Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

EIGHTEENTH CONGRESS

First Regular Session
6122

HOUSE BILL NO.

Introduced by Representative Wes Gatchalian

AN ACT
PROTECTING CONSUMERS AND MERCHANTS ENGAGED IN INTERNET
TRANSACTIONS, CREATING FOR THIS PURPOSE THE ECOMMERCE BUREAU
AND APPROPRIATING FUNDS THEREFOR

EXPLANATORY NOTE

There is no denying that eCommerce has radically changed the way we live
our lives. Whether as a consumer or seller, technology and the internet has
dramatically transformed the way business is conducted. The rise of digital
technology saw the emergence of mobile networks and rapid advancement in
computer technologies. Such advancement boosted humanity to where we are today.
As Bill Gates said, “digital technology] is the center of attention for businesses,
governments and individuals around the world. It has spawned entirely new
industries, transformed existing ones, and become a global cultural phenomenon.”

From the buyer's perspective, eCommerce is faster, cheaper and more
convenient. Consumers are presented with a variety of options to meet their every
need with a tap of a finger. eCommerce provides the consumers with time-saving
options and access to swift delivery of goods and services. Finally, it presents value
for money largely because from the seller’s perspective, set-up costs are lower and
operating costs are kept at a minimum. It has been said that from an enterprise’s
perspective, eCommerce is the great equalizer, because MSME’s gain access to the
same markets at low costs. Furthermore, the importance of eCommerce platforms in
the ecosystem has become integral as they are able to aggregate multiple
transactions. They play a key role in balancing the needs of consumers and sellers
by facilitating fair and efficient trade between these two players.

Undeniably, technology has revolutionized our conventional way of buying and
selling in ways unimaginable to those that have come before us.

Based on a recent 2019 study by Google and Temasek, in ASEAN alone, the
Internet economy is experiencing exponential growth as total Gross Merchandise
Value (GMV) in Southeast Asia has reached the $100B mark, and is projected to
reach $300 billion in 2025. ASEAN economies have witnessed huge increases in


internet economy from 2015 to 2019 and growth rate is expected to continue at 10%-
30% from 2019 to 2025.

Notably, the Philippines has the lowest GMV in 2019 at $7B, lower than
Malaysia ($11B), Vietnam ($12B), Singapore ($12B), Thailand($16B), and Indonesia
($40B), this - despite the Philippines’ estimated 76 million active internet users and
high ern penetration rate (71% vis-a-vis a global average of 54%), longer hours
spent daily on internet (10 hours vis-a-vis a global average of 6 hours 42 minutes),
and very high social media penetration for population aged 13+ (99% vis-a-vis a 59%
global average).

This representation acknowledges that expected growth of the Philippine
internet economy at 27% CAGR, is deemed to be one of the fastest among ASEAN
economies. We acknowledge the findings of Google and Temasek and the aim of this
bill is to ensure that this growth is achieved or even surpassed.

Indeed, eCommerce in the country is in its nascent stage, reflecting immense
potential for businesses. The Philippines has not yet generated unicorns - a tech
startup company that reaches a valuation of $1 billion - nor has our economy
reflected the dynamism the Indonesian and Vietnamese eCommerce markets have
reached, at 2.9% and 4.0% of GDP, respectively. The Philippines’ eCommerce market
remains at 1.6% of GDP.

either find using digital technology platforms and tools too difficult, or are unaware
of the benefits they offer. The Philippines also lacks policies and regulations that will
facilitate online transactions and cross-border trade processes which should address
the following concerns:

aes MSMES lag behind the adoption of eCommerce because enterprises

(a) Lack of trust;

(b) ipierasl infrastructure (Low internet speed experienced in
ilippines);

(c) Logistics infrastructure (Weak last-mile delivery options;
challenging topographical structure);

(d) Payment mechanisms (Payment gateways and currency exchange
rates; Majority still prefer to pay in local currency against foreign
currency);

(e) Lack of governing entity at the regional level that can fight
cybercrime and settle cross-border disputes;

@ Difficulty in the process of returning product;

(e) Heme (VAT, customs duties and other charges, de minimis
eshold, VAT registrations of foreign e-commerce operators,


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12% VAT on total value of online transactions in the Philippines);
and

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(b) Online consumer complaints.

