
100% Filipino capitalization for a corporation or entity to entitle it to engage in the retail
business, violate the spirit of Sections 1 and 5, Article XIII and Section 8 of Article XIV of
the Constitution.
In answer, the Solicitor-General and the Fiscal of the City of Manila contend that: (1) the
Act was passed in the valid exercise of the police power of the State, which exercise is
authorized in the Constitution in the interest of national economic survival; (2) the Act has
only one subject embraced in the title; (3) no treaty or international obligations are
infringed; (4) as regards hereditary succession, only the form is affected but the value of the
property is not impaired, and the institution of inheritance is only of statutory origin.
IV. Preliminary consideration of legal principles involved
a. The police power.
There is no question that the Act was approved in the exercise of the police power, but
petitioner claims that its exercise in this instance is attended by a violation of the
constitutional requirements of due process and equal protection of the laws. But before
proceeding to the consideration and resolution of the ultimate issue involved, it would be
well to bear in mind certain basic and fundamental, albeit preliminary, considerations in the
determination of the ever recurrent conflict between police power and the guarantees of due
process and equal protection of the laws. What is the scope of police power, and how are the
due process and equal protection clauses related to it? What is the province and power of
the legislature, and what is the function and duty of the courts? These consideration must be
clearly and correctly understood that their application to the facts of the case may be
brought forth with clarity and the issue accordingly resolved.
It has been said the police power is so far - reaching in scope, that it has become almost
impossible to limit its sweep. As it derives its existence from the very existence of the State
itself, it does not need to be expressed or defined in its scope; it is said to be co-extensive
with self-protection and survival, and as such it is the most positive and active of all
governmental processes, the most essential, insistent and illimitable. Especially is it so
under a modern democratic framework where the demands of society and of nations have
multiplied to almost unimaginable proportions; the field and scope of police power has
become almost boundless, just as the fields of public interest and public welfare have
become almost all-embracing and have transcended human foresight. Otherwise stated, as
we cannot foresee the needs and demands of public interest and welfare in this constantly
changing and progressive world, so we cannot delimit beforehand the extent or scope of
police power by which and through which the State seeks to attain or achieve interest or
welfare. So it is that Constitutions do not define the scope or extent of the police power of
the State; what they do is to set forth the limitations thereof. The most important of these are
the due process clause and the equal protection clause.
b. Limitations on police power.
The basic limitations of due process and equal protection are found in the following
provisions of our Constitution:
SECTION 1.(1) No person shall be deprived of life, liberty or property without
due process of law, nor any person be denied the equal protection of the laws.
(Article III, Phil. Constitution)
These constitutional guarantees which embody the essence of individual liberty and
freedom in democracies, are not limited to citizens alone but are admittedly universal in
their application, without regard to any differences of race, of color, or of nationality. (Yick
Wo vs. Hopkins, 30, L. ed. 220, 226.)
c. The, equal protection clause.
The equal protection of the law clause is against undue favor and individual or class
privilege, as well as hostile discrimination or the oppression of inequality. It is not intended
to prohibit legislation, which is limited either in the object to which it is directed or by
territory within which is to operate. It does not demand absolute equality among residents; it
merely requires that all persons shall be treated alike, under like circumstances and
conditions both as to privileges conferred and liabilities enforced. The equal protection
clause is not infringed by legislation which applies only to those persons falling within a
specified class, if it applies alike to all persons within such class, and reasonable grounds
exists for making a distinction between those who fall within such class and those who do
not. (2 Cooley, Constitutional Limitations, 824-825.)
d. The due process clause.
The due process clause has to do with the reasonableness of legislation enacted in pursuance
of the police power. Is there public interest, a public purpose; is public welfare involved? Is
the Act reasonably necessary for the accomplishment of the legislature's purpose; is it not
unreasonable, arbitrary or oppressive? Is there sufficient foundation or reason in connection
with the matter involved; or has there not been a capricious use of the legislative power?
Can the aims conceived be achieved by the means used, or is it not merely an unjustified
interference with private interest? These are the questions that we ask when the due process
test is applied.
The conflict, therefore, between police power and the guarantees of due process and equal
protection of the laws is more apparent than real. Properly related, the power and the
guarantees are supposed to coexist. The balancing is the essence or, shall it be said, the
indispensable means for the attainment of legitimate aspirations of any democratic society.
There can be no absolute power, whoever exercise it, for that would be tyranny. Yet there
can neither be absolute liberty, for that would mean license and anarchy. So the State can
deprive persons of life, liberty and property, provided there is due process of law; and
persons may be classified into classes and groups, provided everyone is given the equal
protection of the law. The test or standard, as always, is reason. The police power legislation
must be firmly grounded on public interest and welfare, and a reasonable relation must exist
between purposes and means. And if distinction and classification has been made, there
must be a reasonable basis for said distinction.
e. Legislative discretion not subject to judicial review.
Now, in this matter of equitable balancing, what is the proper place and role of the courts? It
must not be overlooked, in the first place, that the legislature, which is the constitutional
repository of police power and exercises the prerogative of determining the policy of the
State, is by force of circumstances primarily the judge of necessity, adequacy or
reasonableness and wisdom, of any law promulgated in the exercise of the police power, or
of the measures adopted to implement the public policy or to achieve public interest. On the
other hand, courts, although zealous guardians of individual liberty and right, have
nevertheless evinced a reluctance to interfere with the exercise of the legislative
prerogative. They have done so early where there has been a clear, patent or palpable
arbitrary and unreasonable abuse of the legislative prerogative. Moreover, courts are not
supposed to override legitimate policy, and courts never inquire into the wisdom of the law.
