R.A. No. 7581 FAQs

by Atty. Fel Lester Brillantes

What is Republic Act No. 7581?

An Act Providing Protection to Consumers by Stabilizing the Prices of Basic Necessities and Prime Commodities and by Prescribing Measures Against Undue Price Increases During Emergency Situations and Like Occasions.

It is commonly referred to as the “Price Act” of the Philippines.

What are the Salient Features of the Price Act?

1. Automatic Price Control on prices of basic necessities. (section 6)

2. Mandated Price Ceiling on any Basic Necessity or Prime Commodity. (section 7, 16)

3. Penalizes Illegal Acts of Price Manipulation on any basic necessity and prime commodity such as Hoarding, Profiteering and Cartel. (section 5, 15)

4. Allocation of a Buffer Fund to Implementing Agencies. (section 9)

5. Creation of the Price Coordinating Council. (section 11)

What are Basic Necessities and Prime Commodities?

Basic Necessities

Prime Commodities

1. Rice 2. Corn 3. Bread 4. fresh, dried and canned fish and other marine products 5. fresh pork, beef and poultry meal 6. fresh eggs 7. fresh and processed milk 8. fresh vegetables 9. root crops 10. coffee 11. sugar 12. cooking oil 13. salt 14. laundry soap 15. detergents 16. firewood 17. charcoal 18. candles 19. drugs classified as essential by the Department of Health;

1. fresh fruits 2. flour 3. dried processed and canned pork 4. beef and poultry meat 5. dairy products not falling under basic necessities 6. noodles 7. onions 8. garlic 9. vinegar 10. patis 11. soy sauce 12. toilet soap 13. fertilizer 14. pesticides 15. herbicides 16. poultry 17. swine and cattle feeds 18. veterinary products for poultry, swine and cattle 19. paper 20. school supplies 21. nipa shingles 22. sawali 23. cement 24. clinker 25. GI sheets 26. hollow blocks

Exclusion from the Coverage of this Act. - Upon petition of the concerned parties and after public hearing, the implementing agency, with the approval of the President, may exclude from the coverage of this Act, types or brands of the goods included in the definition of basic necessities and prime commodities, which may be deemed as nonessential goods or luxury goods: Provided, That, any type or brand so excluded may be reinstated by the implementing agency during occasions of acute shortage in the supply of the basic necessity or prime commodity to which the excluded type or brand used to belong. (section 4)

What are the implementing agencies under the Price Act?

"Implementing agency" means the department, agency or office of the Government which has jurisdiction over a basic necessity or prime commodity as defined in the Price Act. (section 3)

DA	DOH	DENR	DTI
with reference to agricultural crops, fish and other marine products, fresh meat, fresh poultry and dairy products, fertilizers, and other farm inputs	with reference to drugs	with reference to wood and other forest product	with reference to all other basic necessities and prime commodities

What are the powers of the implementing agencies?

Powers and Responsibilities of Implementing Agencies. - To carry out the intents and purposes of this Act, the head of the implementing agency shall have the following additional powers and responsibilities:

(1) He shall, with the approval of the President, promulgate rules, regulations, and procedure for the implementation of this Act;

(2) He shall develop, promulgate and implemental programs, projects or measures to promote productivity in all basic necessities and prime commodities under his agency's jurisdiction;

(3) He shall promote and facilitate the establishment of an effective procurement, storage, marketing and distribution system of basic necessities and prime commodities to ensure their availability in all areas of the country where they are needed;

(4) During instances of panic-buying, he may, with the approval of the President, institute temporary measures to ensure orderly and equitable distribution to consumers of basic necessities and prime commodities in the affected area;

(5) Form time to time, he may issue suggested reasonable retail prices for any or all basic necessities and prime commodities under his jurisdiction for the information and guidance of producers, manufacturers, traders, dealers, sellers, retailers, and consumers;

(6) He shall cause the immediate dissemination of any mandated price ceiling for any basic necessity or prime commodity under his agency's jurisdiction through publication in a newspaper of general circulation in the area affected, and through broadcast by radio, or whenever deemed to materially make dissemination of the information more effective, by television. He may also cause the information to be disseminated through posting in public markets, supermarkets or other public places;

(7) He may, upon approval of the President, and subject to existing laws, rules and regulations on bidding, enter into any agreement with any local or foreign producer, manufacturer, supplier, distributor, or seller for the procurement of supplies of stocks of any basic necessity or prime commodity for purposes of buffer stocking: Provided, That, in areas where there are shortages or rampant illegal manipulation of prices, he may order their immediate sale;

