Electronic Commerce Act- Part 2

PART 1- SHORT TITLE AND DECLARATION OF POLICY

Section 1. Short Title- This law is officially called the “Electronic Commerce Act.”

Section 2. Declaration of Policy- The government recognizes the importance of information and communications technology (ICT) in
developing the country.
Goals:
●​ Make ICT products and services accessible and affordable.
●​ Encourage private sector investment.
●​ Train people to use ICT (computers, electronic devices, etc.).
●​ Ensure security and neutrality of networks.
●​ Build strong national and global ICT infrastructures.

PART 2- ELECTRONIC COMMERCE IN GENERAL

CHAPTER 1- GENERAL PROVISIONS

Section 3. Objective- The main goal of this law is to make it easier to conduct business and other activities, both domestically and
internationally, using electronic means. This includes things like contracts, agreements, and the exchange of information. The law
aims to ensure that electronic data messages (EDMs) and electronic documents (EDs) are considered authentic and reliable and to
encourage the use of electronic transactions by both the government and the public.

Section 4. Sphere of Application- This law applies to all kinds of electronic data messages and electronic documents used in:
➔​ Commercial (business) activities

📌 ➔​ Non-commercial (personal, government, or other) activities

Note: Includes domestic and international transactions, agreements, contracts, and storage of information.

Section 5. Definition of Terms- For the purposes of this Act, the following terms are defined, as follows:
A.​ Addressee: The person intended to receive an electronic message by the originator, excluding any intermediary (or not just
someone who forwards it).
B.​ Computer: Any device that can process or store information electronically, such as personal computers, smartphones, and
other similar devices.
C.​ Electronic Data Message (EDM) – Information sent, received, or stored electronically (e.g., email, fax, telex, telegram).
-​ Note: The law’s IRR says EDM = Electronic Document.
D.​ Information and Communication System – The setup or system used to process, send, receive, or store electronic data
messages/documents (includes the computer and related processes).
E.​ Electronic Signature- Any electronic mark (sound, symbol, character, etc.) that represents a person’s identity and is used to
approve or authenticate an electronic document/message.
F.​ Electronic Document – Any information/data (text, numbers, graphics, etc.) stored or presented electronically that
represents a right or fact.
G.​ Electronic key
H.​ Intermediary: A person who acts on behalf of another to send, receive, or store an electronic document without changing
its content.
I.​ Originator: The person who creates or sends an electronic document.
J.​ Service Provider: A company that offers online services, network access, or facilities for transmitting and storing electronic
documents (e.g., an internet service provider).
➔​ Commercial Activities: Any business-related transactions. The law interprets this broadly to cover all kinds of business
relationships, like buying and selling, investments, and providing services.
➔​ Non-Commercial Activities: Any activities that are not for business purposes.

CHAPTER 2- LEGAL RECOGNITION OF ELECTRONIC DATA MESSAGES & ELECTRONIC DOCUMENTS

Section 6. Legal recognition of Electronic Data Messages- An electronic message cannot be dismissed or considered invalid just
because it's in an electronic format. The law gives it the same legal effect as a traditional document (physically written on paper).

📌 Note:This also applies to information that is not directly in the electronic message itself but is "incorporated by reference"
(meaning it's mentioned and linked to).

Section 7. Legal recognition of Electronic Documents-

Rule: Electronic documents are legally valid and enforceable like any written document.
Key Points:
1.​ Writing Requirement
○​ If the law requires something “in writing,” an electronic document is good enough if:
○​ It remains complete and unaltered (except for normal changes like formatting or authorized edits).
○​ It is reliable based on its purpose and circumstances.
2.​ Original Requirement
○​ if the law requires the “original” document, an electronic copy is acceptable if:
○​ There’s a reliable assurance the document hasn’t been tampered with since it was finalized.

