8/15/2015 G.R.No.

143855

TodayisSaturday,August15,2015

RepublicofthePhilippines
SUPREMECOURT
Manila

ENBANC

G.R.No.143855September21,2010

REPRESENTATIVES GERARDO S. ESPINA, ORLANDO FUA, JR., PROSPERO AMATONG, ROBERT ACE S.
BARBERS, RAUL M. GONZALES, PROSPERO PICHAY, JUAN MIGUEL ZUBIRI and FRANKLIN BAUTISTA,
Petitioners,
vs.
HON. RONALDO ZAMORA, JR. (Executive Secretary), HON. MAR ROXAS (Secretary of Trade and
Industry), HON. FELIPE MEDALLA (Secretary of National Economic and Development Authority), GOV.
RAFAELBUENAVENTURA(BangkoSentralngPilipinas)andHON.LILIABAUTISTA(Chairman,Securities
andExchangeCommission),Respondents.

DECISION

ABAD,J.:

This case calls upon the Court to exercise its power of judicial review and determine the constitutionality of the
RetailTradeLiberalizationActof2000,whichhasbeenassailedasinbreachoftheconstitutionalmandateforthe
developmentofaselfreliantandindependentnationaleconomyeffectivelycontrolledbyFilipinos.

TheFactsandtheCase

OnMarch7,2000PresidentJosephE.EstradasignedintolawRepublicAct(R.A.)8762,alsoknownastheRetail
Trade Liberalization Act of 2000. It expressly repealed R.A. 1180, which absolutely prohibited foreign nationals
fromengagingintheretailtradebusiness.R.A.8762nowallowsthemtodosounderfourcategories:

CategoryA Lessthan ExclusivelyforFilipinocitizensandcorporations

US$2,500,000.00 whollyownedbyFilipinocitizens.

CategoryB US$2,500,000.00up ForthefirsttwoyearsofR.A.8762seffectivity,

butlessthan foreignownershipisallowedupto60%.Afterthe
US$7,500,000.00 twoyearperiod,100%foreignequityshallbe
allowed.
CategoryC US$7,500,000.00or Maybewhollyownedbyforeigners.Foreign
more investmentsforestablishingastorein
CategoriesBandCshallnotbelessthanthe
equivalentinPhilippinePesosof
US$830,000.00.
CategoryD US$250,000.00per Maybewhollyownedbyforeigners.
storeofforeign
enterprisesspecializing
inhighendorluxury
products

R.A. 8762 also allows naturalborn Filipino citizens, who had lost their citizenship and now reside in the
Philippines,toengageintheretailtradebusinesswiththesamerightsasFilipinocitizens.

On October 11, 2000 petitioners ***Magtanggol T. Gunigundo I, Michael T. Defensor, Gerardo S. Espina,
Benjamin S. Lim, Orlando Fua, Jr., Prospero Amatong, Sergio Apostol, Robert Ace S. Barbers, Enrique Garcia,
Jr., Raul M. Gonzales, Jaime Jacob, Apolinario Lozada, Jr., Leonardo Montemayor, Ma. Elena PalmaGil,
ProsperoPichay,JuanMiguelZubiriandFranklinBautista,allmembersoftheHouseofRepresentatives,filedthe
presentpetition,assailingtheconstitutionalityofR.A.8762onthefollowinggrounds:
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First,thelawrunsafoulofSections9,19,and20ofArticleIIoftheConstitutionwhichenjoinstheStateto
place the national economy under the control of Filipinos to achieve equal distribution of opportunities,
promoteindustrializationandfullemployment,andprotectFilipinoenterpriseagainstunfaircompetitionand
tradepolicies.

Second, the implementation of R.A. 8762 would lead to alien control of the retail trade, which taken
togetherwithaliendominanceofotherareasofbusiness,wouldresultinthelossofeffectiveFilipinocontrol
oftheeconomy.

Third, foreign retailers like Walmart and KMart would crush Filipino retailers and sarisari store vendors,
destroyselfemployment,andbringaboutmoreunemployment.

Fourth,theWorldBankInternationalMonetaryFundhadimproperlyimposedthepassageofR.A.8762on
thegovernmentasaconditionforthereleaseofcertainloans.

