Amendments to Consumer Act Sales Promotion Rules

Legal basis and governing framework

Republic Act No. 7394 establishes the policy of the State to protect the interests of the consumer, promote general welfare, and establish standards of conduct for business and industry.
Republic Act No. 7394 requires measures to protect consumers against deceptive, unfair, and unconscionable sales acts and practices.
Republic Act No. 7394 directs protection of consumers against misleading advertisements and fraudulent sales promotion practices.
DTI Administrative Order No. 10-02, s. of 2010 strengthens DTI Administrative Order No. 2, series of 1993 to address evolving issues in sales promotion campaigns.
The Order is issued pursuant to the provisions of the Consumer Act of the Philippines.

Policy and purpose statements

The Order is anchored on the policy to protect consumers from deceptive, unfair, and unconscionable sales act and practices.
The Order targets honest, transparent, and fair conduct in sales promotion campaigns.
The Order aims to strengthen regulatory rules on sales promotion campaigns to effectively address evolving issues.

Coverage, definitions, and scope

The amended rules apply to the advertising and sales promotion of all consumer products, services and credit facilities, including sponsorships of game shows and similar activities.
The coverage includes advertising and sales promotion campaigns nationwide in character for promotional campaigns/announcements.
Food, drugs, devices, cosmetics and hazardous substances, and agricultural products fall under the jurisdiction of the concerned departments.
“In Store Promotion” is promotional campaign conducted within the retail store’s premises where no advertisement or public announcement is made on such activity, including window displays and/or signage visible outside the retail premises.
The rules on promotional campaigns apply to promotional campaigns/announcements for consumer products, services, credit facilities, including sponsorships of game shows and similar activities, as well as beauty contests and nationwide promotion.
The rules govern covered promotional campaign/activity conduct and compliance requirements before any launch.

Permit requirement and who may apply

Any person intending to conduct any covered activity must file an application for a permit with complete supporting documents before the proper DTI office.
The application must be filed at least thirty (30) days before the commencement of the activity.
An incomplete application is deemed not filed for purposes of the permit requirement.
The concerned DTI office must immediately act on the application.
If an application is not acted upon within ten (10) days from receipt, it is considered approved.
Even when the application is considered approved, the promotional activity must commence on the date stated in the application.
No person shall conduct any covered promotional campaign or activity prior to issuance of the DTI permit.
The application may be filed by the persons whose consumer products, services, credit facilities, beauty contests, competition, game shows, and the like are being promoted.
The persons filing must sign the application individually or jointly, or submit a true copy of a written agreement showing the degree or extent of participation and responsibility in the promotion conduct.
Where no limitation on extent of liability or responsibility is indicated in the agreement, all such persons are jointly and severally liable and responsible.
Where an application is filed and facilitated for and on behalf of the persons covered, the agent must be authorized by a Special Power of Attorney or Secretary’s Certificate, as the case may be.

Application form, contents, and required details

The permit application must be in the form prescribed by the Department and must contain the information and documents enumerated below.
The application must identify the complete name, address, and telephone number (if any) of the sponsor(s).
The application must identify the complete name, address, telephone number, fax number, email address (if any) of the person lodging the application if that person is the sponsor’s duly authorized representative or agent.
The application must identify the complete name, address, telephone number, fax number, email address (if any) of the person the participant may contact for inquiries, complaints, and similar purposes.
The application must include a description of the consumer products to be promoted and/or the extent of the service or credit, and the details of the contest/competition/game show and the like.
The application must include proof of business and/or product registration when required by any government agency.
The application must state the type of announcement/information and the text or substance to be used.
The application must state the geographical area to be covered.
The application must state the period of the promotion campaign/activity.
The application must state the target participants and required qualifications, if any.
The application must state the mechanics and the criteria for participating and winning, if any.
The application must state the procedure in the predetermination of winning entry forms, and the computer program to be used, if applicable.
The application must state the type of entry forms and/or paraphernalia or electronic device to be used.
The application must include the plan for seeding qualifying entry forms, paraphernalia, or predetermined winning entry forms.
The application must state the date/time/place for auditions, try-outs, pre-qualification, and/or qualification of participants, if required.
The application must describe security marks (if any), including their purpose, verification method, and a sample specimen containing the security mark.
The application must state the deadline of submission of entries.
The application must state the specific city/municipality/province and the number of drop boxes, and the names and addresses or telephone numbers of the business entities where entries may be sent.
The application must list the prizes of each category of winners, including the amount or, if in kind, the description/brand/size/model/make and their market value at the time of application.
The application must state whether a prize in kind is transferable and/or convertible to cash.
The application must state whether required taxes for winnings are shouldered by sponsors/applicants or by winners, and if by winners, whether withheld by sponsors/applicants.
The application must state time and dates when prizes are demandable after termination of the campaign/activity, which must be not less than sixty (60) days from the notification or publication, whichever comes last.
The application must state the requirements and/or type of identification required to claim prizes.
The application must state the locations of redemption/exchange centers, or where prizes may be claimed.
The application must include such other information and documents required by the Department to protect public interest.

