Electronic Commerce Act provisions on e-transactions

Declaration of national policy

The State recognizes ICT’s vital role in nation-building under Section 2.
The State directs the creation of an “information-friendly” environment supporting the availability, diversity, and affordability of ICT products and services under Section 2.
The State recognizes the primary responsibility of the private sector in ICT investment and services under Section 2.
The State prioritizes training programs and institutional policy changes to develop human resources for the information age under Section 2.
The State commits to facilitate transfer and promotion of technology under Section 2.
The State requires network security, connectivity, and neutrality of technology for national benefit under Section 2.
The State commits to marshal and deploy national information infrastructures, including their interconnection to global networks, with appropriate legal, financial, diplomatic, and technical frameworks under Section 2.

Scope, purpose, and key definitions

The Act aims to facilitate domestic and international dealings, transactions, arrangements, agreements, contracts, and exchanges and storage of information through electronic, optical, and similar media to recognize authenticity and reliability of electronic data messages and electronic documents, and to promote universal electronic transactions in government and by the general public under Section 3.
The Act applies to any kind of electronic data message and electronic document used in the context of commercial and non-commercial activities, including domestic and international dealings and transactions under Section 4.
The Act defines “Addressee” as the intended recipient, excluding a person acting as intermediary under Section 5.
The Act defines “Computer” broadly as any device or interconnected devices that can receive, record, transmit, store, process, correlate, analyze, project, retrieve, and/or produce information and can perform one or more such functions under Section 5.
The Act defines “Electronic data message,” “Information and Communications System,” “Electronic signature,” “Electronic document,” “Electronic key,” “Intermediary,” “Originator,” and “Service provider” under Section 5.
The Act defines “Service provider” to include (a) online services or network access (including transmission/routing/connection facilities) and (b) the technical means by which electronic documents may be stored and made accessible, and it states that such service providers have no authority to modify/alter content or make entries unless specifically authorized, while retaining documents as required to perform the services under Section 5.

Legal recognition: data, documents, signatures

Information shall not be denied validity or enforceability solely because it is in the form of an electronic data message purporting to give legal effect, or because it is incorporated by reference in such electronic data message under Section 6.
Electronic documents have the legal effect, validity, or enforceability as any other document or legal writing under Section 7.
Where the law requires a document to be in writing, the requirement is met by an electronic document if it maintains integrity and reliability and can be authenticated for subsequent reference, showing that it remains complete and unaltered (except authorized changes/endorsements or changes arising normally) and is reliable in light of purpose and relevant circumstances under Section 7.
Where the law requires a document be presented or retained in its original form, the requirement is met by an electronic document if there is reliable assurance as to integrity from time generated in final form and the document is capable of being displayed to the person to whom it is to be presented under Section 7.
For evidentiary purposes, an electronic document is treated as the functional equivalent of a written document under existing laws under Section 7.
No provision of the Act varies existing requirements of laws on formalities for validity under Section 7.
The Act does not modify statutory rules on admissibility of electronic data messages or electronic documents, except rules relating to authentication and best evidence under Section 7.
An electronic signature is equivalent to a signature on a written document if it is proved that a non-alterable prescribed procedure existed under which (1) the method identifies the party and indicates access for consent/approval, (2) the method is reliable and appropriate for the purpose in light of circumstances (including any relevant agreement), (3) execution/provision of the signature is necessary to proceed, and (4) the other party is authorized and enabled to verify and decide to proceed based on authentication under Section 8.
In proceedings involving an electronic signature, it is presumed that the signature is the signature of the person it correlates to and that the signature was affixed with intention to sign/approve unless the relying party knows or has notice of defects/unreliability or reliance is not reasonable under the circumstances under Section 9.