This bill seeks to culture an environment founded on trust among consumers
and merchants, as a means to increase the number of eCommerce participants, and
ultimately achieve sustainable growth. This bill will address the need to establish a
singular office that: (1) will be given the responsibility to carry out provisions of this
bill; (2) will ensure the implementation of Republic Act. No. 8792 or the Electronic
Commerce Act of 2000; and (3) will be the focal point in the monitoring and
implementation of the Philippine eCommerce roadmap.

In view of the foregoing, approval of this bill is earnestly sought.
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Republic of the Philippines
HOUSE OF REPRESENTATIVES

EIGHTEENTH CONGRESS
First Regular Session

House Brit no. ©122

Introduced by Representative Wes Gatchalian

ooo

AN ACT
PROTECTING CONSUMERS AND MERCHANTS ENGAGED IN INTERNET
TRANSACTIONS, CREATING FOR THIS PURPOSE THE ECOMMERCE BUREAU
AND APPROPRIATING FUNDS THEREFOR

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

SECTION 1. Short Title. - This act shall be known as the “Internet
Transactions Act".

SEC. 2, Declaration of Policy. - It is the policy of the State to promote the
growth of electronic commerce (eCommerce) in the country by building trust between
online sellers and consumers. The State recognizes the growth of the digital economy
where digital access to goods and services is secure, fast, and accessible to
consumers, and where businesses are more readily able to adopt innovations to
increase their efficiency. Towards these ends, the State shall ensure fair business
and advertising practices, secure online transactions through appropriate
disclosure, maintain data privacy rights, affirm the paramount importance of
product safety, and enable all consumers and businesses to have meaningful access

to effective mechanisms for dispute resolution.

SEC. 3. Definition of Terms. - As used in this Act:

(A) 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;


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(B)

(c)

(D)

(£)

(Gg)

Consumer refers to a natural or juridical 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 to another that are
not made in the ordinary course of business;

Digital contents refer to data which are produced and supplied in
¢lectronic form;

Digital products refer to goods and services transacted over the internet;

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;

Commerce Philippine Trustmark refers to the mark approved by the
eCommerce Bureau that assures consumer protection for online
transactions and consumer complaints;

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

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

Goods or Digital Goods refer to physically 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;


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(M)

(N)

(0)

Q)

Interoperability refers to the ability of the 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 eCommerce Platform refers to a natural or juridical person that
solicits the purchase of digital products through digital platforms and
marketplaces whose business is to connect online buyers and online
sellers, facilitating sales of products, goods or services through the
internet with the presence and use of monetary transaction.

Online merchant refers to any natural, or juridical person, irrespective
of whether privately or publicly owned, that directly sells, manufactures
goods, or offers for sale, any goods and services, in the ordinary course
of business over the internet, through a website, an online marketplace,
a social media website or application or through other similar means.

ice refers to money or a digital representation of value that is due in
the exchange for the supply of digital products, whether goods and
services, digital content, or digital service;

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

Repair refers to bringing goods into conformity with the contract, in
case of defective goods;

Trader refers to any natural person, or juridical person irrespective of
whether privately or publicly owned, who is acting, including through
any other person acting on the trader’s name or on the trader's behalf,
for purposes relating to the trader's business, craft, or profession, in
relation to contracts covered by this Act.

SEC. 4, Scope and Coverage. - This Act applies to the sale or exchange of
digital products, including the following:


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(B)

(°)

(D)

(E)

Internet retail of consumer goods;

Online travel services, covering the purchase of flights, hotel
accommodations, and vacation rental spaces;

Digital media providers, including advertising, gaming, music
subscription, and video on demand;

Ride hailing services for personal transport, delivery of food and
erchandise; and

Financial services offered through digital online platforms, such as
nline payments, remittances, online lending, online investment, and

online insurance services.
]

SEC. 5. eCommerce Bureau. - To coordinate and supervise the
implementatiqn of this Act, and to promote the growth of the eCommerce sector,
there is hereby created the eCommerce Bureau, hereinafter referred to as the
Bureau, under the Department of Trade and Industry (DTI), to perform the following

functions:

(a)

(B)

Co)

(D)

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lfnplemonty |snaeitor. lend fenstire|etrict! compliance by oCommerce
stakeholders of the provisions of this Act;

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Build trust between consumers and sellers to promote eCommerce
growth;

Coordinate the formulation of policies, plans and programs to increase
the number of online merchants and consumers;

Act as a virtual one stop shop for consumer complaints on internet
transactions, and facilitate the speedy resolution of consumer
complaints by the respective government agency which has jurisdiction
‘over the complaint;



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(£)

(G)

(k)

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Compel or petition any entity, government agency or instrumentality of
take action on any matter that may impeded eCommerce;

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

Represent the Philippines in international negotiations to promote
¢ross border eCommerce transactions;

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

Prepare and conduct periodic studies on eCommerce;
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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 pro-active; and
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end executive and legislative measures to ensure a regulatory
ework that encourages growth of the sector.

