King vs. Hernandez

The Anti-Dummy Law prohibits the employment of aliens in all positions in a retail establishment owned by a Filipino citizen—whether control or non-control positions—except technical personnel whose employment is specifically authorized by the President of the Philippines. The words "management, operation, administration and control," read in connection with "whether as an officer, employee, or laborer therein," cover the entire range of employment regardless of the nature of the activity involved.

Macario King, a naturalized Filipino citizen, acquired on January 1, 1957 the business establishment known as "Import Meat and Produce," a grocery wholesale and retail business previously owned by Philippine Cold Stores, Inc. The establishment employed fifteen persons, twelve Filipinos and three Chinese; the three Chinese had been employees of the previous owner, one as purchaser and two as salesmen. The controversy centers on the interplay between Republic Act No. 1180 (the Retail Trade Law), which nationalizes the retail trade by restricting ownership to Filipino citizens, and Commonwealth Act No. 108 as amended by Republic Act No. 134 (the Anti-Dummy Law), which punishes acts of evasion of laws nationalizing certain rights, franchises, or privileges.

On January 1, 1957, Macario King, a naturalized Filipino citizen, became the owner of the business establishment known as "Import Meat and Produce," a grocery wholesale and retail business previously owned by Philippine Cold Stores, Inc. The establishment employed fifteen persons—twelve Filipinos and three Chinese. The three Chinese employees had been with the previous owner: one served as purchaser and the other two as salesmen.

Three weeks after acquiring the business, King sought permission from the President of the Philippines to retain the services of the three Chinese employees, pursuant to Section 2-A of Commonwealth Act No. 108, coursing his letter through the Secretary of Commerce and Industry. The Secretary recommended disapproval on the ground that aliens may not be appointed to operate or administer a retail business under Section 1 of Republic Act No. 1180, which requires that the capital of such business be wholly owned by citizens of the Philippines, the only exception being the employment of technical personnel with presidential authorization. The President approved the recommendation, finding that the positions of purchaser and salesmen occupied by the three Chinese were not technical positions within the meaning of Section 2-A of Commonwealth Act No. 108, as amended by Republic Act No. 134.

As a result of this adverse ruling, King and his three Chinese employees—Lim Pin, Chang Pak, and Ng See Keng—filed a petition for declaratory relief, injunction, and mandamus on August 25, 1958 before the Court of First Instance of Manila. The lower court issued a writ of preliminary injunction ex parte upon petitioners' filing of a bond in the amount of ₱5,000.00. Respondents moved to dismiss, arguing that the petition failed to state a cause of action and that declaratory relief was unavailable because the statute had already been breached. The motion to dismiss was denied for lack of merit, and trial proceeded.

The three Chinese employees testified that they had nothing to do with the management and control of the business, nor did they participate in its profits beyond their monthly salaries. They had been employed long before the enactment of Republic Act No. 1180. They only waited for customers and sold according to prices appearing on tags previously fixed by their manager, Macario King. Lim Pin, employed as buyer, declared that his duties consisted of no more than buying groceries appearing on a list prepared and given to him from time to time by King, at prices indicated in the list. Respondents presented no evidence to contradict these facts, relying solely on their motion to dismiss. The lower court ruled in favor of petitioners, declaring that King could employ the three Chinese in non-control positions and making the preliminary injunction final. Respondents appealed to the Supreme Court.

• Non-Coverage Under Anti-Dummy Law: Petitioners contended that their employment was not prohibited by either the Retail Trade Law or the Anti-Dummy Law because they did not intervene in the management, operation, administration, or control of the retail establishment, nor did they participate in profits beyond their monthly salaries.
• Nationalization Limited to Ownership: Petitioners argued that Section 1 of Republic Act No. 1180 mirrors the legislative intent to nationalize retail trade merely through Filipino ownership of the business, and since nothing in the Retail Trade Law prohibits a Filipino-owned retail enterprise from employing an alien, and the Anti-Dummy Law limits its prohibition to positions relating to management, operation, administration, or control, they may continue in their non-control positions without violating either law.
• Distinction Between Control and Non-Control Positions: Petitioners drew a line of distinction between alien employees occupying positions of control and those occupying non-control positions, maintaining that only the former are covered by the Anti-Dummy Law's prohibition.
• Constitutional Right to Employ: Petitioners invoked the constitutional guarantee of the right of an employer to employ and of an employee to work, accorded to citizens and aliens alike, citing Meyer vs. Nebraska for the proposition that liberty includes the right to engage in common occupations of life.

