CASE DIGEST: Balmaceda v. Union Carbide Phils.

 


HONORABLE CORNELIO BALMACEDA, now LEONIDES VIRATA, in his capacity as Secretary of Commerce and Industry, petitioner, vs. UNION CARBIDE PHILIPPINES, INC., HONORABLE FEDERICO C. ALIKPALA, Presiding Judge, Branch XXII, Court of First Instance of Manila, respondents
G.R. No. L-30442         |          September 30, 1983

FACTS:

The Solicitor General filed a petition to review the decision of then respondent Judge, the late Federico C. Alikpala, declaring that private respondent Union Carbide of the Philippines is not engaged in the retail business.

PD 714 amended RA 1180, The Retail Trade Act. Section 4 of which starts with an opening statement as to what the term “retail business” shall mean, namely, “occupation or calling of habitually selling direct to the general public merchandise, commodities or goods for consumption.” It excludes, according to the amendment, “(c) a manufacturer or processor selling to the 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 to them; * * *.”

Private respondent has two divisions, the Consumer Products Division and the Industrial Products Division. As to the former, it effected its sales through retail outlets, dealers and distributors. As to the Industrial Products Division, its Agricultural Chemicals Department sold its products through exclusive distributors. The products handled by the five other departments of the Industrial Products Division, namely, the Metals and Carbide; Plastics; Industrial Chemicals; Linde, Haynes Stellite and Carbon Products and Polyethylene Bags were generally sold to producers, processors, fabricators and to industries. While these departments had a limited fixed clientele, still there was no prohibition as to the general public making similar purchases from them.

ISSUE:

Whether or not respondent Union Carbide is engaged in retail business

RULING:

“In the field of economics, in the area of marketing, the interpretation given by Government agencies, and by common acceptation, the term ‘retail’, is associated with and limited to goods for personal, family or household use, consumption and utilization. This is also in accord with the ruling of the Supreme Court in the Ichong case regarding the nature and kind of goods a retailer handles. Under the situation, the Court is persuaded to hold that the goods for consumption mentioned in Republic Act No. 1180 should be construed to refer to the final and end [uses] of a product which directly satisfy human wants and desires and are needed for home and daily life. Accordingly, the goods which petitioner’s Industrial Products Division handle (commonly referred to as intermediate goods), do not fall and cannot be classified as consumption goods.”

What removed the 5 departments from the operation of the Retail Trade Act was pointed out in the appealed decision in these words: “The goods handled by the five remaining departments of petitioner’s Industrial Products Division are generally raw materials used in the manufacture of other goods, or if not, as one of the component raw materials, or at the least as elements utilized in the process of production or manufacturing.”

After considering the statutory definition in the Retail Trade Act itself, its definition by economists, and in judicial opinions, as well as the view of former Central Bank Governor Cuaderno as to the adverse consequences in terms of increased cost to consumers, loss of financial assistance from producers, elimination of much needed foreign capital and loss of technical assistance, the lower court held it was not engaged in the retail business. The amendatory Decree removes whatever doubt there could have been as to the correctness of the conclusion reached by the lower court.

WHEREFORE, the Court affirms the lower court decision holding that Union Carbide Philippines, Inc. is not engaged in the “retail business” as this term is defined in Section 4 of Republic Act No. 1180.


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