Electronic Commerce Act Recognition and Use

Policy, purpose, and objective

The State recognizes the vital role of ICT in nation-building and the need to create an information-friendly environment supporting the availability, diversity, and affordability of ICT products and services (Section 2).
The State recognizes the primary responsibility of the private sector in contributing investments and services in ICT (Section 2).
The State undertakes to develop human resources for the information age through appropriate training programs and institutional policy changes (Section 2).
The State commits to facilitate transfer and promotion of technology and to ensure network security, connectivity, and neutrality of technology for national benefit (Section 2).
The Act aims to facilitate domestic and international dealings, transactions, arrangements, agreements, contracts, and exchanges and storage of information through electronic means to promote authenticity and reliability of electronic data messages/documents (Section 3).
The Act promotes universal use of electronic transactions in government and by the general public (Section 3).

Definitions for electronic commerce

An “Addressee” is a person intended by the originator to receive the electronic data message or electronic document, excluding a person acting as an intermediary (Section 5).
A “Computer” is any device or interconnected apparatus that, through electronic, electro-mechanical, optical, and/or magnetic impulse (or similar means), can receive, record, transmit, store, process, correlate, analyze, project, retrieve, and/or produce information or other modes of expression (Section 5).
An “Electronic data message” is information generated, sent, received, or stored by electronic, optical, or similar means (Section 5).
An “Information and Communications System” is a system for generating, sending, receiving, storing, or otherwise processing electronic data messages/electronic documents, including the computer system or similar device by/in which data is recorded/stored and related recording/storage procedures (Section 5).
An “Electronic signature” is any distinctive mark, characteristic, and/or sound in electronic form representing identity and attached to or logically associated with the electronic data message/electronic document, or any methodology/procedures executed or adopted with the intention of authenticating or approving (Section 5).
An “Electronic document” is information or its representation by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, received/recorded/transmitted/stored/processed/retrieved/produced electronically (Section 5).
An “Electronic key” is a secret code that secures and defends sensitive information crossing public channels into a decipherable form only with a matching key (Section 5).
An “Intermediary” sends/receives/stores or provides other services in respect of an electronic data message/electronic document on behalf of another person (Section 5).
An “Originator” is a person by whom (or on whose behalf) the electronic document purports to have been created, generated, and/or sent, excluding an intermediary (Section 5).
A “Service provider” includes: (a) an online services/network access provider (or operator of facilities) that transmits, routes, or provides connections for online communications among points specified by a user; and/or (b) the necessary technical means by which electronic documents may be stored and made accessible to designated/undesignated third parties (Section 5).
A service provider has no authority to modify/alter received electronic documents or make any entry on behalf of an originator/addressee/third party unless specifically authorized, and must retain the electronic document per the specific request or the purpose for which it was engaged (Section 5).

Scope of coverage and applicability

The Act applies to any kind of electronic data message and electronic document used in commercial and non-commercial activities, including domestic and international dealings and arrangements (Section 4).
The Act covers electronic data messages/electronic documents used for activities including transactions, agreements, contracts, exchanges, and storage of information (Section 4).
The Act’s coverage expressly includes both domestic and international electronic dealings (Section 4, Section 3).

