UNIVERSAL CORN PRODUCTS INC., ET AL., PETITIONERS-APPELLANTS, VS. RICE AND CORN BOARD, ET AL., RESPONDENTS-APPELLEES.

Universal Corn Products versus Rice and Corn Board

The Case

This is an appeal by Universal Corn Products, Inc. and several of its alien officers and employees against the Rice and Corn Board and its officials. The petitioners sought a judicial declaration that the Board's construction of its own Resolution No. 10, read with Section 2-A of Commonwealth Act No. 108, was illegal — because it would retroactively and unconstitutionally require the dismissal of aliens employed long before the governing law took effect. The case matters because it fixes two enduring rules: statutes and their implementing regulations operate prospectively only, and the nationalization of employment in a regulated industry is a valid exercise of the police power that does not offend due process or equal protection.

Procedural History

The petitioners filed an amended petition for declaratory relief before the Court of First Instance of Pasig, Rizal. The respondents answered, admitting the factual allegations but denying the legal conclusions, and invoking the impropriety of declaratory relief and the absence of a cause of action. The trial court, through Judge Guillermo Torres, rendered judgment dismissing the petition. The petitioners appealed directly to the Supreme Court, which affirmed the dismissal.

Facts

Universal Corn Products, Inc. is a corporation wholly owned by Filipino citizens and engaged in lines of activity covered by Republic Act No. 3018. Of its more than two hundred employees, all were Filipinos except the individual co-petitioners, who held the positions of executive vice-president, comptroller, sales manager, chief warehouseman, assistant plant superintendent, cashier, and sales supervisor. All of these alien employees had been with the company long before Republic Act No. 3018 was enacted and before Resolution No. 10 was promulgated.

Pursuant to the power vested in it by Section 6 of Republic Act No. 3018, the Rice and Corn Board promulgated Resolution No. 10 on November 21, 1960. One of its regulations barred non-citizens from employment in any capacity in a Filipino-owned establishment engaged in the rice and corn industry, except technical personnel whose employment the President may authorize upon the Board's recommendation.

The petitioners contended that applying this regulation to them would give it a retroactive and unconstitutional effect, depriving them of their means of livelihood without due process and denying them the equal protection of the law. The respondents countered that upon the passage of the law and the regulation, the employment of aliens in the regulated industry had become unlawful regardless of the date of hiring.

Issues

• Whether or not the construction placed by the Rice and Corn Board on Resolution No. 10, in connection with Section 2-A of Commonwealth Act No. 108, is invalid for retroactivity.
• Whether or not such construction is unconstitutional for depriving the alien petitioners of their means of livelihood without due process of law and denying them the equal protection of the law.

Applicable Provisions

The regulation in Resolution No. 10 of the Rice and Corn Board provides:

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.

This is the regulation whose application to pre-existing alien employees the petitioners challenged as retroactive and unconstitutional.

Section 6 of Republic Act No. 3018, on the effectivity of the Board's rules, provides:

Such rules and regulations which may be necessary to carry out its provision shall take effect fifteen (15) days after their publication in a newspaper of general circulation printed in Manila.

This provision defeats the charge of retroactivity, because the regulation operates only from its publication and not before.

Ruling

On the first issue, the Court held that the construction is not retroactive. It reaffirmed the settled canon 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, and that in every case of doubt, the doubt must be resolved against the retrospective effect. Republic Act No. 3018 was approved on August 2, 1960 and made to take effect on January 1, 1961, except as to certain provisions; its rules and regulations were to take effect fifteen days after publication. Applying the regulation to the petitioners does not reach back to their hiring; it governs their continuance in employment only after the law and regulation took effect. The Court likened the case to earlier rulings holding that a law is not retroactive merely because it affects persons appointed or licensed before its approval.

On the second issue, the Court held that the regulation does not offend the Constitution. Nationalization of employment in the rice and corn industry is a valid exercise of the police power, aimed not at depriving citizens of rights but at promoting and protecting the rights to life, liberty, and the pursuit of happiness. Following its ruling upholding the nationalization of the retail trade, the Court held that such a measure, founded on grounds of public policy, cannot be branded as unjust, arbitrary, or oppressive. In nationalizing employment, the employer's right of choice is not impaired; its sphere is merely limited to citizens to the exclusion of other nationalities.

Doctrine

First, a statute and its implementing regulation operate prospectively only unless the Legislature expressly declares or necessarily implies a retrospective effect, and any doubt is resolved against retroactivity. Second, applying a regulation to terminate or restrict an existing employment only from the date the law and regulation take effect is not retroactive application. Third, the nationalization of employment in a regulated industry is a valid exercise of the police power and does not violate due process or equal protection, since it merely limits the employer's choice of employees to citizens.

Disposition

The Supreme Court affirmed the judgment appealed from, with costs against the petitioners.

Remember This

The one line to memorize: a law is not retroactive when it governs only the continuance of a relationship after its effectivity, not the acts that preceded it. Examiners use this case to test the prospective-operation canon and the police-power validity of employment nationalization laws.