Universal Corn Products, Inc., et al. vs. Rice and Corn Board, et al.

A statute or regulation prohibiting the employment of aliens in a nationalized industry applies prospectively to the continuance of employment after its effectivity, and such nationalization of employment is a valid exercise of police power notwithstanding that the affected employees were hired before the law's enactment.

Republic Act No. 3018 nationalized the rice and corn industry, and Section 6 thereof authorized the Rice and Corn Board to issue rules and regulations to carry out its provisions. Section 2-A of Commonwealth Act No. 108, as amended by Republic Act No. 134, prohibits the employment of non-citizens in Filipino-owned establishments in the rice and/or corn industry. The petitioners, a Filipino-owned corporation and its alien employees, sought a judicial declaration that the Board's construction of its Resolution No. 10 was illegal for retroactivity and unconstitutionality.

Universal Corn Products, Inc. is a corporation whose capital stock is wholly owned by citizens of the Philippines, engaged in certain lines of activity covered by Republic Act No. 3018 and Resolution No. 10 of the Rice and Corn Board. Its co-petitioners, all aliens, held the positions of executive vice-president, comptroller, sales manager, chief warehouseman, assistant plant superintendent, cashier, and sales supervisor, and had been with the company long before the enactment of Republic Act No. 3018 and the promulgation of Resolution No. 10.

Pursuant to the power vested in the Rice and Corn Board by Section 6 of Republic Act No. 3018, Resolution No. 10 was promulgated on November 21, 1960, containing a regulation providing that no person who is not a citizen of the Philippines shall be employed in any capacity in any Filipino-owned establishment engaged in any of the lines of activity in the rice and/or corn industry, except technical personnel whose employment may be authorized by the President of the Philippines upon recommendation of the Rice and Corn Board.

The amended petition of February 8, 1961 impugned the construction placed on Resolution No. 10 for its retroactivity insofar as it would be made to apply to the alien petitioners, resulting in their dismissal, and for its unconstitutionality insofar as such individuals would be deprived of their means of livelihood without due process of law and denied the equal protection of the law. The respondents, in their answer of March 9, 1961, admitted the allegations but denied the legal conclusions, asserting that regardless of the date of employment, upon the passage of Republic Act No. 3018 and the regulation, employment of aliens in the regulated industry became unlawful and contracts of employment entered prior to the passage of the Act became legally impossible of performance. They likewise denied the allegation of unconstitutionality, the statute being a valid measure under the police power of the state, and alleged the impropriety of the action for declaratory relief and the absence of a cause of action.

The lower court dismissed the petition, and the petitioners appealed.

• Retroactivity: Petitioners argued that the construction of Resolution No. 10 is retroactive insofar as it would be made to apply to alien employees who were employed before the law's enactment, resulting in their dismissal, and that such retroactive application should be avoided.
• Unconstitutionality: Petitioners argued that the resolution deprives aliens of their means of livelihood without due process of law and denies them the equal protection of the law, and that a judicial declaration was proper to avoid the taint of unconstitutionality.

• No Retroactivity: Respondents argued that regardless of the date of employment, upon the passage of Republic Act No. 3018 and the regulation in question, employment of aliens in the regulated industry became unlawful and contracts of employment entered prior to the passage of the Act became legally impossible of performance.
• Police Power: Respondents argued that the statute is a valid measure under the police power of the state, and denied the allegation of unconstitutionality on due process and equal protection grounds.
• Procedural Objections: Respondents alleged the impropriety of the action for declaratory relief and the absence of a cause of action.

• Retroactivity: Whether the construction of Resolution No. 10 in connection with Section 2-A of Commonwealth Act No. 108 is retroactive.
• Constitutionality: Whether the resolution is unconstitutional for depriving aliens of their means of livelihood without due process of law and denying the equal protection of the law.

• Retroactivity: No. The imputation of retroactivity lacks support in law because Republic Act No. 3018 took effect on January 1, 1961, and the rules and regulations took effect fifteen days after publication; the law affects only the continuance of employment after its effectivity, not the prior hiring of the alien employees.
• Constitutionality: No. The nationalization of employment in the rice and corn industry is a valid exercise of police power, as established in King vs. Hernaez, which held that the nationalization of an economic measure founded on grounds of public policy cannot be branded as unjust, arbitrary, or oppressive.

• Retroactivity: The Court cited the rule from Montilla vs. Augustinian Corp. that all statutes are construed as having only prospective operation unless the legislative intent to the contrary is expressly declared or necessarily implied from the language used, and that in every case of doubt, the doubt must be resolved against the retrospective effect. The Court noted that Republic Act No. 3018 was approved on August 2, 1960 and made to take effect on January 1, 1961, with rules and regulations taking effect fifteen days after their publication in a newspaper of general circulation. Applying the law to the alien employees' continuance in employment after the law's effectivity is not retroactive, as established in Salcedo and Ignacio vs. Carpio, which held that applying a provision to the continuance in office after the law's approval is not retroactive because it makes the Act effective after, not before, the date it became effective. The Court also cited People vs. Yu Bao and People vs. Ong Tin, which held that penalizing acts committed after the effectivity of a law is not an ex post facto application, since the law penalizes the act of engaging in the regulated activity thereafter, not the prior engagement.