V. Economic problems sought to be remedied
With the above considerations in mind, we will now proceed to delve directly into the issue
involved. If the disputed legislation were merely a regulation, as its title indicates, there
would be no question that it falls within the legitimate scope of legislative power. But it
goes further and prohibits a group of residents, the aliens, from engaging therein. The
problem becomes more complex because its subject is a common, trade or occupation, as
old as society itself, which from the immemorial has always been open to residents,
irrespective of race, color or citizenship.
a. Importance of retail trade in the economy of the nation.
In a primitive economy where families produce all that they consume and consume all that
they produce, the dealer, of course, is unknown. But as group life develops and families
begin to live in communities producing more than what they consume and needing an
infinite number of things they do not produce, the dealer comes into existence. As villages
develop into big communities and specialization in production begins, the dealer's
importance is enhanced. Under modern conditions and standards of living, in which man's
needs have multiplied and diversified to unlimited extents and proportions, the retailer
comes as essential as the producer, because thru him the infinite variety of articles, goods
and needed for daily life are placed within the easy reach of consumers. Retail dealers
perform the functions of capillaries in the human body, thru which all the needed food and
supplies are ministered to members of the communities comprising the nation.
There cannot be any question about the importance of the retailer in the life of the
community. He ministers to the resident's daily needs, food in all its increasing forms, and
the various little gadgets and things needed for home and daily life. He provides his
customers around his store with the rice or corn, the fish, the salt, the vinegar, the spices
needed for the daily cooking. He has cloths to sell, even the needle and the thread to sew
them or darn the clothes that wear out. The retailer, therefore, from the lowly peddler, the
owner of a small sari-sari store, to the operator of a department store or, a supermarket is so
much a part of day-to-day existence.
b. The alien retailer's trait.
The alien retailer must have started plying his trades in this country in the bigger centers of
population (Time there was when he was unknown in provincial towns and villages).
Slowly but gradually be invaded towns and villages; now he predominates in the cities and
big centers of population. He even pioneers, in far away nooks where the beginnings of
community life appear, ministering to the daily needs of the residents and purchasing their
agricultural produce for sale in the towns. It is an undeniable fact that in many communities
the alien has replaced the native retailer. He has shown in this trade, industry without limit,
and the patience and forbearance of a slave.
Derogatory epithets are hurled at him, but he laughs these off without murmur; insults of ill-
bred and insolent neighbors and customers are made in his face, but he heeds them not, and
he forgets and forgives. The community takes note of him, as he appears to be harmless and
extremely useful.
c. Alleged alien control and dominance.
There is a general feeling on the part of the public, which appears to be true to fact, about
the controlling and dominant position that the alien retailer holds in the nation's economy.
Food and other essentials, clothing, almost all articles of daily life reach the residents
mostly through him. In big cities and centers of population he has acquired not only
predominance, but apparent control over distribution of almost all kinds of goods, such as
lumber, hardware, textiles, groceries, drugs, sugar, flour, garlic, and scores of other goods
and articles. And were it not for some national corporations like the Naric, the Namarco, the
Facomas and the Acefa, his control over principal foods and products would easily become
full and complete.
Petitioner denies that there is alien predominance and control in the retail trade. In one
breath it is said that the fear is unfounded and the threat is imagined; in another, it is
charged that the law is merely the result of radicalism and pure and unabashed nationalism.
Alienage, it is said, is not an element of control; also so many unmanageable factors in the
retail business make control virtually impossible. The first argument which brings up an
issue of fact merits serious consideration. The others are matters of opinion within the
exclusive competence of the legislature and beyond our prerogative to pass upon and
decide.
The best evidence are the statistics on the retail trade, which put down the figures in black
and white. Between the constitutional convention year (1935), when the fear of alien
domination and control of the retail trade already filled the minds of our leaders with fears
and misgivings, and the year of the enactment of the nationalization of the retail trade act
(1954), official statistics unmistakably point out to the ever-increasing dominance and
control by the alien of the retail trade, as witness the following tables:
The above statistics do not include corporations and partnerships, while the figures on
Filipino establishments already include mere market vendors, whose capital is necessarily
small..
The above figures reveal that in percentage distribution of assests and gross sales, alien
participation has steadily increased during the years. It is true, of course, that Filipinos have
the edge in the number of retailers, but aliens more than make up for the numerical gap
through their assests and gross sales which average between six and seven times those of
the very many Filipino retailers. Numbers in retailers, here, do not imply superiority; the
alien invests more capital, buys and sells six to seven times more, and gains much more.
The same official report, pointing out to the known predominance of foreign elements in the
retail trade, remarks that the Filipino retailers were largely engaged in minor retailer
enterprises. As observed by respondents, the native investment is thinly spread, and the
Filipino retailer is practically helpless in matters of capital, credit, price and supply.
d. Alien control and threat, subject of apprehension in Constitutional convention.
