It’s Cybersecurity Awareness Month Proclamation No. 2054, s. 2010, as amended by Proclamation No. 353, s. 2023, and this week, we take a look at Republic Act No. 8792, otherwise known as the Electronic Commerce Act of 2000 (E-Commerce Act). This was enacted to recognize the need for safeguard mechanisms on electronic contracts and transactions in the face of the Philippines’ ever-evolving cyberscape.
The Philippines ranks as one of the fastest-growing e-commerce markets worldwide, according to a study by Statista and Mobiloud. With a 24.10% growth yearly, this also makes the country the fastest-growing e-commerce markets in Southeast Asia.
This rapid growth can mainly be attributed to the sudden, but not entirely surprising, popularity of online shopping platforms during the pandemic. USA’s International Trade Administration (ITA) reported that the country’s e-commerce market sales reached $17 billion in 2021, largely contributed by 73 million active online users, and is estimated to reach $24 billion, with 17% growth, through 2025.
These whopping numbers underscore the change in the way businesses and consumers interact and behave over the years. With the continuously increasing volume of transactions in the online sphere, concerns about fraud, security, and regulatory compliance naturally emerge, which, in turn, highlight the country’s legal means and procedures for protecting both e-businesses and consumers.
One of these is the Republic Act No. 8792 or the Electronic Commerce Act of 2000 (E-Commerce Act of 2000).
Contextualizing the E-Commerce Act
Signed into law in 2000, the E-Commerce Act recognizes the vital role of information and communications technology (ICT) in nation-building. It aims to recognize the validity and authenticity, as well as facilitate and protect domestic and international dealings, transactions, arrangements, agreements, contracts, and exchanges done through the electronic or online space.
It is important to note that electronic contracts or transactions were never invalid under Philippine law. Contracts of this nature are accommodated in Article 1356 of the Civil Code of the Philippines:
Art. 1356. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential requisites for their validity are present […]
But the State recognized the movement towards the usage of ICT as modes of various types of communications, no matter their legal nature, in commerce or not, and had to outline a more robust legal framework for the recognition of e-contracts, which can accommodate the evolving legal landscape of the matter.
This was further proven during the pandemic, where various government agencies had to resort to using online platforms as the main mode of communication with their clients and other stakeholders. The Securities and Exchange Commission (SEC) released the Memorandum Circular (MC) No. 10 series of 2020 to facilitate the receipt of submissions of documents of corporations and other entities, and submissions by e-mail and use of e-signatures for the respective documents in line with the E-Commerce Act.
Important Provisions of the Act
Legal Recognition of Electronic Documents
Part II, Chapter II of the Act, in general, gives full legal validity and enforceability to electronic data messages, electronic documents, and digital signatures. This means that such electronic records hold the same legal weight as their paper-based counterparts in courts, contracts, and business transactions.
Sec. 6 Legal Recognition of Electronic Data Message. — Information shall not be denied validity or enforceability solely on the ground that it is in the form of an electronic data message purporting to give rise to such legal effect, or that it is merely incorporated by reference in that electronic data message.
Sec. 7. Legal Recognition of Electronic Documents. — Electronic documents shall have the legal effect, validity or enforceability as any other document or legal writing, and —
(a) Where the law requires a document to be in writing, that requirement is met by an electronic document if the said electronic document maintains its integrity and reliability and can be authenticated so as to be usable for subsequent reference, in that —
(i) The electronic document has remained complete and unaltered, apart from the addition of any endorsement and any authorized change, or any change which arises in the normal course of communication, storage and display; and
(ii) The electronic document is reliable in the light of the purpose for which it was generated and in the light of all relevant circumstances.
(b) Paragraph (a) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the document not being presented or retained in its original form.
(c) Where the law requires that a document be presented or retained in its original form, that requirement is met by an electronic document if —
i) There exist a reliable assurance as to the integrity of the document from the time when it was first generated in its final form; and
ii) That document is capable of being displayed to the person to whom it is to be presented: Provided, That no provision of this Act shall apply to vary any and all requirements of existing laws on formalities required in the execution of documents for their validity.