📌
○​ It can be displayed properly to the intended recipient
Note: Evidentiary Rule
 ○​ For use in court, an electronic document = a written document under the law.
○​ However, the Act does not change existing rules on admissibility of evidence, except for rules on authentication and
the best evidence rule

📌 Note: Use Not Mandatory: The law does not force anyone to use or accept electronic documents or signatures. A person's

📌
agreement to use them can be inferred from their actions
Note: Solemn Contracts- Some contracts (like those requiring notarization, public instruments, or special formalities under the

📌Note:
Civil Code) still need the traditional formalities. R.A. 8792 does not remove these requirements.

●​ Question: Is a fax considered an electronic document or data message?

-​ NO, The Supreme Court (MCC Industrial Sales v. Ssangyong) ruled that fax is not covered by R.A. 8792.
-​ Fax is just a reproduction via phone/microwave lines, not an electronic document under the Act.
-​ Therefore, a fax is not admissible as electronic evidence.

●​ Does the Electronic Commerce Act change evidentiary rules?

-​ No. It does not alter existing rules on admissibility of documents.
-​ The only changes are for authentication (proving the document is real) and best evidence (allowing an e-document
to count as original if integrity is proven).

Section 8. Legal recognition of Electronic Signatures-

Rule: An electronic signature on an electronic document is considered the same as a handwritten signature on a paper document, if
certain safeguards are met.

Conditions that make the e-signature valid:

1.​ The method used can identify the person who signed and show their consent.
2.​ The method is reliable and appropriate for its purpose.
3.​ The person must actually execute the e-signature before moving forward with the transaction.
4.​ The other party can verify the signature and confirm if it’s authentic before proceeding.

Authentication of e-signatures (how to prove they’re genuine):

1.​ By showing a process (like encryption) was used to create and verify the signature.
2.​ By other ways allowed by law.
3.​ By any method the judge accepts as proof.

Section 9. Presumption relating to Electronic Signatures- This section establishes legal presumptions about electronic signatures.
Once a signature is authenticated, the law presumes that:
1.​ The signature really belongs to the person it’s linked to.
2.​ The person signed it with the intent to approve or authenticate the document.
3.​ The method or system used to sign/verify worked without errors.

📌Note: These are disputable presumptions, meaning they are accepted as true unless proven otherwise.
Disputable presumptions relating to digital signatures that:
Upon the authentication of a digital signature, it shall be presumed
●​ The certificate (issued by an authority) is correct.
●​ The signature was made during the certificate’s valid period.​
The certificate wasn’t invalid or revoked.
●​ The signed message wasn’t altered after signing.
●​ The certificate was really issued by the certifying authority.

Section 10. Original Documents-

Rule: If the law requires an original document, an electronic document can count as the original if:
1.​ Its integrity (no tampering or alteration) is proven. The document's integrity must be proven from the time it was first
created. Integrity means the information has remained complete and unaltered, except for normal changes that occur
during communication or storage.
2.​ If the document needs to be presented to someone, it must be capable of being displayed.

📌 Note: if a law requires a document to be "in its original form," an electronic document can satisfy this requirement if it meets
these criteria.
-​ For purposes of the Best Evidence Rule in a legal setting, an electronic document is considered the equivalent of an original
if a printout or output accurately reflects the data.

Section 11. Authentication of Electronic Data messages and Electronic Documents-

➔​ If you want to use an electronic data message (EDM), electronic document (ED), or electronic signature in court or any
legal proceeding, you must first prove that it’s authentic.
➔​ Burden of proof = on the person introducing the e-document.

a.​ How to Authenticate Electronic Signatures

●​ It is a symbol (letter, number, mark, sound, etc.) logically attached to the document.
●​ A reliable security method or procedure (like encryption, password, or digital certificate) was used.
●​ The method was used with the intent to approve or authenticate the document.
b.​ How to Authenticate Electronic Data Messages or Documents
●​ To authenticate a document or message, you must show that a proper security procedure was used to verify the
sender or detect any changes to the content during communication or storage. This can involve using security
measures like algorithms, codes, or encryption.
📌 Note: Burden of Proof for Authentication
The person who wants to use an electronic document as evidence in a legal case has the burden of proving its authenticity. They
must present evidence that shows the document is what they claim it to be.
●​ How to Prove Integrity: The integrity of the system where the document was stored can be proven in a few ways, unless
there's evidence to the contrary:
○​ Showing the system operated in a way that didn't affect the document's integrity.
○​ Showing the document was stored by an opposing party in the case.
○​ Showing the document was stored in the normal course of business by a neutral third party.

