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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
The world of online transactions has been growing exponentially ever since the pandemic happened. It made everything convenient and it brought the world closer to us. However, despite the positive feedback that online transactions have given us, there have been a lot of horror stories such as scams, fraud, and other issues arising from online transactions.
It is the policy of the State to promote and maintain a robust electronic commerce (e-commerce) environment in the country by building trust between online merchants and online consumers.
The State recognizes the value and potential of the digital economy to increase competition and improve productivity. Towards this end, the State shall guarantee effective regulation of e-commerce to protect consumer rights and data privacy, encourage innovation, promote competition, secure internet transactions, uphold intellectual property rights, ensure product standards and safety compliance, and observe environmental sustainability.
This act shall apply to all business-to-business and business-to-consumer internet transactions within the mandate of the Department of Trade and Industry (DTI), where one (1) of the parties is situated in the Philippines or where the digital the digital platform, e-retailer, or online merchant is availing of the Philippine market and has minimum contacts therein: Provided, That online media content, and consumer-to-consumer (C2C) transactions shall not be covered under this Act.
Extra-Territorial Applications: A person who engages in e-commerce, who avails of the Philippine Market to the extent of establishing minimum contacts herein, shall be subject to applicable to Philippine laws and regulations and cannot evade legal liability in the Philippines despite of lack of legal presence in the country.
Equal Treatment of Online and Offline Commercial Activities: Unless otherwise specified, this Act shall be construed to ensure that those engage in e-commerce shall not enjoy any beneficial treatment that is more favorable, nor be placed at a disadvantage, in relation to other enterprises that offer goods and services offline in the Philippines.
E-Commerce Bureau
Creation: Within six (6) months after the effectivity of this Act, the E-commerce Bureau, hereinafter referred to as the Bureau shall be created under the DTI.
The Bureau shall be headed by a Director and at least one (1) Assistant Director who must possess competencies in e-commerce and online transactions, and all the laws and processes related thereto.
The DTI Secretary shall determine the organizational structure and staffing pattern of the Bureau, subject to the approval of the Department of Budget and Management (DBM) and consistent with the civil service laws, rules and regulations.
The powers of the Bureau shall not be exercised in a manner that stifles innovation, restricts competition, creates barriers to entry in trade, or impedes the ease of doing business.
Referral and Trafficking of Complaints: The Bureau shall refer any complaint it receives involving violations of other laws committed in the course of e-commerce activities to the appropriate cases, the DTI may initiate a formal complaint with the appropriate regulatory authorities. The Bureau shall track any such complaint or referral or coordinate the speedy resolution thereof.
Online Business Database (OBD): Within one (1) year from effectivity of this Act, the Bureau shall establish a database of digital platforms, e-marketplaces, e-retailers, and online merchants engaged in e-commerce in the Philippines that will provide the government and online consumers access to contact information of online businesses.
E-commerce Philippine Trustmark: To provide assurance of safety and security in internet transactions, the DTI shall encourage the development of an E-Commerce Philippine Trustmark, hereinafter referred to as the “Trustmark,” which may be established and operated by an industry-led private sector governance body.
Regulatory Jurisdiction of DTI
For purposes of this Act, the DTI shall exercise regulatory jurisdiction as to the use of internet for conducting e-commerce by e-marketplaces, online merchants, e-retailers, digital platforms, and third party platforms.
Subpoena: In the exercise of its powers under this Act, the DTI Secretary shall have the power to issue summons, subpoena ad testificandum, and subpoena duces tecum to alleged violators or witnesses to compel attendance and the production of documents in investigations or proceedings before the Bureau. Failure to comply with the subpoena ad testificandum and subpoena duces tecum shall authorize the filing a case for contempt under the Rules of Court.
Authority to issue takedown order: The DTI Secretary after investigation or verification, may issue an ex parte takedown order directing the removal of a listing or offer on a webpage, website, platform or application, regardless of the intended nature of the transaction, when any of the following is present:
- Sale or lease of goods or services which are prohibited or regulated under existing laws such as endangered animals, illicit drugs, fireworks and other explosives, and counterfeit goods: Provided, That the prohibited nature of the goods and services is apparent from the photo or description in the post;
- Sale or lease of goods or services subject of a cease and desist order issued by an appropriate government agency;
- Sale or lease of goods or services online previously subject of a takedown order but which are subsequently reposted and proliferated online by the seller under investigation;
- Such other transactions or activities online, within the jurisdiction of DTI, purporting to sell or lease goods or services that otherwise threaten public or personal safety, compromises financial or personal information.
Other regulatory government agencies may request the DTI to issue a takedown order for the removal of an online listing or offer in violation of laws, rules or regulations under their jurisdiction. Nothing herein shall preclude the appropriate agency from exercising its regulatory authority, including the issuance of orders directly to the erring person or entity, to prevent or stop the sale of goods or services under its jurisdiction.
