It is the key policy of the Republic Act 11967 or the Internet Transactions Act, or ITA, to build trust between online merchants and online consumers to promote and maintain a robust electronic commerce (e-commerce) environment in the Philippines. Consequently, aside from establishing the powers and regulatory functions of the government, through the Department of Trade and Industry, or DTI, and the E-Commerce Bureau to secure internet transactions, the ITA imposes obligations on all the parties to business-to-business and business-to-consumer internet transactions.
The ITA identifies three key parties to Internet transactions: online consumers, e-marketplaces, and e-retailers or online merchants.
Online consumers are the persons who purchase or receive goods or services over the Internet for a fee. The ITA requires online consumers to exercise ordinary diligence in any internet transactions, places restrictions on consumers’ cancellation of orders, and provides remedies, including refund, replacement, and repair, to online consumers in case of defect, malfunction, or loss of goods. The ITA provides that if the online consumers pursue replacement or refund as a remedy, the original goods should be returned to the online merchant without any cost to the online consumer unless otherwise agreed upon by the parties. The consumer may claim damages by filing a case before the court or DTI within two years from when the cause of action arose.
E-retailer refers to direct sellers of goods or services to online consumers through their own website, webpage, or application. On the other hand, online merchants refer to a person selling non-financial goods or services to online consumers through an e-marketplace or third-party digital platform. Among others, the ITA requires e-retailers and online merchants to indicate the price of goods and services offered, ensure the delivery to and receipt by consumers of the goods in the condition, quantity, quality, and standard agreed upon, protect the data privacy of consumers, issue invoices or receipts for all sales, and have in place an accessible and efficient redress mechanism for handling complaints. The ITA imposes primary liability on e-retailers or online merchants for indemnifying the online consumer in civil actions or administrative complaints arising from internet transactions.
E-marketplace refers to digital platforms that connect online consumers with online merchants, facilitate and conclude the sales, process the payment of the products through the platform, facilitate the shipment of goods or provide logistics services and post-purchase support within such platforms, or otherwise retain oversight over the consummation of the transaction. The ITA now mandates e-marketplaces to exercise due diligence before onboarding online merchants and maintain a list of all online merchants registered under the platform. E-marketplaces are obligated to require all online merchants to clearly indicate the relevant details of the goods or services offered through their platform, particularly its name and brand, price, description and condition.
The ITA also imposes obligations on digital platforms that do not retain oversight over the consummation of the transaction, including enabling consumers to distinguish commercial and non-commercial or private accounts, maintain an updated list of accounts that make use of the platform for e-commerce, and require online merchants to indicate relevant product details, including name and brand, price, description, and condition.
E-marketplaces and digital platforms are subsidiaries liable to the online consumer if they fail to exercise ordinary diligence in complying with their obligations, to remove or disable access to goods or services that are subject to takedown order or infringe another’s intellectual property rights, or if the online merchant has no legal presence in the Philippines and the digital platform or e-marketplace failed to provide the contact details thereof despite notice. E-marketplaces and digital platforms are also solidarily liable if they fail, after notice, to remove or disable access to goods or services appearing on the platform that are prohibited by law, imminently injurious, unsafe, or dangerous.
The ITA requires the promulgation of the implementing rules and regulations within 90 days from its effectivity. It is anticipated that the ITA, together with its rules and regulations, will strengthen the business relationships of all parties in internet transactions, and promote the progress of the Philippine digital economy.