It is this domination and control, which we believe has been sufficiently shown to exist, that
is the legislature's target in the enactment of the disputed nationalization would never have
been adopted. The framers of our Constitution also believed in the existence of this alien
dominance and control when they approved a resolution categorically declaring among
other things, that "it is the sense of the Convention that the public interest requires the
nationalization of the retail trade; . . . ." (II Aruego, The Framing of the Philippine
Constitution, 662-663, quoted on page 67 of Petitioner.) That was twenty-two years ago;
and the events since then have not been either pleasant or comforting. Dean Sinco of the
University of the Philippines College of Law, commenting on the patrimony clause of the
Preamble opines that the fathers of our Constitution were merely translating the general
preoccupation of Filipinos "of the dangers from alien interests that had already brought
under their control the commercial and other economic activities of the country" (Sinco,
Phil. Political Law, 10th ed., p. 114); and analyzing the concern of the members of the
constitutional convention for the economic life of the citizens, in connection with the
nationalistic provisions of the Constitution, he says:
But there has been a general feeling that alien dominance over the economic life
of the country is not desirable and that if such a situation should remain, political
independence alone is no guarantee to national stability and strength. Filipino
private capital is not big enough to wrest from alien hands the control of the
national economy. Moreover, it is but of recent formation and hence, largely
inexperienced, timid and hesitant. Under such conditions, the government as the
instrumentality of the national will, has to step in and assume the initiative, if not
the leadership, in the struggle for the economic freedom of the nation in
somewhat the same way that it did in the crusade for political freedom. Thus . . . it
(the Constitution) envisages an organized movement for the protection of the
nation not only against the possibilities of armed invasion but also against its
economic subjugation by alien interests in the economic field. (Phil. Political Law
by Sinco, 10th ed., p. 476.)
Belief in the existence of alien control and predominance is felt in other quarters. Filipino
businessmen, manufacturers and producers believe so; they fear the dangers coming from
alien control, and they express sentiments of economic independence. Witness thereto is
Resolution No. 1, approved on July 18, 1953, of the Fifth National convention of Filipino
Businessmen, and a similar resolution, approved on March 20, 1954, of the Second National
Convention of Manufacturers and Producers. The man in the street also believes, and fears,
alien predominance and control; so our newspapers, which have editorially pointed out not
only to control but to alien stranglehold. We, therefore, find alien domination and control to
be a fact, a reality proved by official statistics, and felt by all the sections and groups that
compose the Filipino community.
e. Dangers of alien control and dominance in retail.
But the dangers arising from alien participation in the retail trade does not seem to lie in the
predominance alone; there is a prevailing feeling that such predominance may truly
endanger the national interest. With ample capital, unity of purpose and action and thorough
organization, alien retailers and merchants can act in such complete unison and concert on
such vital matters as the fixing of prices, the determination of the amount of goods or
articles to be made available in the market, and even the choice of the goods or articles they
would or would not patronize or distribute, that fears of dislocation of the national economy
and of the complete subservience of national economy and of the consuming public are not
entirely unfounded. Nationals, producers and consumers alike can be placed completely at
their mercy. This is easily illustrated. Suppose an article of daily use is desired to be
prescribed by the aliens, because the producer or importer does not offer them sufficient
profits, or because a new competing article offers bigger profits for its introduction. All that
aliens would do is to agree to refuse to sell the first article, eliminating it from their stocks,
offering the new one as a substitute. Hence, the producers or importers of the prescribed
article, or its consumers, find the article suddenly out of the prescribed article, or its
consumers, find the article suddenly out of circulation. Freedom of trade is thus curtailed
and free enterprise correspondingly suppressed.
We can even go farther than theoretical illustrations to show the pernicious influences of
alien domination. Grave abuses have characterized the exercise of the retail trade by aliens.
It is a fact within judicial notice, which courts of justice may not properly overlook or
ignore in the interests of truth and justice, that there exists a general feeling on the part of
the public that alien participation in the retail trade has been attended by a pernicious and
intolerable practices, the mention of a few of which would suffice for our purposes; that at
some time or other they have cornered the market of essential commodities, like corn and
rice, creating artificial scarcities to justify and enhance profits to unreasonable proportions;
that they have hoarded essential foods to the inconvenience and prejudice of the consuming
public, so much so that the Government has had to establish the National Rice and Corn
Corporation to save the public from their continuous hoarding practices and tendencies; that
they have violated price control laws, especially on foods and essential commodities, such
that the legislature had to enact a law (Sec. 9, Republic Act No. 1168), authorizing their
immediate and automatic deportation for price control convictions; that they have secret
combinations among themselves to control prices, cheating the operation of the law of
supply and demand; that they have connived to boycott honest merchants and traders who
would not cater or yield to their demands, in unlawful restraint of freedom of trade and
enterprise. They are believed by the public to have evaded tax laws, smuggled goods and
money into and out of the land, violated import and export prohibitions, control laws and
the like, in derision and contempt of lawful authority. It is also believed that they have
engaged in corrupting public officials with fabulous bribes, indirectly causing the
prevalence of graft and corruption in the Government. As a matter of fact appeals to
unscrupulous aliens have been made both by the Government and by their own lawful
diplomatic representatives, action which impliedly admits a prevailing feeling about the
existence of many of the above practices.
The circumstances above set forth create well founded fears that worse things may come in
the future. The present dominance of the alien retailer, especially in the big centers of
population, therefore, becomes a potential source of danger on occasions of war or other
calamity. We do not have here in this country isolated groups of harmless aliens retailing
goods among nationals; what we have are well organized and powerful groups that
dominate the distribution of goods and commodities in the communities and big centers of
population. They owe no allegiance or loyalty to the State, and the State cannot rely upon
them in times of crisis or emergency. While the national holds his life, his person and his
property subject to the needs of his country, the alien may even become the potential enemy
of the State.
f. Law enacted in interest of national economic survival and security.
We are fully satisfied upon a consideration of all the facts and circumstances that the
disputed law is not the product of racial hostility, prejudice or discrimination, but the
expression of the legitimate desire and determination of the people, thru their authorized
representatives, to free the nation from the economic situation that has unfortunately been
saddled upon it rightly or wrongly, to its disadvantage. The law is clearly in the interest of
the public, nay of the national security itself, and indisputably falls within the scope of
police power, thru which and by which the State insures its existence and security and the
supreme welfare of its citizens.
