Definition of Retail Trade: RETAIL TRADE LAWS AND CONSUMER ACT-A 9/13/23, 6:45 AM

Definition of Retail Trade

Definition of Retail Trade

"Retail trade" shall mean any act, occupation or calling of habitually selling direct to the general
public merchandise, commodities or good for consumption, but the restriction of this law shall
not apply to the following:

(a) Sales by manufacturer, processor, laborer, or worker, to the general public the products
manufactured, processed or products by him if his capital dose not exceed One hundred
thousand pesos(100,000.00);

(b) Sales by a farmer or agriculturist selling the products of his farm;

(c) Sales in restaurant operations by a hotel owner or inn-keeper irrespective of the amount
capital: provided, that the restaurant is incidental to the hotel business; and

(d) Sales which are limited only to products manufactured, processed or assembled by a
manufactured, processed or assembled by a manufacturer though a single outlet, irrespective
of capitalization.

The law defines a retail business as any act, occupation or calling of habitually selling direct to the
general public merchandise, commodities or goods for consumption.

Elements:

1. seller is habitually engaged in selling;

2. selling directly to the public;

3. the object consists of merchandise, commodities or goods for consumption.

“Consumption” shall mean the utilization of economic goods in the satisfaction of want
resulting in immediate destruction, gradual decay or deterioration or transformation into
other goods.

In Balmaceda v. Union Carbide Philippines, 124 SCRA 893

(https://www.chanrobles.com/cralaw/1983septemberdecisions.php?id=432) , the Supreme Court
ruled that "the goods for consumption mentioned in Republic Act No. 1180 should be
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ruled that "the goods for consumption mentioned in Republic Act No. 1180 should be
construed to refer to the final and end (uses) of a product which directly satisfy human wants
and desires and are needed for home and daily life. Accordingly, the goods which
petitioner’s Industrial Products Division handle (commonly referred to as intermediate
goods), do not fall and cannot be classified as consumption goods."

Sales Not Considered As Retail

The following sales are not considered as retail:

(a) Sales of a manufacturer, processor, laborer, or worker of products manufactured, processed or

produced by him to the general public whose capital does not exceed One hundred thousand
pesos (100,000.00);

“Manufacturer” refers to a person who alters raw material or manufactured or partially

manufactured products, or combines the same in order to produce finished products for the
purpose of being sold or distributed to others.

“Processor” refers to a person who converts raw materials into marketable form by special
treatment or a series of action that changes the nature or state of the product, like slaughtering,
milling, pasteurization, drying, or dessicating, quick freezing and the like. Mere packing,
packaging, sorting or classifying does not make a person a processor.

(b) Sales by a farmer or agriculturist selling the products of his farm, regardless of capital;

“Farmer or Agriculturist” refers to an individual personally engaged in dairy farming, fish farming,
aquaculture, poultry or livestock raising, and his principal income is derived from any one or more
of the foregoing operations.

(c) Sales arising from restaurant operations by a hotel owner or inn-keeper irrespective of the
amount of capital, provided, that the restaurant is incidental to the hotel business

(d) Sales through a single outlet owned by a manufacturer of products manufactured, processed
or assembled in the Philippines, irrespective of capitalization;

(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; or

(f) Sales to the government and/or its agencies and government-owned and controlled
corporations.
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Definition of Retail Trade: RETAIL TRADE LAWS AND CONSUMER ACT-A 9/13/23, 6:45 AM

corporations.

Sales by a manufacturer of products manufactured by him, when his capital does not exceed One
hundred thousand pesos (P100,000.00), is not considered retail trade. The same is true with a
farmer selling the products of his farm. Sales in restaurant operations by a hotel owner or inn-
keeper, irrespective of the amount of capital, where the restaurant is incidental to the hotel
business, is also exempt. Finally, sales which are limited only to products manufactured,
processed or assembled by a manufacturer through a single outlet, irrespective of capitalization,
are likewise outside the coverage of the Retail Trade Liberalization Law.

Where a business would fall under the four (4) exceptions, foreign equity is welcomed by the law.
The wording of the last exception “sales which are limited only to products manufactured,
processed or assembled by a manufacturer through a single outlet, irrespective of capitalization”
in fact allows for a very broad interpretation, which can cover variably any form of business.

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