SEC. 6. Composition of the Bureau. - The Bureau shall be headed by a
commissioner who must have sufficient knowledge and background in production,
distribution, marketing, sale, or delivery of goods and services by electronic means.

|

The
for administr:

joner shall be assisted by six (6) deputy commissioners; one (1)

one (1) for finance, one (1) for planning, one (1) for operations,

one (1) for franchising, and one (1) for law enforcement and adjudication. All deputy

commissioners must be career executive service officers with at least ten (10) years

of experience

and practice in eCommerce.



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‘The commissioner and deputy commissioners shall be appointed by the
President of the Philippines upon the recommendation of the Secretary of Trade and
Industry.

SEC. 7, Code of Conduct. - To build trust in online businesses and in
keeping consumers’ interests primordial, all businesses engaged in eCommerce are
expected to act responsibly, consistent with the following principles:

(A) Treat consumers with honesty, integrity, and fairness, and refrain from
engaging in illegal, fraudulent, unethical, or unfair business practices
that harm consumers;

(B) Uphold their responsibilities to the public and to the State, and to apply
the rights of consumers equally;

(C) Comply with applicable laws and regulations, especially the protection
of intellectual property rights;

(D) Ensure that goods and services marketed and sold online to Philippine
consumers conform to Philippine regulatory standards and provide
accurate information about the digital products in Filipino and English;

(E) Ensure that the safety of digital products marketed or sold online are
not compromised and that products that have been recalled in the
offline retail market are not marketed or sold online;

(F) Be honest and truthful in all representations and all information on
digital products or services must be easily accessible, complete, and
correct and promoted through fair advertising and marketing practices;

(G) Be transparent to consumers about costs and avoid any hidden charges
or additional costs such as customs duties, currency conversion, and

shipping, or delivery;


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(H)

@

(l)

(m)

(2)

Allow for tracking of deliveries by online merchants and provide
complete records of the goods purchased and have them delivered
within the promised time and described condition;

Offer cancellation options in order that consumers may be able to
review their online orders before finally confirming their purchase, and
be able to withdraw from a confirmed transaction in appropriate

circumstances;

Take consumer complaints seriously and address them fairly by
instituting comprehensive and equitable mechanisms for consumer
redress through easy, fair, and transparent methods, and provide
compensation, refund, repair, and replacement, if warranted;

Keep private information private by strictly complying with all
applicable 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;

Ensure the safety and security of online payments and safeguard
sensitive data by using secure technology and protocols as evidenced
by visible trust certificates;

Avoid online spamming except online spamming or unsolicited
commercial email or bulk email subject to the control and discretion of
the consumer through readily accessible configurations allowing the
consumer to choose whether they wish to receive or opt-out from
commercial messages by email or electronic means;

Avoid improper conduct such as producing fake online reviews or
spreading wrong information about competitors but allowing
consumers to make critical reviews about digital products; and

Educate consumers about online risks as a priority by informing the
consumers about risks of internet transactions and providing
competent and professional advice.


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Whenever appropriate, the DTI shall issue the corresponding rules and

regulations

SEC.

in accordance with international best practices.

8. Qualifications to Engage in eCommerce. - The following are

presumed a authorized to engage in eCommerce in the Philippines in the

ordinary cou:

(A)

(B)

(c)

©)

of their trade or business:

Filipino individual who is duly licensed to do business as a single-
roprietor with the DTI;

Filipino juridical entity that is duly registered with the Securities and
ange Commission (SEC), whether as a corporation, a one-person
‘orporation, or as a partnership;

Filipino cooperative that is duly licensed by the Cooperative
evelopment Authority (CDA); and

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

A resident of the Philippines who engages in unauthorized eCommerce

activities in

\e ordinary course of trade or business shall be subject to the penal

provisions of this Act.

A person who is authorized to engage in eCommerce in the Philippines and
who facilitates the 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 marketing
goods or services that are accessible in the Philippines may not evade legal liability
in the Philippines owing to the fact of non-residency, and shall be subject the same

obligations

to engage in

sere arising from any transaction as those who are authorized
erce in the Philippines.