VI. The Equal Protection Limitation
a. Objections to alien participation in retail trade. The next question that now poses
solution is, Does the law deny the equal protection of the laws? As pointed out above, the
mere fact of alienage is the root and cause of the distinction between the alien and the
national as a trader. The alien resident owes allegiance to the country of his birth or his
adopted country; his stay here is for personal convenience; he is attracted by the lure of gain
and profit. His aim or purpose of stay, we admit, is neither illegitimate nor immoral, but he
is naturally lacking in that spirit of loyalty and enthusiasm for this country where he
temporarily stays and makes his living, or of that spirit of regard, sympathy and
consideration for his Filipino customers as would prevent him from taking advantage of
their weakness and exploiting them. The faster he makes his pile, the earlier can the alien go
back to his beloved country and his beloved kin and countrymen. The experience of the
country is that the alien retailer has shown such utter disregard for his customers and the
people on whom he makes his profit, that it has been found necessary to adopt the
legislation, radical as it may seem.
Another objection to the alien retailer in this country is that he never really makes a genuine
contribution to national income and wealth. He undoubtedly contributes to general
distribution, but the gains and profits he makes are not invested in industries that would help
the country's economy and increase national wealth. The alien's interest in this country
being merely transient and temporary, it would indeed be ill-advised to continue entrusting
the very important function of retail distribution to his hands.
The practices resorted to by aliens in the control of distribution, as already pointed out
above, their secret manipulations of stocks of commodities and prices, their utter disregard
of the welfare of their customers and of the ultimate happiness of the people of the nation of
which they are mere guests, which practices, manipulations and disregard do not attend the
exercise of the trade by the nationals, show the existence of real and actual, positive and
fundamental differences between an alien and a national which fully justify the legislative
classification adopted in the retail trade measure. These differences are certainly a valid
reason for the State to prefer the national over the alien in the retail trade. We would be
doing violence to fact and reality were we to hold that no reason or ground for a legitimate
distinction can be found between one and the other.
b. Difference in alien aims and purposes sufficient basis for distinction.
The above objectionable characteristics of the exercise of the retail trade by the aliens,
which are actual and real, furnish sufficient grounds for legislative classification of retail
traders into nationals and aliens. Some may disagree with the wisdom of the legislature's
classification. To this we answer, that this is the prerogative of the law-making power. Since
the Court finds that the classification is actual, real and reasonable, and all persons of one
class are treated alike, and as it cannot be said that the classification is patently
unreasonable and unfounded, it is in duty bound to declare that the legislature acted within
its legitimate prerogative and it can not declare that the act transcends the limit of equal
protection established by the Constitution.
Broadly speaking, the power of the legislature to make distinctions and classifications
among persons is not curtailed or denied by the equal protection of the laws clause. The
legislative power admits of a wide scope of discretion, and a law can be violative of the
constitutional limitation only when the classification is without reasonable basis. In addition
to the authorities we have earlier cited, we can also refer to the case of Linsey vs. Natural
Carbonic Fas Co. (1911), 55 L. ed., 369, which clearly and succinctly defined the
application of equal protection clause to a law sought to be voided as contrary thereto:
. . . . "1. The equal protection clause of the Fourteenth Amendment does not take
from the state the power to classify in the adoption of police laws, but admits of
the exercise of the wide scope of discretion in that regard, and avoids what is done
only when it is without any reasonable basis, and therefore is purely arbitrary. 2. A
classification having some reasonable basis does not offend against that clause
merely because it is not made with mathematical nicety, or because in practice it
results in some inequality. 3. When the classification in such a law is called in
question, if any state of facts reasonably can be conceived that would sustain it,
the existence of that state of facts at the time the law was enacted must be
assumed. 4. One who assails the classification in such a law must carry the burden
of showing that it does not rest upon any reasonable basis but is essentially
arbitrary."
c. Authorities recognizing citizenship as basis for classification.
The question as to whether or not citizenship is a legal and valid ground for classification
has already been affirmatively decided in this jurisdiction as well as in various courts in the
United States. In the case of Smith Bell & Co. vs. Natividad, 40 Phil. 136, where the validity
of Act No. 2761 of the Philippine Legislature was in issue, because of a condition therein
limiting the ownership of vessels engaged in coastwise trade to corporations formed by
citizens of the Philippine Islands or the United States, thus denying the right to aliens, it was
held that the Philippine Legislature did not violate the equal protection clause of the
Philippine Bill of Rights. The legislature in enacting the law had as ultimate purpose the
encouragement of Philippine shipbuilding and the safety for these Islands from foreign
interlopers. We held that this was a valid exercise of the police power, and all presumptions
are in favor of its constitutionality. In substance, we held that the limitation of domestic
ownership of vessels engaged in coastwise trade to citizens of the Philippines does not
violate the equal protection of the law and due process or law clauses of the Philippine Bill
of Rights. In rendering said decision we quoted with approval the concurring opinion of
Justice Johnson in the case of Gibbons vs. Ogden, 9 Wheat., I, as follows:
"Licensing acts, in fact, in legislation, are universally restraining acts; as, for
example, acts licensing gaming houses, retailers of spirituous liquors, etc. The act,
in this instance, is distinctly of that character, and forms part of an extensive
system, the object of which is to encourage American shipping, and place them on
an equal footing with the shipping of other nations. Almost every commercial
nation reserves to its own subjects a monopoly of its coasting trade; and a
countervailing privilege in favor of American shipping is contemplated, in the
whole legislation of the United States on this subject. It is not to give the vessel an
American character, that the license is granted; that effect has been correctly
attributed to the act of her enrollment. But it is to confer on her American
privileges, as contra distinguished from foreign; and to preserve the Government
from fraud by foreigners; in surreptitiously intruding themselves into the
American commercial marine, as well as frauds upon the revenue in the trade
coastwise, that this whole system is projected."
