o Third, foreign retailers like Walmart and K-Mart would
crush Filipino retailers and sari-sari store vendors,
CASE DIGEST: destroy self-employment, and bring about more
ESPINA V. ZAMORA unemployment.
TOPIC: The Constitutionality of the Retail o Fourth, the World Bank-International Monetary Fund
Trade Liberization Act had improperly imposed the passage of R.A. 8762 on
the government as a condition for the release of
FACTS: certain loans.
On March 7, 2000 President Joseph E. Estrada signed into law
o Fifth, there is a clear and present danger that the law
Republic Act (R.A.) 8762, also known as the Retail Trade would promote monopolies or combinations in
Liberalization Act of 2000. It expressly repealed R.A. 1180, restraint of trade.
which absolutely prohibited foreign nationals from engaging in
the retail trade business. R.A. 8762 now allows them to do so Respondents countered that:
under four categories:
o First, petitioners have no legal standing to file the
petition. They cannot invoke the fact that they are
Category A Less than Exclusively for Filipino taxpayers since R.A. 8762 does not involve the
US$2,500,000.0 citizens and disbursement of public funds. Nor can they invoke the
0 corporations wholly fact that they are members of Congress since they
owned by Filipino made no claim that the law infringes on their right as
citizens. legislators.
Category B US$2,500,000.0 For the first two years of o Second, the petition does not involve any justiciable
0 up but less R.A. 8762’s effectivity,
controversy. Petitioners of course claim that, as
than foreign ownership is
members of Congress, they represent the small retail
US$7,500,000.0 allowed up to 60%. After
vendors in their respective districts but the petition
0 the two-year period,
does not allege that the subject law violates the rights
100% foreign equity
of those vendors.
shall be allowed.
Category C US$7,500,000.0 May be wholly owned by o Third, petitioners have failed to overcome the
0 or more foreigners. Foreign presumption of constitutionality of R.A. 8762. Indeed,
investments for they could not specify how the new law violates the
establishing a store in constitutional provisions they cite. Sections 9, 19, and
Categories B and C 20 of Article II of the Constitution are not
shall not be less than self-executing provisions that are judicially
the equivalent in demandable.
Philippine Pesos of
US$830,000.00. o Fourth, the Constitution mandates the regulation but
not the prohibition of foreign investments. It directs
Category D US$250,000.00 May be wholly owned by Congress to reserve to Filipino citizens certain areas
per store of foreigners. of investments upon the recommendation of the
foreign NEDA and when the national interest so dictates. But
enterprises the Constitution leaves to the discretion of the
specializing in Congress whether or not to make such reservation. It
high-end or does not prohibit Congress from enacting laws
luxury products allowing the entry of foreigners into certain industries
not reserved by the Constitution to Filipino citizens.
On October 11, 2000 filed the present petition, assailing the
constitutionality of R.A. 8762 on the following grounds: ISSUES:
o First, the law runs afoul of Sections 9, 19, and 20 of 1. Whether or not petitioner lawmakers have the legal standing
Article II of the Constitution which enjoins the State to to challenge the constitutionality of R.A. 8762; and
place the national economy under the control of
Filipinos to achieve equal distribution of opportunities, 2. Whether or not R.A. 8762 is unconstitutional.
promote industrialization and full employment, and
protect Filipino enterprise against unfair competition RULING:
and trade policies.
One. The long settled rule is that he who challenges the
o Second, the implementation of R.A. 8762 would lead validity of a law must have a standing to do so. Legal standing
1
to alien control of the retail trade, which taken or locus standi refers to the right of a party to come to a court
together with alien dominance of other areas of of justice and make such a challenge. More particularly,
business, would result in the loss of effective Filipino standing refers to his personal and substantial interest in that
control of the economy. he has suffered or will suffer direct injury as a result of the
passage of that law. To put it another way, he must show that
2
he has been or is about to be denied some right or privilege to competition that is unfair. The key, as in all economies in the
10
which he is lawfully entitled or that he is about to be subjected world, is to strike a balance between protecting local
to some burdens or penalties by reason of the law he businesses and allowing the entry of foreign investments and
complains of. services.
Here, there is no clear showing that the implementation of the More importantly, Section 10, Article XII of the 1987
Retail Trade Liberalization Act prejudices petitioners or inflicts Constitution gives Congress the discretion to reserve to
damages on them, either as taxpayers or as legislators. Still
4 5
Filipinos certain areas of investments upon the
the Court will resolve the question they raise since the rule on recommendation of the NEDA and when the national interest
standing can be relaxed for nontraditional plaintiffs like ordinary requires. Thus, Congress can determine what policy to pass
citizens, taxpayers, and legislators when as in this case the and when to pass it depending on the economic exigencies. It
public interest so requires or the matter is of transcendental can enact laws allowing the entry of foreigners into certain
importance, of overarching significance to society, or of industries not reserved by the Constitution to Filipino citizens.
paramount public interest. In this case, Congress has decided to open certain areas of
the retail trade business to foreign investments instead of
Two. Petitioners mainly argue that R.A. 8762 violates the reserving them exclusively to Filipino citizens.
mandate of the 1987 Constitution for the State to develop a
self-reliant and independent national economy effectively CONCLUSION:
controlled by Filipinos. They invoke the provisions of the
Declaration of Principles and State Policies under Article II of First, aliens can only engage in retail trade business subject to
the 1987 Constitution the categories above-enumerated;
But, as the Court explained in Tañada v. Angara, the 7 Second, only nationals from, or juridical entities formed or
provisions of Article II of the 1987 Constitution, the declarations incorporated in countries which allow the entry of Filipino
of principles and state policies, are not self-executing. retailers shall be allowed to engage in retail trade business;
Legislative failure to pursue such policies cannot give rise to a and Third, qualified foreign retailers shall not be allowed to
cause of action in the courts. engage in certain retailing activities outside their accredited
stores through the use of mobile or rolling stores or carts, the
The Court further explained in Tañada that Article XII of the use of sales representatives, door-to-door selling, restaurants
1987 Constitution lays down the ideals of economic and sari-sari stores and such other similar retailing activities.
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.
8
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