Fifth,thereisaclearandpresentdangerthatthelawwouldpromotemonopoliesorcombinationsin
restraintoftrade.

Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary Mar Roxas, National
EconomicandDevelopmentAuthority(NEDA)SecretaryFelipeMedalla,BangkoSentralngPilipinasGov.Rafael
Buenaventura,andSecuritiesandExchangeCommissionChairmanLiliaBautistacounteredthat:

First, petitioners have no legal standing to file the petition. They cannot invoke the fact that they are
taxpayerssinceR.A.8762doesnotinvolvethedisbursementofpublicfunds.Norcantheyinvokethefact
that they are members of Congress since they made no claim that the law infringes on their right as
legislators.

Second, the petition does not involve any justiciable controversy. Petitioners of course claim that, as
members of Congress, they represent the small retail vendors in their respective districts but the petition
doesnotallegethatthesubjectlawviolatestherightsofthosevendors.

Third, petitioners have failed to overcome the presumption of constitutionality of R.A. 8762. Indeed, they
couldnotspecifyhowthenewlawviolatestheconstitutionalprovisionstheycite.Sections9,19,and20of
ArticleIIoftheConstitutionarenotselfexecutingprovisionsthatarejudiciallydemandable.

Fourth, the Constitution 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 or not to make such reservation. It does not prohibit Congress from enacting laws
allowingtheentryofforeignersintocertainindustriesnotreservedbytheConstitutiontoFilipinocitizens.

TheIssuesPresented

Simplified,thecasepresentstwoissues:

1. Whether or not petitioner lawmakers have the legal standing to challenge the constitutionality of R.A.
8762and

2.WhetherornotR.A.8762isunconstitutional.

TheCourtsRuling

One.Thelongsettledruleisthathewhochallengesthevalidityofalawmusthaveastandingtodoso.1Legal
standingorlocusstandi refers to the right of a party to come to a court of justice and make such a challenge.
More particularly, standing refers to his personal and substantial interest in that he has suffered or will suffer
directinjuryasaresultofthepassageofthatlaw.2Toputitanotherway,hemustshowthathehasbeenoris
about to be denied some right or privilege to which he is lawfully entitled or that he is about to be subjected to
someburdensorpenaltiesbyreasonofthelawhecomplainsof.3

Here, there is no clear showing that the implementation of the Retail Trade Liberalization Act prejudices
petitioners or inflicts damages on them, either as taxpayers4 or as legislators.5 Still the Court will resolve the
question they raise since the rule on standing can be relaxed for nontraditional plaintiffs like ordinary citizens,
taxpayers,andlegislatorswhenasinthiscasethepublicinterestsorequiresorthematterisoftranscendental
importance,ofoverarchingsignificancetosociety,orofparamountpublicinterest.6

Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987 Constitution for the State to
develop a selfreliant and independent national economy effectively controlled by Filipinos. They invoke the
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provisionsoftheDeclarationofPrinciplesandStatePoliciesunderArticleIIofthe1987Constitution,whichread
asfollows:

Section 9. The State shall promote a just and dynamic social order that will ensure the prosperity and
independence of the nation and free the people from poverty through policies that provide adequate social
services,promotefullemployment,arisingstandardofliving,andanimprovedqualityoflifeforall.

xxxx

Section 19. The State shall develop a selfreliant and independent national economy effectively controlled by
Filipinos.

Section20.TheStaterecognizestheindispensableroleoftheprivatesector,encouragesprivateenterprise,and
providesincentivestoneededinvestments.

Petitioners also invoke the provisions of the National Economy and Patrimony under Article XII of the 1987
Constitution,whichreads:

Section10.TheCongressshall,uponrecommendationoftheeconomicandplanningagency,whenthenational
interestdictates,reservetocitizensofthePhilippinesortocorporationsorassociationsatleastsixtypercentum
ofwhosecapitalisownedbysuchcitizens,orsuchhigherpercentageasCongressmayprescribe,certainareas
of investments. The Congress shall enact measures that will encourage the formation and operation of
enterpriseswhosecapitaliswhollyownedbyFilipinos.

Inthegrantofrights,privileges,andconcessionscoveringthenationaleconomyandpatrimony,theStateshall
givepreferencetoqualifiedFilipinos.