The violating entity shall be given an opportunity to be heard within forty-eight (48) hours from the issuance of a takedown order.
The takedown order shall be directed against the e-retailer or online merchant, and the owner or operator of the e-marketplace or digital platform.
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.
Blacklisting of Online Business: The DTI Secretary shall have the authority to establish a publicly accessible list of website, webpages, online applications, social media accounts, or other similar platforms that fail to comply with the compliance order, or are subject of the takedown order or of a cease and desist order issued by an appropriate government agency, indicating the specific provision incurred.
Should the violation consist of failure to abide by the compliance order, the entry in the blacklist shall indicate the act or requirement subject of the compliance order. The blacklist shall be made publicly available and shall be furnished to digital platforms and financial regulators. After compliance or correction, the DTI, motu proprio or upon request, shall promptly remove the entry from the list, without the necessity of a hearing.
Online Dispute Resolution (ODR): Within six (6) months from the effectivity of this Act, the DTI shall develop a platform to facilitate an alternative mode of dispute resolution for online consumers, online merchants, e-retailers, e-marketplaces, and other digital platforms.
Obligations of Online Consumers: The online consumers shall exercise ordinary diligence in any internet transaction.
If the transaction includes the delivery of the purchased goods, the online consumer shall not cancel confirmed orders when the said items have already been paid for by, or the goods are perishable in nature and are already in the possession of a third-party delivery service, or otherwise in transit to the online consumer unless:
- The online consumer uses electronic or digital payment and authorized the crediting of the amount despite the cancellation;
- The online consumer reimburses third-party delivery service as a pre-condition for the cancellation of the order;
- The transaction allows cancellation of a fee; or
- The parties agree otherwise.
Remedies of Online Consumer: In case of defect, malfunction, or loss without the fault of the online consumer, or failure to conform with warranty or any liability of the online merchant or e-retailer arising from the contract, the online consumer shall the right to pursue repair, replacement, refund or other remedies provided under R.A. No. 7394 or any existing relevant laws.
When the online consumer avails replacement or refund as a remedy the online merchant is entitled to the return of the original goods delivered, without any cost to the online consumer, within a reasonable period from the receipt thereof, unless otherwise agreed upon by the parties. In case the refund is already paid, but the goods cannot be returned due to the fault of the online consumer, the amount received shall be immediately reimbursed to the online merchant or e-retailer subject to proportionate reduction in price, if appropriate.
Internal Redress Mechanism: an aggrieved party shall avail of the internal redress mechanism of the digital platform, e-marketplace or e-retailer prior to the filing of the complaint before any court or appropriate government agency, or resorting to alternative dispute resolution. Such mechanism is deemed exhausted if the complaint remains unsolved after seven (7) calendar days from filing thereof.
Primary Liability of E-Retailers and Online Merchants: The e-marketplace or online merchant shall be primarily liable for indemnifying the online consumer in civil actions or administrative complaints arising from the internet transaction, without prejudice to the imposition of other penalties under this Act and other laws.
Subsidiary Liability of E-Marketplaces of Digital Platforms: The e-marketplace or digital platform that facilitated the internet transaction subject of a civil action or administrative complaint shall be subsidiary liable to the online consumers if any of the following circumstances are present:
- The digital platform or e-marketplace failed to exercise diligence in complying with its obligations, resulting in loss or damage to the online consumer; or
- If the digital platform or e-marketplace failed, after notice, to act expeditiously in removing or disabling access to goods or services that either infringe in another’s intellectual property rights or is subject to a takedown order by any appropriate government agency; or
- If the online merchant has no legal presence in the Philippines and the digital platforms or e-marketplace failed to provide contact details thereof despite notice.
The subsidiary liability of digital platforms or e-marketplaces shall be limited only to the extent of damages suffered by the online consumer as a direct result of the transaction, without prejudice to the other liabilities that may be incurred under this Act or other laws.
Digital platforms or e-marketplaces shall not be held liable for their reliance in good faith on an online merchant’s representations, warranties, or submitted registration documents regardless if such information or documents later proved to be inaccurate, false, or untrue: Provided, That the digital platform or e-marketplace must show evidence of reliance in good faith and that reasonable effort was exerted to ascertain and maintain the accuracy, authenticity and veracity of the documents or information submitted.
Solidary liability of E-marketplace or Digital Platform: The e-marketplaces or digital platforms shall be solidarily liable if it falls, after notice, to act expeditiously to remove or disable access to goods or services appearing on its platform that are prohibited by law, immediately injurious, unsafe or dangerous.
Damages: The consumer may claim damages by filing a case before the court or the DTI within two (2) years from the time the cause of action arose.
Related Articles:
Decoding the Role of the Electronic Commerce Act of 2000 (Republic Act No. 8792) in Business
WHAT IS THE OBLIGATION OF CONFIDENTIALITY UNDER THE ELECTRONIC COMMERCE ACT OF 2000?
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Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding legal services, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/ 0917-5772207/ 09778050020.
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