For evidentiary purposes, an electronic document shall be the functional equivalent of a written document under existing laws.
This Act does not modify any statutory rule relating to the admissibility of electronic data messages or electronic documents, except the rules relating to authentication and best evidence.
Sec. 12. Admissibility and Evidential Weight of Electronic Data Messages or Electronic Documents. — In any legal proceedings, nothing in the application of the rules on evidence shall deny the admissibility of an electronic data message or electronic document in evidence —
a. On the sole ground that it is in electronic form; or
b. On the ground that it is not in the standard written form, and the electronic data message or electronic document meeting, and complying with the requirements under Sections 6 or 7 hereof shall be the best evidence of the agreement and transaction contained therein.
In assessing the evidential weight of an electronic data message or electronic document, the reliability of the manner in which it was generated, stored or communicated, the reliability of the manner in which its originator was identified, and other relevant factor shall be given due regard.
Electronic Signatures and Authentication
In the same chapter, Sections 8 and 9 recognize electronic and digital signatures as legally binding when created through secure authentication methods. This ensures the accountability and reliability of online agreements while preventing identity fraud.
Sec. 8. Legal Recognition of Electronic Signatures. — An electronic signature on the electronic document shall be equivalent to the signature of a person on a written document if the signature is an electronic signature and proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document, existed under which —
a.) A method is used to identify the party sought to be bound and to indicate said party’s access to the electronic document necessary for his consent or approval through the electronic signature;
b.) Said method is reliable and appropriate for the purpose for which the electronic document was generated or communicated, in the light of all circumstances, including any relevant agreement;
c.) It is necessary for the party sought to be bound, in order to proceed further with the transaction, to have executed or provided the electronic signature; and
d.) The other party is authorized and enabled to verify the electronic signature and to make the decision to proceed with the transaction authenticated by the same.
Sec. 9. Presumption Relating to Electronic Signatures. — In any proceedings involving an electronic signature, it shall be presumed that,
a.) The electronic signature is the signature of the person to whom it correlates; and
b.) The electronic signature was affixed by that person with the intention of signing or approving the electronic document unless the person relying on the electronically signed electronic document knows or has notice of defects in or unreliability of the signature or reliance on the electronic signature is not reasonable under the circumstances.
Formation and Validity of Electronic Contracts
Chapter III allows contracts to be created, transmitted, and stored electronically. Contracts formed through email, websites, or other digital platforms are binding, provided the consent of both parties is clear and verifiable.
Sec. 16. Formation and Validity of Electronic Contracts. — (1) Except as otherwise agreed by the parties, an offer, the acceptance of an offer and such other elements required under existing laws for the formation of contracts may be expressed in, demonstrated and proved by means of electronic data messages or electronic documents and no contract shall be denied validity or enforceability on the sole ground that it is in the form of an electronic data message or electronic document, or that any or all of the elements required under existing laws for the formation of the contracts is expressed, demonstrated and proved by means of electronic data messages or electronic documents.
(2) Electronic transactions made through networking among banks, or linkages thereof with other entities or networks, and vice versa, shall be deemed consummated upon the actual dispensing of cash or the debit of one account and the corresponding credit to another, whether such transaction is initiated by the depositor or by an authorized collecting party: Provided, That the obligation of one bank, entity, or person similarly situated to another arising therefrom shall be considered absolute and shall not be subjected to the process of preference of credits.
Sec. 17. Recognition by Parties of Electronic Data Message or Electronic Document. — As between the originator and the addressee of an electronic data message or electronic document, a declaration of will or other statement shall not be denied legal effect, validity or enforceability solely on the ground that it is in the form of an electronic data message or electronic document.
Government Use of E-Transactions
Part IV of the Act mandates government agencies to accept and process electronic filings, payments, and applications. This initiative laid the groundwork for e-Government services that promote transparency, reduce bureaucracy, and make transactions more convenient for citizens.