Legal recognition and evidence rules

Information shall not be denied validity or enforceability solely because it is in the form of an electronic data message or because it is incorporated by reference in an electronic data message (Section 6).
Electronic documents have the legal effect, validity, or enforceability of any other document or legal writing (Section 7).
If a law requires a document to be in writing, that requirement is satisfied by an electronic document if it maintains integrity and reliability and can be authenticated for subsequent reference (Section 7).
Integrity and reliability for a writing requirement are met if the electronic document has remained complete and unaltered apart from authorized changes/normal communication/storage/display and is reliable in light of the purpose and relevant circumstances (Section 7).
The writing/in-original-form equivalence applies whether the legal requirement is an obligation to present/retain or a law that imposes consequences for non-presentation/non-retention in original form (Section 7).
If a law requires a document be presented or retained in its original form, that requirement is met if there is reliable assurance as to integrity from when first generated in final form and the document is capable of being displayed to the person to whom it is to be presented (Section 7).
This Act does not vary existing laws on formalities required in execution of documents for their validity (Section 7).
For evidentiary purposes, an electronic document is the functional equivalent of a written document under existing laws (Section 7).
The Act does not modify statutory rules on admissibility of electronic data messages/electronic documents, except rules relating to authentication and best evidence (Section 7).
An electronic signature on an electronic document is equivalent to a signature on a written document if a prescribed procedure exists that parties cannot alter and under that procedure: identity is identified and access for consent/approval is indicated; the method is reliable/appropriate for the purpose in light of circumstances; execution of the electronic signature is necessary to proceed; and the other party can verify it and decide to proceed based on the authentication (Section 8).
In proceedings involving an electronic signature, it is presumed that the electronic signature is the signature of the person to whom it correlates, and that it was affixed with intention to sign/approve unless the relying party knew/had notice of defects or unreliability, or reliance is not reasonable under the circumstances (Section 9).
If a law requires information to be presented or retained in its original form, that requirement is met for evidentiary/integrity purposes if integrity is shown by evidence aliunde or otherwise and the information is capable of being displayed to the intended recipient (Section 10).
Integrity criteria are whether the information remains complete and unaltered apart from endorsement additions and authorized/normal-course changes, and reliability is assessed in light of purpose and relevant circumstances (Section 10).
Electronic documents/electronic data messages/electronic signatures must be authenticated by demonstrating substantiating and validating a claimed identity of a user/device/entity in an information system, including proof that relevant electronic signatures are associated with persons and methodology/security procedures were used with intention to authenticate/approve, and proof that security procedures were adopted/employed to verify origin or detect error/alteration through encryption/acknowledgment/security devices (Section 11).
Authentication procedures may include use of electronic notarization systems, and certificates of authentication on printed/hard copies by electronic notaries, service providers, and duly recognized/appoined certification authorities (Section 11).
The person introducing an electronic data message/electronic document bears the burden of proving authenticity with evidence capable of supporting a finding the document/message is what it is claimed to be (Section 11).
In absence of contrary evidence, integrity of the information/communications system may be established by: proof the system operated without affecting integrity and with no reasonable grounds to doubt; showing the document was recorded/stored by a party adverse in interest; or showing it was recorded/stored in the usual and ordinary course of business by a non-party who did not act under the control of the party using the record (Section 11).
Electronic data messages/electronic documents are admissible in evidence in legal proceedings even if they are electronic form, and even if they are not in standard written form, if they meet Sections 6 or 7 requirements and they serve as best evidence of the agreement/transaction contained therein (Section 12).
Evidential weight is assessed giving due regard to the reliability of generation, storage, or communication; reliability of originator identification; and other relevant factors (Section 12).
Requirements to retain certain documents in original form are satisfied by retaining them electronically if they remain accessible for subsequent reference; are retained in the format generated/sent/received or a format accurately representing them; and enable identification of originator and addressee, and determination of date/time sent/received (Section 13).
Retention may use a third party if the conditions in Section 13(a)(i)–(iii) are met (Section 13(b)).
Matters in Section 12 and the presumption rules in Section 9 may be presumed established by an affidavit to the best of the deponent’s knowledge, subject to the rights of parties in interest as defined in the affidavit provisions (Section 14).
A deponent of an affidavit introduced in evidence may be cross-examined as of right by the adverse party (Section 15).
Any party may cross-examine the person referred to in Section 11, paragraph 4, sub-paragraph c (Section 15).