Evidentiary rules and authentication

For original-form requirements, integrity is shown where the integrity of information from its first generation in final form is evidenced by evidence “aliunde” or otherwise, and where the information required to be presented is capable of being displayed under Section 10.
Authentication of electronic documents, electronic data messages, and electronic signatures is done by demonstrating, substantiating, and validating a claimed identity of a user, device, or other entity in an information or communications system under Section 11, including:
- Signature authentication through proof that the electronic symbol/character/number representing named persons or the applicable methodology/security procedure was employed or adopted with intention to authenticate/approve under Section 11.
- Data message/document authentication through proof that an appropriate security procedure was adopted and employed to verify originator or detect error/alteration in communication/content/storage using specified or similar security devices under Section 11.
The Supreme Court may adopt other authentication procedures, including electronic notarization systems, and may allow certificate of authentication on printed/hard copies by electronic notaries, service providers, and duly recognized/appointed certification authorities under Section 11.
The person introducing an electronic data message or electronic document in legal proceedings bears the burden to prove authenticity with evidence supporting that it is what it is claimed to be under Section 11.
In the absence of evidence to the contrary, integrity of the information/communication system may be established by proof of system operation without affecting integrity and no reasonable doubt; or that the record was made/stored by an adverse party to the proceeding; or that it was stored in the usual and ordinary course of business by a non-party who did not act under the control of the party using it under Section 11.
In legal proceedings, no rule on evidence denies admissibility of an electronic data message or electronic document solely because it is electronic-form, or solely because it is not in standard written form, if it meets Sections 6 or 7 such that it is the best evidence of the agreement and transaction under Section 12.
In assessing evidential weight, reliability of manner of generation, storage, or communication and reliability of originator identification and other relevant factors must be given due regard under Section 12.
Electronic retention is permitted notwithstanding contrary law/rules: retention satisfies original-form document retention requirements if the electronic document remains accessible for subsequent reference; is retained in generated/sent/received format or a format accurately representing it; and enables identification of originator/addressee and determination of date and time sent/received under Section 13.
If third-party services are used for retention, satisfaction requires meeting the conditions in Section 13(a)(i)-(iii) under Section 13.
Matters in Section 12 (admissibility/evidential weight) and Section 9 (presumptions) may be presumed established by an affidavit given to the best of the deponent’s knowledge subject to rights of parties under Section 14.
A deponent of an affidavit introduced in evidence may be cross-examined as of right by an adverse party under Section 15.
Any party may cross-examine a person referred to in Section 11, paragraph 4, sub-paragraph c under Section 15.

Contract formation and transaction attribution

Contract formation elements may be expressed, demonstrated, and proved by electronic data messages or electronic documents, and no contract is denied validity or enforceability solely because it is electronic-form or because elements required for contract formation are expressed/demonstrated/proved by electronic data messages or electronic documents under Section 16.
For electronic transactions among banks (and linkages with other entities/networks), transactions are deemed consummated upon actual dispensing of cash or debit of one account and corresponding credit to another, whether initiated by depositor or authorized collecting party, under Section 16.
For such banking transactions, the obligation arising between one bank/entity/person and another is considered absolute and is not subject to the process of preference of credits under Section 16.
As between originator and addressee, declarations of will or other statements in an electronic data message or electronic document are not denied legal effect/validity/enforceability solely because they are electronic-form under Section 17.
An electronic data message or electronic document is deemed to be that of the originator if sent by the originator himself under Section 18.
Between originator and addressee, it is deemed sent by the originator if sent by an authorized person acting on behalf of the originator regarding that message/document, or by an information system programmed by or on behalf of the originator to operate automatically under Section 18.
An addressee may treat the message/document as being that of the originator and act on that assumption if the addressee properly applied a previously agreed procedure to ascertain originator, or if the message/document resulted from actions of a person whose relationship enabled access to an originator identification method under Section 18.
The addressee’s assumption rights do not apply once the addressee has both received notice from the originator that it is not from the originator and has reasonable time to act accordingly, or if the addressee knew or should have known (with reasonable care or agreed procedure) it was not from the originator under Section 18.
Where message/document is treated as being of the originator (or addressee is entitled to act on that assumption), the addressee may regard receipt as what the originator intended to send and act on that assumption under Section 18.
The addressee is not entitled to that assumption when it knew or should have known (with reasonable care or agreed procedure) that transmission resulted in an error in what is received under Section 18.
Each received electronic data message or electronic document is treated as separate and actionable on that basis, except where it duplicates another and the addressee knew or should have known it was a duplicate under Section 18.
An addressee may regard the received electronic data message/document as the one the originator intended unless the addressee knew or should have known (with reasonable care or appropriate procedure) that transmission resulted in error or was sent to an undesignated information system under Section 19.
Where parties agree on acknowledgment of receipt, acknowledgment may be given by any communication or conduct sufficient to indicate receipt unless the originator states the effect/significance is conditional on acknowledgment; then it is treated as though never sent until acknowledgment is received under Section 20.
If the originator does not make acknowledgment conditional and acknowledgment is not received within specified/agreed time or, if none, within reasonable time, the originator may give notice specifying a reasonable time and, if not received, may treat the message/document as though never sent or exercise other rights under Section 20.
Dispatch occurs when the electronic data message/document enters an information system outside the control of the originator or the sender on the originator’s behalf, unless otherwise agreed under Section 21.
Receipt rules allocate receipt based on whether a designated information system exists, when entry/retrieval occurs, and regardless of where the system is located, unless otherwise agreed under Section 22.
Place of dispatch is where the originator has its place of business; place of receipt is where the addressee has its place of business, even if laptops/portable devices are used, and this rule also determines tax situs of the transaction, unless otherwise agreed under Section 23.
If a party has more than one place of business, “place of business” is the one with the closest relationship to the underlying transaction, or the principal place of business if there is no underlying transaction under Section 23.
If a party has no place of business, reference is made to habitual residence; for a body corporate, usual place of residence is where incorporated or legally constituted under Section 23.
Parties may choose the type and level of security needed for electronic transactions and select and use technological methods that suit their needs, subject to applicable laws and/or Department of Trade and Industry rules with other appropriate government agencies under Section 24.