(8) He may, subject to existing laws, rules and regulations on bidding, enter into any agreement with owners or operators of warehouses or storage houses or with owners, operators of franchise holders of vehicles or public utilities for the storage, transport, or distribution of any basic necessity or prime commodity;

(9) He may conduct investigations of any violation of this Act and, after due notice and hearing, impose administrative fines in such amount as he may deem reasonable which shall in no case be less than One thousand pesos (P1,0000) nor more than One million pesos (P1,000,000). In the imposition of administrative fines the following factors shall be taken into consideration:

(a) Whether the subject of the violation is a basic necessity or a prime commodity; violations involving basic necessities shall be deemed more serious;

(b) Whether the subject of the violation is under price control under Sections 6 and 7 of this Act; violations involving basic necessities and prime commodities under price control shall be deemed more serious;

(c) The number of violations committed; respondents who had previously been found to have violated any of the provisions of this Act shall be imposed a higher fine; and

(d) Such other considerations as may be deemed necessary to carry out the intents purposes and provisions of this Act.

(10) He may require the attendance and testimony of witnesses or the production of goods, objects, books, papers, documents, contracts, records, financial statements, accounts, agreements and such other evidences material in the determination of any violation of this Act;

(11) Without prejudice to the power to issue temporary closure or temporary restraining order for a period which shall not be more than ten (10) days, he may, after due notice and hearing issue cease and desist orders; reprimand; censure; suspend, revoke or cancel any permit, license, authority or registration issued by his office; or order the permanent closure of any establishment violating the provisions of this Act;

(12) He may initiate summary proceedings to cause the seizure by the Government of basic necessities and prime commodities subject of a violation of this Act and order their sale to the public at reasonable prices whenever the nature of or the demand for such goods so requires: Provided, That, pending litigation, the proceeds of the sale shall be held in trust or escrow by the implementing agency: Provided, further, That, should the owner of the basic necessity or prime commodity seized and sold be found not liable for the violation which was the basis of the seizure, the proceeds from their sale shall be paid to him, otherwise, they shall accrue to the general fund of the Government and: Provided, finally, That, the head of the implementing agency shall cause the broadcast in radio or television and the publication in at least two (2) newspapers of general circulation of the fact of sale or disposition of such seized goods at least three (3) days before the date of sale or disposition;

(13) He may initiate action and cause the prosecution before the proper court of law of violations of this Act;

(14) He may deputize and enlist the assistance of any government official or agency in carrying out the provisions of this Act; and

(15) Such other functions and ancillary powers as may be necessary to effectively implement this Act. (section 10)

What is Automatic Price Control?

Unless otherwise declared by the President, prices of basic necessities in an area shall automatically be frozen at their prevailing prices or placed under automatic price control whenever:

(1) That area is proclaimed or declared a disaster area or under a state of calamity;

(2) That area is declared under an emergency;

(3) The privilege of the writ of habeas corpus is suspended in that area;

(4) That area is placed under martial law;

(5) That area is declared to be in a state of rebellion; or

(6) A state of war is declared in that area.

If the prevailing price of any basic necessity is excessive or unreasonable, the implementing agency may recommend to the President the imposition of a price ceiling for the sale of the basic necessity at a price other than its prevailing price.

Unless sooner lifted by the President, price control of basic necessities under this section shall remain effective for the duration of the condition that brought it about, but not for more than sixty (60) days.

The terms "disaster" and "calamity" shall include those brought about by natural or man-made causes, whether local or foreign. (section 6)

Is there an automatic price control on

the prices of Prime Commodities?

No. Only the prices of basic necessities are automatically frozen when an area is declared under state of calamity.

According to Ernesto Ordoñez, “this automatic feature applies only to basic necessities defined in the law, including but not limited to products, such as rice, canned fish, coffee and sugar.

However, for prime commodities defined in this law, including noodles, onions, garlic, school supplies, cement and steel wires, price control is not automatic. It is required that the President first impose a price ceiling upon the recommendation of the implementing agency or the Price Coordinating Council (PCC).

This differentiation is needed. For basic necessities, action should be swift and, thus, automatic. For prime commodities, time is given to the implementing agency or PCC to recommend the appropriate action.

Since 1986, only the option of automatic price control on basic necessities has been used. For prime commodities, the option used to catch profiteers was not price control but the Price Tag Law, which is substantially incorporated in the Price Act. (Price controls: Blessing or curse? by Ernesto Ordoñez, Philippine Daily Inquirer, 20:18:00 10/15/2009)

What is Price Ceiling?

