DOJ Opinion No. 178, s. 1983

DOJ OPINION NO. 178 , s. 1983 2nd Indorsement November 24, 1983 Respectfully returned to Associate Commissioner Jesus J. Valdes, Securities and Exchange Commission, Mandaluyong, Metro Manila, the within query of Westchem Marketing Industries, Incorporated ("Westchem Marketing") on whether it can legally accept the offer of a foreign company to participate to the extent of 30% of its total equity, which has been referred to this Ministry "for comments". It is disclosed that Westchem Marketing is a wholly Filipino-owned corporation engaged in the business of trading in chemicals which are imported from Japan, and which are, in turn, sold locally by the company either to dealers or to industrial companies. The industrial customers use the chemicals either as a part of the products which they manufacture, or reprocess them and/or use them to enable them to render service to the general public. It is further disclosed that Nagase & Company, Ltd. of Japan, which is one of Westchem Marketing's suppliers and has regional headquarters in the Philippines, has offered to invest in 30% of the latter's equity and that Westchem Marketing is of the belief that it can accept the offer inasmuch as it not engaged in the retail trade. LexLib We are unable to concur with the above view. Section 4 of R.A. No. 1180, as amended by P.D. No. 714, otherwise known as the Retail trade Nationalization Law, reads, as follows: "SECTION 4. As used in this Act, the term "retail business" shall mean any act, occupation or calling or habitually selling direct to the general public merchandise, commodities or goods for consumption, but shall not include: (a) a manufacturer, processor, laborer, or workers selling to the general public the products manufactured, processed, or produced by him of his capital does not exceed five thousand pesos. (b) a farmer or agriculturist selling the product of his farm, (c) a manufacturer or processor selling 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 goods which are in turn sold by them . (d) a hotel-owner or keeper operating a restaurant, irrespective or the amount of capital, provided that the restaurant is necessarily included in, or incidental to, the hotel business." (Emphasis ours). We have consistently held that to constitute a retail business under the Act, the following requisites must be present: (1) habitually selling merchandise, commodities or goods; (2) direct to the general public, and; (3) for consumption (see Ops., Sec. of Justice, No. 253, s. 1954; No. 47, s. 1955; 160, s. 1963). LexLib Before the above Section 4 was amended by P.D. No. 714 to include the last two exceptions, it had been ruled that sales made to large buyers or bulk sales to industrial users or producers who use or consume the goods are retail sales under the Act, as they are for Consumption. (Op. No. 253, s. 1954; No. 160, s. 1963; No. 175, s. 1963). With the amendment introduced by P.D. No. 714, sales made by a manufacturer or processor to industrial or commercial users are no longer considered retail. (See Goodrich Plants, Inc., vs. Reyes 363; Goodyear Tire and Nullers Co. vs. Reyes Sr. G.R. No. L-30063 prom July 2, 1983; Mobil Oil Phil., Inc. vs. Reyes, G.R. No. L-29013 prom Aug. 31, 1983) While it is true that the nature of Westchem Marketing's business, which is, that it sells its merchandise to customers who either re-sell them or utilize or process them in connection with their own business of rendering service or manufacturing, would appear to make it fall within the purview of the third exception quoted above, it is to be noted that the said exception explicitly refers only to a "manufacturer" or a "processor", and does not include a mere importer or trader. It is settled in statutory construction that exceptions in a statute are to be strictly construed. "It has been held that exceptions are not to be implied. Especially where there is an express exception, it comprises the only limitation on the operation of the statute and no other exceptions will be implied. An enumeration of exceptions from the operation of a statute indicated that it should apply to all cases not specifically enumerated." (Sutherland, Stat. Construction, Vol. 2A p. 90) "It is well settled that an exception in a statute amounts to an affirmation of the application of its provision to all other cases not excepted and excludes all other." (Gonzaga, Stat. and their Construction, 1969, p. 251) Since Westchem Marketing is admittedly not a manufacturer or processor of the imported products that it resells to dealers or industrial companies, it does not satisfy the requirements of the third exception. Despite the broad intent in P.D. 714 to exempt sales made to industrial or commercial users or consumers (2nd "Whereas" clauses). The element of being a manufacturer or processor cannot be waived in the construction of paragraph (c) without violating its literal import, and without undue or warranted implications on the exception contained in paragraph (a). LexLib Premises considered, the query is answered in the negative. (SGD.) RICARDO C. PUNO Minister of Justice