Exemptions from promotional rules

The rules on promotional campaigns do not apply to promotional campaigns/activities conducted by the government or any of its agencies or instrumentalities in the exercise of their governmental functions.
The rules on promotional campaigns do not apply to promotional campaign/activities of private entities in joint projects with any government agency under the governmental-functions category.
The rules on promotional campaigns do not apply to promotional activities extended by social, civic, political, religious, educational, professional and other similar organizations among their members.
Exemption for covered organizations applies provided the promotional activity is not considered sales promotion as defined in the rules.

Prohibited acts and integrity safeguards

No person shall directly or indirectly tamper with entries, paraphernalia, and/or electronic devices used in a promotional campaign/activity covered by the rules.
No person shall unduly influence the results of a covered promotional campaign/activity.
No person shall perform any act to the prejudice of legitimate participants and/or winners.

Mechanics requirements and operational controls

Covered promotional campaigns/activities must comply with the general rules on mechanics, unless otherwise provided.
Entry forms that are to be obtained at specific places must be made available to qualified participants during office or store hours, unless other obtaining methods are specified in the mechanics.
Prospective participants/entries must be selected in a fair, honest, and transparent manner.
Proof of notice of selection and other relevant information must be given to selected participants in a manner expressly provided in the mechanics.
Draw date(s) for selection/determination of participants or winners must not be more than fourteen (14) days after the deadline of submission of entries.
Determination of winners may use any technique not contrary to law, morals, and public policy, provided determination is conducted in a fair, honest, and transparent manner.
For raffles/sales promotion using electronic means, DTI Regional and Provincial Offices shall check the program software source code and the database for prizes to ensure prizes are distributed throughout the whole promo period.
Without verification by DTI Regional and Provincial Offices, there can be no approval of the sales promo.
Changes in the sales promotion campaign, and the fact of approval, must be published, announced, or advertised at least twice on two (2) different dates before the change is effected.
The publication/announcement/advertisement of changes must be made in the same manner and medium used to announce/publish/advertise the original sales promotion campaign.

Information disclosure requirements

A sales promotion intended for broad consumer participation must disclose required details in the announcement, information dissemination, or advertisement of the promotion.
The required disclosures include the location and/or manner of dropping or submitting entry forms/entries.
The required disclosures include the person and address to which entry forms/entries may be sent.
The required disclosures include the deadline for submission of entry forms/entries.

Department verification and witness requirements

A Department representative must be invited and/or notified to inspect and verify the electronic device or similar contraption used to determine/select participants and/or winner(s) or winning entries.
A Department representative must be invited and/or notified to witness the drawing of pre-determined winning entry forms/entries.
A Department representative must be invited and/or notified to witness the printing and seeding of pre-determined winning entry forms/entries.
A Department representative must be invited and/or notified to witness pre-qualifications, try-outs, auditions, and to verify and certify qualified participants.
A Department representative must be invited and/or notified to witness pre-draws or drawing of minor prizes and verify and certify the winners of the same.
A Department representative must be invited and/or notified to witness final draws or final determination of winners.
The sponsor must send an invitation and notification to the Department at least seven (7) calendar days before the event.
If printing, seeding, and/or drawing of winners is to be held outside the country, notification must be at least fourteen (14) calendar days prior to the conduct of the activities.
A list of the complete names and addresses of winners and their corresponding prizes must be provided to the Department.

Voluntary cancellation rules

A person may voluntarily cancel or discontinue an approved promotional campaign/activity before publication if no information dissemination or advertising has been made and a written notice is submitted to the Department prior to cancellation.
If announcements/information dissemination/advertising has already been made but the promotion period has not yet commenced, discontinuance/cancellation may be made only upon prior written notice to the Department within a period of not less than five (5) days before the commencement of the originally intended promotion date.
If the sponsor fails to comply with the required period for cancellation/discontinuance after publication, the sponsor must honor the promotional commitments.
Voluntary cancellation, discontinuance, or suspension of an ongoing promotional campaign/activity is not allowed except upon prior written approval by the Department.
Department approval for cancellation of ongoing promotions is based on either:
- a final judgment of voluntary insolvency/bankruptcy against the applicant referred to in the permit application rules; or
- occurrence of a fortuitous event or force majeure that makes it impossible to continue the promotional campaign/activity.
Winners who had already won before Department approval of cancellation/discontinuance/suspension must be paid or given their prizes.

In-store promotion classification and permit effects

The rules include in-store promotions such as price reduction, special offers, product demonstration, product samples, rebates, premium-in-pack, expert advise, and other analogous activities.
Promotional campaigns exempted from the permit requirement remain subject to all other pertinent rules on sales promotion campaigns.

Additional prohibitions on entry tampering

Covered promotional campaign/activity conduct is restricted against tampering with entries and devices, undue influence of results, and prejudice to legitimate participants and/or winners.

Separability, repeal, and publication

If any provision of the Order is declared unconstitutional, the validity of other provisions is not affected.
All DTI Administrative Orders, Department Orders, other issuances, or parts inconsistent with the Order are repealed or amended accordingly.
The Order is published and takes effect under the publication rule and filing requirement stated in its effectivity clause.