Price ceiling means the maximum price at which any basic necessity or prime commodity may be sold to the general public

Mandated Price Ceiling. - The President, upon the recommendation of the implementing agency, or the Price Coordinating Council, may impose a price ceiling on any basic necessity or prime commodity if any of the following conditions so warrants:

(1) The impendency, existence, or effects of a calamity;

(2) The threat, existence, or effect of an emergency;

(3) The prevalence or widespread acts of illegal price manipulation:

(4) The impendency, existence, or effect of any event that causes artificial and unreasonable increase in the price of the basic necessity or prime-commodity; and

(5) Whenever the prevailing price of any basic necessity or prime commodity has risen to unreasonable levels. (section 7)

How are Price Ceilings determined?

The head of the Local Price Coordinating Council or concerned implementing agency shall call for a public hearing or conduct dialogues with representatives of DILG, producers, manufacturers, distributors, sellers and consumers in order to arrive a reasonable price ceiling.

The LPCC shall forward to the implementing agency the proposed price ceiling. The secretary after review shall recommend to the NPCC or to the President the recommended price ceiling. (Section 2, Rule VIII, Joint DAO No. 1, series of 1993)

Determination of Price Ceilings. - In determining the reasonable price ceiling, the following factors may be taken into consideration:

(1) The average price, in the last three (3) months immediately preceding the proclamation of the price ceiling, of the basic necessity or prime commodity under consideration;

(2) The supply available in the market;

(3) The cost to the producer, manufacturer, distributor or seller including but not limited to:

(a) The exchange rate of the peso to the foreign currency with which a basic necessity or prime commodity or any component, ingredient or raw material thereof was paid for;

(b) Any change in the amortization cost of machinery brought about by any change in the exchange rate of the peso to the foreign currency with which the machinery was bought through credit facilities;

(c) Any change in the cost of labor brought about by a change in the minimum wage; and

(d) Any increase in the cost of transporting or distributing the basic necessity or prime commodity to the area of destination.

(4) Such other factors or conditions which will aid in arriving at a just and reasonable price ceiling. (section 8)

Any person who violates Section 6 or 7 of this Act shall suffer the penalty of imprisonment for a period of not less than one (1) year nor more than ten (10) years of a fine of note less than Five thousand pesos (P5,000) nor more than One million pesos (P1,000,000), or both, at the discretion of the court. (section 16)

Is the Department of Trade and Industry

allowed to impose Price Ceiling?

No. Only the President of the Philippines can impose mandated price ceiling. In RFM vs. DTI, the Court of Appeals ruled:

“xxx. The imposition of a price ceiling on the ex-mill prices of RFM’s flour products is beyond the authority of DTI.

“The Price Act is clear that only the President of the Philippines can impose a price ceiling on any basic necessity or prime commodity albeit upon the recommendation of the implementing agency or the Price Coordinating Council.” (RFM vs. DTI, Court of Appeals GR SP No. 114781, January 7, 2011)

What are illegal acts of price manipulation?

1. Hoarding, which is the undue accumulation by a person or combination of persons of any basic commodity beyond his or their normal inventory levels or the unreasonable limitation or refusal to dispose of, sell or distribute the stocks of any basic necessity of prime commodity to the general public or the unjustified taking out of any basic necessity or prime commodity from the fellester.blogspot.com channels of reproduction, trade, commerce and industry. There shall be prima facie evidence of hoarding when a person has stocks of any basic necessity or prime commodity fifty percent (50%) higher than his usual inventory and unreasonably limits, refuses or fails to sell the same to the general public at the time of discovery of the excess. The determination of a person's usual inventory shall be reckoned from the third month immediately preceding before the discovery of the stocks in case the person has been engaged in the business for at least three (3) months; otherwise, it shall be reckoned from the time he started his business.

2. Profiteering, which is the sale or offering for sale of any basic necessity or prime commodity at a price grossly in excess of its true worth. There shall be prima facie evidence of profiteering whenever a basic necessity or prime commodity being sold: (a) has no price tag; (b) is misrepresented as to its weight or measurement; (c) is adulterated or dilluted; or (d) whenever a person raises the price of any basic necessity or prime commodity he sells or offers for sale to the general public by more than ten percent (10%) of its price in the immediately preceding month: Provided, That, in the case of agricultural crops, fresh fish, fresh marine products, and other seasonal products covered by this Act and as determined by the implementing agency, the prima facie provisions shall not apply;

3. Cartel, which is any combination of or agreement between two (2) or more persons engaged in the production, manufacture, processing, storage, supply, distribution, marketing, sale or disposition of any basic necessity or prime commodity designed to artificially and unreasonably increase or manipulate its price. There shall be prima facie evidence of engaging in a cartel whenever two (2) or more persons or business enterprises competing for the same market and dealing in the same basic necessity or prime commodity, perform uniform or complementary acts among themselves which tend to bring about artificial and unreasonable increase in the price of any basic necessity or prime commodity or when they simultaneously and unreasonably increase prices on their competing products thereby lessening competition among themselves. (section 5)

What is the penalty of illegal acts of price manipulation?

