Mr. Hsiao-Ti Yu

July 17, 2003 SEC OPINION NO. 38-03 Mr. Hsiao-Ti Yu Admin Manager Hitachi Air Conditioning Sales (Phils.) Inc. #22 G Araneta Ave., Brgy. Sto. Domingo (Matalahib) San Francisco Del Monte, Quezon City Tel. Nos. 732-9801 Fax No. 7423374 Dear Sir : This refers to your letter dated May 20, 2003 requesting answers to your questions regarding Sections 3 and 7 of the Retail Trade Liberalization Act of 2000 (R.A. 8762). As to your first question, the definition of "retail trade" stated in Section 3(1), we believe, is clear enough. In reply to your second question, the restrictions of the law shall not apply to the following sales: "(c) Sales in 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; and (d) Sales which are limited only to products manufactured through a single outlet, irrespective of capitalization." "Single outlet" as used in paragraph (d) above would mean single store. In regard to your third query, Section 7 pertaining to public offering of shares of stock is still in effect. R.A. 8762 specifically Sec. 12 provides a penalty for violation of any provision of the law. "Sec. 12. Penalty Clause . Any person who shall be found guilty of violation of any provision of this Act shall be punished by imprisonment of not less than six (6) years and one (1) day but not more than eight (8) years, and a fine of not less than One million pesos (P1,000,000.00) but not more than Twenty million pesos (P20,000,000.00). In the case of associations, partnerships, or corporations, the penalty shall be imposed upon its partners, president, directors, manager, and other officers responsible for the violation. If the offender is not a citizen of the Philippines, he shall be deported immediately after service of sentence. If the Filipino offender is a public officer or employee, he shall, in addition to the penalty prescribed herein, suffer dismissal and permanent disqualification from public office." In reply to your last question, Section 2(f) of the Rules and Regulations Implementing R.A. 8762 provides that sales to the government and/or its agencies and government owned and controlled corporation are not considered as retail. Nevertheless, please be advised that the foregoing does not prelude judicial interpretation of the law and its implementing rules and regulations should the question you raised be litigated in the proper forum. DaHISE Very truly yours, (SGD.) VERNETTE UMALI-PACO General Counsel