Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 143855               September 21, 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. RAFAEL BUENAVENTURA (Bangko
Sentral ng Pilipinas) and HON. LILIA BAUTISTA (Chairman, Securities and
Exchange Commission), Respondents.

DECISION

ABAD, J.:

This case calls upon the Court to exercise its power of judicial review and determine the
constitutionality of the Retail Trade Liberalization Act of 2000, which has been assailed
as in breach of the constitutional mandate for the development of a self-reliant and
independent national economy effectively controlled by Filipinos.

The Facts and the Case

On March 7, 2000 President Joseph E. Estrada signed into law Republic Act (R.A.)
8762, also known as the Retail Trade Liberalization Act of 2000. It expressly repealed
R.A. 1180, which absolutely prohibited foreign nationals from engaging in the retail
trade business. R.A. 8762 now allows them to do so under four categories:

Category A Less than  Exclusively for Filipino citizens and cor

US$2,500,000.00 owned by Filipino citizens.
Category B US$2,500,000.00 up but less than For the first two years of R.A. 8762’s e
US$7,500,000.00 ownership is allowed up to 60%. After t
period, 100% foreign equity shall be all
Category C US$7,500,000.00 or more May be wholly owned by foreigners. Fo
investments for establishing a store in
and C shall not be less than the equiva
Pesos of US$830,000.00.
 Category D US$250,000.00 per store of May be wholly owned by foreigners.
foreign enterprises specializing in
high-end or luxury products

R.A. 8762 also allows natural-born Filipino citizens, who had lost their citizenship and
now reside in the Philippines, to engage in the retail trade business with the same rights
as Filipino citizens.

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 Palma-Gil, Prospero Pichay,
Juan Miguel Zubiri and Franklin Bautista, all members of the House of Representatives,
filed the present petition, assailing the constitutionality of R.A. 8762 on the following
grounds: 

First, the law runs afoul of Sections 9, 19, and 20 of Article II of the Constitution
which enjoins the State to place the national economy under the control of
Filipinos to achieve equal distribution of opportunities, promote industrialization
and full employment, and protect Filipino enterprise against unfair competition
and trade policies. 

Second, the implementation of R.A. 8762 would lead to alien control of the retail
trade, which taken together with alien dominance of other areas of business,
would result in the loss of effective Filipino control of the economy. 

Third, foreign retailers like Walmart and K-Mart would crush Filipino retailers and
sari-sari store vendors, destroy self-employment, and bring about more
unemployment. 

Fourth, the World Bank-International Monetary Fund had improperly imposed the
passage of R.A. 8762 on the government as a condition for the release of certain
loans. 

Fifth, there is a clear and present danger that the law would promote monopolies
or combinations in restraint of trade.

Respondents Executive Secretary Ronaldo Zamora, Jr., Trade and Industry Secretary
Mar Roxas, National Economic and Development Authority (NEDA) Secretary Felipe
Medalla, Bangko Sentral ng Pilipinas Gov. Rafael Buenaventura, and Securities and
Exchange Commission Chairman Lilia Bautista countered that: 

First, petitioners have no legal standing to file the petition. They cannot invoke
the fact that they are taxpayers since R.A. 8762 does not involve the
disbursement of public funds. Nor can they invoke the fact 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 does not allege that the
subject law violates the rights of those vendors. 

Third, petitioners have failed to overcome the presumption of constitutionality of

R.A. 8762. Indeed, they could not specify how the new law violates the
constitutional provisions they cite. Sections 9, 19, and 20 of Article II of the
Constitution are not self-executing provisions that are judicially demandable. 

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 allowing the entry of foreigners into certain industries not reserved
by the Constitution to Filipino citizens.

The Issues Presented

Simplified, the case presents two issues: 

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

2. Whether or not R.A. 8762 is unconstitutional.

The Court’s Ruling

One. The long settled rule is that he who challenges the validity of a law must have a
standing to do so.1 Legal standing or locus standi 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 direct injury as a
result of the passage of that law.2 To put it another way, he must show that he has been
or is about to be denied some right or privilege to which he is lawfully entitled or that he
is about to be subjected to some burdens or penalties by reason of the law he
complains of.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, and legislators when as in this case the public interest so requires or the
matter is of transcendental importance, of overarching significance to society, or of
paramount public interest.6

Two. Petitioners mainly argue that R.A. 8762 violates the mandate of the 1987
Constitution for the State to develop a self-reliant and independent national economy
effectively controlled by Filipinos. They invoke the provisions of the Declaration of
Principles and State Policies under Article II of the 1987 Constitution, which read as
follows:

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, promote full employment, a rising
standard of living, and an improved quality of life for all.

x x x x 

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

Section 20. The State recognizes the indispensable role of the private sector,
encourages private enterprise, and provides incentives to needed investments. 