The State shall regulate and exercise authority over foreign investments within its national jurisdiction and in
accordancewithitsnationalgoalsandpriorities.

xxxx

Section12.TheStateshallpromotethepreferentialuseofFilipinolabor,domesticmaterialsandlocallyproduced
goods,andadoptmeasuresthathelpmakethemcompetitive.

Section 13. The State shall pursue a trade policy that serves the general welfare and utilizes all forms and
arrangementsofexchangeonthebasisofequalityandreciprocity.

But, as the Court explained in Taada v. Angara,7 the provisions of Article II of the 1987 Constitution, the
declarations of principles and state policies, are not selfexecuting. Legislative failure to pursue such policies
cannotgiverisetoacauseofactioninthecourts.

TheCourtfurtherexplainedinTaadathatArticleXIIofthe1987Constitutionlaysdowntheidealsofeconomic
nationalism: (1) by expressing preference in favor of qualified Filipinos in the grant of rights, privileges and
concessions covering the national economy and patrimony and in the use of Filipino labor, domestic materials
andlocallyproducedgoods(2)bymandatingtheStatetoadoptmeasuresthathelpmakethemcompetitiveand
(3) by requiring the State to develop a selfreliant and independent national economy effectively controlled by
Filipinos.8 te n .lih p w a l

Inotherwords,whileSection19,ArticleIIofthe1987Constitutionrequiresthedevelopmentofaselfreliantand
independent national economy effectively controlled by Filipino entrepreneurs, it does not impose a policy of
Filipino monopoly of the economic environment. The objective is simply to prohibit foreign powers or interests
from maneuvering our economic policies and ensure that Filipinos are given preference in all areas of
development.

Indeed,the1987Constitutiontakesintoaccounttherealitiesoftheoutsideworldasitrequiresthepursuitofa
tradepolicythatservesthegeneralwelfareandutilizesallformsandarrangementsofexchangeonthebasisof
equalityandreciprocityandspeaksofindustrieswhicharecompetitiveinbothdomesticandforeignmarketsas
wellasoftheprotectionofFilipinoenterprisesagainstunfairforeigncompetitionandtradepractices.Thus,while
theConstitutionmandatesabiasinfavorofFilipinogoods,services,laborandenterprises,italsorecognizesthe
need for business exchange with the rest of the world on the bases of equality and reciprocity and limits
protectionofFilipinoenterprisesonlyagainstforeigncompetitionandtradepracticesthatareunfair.9

In other words, the 1987 Constitution does not rule out the entry of foreign investments, goods, and services.
Whileitdoesnotencouragetheirunlimitedentryintothecountry,itdoesnotprohibitthemeither.Infact,itallows
an exchange on the basis of equality and reciprocity, frowning only on foreign competition that is unfair.10 The
key,asinalleconomiesintheworld,istostrikeabalancebetweenprotectinglocalbusinessesandallowingthe
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entryofforeigninvestmentsandservices. 1 a v v p h i1

More importantly, Section 10, Article XII of the 1987 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, Congress has decided to open certain areas of the retail trade
business to foreign investments instead of reserving them exclusively to Filipino citizens. The NEDA has not
opposedsuchpolicy.

Thecontrolandregulationoftradeintheinterestofthepublicwelfareisofcourseanexerciseofthepolicepower
oftheState.Apersonsrighttoproperty,whetherheisaFilipinocitizenorforeignnational,cannotbetakenfrom
himwithoutdueprocessoflaw.In1954,CongressenactedtheRetailTradeNationalizationActorR.A.1180that
restrictstheretailbusinesstoFilipinocitizens.IndenyingthepetitionassailingthevalidityofsuchActforviolation
oftheforeignersrighttosubstantivedueprocessoflaw,theSupremeCourtheldthatthelawconstitutedavalid
exerciseofpolicepower.11TheStatehadaninterestinpreventingaliencontroloftheretailtradeandR.A.1180
wasreasonablyrelatedtothatpurpose.Thatlawisnotarbitrary.

Here,totheextentthatR.A.8762,theRetailTradeLiberalizationAct,lessenstherestraintontheforeignersright
topropertyortoengageinanordinarilylawfulbusiness,itcannotbesaidthatthelawamountstoadenialofthe
Filipinosrighttopropertyandtodueprocessoflaw.Filipinoscontinuetohavetherighttoengageinthekindsof
retailbusinesstowhichthelawinquestionhaspermittedtheentryofforeigninvestors.

