Online Marketplace Platform Liability in the Philippines: The Internet Transactions Act

Online marketplace platform liability in the Philippines is governed by Republic Act No. 11967, the Internet Transactions Act of 2023. The law treats the online merchant or e-retailer as primarily liable to the consumer. The e-marketplace or digital platform is only subsidiarily liable — and only in specific circumstances, such as failing to exercise ordinary diligence over its obligations, failing to act expeditiously on a takedown order, or failing to provide the contact details of a foreign merchant. If the platform fails to remove prohibited, unsafe, or dangerous listings after notice, its liability becomes solidary.

Who is an e-marketplace under the law?

Under Section 4 of the Internet Transactions Act, an e-marketplace is a digital platform whose business is to connect online consumers with online merchants, facilitate shipment or logistics and post-purchase support, and otherwise retain oversight over the consummation of the transaction.

This definition matters because the law splits platforms into two groups with different obligations:

• E-marketplaces — platforms that retain oversight over the transaction, governed by Section 21.
• Other digital platforms that do not retain oversight over the consummation of the transaction, governed by Section 22.

Both groups must observe ordinary diligence. Failure to do so exposes them to penalties under Section 29.

What are the primary obligations of e-marketplaces?

Section 21 requires e-marketplaces, among others, to:

• Ensure transactions on the platform are clearly identifiable as e-commerce, identify on whose behalf the transaction is made, and disclose promotional offers clearly.
• Require online merchants, as far as practicable, to submit prior to listing: a name with valid government identification or business registration, geographic address, contact details including a mobile or landline number and valid e-mail address, and professional body membership where the service involves a regulated profession.
• Maintain, update, and regularly verify a list of all online merchants on the platform.
• Protect consumer data privacy under Republic Act No. 10173, the Data Privacy Act of 2012.
• Prohibit the sale of regulated goods unless the necessary permits and licenses are shown.
• Provide an effective and responsive redress mechanism for consumers and merchants.
• Require merchants to clearly indicate the name and brand, price, description, and condition of the goods or services offered.

Platforms must also provide specific information upon a subpoena by competent authority in an investigation based on a sworn complaint that the platform is being used to commit a crime or a fraudulent or unlawful act, and the complainant cannot ascertain the perpetrator's identity.

How does subsidiary liability arise?

Section 26 provides that an e-marketplace or digital platform that facilitated the transaction is subsidiarily liable to the online consumer only if any of these circumstances is present:

1. It failed to exercise ordinary diligence in complying with its obligations under Sections 21 and 22, resulting in loss or damage to the consumer;
2. It failed, after notice, to act expeditiously in removing or disabling access to goods or services that infringe another's intellectual property rights or are subject to a takedown order; or
3. The online merchant has no legal presence in the Philippines and the platform failed to provide the merchant's contact details despite notice.

Subsidiary liability is limited to the damages suffered by the consumer as a direct result of the transaction. The law also protects platforms that rely in good faith on a merchant's representations or submitted registration documents, provided the platform shows evidence of good faith and that reasonable effort was exerted to verify the accuracy and authenticity of those documents.

When is a platform solidarily liable?

Under Section 27, e-marketplaces and digital platforms become solidarily liable if they fail, after notice, to act expeditiously to remove or disable access to goods or services on their platform that are prohibited by law, imminently injurious, unsafe, or dangerous.

Solidary liability means the consumer can recover the full amount from the platform, without prejudice to the platform's own remedies against the merchant. This is a heavier exposure than subsidiary liability and turns on the platform's failure to act once notified.

What about platforms that do not retain oversight?

Section 22 covers digital platforms that do not retain oversight over the consummation of the transaction. Their obligations are lighter but still real: they must let consumers distinguish commercial from non-commercial accounts, prohibit the sale of regulated goods without permits, require merchants to indicate name and brand, price, description, condition, and contact information, provide a redress mechanism, maintain an updated list of accounts used for e-commerce, and protect consumer data privacy. They must likewise observe ordinary diligence, and failure to do so exposes them to penalties under Section 29.

What remedies and penalties apply?

The DTI Secretary may issue a takedown order under Section 15 directing removal of a listing or offer, and may blacklist non-compliant online businesses under Section 16. A takedown order is directed against the e-retailer or online merchant and the owner or operator of the e-marketplace or digital platform, and remains in effect for a maximum of thirty (30) days unless extended or made permanent by judicial order.

Section 29 imposes administrative fines, including for willful or unreasonable refusal to comply with a takedown order and for violations of the platform obligations under Sections 21 and 22. Consumers may claim damages before the court or the DTI within two (2) years from the time the cause of action arose, under Section 28.

Before filing a complaint with any court or agency, Section 24 requires the aggrieved party to avail of the platform's internal redress mechanism. That mechanism is deemed exhausted if the complaint remains unresolved after seven (7) calendar days from filing.

Frequently asked questions

Can I sue an online marketplace directly if a seller scams me? The online merchant or e-retailer is primarily liable. You may hold the marketplace subsidiarily liable only if the circumstances under Section 26 are present, such as failure to exercise ordinary diligence or failure to act on a takedown order after notice.

What if the seller is a foreign company with no office in the Philippines? A platform may be subsidiarily liable if the online merchant has no legal presence in the Philippines and the platform failed to provide the merchant's contact details despite notice. The law also applies extraterritorially under Section 5 to those who avail of the Philippine market.

Do I need to complain to the platform first before going to the DTI or court? Yes. Section 24 requires you to avail of the platform's internal redress mechanism first. It is deemed exhausted if unresolved after seven (7) calendar days.

Practical takeaways

• The online merchant or e-retailer is primarily liable; the platform's liability is only subsidiary or, in specific cases, solidary.
• A platform becomes solidarily liable when it fails, after notice, to remove prohibited, unsafe, or dangerous listings.
• Platforms must observe ordinary diligence in verifying merchants, maintaining records, and running a redress mechanism.
• Consumers must first exhaust the platform's internal redress mechanism, deemed exhausted after seven (7) calendar days.
• Damages may be claimed before the court or the DTI within two (2) years from the time the cause of action arose.

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. 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.