Definition of "Retailing" or Retail Sale

January 19, 1960 BIR RULING NO. 066-60 2nd Indorsement Respectfully returned to the Honorable, The Secretary of Finance, ATTN: Chief, Technical Staff, the herein basic communication of Adamson & Adamson, Inc. dated February 6, 1959. cdi "Retailing" or retail sale, in general, is not defined by the Tax Code or any special law administered by the Bureau of Internal Revenue. Even the Supreme Court in Sy Kiong case (G.R. No. L-2934, prom. Nov. 29, 1951) had an occasion to determine that the National Internal Revenue Code does not furnish any lead as regards the nature of a retail sale for purposes of taxation. However, in the case of City of Manila vs. Manila Blue Printing Co., 72 Phil. 317, the Supreme Court said that there are two criteria by which this can be determined. "One is by the quantity, whether small or large; and the other is by the nature of the buyers, whether he is a consumer or a merchant who resells at a profit." The Court followed the second criterion and held that it is the character of the purchaser and not the quantity of the commodity sold that determine if the purchaser buys the commodity for his own consumption, the sale is considered retail, irrespective of the quantity of the commodity sold. If the purchaser buys the commodity for resale, the sale is deemed wholesale regardless of the quantity of the transaction. It may be stated in this connection that Republic Act No. 1180 (An Act to Regulate the Retail Business) defines what is "retail business". According to said 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: (a) a manufacturer, processor, laborer or worker selling to the general public the products manufactured, processed or produced by him if his capital does not exceed P5,000.00, or (b) a farmer or agriculturists selling the product of his farm. (Sec. 4, R.A. No. 1180, approved June 19, 1954.) This definition, however, is not controlling with respect to internal revenue tax cases. Since the National Internal Revenue Code does not "officially" define what is "retailing" or retail sale, the undersigned does not feel justified to give official meaning to the term in question unless he is presented with an actual case with complete facts for decision. In specific cases, however, the Tax Code gives meaning or defines who are retail dealers of a particular commodity, such as liquor, vino, fermented liquors, tobacco, or leaf tobacco. The official definitions of some retailers in specific cases are as follows: (a) Retail liquor dealer includes every person, except a retail vino dealer, who for himself or on commission sells or offers for sale wine or distilled spirits (other than denatured alcohol) in quantities of five liters or less at any one time and not for resale. (Sec. 194(i), N.I.R.C.) (b) Retail vino dealer includes every person who for himself or on commission sells or offers for sale only domestic distilled spirits in quantities of five liters or less at any one time and not for resale. (Sec. 194(j), N.I.R.C.) (c) Retailer dealer in fermented liquors includes every person, except retail dealers in tuba , basi , and tapuy , who for himself or on commission sells or offers for sale fermented liquors in quantities of five liters or less at any one time and not for resale. (Sec. 194(k), N.I.R.C.) (d) Retail tobacco dealer comprehends every person who for himself or on commission sells or offers for sale not more than two hundred cigars, not more than eight hundred cigarettes, or not more than five kilos of manufactured tobacco at any one time and not for resale. (Sec. 194(o) last portion, N.I.R.C.) (e) Retail leaf tobacco dealer includes every person who for himself or on commission sells leaf tobacco or offers the same for sale to any person except a registered dealer in leaf tobacco or a manufacturer of cigars, cigarettes, or manufactured tobacco; but the term does not include a planter or producer so far as concerns the sale of leaf tobacco of his own production (Sec. 194(l), N.I.R.C.) (f) Retail peddler in fermented liquors embraces every person who either for himself or on commission travels from place to place in town or country and sells or offers for sale and delivery foreign or domestic fermented liquors in quantities of five liters or less at any one time and not for resale. (Regulations No. 83 dated Aug. 10, 1934, XXXII Off. Gaz., 112, p. 2013, prom. Sept. 18, 1934.) MELECIO R. DOMINGO Commissioner of Internal Revenue