A state of National Public Health Emergency (Proclamation No. 922) was declared by the president as a response to the emerging public health situation — the spread of coronavirus disease 2019 or Covid-19.
Now referred to as a pandemic, Covid-19 constitutes a threat to national security. Consequently, the code alert system was raised to Code Red sub-level 2 which has so many serious and strong repercussions. For students and the school institutions, it means prolonged #walangpasok until April 12, 2020. Community quarantine is imposed in the whole National Capital Region. While no clear and specific guidelines have been released except the consequences of Code Red sub-level 2, men and women, boys and girls in NCR and other parts of the country are uncertain about the possible impact of this declaration of national emergency in their day-to-day lives.
In the light of the announcements, it is always a reminder to only trust reliable resources to prevent a public scare. However, it is a fact that even prior to the actual pronouncements of the government, reports and actual experiences mirrored panic and discomfort among consumers. The sale of face masks for example, both in the regular stores and online, have been controversial. The sad part is supply is unavailable. Weeks before, prices have skyrocketed. It is surprising to hear enforcement actions from the operatives of the DTI and NBI that found masks and other hoarded products stored in warehouses.
Upon announcement of the one-month community quarantine from March 15 to April 14, 2020 (not a lockdown as earlier information reported), consumers rushed to the groceries and raided supplies of basic goods, alcohol, sanitizers and other food items. Complaints and shoutouts about panic-buying and hoarding of basic items have been soaring. It calls for responsibility and collaboration on the part of the consumers and the merchandisers, and the public authorities involved.
Many are asking about what acts or practices of certain persons, natural or juridical, taking advantage of the situation, can qualify as violations of consumer-related laws or regulations in this time of public emergency.
Republic Act (RA) 7581 or the Price Act (1992), as amended by RA 10623, provides protection to consumers by stabilizing the prices of basic necessities and prime commodities during periods of calamity, emergency or widespread manipulation. It establishes a mechanism that protects consumers from inadequate supply of goods and unreasonable price increases in occasions of disasters and emergencies.
The prices of basic necessities are automatically frozen at prevailing prices or placed under automatic price control when there is an emergency, in this case of Covid-19, a declared a national public health emergency.
The law mandates that 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.
Basic necessity distinguished from basic commodity
The law distinguishes between basic necessities and basic commodities, to wit:
Basic necessities include: rice; corn; bread; fresh, dried and canned fish and other marine products, fresh pork, beef and poultry meal; fresh eggs; fresh and processed milk; fresh vegetables; root crops; coffee; sugar; cooking oil; salt; laundry soap; detergents; firewood; charcoal; candles; and drugs classified as essential by the Department of Health;
Prime commodities include fresh fruits; flour; dried processed and canned pork; beef and poultry meat; dairy products not falling under basic necessities; noodles; onions; garlic; vinegar; patis; soy sauce; toilet soap; fertilizer; pesticides; herbicides; poultry; swine and cattle feeds; veterinary products for poultry, swine and cattle; 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 drugs not classified as essential drugs by the Department of Health. (Section 3, RA 7581)
RA 10623, a law amending certain provisions of Republic Act No. 7581, expanded the basic necessities to include bottled water, instant noodles, fresh fruits, and LPG and kerosene. Added to the list of prime commodities are livestock and fishery feeds.
Illegal price manipulation
The law further mandates that the price control may be imposed, but shall last for only 60 days. Illegal acts of price manipulation of any basic necessity or prime commodity, such as hoarding, profiteering, and cartel, are also comprehensively defined under this law, and are considered violations of law:
Hoarding 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 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. (Sec. 5)
Profiteering 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 diluted; 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.(Sec. 5)
Cartel 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. (Sec. 5)
A mandated price ceiling may be imposed on any basic necessity or prime commodity as warranted under the following circumstances:
(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.
To carry out its mandates, the National Price Coordinating Council was created and is composed of secretaries of the Department of Trade and Industry, the Department of Agriculture, the Department of Health, the Department of Environment and Natural Resources, the Department of the Interior and Local Government, the Department of Transportation and Communication, the Department of Justice, director general of NEDA, and representatives from the consumers’ sector, producers’ sector, and the manufacturers’ and retailers’ sectors.
Overpricing may also be a violation of the Consumer Act of the Philippines
The reports on overpricing of facemasks, rice, water, and other goods falls squarely in the category of deceptive, unfair and unconscionable sales act or practice under the Consumer Act of the Philippines or Republic Act 7394, as it is considered taking undue advantage of consumers in this period of pandemic. It also qualifies as profiteering under the Price Act.
Penalties that may be imposed
The penalty for acts of illegal price manipulation shall be the penalty of imprisonment for five (5) years to Fifteen (15) years, and a fine P5,000 to P2,000,000. On the other hand, the penalty for violation of price ceiling shall be the penalty of imprisonment one (1) year to ten (10) years or a fine P5,000 to P1,000,000, or both, at the discretion of the court.
Under the Consumer Act, the deceptive, unfair and unconscionable sales act or practice shall be subject to a fine P500.00 to P10,000.00 or imprisonment of not less than five (5) months to (1) year or both, upon the discretion of the court. Injunction and damages may also be obtained under the circumstances.
Possible actions
The Price Act (RA 7581) sets up a system that ideally protects consumers from insufficient supply of goods and unreasonable price increase in occasions of emergencies and pandemic such as Covid-19. However, as experienced, the problem lies mostly in product availability and not in prices.
Price control mechanisms or any government intervention, in this case, a price freeze, will result in the shortage of goods as it draws raw materials and reduces manpower in production just when they are needed most.
It is noted that work is suspended in certain circumstances and the movement of people is limited. Thus, it is hoped that the government will really strike a balance between consumers and manufacturers.
This is not the best time to take advantage of the vulnerabilities of each one. It is time to take this seriously and responsibly. Let us continue to spread the right information, wash our hands and to be responsible consumers.