Republic Act No. 11967: Internet Transactions Act of 2023

Republic Act No. 11967, known as the “Internet Transactions Act of 2023,” is a comprehensive legislation enacted to protect online consumers and merchants engaged in internet transactions in the Philippines. The act establishes the Electronic Commerce Bureau and outlines various measures to ensure a robust and dynamic e-commerce environment in the country.

Key Provisions of the Act

Purpose and Policy:

• Known as the “Internet Transactions Act of 2023.”
• Aims to foster a robust e-commerce environment in the Philippines.
• Focuses on building trust between online consumers and merchants, promoting competition, securing internet transactions, upholding intellectual property rights, ensuring product safety and standards, and observing environmental sustainability.

Scope and Coverage:

• Applies to business-to-business and business-to-consumer internet transactions within the Department of Trade and Industry’s (DTI) mandate.
• Covers transactions where at least one party is in the Philippines or using the Philippine market.
• Excludes online media content and consumer-to-consumer transactions.

Creation of the E-Commerce Bureau:

• The E-Commerce Bureau will be established under the DTI.
• Led by a Director and Assistant Director with expertise in e-commerce and online transactions.
• Responsible for policy formulation, compliance monitoring, regulatory gap identification, consumer and business complaint management, and e-commerce sector growth promotion.

Functions of the E-Commerce Bureau:

• Formulate and implement e-commerce policies, plans, and programs.
• Monitor and ensure compliance with the Act.
• Enforce registration of digital platforms and online merchants.
• Develop consumer education programs.
• Collaborate with other government agencies for policy development and enforcement.

Online Business Database: A database of digital platforms, e-marketplaces, e-retailers, and online merchants will be established for government and consumer access.

E-Commerce Philippine Trustmark: The development of a Trustmark to assure safety and security in internet transactions is encouraged.

Regulatory and Legal Framework:

• The Act has extra-territorial application for e-commerce entities targeting the Philippine market.
• Aims to provide equal treatment for online and offline commercial activities.
• DTI to have regulatory jurisdiction over e-commerce activities.

Obligations and Liabilities:

• E-marketplaces, digital platforms, and online merchants have specific obligations regarding consumer safety, data privacy, transparent transactional information, and redress mechanisms.
• Establishes guidelines for handling and resolving online transaction disputes.
• Introduces a “blacklist” for non-compliant online businesses.
• Specifies subsidiary and solidary liabilities for e-marketplaces and digital platforms in certain cases.

Code of Conduct: The DTI will provide a Code of Conduct for e-commerce businesses.

Consumer Rights and Protection:

• Outlines consumers’ rights in Internet transactions, including remedies in case of defective products or services.
• The DTI will develop a platform for alternative online dispute resolution specific to online transactions.

Penalties and Blacklisting: The law specifies penalties for violations, including administrative fines and blacklisting of non-compliant online businesses.

Implementation and Oversight:

• DTI, in consultation with other relevant agencies, will promulgate implementing rules and regulations within 90 days of the Act’s effectiveness.
• The DTI is given the authority to regulate internet-based commercial activities, ensuring equal treatment of online and offline enterprises.
• The DTI Secretary is empowered to issue subpoenas and compliance orders to ensure adherence to the Act’s provisions.
• Establishes a Congressional Oversight Committee for monitoring the Act’s implementation.

Civil Code Applicability: Provisions of the Civil Code on sales, obligations, and contracts apply to Internet transactions.

Transitory Provisions:

• Provides an 18-month period for affected online businesses to comply with the law.

Interpretation and Applicability:

• The Act and its regulations are to be interpreted in favor of consumer rights, privacy, and human dignity.

Here’s the full text of the law:

 

Republic of the Philippines
Congress of the Philippines
Metro Manila

Nineteenth Congress

Second Regular Session

Begun and held in Metro Manila, on Monday, the twenty-fourth day of July, two thousand twenty-three.

[REPUBLIC ACT NO. 11967]

AN ACT PROTECTING ONLINE CONSUMERS AND MERCHANTS ENGAGED IN INTERNET TRANSACTIONS, CREATING FOR THIS PURPOSE THE ELECTRONIC COMMERCE BUREAU, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

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

CHAPTER I

GENERAL PROVISIONS

SECTION 1. Short Title. This Act shall be known as the “Internet Transactions Act of 2023”.

