Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
First Regular Session

HOUSE BILL NO._5876
Introduced by Representative Joseph Gilbert F. Violago

EXPLANATORY NOTE

According to Forbes, e-commerce sales grew 50% to $870-billion during the Covid-19
pandemic in the US alone.' Globally, e-commerce rose from 15% of total retail sales in 2019
to 21% in 2021 — where it is currently at 22% of sales.” It is estimated that by 2026, the e-
commerce market could grow to $5.4-trllion, from today’s $3.3-trillion market.’ The
availability of logistics, mobile device ownership, and marketplace expansion, including the
change of attitude in how people shop all contribute to the growth of e-commerce."

In the Philippines, the country saw the rise of e-commerce transactions especially
during the pandemic. As the economy was disrupted — with businesses closing down and lack
of mobility — Filipinos tuned to their mobile gadgets to purchase, sel, or trade goods, services,
and other items through various digital e-commerce platforms. In fact, the e-commerce market
sales reached $17-billion, with 73 million online users, in 2021; with a projection of $24-billion
sales by 2025 or 17% market growth.® Beauty products, electronics, fashion items, furniture,
health and household care were the top categories in 2021. With Filipinos using social media
platforms for at least 10 hours a day, advertisements for the goods and services are coursed
through these digital apps. There is also an increase in the adoption of digital payment
transactions — with 20.1% digital payments from financial transactions in 2020, or a 61%
increase from the previous year. °

For this reason, there is a need to establish policies and regulations to protect not only
‘consumers but also the businesses and platforms. Thus, this bill secks to fill in the gaps of
existing laws, rules, and regulations to adequately protect consumer rights, data privacy rights,
intellectual property rights, among others, of different players in the e-commerce market.
Likewise, this bill secks to establish an e-commerce bureau under the Department of Trade and
Industry which will implement, monitor, and ensure strict compliance by ecommerce
stakeholders of the provisions of this proposed bill, among other functions and powers.

* Goldberg, Jason. “E-commerce Sales Grew SO% to'$870 Bilion During the Pandemic". Forbes.com. 18 February 2022.
|Web. <htts://wwrw forbes. com/sites/jasongoldberg/2022/02/18/e-commerce-sales-grew-50-10-870-ilion-during-the-
andemic/*sh=146b78714e83>

Na. “Here's why E-Commerce Growth Can Stay Stronger for Longer”. Morgan Stanley. 16 June 2022. Webs.

<tps/ fw. norganstanley convideas/global-ecommerce-growth-torecast-2022>

eid

eid.

Na. “Philipines ~ Country Commercial Guide". International Trade Administration. 25 July 2022. Web. <
http://www trade. gov/country-commerciat-gudes/philppines-ecommercot~text=Overvew-
_Market9.200 verview withX2O17%2S¥20growth¥2Othrough202025.>

Sia.


This commendable bill had been filed and was approved on Third Reading in the 18th
Congress and the present proponent is acknowledging the wisdom and hard work of his
predecessors.

In view of the foregoing, the urgent passage of this measure is sought.

5AM. VIOLAGO


Republic of the Philippines
HOUSE OF REPRESENTATIVES
‘Quezon City

NINETEENTH CONGRESS:
First Regular Session

HOUSE BILL NO._5876
Introduced by Representative Joseph Gilbert F. Violago

AN ACT
PROVIDING PROTECTION TO CONSUMERS AND MERCHANTS ENGAGED IN
INTERNET TRANSACTIONS, CREATING FOR THE PURPOSE THE
ELECTRONIC COMMERCE BUREAU, AND APPROPRIATING FUNDS
THEREFOR

Be it enacted by the Senate and House of Representatives of the Philippines in Congress
assembled:

SECTION 1. Short Title. —This Act shall be known as the “Internet Transactions Act”.

SECTION 2. Declaration of Policy. —It is the policy of the State to promote and maintain a
robust electronic commerce (eCommerce) environment in the country by building trust
between online merchants and consumers. The State recognizes the value and potential of the
digital economy to increase competition and improve productivity, thus the need to establish
secure and reliable eCommerce platforms where goods and services are transacted online with
appropriate transparency and utmost efficiency to encourage the creation of new products,
services, business models and processes. Towards these ends, the State shall ensure an effective
regulation of commercial activities through the internet or electronic means to ensure that
consumer rights and data privacy are protected, innovation is encouraged, fair advertising
practices and competition are promoted, online transactions are secured, intellectual property
rights are respected, and where product standards and safety are observed.

SECTION 3. Definition of Terms. — As used in this Act:

a, “Business to business transaction” refers to intemet transactions conducted over
marketplaces that facilitate business to business electronic sales of new and used
merchandise using the internet;

b. “Business to consumer transaction” refers to the process of selling products and
services by businesses to consumers who are end- users, generally for a profit;

¢. “Compatibility” refers to the ability of the digital content or digital service to function
with hardware or software with which digital content or digital services of the same
type are normally used, without the need to convert the digital content or digital service;



“Consumer” refers to a person who is a purchaser, lessee, recipient or prospective
purchaser, lessor or recipient of consumer products, services, credit, technology,
advertising or promotion, and other items in eCommerce;

“Consumer-to-consumer transactions (C2Cs)" refer to one-off, petty, or occasional
low-value transactions of an individual or group of individuals to another that are not
made in the ordinary course of business of any party to the transaction;

“Digital content” refers to data which are produced and supplied in electronic form;
“Digital service” refers to a service that allows the consumer to create, process, store or

access data in electronic form or allows the sharing of or any other interaction with data
in electronic form uploaded or created by the consumer or other users of that service;

‘Digital financial services” refer to services of financial nature that are made available
to the public through the internet, including banking services, insurance and insurance-
related services, payment and money transmission services, including remittance
services, online lending services, online investment services, and other similar or
related services;

