Gerardo Espina v Ronaldo Zamora

GR No. 143855, 21 Sept. 2010

Abad, J.:

FACTS
On 7 Mar. 2000, Pres. Estrada signed into law RA 8762, also known as the Retail Trade
Liberalization Act of 2000. It expressly repealed RA 1180, which absolutely prohibited
foreign national from engaging in the retail trade business. RA 8762 now allows foreign
nationals to engage in the retail trade business under 4 categories (see table no. 1) and
allows natural-born Filipino who had lost their citizenship but now reside in the
Philippines to engage in the said business with the same rights as Filipino citizens.

On 11 Oct. 2000, petitioners who are all members of the House of Representatives,
assailed the constitutionality of RA 8762 for being violative of Secs. 9, 19, and 20 of Art.
II.1 RA 8762 would lead to alien control of the retail trade which would result in the
loss of effective Filipino control of the economy. Foreign retailers would crush Filipino
retailers and sari-sari store vendors, destroy self-employment, and bring about more
unemployment. Moreover, the World Bank-International Monetary Fund had
improperly imposed the passage of RA 8762 on the gov. as a condition for the release of
certain loans. Furthermore, there is a clear danger that the law would promote
monopolies or combinations in restraint of trade.

Respondents:
a. Petitioners have no legal standing to file the petition. They cannot invoke the
fact that they are taxpayers since RA 8762 does not involve the disbursement of
public funds;
b. Petition does not involve any justiciable controversy;
c. Petitioners have failed to overcome the presumption of constitutionality and that
the constitutional provisions invoked are not self-execution provisions that are
judicially demandable;
d. Constitutional mandates the regulation but not the prohibition of foreign
investments. It directs Congress to reserve to Filipino citizens certain areas of
investments upon the recommendation of the NEDA and when the national
interest so dictates. But the Constitution leaves to the discretion of the Congress
whether to make such reservation.

1
Enjoins the State to place the national economy under control of Filipino to
achieve equal distribution of opportunities, promote industrialization and full
employment and protect Filipino enterprise against unfair competition and trade
policies.
 ISSUE
1. Whether petitioners-lawmakers have the legal standing to challenge the
constitutionality of RA 8762.
2. Whether RA 8762 is unconstitutional.

HELD
1. No, the petitioners-lawmakers do not have the legal standing to assail the
validity of RA 8762.

Legal standing or locus standi refers to the right of the party to come to a court of
justice and make a challenge. More particularly, standing refers to the person’s
personal substantial interest in that he has suffered or will suffer direct injury as
a result of the passage of that law.

In the instant case, there is no showing that the implementation of RA 8762

prejudices petitioners or inflicts damages on them, either as taxpayers or as
legislators. Still, the Court will resolve the question they raise since the rule on
standing can be relaxed for nontraditional plaintiffs when (a) the public interest
so requires or (b) the matter is transcendental importance, of overreaching
significance to society, or of paramount public interest.

2. No, RA 8762 is not unconstitutional, it is valid.

The provisions under Art. II of the 1987 Constitution are not self-executing. Sec.
9 thereof requires the development of a self-reliant and independent national
economy effectively controlled by Filipino entrepreneurs, it does not, however,
impose a policy of Filipino monopoly of the economic environment.

More importantly, Sec. 10, Art. XII of the Constitution gives Congress the
discretion to reserve to Filipinos certain areas of investments upon the
recommendation of the NEDA and when the national interest requires. Thus,
Congress can determine what policy to pass and when to pass it depending on
the economic exigencies. It can enact laws allowing the entry of foreigners into
certain industries not reserved by the Constitution to Filipino citizens. In this
case, the Congress has decided to upon certain areas of the retail trade business
to foreign investments instead of reserving them exclusively to Filipino citizens.
The NEDA has not opposed such policy.

Certainly, it is not within the province of the Court to inquire into the wisdom of
RA 8762, save when it blatantly violates the Constitution. But as the Court has
said, there is no showing that the law has contravened any constitutional
 mandate. The Court is not convinced that the implementation of RA 8762 would
eventually lead to alien control of the retail trade business. Petitioners have not
mustered any concrete and strong argument to support their thesis. The law
itself has provided strict safeguards on foreign participation in that business:
a. Aliens can only engage in retail trade business subject to the categories
below;
b. Only nationals from, or juridical entities formed or incorporated in
countries which allow the entry of Filipino retailers shall be allowed to
engage in retail trade business; and
c. 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.

It is integral indeed to primarily promote the welfare of Filipino investors as

mandated by the Constitution. Nonetheless, it is equally important that holistic
economic growth must be assured for the overall development of our country’s
trade industry. This can be done by allowing entry of foreign investors that will
be allowed to engage in businesses regulated by the provisions of RA 8762.

Table No. 1
Category A Less than $2.5M Exclusively for Filipino citizens and corp.
owned by Filipino citizens;
Category B $2.5M to $7.5M For the first 2 years of RA 8762’s effectivity,
foreign ownership is allowed up to 60%. After
the said period, 100% foreign equity shall be
allowed;
Category C $7.5M or more May be wholly owned by foreigners. Foreign
investments for establishing a store in
Categories B and C shall not be less than the
equivalent in Philippine Peso of $830k;
Category D $250k per store of May be wholly owned by foreigners.
foreign enterprises
specializing in high-
end or luxury
products.