Any person who commits any act of illegal price manipulation of any basic necessity or prime commodity under Section 5 hereof shall suffer the penalty of imprisonment for a period of not less than five (5) years nor more than Fifteen (15) years, and shall be imposed a fine of not less than Five thousand pesos (P5,000) nor more than Two million pesos (P2,000,000). (section 15)

Allocation of Buffer Fund

Allocation of a Buffer Fund to the Implementing Agency. - The implementing agency may procure, purchase, import, or stockpile any basic necessity or prime commodity, devise ways and means of distributing them for sale at reasonable prices in areas where there is shortage of supply or a need to effect changes in its prevailing price. For any or all of these purposes, a buffer fund shall be allocated in the annual appropriations of the implementing agencies. (section 9)

What is the Price Coordinating Council?

Sec. 11. Price Coordinating Council. - There is hereby created a Price Coordinating Council, hereinafter referred to as the Council, to be composed of the following members:

(1) The Secretary of Trade and Industry, as Chairman;

(2) The Secretary of Agriculture;

(3) The Secretary of Health;

(4) The Secretary of Environment and Natural Resources;

(5) The Secretary of Local Government;

(6) The Secretary of Transportation and Communications;

(7) The Secretary of Justice;

(8) The Director General of the National Economic and Development Authority;

(9) One (1) representative from the consumers' sector;

(10) One (1) representative from the agricultural producers' sector;

(11) One (1) representative from the trading sector; and

(12) One (1) representative from the manufacturers' sector.

The sectoral representatives of the Price Coordinating Council shall be appointed by the President for a term of one (1) year, without prejudice to reappointment for another term.

The Council shall meet every quarter and whenever the President or the Chairman shall convene the same. Each member shall receive reasonable reimbursements for transportation.

Members from the government sector may designate their representative to the Council;

The Department of Trade and Industry shall provide the secretariat to the Council from its existing organizational structure. (section 11)

What are the functions of the Price Coordinating Council?

The Price Coordinating Council shall have the following functions:

(1) It shall coordinate the productivity, distribution and price stabilization programs, project and measures of the Government and develop comprehensive strategies to effect a general stabilization of prices of basic necessities and prime commodities at affordable levels;

(2) It shall report to the President and to the Congress of the Philippines the status and progress of the programs, projects, and measures undertaken by each implementing department, agency or office as well as the comprehensive strategies developed by the Council to stabilize the prices of basic necessities and prime commodities;

(3) It shall advise the President on general policy matters for promotion and improvement in productivity, distribution and stabilization of prices of basic necessities and prime commodities;

(4) It may require from its members or any other government agency such information as it may deem necessary, and conduct public hearings for purposes of assessing the supply, distribution and price situation of any basic necessity or prime commodity;

(5) It shall publicize from time to time developments in productivity, supply, distribution and prices of basic necessities and prime commodities; and

(6) Whenever automatic price control of basic necessities is imposed under Section 6 of this Act, it shall cause the immediate dissemination of their prevailing prices or the price ceilings imposed in lieu thereof, as the case may be, fellester.blogspot.com through publication in a newspaper of general circulation in the area affected, and through broadcast by radio and, whenever the same is deemed to materially make dissemination of the information more effective, by television. It may also disseminate the information through posting in public markets, supermarkets and other public places. (section 12)

Sec. 13. The Price Action Officer Powers and Functions. - Whenever the President deems it necessary, he may appoint any of the members of the Price Coordinating Council as Price Action Officer for the duration of the automatic price control under Section 6 of this Act who shall have the following powers and functions:

(1) He shall carry out, implement and enforce the policies and decisions of the Council;

(2) He shall coordinate the actions of all implementing agencies involved in the monitoring and investigation of abnormal price movements and shortages of basic necessities and prime commodities;

(3) He may call upon any official, agent, employee, agency or instrumentality of the national or local government for any other assistance that he may deem necessary to carry out the purposes of this Act;

(4) He shall establish linkage and coordinate with non-government or private organizations in the affected are to assist in the monitoring and implementation of price control therein; and

(5) He shall exercise such other functions and duties as may be given to him by the President.