Police Power

4. Ichong v. Hernandez
(G.R. No. L-7995; May 31, 1957)

FACTS:
Republic Act 1180 was enacted by Congress, which barred all non-citizens of the Philippines and
businesses whose capital are not owned by citizens of the Philippines from engaging in the retail trade in
any manner. Petitioner, who is among the foreigners residing in the Philippines who are affected by the
Republic Act, alleges that the same is unconstitutional because, among other grounds, the Republic Act
denies to him and other foreign residents equal protection under the law and that the same constitutes a
deprivation of their liberty and property w/o due process of the law. The Solicitor General, representing
respondent Secretary of Finance, counters these arguments of the petitioner by claiming that the Republic
Act is a valid exercise of the State’s police power, since the law aims to protect the economic activities of
Filipinos from foreign competition.

ISSUE:
Whether or not Republic Act 1180 is constitutional as an exercise of the State’s police power.

HELD:
Yes. Police power is one of the most expansive powers of the State. This power is invoked to ensure
the survival of State and has very few limitations, in response to the growing needs of the citizens as time
passes. The only limitations of this power are due process and equal protection, which are enshrined in Art.
3(1) of the 1987 Constitution. Due process ensures the reasonableness of laws enacted in relation to the
exercise of police power while equal protection ensures that no individual or class of individuals are unfairly
favored or otherwise.

As mentioned in the Facts, Republic Act 1180 is targeted specifically against foreigners and
foreign-owned businesses and prohibits them from engaging in the retail trade. While this appears to be
violative of equal protection, this is not the case. An exception to equal protection is when there are
reasonable grounds for enforcing a law against a certain class of people and not on those who don’t fall
under that class. In this case, foreigners who reside in the Philippines and engage in business there do so
for their own personal profit. While this is also true of Filipinos as well, foreigners are more likely to place
their own interests ahead of the welfare of their Filipino customers since the former owe allegiance and
loyalty to their own native countries than the Philippines. Also, the contributions of foreigners to the
national economy are transient, as they can simply move back to their homelands when market conditions
are no longer favorable to them. The Filipino entrepreneurs have no such backup plan. These characteristics
of foreigners are of such a fundamental nature that they warrant special treatment under the law.

With regard to the reasonableness of the Republic Act, the goal of the same has been stated as to
protect the economic interests of Filipino entrepreneurs and the national economy itself from foreign control
and competition. The attainment of this goal is necessary if the independence of the Philippines is to be
safeguarded. In addition to this, the law has a prospective application only, as the same allows those
foreigners engaged in the retail trade to continue their businesses for the rest of their lives, except those
who have been convicted of specified offenses. Businesses not wholly owned by Filipinos, meanwhile, are
allowed to operate for another ten years after the Republic Act was enacted. Thus, the provisions of the
Republic Act are reasonable and are not violative of the foreigners’ due process.

Given these factors, Republic Act 1180 is constitutional as an exercise of the State’s police power.
The petition is hereby denied.