ICHONG v.

HERNANDEZ
May 31, 1957

Petitioner: LAO H. ICHONG (operator of market stalls in Pasay City market)

Respondents: JAIME HERNANDEZ, Secretary of Finance, MARCELINO SARMIENTO, City Treasurer of Manila

Ponente: LABRADOR, J

WHERE? Manila
WHEN? May 1957 Philippine Republic.
Whos the president? President Magsaysay just died in a plane crash in March 1957 and was succeeded by Carlos P. Garcia
What constitution governs? 1935 Constitution (as amended in 1940)
National Legislature? Congress and bicameral
Citation? Republic Act

FACTS:
Chinese businessman, Lao Ichong, entered the country to take advantage of business opportunities herein abound. His type of
business particularly is a retail business. He and his fellow Chinese businessmen enjoyed a monopoly in the local market in Pasay.
But in June 1954, Congress passed the Republic Act No. 1180 or the Retail Trade Nationalization Act. This act is to reserve to
Filipinos the right to engage in the retail business.

Ichong then petitioned for the nullification of the said Act on the following grounds:

Arguments of the petitioner: Respondents Answers (Solicitor General an Fiscal):

1. it denies to alien residents the equal protection of the laws and the Act was passed in the valid exercise of the police power
deprives of their liberty and property without due process of of the State, which exercise is authorized in the Constitution
law; (Lex injusta non / est lex = An unjust law is not a law) in the interest of national economic survival;
2. the subject of the Act is not expressed or comprehended in the the Act has only one subject embraced in the title ;
title thereof;
3. the Act violates international and treaty obligations of the no treaty or international obligations are infringed;
Republic of the Philippines;
4. the provisions of the Act against the transmission by aliens of as regards hereditary succession, only the form is affected
their retail business thru hereditary succession, and those but the value of the property is not impaired, and the
requiring 100% Filipino capitalization for a corporation or entity institution of inheritance is only of statutory origin.
to entitle it to engage in the retail business, violate the spirit of
Sections 1 and 5, Article XIII and Section 8 of Article XIV of the
Constitution.

ISSUES:
1. Whether or not R.A. 1180 deprives aliens of equal protection and due process.
2. Whether or not R.A. 1180 violates the one subject one title policy.
3. Whether or not R.A. 1180 violates international and treaty obligations of the Republic of the Philippines.
4. Whether or not R.A. 1180 is unconstitutional.

HELD:
1. NO. Does not violate equal protection clause because sufficient ground exists for the distinction between alien and citizen.
Equal protection does not demand absolute equality among residents, merely requires that all persons be treated
alike, under like circumstances and conditions both as to privileges conferred and liabilities enforced. Likewise does not
violate due process clause because the law is prospective in operation and recognizes the privilege of aliens already
engaged in the occupation and reasonably protects their privilege. Due process demands that law shall not be
unreasonable, arbitrary or capricious, and that the means selected shall have a real and substantial relation to the subject
sought to be attained.
The law is a valid exercise of police power and it does not deny the aliens the equal protection of the laws. There are real
and actual, positive and fundamental differences between an alien and a citizen, which fully justify the legislative
classification adopted.
2. NO. Provisions in the law are clearly embraced in the title and suffer no duplicity. While the term regulate does not
readily convey the idea of nationalization and prohibition, such term is broad enough to cover the two. Title of a bill
 need not be an index to the entire contents of the law. (Generale dictum / generliter est interpretandum = A general
statement is understood in its general sense)
3. NO. UNDHR merely a recommendation or a common standard of achievement or all peoples and all nations. No treaty has
actually been entered into and the police power may not be curtailed or surrendered by any treaty or any other
conventional agreement. For the Treaty of Amity with China, this merely guarantees equal treatment of Chinese nationals
as other nationals of any other country.
4. YES. R.A. 1180 is CONSTITUTIONAL. Petition by Ichong was dismissed.

RATIO:

The mere fact of alienage is the root and cause of the distinction between the alien and the national as a trader.
The alien resident owes allegiance to the country of his birth or his adopted country; his stay here is for personal convenience; he is
attracted by the lure of gain and profit. He is naturally lacking in that spirit of loyalty and enthusiasm for this country where he
temporarily stays and makes his living or of that spirit of regard, sympathy and consideration for his Filipino customers as would
prevent him from taking advantage of their weakness and exploiting them.

Another objection to the alien retailer in this country is that he never really makes a genuine contribution to national income and
wealth. The alien's interest in this country being merely transient and temporary, it would indeed be ill-advised to continue
entrusting the very important function of retail distribution to his hands.

The classification is actual, real and reasonable, and all persons of one class are treated alike.