• Total Ban on Alien Employment: Respondents contended that the language of the Anti-Dummy Law bans alien employment in both control and non-control positions, the words "management, operation, administration and control" followed by "whether as an officer, employee or laborer therein" signifying legislative intent to cover the entire scale of personnel activity, including laborers, with the only exemption being technical personnel with prior presidential authorization.
• Statutory Construction — Redendo Singula Singulis: Respondents applied the rule of redendo singula singulis, arguing that the antecedents "management, operation, administration and control" and the consequents "officer, employee, and laborer" should be read distributively, each word applied to the subject to which it most properly relates.
• Declaratory Relief Unavailable: Respondents argued that declaratory relief would not prosper because the statute had already been breached—King had employed the three Chinese for more than two years in violation of Section 2-A of Republic Act No. 134—and where there is a breach or actionable violation, a complaint for declaratory judgment is barred.
• Non-Technical Personnel: Respondents maintained that the three Chinese employees were not technical men exempted from the operation of the law, and even if they were, they lacked the required presidential authorization.

• Scope of Anti-Dummy Law: Whether the employment of aliens in non-control positions in a retail establishment is prohibited by the Anti-Dummy Law (Commonwealth Act No. 108, as amended by Republic Act No. 134).
• Constitutionality of Employment Nationalization: Whether the nationalization of employment in retail trade violates the constitutional right of a citizen to select and employ persons of his choice, or the right to association.
• Availability of Declaratory Relief: Whether the petition for declaratory relief was properly filed, or whether it was barred by a prior breach of the statute.

• Scope of Anti-Dummy Law: Yes. The Anti-Dummy Law prohibits the employment of aliens in all positions in a retail establishment—control and non-control alike—except technical personnel authorized by the President, the words "management, operation, administration and control" read with "whether as an officer, employee, or laborer therein" covering the entire range of employment.
• Constitutionality of Employment Nationalization: No, the nationalization of employment in retail trade does not violate the Constitution. It is a valid exercise of police power aimed at protecting national economy and security, and does not impair the right to association guaranteed by the Bill of Rights.
• Availability of Declaratory Relief: Yes, the petition was properly filed. King had not breached the law because he sought presidential authorization before retaining the Chinese employees and filed the action immediately after the request was denied.

• Scope of Anti-Dummy Law: The Court agreed with respondents that the Anti-Dummy Law, read in pari materia with the Retail Trade Law, prohibits alien employment in all positions in a retail establishment. The words "management, operation, administration and control," while technically synonymous in referring to the exercise of a directing or governing influence, when read in connection with the positions enumerated—"whether as an officer, employee, or laborer therein"—cover the entire range of employment regardless of whether the activity involves control or non-control functions. The Court applied the principle of redendo singula singulis, reading the antecedents and consequents distributively. The rationale is to plug any loophole or close any avenue that an unscrupulous alien may exploit to flout the law: a person employed in a non-control position, though apparently harmless, may later become a tool to further the employer's designs. The Retail Trade Law nationalizes ownership; the Anti-Dummy Law nationalizes management, operation, administration, and control. Together they secure both ownership and management of retail business in Filipino hands.

• Constitutionality of Employment Nationalization: The Court rejected the trial court's view that nationalization of employment impairs a citizen's constitutional right to employ persons of his choice or the right to associate. The right to employ is not the same as the right to association embodied in the Bill of Rights (Section 1, paragraph 6), which encourages the formation of voluntary associations for purposes not contrary to law. Petitioners had never been denied the right to form voluntary associations. The nationalization of employment merely limits the employer's sphere of choice to citizens, excluding aliens, and is a valid exercise of police power. The Court relied on its prior ruling in the Ichong case upholding the constitutionality of the Retail Trade Law as a measure "in the interest of the public, nay of the national security itself," and held that since the Anti-Dummy Law is a complement of the Retail Trade Law, the same constitutional validation applies with equal if not greater force. The Meyer vs. Nebraska case was distinguished and rejected, as the Court had already brushed aside the theory that retail trade is a common occupation whose pursuit cannot be impaired, given the monopolistic control exercised by aliens and their stranglehold on the national economy.

• Availability of Declaratory Relief: The Court found that King had not breached the law when he filed the action. The alien employees were already in the employ of the establishment when King acquired it; King wrote the President requesting permission to continue their employment; and immediately after the request was denied, he instituted the petition for declaratory relief. There was no prior breach that would bar the action.

