SEC: Sale of Agricultural Inputs to Industrial Consumers Not Covered by the Retail Trade Liberalization Act

On 21 February 2023, the Securities and Exchange Commission (“SEC”) issued SEC OGC Opinion No. 23-02 (“Opinion”) which confirmed that an importer/wholesaler selling agricultural inputs/sprayers and other supplies and implements to industrial consumers is engaged in a wholesale transaction and not retail trade under the Retail Trade Liberalization Act of 2000 (“RTLA”).

The Opinion was issued in response to an inquiry by an importer, Siri Tulin Philippines Inc. (“Siri Tulin”) on whether its activities of selling agricultural sprayers, agro-industrial equipment and machinery to corporate plantation growers and industrial farms falls under the concept of “retail trade.”

Ruling on this matter, the SEC referred to the definition of “retail trade” under the RTLA. For an activity to be considered retail trade, the following conditions must be present: (a) The seller should be habitually engaged in selling; (b) The sale must be direct to the general public; and (c) The object of the sale is limited to merchandise, commodities or goods for consumption. 
Since Siri Tulin sells agricultural machinery to industrial and commercial users and not to the general public, the goods sold by Siri Tulin are considered only producer goods. Citing Marsman & Co. v. First Coconut Company Inc., the SEC ruled that producer goods, by their very nature, are not sold to the public for consumption. Thus, the sale of agricultural machinery and equipment to industrial and commercial users is not retail trade under the RTLA.