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SEC.9, Business Registration. —

(A)

(B)

Co)

(D)

(£)

"0 encourage the formation of business enterprises, the growth and
tegrated development of eCommerce, and protection of online

sumers, all individuals engaged in internet transactions as Online
lerchants or as Online eCommerce Platforms shall register as a
usiness either as a sole proprietor, one-person corporation,
partnership, corporation, or cooperatives.

jo person shall be allowed to engage in eCommerce, including the sale

’ any digital product without a license to operate. Any entity, whether
tural or juridical, who offers to sell or have been found engaged in
yy internet transaction without a license to operate is in violation of
is Act; Provided, however, That consumer to consumer transactions
all not be covered by this Act. For the first year of implementation,
1¢ penalty for unregistered online merchants and first-time offenders
all be waived upon presentation of business registration papers.

regulatory agencies responsible for business registration whether
L sole proprietorships, one-person corporations, partnerships,
orporations, or cooperatives, shall extend its jurisdiction or regulatory
wers over business websites and other communication channels
ering internet transactions. The DTI or any of the implementing
ncies shall have the authority to enforce website takedown
ce and shall report the violator to the Bureau of Internal

evenue.

Consistent with Republic Act No. 11032, otherwise known as the “Ease
Doing Business Act,” all National Government agencies and local
ent agencies (LGUs) shall make available online registration of
yusiness permits and licenses particularly for those engaged in

eCommerce.

‘The SEC, LGUs, and the CDA shall submit to the DTI an annual list of
registered enterprises for monitory and for purposes of maintaining a
database of online merchants.



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SEC. 10. Regulatory Jurisdiction of the DTI. - The DTI shall exercise
primary regulatory jurisdiction over any website, webpage, social media account, or
other similar platform that markets digital products that are accessible in the
Philippines, regardless of whether the owner of the website, webpage, social media
account, or other similar platform is authorized to engage in eCommerce in the
Philippines. The jurisdiction of the DTI includes the authority to order the owner of
the website, webpage, social media account, or other similar platform to desist from
marketing or offering goods or services that are accessible in the Philippines on
account of violation of this Act, or any other consumer or trade laws and regulations,
as well as the prerogative to refer the matter to the Bureau of Internal Revenue for
appropriate action.

SEC. 11. Obligations of Online eCommerce Platforms. —

(A) Online eCommerce Platforms shall ensure that any commercial
communication shall:

@ Be clearly identifiable as a commercial communication;

(i) Clearly identify the person on whose behalf the commercial
| communication is made;

(ii) Clearly identify any promotional offer including any discount,
| premium, or gift, and ensure that any conditions which must be
| met to qualify for it are easily accessible, and presented clearly
and unambiguously; and

(iv) Clearly identify any promotional competition or game and ensure
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| that any conditions for participation are easily accessible and
| __ presented clearly and unambiguously.

(B) Online eCommerce Platforms shall require all Online Merchants, prior
to the latter's onboarding to submit the following:

) Name of the online merchant;


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(c)

(2)

ii)

iii)

Gv)

(v)

Registration documents of the online merchant from the
appropriate regulatory authority, including but not limited to
business permits, certificate of registration, barangay clearance;

Geographic address at which the online merchant is established;

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

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.

Online eCommerce Platforms shall maintain a file of all registered
line merchants which shall be regularly verified and updated.

ine eCommerce Platforms shall publish on their website, webpage,

media account, or other similar platform, the following general

formation:

Name of the online merchant;

Registration documents of the online merchant from the
appropriate regulatory authority, including but not limited to
business permits, certificate of registration, barangay clearance;

Geographic address at which the online merchant is established;
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


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online seller and communicate in a direct and effective manner;

and

(¥) 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.

() Online eCommerce Platforms shall submit to the Bureau a list of all
nline merchants registered under their platform. When an Online
¢Commerce Platform discovers that an online merchant has not
)btained registration documents from the relevant regulatory agency,
it shall report such fact to the Bureau within fifteen (15) days from
discovery thereof.

Where the Online eCommerce Platform provides prices, the prices shall be
indicated clearly and unambiguously and, in particular, shall indicate whether the
prices are inclusive of taxes and delivery costs.

