Picazo Buyco Tan Fider and Santos

November 12, 1999 Picazo Buyco Tan Fider and Santos 8th, 6th and 4th Floors Singapore Airlines Building 138 H.V. dela Costa Street Salcedo Village, Makati City Attention : Atty . Cynthia Y . Legaralde-De La Paz Gentlemen: This refers to your letter dated October 20, 1999 requesting opinion on whether or not a corporation, which is engaged in the operation of a hospital/clinic and maintains a "pharmacy" within its premises, is engaged in a " retail business ". While a pharmacy operated and maintained by a hospital is not expressly exempted from the foreign ownership restriction under RA No. 1180, otherwise known as the Retail Trade Nationalization Law, as amended by PD 714, the rationale behind the exception granted to hotels which operate "restaurants" under Section 4 (d) thereof, may be applied by analogy to the instant case considering that operating and maintaining a pharmacy is a necessary incident of a hospital business. Said law provides: "SECTION 4. as used in this Act, the term "retail business" shall mean any act or occupation or calling or habitually selling direct to the general public merchandise, commodities or goods for consumption, but shall not include : xxx xxx xxx (d) a hotel-owner or keeper operating a restaurant ,irrespective of the amount of capital, provided that the restaurant is necessarily included, or incidental to the hotel business .(Emphasis supplied) Further, the exercise of incidental powers by a corporation is expressly recognized by law, particularly under paragraph 11 of Section 36 of the Corporation Code, quoted hereunder: "SECTION 36. Corporate powers and capacity . Every corporation incorporated under this Code has the power and capacity: xxx xxx xxx 11. To exercise such other powers as may be essential or necessary to carry out its purpose or purposes as stated in the articles of incorporation." (Emphasis supplied) Accordingly, since a hospital, by its very nature, cannot operate without a pharmacy to cater to its patient, it is believed that the putting up by a hospital of its own pharmacy does not constitute a "retail trade" within the purview of the Retail Trade Nationalization Law, provided that the pharmacy is located within the hospital or clinic premises and it shall cater exclusively to its patients . Very truly yours, (SGD.) FE ELOISA C. GLORIA Associate Commissioner