Mr. Mo-Il Lee

August 31, 1994 Mr. Mo-Il Lee 347 Lirio Street Palm Village Makati, Metro Manila S i r : This refers to your letter of August 30, 1994 requesting opinion whether or not Dongjin Gaebal Phils. Corporation, a 100% foreign owned company, is empowered to sell to the general public the ice produced by its ice plant in San Jose, Occidental Mindoro under the purpose clause of its amended articles of incorporation approved by the SEC on July 29, 1994 quoted hereunder: LibLex "To engage in the manufacture and sale of ice and cool storage in the domestic market and foreign market." (Article 2) When a corporation is authorized to engage in the business of manufacturing, naturally it is authorized to sell its products. However, if there are foreign stockholders in the corporation, its selling activity shall be limited only to "wholesale". It cannot engage in "retail business". Section 1 of R.A. 1180, as amended by P.D. 714, otherwise known as the Retail Trade Nationalization Law, explicitly provides that no corporation the capital of which is not wholly owned by citizens of the Philippines shall engage directly or indirectly in retail business . Section 4 of said Law further reads: "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. (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 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 to produce or manufacture goods which are in turn sold by them. (d) a hotel-owner or keeper operating a restaurant, irrespective of the amount of capital, provided that the restaurant is necessarily included in, or incidental to the hotel business." (Emphasis supplied) The Department of Justice 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. (Department of Justice opinion, No. 178, S. 1983 citing several previous opinions) Since subject corporation is presently owned by foreigners, its selling activity in connection with its manufacturing business shall be on a wholesale basis only. Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner