Seller Obligations Under the Internet Transactions Act of 2023

Online sellers in the Philippines must follow a clear set of duties under Republic Act No. 11967, the Internet Transactions Act of 2023. An e-retailer or online merchant must indicate the price of goods and services, deliver items that match their description and sample, include accessories and instructions, issue invoices or receipts for every sale, protect consumer data, and maintain an accessible redress mechanism for complaints. E-marketplaces carry separate duties, including verifying merchants before listing them. Violations can lead to liability and penalties, so sellers should treat these obligations as part of doing business online.

Who is covered by the Internet Transactions Act

The law applies to all business-to-business and business-to-consumer internet transactions within the mandate of the Department of Trade and Industry, 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. Online media content and consumer-to-consumer transactions are not covered.

An online merchant is a person selling non-financial goods or services to online consumers through an e-marketplace or third-party digital platforms. An e-retailer sells goods or services directly to online consumers through its own website, webpage, or application. The obligations in Section 23 of the law apply to both.

The Act also has extra-territorial reach. A person who engages in e-commerce and avails of the Philippine market to the extent of establishing minimum contacts is subject to Philippine laws and cannot evade liability despite having no legal presence in the country.

Core obligations of e-retailers and online merchants

Under Section 23 of the Internet Transactions Act, an e-retailer or online merchant must:

Indicate the price. The price of goods and services offered must be indicated, consistent with Article 81 of Republic Act No. 7394, the Consumer Act of the Philippines.

Deliver what was promised. Goods must be received by the online consumer in the same condition, type, quantity, and quality as described and stated, and must possess the functionality, compatibility, interoperability, and fitness for the purpose for which they were intended. Goods must also match any sample, picture, or model shown upon the consumer's request, and fit the particular purpose communicated to the seller at the time the contract was perfected.

Include everything advertised. Goods must be delivered with their accessories, including packaging, installation inclusions, user manuals, or other instructions as advertised or described, with relevant information in the packaging printed or written in Filipino and/or English.

Meet standard quality. Goods must possess qualities and performance capabilities standard for goods of the same type, considering any public statement made by the seller or earlier links in the chain, such as the producer, unless the seller shows it was not reasonably aware of the statement, the statement was already corrected, or the purchase could not have been influenced by it.

For digital goods and services, the provider must ensure qualities and performance features in functionality, compatibility, interoperability, accessibility, continuity, and security that are standard for digital goods or services of the same type as advertised.

Issue invoices or receipts. E-retailers or online merchants must issue paper or electronic invoices or receipts for all sales.

Maintain a redress mechanism. E-retailers must have an accessible and efficient mechanism for handling complaints from their clients.

What e-retailers must publish and submit

An e-retailer must 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 a valid e-mail address, and, where the service offered is connected with a regulated profession, details of membership in the relevant professional body.

This information must be submitted to the E-Commerce Bureau and accompanied by at least one government identification card or registration document as valid proof of identity. E-retailers must also take necessary precautions to protect consumer data privacy in accordance with Republic Act No. 10173, the Data Privacy Act of 2012.

Obligations of e-marketplaces

E-marketplaces have their own duties under Section 21. They must ensure transactions on their platform are clearly identifiable as e-commerce transactions, identify the persons on whose behalf the transaction is made, and identify promotional offers and the conditions to qualify for them.

Before listing, e-marketplaces must require online merchants to submit their name with at least one valid government identification or business registration document, geographic address, contact details including a mobile or landline number and valid e-mail address, and professional body membership details where applicable.

E-marketplaces must also maintain an updated list of registered merchants, protect consumer data privacy, prohibit the sale of regulated goods without the necessary permits and licenses, provide an effective redress mechanism, and require merchants to clearly indicate the name and brand, price, description, and condition of goods or services. They are required to observe ordinary diligence, and failure to do so subjects them to penalties under Section 29.

Liability and the redress requirement

The e-retailer or online merchant is primarily liable for indemnifying the online consumer in civil actions or administrative complaints arising from the internet transaction. An e-marketplace or digital platform may be subsidiarily liable if it failed to exercise ordinary diligence in complying with its obligations, failed to act expeditiously in removing or disabling access to goods subject to a takedown order, or if the online merchant has no presence or cannot be located.

Before filing a complaint with any court or agency, an aggrieved party must avail of the internal redress mechanism of the digital platform, e-marketplace, or e-retailer. That mechanism is deemed exhausted if the complaint remains unresolved after seven calendar days from filing.

Frequently asked questions

What are the obligations of online sellers in the Philippines? Online sellers must indicate prices, deliver goods that match their description and sample, include accessories and instructions, issue invoices or receipts, protect consumer data, and maintain a redress mechanism for complaints, among other duties under Section 23 of the Internet Transactions Act.

Do online sellers need to issue receipts? Yes. Under the Internet Transactions Act, e-retailers or online merchants must issue paper or electronic invoices or receipts for all sales.

Can an online consumer complain directly to the DTI? An aggrieved party must first avail of the seller's or platform's internal redress mechanism. If the complaint remains unresolved after seven calendar days, it is deemed exhausted, and the consumer may pursue other remedies.

Practical takeaways

• Price, description, condition, and brand must be clearly indicated in every online product offer.
• Deliver goods that match what was advertised, including accessories, packaging, and instructions in Filipino and/or English.
• Issue paper or electronic invoices or receipts for all sales, without exception.
• Publish complete business contact details and maintain a working complaints mechanism for buyers.
• Remember that the seven-day internal redress period must lapse before a complaint can be elevated to a court or agency.

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. 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. 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.