The rule in general is as follows:
Aliens are under no special constitutional protection which forbids a classification
otherwise justified simply because the limitation of the class falls along the lines
of nationality. That would be requiring a higher degree of protection for aliens as
a class than for similar classes than for similar classes of American citizens.
Broadly speaking, the difference in status between citizens and aliens constitutes a
basis for reasonable classification in the exercise of police power. (2 Am., Jur.
468-469.)
In Commonwealth vs. Hana, 81 N. E. 149 (Massachusetts, 1907), a statute on the licensing
of hawkers and peddlers, which provided that no one can obtain a license unless he is, or
has declared his intention, to become a citizen of the United States, was held valid, for the
following reason: It may seem wise to the legislature to limit the business of those who are
supposed to have regard for the welfare, good order and happiness of the community, and
the court cannot question this judgment and conclusion. In Bloomfield vs. State, 99 N. E.
309 (Ohio, 1912), a statute which prevented certain persons, among them aliens, from
engaging in the traffic of liquors, was found not to be the result of race hatred, or in
hospitality, or a deliberate purpose to discriminate, but was based on the belief that an alien
cannot be sufficiently acquainted with "our institutions and our life as to enable him to
appreciate the relation of this particular business to our entire social fabric", and was not,
therefore, invalid. In Ohio ex rel. Clarke vs. Deckebach, 274 U. S. 392, 71 L. ed. 115
(1926), the U.S. Supreme Court had under consideration an ordinance of the city of
Cincinnati prohibiting the issuance of licenses (pools and billiard rooms) to aliens. It held
that plainly irrational discrimination against aliens is prohibited, but it does not follow that
alien race and allegiance may not bear in some instances such a relation to a legitimate
object of legislation as to be made the basis of permitted classification, and that it could not
state that the legislation is clearly wrong; and that latitude must be allowed for the
legislative appraisement of local conditions and for the legislative choice of methods for
controlling an apprehended evil. The case of State vs. Carrol, 124 N. E. 129 (Ohio, 1919) is
a parallel case to the one at bar. In Asakura vs. City of Seattle, 210 P. 30 (Washington,
1922), the business of pawn brooking was considered as having tendencies injuring public
interest, and limiting it to citizens is within the scope of police power. A similar statute
denying aliens the right to engage in auctioneering was also sustained in Wright vs. May,
L.R.A., 1915 P. 151 (Minnesota, 1914). So also in Anton vs. Van Winkle, 297 F. 340
(Oregon, 1924), the court said that aliens are judicially known to have different interests,
knowledge, attitude, psychology and loyalty, hence the prohibitions of issuance of licenses
to them for the business of pawnbroker, pool, billiard, card room, dance hall, is not an
infringement of constitutional rights. In Templar vs. Michigan State Board of Examiners, 90
N.W. 1058 (Michigan, 1902), a law prohibiting the licensing of aliens as barbers was held
void, but the reason for the decision was the court's findings that the exercise of the business
by the aliens does not in any way affect the morals, the health, or even the convenience of
the community. In Takahashi vs. Fish and Game Commission, 92 L. ed. 1479 (1947), a
California statute banning the issuance of commercial fishing licenses to person ineligible to
citizenship was held void, because the law conflicts with Federal power over immigration,
and because there is no public interest in the mere claim of ownership of the waters and the
fish in them, so there was no adequate justification for the discrimination. It further added
that the law was the outgrowth of antagonism toward the persons of Japanese ancestry.
However, two Justices dissented on the theory that fishing rights have been treated
traditionally as natural resources. In Fraser vs. McConway & Tarley Co., 82 Fed. 257
(Pennsylvania, 1897), a state law which imposed a tax on every employer of foreign-born
unnaturalized male persons over 21 years of age, was declared void because the court found
that there was no reason for the classification and the tax was an arbitrary deduction from
the daily wage of an employee.
d. Authorities contra explained.
It is true that some decisions of the Federal court and of the State courts in the United States
hold that the distinction between aliens and citizens is not a valid ground for classification.
But in this decision the laws declared invalid were found to be either arbitrary, unreasonable
or capricious, or were the result or product of racial antagonism and hostility, and there was
no question of public interest involved or pursued. In Yu Cong Eng vs. Trinidad, 70 L. ed.
1059 (1925), the United States Supreme Court declared invalid a Philippine law making
unlawful the keeping of books of account in any language other than English, Spanish or
any other local dialect, but the main reasons for the decisions are: (1) that if Chinese were
driven out of business there would be no other system of distribution, and (2) that the
Chinese would fall prey to all kinds of fraud, because they would be deprived of their right
to be advised of their business and to direct its conduct. The real reason for the decision,
therefore, is the court's belief that no public benefit would be derived from the operations of
the law and on the other hand it would deprive Chinese of something indispensable for
carrying on their business. In Yick Wo vs. Hopkins, 30 L. ed 220 (1885) an ordinance
conferring powers on officials to withhold consent in the operation of laundries both as to
persons and place, was declared invalid, but the court said that the power granted was
arbitrary, that there was no reason for the discrimination which attended the administration
and implementation of the law, and that the motive thereof was mere racial hostility.
In State vs. Montgomery, 47 A. 165 (Maine, 1900), a law prohibiting aliens to engage as
hawkers and peddlers was declared void, because the discrimination bore no reasonable and
just relation to the act in respect to which the classification was proposed.