Carriage of goods using electronic records

This Chapter applies to actions connected with or in pursuance of a contract of carriage of goods, including furnishing marks/number/quantity/weight; stating/declaring nature or value; issuing receipts; confirming loading; notifying terms and conditions; giving instructions; claiming delivery; authorizing release; giving notice of loss or damage; giving any other notice or statement; undertaking delivery to a named person or authorized claimant; and granting/acquiring/renouncing/surrendering/transferring/negotiating rights and rights and obligations under the contract under Section 25.
Where the law requires actions under Section 25 to be carried out in writing or by paper document, the requirement is met by using one or more electronic data messages or electronic documents under Section 26.
Where a right is to be granted to, or an obligation is to be acquired by, one person only and the law requires conveyance by transfer/use of a paper document, the requirement is met if conveyed by electronic data messages/documents using a reliable method to render them unique under Section 26.
The reliability standard for such unique conveyance is assessed in light of the purpose and all circumstances including any relevant agreement under Section 26.
Where electronic data messages/electronic documents are used to effect actions in Section 25(f) and (g), no paper document used to effect any such action is valid unless the electronic use is terminated and replaced by paper documents, and the paper document must state such termination; replacement does not affect parties’ rights/obligations under Section 26.
Compulsorily applicable rules to contracts evidenced by paper documents remain applicable even where contracts are evidenced by one or more electronic data messages/electronic documents under Section 26.

Government electronic transactions framework

Within two (2) years from the Act’s effectivity, government departments/bureaus/offices/agencies and government-owned and-controlled corporations must accept the creation, filing, or retention of required/accepted documents in electronic form, issue permits/licenses/approvals in electronic form, require/accept payments and issue receipts via electronic data messages/electronic documents, and transact government business/functions using electronic data messages/electronic documents under Section 27.
Within the same two (2) years, those entities are authorized to adopt and promulgate rules/regulations/guidelines after appropriate public hearing and with due publication in newspapers of general circulation under Section 27.
The promulgated rules/guidelines must specify, among others, the manner and format for filing/creation/retention/issuance; where/when signing is required and the type of electronic signature required; the format and manner of affixing the electronic signature; control processes to ensure integrity/security/confidentiality; other attributes required; and full or limited use of documents and papers for compliance under Section 27.
The Act itself mandates acceptance or issuance of documents in electronic data message/electronic document form when the required rules/regulations/guidelines are adopted, promulgated, and published under Section 27.
Within two (2) years from effectivity, an electronic online network called RPWEB must be installed per Administrative Order 332 and House of Representatives Resolution 890 to implement Part IV and facilitate open, speedy, efficient electronic online transmission and conveyance among government offices down to division level and regional/provincial offices, government-owned and-controlled corporations, local government units, other public instrumentalities, universities/colleges/schools, and universal access to the general public under Section 28.
RPWEB must serve as an initial platform of the government information infrastructure (GII) to evolve and improve through better technologies or electronic online wide area networks using, among others, fiber optic, satellite, wireless, and other broadband telecommunication mediums under Section 28.
The Department of Transportation and Communications, National Telecommunications Commission, and the National Computer Center must aggressively promote and implement policies and frameworks to substantially reduce costs of connectivity for government and the general public, including establishment of a government website portal and a domestic internet exchange system to facilitate strategic access and improve local internet traffic flow under Section 28.
Cable TV and broadcast infrastructure for cable TV and broadcast excluding programming/content and its management are treated as within telecommunications activity for purposes of electronic commerce and maximizing ICT convergence for GII installation under Section 28.
The Department of Trade and Industry (DTI) must direct and supervise the promotion and development of electronic commerce with relevant agencies, without prejudice to Republic Act No. 7653 (Charter of Bangko Sentral ng Pilipinas) and Republic Act No. 337 (General Banking Act), as amended, under Section 29.
The DTI is empowered to promulgate rules and regulations and provide quality standards or issue certifications, and to perform functions necessary for implementation of the Act in electronic commerce, including installation of an online public information and quality/price monitoring system for goods and services to protect consumers under Section 29.

