G.R. No. L-7995 May 31, 1957
LAO H. ICHONG, in his own behalf and in behalf of other alien residents, corporations and partnerships adversely affected by Republic Act No. 1180, petitioner, vs. JAIME HERNANDEZ, Secretary of Finance, and MARCELINO SARMIENTO, City Treasurer of Manila, respondents.

FACTS

Petitioner Lao H. Ichong, on behalf of himself and other affected alien residents, corporations, and partnerships, filed an action seeking a judicial declaration that Republic Act No. 1180 (the Retail Trade Nationalization Act) is unconstitutional and to enjoin its enforcement. The Act nationalizes the retail trade business by prohibiting non-citizens and entities not wholly owned by Filipino citizens from engaging in it. It provides exceptions for aliens already engaged in the business as of May 15, 1954, allowing them to continue until death or voluntary retirement (for natural persons) or for ten years (for juridical persons), with an exception for U.S. citizens and entities. The petitioner contends the Act denies alien residents equal protection of the laws, deprives them of liberty and property without due process, has a title that does not express its subject, violates international treaty obligations, and contravenes constitutional provisions on property and inheritance.

ISSUE

The primary issue is whether Republic Act No. 1180 is a valid exercise of the police power of the State or if it violates constitutional guarantees of due process and equal protection of the laws.

RULING

The Supreme Court upheld the constitutionality of Republic Act No. 1180. The Court ruled that the law is a valid exercise of the State’s police power, enacted to address a genuine and serious economic problem affecting national survival and welfare—the dominance of alien retailers and its perceived threat to the nation’s economic independence. The legislative classification between aliens and citizens in the retail trade is based on substantial distinctions (aliens owe allegiance to another nation and their economic activities may not align with national interests) and is germane to the law’s purpose of promoting a Filipino citizenry in the retail trade. The law applies equally to all within the class (all aliens), satisfying the equal protection clause. The Court also found that the means employed (phasing out alien participation) are reasonably necessary to achieve the legitimate state objective, complying with due process. The title of the Act (“An Act to Regulate the Retail Business”) sufficiently expresses its subject. The Court further ruled that the law does not violate any treaty obligations and that the provisions on hereditary succession and capitalization are valid exercises of legislative power. The dissenting opinion argued that certain provisions compelling the winding up of businesses within fixed periods, regardless of agreed terms or for heirs, constituted a deprivation of property without due process.