●​ Manner of Authentication: A private electronic document can be authenticated in court by proving it was digitally signed,
that a specific security procedure was applied, or by any other evidence that convinces the judge of its reliability.

●​ Integrity of an Information and Communication System: When there is a dispute over the integrity of a system, a court can
consider several factors to determine if the electronic document is trustworthy. This includes whether the system was
operated correctly, whether the document was stored by an adverse party, or whether it was stored in the ordinary course
of business by a neutral person.

Section 12. Admissible and Evidential Weight of Electronic Data Messages or Documents-
An electronic data message or document cannot be denied as evidence in court just because:
1.​ It's in electronic form.
2.​ They are not in the standard written form (paper).

📌 Note: As long as they meet the requirements of Section 6 (Legal Recognition of EDMs/EDs) and Section 7 (Legal Recognition of
Electronic Signatures), they are considered best evidence of the agreement or transaction.

📌 Note: Proof by Affidavit: Matters related to the admissibility and evidential weight of an electronic document can be established
using an affidavit (a sworn statement). The person making the affidavit must have direct personal knowledge of the facts.

Section 13. Retention of Electronic Data Message or Electronic Document. Notwithstanding any provision of law, rule or regulation
to the contrary
If the law requires keeping original documents, you can keep them as e-documents if:
1.​ They remain accessible for future use.
2.​ They are kept in their original format (or a reliable copy).
3.​ The sender, receiver, date, and time can be identified.

📌Note: You can also use a third-party service to store these documents, as long as these three conditions are met.
Section 14. Proof by Affidavit- Admissibility (Sec. 12) and presumptions (Sec. 9) may be established by an affidavit (sworn
statement) from someone with personal knowledge or access to records.
-​ You can prove the validity of e-documents through an affidavit (sworn written statement), instead of always needing live
testimony.

📌 Affidavit- a written statement or declaration made under oath before an authorized official like notary public, that can serves as
evidence in court

Section 15. Cross-Examination

➔​ If an affidavit is presented as evidence, the opposing party has the right to cross-examine the person who made the
affidavit. This ensures that the information is truthful and reliable. The right to cross-examine also extends to a person who
recorded or stored an electronic document in the usual course of business for a party to the proceedings.

CHAPTER 3- COMMUNICATION OF ELECTRONIC DATA MESSAGES OR ELECTRONIC DOCUMENTS

Section 16. Formation and Validity of Electronic Contracts

1.​ A contract (offer + acceptance + other legal requirements) can be made through electronic data messages or electronic
documents
●​ A contract cannot be denied validity just because it’s electronic.
2.​ For electronic banking transactions:
●​ A transaction, such as cash withdrawals or transfers, is deemed completed when cash is dispensed, or an account
is debited/credited.
●​ These obligations are absolute and not subject to preference of credits.

Section 17. Recognition by Parties of Electronic Data Message or Electronic Document

This section confirms that a statement or a "declaration of will" (like an agreement or a decision) is legally valid even if it's sent
electronically between the sender (originator) and receiver (addressee),.
●​ It ensures that the use of an electronic format doesn't, on its own, invalidate a person's legal intent.

Section 18. Attribution of Electronic Data Messages- This section clarifies how an electronic message is legally connected, or
"attributed," to a specific person.
1.​ A message is considered from the originator if the originator personally sent it.
2.​ It is also deemed from the originator if:
a.​ Sent by someone authorized to act for the originator; or
b.​ Sent by a system programmed to act automatically (e.g., auto-confirmation emails)\
 3.​ The addressee may assume the message came from the originator if:
a.​ The addressee used a pre-agreed procedure to verify origin; or
b.​ The message was sent by someone with access to the originator’s system
4.​ But this assumption does not apply if:
a.​ The addressee received notice that the message was not from the originator and had time to act on it; or
b.​ The addressee knew (or should have known, with reasonable care) that the message was not from the originator.
5.​ The addressee knew (or should have known, with reasonable care) that the message was not from the originator.
6.​ Each e-message is treated as a separate message, unless it’s a duplicate and the addressee knew or should have known it
was a duplicate.