The case at bar is radically different, and the facts make them so. As we already have said,
aliens do not naturally possess the sympathetic consideration and regard for the customers
with whom they come in daily contact, nor the patriotic desire to help bolster the nation's
economy, except in so far as it enhances their profit, nor the loyalty and allegiance which
the national owes to the land. These limitations on the qualifications of the aliens have been
shown on many occasions and instances, especially in times of crisis and emergency. We
can do no better than borrow the language of Anton vs. Van Winkle, 297 F. 340, 342, to drive
home the reality and significance of the distinction between the alien and the national, thus:
. . . . It may be judicially known, however, that alien coming into this country are
without the intimate knowledge of our laws, customs, and usages that our own
people have. So it is likewise known that certain classes of aliens are of different
psychology from our fellow countrymen. Furthermore, it is natural and reasonable
to suppose that the foreign born, whose allegiance is first to their own country,
and whose ideals of governmental environment and control have been engendered
and formed under entirely different regimes and political systems, have not the
same inspiration for the public weal, nor are they as well disposed toward the
United States, as those who by citizenship, are a part of the government itself.
Further enlargement, is unnecessary. I have said enough so that obviously it
cannot be affirmed with absolute confidence that the Legislature was without
plausible reason for making the classification, and therefore appropriate
discriminations against aliens as it relates to the subject of legislation. . . . .
VII. The Due Process of Law Limitation.
a. Reasonability, the test of the limitation; determination by legislature decisive.
We now come to due process as a limitation on the exercise of the police power. It has been
stated by the highest authority in the United States that:
. . . . And the guaranty of due process, as has often been held, demands only that
the law shall not be unreasonable, arbitrary or capricious, and that the means
selected shall have a real and substantial relation to the subject sought to be
attained. . . . .
xxx xxx xxx
So far as the requirement of due process is concerned and in the absence of other
constitutional restriction a state is free to adopt whatever economic policy may
reasonably be deemed to promote public welfare, and to enforce that policy by
legislation adapted to its purpose. The courts are without authority either to
declare such policy, or, when it is declared by the legislature, to override it. If the
laws passed are seen to have a reasonable relation to a proper legislative purpose,
and are neither arbitrary nor discriminatory, the requirements of due process are
satisfied, and judicial determination to that effect renders a court functus officio. . .
. (Nebbia vs. New York, 78 L. ed. 940, 950, 957.)
Another authority states the principle thus:
. . . . Too much significance cannot be given to the word "reasonable" in
considering the scope of the police power in a constitutional sense, for the test
used to determine the constitutionality of the means employed by the legislature is
to inquire whether the restriction it imposes on rights secured to individuals by the
Bill of Rights are unreasonable, and not whether it imposes any restrictions on
such rights. . . .
xxx xxx xxx
. . . . A statute to be within this power must also be reasonable in its operation
upon the persons whom it affects, must not be for the annoyance of a particular
class, and must not be unduly oppressive. (11 Am. Jur. Sec. 302., 1:1)- 1074-
1075.)
In the case of Lawton vs. Steele, 38 L. ed. 385, 388. it was also held:
. . . . To justify the state in thus interposing its authority in behalf of the public, it
must appear, first, that the interests of the public generally, as distinguished from
those of a particular class, require such interference; and second, that the means
are reasonably necessary for the accomplishment of the purpose, and not unduly
oppressive upon individuals. . . .
Prata Undertaking Co. vs. State Board of Embalming, 104 ALR, 389, 395, fixes this test of
constitutionality:
In determining whether a given act of the Legislature, passed in the exercise of
the police power to regulate the operation of a business, is or is not constitutional,
one of the first questions to be considered by the court is whether the power as
exercised has a sufficient foundation in reason in connection with the matter
involved, or is an arbitrary, oppressive, and capricious use of that power, without
substantial relation to the health, safety, morals, comfort, and general welfare of
the public.
b. Petitioner's argument considered.
Petitioner's main argument is that retail is a common, ordinary occupation, one of those
privileges long ago recognized as essential to the orderly pursuant of happiness by free men;
that it is a gainful and honest occupation and therefore beyond the power of the legislature
to prohibit and penalized. This arguments overlooks fact and reality and rests on an
incorrect assumption and premise, i.e., that in this country where the occupation is engaged
in by petitioner, it has been so engaged by him, by the alien in an honest creditable and
unimpeachable manner, without harm or injury to the citizens and without ultimate danger
to their economic peace, tranquility and welfare. But the Legislature has found, as we have
also found and indicated, that the privilege has been so grossly abused by the alien, thru the
illegitimate use of pernicious designs and practices, that he now enjoys a monopolistic
control of the occupation and threatens a deadly stranglehold on the nation's economy
endangering the national security in times of crisis and emergency.
The real question at issue, therefore, is not that posed by petitioner, which overlooks and
ignores the facts and circumstances, but this, Is the exclusion in the future of aliens from the
retail trade unreasonable. Arbitrary capricious, taking into account the illegitimate and
pernicious form and manner in which the aliens have heretofore engaged therein? As thus
correctly stated the answer is clear. The law in question is deemed absolutely necessary to
bring about the desired legislative objective, i.e., to free national economy from alien
control and dominance. It is not necessarily unreasonable because it affects private rights
and privileges (11 Am. Jur. pp. 1080-1081.) The test of reasonableness of a law is the
appropriateness or adequacy under all circumstances of the means adopted to carry out its
purpose into effect (Id.) Judged by this test, disputed legislation, which is not merely
reasonable but actually necessary, must be considered not to have infringed the
constitutional limitation of reasonableness.
The necessity of the law in question is explained in the explanatory note that accompanied
the bill, which later was enacted into law:
This bill proposes to regulate the retail business. Its purpose is to prevent persons
who are not citizens of the Philippines from having a strangle hold upon our
economic life. If the persons who control this vital artery of our economic life are
the ones who owe no allegiance to this Republic, who have no profound devotion
to our free institutions, and who have no permanent stake in our people's welfare,
we are not really the masters of our destiny. All aspects of our life, even our
national security, will be at the mercy of other people.