SEC. 12. Internet Transactions Involving Consumers. - An online
merchant of goods shall exercise the following responsibilities:

(A) Deliver or cause the delivery of goods to the consumer ensuring the
lowing requirements:

() 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;

(ii) The seller must show a sample or a model of 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; fir for
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(8)

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and which the consumer made known to the seller at the time of
the conclusion of the contract, and which the seller has
accepted; and possess the qualities and performance capabilities
indicated in any pre-contractual statement which forms an
integral part of the contract.

(ii) All digital goods shall:

(a) Be delivered along with the accessories including
packaging, installation instructions or other instruction

as the consumer may expect to receive; and

(b) 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
seller or other persons in earlier links of the chain of
transactions, including the producer, unless the online
merchant shows that:

1. The online merchant was not, and could not
reasonably have been aware of the statement in
question;

2. By the time of conclusion of the contract, the
statement had been corrected; or

3. The decision to buy the goods could not have been
influenced by the statement.

liable for any lack of conformity with the contract which exists at

e time when:

‘The consumer or a third party indicated by the consumer other
than the carrier has acquired the physical possession of the
goods, or when the goods are handed over to the carrier chosen


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(©)

by the consumer, and that carrier was not proposed by the seller
or where the seller proposes no means of carriage;

(i) The goods were installed by the seller or under the seller’s
responsibility, and the time when the installation is completed
is considered as the time when the consumer has acquired the
physical possession of the goods;

(ii) ‘The goods were intended to be installed by the consumer, and
the time when the consumer had reasonable time for the
installation not later than thirty (30) days after the time
indicated in subparagraph (a) of paragraph B, is considered as
| the time when the consumer has acquired the physical
possession of the goods.

iv) 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:

(a) The goods were installed by the seller or under the seller’s
responsibility; and

(b) 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
be supplied or made accessible to the consumer over a period of time,
‘ seller may modify the digital content or digital service beyond what
necessary to maintain the digital content or digital service in
nformity, if the following conditions are met:

() The contract allows, and provides a valid reason for, such a
modification;



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@ Such a modification is made without additional cost to the

consumer; and

(ii) The consumer is informed in a clear and comprehensible

manner of the modification.

(D) Where the online merchant operates its own website, webpage, social

edia account, or any other similar platform, it shall publish on its

homepage the following:

Name of the online merchant;

(i) Registration documents of the online merchant from the

appropriate regulatory authority, including but not limited to
business permits, certificate of registration, barangay clearance;

(ii) Geographic address at which the online merchant is established;

(iv) 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 seller and communicate in a direct and effective manner;

and

(%) 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 expressly

SEC. Hk
merchant is liable to the consumer because of a lack of conformity with the contract

resulting from

jas knowledge of the specific condition of the goods and the consumer
cepted this specific condition when concluding the contract.

Right to Redress by Online Merchants. - Where the online

an act or omission by a person in earlier links of the chain of


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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)

®)

el)

(D)

2)

A repair or replacement must be completed within a reasonable time

.d without any significant inconvenience to the consumer, taking into
feet the nature of the goods and the purpose for which the
sonsumer acquired the goods;

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

()  Arepair or replacement is impossible or unlawful;

(i) ‘The online merchant has not completed repair or replacement
within a reasonable time;

A repair or replacement may cause significant inconvenience to

the consumer; or

(iv) The online merchant has declared, or it is equally clear from the
circumstances that the online merchant may not bring the goods
in conformity with the contract within a reasonable time;

sumer is entitled to withhold the payment of any outstanding
of the price, until the online merchant has brought the goods into
ity with the contract;

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

Where the online merchant remedies the lack of conformity with the
contract by replacement, the online merchant may take back the



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(F)

(a)

(H)

eplaced goods at the online merchant’s expense unless the parties
ave agreed otherwise after the lack of conformity with the contract has
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
ntract became apparent, the cost for the removal of the non-
nforming goods and the installation of replacement goods, and all
associated costs shall be for the account of the online merchant;

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

lacement;

The consumer may choose between repair and replacement unless the

tion chosen is impossible, unlawful or, imposes costs upon the online
fare that is disproportionate, taking into account all
sircumstances, including:

() The value the goods would have if the goods conformed to the
contract;

(ii) The significance of the lack of conformity with the contract; and

(ii) Whether the alternative remedy may be completed without

significant inconvenience to the consumer.

‘The reduction of price is proportionate to the decrease in the value of the goods
which were received by the consumer compared to the value the goods would have if
in conformity with the contract.

