LAO ICHONG v.

JAIME HERNANDEZ (Secretary if Finance), MARCELINO

SARMIENTO (Manila City Treasurer)

FACTS:
 Questions on due process, police power, and equal protection of laws
 The law affirms to protect citizen and the country from alien retailer
 RA 1180: AN ACT TO REGULATE THE RETAIL BUSINESS
o Prohibits persons, not Filipino citizens, and associations/partnerships
or corporations which are not wholly owned by Fil citizens, from
engaging directly or indirectly in retail trade
o An exception from the previous prohibition in favor of aliens are
those actually engaged in said business on May 15 1954 (allowed to
continue) unless their license are forfeited in accordance to law
o An exception therefrom in favor of the citizens and juridical entities
of the US
o For the forfeiture of license (to engage in retail business) for violation
of the laws on nationalization, labor and other laws relating to trade,
commerce, and industry
o Against an establishment or openings by aliens engaged in the retail
business of additional stores or branches of retail
o Requiring aliens engaged in retail to present registration with the
proper authorities a verified statement concerning their business,
giving among other matters (its nature, assets and liabilities)
o And allowing the heirs of aliens now engaged in retail business who
die, to continue such business for a period of six months for purpose
of liquidation

ISSUE:
 PETITIONER (Ichong) on behalf of other alien residents corporations and
partnerships affected by RA 1180: ACTION TO OBTAIN A JUDICIAL
DECLARATION THAT SAID ACT IS UNCONSTITUTIONAL, and to enjoin the
Secretary of Finance (Hernandez) and persons acting under him, specifically
city (Sarmiento) and municipal treasurers, from enforcing its provisions
 o It denies them (alien residents) equal protection of law and deprives
them the liberty and property without due process
o The act’s subject is not expressed in the title
o It violates international and treaty obligations of the Republic of the
PH
o Its provisions are against the transmission by aliens of their business
through hereditary succession,
o And requiring 100% Filipino capitalization for a corporation/entity to
be entitled in engaging in the retail business violates Sections 1 and
5, Article 13 and Section 8 of Article 14 of the Constitution

HELD:
 SOLICITOR-GENERAL AND THE FISCAL OF MANILA ANSWERED THAT:
o Act was passed in valid exercise of the State’s police power, an
exercise which is authorized by the Constitution in the interest of
economic survival
o It has only one subject embraced in the title
o No treaty or int’l obligation are violated
o In relation to hereditary succession, only the form is affected but not
the property value

 ON POLICE POWER: to which petitioner claims that its exercise in this case
violates the constitutional requirements of due process and equal
protection of laws

o We cannot define the limits beforehand or scope of police power

since the demands of society and nations are unpredictable
o So, Constitution do not define its scope or extent,
o What done is to set forth limitations to which the most important is
the due process and equal protection clause
o Police power legislation must be firmly grounded on public interest
and welfare
 LIMITATIONS: Due Process and Equal Protection
o Article 3, 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
o These are not limited to citizens alone but are admittedly universal in
application, regardless to any differences of race, color, or nationality
(Yick Wo v. Hopkins)

 EQUAL PROTECTION CLAUSE

o Is against undue favor and individual or class privilege, and hostile
discrimination
o Does not determine absolute equality among residents,
o Simply a requirement that all persons shall be treated alike
o It is not infringed by legislation

 The state can deprive person of life, liberty, and property, provided there
is due process and that everyone if given equal protection of law
 To which the test is always reason