In seeking to accomplish the foregoing purpose, we do not propose to deprive
persons who are not citizens of the Philippines of their means of livelihood. While
this bill seeks to take away from the hands of persons who are not citizens of the
Philippines a power that can be wielded to paralyze all aspects of our national life
and endanger our national security it respects existing rights.
The approval of this bill is necessary for our national survival.
If political independence is a legitimate aspiration of a people, then economic independence
is none the less legitimate. Freedom and liberty are not real and positive if the people are
subject to the economic control and domination of others, especially if not of their own race
or country. The removal and eradication of the shackles of foreign economic control and
domination, is one of the noblest motives that a national legislature may pursue. It is
impossible to conceive that legislation that seeks to bring it about can infringe the
constitutional limitation of due process. The attainment of a legitimate aspiration of a
people can never be beyond the limits of legislative authority.
c. Law expressly held by Constitutional Convention to be within the sphere of legislative
action.
The framers of the Constitution could not have intended to impose the constitutional
restrictions of due process on the attainment of such a noble motive as freedom from
economic control and domination, thru the exercise of the police power. The fathers of the
Constitution must have given to the legislature full authority and power to enact legislation
that would promote the supreme happiness of the people, their freedom and liberty. On the
precise issue now before us, they expressly made their voice clear; they adopted a resolution
expressing their belief that the legislation in question is within the scope of the legislative
power. Thus they declared the their Resolution:
That it is the sense of the Convention that the public interest requires the
nationalization of retail trade; but it abstain from approving the amendment
introduced by the Delegate for Manila, Mr. Araneta, and others on this matter
because it is convinced that the National Assembly is authorized to promulgate a
law which limits to Filipino and American citizens the privilege to engage in the
retail trade. (11 Aruego, The Framing of the Philippine Constitution, quoted on
pages 66 and 67 of the Memorandum for the Petitioner.)
It would do well to refer to the nationalistic tendency manifested in various provisions of
the Constitution. Thus in the preamble, a principle objective is the conservation of the
patrimony of the nation and as corollary the provision limiting to citizens of the Philippines
the exploitation, development and utilization of its natural resources. And in Section 8 of
Article XIV, it is provided that "no franchise, certificate, or any other form of authorization
for the operation of the public utility shall be granted except to citizens of the Philippines."
The nationalization of the retail trade is only a continuance of the nationalistic protective
policy laid down as a primary objective of the Constitution. Can it be said that a law imbued
with the same purpose and spirit underlying many of the provisions of the Constitution is
unreasonable, invalid and unconstitutional?
The seriousness of the Legislature's concern for the plight of the nationals as manifested in
the approval of the radical measures is, therefore, fully justified. It would have been
recreant to its duties towards the country and its people would it view the sorry plight of the
nationals with the complacency and refuse or neglect to adopt a remedy commensurate with
the demands of public interest and national survival. As the repository of the sovereign
power of legislation, the Legislature was in duty bound to face the problem and meet,
through adequate measures, the danger and threat that alien domination of retail trade poses
to national economy.
d. Provisions of law not unreasonable.
A cursory study of the provisions of the law immediately reveals how tolerant, how
reasonable the Legislature has been. The law is made prospective and recognizes the right
and privilege of those already engaged in the occupation to continue therein during the rest
of their lives; and similar recognition of the right to continue is accorded associations of
aliens. The right or privilege is denied to those only upon conviction of certain offenses. In
the deliberations of the Court on this case, attention was called to the fact that the privilege
should not have been denied to children and heirs of aliens now engaged in the retail trade.
Such provision would defeat the law itself, its aims and purposes. Beside, the exercise of
legislative discretion is not subject to judicial review. It is well settled that the Court will not
inquire into the motives of the Legislature, nor pass upon general matters of legislative
judgment. The Legislature is primarily the judge of the necessity of an enactment or of any
of its provisions, and every presumption is in favor of its validity, and though the Court may
hold views inconsistent with the wisdom of the law, it may not annul the legislation if not
palpably in excess of the legislative power. Furthermore, the test of the validity of a law
attacked as a violation of due process, is not its reasonableness, but its unreasonableness,
and we find the provisions are not unreasonable. These principles also answer various other
arguments raised against the law, some of which are: that the law does not promote general
welfare; that thousands of aliens would be thrown out of employment; that prices will
increase because of the elimination of competition; that there is no need for the legislation;
that adequate replacement is problematical; that there may be general breakdown; that there
would be repercussions from foreigners; etc. Many of these arguments are directed against
the supposed wisdom of the law which lies solely within the legislative prerogative; they do
not import invalidity.
VIII. Alleged defect in the title of the law
A subordinate ground or reason for the alleged invalidity of the law is the claim that the title
thereof is misleading or deceptive, as it conceals the real purpose of the bill which is to
nationalize the retail business and prohibit aliens from engaging therein. The constitutional
provision which is claimed to be violated in Section 21 (1) of Article VI, which reads:
No bill which may be enacted in the law shall embrace more than one subject
which shall be expressed in the title of the bill.
What the above provision prohibits is duplicity, that is, if its title completely fails to
appraise the legislators or the public of the nature, scope and consequences of the law or its
operation (I Sutherland, Statutory Construction, Sec. 1707, p. 297.) A cursory consideration
of the title and the provisions of the bill fails to show the presence of duplicity. It is true that
the term "regulate" does not and may not readily and at first glance convey the idea of
"nationalization" and "prohibition", which terms express the two main purposes and
objectives of the law. But "regulate" is a broader term than either prohibition or
nationalization. Both of these have always been included within the term regulation.