• In Pari Materia Construction of Nationalization Laws — The Retail Trade Law (Republic Act No. 1180) and the Anti-Dummy Law (Commonwealth Act No. 108, as amended by Republic Act No. 134) must be read together as complementary statutes pursuing the same objective: the complete nationalization of retail trade, both in ownership and employment. The Retail Trade Law excludes aliens from owning any retail trade; the Anti-Dummy Law bans their employment if the trade is owned by Filipinos. Together they secure both ownership and management in Filipino hands.

• Redendo Singula Singulis — The antecedents "management, operation, administration and control" and the consequents "officer, employee, and laborer" in Section 2-A of the Anti-Dummy Law should be read distributively, each word applied to the subject to which it most properly relates, resulting in a total ban on alien employment in all positions except technical personnel with presidential authorization.

• Police Power and Nationalization — Nationalization of employment in retail trade, when founded on grounds of public policy and national security, is a valid exercise of police power and cannot be branded as unjust, arbitrary, oppressive, or contrary to the Constitution. The right of an employer to choose employees is not impaired but merely limited to citizens, excluding aliens.

• Right to Employ Distinguished from Right to Associate — The right to employ is not the same as the right to association guaranteed by the Bill of Rights. The constitutional right to form associations for purposes not contrary to law encourages voluntary associations to advance the nation's welfare; it does not guarantee an unrestricted right to employ aliens in nationalized businesses.

• "When the law says that you cannot employ an alien in any position pertaining to management, operation, administration and control, 'whether as an officer, employee, or laborer therein', it only means one thing: the employment of a person who is not a Filipino citizen even in a minor or clerical or non-control position is prohibited." — This passage articulates the core ratio decidendi: the Anti-Dummy Law's prohibition on alien employment covers all positions, not merely those involving control.

• "The one advocates the complete nationalization of the retail trade by denying its ownership to any alien, while the other limits its management, operation, administration and control to Filipino citizens. The prevailing idea is to secure both ownership and management of the retail business in Filipino hands." — This defines the complementary relationship between the Retail Trade Law and the Anti-Dummy Law as instruments of complete nationalization.

• "There is no point in distinguishing employments in positions of control from employments in non-control positions except to facilitate violations of the Anti-Dummy Law." — The Solicitor General's remark, adopted by the Court, explains why any distinction between control and non-control positions would defeat the legislative purpose.

• "In nationalizing employment in retail trade the right of choice of an employer is not impaired but its sphere is merely limited to the citizens to the exclusion of those of other nationalities." — This passage defines the constitutional boundary: police power limits but does not destroy the employer's right of choice.

• Lao H. Ichong vs. Hernandez, G.R. No. L-7995, May 31, 1957 — Controlling precedent upholding the constitutionality of the Retail Trade Law as a valid exercise of police power. The Court relied on it to validate the Anti-Dummy Law as a complementary measure, applying the same constitutional reasoning to employment nationalization.
• Meyer vs. Nebraska, 67 Law Ed. 1042 — Distinguished and rejected. Cited by petitioners and the trial court to support the proposition that liberty includes the right to engage in common occupations; the Court brushed aside this theory given the monopolistic control by aliens in retail trade and the danger to national security.
• Commonwealth vs. Hans, 81 N.E. 149 — Cited as basic authority for nationalization of legislative measures, supporting the validity of employment nationalization in retail trade.
• Bloomfield vs. State, 99 N.E. 309 — Similarly cited as basic authority for nationalization measures, reinforcing the constitutionality of the Anti-Dummy Law.

• Section 1, Republic Act No. 1180 (Retail Trade Law) — Provides that no person who is not a citizen of the Philippines, and no association, partnership, or corporation the capital of which is not wholly owned by citizens of the Philippines, shall engage directly or indirectly in the retail business. Applied to establish that the nationalization of retail trade is complete as to ownership.
• Section 2-A, Commonwealth Act No. 108, as amended by Republic Act No. 134 (Anti-Dummy Law) — Prohibits any person, corporation, or association holding a right, franchise, privilege, property, or business reserved by the Constitution or laws to Filipino citizens from allowing a non-qualified person to intervene in the management, operation, administration, or control thereof, whether as officer, employee, or laborer, with or without remuneration, except technical personnel whose employment may be specifically authorized by the President. Applied to prohibit alien employment in all positions in a Filipino-owned retail establishment, except technical personnel with presidential authorization.
• Section 1, paragraph 6, Bill of Rights (1935 Constitution) — Provides that the right to form associations or societies for purposes not contrary to law shall not be abridged. Applied to distinguish the right to associate from the right to employ, holding that nationalization of employment does not abridge the right to association.

Bengzon, C.J., Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, and De Leon, JJ., concurred.