Formation, attribution, dispatch/receipt, and acknowledgment

An offer, acceptance, and other contract formation elements required under existing laws may be expressed, demonstrated, and proved through electronic data messages/electronic documents, and no contract is denied validity/enforceability solely because it is in electronic form or because elements are expressed/demonstrated/proved through electronic messages/documents (Section 16).
Electronic transactions made through networking among banks, or linkages thereof with other entities/networks, are deemed consummated upon actual dispensing of cash or the debit of one account and the corresponding credit to another, whether initiated by the depositor or an authorized collecting party (Section 16).
In these bank-network transactions, the resulting obligation of one bank/entity/person similarly situated is considered absolute and is not subjected to the process of preference of credits (Section 16).
Between originator and addressee, a declaration of will or other statement shall not be denied legal effect, validity, or enforceability solely because it is in the form of an electronic data message/electronic document (Section 17).
An electronic data message/electronic document is that of the originator if sent by the originator himself (Section 18).
As between originator and addressee, it is deemed to be that of the originator if sent by a person authorized to act on behalf of the originator with respect to that specific message/document, or sent by an information system programmed by/on behalf of the originator to operate automatically (Section 18).
The addressee is entitled to treat the message/document as being that of the originator and to act on that assumption if: the addressee properly applied a previously agreed procedure to ascertain origin, or the message/document resulted from actions of a person whose relationship enabled gaining access to a method used by the originator to identify messages/documents as his own (Section 18).
The addressee’s entitlement to assume origin does not apply when the addressee has received notice from the originator that the message/document is not from the originator and has had reasonable time to act accordingly (Section 18).
The entitlement also does not apply where the addressee knew or should have known, had it exercised reasonable care or used any agreed procedure, that the message/document was not from the originator (Section 18).
When attribution is established or the addressee is entitled to assume origin, the addressee is entitled to regard the message/document received as what the originator intended to send and to act on that assumption, except when the addressee knew/should have known, using reasonable care or agreed procedure, that transmission resulted in an error in the received message/document (Section 18).
Each electronic message/document received is treated as a separate message/document for assumption and action purposes, except to the extent it duplicates another message/document and the addressee knew/should have known, had it exercised reasonable care or used agreed procedure, that it was a duplicate (Section 18).
The addressee may regard the message/document received as what the originator intended to send and act on that assumption unless the addressee knew or should have known, had it exercised reasonable care or used the appropriate procedure, that transmission resulted in error when the message/document entered the designated information system, or that it was sent to an information system not designated for that purpose (Section 19).
Where originator and addressee have agreed or the originator has requested acknowledgment of receipt: if no particular form/method is required, acknowledgment may be given by any communication/conduct sufficient to indicate receipt (Section 20).
If the originator states that effect/significance is conditional on acknowledgment receipt, the message/document is treated as never sent until acknowledgment is received (Section 20).
If the originator does not condition effect/significance on acknowledgment and acknowledgment is not received within the specified/agreed time, or within a reasonable time if none is specified/agreed, the originator may give notice specifying a reasonable time for acknowledgment; if not received within that time, the originator may treat the message/document as never sent or exercise other rights (Section 20).
Dispatch occurs when the message/document enters an information system outside the control of the originator or the sender on behalf of the originator, unless otherwise agreed (Section 21).
Receipt time is: (a) when entering the designated information system, unless both participants in the designated system, in which case receipt occurs when retrieved by the addressee; (b) when retrieved if sent to a non-designated information system of the addressee; or (c) when entering the addressee’s information system if addressee has not designated a system, regardless of where the system is located (Section 22).
Unless otherwise agreed, dispatch place is where the originator has its place of business and receipt place is where the addressee has its place of business, even if transmitted/received via laptop/portable device; this rule also determines tax situs (Section 23).
If originator/addressee has more than one place of business, the place used is the one with closest relationship to the underlying transaction, or principal place of business where none (Section 23).
If originator/addressee has no place of business, reference is made to habitual residence; for a body corporate, it means the place where incorporated or otherwise legally constituted (Section 23).
Parties to any electronic transaction are free to determine the type and level of security needed and select appropriate technological methods, subject to applicable laws and/or rules and guidelines promulgated by the Department of Trade and Industry with other appropriate agencies (Section 24).