 RETAIL TRADE’ AND ITS IMPORTANCE

o Foundation of community life
o ALIEN RETAILERS: SLOWLY PREDOMINATES cities to which he even
pioneers
o In communities, aliens have replaced native retailers
o Petitioner denies alien predominance
o But statistics show that petitioner’s claim is false which was
o PROVEN THROUGH STATISTICS between the 1935 Constitutional
Convention Year and 1954 enactment of the Nationalization of the
Retail Trade Act
o The distribution of assets and gross sales’ percentage shows that
ALIEN PARTICIPATION HAS STEADILY INCREASED THROUGH THE
YEARS
 o It shows that Filipino retailers were largely engaged in minor retail
enterprises only
o Therefore, there are little native investments made
o ALIEN DOMINANCE ON ECONOMY = RISKS POLITICAL
INDEPENDENCE IN RELATION TO NATIONAL STABILITY
o It also endangers national interest since alien retailers can act in
unison and settle vital matters like fixing of prices and even goods to
be made available
o Therefor freedom of trade would be limited and free enterprise is
suppressed
o Witness to this phenomenon is Resolution No. 1 of the 5th National
Convention of Filipino Businessmen, and a similar resolution of the
2nd National Convention of Manufacturers and Producers
o SC THEREFOR FIND ALIEN DOMINATION AND CONTROL TO BE A
FACT and reality proven by statistics
o Example. The government had to establish the National Rice and
Corn Corporation to save the public from alien’s hoarding practices
of essential food
o Aliens do not owe allegiance to the State and the State cannot rely
on them on times of crisis
o LAW IS NOT A PRODUCT OF RACIAL PREJUDICE BUT AN EXPRESSION
OF THE PEOPLE’S DETERMINATION TO FREE THE NATION OF
WRONGLY AND UNJUST ECONOMIC SITUATION

 ON EQUAL PROTECTION: Does the law deny equal protection of laws?

o Alien resident owes allegiance to his birth or adopted country
o He is attracted by gain and profit
o The gains and profits of an alien are not invested in industries that
would help the country’s economy therefor he NEVER REALLY
CONTRIBUTES TO NATIONAL WEALTH
o With the given circumstances and characteristics of alien retail trade,
it is the law-making power’s prerogative.
o The LEGISLATURE ACTED WITHIN ITS LEGITIMATE PREROGATIVE
 o A law can be violative of constitutional limitation only when the
classification is without reasonable basis
o SC: PH Legislature did not violate the equal protection clause of Bill
of Rights
o SC: it is a valid exercise of police power
o SC: It is reasonable, and requirements of due process are satisfied
o Basis: ACTED TO PRESERVE GOVT FROM FOREIGN FRAUD (and
safekeep national wealth)
o Aliens do not naturally possess sympathetic consideration nor
patriotic desire to help boost national economy nor allegiance
o Approval of bill / The law which regulates retail business, and
prevents people who are not citizen of the PH to endanger national
economic life, while takes away a power that can be a disadvantage
to persons who are not citizens of the PH, is necessary for national
survival
o Relation to the Constitution: Section 8, Article 14. No franchise,
certificate or any form of authorization for the operation of public
utility shall be granted except to PH citizens,
o Nationalizes retail trade and THIS IS IN RESPECT OF THE
CONSTITUTION’S NATIONALISTIC PROTECTIVE POLICY

 ON TITLE (SUBJECT) DEFECT: Title is misleading

o Consti: SECTION 21, ARTICLE 6. No bill may be enacted in the law
shall embrace more than one subject which shall be expressed in the
title of the bill
o What that provision prohibits is duplicity
o General rule: Use general terms in the title of the bill
o That the title does not need to be an index to the entire context of
the law
o It cannot be claimed that reasons for declaring the law invalid ever
existed

 On Treaty Violations
 o Nations Charter (which is claimed to be violated) imposes no strict
legal obligation regarding their subjects’ rights and freedom
o Declaration of Human Rights is only a common standard of
achievement for all people and nation
o General Principle: TREATY IS ALWAYS SUBJECT TO QUALIFICATION
BY A SUBSEQUENT LAW

 CONCLUSION
o Disputed LAW IS ENACTED TO REMEDY REAL THREAT TO NATIONAL
ECONOMY BY ALIEN DOMINANCE, and free citizens from alien
control
o Therefor it clearly falls within the scope of police power
o It does not violate the equal protection clause because sufficient
ground exist for the distinction of alien and citizen
o It also does not violate the due process clause because the law is
prospective in application and recognizes the privilege of aliens
already engaged in the occupation
o Provisions of the law is clearly embraced in the title and suffers no
duplicity
o No treaty has been entered into the subject therefor it cannot be
claimed void for conflict on treaty obligations
o PETITION DENIED, COSTS AGAINST PETITIONER