SEC. 2. Declaration of Policy. 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. Toward 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.

SEC. 3. Scope and Coverage. 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 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.

SEC. 4. Definition of Terms. As used in this Act:

• (a) Business-to-business Transaction refers to internet transactions between businesses, such as between a manufacturer and a wholesaler, or a wholesaler and a retailer, whether the transacting parties are natural or juridical persons;
• (b) Business-to-consumer Transaction refers to internet transactions between businesses and end-users;
• (c) Consumer-to-consumer (C2C) Transactions refer to transactions between end-users done for personal, family, or household purposes and not done in the ordinary course of business;
• (d) Digital Platforms refer to information and communication technology-enabled mechanisms that connect and integrate producers and users in online environments where goods and services are requested, developed, and sold, and data is generated and exchanged such as, but not limited to, e-marketplace, mobile application platforms, online delivery platforms, social media platforms, and travel platforms;
• (e) E-marketplace refers to digital platforms whose business is to connect online consumers with online merchants, facilitate and conclude the sales, process the payment of the products, goods or services through the platform, or facilitate the shipment of goods or provide logistics services and post-purchase support within such platforms, and otherwise retains oversight over the consummation of the transaction;
• (f) E-retailer refers to a natural or juridical person selling goods or services directly to online consumers through its own website, webpage or application;
• (g) Goods refer to physically or digitally produced items over which ownership or proprietary rights may be established and transferred from one (1) institutional unit to another by entering into a transaction;
• (h) Internet Transaction refers to the sale or lease of digital or non-digital goods and services over the internet. For purposes of this Act, internet transactions shall also refer to e-commerce;
• (1) Online Consumer refers to a natural or juridical person who purchases, leases, receives, or subscribes to goods or services over the internet for a fee;
• (j) Online Merchant refers to a person selling non-financial goods or services to online consumers through an e-marketplace or third-party digital platform. An e-retailer shall also be considered an online merchant if it offers the same goods or services outside its own website through a third-party digital platform and the online consumer purchases, leases, subscribes to, or obtains the service of the e-retailer through the said third-party platform; and
• (k) 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 goods.

SEC. 5. Extra-territorial Application. 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 Philippine laws and regulations and cannot evade legal liability in the Philippines despite lack of legal presence in the country.

SEC. 6. Equal Treatment of Online and Offline Commercial Activities. – Unless otherwise specified, this Act shall be construed to ensure that those who 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.

CHAPTER II

E-COMMERCE BUREAU

SEC. 7. Creation and Composition of the E-Commerce Bureau. 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 and consistent with the civil service laws, rules, and regulations.

SEC. 8. Functions of the E-Commerce Bureau. The Bureau shall have the following powers and functions:

• (a) Formulate policies, plans, and programs to ensure the robust and dynamic development of e-commerce;

• (b) Implement, monitor, and ensure strict compliance with the provisions of this Act;

• (c) Exert efforts to enforce the registration of digital platforms and online merchants with the Bureau and to require the submission of information necessary for policy-making and program development purposes, consistent, however, with the principles of minimization and proportionality in data privacy;

• (d) Identify regulatory gaps affecting e-commerce and recommend appropriate executive or legislative measures that foster the growth of the sector;

• (e) Receive and refer business and consumer complaints on internet transactions to the appropriate government agency, consistent with the no-wrong door policy of the DTI;

• (f) Coordinate with or petition, through the DTI Secretary, whenever appropriate, any entity, government agency, or instrumentality to take action on any matter that may impede e-commerce;

• (g) Investigate, motu proprio, and recommend the filing of the appropriate case for violations of this Act;

• (h) Monitor the implementation of this Act for policy-making and program development purposes;

• (i) Develop consumer education and information programs for consumers of different ages, incomes, and literacy, giving special attention to the needs of vulnerable and disadvantaged consumers, by raising awareness of rights, responsibilities, and red flags in internet transactions, with the goal of enabling consumers to make informed choices and preventing them from falling prey to online frauds and scams;

• (j) Collaborate with Bangko Sentral ng Pilipinas (BSP) and other government agencies to develop frameworks to incentivize the use of digital payments and promote their education and adoption among businesses and consumers; and

• (k) Engage with law enforcement and other relevant government agencies in a formalized inter-regulator cooperation mechanism to address all cross-cutting issues and concerns that affect online consumers and the general public.

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.