SEC. 14. 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

the goods delivered under the contract, the consumer may terminate



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the contract only in relation to the non-conforming good and any other goods which

was acquired

Where

as an accessory it.

the consumer terminates a contract as a whole or in relation to some

of the goods delivered:

(A)

(B)

()

(D)

SEC. 1

The online merchant shall reimburse to the consumer the price paid
ithout undue delay and in any event not later than fourteen (14) days
from receipt of the notice;

Upon receipt of the reimbursement from the online merchant, the
sumer shall return, at the online merchant’s expense, the goods
ithout undue delay and in any event not later than fourteen (14) days
‘om the receipt of the reimbursement;

ere the goods cannot be returned because of destruction or loss, the

sumer shall pay to the online merchant the monetary value which

¢ non-conforming goods would have had at the date when the return

to be made if they had been kept by the consumer without

jestruction or loss until that date, unless the destruction or loss has

ie caused by a lack of conformity with the goods with the contract;
id

¢ consumer shall 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.

$. Damages. - The online merchant is liable for damages to the

consumer due to the lack of conformity with the contract of the goods: Provided, That
the lack of conformity becomes apparent within two (2) years from the relevant time
of establishing conformity.

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



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SEC. 1
dispute resol

if Online Dispute Resolution. - The DTI shall develop an online
tion (ODR) platform which is a single point of entry for consumers,

online merchants and traders seeking out-of-court resolution of disputes.

(a)

(B)

(c)

(0)

¢ ODR shall be an interactive website which may be accessed
lectronically and free of charge. The DTI, through the Bureau, shall be

sponsible for its operation, including its maintenance, funding and
late security. The ODR platform must be user-friendly and must adopt
the twin principles of “privacy by design” and “design for all”, where the

ivacy of its users is respected from the design stage, and the ODR
latform is accessible and usable by all, including vulnerable users.

‘The DTI shall establish a network of ODR contact points from, among

\ers, the agencies involved in consumer complaints specified in
public Act No. 7394, otherwise known as the “Consumer Act of the
Areas which includes the DTI’s Fair Trade Enforcement Bureau,
Department of Agriculture, Department of Tourism, and the
, ent of Health. The National Privacy Commission and the
tellectual Property Office of the Philippines shall also form part of the
DR network.

fach 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
omplaints submitted through the ODR platform.

‘The ODR platform shalll have the following functions:

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

(ii) 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



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(E)

(G)

(A)

(B)

()

(D)

(ii) 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.

1e ensure that the formation in the website is accurate,
The DTI shall that the inf ion in the website i
up to date and provided in a clear, understandable and accessible way.

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

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.

‘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 within three (3)
months from the effectivity of this Act.

Joint and Solidary Liability. - Online eCommerce platforms shall
‘liability with an online merchant under the following instances:

If the online eCommerce platform fails to exercise extraordinary
diligence to prevent any loss or damage to the consumer;

if the identity of the online merchant snd the online eCommerce
platform is the same;

If the online eCommerce platform knows or should have known that
the digital products sold do not comply with law, or otherwise infringes
on intellectual property rights, and fails to take necessary measures;

If the online eCommerce platform fails to publish details of its online
merchant;


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{E) If the online eCommerce Platform fails to examine digital products
telated to food, drugs, and cosmetics or otherwise relates to the life or

health of consumers;

(fF) If an online merchant is not duly registered with the appropriate
regulatory agencies and the online eCommerce platform permits the
online merchant to sell digital products;

SEC. 18. Digital Payments. - Online eCommerce Platforms and Online
Merchants shall, issue paper or electronic invoices or receipts for all sales. An
electronic invoice or receipt shall have the same legal effect as a physical invoice or
receipt.

Within sixty (60) days from the effectivity of this Act, the Bureau of Internal
Revenue shall, in coordination with the Bureau of Customs, issue rules and
regulations that modernize and streamline the regulatory framework and encourage
the adoption of electronic payment systems by the citizenry. The DTI and the Bangko
Sentral ng Pilipinas shall also develop guidelines to protect merchants and
consumers covering the various digital payment solutions.