The difference in status between citizens and aliens constitutes a basis for reasonable classification in the exercise of police power.

The alien retailer has shown such utter disregard for his customers and the people on whom he makes his profit. Through the
illegitimate use of pernicious designs and practices, the alien now enjoys a monopolistic control on the nations economy
endangering the national security in times of crisis and emergency.

The mere fact of alienage is the root cause of the distinction between the alien and the national as a trader. The alien is naturally
lacking in that spirit of loyalty and enthusiasm for the Phil. where he temporarily stays and makes his living. The alien owes no
allegiance or loyalty to the State, and the State cannot rely on him/her in times of crisis or emergency.

While the citizen holds his life, his person and his property subject to the needs of the country, the alien may become the potential
enemy of the State.

Official statistics point out to the ever-increasing dominance and control by alien of the retail trade. It is this domination and control
that is the legislatures target in the enactment of the Act.

Test of reasonableness (for due process). Law in question is deemed absolutely necessary to bring about desired legislative objective
to free national economy from alien control and dominance. Law is not unnecessarily unreasonable because it affects private life or
privileges.

Cursory study of provisions reveal how tolerant and reasonable the legislature has been.
R.A. 1180 An Act to Regulate the Retail Business
1. a prohibition against persons, not citizens of the Philippines, and against associations, partnerships, or corporations the capital
of which are not wholly owned by citizens of the Philippines, from engaging directly or indirectly in the retail trade;
2. an exception from the above prohibition in favor of aliens actually engaged in said business on May 15, 1954, who are allowed
to continue to engaged therein, unless their licenses are forfeited in accordance with the law, until their death or voluntary
retirement in case of natural persons, and for ten years after the approval of the Act or until the expiration of term in case of
juridical persons;
3. an exception therefrom in favor of citizens and juridical entities of the United States;
4. a provision for the forfeiture of licenses (to engage in the retail business) for violation of the laws on nationalization, control
weights and measures and labor and other laws relating to trade, commerce and industry;
5. a prohibition against the establishment or opening by aliens actually engaged in the retail business of additional stores or
branches of retail business,
6. a provision requiring aliens actually engaged in the retail business to present for registration with the proper authorities a
verified statement concerning their businesses, giving, among other matters, the nature of the business, their assets and
liabilities and their offices and principal offices of judicial entities; and
 7. a provision allowing the heirs of aliens now engaged in the retail business who die, to continue such business for a period of six
months for purposes of liquidation.

LEGAL PRINCIPLES INVOLVED:

I. POLICE POWER? (Nulla potentia / supra legis esse debet = no power must be above the law)
Derive its existence from the very existence of the State. Co-extensive with self-protection and survival, most positive and active of
all government processes. So far-reaching in scope and most essential, insistent and illimitable power of the state. Constitution does
not define scope or extent of police power, what it does is set forth the limitations.

What are the constitutional limitations on police power?

SECTION 1.(1) No person shall be deprived of life, liberty or property without due process of law, nor any person be denied the equal
protection of the laws. (Article III, Phil. Constitution)
1. Equal protection clause
Law is against undue favor and individual or class privilege or oppression of inequality. Does not demand absolute equality
among residents, merely requires that all persons be treated alike, under like circumstances and conditions both as to
privileges conferred and liabilities enforced.
2. Due process clause
Law shall not be arbitrary or capricious, and that the means selected shall have a real and substantial relation to the subject
sought to be attained.
Due process test: Is there public interest, a public purpose; is public welfare involved? Is the Act reasonably necessary for the
accomplishment of the legislature's purpose; is it not unreasonable, arbitrary or oppressive? Is there sufficient foundation or
reason in connection with the matter involved; or has there not been a capricious use of the legislative power? Can the aims
conceived be achieved by the means used, or is it not merely an unjustified interference with private interest?

The conflict, therefore, between police power and the guarantees of due process and equal protection of the laws are supposed to
coexist. The balancing is the essence or, shall it be said, the indispensable means for the attainment of legitimate aspirations of any
democratic society. There can be no absolute power =tyranny. Yet there can neither be absolute liberty = license and anarchy. So
the State can deprive persons of life, liberty and property, provided there is due process of law; and persons may be classified into
classes and groups, provided everyone is given the equal protection of the law. The test or standard, as always, is reason. The police
power legislation must be firmly grounded on public interest and welfare, and a reasonable relation must exist between purposes
and means. And if distinction and classification has been made, there must be a reasonable basis for said distinction.

II. Legislative discretion not subject to judicial review

Courts are not supposed to override legitimate policy, and courts never inquire into the wisdom of the law.