Electronic commerce in carriage of goods

Chapter III applies to actions connected with or in pursuance of a contract of carriage of goods, including furnishing marks/number/quantity/weight; stating nature/value; issuing receipts; confirming loading; notifying terms; giving carrier instructions; claiming delivery; authorizing release; giving notice of loss/damage; giving any other notice/statement; undertaking to deliver to a named person/authorized claimant; and granting/acquiring/renouncing/surrendering/transferring/negotiate rights and acquiring/transferring rights and obligations under the contract (Section 25).
Where law requires actions under Section 25 be in writing or by paper document, the requirement is met if done using one or more electronic data messages/electronic documents (Section 26).
This equivalence applies whether the requirement is an obligation or consequences for failing to carry out in writing or to use paper document (Section 26).
Where rights are to be granted to or obligations acquired by one person and conveyance to that person requires transfer/use of a paper document, conveyance is met by electronic data messages/electronic documents if a reliable method renders them unique (Section 26).
The reliability standard for uniqueness is assessed in light of the purpose for conveying the right/obligation and all circumstances, including any relevant agreement (Section 26).
Where electronic data messages/electronic documents are used to effect actions in Section 25(f) and (g), any paper document used to effect any such action is invalid unless electronic use has been terminated and replaced by paper documents; the paper document must contain a statement of such termination, and replacement with paper documents does not affect parties’ rights/obligations (Section 26).
Mandatory rules applicable to carriage contracts evidenced by paper documents remain applicable even when the contract is evidenced by one or more electronic data messages/electronic documents instead of paper (Section 26).

Government electronic transactions and RPWEB

Within two (2) years from the date of effectivity, government departments, bureaus, offices, agencies, and government-owned and-controlled corporations that require or accept filing/creation/retention/submission of documents, issue permits/licenses/certificates of registration/approval, or provide payment/settlement methods/fees/obligations shall accept creation/filing/retention in electronic form, issue permits/licenses/approvals in electronic form, accept payments and issue receipts acknowledging payment through electronic-message/document systems, and transact/performs governmental functions using electronic messages/documents (Section 27).
These entities may adopt and promulgate, after appropriate public hearing and with due publication in newspapers of general circulation, rules/regulations/guidelines specifying: filing/creation/retention/issuance manner and format; where/when documents must be signed and the use/type of electronic signature required; electronic message/document format and how signature is affixed; control processes and procedures ensuring integrity/security/confidentiality; other required attributes of electronic messages/documents/payments; and full or limited use of documents and papers for compliance (Section 27).
This Act by itself mandates no agency/unit to accept or issue electronic documents upon adoption/publication of the required rules/guidelines, but the two-year transition framework requires authorized issuance of such rules for covered functions (Section 27).
Within two (2) years from the effectivity of the Act, an electronic online network known as RPWEB must be installed pursuant to Administrative Order 332 and House of Representatives Resolution 890 to implement Part IV and facilitate open, speedy, efficient electronic transmission/conveyance/use of electronic messages/documents among government departments down to the division level and regional/provincial offices as practicable, government-owned and-controlled corporations, local government units, other public instrumentalities, universities/colleges/schools, and universal access to the general public (Section 28).
RPWEB serves as the initial platform of the government information infrastructure (GII) and facilitates evolution/improvement by better technologies or kinds of electronic online wide area networks utilizing fiber optic, satellite, wireless, and other broadband telecommunication mediums (Section 28).
The Act directs the Department of Transportation and Communications, National Telecommunications Commission, and National Computer Center to aggressively promote and implement a policy environment and regulatory or non-regulatory framework to substantially reduce costs of lease lines, land, satellite, dial-up telephone access, cheap broadband, and wireless accessibility for covered government and the general public, including establishment of a government website portal and domestic internet exchange system to facilitate strategic access to government and among agencies and the general public and to speed locally generated internet traffic within the Philippines (Section 28).
The physical infrastructure of cable and wireless systems for cable TV and broadcast excluding programming/content and their management is considered within telecommunications for purposes of electronic commerce to maximize ICT convergence in installing the GII (Section 28).
The Department of Trade and Industry (DTI) directs and supervises 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 (Section 29).
DTI is empowered to promulgate rules/regulations and provide quality standards or issue certifications as needed, and perform functions necessary for implementing the Act, including installation of an online public information and quality and price monitoring system for goods and services to protect consuming public interests (Section 29).