Service provider liability limits and rights controls

A service provider acting as defined in Section 5 is not subject to civil or criminal liability for electronic data messages/electronic documents it merely provides access to when liability is founded on the obligations/dissemination of such material or statements in it, provided the service provider does not have actual knowledge or awareness of unlawfulness/infringement; does not knowingly receive financial benefit directly attributable to unlawful/infringing activity; and does not directly commit infringement or unlawful act, induce/ cause another to infringe, or benefit financially from another’s unlawful/infringing act under Section 30.
Nothing in Section 30 affects contractual obligations; obligations of a service provider under a licensing or other regulatory regime established by written law; obligations imposed under any written law; or civil liability to the extent that such liability forms the basis for injunctive relief issued by a court requiring actions necessary to remove/block/deny access to material or preserve evidence of a violation under Section 30.
Access to an electronic file or electronic signature is authorized/enforced only for the individual/entity having legal right to possession/use of the plaintext/electronic signature/file and solely for authorized purposes under Section 31.
The electronic key for identity or integrity must not be made available to any person or party without consent of the individual/entity in lawful possession under Section 31.
Any person who obtained access to an electronic key, electronic data message/electronic document, book, register, correspondence, information, or other material pursuant to powers under the Act must not convey or share it with any other person except for purposes authorized under the Act under Section 32.

Criminal penalties and implementing oversight

Hacking or cracking—unauthorized access into or interference with a computer system/server or information and communication system, including access to corrupt/alter/steal/destroy using a computer or similar devices without owner knowledge/consent, including introduction of computer viruses and resulting in corruption/destruction/alteration/theft/loss of electronic data messages or electronic documents—is punished by a minimum fine of PHP 100,000 and a maximum commensurate to the damage incurred, plus mandatory imprisonment of six (6) months to three (3) years under Section 33.
Piracy—unauthorized copying/reproduction/dissemination/distribution/importation/use/removal/alteration/substitution/modification/storage/uploading/downloading/communication/making available to the public/broadcasting of protected material, electronic signature, or copyrighted works (including sound recordings/phonograms) or information material on protected works through telecommunication networks (including the internet) in a manner that infringes intellectual property rights—is punished by a minimum fine of PHP 100,000 and a maximum commensurate to damage incurred, plus mandatory imprisonment of six (6) months to three (3) years under Section 33.
Violations of the Consumer Act or Republic Act No. 7394 and other relevant laws through transactions covered by or using electronic data messages or electronic documents are penalized with the same penalties as provided in those laws under Section 33.
Other violations of the provisions of this Act are punished by a maximum penalty of PHP 1,000,000 or six (6) years imprisonment under Section 33.
The DTI, Department of Budget and Management, and Bangko Sentral ng Pilipinas are empowered to enforce the Act and issue implementing rules and regulations necessary in coordination with Department of Transportation and Communications, National Telecommunications Commission, National Computer Center, National Information Technology Council, Commission on Audit, other concerned agencies, and the private sector, within sixty (60) days after approval under Section 34.
Failure to issue rules and regulations does not affect the executory nature of the Act’s provisions under Section 34.
A Congressional Oversight Committee exists, composed of relevant Senate and House committees, which must meet at least quarterly during the first two (2) years and every semester for the third year after approval to oversee implementation under Section 35.
The DTI, DBM, Bangko Sentral ng Pilipinas, and other agencies designated by the Congressional Committee must submit quarterly performance reports for the first three (3) years under Section 35.
Appropriations for Sections 27 and 28 must be charged against available funds/savings under the General Appropriations Act of 2000 in the first year of effectivity; thereafter, funds needed for continued implementation must be included in the annual General Appropriations Act under Section 36.

Interpretation, agreements, reciprocity, and effectivity

Interpretation must give due regard to the Act’s international origin, the need for uniform application, and observance of good faith in international trade relations; generally accepted principles of international law and conventions on electronic commerce must be considered under Section 37.
As between parties involved in generating, sending, receiving, storing, or processing electronic data messages/electronic documents, any provision of the Act may be varied by agreement between and among them under Section 38.
Benefits, privileges, advantages, or statutory rules established under the Act, including involving practice of profession, are enjoyed only by parties whose country of origin grants the same to Filipino citizens under Section 39.
Provisions are separable: if any provision is declared unconstitutional, remaining provisions stay in force under Section 40.
Laws, decrees, rules, and regulations inconsistent with the Act are repealed, amended, or modified accordingly under Section 41.
Effectivity is immediately upon publication in the Official Gazette or in at least two (2) newspapers of general circulation under Section 42.