“Electronic commerce or eCommerce” refers to the production, distribution, marketing,
sale, or delivery of goods and services by electronic means;

“eCommerce platform operator” refers to a natural or juridical person that solicits the
purchase of goods and services through digital platforms and marketplaces whose
business is to connect consumers and online merchants, facilitating sales of products,
goods or services through the intemet with the presence and use of monetary
transactions. These shall include social media websites and any other similar platforms
in so far that itis used for business;

“Functionality” refers to the ability of the digital content or digital service to perform
its functions according to its purpose;

“Goods” refer to physically or digitally produced items over which ownership rights
may be established and whose economic ownership may be passed from one
institutional unit to another by engaging in transactions;

“Internet access and service provider” refer to an entity that provides households,
businesses, and government access to the intemet through the physical transport
infrastructure;

“Internet retailing of consumer goods” refers to engaging in any eCommerce activity
other than online travel services, online media, ride hailing services, and digital
financial services;


“Internet transaction” refers to the sale or purchase of goods or services, whether
between businesses, households, individuals, governments, and other public or private
organizations, conducted over the internet. At least one point of these transactions is
conducted over the intemet but the payment and ultimate delivery of the goods or
service may be conducted on or offline;

“Interoperability” refers to the ability ofthe digital content or digital service to function
with hardware or software different from those with which digital content or digital
services of the same type are normally used;

“Online merchant” refers to a natural or juridical person, regardless of location, that
directly sells, manufactures goods, or offers for sale, any good or service, either
individually or through a platform, in the ordinary course of business, over the internet,
through a website, an online marketplace, a social media website or applic
through other similar means;

“Online media” refers to digital media products or services pertaining to advertising,
gaming, subscription music, and video on demand, available through an online
platform, application, website, webpage, social media account, or other similar
platforms operated by the provider, regardless of whether the provider is authorized to
engage in eCommerce;

“Online travel services” refer to services that facilitate the reservation, purchase or
discounting of flights, hotel accommodations, and vacation rental spaces, through an.
online platform, application, website, webpage, social media account, or other similar
platform operated by the provider, regardless of whether the provider is authorized to
engage in eCommerce in the Philippines:

“Price” refers to money or a digital representation of value that is due in exchange for
the supply of goods, services, digital content, or digital service;

“Producer” refers to the manufacturer or importer of goods, or any person purporting
to bea manufacturer who places its name, trademark, or other distinctive sign on goods;

“Repair” refers to bringing defective goods into conformity with the contract;

.. “Ride hailing service” refers to the delivery of food, goods or other merchandise, or of

personal transport services, contracted through an online platform, application, website,
‘webpage, social media account, or other similar platform operated by the provider,
regardless of whether the provider is authorized to engage in eCommerce in the
Philippines;

“Ride hailing service partner” refers to third-parties who offer their services to transport
or deliver food, parcels or any other item, on behalf of ride hailing service providers;


y. “Ride hailing service provider” refers to those, who in the ordinary course of trade or
business, provide for or facilitate ride hailing services; and

SECTION 4. Scope and Coverage. ~ Unless otherwise specified, this Act shall apply to any
stage of all business-to-business and business-to-consumer eCommerce and internet
transactions including those related to the following activities:

a. Internet retail of consumer goods and services;
b. Online travel services;

Online media providers;

d. Ride hailing services; and

e. Digital financial service.

Consumer-to-consumer transactions shall be exempt from the operation of this Act, without
prejudice to the application of other laws.

Unless expressly specified, nothing in this Act shall be construed as to diminish or deprive the
regulatory jurisdiction conferred by law upon other government agencies with respect to
regulated services that fall within the scope of eCommerce.

SECTION 5. Extra-territorial Application. — A person engaging in eCommerce who
purposefully avails of the Philippine market shall be deemed as doing business in the
Philippines and be subject to applicable Philippine laws and regulations, including this Act.
avails of the Philippine market without establishing any real or legal
presence in the Philippines shall be required to notify the eCommerce Bureau created under
Section 7 of this Act for inclusion in the Registry of Online Business established under Section
11 of this Act or may designate a resident agent who shall be authorized to receive on their
behalf notices or processes in any legal proceeding in the Philippines. The accessibility of
goods and services to consumers in the Philippines shall be considered in ascertaining whether
cone engaged in eCommerce is purposefully availing the Philippine market.

SECTION 6. Equal Treatment of Online and Offline Commercial Activities. - Unless
otherwise specified, this Act shall be construed to ensure that those who engage in eCommerce
may not enjoy any benefit that is more favorable, nor be placed at a disadvantage, in relation
to other enterprises that offer goods and services offline in the Philippines.

CHAPTER 2
ECOMMERCE BUREAU

SECTION 7. Creation of the eCommerce Bureau. ~ To ensure the attainment of the
objectives of this Act and promote the growth of eCommerce, there is hereby created an
eCommerce Bureau under the Department of ‘Trade and Industry (DTI), hereinafter referred to


as the Bureau, which shall be organized within six (6) months after the effectivity of this Act.
The Bureau shall have the following powers and functions:

a. Implement, monitor, and ensure strict compliance by eCommerce stakeholders of the
provisions of this Act;

b. Build trust between consumers and sellers by requiring eCommerce platform operators,
online merchants, or any other entity who engages in eCommerce to register their
business with the Bureau;

‘c, Formulate policies, plans and programs to ensure the robust and dynamic development
of eCommerce;

d. Identify regulatory gaps affecting the eCommerce sector that are not sufficiently
addressed by this Act or by existing laws or regulations, and recommend appropriate
executive or legislative measures, including those that can be undertaken by the DTI on
its own, that fosters the growth of the sector;

fe. Act as a virtual central unit tasked to receive and address consumer complaints on
internet transactions, facifitate the speedy resolution of consumer complaints by the
respective govemment agency which has jurisdiction over it, and track complaints
referred to or initiated by it to ensure the speedy and appropriate action by the agency
to which such matters have been referred to;

