Local canned sardine manufacturers questioned the legal basis of the Suggested Retail Price (SRP) on basic necessities and prime commodities (BNPCs) with price ranges, implying that the Department of Trade and Industry (DTI) has no power to issue the SRP Bulletin because of the absence of an enabling law.

This was raised by the Canned Sardines Association of the Philippines (CSAP) in a letter addressed to DTI Secretary Ramon M. Lopez in light of the consultation being conducted by the agency on a draft Department Administrative Order (DAO) on guidelines for SRP Bulletin listing and delisting of BNPCs.

CSAP Executive Director Francisco J. Buencamino stated in a June 13,2022, letter that “CSAP is declaring its objection to the proposed draft DAO. “It may be wiser for us to recommend deferring a final action on this DAO until an effort to establish an enabling law will support the DAO.”

Buencamino cited three most fundamental concerns on the draft DAO. “The main issue with the DAO is that there is no enabling law and legal foundation on the SRP,” said Buencamino.

Buencamo added that the Price Act merely makes the SRP recommendatory as shown by the use of the qualifier “suggested.”

Second, Buencamino said that some of its members who consulted their legal advisers have cautioned their participation to this proposed guidelines on SRP’s enforcement because their mere participation will be deemed as an ultra vires act of price control.

The last concern is the Price Act recognizes only two instances when the government can exercise price control under qualified conditions: price freeze and price ceiling.”There is no SRP,” Buencamino added.

And yet, canned sardines manufacturers noted that DTI sanctions or threatens to sanction supermarkets for nonobservance of SRP. Thus manufacturers are compelled to adjust prices to the SRP even though there is no price freeze or a price ceiling.

“Our manufacturers are compelled to accept ‘losses’ mandated by the enforcement. We, the manufacturers, need a balanced concern of the DTI to protect our rights to earn reasonable profits of doing legitimate business,” Buencamino said.

CSAP further cited factors that affect their prices such as raw materials as prices depend on catch volume, and for imported fish, prices are affected by international demand. They are also burdened with high freight rates of shipping lines which they blamed DTI for failing to monitor that rates have already increased by more than 100 percent since the pandemic.

The groups also cited increasing add-on costs selling to supermarkets as they demand more support from manufacturers, high listing fee to introduce new brands, constant de-listing of slow-moving brands once they do not move for a certain period, payment of renovating fees when they redo their existing outlets, required deployment of merchandisers even if the sales volume in the outlet does not justify the cost, service level penalties and/or non delivery penalties for every Purchase Order not served, anniversary supports and promo supports, and increased government regulation fees in almost all agencies.

With these concerns, CSAP believes that the Price Act must be amended or updated. “DTI cannot issue a DAO without an enabling law to support it. Penalizing retailers and manufacturers for non-observance of the SRP thru monitoring letters, rebates, and pull-out of products will constitute a prohibited act of price control that is neither Price Freeze nor Price Ceiling,” the CSAP letter stated.

Moreover, CSAP also questioned one of the basis mentioned in the DAO which is the unavailability of the product when the DTI monitoring team cannot fund the product brands in the supermarket.

CSAP said that these brands may not be in supermarkets because these low-cost products cannot afford the “listing fee” requirements of supermarkets.

However, these products are indeed present and sold in other market channels that are more affordable to a greater number of our consumers. “By our analysis, the proposed basis for delisting/enlisting some brands from SRP exclusion/inclusion is without genuine consultation,” the letter alleged.

As proposed in the draft DAO, the basis for listing provided under Rule IV, Section 1 and Section 2 should be a cojoined decision of both the government and the manufacturers.

“The mere act of submitting a proposal to the industry is deemed compliance to consultation and can now ratify all actions of the DTI even if it were ultra vires to the Price Act,” CSAP said.