RULES AND REGULATIONS IMPLEMENTING REPUBLIC ACT NO. 8762, AN ACT LIBERALIZING THE RETAIL TRADE BUSINESS, REPEALING REPUBLIC ACT NO. 1180, AS AMENDED
Pursuant to the provisions of Section 11 of Republic Act No. 8762, the following rules and regulations are hereby promulgated.
RULE I : DEFINITION OF TERMS
Section 1. For purposes of this Rules and Regulations:
(a) “Retail Trade” shall mean any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption.
(b) “High-end or Luxury Goods” shall refer to goods which are not necessary for life maintenance and whose demand is generated in large part by the higher income groups. Luxury goods shall include, but are not limited to, products such as: jewelry, branded or designer clothing and footwear, wearing apparel, leisure and sporting goods, electronics and other personal effects.
(c) “Investment” shall mean assets, tangible or intangible including but not limited to buildings, leasehold rights, furniture, equipment and inventory.
(d) “Foreign Retailer” shall mean a non-Filipino citizen, if a natural person, or if a juridical person, a duly formed and organized corporation, partnership, association or entity that is not wholly-owned by Filipinos, engaged in retail trade.
(e) “Foreign Investor” shall mean a non-Filipino citizen, if a natural person, or if a juridical person, a duly formed and organized corporation, partnership, association or entity that is not wholly-owned by Filipinos, whether or not engaged in retail trade.
(f) “Natural-born Filipino Citizen” are those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their citizenship. Those who elect Philippine citizenship in accordance with Article IV, paragraph 3 of the 1987 Constitution shall be deemed natural-born citizens.
(g) “Consumption” shall mean the utilization of economic goods in the satisfaction of want resulting in immediate destruction, gradual decay or deterioration or transformation into other goods.
(h) “Manufacturer” refers to a person who alters raw material or manufactured or partially manufactured products, or combines the same in order to produce finished products for the purpose of being sold or distributed to others.
(m) “Processor” refers to a person who converts raw materials into marketable form by special treatment or a series of action that changes the nature or state of the product, like slaughtering, milling, pasteurization, drying, or dessicating, quick freezing and the like. Mere packing, packaging, sorting or classifying does not make a person a processor.
(n) “Farmer or Agriculturist” refers to an individual personally engaged in dairy farming, fish farming, aquaculture, poultry or livestock raising, and his principal income is derived from any one or more of the foregoing operations.
(o) “Capital” shall mean the working capital for sole proprietorships and partnerships, while for corporations, it shall be the paid-up capital.
(l) “Paid-Up Capital” shall mean the total investment in a business that has been paid-in in a corporation or partnership or invested in a single proprietorship, which may be in cash or in property. It shall also refer to inward remittance or assigned capital in the case of foreign corporations.
(m) “Retail Store” shall mean the company that owns the retail store and/or the physical location, such as a shop, where goods are sold on a retail basis. It includes the administrative offices, warehouse, preparation facility or storage facility of such goods, regardless of whether or not it is adjacent to such outlet.
In cases where the administrative office, warehouse, preparation facility or storage facility services several stores, the capital for such administrative office, warehouse preparation or storage facility to be included in the investment requirement for one store shall be pro-rated to the number of stores being serviced.
(n) “Locally Manufactured Goods” shall mean goods produced in the Philippines.
(o) “Branch Office” shall mean an office of a foreign company that carries out the business activities of such head office and derives income from the host country.
(p) “Franchise” shall mean a business relationship wherein, for a consideration, the franchisor grants to the franchisee a licensed right, subject to agreed-upon requirements and restrictions, to conduct business utilizing the trade and/or service marks of the franchisor, and also provides to the franchisee, advice and assistance in organizing, merchandising, and managing the business conducted pursuant to the license. This type of agreement may include a licensing agreement or any similar arrangement.
(q) “Net Worth” shall mean total equity of a business; total assets less total liabilities.
(r) “Track record” shall include the track record of the applicant-foreign retailer, its predecessors, or its principal stockholders, affiliates and subsidiaries.
(s) “Reciprocity Rights” shall denote the relation between two states when each of them, by their respective laws or by treaty, gives the citizens or nationals of the other certain privileges, as in the undertaking of retail trade activities, on condition that its own citizens or nationals shall enjoy similar privileges in the latter state.
Notwithstanding the law allowing one hundred percent foreign ownership of retail activities subject to the capitalization requirements, a foreign retailer shall only be allowed to own up to the extent of the foreign ownership allowed for retailing in its home country.
(t) A former natural born Filipino citizen is deemed “residing in the Philippines” if he physically stays in the country for at least one hundred eighty (180) days within a given year.
Sec. 2. Sales Not Considered As Retail. – The following sales are not considered as retail:
(a) Sales of a manufacturer, processor, laborer, or worker of products manufactured, processed or produced by him to the general public whose capital does not exceed One hundred thousand pesos (100,000.00);
(b) Sales by a farmer or agriculturist selling the products of his farm, regardless of capital;
(c) Sales arising from 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
(d) Sales through a single outlet owned by a manufacturer of products manufactured, processed or assembled in the Philippines, irrespective of capitalization;
(e) Sales 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 of goods which are in turn sold by them; or
(f) Sales to the government and/or its agencies and government-owned and controlled corporations.