£ Coordinate with, compel or petition whenever appropriate, any entity, government
agency or instrumentality to take action on any matter that may impede eCommerce;

g. Investigate, motu proprio, and file the appropriate cases for violations of any provision
of this Act;

hh, Intervene or participate, in a manner as may be appropriate, in cases initiated or pending
with other regulatory agencies involving eCommerce or violations of any provision of
this Act;

Monitor internet transactions and undertake consultation with stakeholders and affected
agencies for the purpose of understanding market behavior in order to update policies
relevant to online transactions;

j. Monitor the compliance of other government agencies or instrumentalities on their
compliance to the provisions of this Act and the eCommerce roadmap;

k, Collect, compile, analyze, abstract, and publish eCommerce data for policy formulation
and program development;

Prepare and conduct periodic studies on eCommerce;


‘m, Collaborate with departments of the National Government including local government
units and government-owned or controlled corporations in implementing programs to
promote eCommerce, including information, education, and campaign, as well as in
ensuring a policy regime that is proactive; and

1. Ensure that those who engage in eCommerce may not enjoy any benefit that is more
favorable, nor be placed at a disadvantage, in relation to other enterprises that offer
200ds and services offline in the Philippines.

In the exercise of the above-stated functions, the Bureau, in coordination with other
government agencies, may convene public consultations or inter-agency meetings to ensure
multi-stakeholder input in the development of eCommerce policies.

Government agencies and instrumentalities involved in the maintenance and development of
the internet infrastructure of the Philippines, such as the Department of Information and
Communications Technology (DICT) and the National Telecommunications Commission
(NTC), shall cooperate with the Bureau on issues within their respective regulatory jurisdiction
that affect the conduct of eCommerce.

SECTION 8. Composition of the Bureau, — The Bureau shall be headed by a Director to be
appointed by the President of the Philippines, as recommended by the Secretary of Trade and
Industry.

‘The Director shall oversee the day-to-day operations of the Bureau and shall be assisted by
three (3) Assistant Directors each for policy and administration, enforcement, and operations.

The Secretary of Trade and Industry shall determine the organizational structure and staffing
pattem of the Bureau, subject to the approval of the Secretary of Budget and Management.

SECTION 9. Subpoena, — In the exercise of its powers under Act, the Director of the
Bureau shall have the power to issue summons, subpoena ad testificandum and subpoena duces
tecum to alleged violators or witnesses to compel their attendance and the production of
documents in investigations or proceedings before the Bureau.

The failure to comply with a subpoena ad testificandum ot subpoena duces tecum shall
authorize the filing of a case for indirect contempt under the Rules of Court with the Regional
Trial Court. A certification duly issued by the Bureau that a respondent to the subpoena ad
testificandum or subpoena duces tecum refuses to comply with the same, despite due notice,
shall be sufficient evidence to authorize the Regional Trial Court to cite the respondent with
contempt. The Regional Trial Court shall likewise have the authority to issue any such order
or relief, including imprisonment, in order to compel compliance with the subpoena ad
testificandum or subpoena duces tecum. The Regional Trial Court may, in addition, also issue
subpoena ad testificandum or subpoena duces tecum addressed to the respondents identical
to the one subject of the complaint.


SECTION 10. Authority to Promulgate Rules and Regulations. ~ As the focal authority of
the National Government for the development of policies and strategies towards the growth of
‘eCommerce, the Bureau shall have the authority to promulgate rules and regulations covering
areas of activities concerning eCommerce and to impose fines to compel compliance with such
rules. The grant of this rule-making authority to the Bureau shall be ancillary to any duly
constituted regulatory jurisdiction granted or that may be granted to other government agencies
by law, including Executive Order No, 292, series of 1987, instituting the "Administrative
Code of 1987", Republic Act No. 7394, otherwise known as the "Consumer Act of the
Philippines”, Republic Act No. 7653, as amended, otherwise known as "The New Central Bank
Act", Republic Act No, 8293, as amended, otherwise known as the "Intellectual Property Code
of the Philippines", Republic Act No. 8799, otherwise known as the "Securities Regulation
Code", Republic Act No. 9239, otherwise known as the "Optical Media Act of 2003", Republic
Act No. 9593, otherwise known as the "Tourism Act of 2009", Republic Act No. 10173,
otherwise known as the "Data Privacy Act of 2012", Republic Act No. 10667, otherwise
known as the "Philippine Competition Act", Republic Act No. 11127, otherwise known as"
‘The National Payment Systems Act", and Republic Act No. 11232, otherwise known as the
"Revised Corporation Code".

‘The Bureau shall defer the exercise of rule-making power to the above-listed goverment
agencies conferred by law with regulatory jurisdictions over eCommerce providers or
platforms unless the other agency declines to exercise its jurisdiction or does not act within a
timely manner.

SECTION 11. Registry of Online Business (ROB). — Within a period of one (1) year from the
effectivity of this Act, the Bureau shall, in coordination with the DICT, establish, manage and
maintain a ROB which shall provide consumers access to data and information of registered
online business entities for purposes of verifying the validity, existence of and other relevant
information pertaining to business entities.

The DICT, in consultation with the DTI, the National Privacy Commission (NPC), the
Philippine Competition Commission (PCC) and other concerned agencies, shall issue the rules
and regulations to govern the development, management, operation, and maintenance of the
ROB.