Under the title of an act to "regulate", the sale of intoxicating liquors, the
Legislature may prohibit the sale of intoxicating liquors. (Sweet vs. City of
Wabash, 41 Ind., 7; quoted in page 41 of Answer.)
Within the meaning of the Constitution requiring that the subject of every act of
the Legislature shall be stated in the tale, the title to regulate the sale of
intoxicating liquors, etc." sufficiently expresses the subject of an
act prohibiting the sale of such liquors to minors and to persons in the habit of
getting intoxicated; such matters being properly included within the subject of
regulating the sale. (Williams vs. State, 48 Ind. 306, 308, quoted in p. 42 of
Answer.)
The word "regulate" is of broad import, and necessarily implies some degree of
restraint and prohibition of acts usually done in connection with the thing to be
regulated. While word regulate does not ordinarily convey meaning of prohibit,
there is no absolute reason why it should not have such meaning when used in
delegating police power in connection with a thing the best or only efficacious
regulation of which involves suppression. (State vs. Morton, 162 So. 718, 182 La.
887, quoted in p. 42 of Answer.)
The general rule is for the use of general terms in the title of a bill; it has also been said that
the title need not be an index to the entire contents of the law (I Sutherland, Statutory
Construction, See. 4803, p. 345.) The above rule was followed the title of the Act in
question adopted the more general term "regulate" instead of "nationalize" or "prohibit".
Furthermore, the law also contains other rules for the regulation of the retail trade which
may not be included in the terms "nationalization" or "prohibition"; so were the title
changed from "regulate" to "nationalize" or "prohibit", there would have been many
provisions not falling within the scope of the title which would have made the Act invalid.
The use of the term "regulate", therefore, is in accord with the principle governing the
drafting of statutes, under which a simple or general term should be adopted in the title,
which would include all other provisions found in the body of the Act.
One purpose of the constitutional directive that the subject of a bill should be embraced in
its title is to apprise the legislators of the purposes, the nature and scope of its provisions,
and prevent the enactment into law of matters which have received the notice, action and
study of the legislators or of the public. In the case at bar it cannot be claimed that the
legislators have been appraised of the nature of the law, especially the nationalization and
the prohibition provisions. The legislators took active interest in the discussion of the law,
and a great many of the persons affected by the prohibitions in the law conducted a
campaign against its approval. It cannot be claimed, therefore, that the reasons for declaring
the law invalid ever existed. The objection must therefore, be overruled.
IX. Alleged violation of international treaties and obligations
Another subordinate argument against the validity of the law is the supposed violation
thereby of the Charter of the United Nations and of the Declaration of the Human Rights
adopted by the United Nations General Assembly. We find no merit in the Nations Charter
imposes no strict or legal obligations regarding the rights and freedom of their subjects
(Hans Kelsen, The Law of the United Nations, 1951 ed. pp. 29-32), and the Declaration of
Human Rights contains nothing more than a mere recommendation or a common standard
of achievement for all peoples and all nations (Id. p. 39.) That such is the import of the
United Nations Charter aid of the Declaration of Human Rights can be inferred the fact that
members of the United Nations Organizations, such as Norway and Denmark, prohibit
foreigners from engaging in retail trade, and in most nations of the world laws against
foreigners engaged in domestic trade are adopted.
The Treaty of Amity between the Republic of the Philippines and the Republic of China of
April 18, 1947 is also claimed to be violated by the law in question. All that the treaty
guarantees is equality of treatment to the Chinese nationals "upon the same terms as the
nationals of any other country." But the nationals of China are not discriminating against
because nationals of all other countries, except those of the United States, who are granted
special rights by the Constitution, are all prohibited from engaging in the retail trade. But
even supposing that the law infringes upon the said treaty, the treaty is always subject to
qualification or amendment by a subsequent law (U. S. vs. Thompson, 258, Fed. 257, 260),
and the same may never curtail or restrict the scope of the police power of the State (plaston
vs. Pennsylvania, 58 L. ed. 539.)
 X. Conclusion
Resuming what we have set forth above we hold that the disputed law was enacted to
remedy a real actual threat and danger to national economy posed by alien dominance and
control of the retail business and free citizens and country from dominance and control; that
the enactment clearly falls within the scope of the police power of the State, thru which and
by which it protects its own personality and insures its security and future; that the law does
not violate the equal protection clause of the Constitution because sufficient grounds exist
for the distinction between alien and citizen in the exercise of the occupation regulated, nor
the due process of law clause, because the law is prospective in operation and recognizes
the privilege of aliens already engaged in the occupation and reasonably protects their
privilege; that the wisdom and efficacy of the law to carry out its objectives appear to us to
be plainly evident as a matter of fact it seems not only appropriate but actually necessary
and that in any case such matter falls within the prerogative of the Legislature, with
whose power and discretion the Judicial department of the Government may not interfere;
that the provisions of the law are clearly embraced in the title, and this suffers from no
duplicity and has not misled the legislators or the segment of the population affected; and
that it cannot be said to be void for supposed conflict with treaty obligations because no
treaty has actually been entered into on the subject and the police power may not be
curtailed or surrendered by any treaty or any other conventional agreement.
Some members of the Court are of the opinion that the radical effects of the law could have
been made less harsh in its impact on the aliens. Thus it is stated that the more time should
have been given in the law for the liquidation of existing businesses when the time comes
for them to close. Our legal duty, however, is merely to determine if the law falls within the
scope of legislative authority and does not transcend the limitations of due process and
equal protection guaranteed in the Constitution. Remedies against the harshness of the law
should be addressed to the Legislature; they are beyond our power and jurisdiction.
The petition is hereby denied, with costs against petitioner.