(a) “Retail Trade” shall mean any act, occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption.
(b) “High-end or Luxury Goods” shall refer to goods which are not necessary for life maintenance and whose demand is generated in large part by the higher income groups. Luxury goods shall include, but are not limited to, products such as: jewelry, branded or designer clothing and footwear, wearing apparel, leisure and sporting goods, electronics and other personal effects.
(c) “Investment” shall mean assets, tangible or intangible including but not limited to buildings, leasehold rights, furniture, equipment and inventory.
(d) “Foreign Retailer” shall mean a non-Filipino citizen, if a natural person, or if a juridical person, a duly formed and organized corporation, partnership, association or entity that is not wholly-owned by Filipinos, engaged in retail trade.
(e) “Foreign Investor” shall mean a non-Filipino citizen, if a natural person, or if a juridical person, a duly formed and organized corporation, partnership, association or entity that is not wholly-owned by Filipinos, whether or not engaged in retail trade.
(f) “Natural-born Filipino Citizen” are those who are citizens of the Philippines from birth without having to perform any act to acquire or perfect their citizenship. Those who elect Philippine citizenship in accordance with Article IV, paragraph 3 of the 1987 Constitution shall be deemed natural-born citizens.
(g) “Consumption” shall mean the utilization of economic goods in the satisfaction of want resulting in immediate destruction, gradual decay or deterioration or transformation into other goods.
(h) “Manufacturer” refers to a person who alters raw material or manufactured or partially manufactured products, or combines the same in order to produce finished products for the purpose of being sold or distributed to others.
(m) “Processor” refers to a person who converts raw materials into marketable form by special treatment or a series of action that changes the nature or state of the product, like slaughtering, milling, pasteurization, drying, or dessicating, quick freezing and the like. Mere packing, packaging, sorting or classifying does not make a person a processor.
(n) “Farmer or Agriculturist” refers to an individual personally engaged in dairy farming, fish farming, aquaculture, poultry or livestock raising, and his principal income is derived from any one or more of the foregoing operations.
(o) “Capital” shall mean the working capital for sole proprietorships and partnerships, while for corporations, it shall be the paid-up capital.
(l) “Paid-Up Capital” shall mean the total investment in a business that has been paid-in in a corporation or partnership or invested in a single proprietorship, which may be in cash or in property. It shall also refer to inward remittance or assigned capital in the case of foreign corporations.
(m) “Retail Store” shall mean the company that owns the retail store and/or the physical location, such as a shop, where goods are sold on a retail basis. It includes the administrative offices, warehouse, preparation facility or storage facility of such goods, regardless of whether or not it is adjacent to such outlet.
In cases where the administrative office, warehouse, preparation facility or storage facility services several stores, the capital for such administrative office, warehouse preparation or storage facility to be included in the investment requirement for one store shall be pro-rated to the number of stores being serviced.
(n) “Locally Manufactured Goods” shall mean goods produced in the Philippines.
(o) “Branch Office” shall mean an office of a foreign company that carries out the business activities of such head office and derives income from the host country.
(p) “Franchise” shall mean a business relationship wherein, for a consideration, the franchisor grants to the franchisee a licensed right, subject to agreed-upon requirements and restrictions, to conduct business utilizing the trade and/or service marks of the franchisor, and also provides to the franchisee, advice and assistance in organizing, merchandising, and managing the business conducted pursuant to the license. This type of agreement may include a licensing agreement or any similar arrangement.
(q) “Net Worth” shall mean total equity of a business; total assets less total liabilities.
(r) “Track record” shall include the track record of the applicant-foreign retailer, its predecessors, or its principal stockholders, affiliates and subsidiaries.
(s) “Reciprocity Rights” shall denote the relation between two states when each of them, by their respective laws or by treaty, gives the citizens or nationals of the other certain privileges, as in the undertaking of retail trade activities, on condition that its own citizens or nationals shall enjoy similar privileges in the latter state.
Notwithstanding the law allowing one hundred percent foreign ownership of retail activities subject to the capitalization requirements, a foreign retailer shall only be allowed to own up to the extent of the foreign ownership allowed for retailing in its home country.
(t) A former natural born Filipino citizen is deemed “residing in the Philippines” if he physically stays in the country for at least one hundred eighty (180) days within a given year.
Sec. 2. Sales Not Considered As Retail. – The following sales are not considered as retail:
(a) Sales of a manufacturer, processor, laborer, or worker of products manufactured, processed or produced by him to the general public whose capital does not exceed One hundred thousand pesos (100,000.00);
(b) Sales by a farmer or agriculturist selling the products of his farm, regardless of capital;
(c) Sales arising from 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
(d) Sales through a single outlet owned by a manufacturer of products manufactured, processed or assembled in the Philippines, irrespective of capitalization;
(e) Sales 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 of goods which are in turn sold by them; or
(f) Sales to the government and/or its agencies and government-owned and controlled corporations.
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