SEC. 9. Referral and Tracking 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 regulatory authority for action. In appropriate cases, the DTI may initiate a formal complaint with the appropriate regulatory authorities. The Bureau shall track any such complaint or referral and coordinate the speedy resolution thereof.

SEC. 10. Online Business Database (OBD). – Within one (1) year from the 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.

In establishing the OBD, the DTI shall utilize existing business databases and coordinate with other agencies that already maintained the same or similar database.

The DTI, in consultation with the Department of Information and Communications Technology (DICT), the National Privacy Commission (NPC), the Philippine Competition Commission (PCC), the Securities and Exchange Commission (SEC), the Cooperative Development Authority (CDA), and other concerned agencies shall issue the regulations to govern the development, management, operation, and maintenance of the OBD, consistent with Republic Act No. 11032 or the “Ease of Doing Business and Efficient Government Service Delivery Act of 2018″.

SEC. 11. 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.

CHAPTER III

AUTHORITY OF THE DEPARTMENT OF TRADE AND INDUSTRY

SEC. 12. Regulatory Jurisdiction of the DTI. For purposes of this Act, the DTI shall exercise regulatory jurisdiction as to the use of the Internet for conducting e-commerce by e-marketplaces, online merchants, e-retailers, digital platforms, and third-party platforms.

Provided, however, That the regulatory authority of the DTI shall be ancillary to any duly constituted regulatory jurisdiction granted to an agency by existing laws such as, but not limited to, the DICT, BSP, and NPC: Provided, further, That reasonable notice to, and coordination with the appropriate regulatory agency shall be made by the DTI prior to the enforcement of the provisions of this Act. Unless expressly specified, nothing in this Act shall be construed as to diminish or deprive the regulatory jurisdiction conferred by law upon other government agencies concerning the services that they regulate, notwithstanding an e-commerce aspect or feature in such services.

SEC. 13. 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 of a case for contempt under the Rules of Court.

A subpoena duces tecum is valid if issued on matters within the jurisdiction of the DTI, is reasonably relevant to the subject matter under investigation, and designates or describes the information or document sought to be produced, allowing it to be identified.

SEC. 14. Authority to Issue Compliance Order. – The DTI Secretary shall have the power to issue a compliance order to require conformity with this Act, Republic Act No. 7394 or the “Consumer Act of the Philippines”, or any other applicable trade and consumer protection issuances promulgated by the DTI.

SEC. 15. 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:

• (a) 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;

• (b) Sale or lease of goods or services subject of a cease and desist order issued by an appropriate government agency;

• (c) 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; and

• (d) Such other transactions or activities online, within the jurisdiction of the 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. Copies of the order shall likewise be served on entities whose cooperation would be required for its enforcement such as, but not limited to, the duly registered internet service provider involved, related payment gateways, and other government agencies.

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.

SEC. 16. Blacklisting of Online Business. The DTI Secretary shall have the authority to establish a publicly accessible list of websites, webpages, online applications, social media accounts, or other similar platforms that fail to comply with a compliance order, or are subject of a takedown order issued under Chapter III hereof or of a cease and desist order issued by an appropriate government agency, indicating the specific violation incurred. Should the violation consist in failure to abide by a compliance order, 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.

SEC. 17. 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. The DTI, in consultation with other concerned agencies, shall issue the implementing rules and regulations on ODR procedure and the development, management, operations, and maintenance of the platform.

CHAPTER V

RIGHTS, OBLIGATIONS, AND LIABILITIES OF PARTIES IN INTERNET TRANSACTIONS

SEC. 18. Code of Conduct. – The DTI, in consultation with relevant government agencies, shall provide a Code of Conduct for all businesses engaged in e-commerce consistent with international trends, developments, standards, and best practices and when necessary, issue guidelines, rules and regulations including voluntary and binding co-regulation mechanisms considering their role, size, and impact in internet transactions.

SEC. 19. Obligations of Online Consumers. The online consumer 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:

• (a) The online consumer uses electronic or digital payment and authorized the crediting of the amount despite cancellation;

• (b) The online consumer reimburses third-party delivery service as a pre-condition for the cancellation of the order;

• (c) The transaction allows cancellation for a fee; or

• (d) The parties agree otherwise.

SEC. 20. Remedies of Online Consumers. 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 have the right to pursue repair, replacement, refund or other remedies provided under Republic Act 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.