Building trust in e-commerce

The e-commerce market has experienced consistent annual growth and is expected to continue to grow in the future, mainly due to consumers’ growing preference for online shopping. Recognizing the need to ensure the sustainability of this thriving market, our legislators passed Republic Act No. 11967, or the Internet Transactions Act (ITA). This Act is complemented by the recent issuance of the Department of Trade and Industry (DTI), the Department of Information and Communications Technology, the National Privacy Commission, the Department of Agriculture, the Department of Health and the Bangko Sentral ng Pilipinas – ITA Implementing Rules and Regulations (IRR), which are intended to provide further guidance and protection for key parties to online transactions.

DTI Scope, Scope and Regulatory Jurisdiction

The ITA applies to all business-to-business (B2B) and business-to-consumer (B2C) online transactions where one of the parties is located in the Philippines or where a digital platform, online seller or online seller of the Philippine market uses and has minimal contacts. For greater clarity, it excludes online media content and consumer-to-consumer (C2C) transactions. Nevertheless, the ITA still has not clearly defined its scope due to the ambiguity of some terms, namely (1) online transactions, (2) “taking advantage of the Philippine market” and “minimal contacts”, and (3) online transactions media content.

By issuing the ITA IRR, the regulation addressed the above concerns about ambiguity by defining online transactions and e-commerce to include not only the sale and leasing of goods but also all other commercial transactions conducted on the Internet. The ITA IRR also defines “exploitation of the Philippine market” as any conduct indicating an intent to transact with persons located in the Philippines, and “minimal contacts” as any point of contact or interaction with a potential or actual customer in the Philippines.

As a result, any B2B or B2C commercial transaction conducted online is covered by the ITA as long as the seller or buyer is located in the Philippines or the digital platform or website that enabled the online transaction is accessible in the Philippines. Online sellers, buyers and digital platforms must therefore comply with the provisions of the ITA and its IRR, including the Codes of Conduct for e-Commerce and Online Consumers (Codes of Conduct).

Codes of conduct

The ITA IRR envisages an E-Commerce Code of Conduct and an Online Consumer Code of Conduct that will promote trust in e-commerce and protect consumer interests. Parties to online transactions are called upon to act fairly, give everyone their due, and maintain honesty and good faith. Notable obligations set out in these Codes of Conduct include obligations relating to transparency and accuracy of information, tracking of deliveries, compliance with product standards, laws and regulations, ensuring the security of personal data, and prohibiting the submission of false and fraudulent claims.

They all address common problems for the average e-commerce consumer. Thanks to these codes of conduct, consumers, on the one hand, gain a level playing field with online sellers and, on the other hand, are urged to avoid abusing the protection provided by the ITA. While these Codes of Conduct serve only as a guide, they represent a step forward towards the development of a sustainable e-commerce market.

Compatibility

The broad scope of the ITA and ITA IRR requires that all stakeholders – both onshore and offshore – comply with the legal requirements of the ITA. According to the ITA, all interested entities have 18 months from the entry into force of the ITA to adapt to its provisions. However, the ITA IRR clarifies that this 18-month transition period does not suspend or prohibit the enforcement of other applicable laws.

ITA compliance entails continuous improvement of capabilities and services, enabling greater transparency and accuracy in the provision of information, adopting internal mechanisms to enable online consumers to seek redress for all forms of non-ITA compliant behavior, and adopting policies that create a safer environment for online consumers. While this incremental development towards a safer online environment may seem daunting at first glance, it will inevitably build trust among stakeholders and ultimately generate long-term value for all.

Atty. Mark S. Gorriceta is Managing Partner and Head of the Corporate Group and Head of the Media and Telecommunications Technology Group at Gorriceta Africa Cauton & Saavedra (Gorriceta) www.gorricetalaw.com. He was recognized as one of the top 100 lawyers in the country for 2020-2023 by the Asian Business Law Journal. Atty. Micaela Kristina V. Galvez is a partner at Gorriceta, head of the intellectual property group, and a member of the corporate and TMT practice groups. The company represented by Atty. Gorricetta is a member of the Philippine Institute of Chief Financial Officers (Finex). The views and opinions expressed above are those of the author and do not necessarily reflect the views of Finex.