CHAPTER 3
SUPERVISION OF ECOMMERCE,

SECTION 12. Authority to Issue Take Down Order. - The Secretary of Trade and Industry,
upon due notice and hearing regarding violations of this Act, the Consumer Act of the
Philippines, or any other related trade or consumer laws, operating to the grave and irreparable
prejudice of a consumer or a rights holder, shall have the power to issue an order directing that
a website, webpage, online application, social media account, or other similar platform, be
taken down, made inaccessible in the Philippines, or that no entity shall process any payment
to any of those entities, or otherwise be rendered commercially inoperative, in order to abate
any further violations.


The said provisional take down order shall be directed against the owner or operator of the
website, webpage, online application, social media account, as well as duly registered internet
service provider, as well as payment gateways or channels. Copies of the order shall likewise
be served on other government agencies whose cooperation would be required for the
enforcement of the same,

The order shall remain in effect for a maximum period of thirty (30) days unless otherwise
extended or made permanent by a judicial order or decision.

SECTION 13. Cease and Desist Order. — The Secretary of Trade and Industry, upon due
notice and hearing, shall have the power to issue an order directing a website, webpage, online
application, social media account, or other similar platform operating to the grave and
itreparable prejudice of a consumer or a rights holder, to desist from marketing, or offering
goods or services that are accessible in the Philippines, and directing that no payments shall be
made to any entity which is marketing or offering such goods or services in violation of this
‘Act, the Consumer Act of the Philippines, or any other relaied trade or consumer laws,

The cease and desist order shall remain in effect for a maximum of thirty (30) days unless
otherwise extended or made permanent by a judicial order or decision.

SECTION 14. Referral of Complaints. ~The Bureau shall refer any complaint it receives
involving violation of other laws committed in the course of eCommerce activities to the
appropriate regulatory authority for action. Ifthe complaint or violation pertains to the violation
of the provisions of Republic Act No. 10175, otherwise known as the "Cybercrime Prevention
Act of 2012, the matter shall be referred to the Department of Justice (DOJ) for appropriate
investigation. In cases where appropriate, the DTI may itself initiates the formal complaint with
the appropriate regulatory authority or the DOJ. The Bureau shall track any such complaint or
referral made to other authorities and coordinate with them to ensure that the said matters are
duly resolved within a reasonable period.

SECTION 15. Qualifications to Engage in eCommerce. — The following are presumed legally
authorized to engage in eCommerce in the Philippines in the ordinary course of their trade or
business:

a. An individual who is duly licensed to do business as a single proprietor with the DTI;

b. A juridical entity that is duly registered with the Securities and Exchange Commission
(SEC), whether as a corporation, a one-person corporation, or as a partnership;

c. A cooperative that is duly licensed by the Cooperative Development Authority (CDA);

d. A foreign corporation that is duly licensed by the SEC to transact business in the

Philippines; and

¢. A non-resident foreign individual or juridical entity who has complied with Section 5
of this Act.


A resident of the Philippines who engages, abets, or aids in unauthorized eCommerce activities
in the ordinary course of trade or business shall be subject to any appropriate penalty as may
be provided by law and shall in the same manner as the party engaged in such unauthorized
eCommerce activities.

‘A person who is authorized to engage in eCommerce in the P
sale of a digital product or service by one who is not so authorized is deemed primarily liable
for any obligation, damage, or fine, that may arise from the transaction or from the digital
product.

‘A non-resident of the Philippines who engages in eCommerce by purposefilly avail
Philippine market may not evade legal liability in the Philippines by virtue of n.
non-registration, and shall be subject to the same obligations and liabilities arising from any
‘transaction as those who are authorized to engage in eCommerce in the Philippines.

SECTION 16. Business Registration. ~

a. To encourage the formation of business enterprises, the growth and integrated
development of the eCommerce market, and protection of online consumers, all
individuals engaged in eCommerce shall register as a business either as a sole
proprietor, one-person corporation, partnership, corporation, or cooperatives.

'b, Consistent with Republic Act No. 11032, otherwise known as the "Ease of Doing
Business and Efficient Government Service Delivery Act of 2018," all national
government agencies and local government units (LGUs) shall make available online
registration of business permits and licenses particularly for those engaged in
eCommerce.

c. The SEC, LGUs, and the CDA shall submit to the Bureau an annual list of registered
enterprises for monitoring and for purposes of maintaining a database of online
‘merchants and eCommerce platform operators.

CHAPTER 4
CONSUMER RIGHTS AND OBLIGATIONS
INVOLVING INTERNET TRANSACTIONS
SECTION 17. Code of Conduct. — To build trust in internet transactions and to protect and
uphold the interest of consumers at all times, all businesses engaged in eCommerce are
expected to act responsibly, consistent with the following principles:
‘a. Consumers shall be treated with honesty, integrity, and fairness at all times;

b, The rights of consumers shall be applied equally;


m.

Business entities shall refrain from engaging in illegal, fraudulent, unethical, or unfair
business practices that harm consumers and shall comply with applicable laws and
regulations, especially the protection of intellectual property rights;

Accurate information about goods and services marketed and sold online to Philippine
consumers shall be given and made available to consumers;

Goods and services sold online must conform to Philippine regulatory standards;
The safety of goods and services marketed or sold online must not be compromised and
products that have been recalled in the offline retail market must not be marketed or

sold online;

Goods and services must be easily acces le, accurately described, and promoted
through fair advertising and marketing practices;

Consumers must be given the correct and complete information about costs through &
sales invoice or an official receipt detailing the particular costs of the goods or service
purchased, including shipping or delivery charges. Hidden charges or additional costs
such as customs duties or currency conversion charges must be avoided;

‘The tracking of deliveries must be provided as part of services of online merchants or
eCommerce platform operators and goods purchased must be delivered within the
promised time and described condition to the address provided by the consumer:

‘A cancellation option must be provided wherein consumers are given the opportunity
to review their online purchases before finally confirming their purchase or
withdrawing from a confirmed transaction in appropriate circumstances;