SEC. 19. Tax Exemption for Newly Registered eCommerce Enterprises.
— Newly registered micro-enterprises, as defined under existing laws, and which are
engaged in eCommerce shall be exempt from all national and local taxes for the first
two (2) years of operation under the following conditions:

(A) The enterprise is not an affiliate, subsidiary, or a franchise of any
existing company;

(8) Ih the case of a sole proprietorship, one-person corporation or
partnership, it does not have any previous or other existing registered
companies, partnerships, or businesses; and

(C) In the case of a corporation, each stockholder of the eCommerce
enterprise must have at least a five percent (5%) share in stocks and
the corporation must have no nominal stakeholders or stockholders
holding the shares in trust for others: Provided, That all stockholders


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of the corporation shall not have held shares of a previous or existing
corporation with at least a five percent (5%) share therein, nor
pec! any former or existing sole proprietorship or partnership.

|
SEC. 20. eCommerce Philippine Trustmark. - To provide assurance of

safety and security in internet transactions, an eCommerce Philippine Trustmark
shall be developed for online merchants.

(A)

(B)

(

(D)

€)

‘The DTI is tasked to create an eCommerce Philippines Trustmark to be
administered and managed by an industry-led private sector
governance body.

|
‘The industry-led governance body comprises the following:

|

(@ Two (2) representatives from the digital platforms;
(ii) Two (2) representatives from the payment gateways;
(ii) Two (2) representatives from the logistics services;
(iv) Two (2) representatives from other enablers; and

(%) One (1) representative from the public sector.

An eCommerce Philippine Trustmark on the website of an online
therchant signifies that the company is committed to the Code of
Conduct stipulated in Section 8 of this Act, guaranteeing ethical
standards in the digital marketplace.

In the case of a complaint involving the purchase of their products or
services, those companies with the trustmark shall give consumers the
ption of filing claims through the trustmark portal, if the company’s

pstomice care service has not been able to resolve the issue.

ia eCommerce Philippines Trustmark shall be linked to DTI’s online

DR.
|

SEC. 21. Implementing Agencies. - The provisions of this Act and its
implementing rules and regulations shall be enforced by the following agencies:


wearvauneune

(a)

()

(0)

(E)

Department of Trade and Industry, with respect to consumer products;

Department of Health, with respect to food, drugs, cosmetics, health
products, and substances;

Department of Agriculture, with respect to products related to
agriculture;

Intellectual Property Office of the Philippines, with respect to
intellectual property, particularly on infringement of patents,
ademarks, and copyrights;

tical Media Board, with respect to digital media and enforcement of
nline piracy;

ilippine National Police, with respect to cybercrime; and
ko Sentral ng Pilipinas, with respect to the implementation of

ublic Act No. 11127, otherwise known as the “National Payment
Systems Act.”

SEC. 22. Jurisdiction. - The implementing agencies mentioned in Section

21 of this A

shall continue to exercise the powers and duties provided to them

under existing laws, unless repealed or modified accordingly. All implementing

agencies mu

respective si

develop and implement programs to inform and educate their
cholders about eCommerce, including the provisions under this Act.

SEC. 23. Penalties. —

(A)

Dnline merchants found guilty of violating Section 9, paragraph (B) of
is Act or who fail to register either as a sole proprietor, one-person
poration, partnership, corporation, or cooperative, shall be

uunished with a fine equivalent to one hundred percent (100%) of the

ount of the digital goods offered or sold based on the market price
determined by the Bureau, including confiscation of the digital
oducts as advertised, and forfeiture of license; and



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(8)

Online eCommerce platforms and online merchants found guilty of
violating Section 11 or Section 12 (D) of this Act shall be punished with
@ fine not less than Five Hundred Thousand Pesos (P500,000.00) but
not more than Five Million Pesos (P5,000,000.00) or the revocation of
cir licenses, or both, at the discretion of the court.

SEC. 24. Appropriations. - The amount of Fifty million pesos
(P50,000,000.00) for the initial operation of the Bureau is hereby appropriated out

of any funds
sum as may

re National Treasury not otherwise appropriated. Thereafter, such
necessary for the continued implementation of this Act shall be

included in the annual General Appropriations Act.

SEC. af Separability Clause. - If any provision or part of this Act is

declared invé
the remainis

id or unconstitutional, such declaration shall not affect the validity of
provisions of this Act.

SEC. 26. Repeating Clause. - All laws, rules, and regulations, presidential
decrees, — of instruction and other presidential issuances which are

incompatible

amended, or

inconsistent with the provisions of this Act are hereby repealed
modified accordingly.

SEC. 27. Effectivity Clause. - This Act shall take effect thirty (30) days after
its publication in the Official Gazette or in a newspaper of general circulation.

Approved,