Sec. 27. Government Use of Electronic Data Messages, Electronic Documents and Electronic Signatures. – Notwithstanding any law to the contrary, within two (2) years from the date of the effectivity of this Act, all departments, bureaus, offices and agencies of the government, as well as all government-owned and -controlled corporations, that pursuant to law require or accept the filling of documents, require that documents be created, or retained and/or submitted, issue permits, licenses or certificates of registration or approval, or provide for the method and manner of payment or settlement of fees and other obligations to the government, shall –
(a) accept the creation, filing or retention of such documents in the form of electronic data messages or electronic documents;
(b) issue permits, licenses, or approval in the form of electronic data messages or electronic documents;
(c) require and/or accept payments, and issue receipts acknowledging such payments, through systems using electronic data messages or electronic documents; or
(d) transact the government business and/or perform governmental functions using electronic data messages or electronic documents, and for the purpose, are authorized to adopt and promulgate, after appropriate public hearing and with due publication in newspapers of general circulation, the appropriate rules, regulations, or guidelines, to, among others, specify –
1) the manner and format in which such electronic data messages or electronic documents shall be filed, created, retained or issued;
2) where and when such electronic data messages or electronic documents have to signed, the use of an electronic signature, the type of electronic signature required;
3) the format of an electronic data message or electronic document and the manner the electronic signature shall be affixed to the electronic data message or electronic document;
4) the control processes and procedures as appropriate to ensure adequate integrity, security and confidentiality of electronic data messages or electronic documents or records of payments;
5) other attributes required to electronic data messages or electronic documents or payments; and
6) the full or limited use of the documents and papers for compliance with the government requirements: Provided, that this Act shall be itself mandate any department of the government, organ of state or statutory corporation to accept or issue any document in the form of electronic data messages or electronic documents upon the adoption, promulgation and publication of the appropriate rules, regulations or guidelines.
Sec. 28. RPWEB To Promote the Use of Electronic Documents or Electronic Data Messages In Government and to the General Public. – Within two (2) years from the effectivity of this Act, there shall be installed an electronic online network in accordance with Administrative Order 332 and House of Representatives Resolution 890, otherwise known as RPWEB, to implement Part IV of this Act to facilitate the open, speedy and efficient electronic online transmission, conveyance and use of electronic data messages or electronic documents amongst all government departments, agencies, bureaus, offices down to the division level and to the regional and provincial offices as practicable as possible, government owned and controlled corporations, local government units, other public instrumentalities, universities, colleges and other schools, and universal access to the general public.
The RPWEB network shall serve as initial platform of the government information infrastructure (GII) to facilitate the electronic online transmission and conveyance of government services to evolve and improve by better technologies or kinds and electronic online wide area networks utilizing, but not limited to, fiber optic, satellite, wireless and other broadband telecommunication mediums or modes.
To facilitate the rapid development of the GII, the Department of Transportation and Communications, National Telecommunications Commission and the National Computer Center are hereby directed to aggressively promote and implement a policy environment and regulatory framework that shall lead to the substantial reduction of costs of including, but not limited to, lease lines, land, satellite and dial-up telephone access, cheap broadband and wireless accessibility by government departments, agencies, bureaus, offices, government owned and controlled corporations, local government units, other public instrumentalities and the general public, to include the establishment of a government website portal and a domestic internal exchange system to facilitate strategic access to government and amongst agencies thereof and the general public and for the speedier flow of locally generated internal traffic within the Philippines.
The physical infrastructure of cable and wireless system for cable TV and broadcast excluding programming content and the management thereof shall be considered as within the activity of telecommunications for the purpose of electronic commerce and to maximize the convergence of ICT in the installation of the GII.
Sec 29. Authority of the Department of Trade and Industry and Participating Entities. – The Department of Trade and Industry (DTI) shall direct supervise the promotion and development of electronic commerce in the country with relevant government agencies, without prejudice to the provisions of Republic Act 7653 (Charter of Bangko Sentral ng Pilipinas) and Republic Act No. 337, (General Banking Act) as amended.
Among others, the DTI is empowered to promulgate rules and regulations, as well as provide quality standards or issue certifications, as the case may be, and perform such other functions as may be necessary for the implementation of this Act in the area of electronic commerce to include, but shall not limited to, the installation of an online public information and quality and price monitoring system for goods and services aimed in protecting the interests of the consuming public availing of the advantages of this Act.