Consumer complaints must be dealt with through fair, easy, transparent and equitable
mechanisms for consumer redress. If warranted, compensation, refund, repair, and
replacement should be provided to the consumer;

Data privacy laws and regulations, including Republic Act No. 10173, otherwise known
as the "Data Privacy Act of 2012,” and other similar laws and regulations shall be
strictly complied with;

The safety and security of online payments and sensitive data shall be safeguarded
through the use of secure technology and protocols including those evidenced by visible
trust certificates or any appropriate similar certification as may emerge in the future;

The transmission of unsolicited commercial email or bulk email, except those subject
to the control and discretion of the consumer through readily accessible configurations
that allow the consumer to choose whether they wish to receive or opt-out from
commercial messages by email or electronic means, must be avoi



©, The product

of fake online reviews or spreading wrong information about

competitors is improper and must be avoided;

p. Consumers must be educated about the risks of transacting through the intemet and
shall be provided competent and professional advice; and

q. Competing fairly with other businesses and adherence to competition principles and all
applicable competition laws and regulations, including Republic Act No. 10667,
otherwise known as the "Philippine Competition Act", shall ensure the robust
development of eCommerce and the economy.

Whenever appropriate, the DTI shall issue rules and regulations corresponding to international
trends, developments and best practices that it may adopt and implement.

SECTION 18. Obligations of eCommerce Platform Operators. — eCommerce platform
‘operators shall have the following obligations:

a. Ensure that any commercial communication shall:

L

&

Be clearly identifiable as a commercial communication;

Clearly identify the person on whose behalf the commercial communication is
made;

Clearly identify any promotional offer including any discount, premium, or gift,

and ensure that any condition which must be met to qualify for it is easily
accessible, and presented clearly and unambiguously; and

Clearly identify any promotional competition or game and ensure that any
condition for participation is easily accessible and presented clearly and
unambiguously;

b. Require all online merchants, prior to the commencement of online transactions to
submit the following to eCommerce platform operators:

. Name of the or

merchant;

Registration documents of the online merchant from the appropriate LGU, the
DTI or SEC, and the Bureau of Intemal Revenue (BIR);

Geographic address at which the online merchant may be served summons or
any other judicial processes in its name and behalf;

Contact details of the online merchant, such as a mobile or landline number, and
a valid electronic mail address, which makes it possible to immediately and
easily contact and communicate with the online merchant in a direct and
effective manner; and


5. Details of any professional body or similar institution with which the online
merchant is registered, in instances when the online merchant exercises a
regulated profession;

c. Maintain a file of all online merchants registered under their platform containing the
information provided by online merchants in paragraph (b) of this Section;

d. Publish at a conspicuous part on their website, webpage, social media account, or other
similar platform, the following general information:

1. Name of the online merchant;

2, Registration documents of the online merchant from the appropriate LGU, the
DTI or SEC, and the BIR;

3. Geographic address at which the online merchant may be served summons or
any other judicial processes in its name and behalf;

4. Contact details of the online merchant, a mobile or landline number, or a valid
electronic mail address, which makes it possible to immediately and easily
contact and communicate with the online merchant and communicate in a direct
and effective manner unless the eCommerce online platform establishes means
to facilitate communication between online merchants and consumers; and

5. Details of any professional body or similar institution with which the online
merchant is registered, in instances when the online merchant exercises a
regulated profession;

e. Submit to the Bureau a list of all online merchants registered under their platform.
When an eCommerce platform operator discovers that an onboarded online merchant
has not obtained registration documents from the relevant regulatory agency, it shall
report such fact to the Bureau within fifteen (15) days from discovery thereof.

£. Cooperate with regulators, in accordance with existing laws and regulations, any
investigation, or resolution of consumer complaints.

SECTION 19. Internet Transactions Involving Consumers. ~ An online merchant of goods
shall exercise the following responsibilities:

‘8, Deliver or cause the delivery of goods to the consumer, ensuring that the following are
complied with:

1. The goods are of the description, type, quantity, and quality, and possess the
functionality, compatibility, interoperability and other features, as required by
the sales contract. The online merchant must show a digital sample or model of


2

the goods to the consumer and the goods possess the quality of and correspond
to the description of the sample or model; possess the qualities and performance
features, including in relation to functionality, compatibility, interoperability,
accessibility, continuity, and security, normal for digital content or digital
services of the same type and of which the consumer may reasonably expect; fit
for any particular purpose for which the consumer requires them and which the
consumer made known to the online merchant at the time of the conclusion of
the contract, and which the online merchant has accepted; and possess the
qualities and performance capabilities indicated in any  pre-contractual
statement which forms an integral part of the contract.

All good shall:

i. Be delivered along with the accessories including packaging,
installation instructions or other instruction as the consumer may expect
to receive; and

fi, Possess qualities and performance capabilities which are normal in
‘goods of the same type and which the consumer may expect given the
nature of the goods and taking into account any public statement made
by or on behalf of the online merchant or other persons in earlier links
of the chain of transactions, including the producer, unless the online
merchant shows that: the online merchant was not, and could not
reasonably have been aware of the statement in question; by the time of
conclusion of the contract, the statement had been corrected; or the
decision to buy the goods could not have been influenced by the
statement.

, Be liable for any lack of conformity with the contract which exists at the time when:

The consumer or a person acting on behalf of the consumer has acquired the
physical possession of the goods, or when the goods are handed over to the
carrier chosen by the consumer, and that carrier was not proffered by the online
merchant or where the online merchant proposes no means of carriage;

The goods have been installed by the online merchant or under the online
‘merchant's responsibility. The time at which the installation has been completed
shall be considered the time when the consumer acquires physical possession of
the goods;

‘The goods have been installed by the consumer in accordance with the online
merchant's installation instructions. The expiration of a reasonable period for
installation, which shall not be more than thirty (30) days, shall be considered
the time when the consumer acquires the physical possession of the goods.