Service provider liability limitations; lawful access; confidentiality

Except as otherwise provided in Section 30, no person or party acting as a service provider is subject to civil or criminal liability in respect of the electronic data message/electronic document for which it merely provides access, where liability is founded on the obligations/liabilities under the message/document or on the making/publication/dissemination/distribution of material or statements in such material, provided the service provider: has no actual knowledge or awareness of facts making the material unlawful or infringing; does not knowingly receive financial benefit directly attributable to unlawful/infringing activity; does not directly commit infringement/unlawful act or induce/cause others; and does not benefit financially from infringing/unlawful acts of others (Section 30).
Nothing in Section 30 affects obligations founded on contract, obligations of service providers under licensing/regulatory regimes established under written law, or obligations imposed under written law (Section 30).
Nothing in Section 30 affects civil liability to the extent it forms the basis for injunctive relief by a court under laws requiring the service provider to take or refrain from actions necessary to remove/block/deny access or preserve evidence of a violation (Section 30).
Access to an electronic file or an electronic signature is authorized and enforced only in favor of the individual or entity having the legal right to possession or use of the plaintext/signature/file and solely for authorized purposes, and the electronic key for identity/integrity is not made available without consent of the person/entity lawfully possessing that electronic key (Section 31).
Any person who obtained access to any electronic key, electronic data message/electronic document, book/register/correspondence/information/other material through powers under the Act must not convey or share the same with any other person except for purposes authorized under the Act (Section 32).

Criminal penalties and sanctions

Hacking or cracking—unauthorized access into/interference with a computer system/server or information and communications system, or any access to corrupt/alter/steal/destroy using a computer or similar device without owner knowledge/consent, including introduction of computer viruses and resulting corruption/destruction/alteration/theft/loss of electronic data messages/electronic documents—punished by a minimum fine of P100,000 and a maximum commensurate to the damage incurred, plus mandatory imprisonment of six (6) months to three (3) years (Section 33).
Piracy—unauthorized copying/reproduction/dissemination/distribution/importation/use/removal/alteration/substitution/modification/storage/uploading/downloading/communication/making available/broadcasting of protected material, electronic signature, or copyrighted works including legally protected sound recordings or phonograms or information material on protected works through telecommunication networks such as the internet in a manner that infringes intellectual property rights—punished by a minimum fine of P100,000 and a maximum commensurate to the damage incurred, plus mandatory imprisonment of six (6) months to three (3) years (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/electronic documents are penalized with the same penalties as those laws (Section 33).
Other violations of provisions of the Act are punished with a maximum penalty of P1,000,000 or six (6) years imprisonment (Section 33).

Implementation rules; oversight; appropriations

DTI, Department of Budget and Management, and Bangko Sentral ng Pilipinas are empowered to enforce the Act and issue implementing rules and regulations necessary within sixty (60) days after approval, in coordination with the 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 (Section 34).
Failure to issue implementing rules and regulations does not affect the executory nature of the Act’s provisions (Section 34).
A Congressional Oversight Committee is established, composed of the Committees on Trade and Industry/Commerce, Science and Technology, Finance and Appropriations of both Senate and House, which must meet at least every quarter of the first two years and every semester for the third year after approval, to oversee implementation (Section 35).
The DTI, DBM, Bangko Sentral ng Pilipinas, and other government agencies determined by the Congressional Committee must provide a quarterly performance report for the first three (3) years (Section 35).
Funds necessary to carry out Sections 27 and 28 are charged against available funds/savings under the General Appropriations Act of 2000 in the first year of effectivity, and thereafter included in annual General Appropriations Act (Section 36).

Interpretation, modification, reciprocity, and continuity

Interpretation gives due regard to the Act’s international origin, the need for uniformity in application, and observance of good faith in international trade relations, and considers generally accepted principles of international law and conventions on electronic commerce (Section 37).
Between parties generating/sending/receiving/storing/processing electronic data messages/electronic documents, any provision of the Act may be varied by agreement among them (Section 38).
Benefits/privileges/advantages/statutory rules established under the Act are enjoyed only by parties whose country of origin grants the same to Filipino citizens, including involving practice of profession (Section 39).
Provisions are separable, and unconstitutional provisions do not affect the remaining provisions (Section 40).
All inconsistent laws, decrees, rules, and regulations, or parts thereof, are repealed, amended, or modified accordingly (Section 41).