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

Section 10. The Congress shall, upon recommendation of the economic and planning
agency, when the national interest dictates, reserve to citizens of the Philippines or to
corporations or associations at least sixty per centum of whose capital is owned by such
citizens, or such higher percentage as Congress may prescribe, certain areas of
investments. The Congress shall enact measures that will encourage the formation and
operation of enterprises whose capital is wholly owned by Filipinos. 

In the grant of rights, privileges, and concessions covering the national economy and
patrimony, the State shall give preference to qualified Filipinos. 

The State shall regulate and exercise authority over foreign investments within its
national jurisdiction and in accordance with its national goals and priorities. 

xxxx

Section 12. The State shall promote the preferential use of Filipino labor, domestic
materials and locally produced goods, and adopt measures that help make them
competitive. 

Section 13. The State shall pursue a trade policy that serves the general welfare and
utilizes all forms and arrangements of exchange on the basis of equality and reciprocity.
But, as the Court explained in Tañada v. Angara,7 the provisions of Article II of the 1987
Constitution, the declarations of principles and state policies, are not self-executing.
Legislative failure to pursue such policies cannot give rise to a cause of action in the
courts. 

The Court further explained in Tañada that Article XII of the 1987 Constitution lays down
the ideals of economic 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 and locally-
produced goods; (2) by mandating the State to adopt measures that help make them
competitive; and (3) by requiring the State to develop a self-reliant and independent
national economy effectively controlled by Filipinos. 8ten.lihpwal

In other words, while Section 19, Article II of the 1987 Constitution requires the
development of a self-reliant and 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, the 1987 Constitution takes into account the realities of the outside world as it
requires the pursuit of a trade policy that serves the general welfare and utilizes all
forms and arrangements of exchange on the basis of equality and reciprocity; and
speaks of industries which are competitive in both domestic and foreign markets as well
as of the protection of Filipino enterprises against unfair foreign competition and trade
practices. Thus, while the Constitution mandates a bias in favor of Filipino goods,
services, labor and enterprises, it also recognizes the need for business exchange with
the rest of the world on the bases of equality and reciprocity and limits protection of
Filipino enterprises only against foreign competition and trade practices that are unfair. 9

In other words, the 1987 Constitution does not rule out the entry of foreign investments,
goods, and services. While it does not encourage their unlimited entry into the country,
it does not prohibit them either. In fact, it allows an exchange on the basis of equality
and reciprocity, frowning only on foreign competition that is unfair. 10 The key, as in all
economies in the world, is to strike a balance between protecting local businesses and
allowing the entry of foreign investments and services.1avvphi1

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 opposed such policy. 
The control and regulation of trade in the interest of the public welfare is of course an
exercise of the police power of the State. A person’s right to property, whether he is a
Filipino citizen or foreign national, cannot be taken from him without due process of law.
In 1954, Congress enacted the Retail Trade Nationalization Act or R.A. 1180 that
restricts the retail business to Filipino citizens. In denying the petition assailing the
validity of such Act for violation of the foreigner’s right to substantive due process of law,
the Supreme Court held that the law constituted a valid exercise of police power. 11 The
State had an interest in preventing alien control of the retail trade and R.A. 1180 was
reasonably related to that purpose. That law is not arbitrary.

Here, to the extent that R.A. 8762, the Retail Trade Liberalization Act, lessens the
restraint on the foreigners’ right to property or to engage in an ordinarily lawful business,
it cannot be said that the law amounts to a denial of the Filipinos’ right to property and to
due process of law. Filipinos continue to have the right to engage in the kinds of retail
business to which the law in question has permitted the entry of foreign investors.

Certainly, it is not within the province of the Court to inquire into the wisdom of R.A.
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 R.A. 8762 would eventually lead to alien control of
the retail trade business. Petitioners have not mustered any concrete and strong
argument to support its thesis. The law itself has provided strict safeguards on foreign
participation in that business. Thus –

First, aliens can only engage in retail trade business subject to the categories above-
enumerated; Second, 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 Third, 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.

In sum, petitioners have not shown how the retail trade liberalization has prejudiced and
can prejudice the local small and medium enterprises since its implementation about a
decade ago.

WHEREFORE, the Court DISMISSES the petition for lack of merit. No costs.

SO ORDERED.

ROBERTO A. ABAD
Associate Justice

WE CONCUR: