Opinion No. 23-02 Re: Retail Trade; Sale to Industrial and Commercial Users

Securities and Exchange Commission

OFFICE OF THE GENERAL COUNSEL

SEC OGC Opinion No.23 -02 Re: Retail Trade; Sale to Industrial and Commercial Users

21 February 2023

Suite 317, Third Floor, Calvo Building acalaw@globelines.com.ph AGUSTIN CHIONG AGUSTIN LAW OFFICES Manila, Philippines No.266 Escolta Street, Binondo

Attention: Atty. Ira Carlota Chiong Agustin

Dear Atty. Agustin,

referred to as "RTLA"). on whether the business activity of your client, Siri Tulin Philippines, Inc., ("Siri Tulin"), is considered as retail under Republic Act (RA) No. 8762 or the "Retail Trade Liberalization Act of 2000" (hereinafter This refers to your letter sent through electronic mail on 26 January 2022 requesting for opinion

principal office address at Cabatian, Buhangin, Davao City. Its secondary purpose states: As background, you mentioned that Siri Tulin is a duly organized and existing corporation with

"To be an importer/wholesaler [sic] of agricultural inputs, sprayers, and other supplies and implements; agro-industrial equipment and machinery importation and installation.

neighboring provinces. The corporate plantation growers and industrial farms use the equipment and sell to corporate clients or use in the manufacturing of its other products such as processed fruits or corporate plantation growers and industrial farms of banana, pineapple, and other fruits in Davao and machinery sold by Siri Tulin in their business operations to produce fruits and vegetables that they either vegetables. You stated that Siri Tulin sells agricultural sprayers, agro-industrial equipment and machinery to

activities of Siri Tulin fall outside the coverage of the RTLA. Relative to the foregoing, you seek confirmation of your position that the above-cited business

habitually selling direct to the general public merchandise, commodities or goods for consumption. Thus, habitually engaged in selling; 2) The sale must be direct to the general public; and 3) The object of the sale is limited to merchandise, commodities, or goods for consumption.2 for transactions to be considered as retail trade, the following must be present: 1) The seller should be Section 3 of the RTLA, as amended1, defines "retail trade" as any act, occupation or calling of

to the general public as end-user. The term "retail" is associated with and limited to goods for personal, family, or household use, consumption and utilization. The items sold must be "the final and end (uses) of As previously opined by the Commission, the RTLA covers only the sale of goods for consumption

2 SEC-OGC Opinion No. 19-61, addressed to Kymco Philippines, Inc., 5 December 2019. 1 On 21 January 2022, RA No. 11595, otherwise known as "An Act Amending RA No. 8762 or the RTLA", took effect.

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a product which directly satisfy human wants and desires and are needed for home and daily life". Moreover, the law covers only the sale of goods for consumption to the general public as end-user.3

and/or produce or manufacture of goods which are in turn sold by them" are not considered as retail. to industrial users or consumers who use the products bought by them to render service to the general public Under Rule IV, Section 1(e) of the Implementing Rules and Regulations (IRR)4 of the RTLA, "sales

explained: In Marsman & Company, Inc. vs. First Coconut Central Company, Inc.5, the Supreme Court

or further use in the production of other products. In other words, consumer goods are goods which ". . . The last element refers to the subject of the retailer's activities or what he is selling, i.e., consumption goods or consumer goods. Consumer goods may be defined as "goods" which are used or bought for use primarily for personal, family or household purposes. Such goods are not intended for resale by their very nature are ready for consumption."

such. the sale of producer goods used for industry or business is classified as a wholesale a sale in large quantity to one who intends to resell." Hence, tools and equipment which will be used for production of other goods and that satisfy wants only indirectly-called also auxiliary goods, instrumental goods, intermediate goods." They are by their very nature not sold to the public for consumption. As transaction. Wholesaling has been defined as "selling to retailers or jobbers rather than to consumers or 'business purposes', not for personal, family or household purposes, are considered as 'producer goods', not as 'consumer goods'."e "Producer goods have been defined as "goods (as tools and raw material) that are factors in the

users, and not by the general public, and hence, are producer goods. The above-described sale of agricultural sprayers, agro-industrial equipment and machinery by Siri Tulin to corporate plantation growers and industrial farms are considered as sale of producer goods or tools that are factors in the production of other goods. The equipment and machinery sold by Siri Tulin are to be used by industrial and commercial

Thus, applying the foregoing discussion, we confirm your position.

circumstances and documents disclosed/submitted and relevant solely to the particular issue raised it will be disclosed that the facts relied upon are different, this opinion shall be rendered void. therein. It shall not be used in the nature of a standing rule binding upon the Commission in other cases or upon the courts whether of similar or dissimilar circumstances.7 If, upon further inquiry or investigation, It shall be understood that the foregoing opinion is rendered solely on the basis of the facts,

Please be guided accordingly.

ery truly yours,

A mmanemng Romuald c./Padilla General Counsel

3 SEC-OGC Opinion No.14-34 addressed to See and Herrera Law Firm, 18 November 2014. 14/F The SEC Headquarters +63 28818 8260/+63 28818 5348 Salcedo Village, Beiair Makati city OC picc@sec.gov.ph ,7907 Makati Avenue OKSO D

4 IRR of the RTLA, as amended by RA No. 11595, 9 March 2022 5 G.R. No. L-39841, 20 June 1988. 6 Supra, no. 3. 7 Section 7, SEC Memorandum Circular No. 15-03, 16 December 2003