QuestionsQuestions (Republic Act No. 7581)
RA 7581 is the “Price Act.” Its policy is to ensure the availability of basic necessities and prime commodities at reasonable prices at all times, without denying legitimate business a fair return, and to provide effective protection against hoarding, profiteering, and cartels—especially during calamities, emergencies, widespread illegal price manipulation, and like situations.
Basic necessities include rice, corn, bread, fish and marine products, fresh meats/poultry, fresh eggs, fresh/processed milk, fresh vegetables, root crops, coffee, sugar, cooking oil, salt, laundry soap, detergents, firewood, charcoal, candles, and essential drugs (DOH-classified). Prime commodities include fresh fruits, flour, various processed meats and dairy (not falling under basic necessities), noodles, onions, garlic, vinegar, patis, soy sauce, toilet soap, fertilizer, pesticides, herbicides, poultry/swine/cattle feeds, veterinary products for feeds, paper, school supplies, nipa shingles/sawali, cement/clinker, GI sheets/hollow blocks, plywood/plyboard, construction nails, batteries, electrical supplies, light bulbs, steel wire, and all non-essential drugs (as classified by DOH).
The implementing agency depends on the commodity: (1) Department of Agriculture—agricultural crops, fish and marine products, fresh meat, fresh poultry, dairy products, fertilizers, and farm inputs; (2) Department of Health—drugs; (3) DENR—wood and other forest products; and (4) Department of Trade and Industry—all other basic necessities and prime commodities.
Panic-buying is the abnormal phenomenon where consumers buy basic necessities/prime commodities grossly beyond their normal requirements, causing undue shortages prejudicial to less privileged consumers. It is relevant because implementing agencies may institute temporary measures during panic-buying to ensure orderly and equitable distribution.
Prevailing price is the average price at which a basic necessity has been sold in a given area within a month from the occurrence of any of the conditions in Section 6. It is used as the baseline for freezing prices or as a basis for recommending a price ceiling if the prevailing price is excessive or unreasonable.
Hoarding is undue accumulation beyond normal inventory levels, or unreasonable limitation/refusal to dispose/sell/distribute stocks to the public, or unjustified removal from production/trade/channels. Prima facie evidence exists when a person’s stocks are 50% higher than usual inventory and the person unreasonably limits/refuses/fails to sell to the general public at discovery of the stocks.
Profiteering is selling/offering basic necessities or prime commodities at a price grossly in excess of their true worth. Prima facie evidence exists if: (a) no price tag; (b) misrepresented weight/measurement; (c) adulterated/diluted; or (d) the seller raises the price by more than 10% from the immediately preceding month—subject to a proviso for certain agricultural and seasonal products as determined by the implementing agency.
Cartel is any combination or agreement among persons engaged in the relevant stages designed to artificially and unreasonably increase/manipulate price. Prima facie evidence exists when two or more competitors for the same market/commodity perform uniform or complementary acts that tend to bring about artificial/unreasonable price increases, or simultaneously and unreasonably increase prices thereby lessening competition among themselves.
Prices of basic necessities in an area automatically freeze or go under automatic price control when the area is: (1) proclaimed/declared a disaster area or state of calamity; (2) declared under an emergency; (3) habeas corpus is suspended; (4) placed under martial law; (5) declared in state of rebellion; or (6) a state of war is declared. Unless sooner lifted by the President, it remains effective for the duration of the condition, but not more than 60 days.
Section 6 is automatic: prices freeze at prevailing prices or become under automatic price control upon enumerated emergency conditions unless otherwise declared by the President. Section 7-8 allows the President, upon recommendation, to impose a specific price ceiling on any basic necessity or prime commodity if conditions warrant (calamity/emergency, widespread illegal manipulation, events causing artificial/unreasonable increases, or prevailing price rising to unreasonable levels). Section 8 provides factors for determining the reasonable ceiling.
A price ceiling may be imposed when: (1) impendency/existence/effects of a calamity; (2) threat/existence/effects of an emergency; (3) prevalence/widespread acts of illegal price manipulation; (4) impendency/existence/effect of any event causing artificial and unreasonable price increase; or (5) when the prevailing price has risen to unreasonable levels.
Factors include: (1) average price in the last three months immediately preceding the proclamation of the ceiling; (2) supply available in the market; (3) costs to producer/manufacturer/distributor/seller including exchange rate of peso to foreign currency used for payment of components/raw materials; (4) changes in amortization cost of machinery due to exchange rate changes through credit facilities; (5) changes in labor cost due to changes in minimum wage; (6) increased cost of transporting/distributing to the area of destination; and (7) other factors/conditions aiding in arriving at a just and reasonable price ceiling.
A buffer fund is a contingent fund in the implementing agency’s budget, not used in normal operations but only for purposes under the Act. With it, the agency may procure/purchase/import/stockpile basic necessities or prime commodities and devise distribution for sale at reasonable prices in shortage areas or to effect changes in prevailing price. It is allocated in annual appropriations.
They may promulgate rules (with President approval); develop productivity/distribution programs; facilitate procurement/storage/marketing/distribution; institute temporary measures during panic-buying (with President approval); issue suggested retail prices; disseminate mandated price ceilings via media and posting; enter agreements for buffer stocking or immediate sale in areas of shortages/manipulation; investigate violations; impose administrative fines (P1,000 to P1,000,000) after notice and hearing; require attendance/production of evidence; issue cease and desist orders or suspend/revoke permits or order closure (with limits and due process); initiate summary seizure and sale with escrow/trust rules; and initiate prosecution before courts.
Section 15: illegal price manipulation—imprisonment of not less than 5 years nor more than 15 years, and a fine of not less than P5,000 nor more than P2,000,000. Section 16: violation of Sections 6 or 7—imprisonment of not less than 1 year nor more than 10 years, or a fine of not less than P5,000 nor more than P1,000,000, or both, at the court’s discretion.
For juridical persons, its officials/employees (or for foreign corporations/associations, the agent or representative in the Philippines responsible for the violation) are held liable. For aliens, in addition to the penalty, the offender is immediately deported upon conviction and after service of sentence, without need for further proceedings.
The Council coordinates productivity, distribution, and price stabilization strategies; reports to the President and Congress; advises on policy; can require information and conduct public hearings; publicizes developments; and disseminates prevailing prices/price ceilings during automatic price control. Composition includes: secretaries of Trade and Industry (Chairman), Agriculture, Health, DENR, Local Government, Transportation and Communications, Justice, NEDA Director General; plus consumer, agricultural producers, trading, and manufacturers sector representatives appointed by the President for one-year terms.
It takes effect three (3) days after its publication in two (2) national newspapers of general circulation.