Consumer Protection, Cybersecurity, Lawful Access, Confidentiality, and the Penal Provisions
To ensure consumer confidence in online transactions, Part V of the Act requires transparency in business practices, data protection, and confidentiality of personal information. It penalizes hacking, data interference, and identity theft, establishing criminal liabilities for cybercrimes.
Only authorized individuals or entities are allowed lawful access to electronic records, ensuring privacy and data security. Unauthorized access, alteration, or destruction of digital data is punishable. The law imposes fines and imprisonment on such offenses.
Section 30. Extent of Liability of a Service Provider. – Except as otherwise provided in this Section, no person or party shall be subject to any civil or criminal liability in respect of the electronic data message or electronic document for which the person or party acting as a service provider as defined in Section 5 merely provides access if such liability is founded on –
(a) The obligations and liabilities of the parties under the electronic data message or electronic document;
(b) The making, publication, dissemination or distribution of such material or any statement made in such material, including possible infringement of any right subsisting in or in relation to such material. Provided, That:
i. The service provider does not have actual knowledge, or is not aware of the facts or circumstances from which it is apparent, that the making, publication, dissemination or distribution of such material is unlawful or infringes any rights subsisting in or in relation to such material;
ii The service provider does not knowingly receive a financial benefit directly attributable to the unlawful or infringing activity; and
iii. The service provider does not directly commit any infringement or other unlawful act and does not induce or cause another person or party to commit any infringement or other unlawful act and/or does not benefit financially from the infringing activity or unlawful act or another person or party; Provider, further, That nothing in this Section shall affect –
(a) Any obligation founded on contract;
(b) The obligation of a service provider as such under a licensing or other regulatory regime established under written law; or
(c) Any obligation imposed under any written law;
(d) The civil liability of any party to the extent that such liability forms the basis for injunctive relief issued by a court under any law requiring that the service provider take or refrain from actions necessary to remove, block or deny access to any material, or to preserve evidence of a violation of law.
Sec. 31. Lawful Access. – Access to an electronic file, or an electronic signature of an electronic data message or electronic document shall only be authorized and enforced in favor of the individual or entity having a legal right to the possession or the use of plaintext, electronic signature or file or solely for the authorized purposes. The electronic key for identity or integrity shall not be made available to any person or party without the consent of the individual or entity in lawful possession of that electronic key;
Section 32. Obligation of Confidentiality. – Except for the purposes authorized under this Act, any person who obtained access to any electronic key, electronic data message or electronic document, book, register, correspondence, information, or other material pursuant to any powers conferred under this Act, shall not convey to or share the same with any other person.
Sec. 33. Penalties. – The following Acts, shall be penalized by fine and/or imprisonment, as follows:
(a) Hacking or crackling with refers to unauthorized access into or interference in a computer system/server or information and communication system; or any access in order to corrupt, alter, steal, or destroy using a computer or other similar information and communication devices, without the knowledge and consent of the owner of the computer or information and communications system, including the introduction of computer viruses and the like, resulting in the corruption, destruction, alteration, theft or loss of electronic data messages or electronic documents shall be punished by a minimum fine of One Hundred Thousand pesos (P 100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years;
(b) Piracy or the unauthorized copying, reproduction, dissemination, or distribution, importation, use, removal, alteration, substitution, modification, storage, uploading, downloading, communication, making available to the public, or broadcasting of protected material, electronic signature or copyrighted works including legally protected sound recordings or phonograms or information material on protected works, through the use of telecommunication networks, such as, but not limited to, the internet, in a manner that infringes intellectual property rights shall be punished by a minimum fine of one hundred thousand pesos (P 100,000.00) and a maximum commensurate to the damage incurred and a mandatory imprisonment of six (6) months to three (3) years;
(c) Violations of the Consumer Act of Republic Act No. 7394 and other relevant to pertinent laws through transaction covered by or using electronic data messages or electronic documents, shall be penalized with the same penalties as provided in those laws;
(d) Other violations of the provisions of this Act, shall be penalized with a maximum penalty of one million pesos (P 1,000,000.00) or six (6) years imprisonment.
