In the competitive Philippine market, businesses frequently utilize sales promotions—discounts, raffles, "buy-one-take-one" schemes, and contests—to boost brand visibility and revenue. However, these activities are not just marketing strategies; they are regulated legal undertakings. Under Philippine law, the Department of Trade and Industry (DTI) serves as the primary watchdog to ensure these promotions are transparent, fair, and free from deceptive practices.
1. The Legal Basis: The Consumer Act
The primary legislation governing sales promotions is Republic Act No. 7394, otherwise known as the Consumer Act of the Philippines.
Article 116 of the Act explicitly states that no person shall conduct any sales promotion campaign without first obtaining a permit from the DTI. The rationale is to protect consumers against "misleading, deceptive, and unfair" sales practices.
2. Do You Need to Register? (The Rule of Thumb)
In general, yes, if your promotion involves a "game of chance" or a "game of skill" that offers a prize or a discount to the public, you are likely required to secure a DTI permit.
When a Permit is Required:
- Raffles and Lucky Draws: Any promotion where winners are determined by chance.
- Discounts and Markdowns: Price reductions (e.g., "50% off everything," "End of Season Sale").
- Premiums: Giving away free items with a purchase (e.g., "Free tote bag for every ₱2,000 spend").
- Redemption Schemes: Collecting caps, labels, or points to exchange for a prize.
- Games of Skill: Contests like essay writing, photo competitions, or talent searches where prizes are awarded based on merit.
When a Permit May NOT be Required:
- Internal Promotions: Contests or incentives strictly for employees and not open to the general public.
- In-Store Sampling: Giving out free samples without requiring a purchase or a "chance" element.
- Government-Regulated Industries: If the promotion falls under the jurisdiction of other agencies (e.g., the FDA for food/drugs/cosmetics, or the HLURB for real estate), the DTI permit may be bypassed or substituted by those agencies' respective rules.
3. The Application Process
To register a promotion, the business (the "proponent") must file an application with the DTI’s Fair Trade Enforcement Bureau (FTEB) or the relevant Regional/Provincial Office.
| Step | Action |
|---|---|
| 1. Submission | Submit the application form at least 30 days before the start of the promotion. |
| 2. Documentation | Provide mechanics, layout of promotional materials, list of prizes, and proof of prize ownership/funds. |
| 3. Fee Payment | Pay the application fees, which vary depending on the scope (National, Regional, or Local) and the total value of prizes. |
| 4. Approval | Upon review, the DTI issues a Permit Number, which must be displayed on all promotional materials. |
4. Essential Rules to Follow
Once a permit is granted, the proponent must adhere to specific operational standards:
- The Permit Number: All advertisements (social media posts, posters, radio ads) must clearly state: "Per DTI Fair Trade Permit No. [Series] of [Year]."
- The Mechanics: Rules must be clear, permanent, and accessible. You cannot change the mechanics midway through the promotion without prior DTI approval.
- Presence of DTI Representative: For major draws or determination of winners, a DTI representative must be present to witness the process and ensure integrity.
- Claiming Period: Winners usually have at least 60 days from receipt of notification to claim their prizes.
5. Penalties for Non-Compliance
Conducting a "colorum" (unregistered) promotion or violating the terms of an approved permit can lead to:
- Administrative Fines: Ranging from ₱500 to over ₱300,000 depending on the gravity.
- Cease and Desist Orders: Immediate stoppage of the promotion.
- Blacklisting: Potential difficulty in securing future permits.
- Criminal Liability: In extreme cases of fraud, imprisonment may be pursued.
Conclusion
In the Philippines, transparency is the cornerstone of consumer trust. Registering your sales promotion with the DTI is not just a bureaucratic hurdle; it is a legal safeguard that protects both the consumer and the brand's reputation. By ensuring your mechanics are vetted and your prizes are guaranteed, you foster a marketplace of fair play.
Would you like me to draft a sample set of "Terms and Conditions" for a Philippine-based raffle or contest that complies with DTI standards?