Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 714)
The main purpose of Presidential Decree No. 714 is to amend Republic Act No. 1180, known as the Retail Trade Nationalization Law, to clarify and specify the definition and scope of 'retail business.'
It defines 'retail business' as the habitual selling direct to the general public of merchandise, commodities, or goods for consumption, but excludes certain sellers such as small manufacturers, farmers, industrial or commercial sales, and hotel restaurants incidental to hotel operations.
Excluded sellers include: (a) manufacturers or processors selling their products if their capital does not exceed five thousand pesos; (b) farmers selling their farm products; (c) manufacturers or processors selling to industrial or commercial users; and (d) hotel owners operating restaurants incidental to the hotel business.
Because the law intends to regulate sales made to the general public for consumption, not sales made to industrial or commercial users who use the products to render services or produce goods for further sale.
No, the capital size does not matter for hotel restaurant operators as long as the restaurant is necessarily included in or incidental to the hotel business.
Excluding hotel restaurants ensures that these establishments are not unnecessarily burdened by retail trade restrictions, as their restaurant business is incidental to their primary hotel operations.
The maximum allowable capital is five thousand pesos.
It took effect immediately upon its signing on May 28, 1975.
President Ferdinand E. Marcos signed the decree, with Executive Secretary Alejandro Melchor attesting.
The decree was enacted by virtue of the powers vested in the President of the Philippines by the Constitution.