Implications on Cross-Border Trades and Investment
The E-Commerce Act aligns with various international laws and instruments of the United Nations Commission On International Trade Law (UNCITRAL). Namely, the Model Law on Electronic Commerce (MLEC) 1996, Model Law on Electronic Signatures (MLES) 2001, and the United Nations Convention on the Use of Electronic Communications in International Contracts (or the Electronic Communications Convention).
According to the UN, MLEC was the first legislative text to adopt the fundamental principles of non-discrimination, technological neutrality, and functional equivalence that are widely regarded as the founding elements of modern electronic commerce law. It aims to enable and facilitate commerce conducted using electronic means by providing national legislators with a set of internationally acceptable rules aimed at removing legal obstacles and increasing legal predictability for electronic commerce.
Article 11 of the MLEC provides for the formation and validity of contracts, to which the E-Commerce Act expands its coverage in Article 16.
Art. 11. Formation and validity of contracts. (1) In the context of contract formation, unless otherwise agreed by the parties, an offer and the acceptance of an offer may be expressed by means of data messages. Where a data message is used in the formation of a contract, that contract shall not be denied validity or enforceability on the sole ground that a data message was used for that purpose.
Chapter III, Sections 20 to 23 of the E-Commerce Act embody the entirety of MLEC’s Article 14, paragraphs (1) to (4), as to the acknowledgment of receipt:
Art. 14. Acknowledgment of receipt.
(1) Paragraphs (2) to (4) of this article apply where, on or before sending a data message, or by means of that data message, the originator has requested or has agreed with the addressee that receipt of the data message be acknowledged.
(2) Where the originator has not agreed with the addressee that the acknowledgement be given in a particular form or by a particular method, an acknowledgement may be given by
(a) any communication by the addressee, automated or otherwise, or
(b) any conduct of the addressee sufficient to indicate to the originator that the data message has been received.
(3) Where the originator has stated that the data message is conditional on receipt of the acknowledgement, the data message is treated as though it has never been sent, until the acknowledgement is received.
(4) Where the originator has not stated that the data message is conditional on receipt of the acknowledgement, and the acknowledgement has not been received by the originator within the time specified or agreed or, if no time has been specified or agreed, within a reasonable time, the originator:
(a) may give notice to the addressee stating that no acknowledgement has been received and specifying a reasonable time by which the acknowledgement must be received; and
(b) if the acknowledgement is not received within the time specified in subparagraph (a), may, upon notice to the addressee, treat the data message as though it had never been sent, or exercise any other rights it may have.
The MLES aims to enable and facilitate the use of electronic signatures by establishing technical reliability criteria for the equivalence between electronic and handwritten signatures. It recognizes the need for a governing legal framework regarding the use of electronic means, brought about by the increased use of electronic authentication techniques as substitutes for handwritten signatures and other traditional authentication procedures.
The E-Commerce Act essentially replicates MLES’ Article 6 on compliance with a requirement for a signature, but adds to it in its Section 8(c) (d).
The Electronic Communications Convention aims to facilitate the use of electronic communications in international trade by assuring that contracts concluded and other communications exchanged electronically are as valid and enforceable as their traditional paper-based equivalents.
It is built upon MLEC and MLEC, and is intended to strengthen the harmonization of the rules regarding electronic commerce and foster uniformity in the domestic enactment of UNCITRAL model laws relating to electronic commerce, as well as to update and complement certain provisions of those model laws in light of recent practice.
In light of these laws, the E-Commerce Act truly strengthens the prospects of the country in terms of the global digital economy. It establishes a secure and comprehensive legal framework that promotes smooth cross-border transactions and international relations.
To Sum Up
The E-Commerce Act protects Philippine business and governance by legitimizing and safeguarding digital online transactions, and paving the way for e-Government services and digital trust across industries, both in the local and global landscape
If you need assistance in navigating the foreign applicability of the law, our Firm can guide you through the legal process and help secure enforceability within the Philippine jurisdiction.
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Author/s: Patricia Minimo
About the author: Patricia is STLAF's Legal Writer-Researcher. She is a Communication graduate from the University of the Philippines – Baguio with a major in Journalism and a minor in Speech Communication.