Internet Transactions Act Compliance in the Philippines: What Online Sellers Must Know

The Internet Transactions Act of 2023, or Republic Act No. 11967, regulates business-to-business and business-to-consumer internet transactions in the Philippines. If a business sells goods or services online to Philippine consumers — or avails of the Philippine market — it must comply even without a physical presence in the country. Compliance centers on four duties: disclosing who you are, describing what you sell, protecting consumer data, and maintaining a working complaints mechanism. Online merchants and e-retailers carry primary liability, while e-marketplaces and digital platforms can be held subsidiarily liable if they fail to exercise ordinary diligence.

Who Is Covered by the Internet Transactions Act

Section 3 of RA 11967 applies the law to all business-to-business and business-to-consumer internet transactions within the mandate of the Department of Trade and Industry (DTI), where one party 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 in the country.

Two categories are excluded: online media content and consumer-to-consumer (C2C) transactions. A C2C transaction is one between end-users for personal, family, or household purposes, not done in the ordinary course of business.

Under Section 5, a person who engages in e-commerce and avails of the Philippine market cannot evade legal liability in the Philippines despite lacking legal presence in the country. Section 6 adds that online businesses must not enjoy more favorable treatment than offline enterprises, nor be placed at a disadvantage.

Core Obligations of E-Retailers and Online Merchants

Section 23 of the Act lists the responsibilities of e-retailers and online merchants. Among the key requirements:

• Indicate the price of goods and services offered, consistent with Article 81 of Republic Act No. 7394, the Consumer Act of the Philippines.
• Deliver goods as described — same condition, type, quantity, and quality as advertised, and fit for the purpose communicated to the seller.
• Include accessories and instructions as advertised, with relevant information printed in Filipino and/or English.
• Issue paper or electronic invoices or receipts for all sales.
• Maintain an accessible and efficient redress mechanism for customer complaints.

An e-retailer must also publish on its homepage its corporate and trade or business name, the address of its physical shop or place of business, contact details including a mobile or landline number and valid e-mail address, and — where the service involves a regulated profession — details of professional body membership. This information must be submitted to the E-Commerce Bureau, accompanied by at least one government identification card or registration document.

What E-Marketplaces and Digital Platforms Must Do

E-marketplaces carry heavier structural duties under Section 21. They must ensure transactions on their platform are clearly identifiable as e-commerce, identify the persons on whose behalf the transaction is made, and disclose promotional offers and their conditions clearly.

Before listing, e-marketplaces must require online merchants to submit their name with a valid government identification or business registration document, geographic address, contact details, and — for regulated professions — professional membership details. E-marketplaces must also maintain and regularly update a verified list of registered merchants.

Other duties include protecting consumer data privacy under Republic Act No. 10173 (the Data Privacy Act of 2012), prohibiting the sale of regulated goods without the necessary permits, and providing an effective redress mechanism. E-marketplaces must also require merchants to indicate the name and brand, price, description, and condition of goods or services offered.

Platforms that do not retain oversight over the consummation of the transaction have a parallel set of obligations under Section 22, including enabling consumers to distinguish commercial from private accounts and requiring merchants to display contact information.

Liability: Who Answers to the Consumer

Section 25 provides that the e-retailer or online merchant is primarily liable for indemnifying the online consumer in civil actions or administrative complaints. Where the e-marketplace and the merchant are the same entity, their liability is treated as one and the same.

Section 26 makes an e-marketplace or digital platform subsidiarily liable when it fails to exercise ordinary diligence in complying with its obligations, fails to act expeditiously to remove goods subject to a takedown order, or when the online merchant cannot be reached.

The Internal Redress Requirement

Under Section 24, an aggrieved party must first avail of the internal redress mechanism of the digital platform, e-marketplace, or e-retailer before filing a complaint with any court or government agency. That mechanism is deemed exhausted if the complaint remains unresolved after seven (7) calendar days from filing.

The DTI also has enforcement tools: the power to issue compliance orders under Section 14, takedown orders under Section 15, and to blacklist non-compliant online businesses under Section 16. Section 17 directs the DTI to develop an online dispute resolution platform.

Frequently asked questions

Does the Internet Transactions Act apply to small online sellers? Yes, if the seller engages in business-to-consumer or business-to-business internet transactions within the DTI's mandate and one party is in the Philippines or the seller avails of the Philippine market.

What information must an online store display? An e-retailer must publish its business name, physical address, contact details, and — for regulated professions — professional membership details on its homepage, per Section 23.

What happens if a seller ignores a complaint? The consumer may elevate the matter after seven calendar days, since the internal redress mechanism is deemed exhausted under Section 24. The DTI may also issue a compliance order or takedown order.

Practical takeaways

• Register your business details with the E-Commerce Bureau and publish them on your homepage.
• Always display the name, brand, price, description, and condition of every product or service.
• Issue receipts for all sales and keep delivery terms consistent with your advertisements.
• Set up a complaints channel that can resolve issues within seven calendar days.
• Handle customer data in line with the Data Privacy Act of 2012.

Primary sources

The rules discussed above are drawn from the following primary sources, as published in the Official Gazette and the national statute book.

• REPUBLIC ACT NO. 8792 - AN ACT PROVIDING FOR THE RECOGNITION AND USE OF ELECTRONIC COMMERCIAL AND NON-COMMERCIAL TRANSACTIONS, PENALTIES FOR UNLAWFUL USE THEREOF, AND OTHER PURPOSES

• REPUBLIC ACT NO. 7394 - THE CONSUMER ACT OF THE PHILIPPINES

• REPUBLIC ACT NO. 11967 - AN ACT PROTECTING ONLINE CONSUMERS AND MERCHANTS ENGAGED IN INTERNET TRANSACTIONS, CREATING FOR THIS PURPOSE ELECTRONIC COMMERCE BUREAU, APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

This article is general information and not legal advice. For your specific situation, consult a lawyer or ask ASG Legal AI.