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This article was originally published on February 6, 2021 and has been updated to reflect recent legal developments.
This article is provided for general informational purposes only and does not create, nor shall it be construed as creating, a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. For advice on specific legal concerns, you are encouraged to engage the services of a qualified lawyer. You may also directly consult Alburo Alburo and Associates Law Offices for proper guidance tailored to your situation.
The views and information presented herein are based on the laws, rules, and jurisprudence prevailing at the time of writing. They do not take into account subsequent legal developments and should not be relied upon as a substitute for professional legal advice.
AT A GLANCE:
Under Section 5 of Republic Act No. 7581, there are three acts of price manipulation: (1) Hoarding; (2) Profiteering; and (3) Cartel.
“Manipulation, fueled with good intent, can be a blessing, but when used wickedly, it is the beginning of a magician’s karmic calamity.” – T.F. Hodge
In our previous discussion on basic necessities and prime commodities, it was emphasized that sellers do not enjoy absolute freedom in fixing the prices of commodities at their own discretion, especially during periods of calamity, emergency, widespread illegal price manipulation and other similar situations.
In such cases, the law steps in to prevent abuse. Thus, price manipulation is considered illegal under Republic Act No. 7581, otherwise known as the “Price Act,” as amended by Republic Act No. 10623.
What is price manipulation?
Section 5 of Republic Act No. 7581 provides that without prejudice to the provisions of existing laws on goods not covered by this Act, it shall be unlawful for any person habitually engaged in the production, manufacture, importation, storage, transport, distribution, sale or other methods of disposition of goods to engage in the acts of price manipulation of the price of any basic necessity or prime commodity.
Forms of Price Manipulation
Under Section 5 of Republic Act No. 7581, there are three acts of price manipulation: (1) Hoarding; (2) Profiteering; and (3) Cartel.
Hoarding (Section 5(1))
It is the undue accumulation by a person or combination of persons of any basic or prime 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 stocks.
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.
Profiteering (Section 5(2))
It 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:
- has no price tag;
- is misrepresented as to its weight or measurement;
- is adulterated or diluted; or
- 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 faciae provisions shall not apply; and casia
Cartel (Section 5(3))
It 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.
What then is the penalty for the commission of any act of illegal price manipulation?
Section 15 of Republic Act No. 7581 states that 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).
Related Article:
- Retail and Wholesale Price of Commodities
- What is the effect of the inadequacy of price in a foreclosure sale?
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 09175772207/ 09778050020.
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