Introduction

In the Philippines, raffles conducted as part of sales promotions are regulated by the Department of Trade and Industry (DTI) to ensure fairness, transparency, and consumer protection. Under the Consumer Act of the Philippines (Republic Act No. 7394), sales promotions involving chance-based activities like raffles must comply with permit requirements if they aim to boost product sales or services. A raffle worth ₱22,500—referring to the total value of prizes—falls within the scope of regulated activities, as it exceeds minimal thresholds for exemptions. This article provides an exhaustive overview of the permit requirements for such raffles in the Philippine context, including legal foundations, applicability, application procedures, documentary prerequisites, fees, bonds, oversight mechanisms, penalties for violations, and practical considerations. It underscores DTI's role in preventing deceptive practices while facilitating legitimate business promotions, distinct from charitable raffles (governed by the Philippine Charity Sweepstakes Office or PCSO) or gambling (under the Philippine Amusement and Gaming Corporation or PAGCOR).

Legal Framework Governing Raffle Permits

The regulation of raffles as sales promotions is primarily anchored in the following laws and issuances:

Consumer Act of the Philippines (Republic Act No. 7394, 1992): Article 116 mandates that all sales promotions require prior approval from DTI to protect consumers from misleading schemes. Raffles are classified as "sales promotion" if they involve prizes awarded by chance to encourage purchases.
DTI Department Administrative Order (DAO) No. 02, Series of 2002: This is the key implementing rule, as amended by subsequent orders (e.g., DAO No. 10-02 and DAO No. 07-06). It outlines permit requirements, exemptions, and procedures for promotions involving prizes worth more than ₱500. For raffles with prizes totaling ₱22,500, this DAO applies fully, classifying it as a standard promotion.
Ease of Doing Business Act (Republic Act No. 11032, 2018): Encourages streamlined processes, leading to online application options via DTI's Business Permits and Licensing System (BPLS) or regional portals.
Data Privacy Act (Republic Act No. 10173, 2012): Governs the handling of participant data in raffles, requiring consent and secure storage.
Other Related Laws: The Civil Code (Republic Act No. 386) addresses contractual aspects of promotions, while the Revised Penal Code (Act No. 3815) penalizes fraud in chance-based activities. For non-commercial raffles, Executive Order No. 292 (Administrative Code) may defer regulation to local government units (LGUs), but commercial ones remain under DTI.

DTI's Fair Trade Enforcement Bureau (FTEB) administers these rules nationwide, with regional offices handling applications for promotions below certain thresholds. Raffles not linked to sales (e.g., pure charity) are exempt from DTI permits but may require PCSO approval under Presidential Decree No. 1602 if prizes exceed ₱5,000.

When a Permit is Required for Raffles Worth ₱22,500

A DTI permit is mandatory for raffles classified as sales promotions where:

The activity promotes goods or services by requiring purchase or participation tied to buying.
The total prize value exceeds ₱500 (DAO No. 02-2002, Section 3). At ₱22,500, this threshold is surpassed, necessitating a permit.
The promotion is nationwide or regional, with no exemptions for scale unless the total budget (including prizes and advertising) is below ₱10,000 and limited to one locality.

Exemptions include:

Internal company incentives not open to the public.
Free-entry draws without purchase requirements (considered contests of skill or chance, not promotions).
Small-scale events with prizes ≤ ₱500, or total promotion cost < ₱2,000.

For ₱22,500 prizes, the raffle is deemed "medium-scale," typically processed at DTI provincial or regional offices if confined to one region. If nationwide, it requires central office approval. The prize value triggers additional safeguards like bonding to ensure prize delivery.

Application Procedure

The process for obtaining a permit is standardized and can be initiated online or in-person:

Pre-Application Assessment: Determine jurisdiction—regional for prizes < ₱50,000 (like ₱22,500), central for higher or multi-regional promotions. Use DTI's online portal (www.dti.gov.ph) for initial checks.
Submission of Application: File at the nearest DTI office or via the Online Sales Promotion Permit System (OSPPS). Timeline: At least 15 days before the promotion start date (DAO No. 02-2002, Section 6).
Review and Approval: DTI evaluates for compliance (e.g., no deceptive mechanics). Processing takes 3-5 working days for complete applications; approvals are issued via permit certificate with a unique control number.
Post-Approval Obligations: Conduct the draw under DTI supervision if prizes exceed ₱10,000. Submit a post-promotion report within 30 days, including winner lists and tax compliance proofs.
Online Facilitation: Under RA 11032, applications can be fully digital, with e-signatures accepted via the Philippine Business Hub.