• Constitutionality: The Court cited King vs. Hernaez, which held that the nationalization of employment in the Philippines does not run counter to any provision of the Constitution because its aim is not to deprive a citizen of a right but rather to promote, enhance, and protect those expressly accorded to a citizen, such as the right to life, liberty, and the pursuit of happiness. The nationalization of an economic measure when founded on grounds of public policy cannot be branded as unjust, arbitrary, or oppressive. The Court noted that the Anti-Dummy Law is a mere complement of the Retail Trade Act, both designed to make effective the exclusion of aliens from owning retail trade or from being employed therein, and both tending to accomplish the same objective of removing and eradicating the shackles of foreign economic control and domination. In nationalizing employment in retail trade, the right of choice of an employer is not impaired but its sphere is merely limited to citizens to the exclusion of those of other nationalities.

• Prospective Operation of Statutes — All statutes are construed as having only prospective operation unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used; in every case of doubt, the doubt must be resolved against the retrospective effect. The Court applied this doctrine to hold that Resolution No. 10, which took effect fifteen days after publication, affects only the continuance of employment after its effectivity, not the prior hiring of the alien employees, and thus is not retroactive.
• Nationalization of Employment as Police Power — The nationalization of employment in a regulated industry is a valid exercise of police power when founded on grounds of public policy, as its aim is to promote, enhance, and protect the rights of citizens, and it cannot be branded as unjust, arbitrary, or oppressive. The Court applied this doctrine to uphold the constitutionality of Resolution No. 10, which prohibits the employment of aliens in the rice and corn industry, as a complement of the nationalization policy expressed in the Retail Trade Act.

• "It is a rule of statutory construction that all statutes are to be construed as having only a prospective operation unless the purpose and intention of the Legislature to give them a retrospective effect is expressly declared or is necessarily implied from the language used. In every case of doubt, the doubt must be resolved against the retrospective effect." — This passage from Montilla vs. Augustinian Corp. states the canonical rule of prospective operation of statutes, which the Court applied to reject the petitioners' claim of retroactivity.
• "To apply the provision of Republic Act No. 546 to the petitioners is not to apply it retrospectively, because to do so is to make said Act merely effective, not before, but after the date it was approved or became effective, and it will affect their continuance in office, not before, but after the approval of Republic Act No. 546." — This passage from Salcedo and Ignacio vs. Carpio establishes that applying a law to the continuance of employment or office after its effectivity is not retroactive, and was the controlling analogy for the Court's ruling.
• "It is hard to see how the nationalization of employment in the Philippines can run counter to any provision of our Constitution considering that its aim is not exactly to deprive a citizen of a right that he may exercise under it but rather to promote, enhance and protect those that are expressly accorded to a citizen such as the right to life, liberty and pursuit of happiness." — This passage from King vs. Hernaez articulates the constitutional basis for the nationalization of employment as a valid police power measure, and was adopted by the Court to uphold the constitutionality of Resolution No. 10.

• Montilla vs. Augustinian Corp., 24 Phil. 220 (1913) — Cited as the early authority for the rule of prospective operation of statutes, with Justice Moreland as ponente.
• Segovia vs. Noel, 47 Phil. 543 (1925) — Followed, reiterating the doctrine that statutes operate prospectively only unless legislative intent to the contrary is made manifest by express terms or necessary implication.
• Salcedo and Ignacio vs. Carpio, 89 Phil. 254 (1951) — Followed, holding that applying a law to the continuance in office after its effectivity is not retroactive.
• People vs. Yu Bao, 103 Phil. 271 (1958) — Followed, holding that Republic Act No. 1180 does not penalize an alien for engaging in retail business prior to its approval but for doing so thereafter, and thus is not an ex post facto law.
• People vs. Ong Tin, 103 Phil. 476 (1958) — Followed, holding that conviction for acts executed after the effectivity of the law is not an ex post facto application.
• King vs. Hernaez, L-14859, March 31, 1962 — Controlling precedent, holding that the nationalization of employment is a valid exercise of police power and does not run counter to the Constitution.

• Section 2-A, Commonwealth Act No. 108 (as amended by Republic Act No. 134) — The provision prohibiting the employment of non-citizens in Filipino-owned establishments in the rice and/or corn industry, which Resolution No. 10 reproduces; the Court construed it as applying prospectively to the continuance of employment after the law's effectivity.
• Section 6, Republic Act No. 3018 — The provision authorizing the Rice and Corn Board to issue rules and regulations to carry out the Act's provisions, and providing that such rules take effect fifteen days after their publication in a newspaper of general circulation printed in Manila; this timing supported the Court's conclusion that the resolution was not retroactive.
• Resolution No. 10, Rice and Corn Board (November 21, 1960) — The regulation at issue, prohibiting the employment of non-citizens in the rice and corn industry except technical personnel authorized by the President upon recommendation of the Rice and Corn Board; upheld as a valid exercise of police power.

Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Sanchez, and Angeles, JJ. concurred; Castro, J., concurred in the result.