4, The goods are incorrectly installed. Any lack of conformity resulting from the
correct installation is regarded as lack of conformity with the contract of the
goods if

i. The goods were installed by the online merchant or under the online
merchant's responsibility; and

ii, The goods, intended to be installed by the consumer, were installed by
the consumer and the correct installation was due to a shortcoming in
the installation instructions.

¢. Where the contract provides that the digital content or digital service is to be supplied
or made accessible to the consumer over a period of time, the online merchant may
modify the digital content or digital service beyond what is necessary to maintain the
digital content or digital service in conformity with the contract, if the following
conditions are met:

1. The contract allows, and provides a valid reason for, such a modification;
2. Such a modification is made without additional cost to the consumer; and

3. The consumer is informed by a clear and comprehensible manner of the
modification.

d, Where the online merchant operates its own website, webpage, social media account,
or any other similar platform, it shall publish on its homepage the following:

. Name of the online merchant;

2. Registration documents of the online the appropriate LGU, the DTI or
BIR, and other appropriate regulatory authorities;

the

3. Geographic address at which the online merchant may be served summons or
any other judicial processes in its name and behalf;

4, Contact details of the online merchant, a mobile or landline number, and a valid
electronic mail address, which makes it possible to immediately and easily
contact and communicate with the online merchant and communicate in a direct
and effective manner; and

5. Details of any professional body or similar institution with which the online
merchant is registered, in instances when the online merchant exercises a
regulated profession,


Any agreement is valid only if, at the time of the conclusion of the contract, the consumer has
knowledge of the specific condition of the goods and the consumer has expressly accepted this
specific condition when concluding the contract.

SECTION 20. Right to Redress by Online Merchants. — Where the online merchant is liable
to the consumer because of a lack of conformity with the contract resulting from an act or
‘omission by a person in earlier links of the chain of transactions, the online merchant is entitled
to pursue remedies against the person or persons liable in the chain of transactions.

‘The person against whom the online merchant may pursue remedies and the relevant actions
‘and conditions to exercise must be in accordance with the following:

a.

ce

f.

Repairs must be completed and replacements delivered within a reasonable time and
without any significant inconvenience to the consumer, taking into account the nature
of the goods and the purpose for which the consumer acquired the goods;

‘A proportionate reduction of the price or the termination of the contract, including
restitution of the price, in the following instances:

1. A repair or replacement is impossible or unlawful;

2. The online merchant has not completed repair or replacement within a
reasonable time;

3. A repair or replacement may cause significant inconvenience to the consumer;
or

4, The online merchant has declared, or itis equally clear from the circumstances
that the online merchant may not deliver the goods in conformity with the
contract within a reasonable time;

The consumer is entitled to withhold the payment of any outstanding part of the price,
until the online merchant has brought the goods into conformity with the contract;

‘The consumer is not entitled to a remedy to the extent that the consumer has contributed
to the lack of conformity with the contract or its effects;

Where the online merchant remedies the lack of conformity with the contract by
replacement, the online merchant may take back the replaced goods at the online
‘merchant's expense unless the parties have agreed otherwise after the lack of conformity
with the contract has been brought to the online merchant's attention by the consumer;

Where the consumer had installed the goods in a manner consistent with their nature
and purpose, before the lack of conformity with the contract became apparent, the cost
for the removal of the non-conforming goods and the installation of replacement goods,
and all associated costs shall be for the account of the online merchant;


g. In case of goods that do not conform to the contract, the consumer is not liable to pay
for using the non-conforming goods prior to its replacement;

h. The consumer may choose between repair and replacement unless the option chosen is
impossible, unlawful or, imposes costs upon the online merchant that is
disproportionate, taking into account all circumstances, including:

The value of the goods, if the goods conformed to the contract;
2. The significance of the lack of conformity with the contract; and

3. Whether the alternative remedy may be completed without significant
inconvenience to the consumer.

The reduction of price should be proportional to the decrease in the value of the goods which
were received by the consumer compared to the value of the goods if it were in conformity
with the contract.

SECTION 21. Obligations of Ride Hailing Service Providers. — Ride hailing service
providers shall require its consumers to register by showing valid proof of identity, email
address or cellular phone number. Ride hailing service providers shall make the identity of its
providers and support staff available to the rider at all times.

SECTION 22. Obligations of Consumers of Ride Hailing Services. — It shall be unlawful for
consumers of ride hailing services to:

a, Cancel confirmed orders for the delivery of food or grocery items when the said items
have already been paid by or is already in the possession of the Ride Hailing Service
otherwise in transit to the consumer unless:

1. The consumer uses credit card services as a means for the payment of the service
and the payment will still be credited notwithstanding the cancellation;

‘The consumer remits the reimbursement and payment tothe ride hailing service
partner as a pre-condition for the cancellation of the order; or

3. The delivery of ordered food or grocery items will be or was delayed for at least
cone (1) hour from the expected time of arrival due to the fault or negligence of
the ride hailing service partner.

b. Unreasonably shame, demean, embarrass, or humiliate ride hailing service partners.
The consumer may invoke as a defense of good faith, a well-founded belief thatthe ride
hailing service partner had committed a crime or caused civil injury towards the
consumer.