Extensions or amendments require supplemental applications, with fees prorated.

Documentary Requirements

Applicants must submit the following (originals or certified copies):

Application Form: DTI-prescribed Form SP-1, detailing promo mechanics, duration (max 1 year), entry methods, prize descriptions (e.g., cash, goods worth ₱22,500), draw date, and publicity plans.
Business Registration: SEC registration for corporations, DTI Certificate for sole proprietors, or CDA for cooperatives.
Affidavit of Undertaking: Sworn statement confirming compliance with rules, no pending violations, and prize funding.
Sample Materials: Promo posters, entry forms, raffle tickets (with security features like serial numbers).
Proof of Prize Funding: Bank certificate or escrow deposit for prizes > ₱10,000.
Bond Requirement: For total prizes ≥ ₱10,000 (applicable here at ₱22,500), a surety bond from an accredited insurer, equivalent to the prize value plus 10% (to cover taxes and contingencies). Bond validity extends 6 months post-draw.
Tax Clearances: BIR certification of withholding tax arrangements (prizes > ₱10,000 subject to 20% final tax under Revenue Regulations No. 2-98).
Data Privacy Compliance: Privacy notice for participants and DTI consent form.

For partnerships with media or influencers, include contracts. Incomplete submissions lead to denial.

Fees and Bonds

Fees are scaled based on prize value (DAO No. 07-06):

For prizes ₱10,001-₱50,000 (including ₱22,500): ₱1,000 application fee + ₱500 supervision fee if DTI oversight is required.
Additional: ₱200 per amendment, ₱500 for extensions.

Bonds, as mentioned, are mandatory for ₱22,500 prizes: Minimum ₱24,750 (₱22,500 + 10%). Refundable post-report if no issues. Fees are non-refundable, payable via cash, manager's check, or online banking.

Oversight and Compliance Monitoring

DTI monitors approved raffles through:

Supervised Draws: Mandatory for prizes > ₱10,000; DTI representatives witness the event to ensure randomness (e.g., using certified randomizers).
Audits: Random inspections of records and publicity materials.
Consumer Complaints: Handled via DTI's Consumer Care Hotline (1-384); unresolved issues escalate to adjudication.

Winners must claim prizes within 60 days, with unclaimed amounts reported to DTI.

Penalties for Non-Compliance

Violations of permit rules carry severe consequences under RA 7394, Article 123:

Administrative Penalties: Fines from ₱500 to ₱300,000, plus permit revocation. For unpermitted raffles worth ₱22,500, initial fine starts at ₱10,000.
Criminal Liabilities: Imprisonment of 6 months to 5 years for fraud or deception, per the Revised Penal Code.
Civil Remedies: Consumers can sue for damages; businesses face product seizures or business closure orders.

Jurisprudence, such as in DTI v. Various Promoters (administrative cases), emphasizes strict enforcement to deter fly-by-night schemes. Repeat offenders risk blacklisting.

Practical Implications and Best Practices

For businesses organizing a ₱22,500 raffle, early planning is crucial to meet timelines. Common pitfalls include vague mechanics (e.g., unclear odds) or non-disclosure of taxes (winners bear 20% tax for prizes > ₱10,000). Digital raffles (e.g., via apps) must comply with e-commerce rules under Republic Act No. 8792.

Charitable overlays may shift jurisdiction to PCSO, but commercial intent prevails. LGUs may impose additional ordinances (e.g., local business permits), but DTI permit supersedes for promotions.

In a post-pandemic economy, hybrid (online-offline) raffles are popular, requiring cybersecurity measures. Consultants or lawyers specializing in consumer law can assist in compliance.

Conclusion

Permit requirements for raffles worth ₱22,500 under DTI ensure ethical promotions while safeguarding consumer interests. Anchored in RA 7394 and supporting DAOs, the process demands meticulous documentation, fees, and bonds to mitigate risks. Businesses must prioritize transparency to avoid penalties, fostering trust in promotional activities. As DTI continues to digitize services, accessibility improves, but core principles of fairness remain unchanged. Entities planning such raffles should consult DTI offices for tailored guidance, reinforcing the Philippine commitment to regulated commerce.