LAO H. ICHONG VS. JAIME HERNANDEZ - G.R NO.

L- 7995

May 31, 1957

Facts:

Chinese entrepreneur Lao Ichong, who had been successful in the local market, encountered an obstacle with the
passage of the Retail Trade Nationalization Act (RA 1180) in 1954. This law reserved retail businesses exclusively
for Filipinos. Ichong sought to invalidate the Act, contending that it contravened international treaties and the
principle of equal protection. His argument was based on his belief that he should have equal opportunities in the
retail sector as a contributor to the country's economy.

The court is reviewing Republic Act No. 1180, a law protecting local retailers from foreign competition. The law is
challenged by a petitioner representing alien residents, corporations, and partnerships, who argue it violates
constitutional and international obligations. In defense, the Solicitor-General and City of Manila Fiscal say that the
Act is a valid exercise of state power and doesn't infringe on international commitments. The petitioner contends
that the Act, approved using the state's police power, violates constitutional due process and equal protection.
Police power, derived from the state's existence, is extensive and complicated to limit, especially in today's
complex society. Constitutions don't define their scope but set limitations, primarily through the due process and
equal protection clauses.

The equal protection clause requires fair treatment for all, not absolute equality. The due process clause checks
the reasonableness of laws under police power. These constitutional guarantees should coexist with police power,
balancing individual liberties with public interest in a democracy. In balancing police power and individual rights,
the legislature primarily determines the necessity and reasonableness of laws under police power. While courts
guard individual liberties, they are generally reluctant to interfere with the legislature unless there's clear,
unreasonable abuse. Courts do not override policy or question the wisdom of the law.

Issue:

Whether or not it is fair and justified to ban foreigners from future retail trade considering their past questionable
practices

Ruling:

No, court has ruled that the law aiming to restrict the participation of foreigners in the retail industry is a
legitimate exercise of the state's police power. This power safeguards the state's interests and maintains its
security. The law is perceived as a reaction to a genuine risk to the national economy caused by foreign control in
the retail sector.

The court has determined that the law doesn't breach the Constitution's equal protection clause, as there are
justifiable reasons to differentiate between foreigners and citizens in the retail sector. It doesn't infringe on the
due process clause either, as it looks forward and upholds the rights of foreigners already involved in the business.
The court recognizes the law's success in meeting its goals and asserts that it's not their role to challenge the
legislature's wisdom. The court also dismisses worries about the law contradicting any treaty obligations, as no
particular treaty has been pointed out.

While some court members think the law could have been more lenient towards foreigners, recommending a
more extended liquidation period for existing businesses, the court emphasizes that its job is to assess if the law is
within the legislative power and adheres to constitutional principles. Any solutions to soften the law's impact
should be proposed to the legislature. Ultimately, the challenge against the law is rejected, with the petitioner
bearing the costs.