SECTION 23. Right to Terminate the Contract. ~If the goods delivered do not conform to
the contract, the consumer may exercise the right to terminate the contract by giving notice to
the online merchant. Where the lack of conformity relates to only some of the goods delivered
under the contract, the consumer may terminate the contract only in relation to the
nonconforming good and any other goods which was acquired as an accessory to it

Where the consumer terminates a contract as a whole or in relation to some of the goods
delivered:

a, The online merchant shall reimburse to the consumer the price paid without undue delay
and in any event not later than fourteen (14) days from receipt of the notice;

b. Upon receipt of the reimbursement from the online merchant, the consumer shall return,
at the online merchant's expense, the goods without undue delay and in any event not
later than fourteen (14) days from the receipt of the reimbursement;

©. Where the goods cannot be retumed because of destruction or loss caused by the
negligence of the consumer, the consumer shall pay to the online merchant the
monetary value which the non-conforming goods would have had at the date when the
return was to be made if they had been kept by the consumer without destruction or loss
until that date, unless the destruction or loss has been caused by a lack of conformity
with the goods with the contract, within fourteen (14) days from receipt of
reimbursement; and

4. The consumer shail pay for a decrease in the value of the goods only to the extent that
the decrease in value exceeds depreciation through regular use. The payment for
decrease in value shall not exceed the price paid for the goods.

SECTION 24. Damages. — The online merchant is liable for damages to the consumer due to
the lack of conformity with the contract of the goods. The consumer may claim damages within
two (2) years from the relevant time of establishing conformity.

No damages may be recovered by virtue of this Act after the lapse of four (4) years from the
time the conformity has been established.

SECTION 25. Online Dispute Resolution, — The DTI shall develop an online dispute
resolution (ODR) platform which is a single point of entry for consumers, online merchants,
and eCommerce platform operators seeking out-of-court resolution of disputes. Where an
‘eCommerce platform operator does not have an internal dispute resolution mechanism, all
complaints through an ODR against an eCommerce platform operator shall be accompanied by
proof that internal dispute resolutions were exhausted.

a. The ODR shall be an interactive website which may be accessed electronically and free
of charge. The DTI, through the Bureau, shall be responsible for its operation, including
its maintenance, funding and data security. The ODR platform must be user-friendly
and must adopt the twin principles of “privacy by design’ and “design for all”, where


the privacy of its users is respected, and the ODR platform is accessible and usable by
all users.

b. The DTI shall establish a network of ODR contact points from, among others, the
agencies involved in consumer complaints specified in Republic Act No. 7394,
otherwise known as the “Consumer Act of the Philippines,” which includes the Fair
Trade Enforcement Bureau (FTEB) of the DTI, the Department of Agriculture (DA),
the Department of Tourism (DOT), and the Department of Health (DOH). The NPC
and the Intellectual Property Office of the Philippines (IPOPHIL) shall also form part
of the ODR network.

¢. Each agency shall designate one ODR contact point and communicate its name and
contact details to the DTI. The head of agency shall confer responsibility to the ODR
contact points in ensuring that timely and competent support is provided to the
resolution of disputes relating to complaints submitted through the ODR platform.

d._ The ODR platform shall have the following functions:

1. Provide an electronic form by means of which alternative dispute resolution
(ADR) entities shall transmit the information;

2. Provide a feedback system which allows the parties to express their views on
the functioning of the ODR platform and on the ADR entity which handles their
dispute; and

3. Make publicly available general information on ADR as a means of out-of-court
dispute resolution and information on ADR entities which are competent to deal
with disputes.

e. The DTI shall ensure that the information in the website is accurate, up to date and
provided in a clear, understandable and accessible way.

f Government and private sector entities which provide ADR services which are
competent to deal with disputes shall be registered electronically with the ODR
platform.

g. Digital platforms and online retailers shall provide on their websites an electronic link
to the DTI ODR platform on their homepage. That link shall be easily accessible to

consumers.

fh. The DTI, in consultation with other concerned agencies, shall issue the implementing
rules and regulations on the development, management, operations, and maintenance
of the ODR platform.

SECTION 26. Limited Liability of eCommerce Platform Operators. ~


a. eCommerce platform operators shall be solidarily liable with an online merchant to the
consumer only to the extent of civil damages suffered by the consumer as a direct result
of the transaction, without prejudice to liabilities that may incur under the next
succeeding paragraph or the provisions of other existing laws.

b. eCommerce platform operators shall, for civil or administrative indemnity, be held
liable with an online merchant only under the following instances:

1. If the eCommerce platform operator fails to exercise ordinary diligence in
complying with its obligations under Section 18 hereof, resulting to loss or
damage to the consumer;

If the identity of the online merchant and the eCommerce platform operator are
the same;

3. Ifthe eCommerce platform operator fails, after notice, to act expeditiously to
remove, or disable access to goods or services appearing on their platform that
they know or should have known to be not compliant with law, or otherwise
infringes on intellectual property rights;

4, Ifthe eCommerce platform operator permits an online merchant, not otherwise
authorized to do business in the Philippines, to offer its goods and services for
sale, resulting in loss or damage to the consumer.

cc, eCommerce platform operators shall not be held liable under the following instances:

1, The eCommerce platform operator relied on the accuracy, authenticity, and
veracity of an online merchant's representations, warranties or submitted
registration documents, even if such information or documents are later proved
to be inaccurate, false or untrue: Provided, That, the eCommerce platform
operators are able to show evidence of good faith and that reasonable efforts
were exerted to ascertain the accuracy and reliability of the documents or
information submitted by such online merchant.

‘The eCommerce platform operator relied on the representations, warranties or
submissions of an online merchant stating that it is duly organized, valid and
‘existing under the laws of the Philippines or under the laws of its respective
jurisdictions to engage in eCommerce, or has obtained all necessary licenses,
permits or approvals required for the sale of goods and services, or that said
goods and services conform to applicable laws, rules and regulations

SECTION 27. Digital Payments. - Commerce platform operators and online merchants shall
issue the appropriate paper or electronic invoices or receipts for all sales in accordance with
relevant internal revenue laws and regulations. An electronic invoice or receipt shall ave the
same legal effect as a physical invoice or receipt.


