Internet Transactions Act

The Internet Transactions Act proposes the creation of an E-Commerce Bureau that will: 1) promote a trustful and honest environment between consumers and merchants; 2) ensure the implementation of RA 8792 or the E-Commerce Act; and 3) monitor and implement the Philippine E-commerce Roadmap.

The measure also called RA 11967 or “An Act Protecting Consumers and Merchants Engaged in lnternet Transactions, creating for this purpose the Electronic Commerce Bureau,” was signed on December 5, 2023. The new legislation is part of the President’s legislative agenda to establish confidence in e-commerce and facilitate the growth and advancement of the evolving e-commerce sector in the Philippines. 

On May 24, the Department of Trade and Industry (DTI) recently released the long-awaited implementing rules and regulations (IRR) of the Internet Transactions Act. The IRRs, which were supposed to be released in March reportedly faced some delays due to the need for extensive consultations with stakeholders in the e-commerce sector. The public consultations aimed to address consumer and merchant concerns on data privacy, consumer protection, and fair-trade practices.  

PSA notes that while the rules shall take effect in the first week of June, merchants are given an 18-month transitory period to review and implement the rules surrounding RA 11967. A copy of the IRR can be accessed here. 

Below is the summary of IRR from the Internet Transactions Act:  

Regulation of Internet Transactions and E-Commerce. DTI will regulate the use of internet for e-commerce transactions conducted in e-marketplaces, online merchants, e-retailers, digital platforms, and third-party platforms. Department of Information and Communications Technology (DICT), Bangko Sentral ng Pilipinas (BSP), and National Privacy Commission (NPC) will serve as regulatory agencies that will closely work with DTI for enforcing additional regulations. 

In addition, foreign businesses involved in e-commerce and targeting the Philippine consumer market are subject to comply with Philippine laws and regulations. They cannot evade legal liability, even if they do not have a physical presence.  

E-Commerce Bureau. The leadership and structure of E-Commerce Bureau shall be determined by the DTI Secretary. The bureau must create plans and policies to promote e-commerce growth while identifying gaps on e-commerce related issues. Some of the functions of the bureau are the following:  

• Policy development and implementation of RA 11967 
• Maintain an Online Business Database (OBD) and online complaints system while handling e-commerce and consumer concerns 
• Registration enforcement of digital platforms and online businesses while ensuring data privacy 
• Promote the creation of E-Commerce Philippine Trustmark  
• Track complaint developments and refer consumers to appropriate agencies involved 

Authority of DTI. Upon the powers provided by RA11967, DTI has the authority to issue and order the following: 

1. subpoena to alleged violators or witnesses to attend investigations  

2. compliance order to ensure relevant parties abide this Act 

3. takedown order from the DTI Secretary such as removal of online listing that offer prohibited, regulated, or banned goods and services.  

4. blacklist order for non-compliant websites and platforms.  

Online Business Database. By June 2025, the E-Commerce Bureau shall establish an online business database (OBD) where consumers can have access to contact information of online businesses. Upon the creation of the OBD, all digital platforms, e-marketplaces, e-retailers, and online merchants engaged in e-commerce in the Philippines or purposely availing of the Philippine market shall submit all required information with the Bureau. 

E-Commerce Philippine Trustmark. The Trustmark aims to signify reliable products and services and offer benefits, and incentives for compliance to foster consumer-merchant trust in e-commerce. DTI has yet to issue a separate guidelines for the creation of the trustmark. 

In addition, the law applies to all merchants participating in business-to-business (B2B), or business-to-consumer (B2C) transactions involved in the sale or lease of digital or non-digital goods and services over the Internet must be aware of the new regulatory framework under ITA. The law does not apply to online media content and consumer-to-consumer transactions.

The act clearly defines the following words to properly categorize transactions and ensure regulatory precision among parties involved:

• Digital platforms – information and communication technology mechanisms that connect and integrate producers and users online. Examples are e-marketplaces, mobile applications, online delivery, social media or travel platforms;
• E-marketplaces – a digital platform that connects online consumers and merchants. It processes the sales and payment of goods and services, facilitates the shipment of goods, provides post-purchase support, and retains oversight over the transaction.
• E-retailer – a natural or juridical person selling or offering for sale goods or services directly to online consumers through its own website, webpage, or application although the e-retailer may have transactions that are not online; and
• Online merchant – seller of non-financial goods or services to online consumers through an e-marketplace or third-party digital platform.

ITA has established the following obligations for e-marketplaces, digital platforms, and e-retailers/online merchants engaged in Internet transactions:

Analysts note that before seeking external resolution, aggrieved parties must first use the platform’s internal redress mechanism of the digital platform, e-marketplace, or e-retailer. If the issue remains unsolved after seven days, aggrieved parties can file for damages in court or lodge a complaint with the DTI within two years of the incident.

While the landmark legislation seeks to safeguard consumer protection and secure online transactions, Stratbase Research Institute (SRI) Executive Director Orlando Oxales points out the law might stifle the growth of micro, small & medium enterprises (MSMEs) in the e-commerce space since larger e-commerce platforms have their own legal departments to handle and resolve consumer disputes. The law requires more compliance requirements which will create more bureaucracy among MSMEs for transparency and legitimacy purposes.

Alongside other economy-focused measures, the law is seen as a “boon for taxpayers, entrepreneurs, consumers, and Filipinos.” The country, hailed as one of the fastest-growing digital economies in Southeast Asia, reported that e-commerce remains the primary growth driver of the Philippine digital economy, accounting for 70 percent of total online activities.