Certainly,itisnotwithintheprovinceoftheCourttoinquireintothewisdomofR.A.8762savewhenitblatantly
violates the Constitution. But as the Court has said, there is no showing that the law has contravened any
constitutionalmandate.TheCourtisnotconvincedthattheimplementationofR.A.8762wouldeventuallyleadto
alien control of the retail trade business. Petitioners have not mustered any concrete and strong argument to
supportitsthesis.Thelawitselfhasprovidedstrictsafeguardsonforeignparticipationinthatbusiness.Thus

First,alienscanonlyengageinretailtradebusinesssubjecttothecategoriesaboveenumeratedSecond,only
nationalsfrom,orjuridicalentitiesformedorincorporatedincountrieswhichallowtheentryofFilipinoretailers
shallbeallowedtoengageinretailtradebusinessandThird,qualifiedforeignretailersshallnotbeallowedto
engageincertainretailingactivitiesoutsidetheiraccreditedstoresthroughtheuseofmobileorrollingstoresor
carts,theuseofsalesrepresentatives,doortodoorselling,restaurantsandsarisaristoresandsuchother
similarretailingactivities.

Insum,petitionershavenotshownhowtheretailtradeliberalizationhasprejudicedandcanprejudicethelocal
smallandmediumenterprisessinceitsimplementationaboutadecadeago.

WHEREFORE,theCourtDISMISSESthepetitionforlackofmerit.Nocosts.

SOORDERED.

ROBERTOA.ABAD
AssociateJustice

WECONCUR:

RENATOC.CORONA
ChiefJustice

ANTONIOT.CARPIO CONCHITACARPIOMORALES
AssociateJustice AssociateJustice

(OnOfficialLeave) (OnOfficialLeave)
PRESBITEROJ.VELASCO,JR.* ANTONIOEDUARDOB.NACHURA*
AssociateJustice AssociateJustice

(OnOfficialLeave) (OnOfficialLeave)
TERESITAJ.LEONARDODECASTRO* ARTUROD.BRION*
AssociateJustice AssociateJustice

DIOSDADOM.PERALTA LUCASP.BERSAMIN
AssociateJustice AssociateJustice

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MARIANOC.DELCASTILLO MARTINS.VILLARAMA,JR.
AssociateJustice AssociateJustice

(OnOfficialLeave)
JOSEPORTUGALPEREZ
AssociateJustice JOSECATRALMENDOZA*
AssociateJustice

(OnLeave)
MARIALOURDESP.A.SERENO**
AssociateJustice

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, it is hereby certified that the conclusions in the above
DecisionhadbeenreachedinconsultationbeforethecasewasassignedtothewriteroftheopinionoftheCourt.

RENATOC.CORONA
ChiefJustice

Footnotes

*Onofficialleave.

**Onleave.

***OrdereddroppedaspetitionersperSupremeCourtEnBancResolutiondatedAugust2,2005.Rollo,p.
170.

1Jumamilv.Cafe,G.R.No.144570,September21,2005,470SCRA475,486487.

2Abayav.Ebdane,Jr.,G.R.No.167919,February14,2007,515SCRA720,756.

3BAYAN(BagongAlyansangMakabayan)v.ExecutiveSecretaryZamora,396Phil.623,646647(2000).

4PublicInterestCenter,Inc.v.Roxas,G.R.No.125509,January31,2007,513SCRA457,470.

5Province of North Cotabato v. Government of the Republic of the Philippines Peace Panel on Ancestral
Domain(GRP),G.R.Nos.183591,183752,183893,183951&183962,October14,2008,568SCRA402,
457Bagatsingv.CommitteeonPrivatization,PN[O]C,316Phil.404,419(1995).
6AutomotiveIndustryWorkersAlliance(AIWA)v.Hon.Romulo,489Phil.710,719(2005).

7338Phil.546,580581(1997).

8Id.at584.

9Id.at584585.

10Id.at585.

11Ichongv.Hernandez,101Phil.1155,1191(1957).

TheLawphilProjectArellanoLawFoundation

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