The DTI, through the Bureau, shall, in coordination with the Bangko Sentral ng Pili
(BSP), the BIR, the Bureau of Customs (BOC), the DOJ, the Philippine National Police, the
DICT, and the NTC, issue rules and regulations to modernize and streamline the regulatory
framework and encourage the adoption of electronic payment systems by the citizenry. The
DTI shall also develop guidelines to protect merchants and consumers covering the various
digital payment solutions.

SECTION 28. Enforcement of Rights and Remedies. - Without prejudice to existing remedies
provided under other laws, the enforcement of the rights and remedies established under this
Chapter shall be through the following means:

a. If involving complaints by a consumer where no damages are sought, the complaint
shall be treated as a consumer complaint with the DTI pursuant to Title V, Chapter III
of Republic Act No. 7394, otherwise known as the "Consumer Act of the Philippines";

b. Ifinvolving a claim for damages, the injured party shall seek recovery by filing a civil
action with the appropriate trial court.

CHAPTER 5
ELECTRONIC COMMERCE PHILIPPINE TRUSTMARK

SECTION 29. ECommerce Philippine Trustmark. ~ To provide assurance of safety and
security in internet transactions, the DTI shall lead the development of an eCommerce
Philippine Trustmark hereinafter referred to as the, "Trustmark", which may be established and
operated by an industry-led private sector governance body. The DTI shall periodically assess
the effectiveness of the industry-led Trustmark in promoting to the public reliable and
trustworthy eCommerce services, and may opt to assume operational control over the Trust
mark if it determines that the industry-led private sector effort cannot sufficiently achieve the
goals of the Trust mark.

CHAPTER 6
FINAL PROVISIONS

SECTION 30. Penalties. ~

‘8. Online merchants who fail to register either as a sole proprietor, one- person
corporation, partnership, corporation, or cooperative, shall be punished with a fine
equivalent to one hundred percent (100%) of the amount ofthe digital goods offered or
sold based on the market price as determined by the Bureau, including confiscation of
the goods as advertised;

b. eCommerce platform operators and online merchants found guilty of violating Section
18, or Section 19 (d) of this Act shall be punished with a fine not less than Five hundred
thousand pesos (PhPS00,000.00) but not more than Five million pesos
(PhP5,000,000.00) or the revocation of their licenses, or both, at the discretion of the
courts



c. Ride hailing service providers found guilty of violating Section 21 of this Act Shall be
punished with a fine of up to Five hundred thousand pesos (PhPS00,000.00) or the
revocation of their licenses, or both, at the discretion of the courts.

4. Consumers found guilty of violating Section 22 (a) of this Act shall be punished with a
fine of up to Fifty thousand pesos (PhP50,000.00) plus one hundred percent (100%) of
the amount advanced by the ride hailing service partner, or both, at the discretion of the
courts.

e. Consumers found guilty of violating Section 22 (b) and Section 23 (b)of this Act shall
be punished with a fine of up to Fifty thousand pesos (PhP50,000.00), at the discretion
of the courts.

The application of these penalties shall be without prejudice to the liability of the offending
party under other laws or regulations.

SECTION 31. Oversight Committee. — There is hereby created a Congressional Oversight
‘Committee, hereinafter referred to as the Internet Transactions Act Congressional Oversight
‘Committee, to be composed of five (5) members from the Senate, which shall include the
Chairpersons of the Senate Committees on Trade, Commerce and Entrepreneurship, Science
and Technology, and Finance, and five (5) members from the House of Representatives, which
shall include the Chairpersons of the House of Representatives Committees on Trade and
Industry, ICT, and Appropriations. The Intemet Transactions Act Congressional Oversight
‘Committee shall be jointly chaired by the Chairpersons of the Senate Committee on Trade and
Commerce and the House of Representatives Committee on Trade and Industry. It shall meet
at least every quarter of the first two years and every semester for the third year after the
approval of this Act to review the implementation of this Act, evaluate the Bureau on its
functions as the lead agency, determine any inherent weaknesses in the law, and recommend
the necessary remedial legislation or executive measures: Provided, That the Intemet
Transactions Act Congressional Oversight Committee shall cease to exist after five (5) years
upon the effectivity of this Act.

‘The Secretariat of the Internet Transactions Act Congressional Oversight Committee shall be
drawn from the existing personnel of the Senate and House of Representatives Committees
comprising the Internet Transactions Act Congressional Oversight Committee,

SECTION 32. Implementing Rules and Regulations, — The Secretary of Trade and Industry
shall, in consultation with the DICT, the BSP, the DOT, the Land Transportation Franchising
and Regulatory Board (LTFRB), the Optical Media Board (OMB), the IPOPHIL, and other
relevant goverment agencies and stakeholders, develop and issue the implementing rules and
regulations of this Act.

SECTION 33. Transitory Provisions, ~ To ensure the continued implementation of programs
to promote eCommerce, the current eCommerce Division shall continue to exercise its


functions until such time that the organizational structure and personnel of the Bureau have
been determined and approved.

AlLaffected officers and personnel of the eCommerce Division shall be absorbed by the Bureau
without demotion in rank or diminution of salaries, benefits and other privileges.

SECTION 34. Appropriations. — The amount necessary to carry out the provisions of this Act
shall be included in the annual General Appropriations Act.

SECTION 35. Separability Clause. — If any provision or part of this Act is declared
unconstitutional or invalid, such declaration shall not affect the validity of the remaining
provisions of this Act.

SECTION 36. Repeating Clause.— All laws, rules and regulations, presidential decrees, letters
of instruction and other presidential issuances which are incompatible or inconsistent with the
provisions of this Act are hereby repealed, amended, or modified accordingly.

SECTION 37. Effectivity. ~ This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least one (1) newspaper of general circulation. It shall also be
published online, through the Official Gazette Online (www.officialgazette.gov.ph), and on the
website of the DTI (www.dti.gov.ph)..

Approved,