Opinion No. 14-12 RE: Retail Trade

Republic of the Philippines Department of Finance

SEC Building, EDSA, Greenhills, Mandaluyong City Securities and Exchange Commission

Office of the General Counsel

2 June 2014

SEC-OGC Opinion No. 14-12 Re: Retail Trade

99 E. Rodriguez Jr. Avenue REYES ESGUERRA BALUYUT BENITEZ & BONGCO LAW OFFICES 3rd Floor Reliance Center Bo.Ugong,1604 Pasig City

Attention: Mr. Paul J. Bongco

Sr:

Reagents & Instruments, Inc. ("Biosystems") does not constitute retail trade. affirm your position that the activity intended to be undertaken by your client, Biosystems This is in response to your letter dated 23 December 2013, requesting this office to

is a wholly-owned subsidiary of Biosystems S.A. of Spain Biosystems is a domestic corporation with SEC Registration No. CS201112823, that

and instruments directly to hospitals and laboratories. It is your position that Biosystems planned sale of chemical reagents, equipments and instruments to laboratories and hospitals 2000 ("RA 8762), hence Biosystems may engage in the same without violating said law. does not constitute retail trade" within the purview of the Retail Trade Liberalization Act of You thus seek confirmation of that position. According to you, Biosystems intends to sell Biosystems S.A. equipments, reagents

calling of habitually selling direct to the general public merchandise, commodities or good for consumption. Further, Rule I, Section 2(e)' of the Implementing Rules and Regulations of RA 8762, reiterating Section 4(c)2 of Republic Act No. 1180 or the Retail Trade Nationalization Law as amended by Presidential Decree No. 714, considers sales to Under Section 3(1 of RA 8762,retail trade shall mean any act, occupation or

1 Sec. 2. Sales Not Considered As Retail. -- The following sales are not considered as retail: XX

2 Section 4. As used in this Act, the term *retail business' shall mean any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption, but shall not include: (e) Sales to industrial and commercial users or consumers who use the products bought by them to render service to the general public and/or produce or manufacture of goods which are in turn sold by them; x x x. (emphasis supplied)

(c) a manufacturer or processor selling to the industrial and commercial users or consumers who use the products bought by them to render service to the general public x x x. (emphasis supplied) and/or to produce or manufacture goods which are in turn sold to them.

SEC-OGC Opinion No. 14-12

Re: Retail Trade

Page 2 of 2

consumers who use the products bought by them to render service to the general public as non-retail sales.

for home and daily life. Moreover, RA 8762 covers only the sale of goods for consumption Union Carbide Philippines3 that to be covered by RA 8762, the items sold must be "the final and end (uses) of a product which directly satisfy human wants and desires and are needed to the general public as.end-user.4 As you correctly pointed out, the Supreme Court ruled in the case of Balmaceda vs.

door, glass fittings and systems, room dividing systems, etc., to the real estate developer. not considered as retail trade. In another opinion, the sale of "Network Box" to industrial category of retail sale. which shall be used by the same in the construction of buildings and other infrastructure, is and commercial users to provide computer network security for the said business firms and not for personal, family or household use, consumption and utilization is not embraced in the The Commission had opined that the sale of door control, automatic and revolving

equipment and instruments directly to hospitals and laboratories cannot be considered as retail trade because it is not a sale of goods for consumption to the general public as end-user. The buyers (i.e., hospitals and laboratories) will use the products to render service to the general public. Applying the abovementioned principles to your case, the sale of chemical reagents.

engage in the business of selling reagents and equipments directly to laboratories, hospitals and distributors, without violating RA 8762. We therefore opine that Biosystems, a foreign-owned domestic corporation, may

inquiry and investigation, it will be disclosed that the facts relied upon are different, this the facts and circumstances disclosed and relevant solely to the particular issue raised therein and 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. If, upon further opinion shall be rendered void.? It shall be understood, however, that the foregoing opinion is rendered based solely on

Please be guided accordingly.

Very truly yours,

AM ORREA

Impb General Counse

3 G.R. No. L-30442, 30 September 1983 Medialdia Bello Guevarra & Gerodias. 6 SEC Opinion No. 06-32, 2 August 2006 addressed to Cayetano Sebastian Ata Dado.& Cruz. 7 SEC Memorandum Cricular No. 15, Series of 2003. 4 SEC Opinion No. 06-32, 2 August 2006, citing SEC Opinion dated 23 June 2005 addressed to De Borja 5 SEC Opinion No. 13-07, 30 July 2013 addressed to Atty. Rosario S. Bernaldo.