Section 19. Error on Electronic Data Message or Electronic Document

📌
Rule: The receiver (addressee) can assume that what they received is exactly what the sender (originator) intended to send.
Exception: The receiver cannot assume this if they knew (or should have known using reasonable care or agreed procedures) that:
●​ The message had an error when it entered their system, or
●​ The message was sent to the wrong system (not the one they designated).

Section 20. Agreement on Acknowledgment of Receipt

Rules when acknowledgment of receipt is required/agreed upon:
a.​ No specific method agreed upon: If you didn't agree on a specific way to acknowledge receipt, any communication or action
that shows the message was received is considered a valid acknowledgment.
b.​ Acknowledgment is conditional: If the sender explicitly says that the message is only legally effective if they receive an
acknowledgment, then the message is treated as if it was never sent until they get the acknowledgment.
c.​ No acknowledgment received: If the sender doesn't receive an acknowledgment within the specified or a reasonable time,
they can send a notice to the addressee. If they still don't get a confirmation after that, they can then treat the original
message as if it were never sent

Section 21. Time of Dispatch of and EDM/EDs

➔​ A message is considered sent when it leaves the sender's control and enters an external information system.

Section 22. Time of Receipt of and EDM/EDs- A message is considered received when:
➔​ If the receiver has a designated system, receipt happens when the message enters that system.
-​ If both sender and receiver are in the same system, receipt is when the receiver retrieves it.
➔​ If sent to a different (non-designated) system, receipt is when the receiver actually retrieves it.
➔​ If no system is designated, receipt is when the message enters any of the receiver’s systems.

Section 23. Place of Dispatch and Receipt of EDM/EDs

●​ The law provides a clear rule for the location of electronic transactions. A message is legally considered to be dispatched
from the sender's place of business and received at the addressee's place of business. This rule is used to determine

📌 where the transaction occurred for legal and tax purposes, even if a mobile device was used.
Special cases:
●​ If multiple business places → the one most connected to the transaction is used.
●​ If no business place → habitual residence.
●​ For corporations → place of incorporation/legal constitution.

Section 24. Choice of Security Methods

➔​ Parties are free to choose the type and level of electronic security (e.g., encryption, authentication methods) as long as it
complies with DTI rules and other applicable laws.

PART 3- ELECTRONIC COMMERCE IN CARRIAGE OF GOODS

Section 25. Actions Related to Contracts of Carriage of Goods

This section specifies that the law applies to all electronic actions related to shipping goods. It ensures that electronic documents
are legally valid for every step of the process, including:
1.​ Giving details of goods (marks, number, weight, nature, value).
2.​ Issuing receipts or confirming loading.
3.​ Sending notices about contract terms or instructions to carriers.
4.​ Claiming delivery, authorizing release, or notifying loss/damage.
5.​ Giving other statements connected with performance of the contract.
6.​ Promising to deliver goods to a specific person.
7.​ Transferring or negotiating rights in goods.
8.​ Transferring rights and obligations under the contract.

Section 26. Transport Documents

This section clarifies that electronic documents are the legal equivalent of paper transport documents.
1.​ If a law requires a paper document for any of the actions listed in Section 25, an electronic document can fulfill that
requirement.
➔​ This applies whether the law imposes an obligation or just penalties for not using paper
2.​ If a right/obligation must be given to one specific person (like a bill of lading that proves ownership), it can also be done
electronically if a reliable method makes it unique (so no duplicates can be wrongly used).
➔​ The reliability standard depends on the purpose and circumstances of the transaction.
3.​ If you're using electronic documents to transfer rights, any paper document issued later is only valid if the electronic process
has been officially terminated. This prevents confusion and conflicts between the two formats.
📌 If the law requires certain rules to apply to paper contracts of carriage, those rules also apply to electronic contracts.
PART 4- ELECTRONIC TRANSACTIONS IN GOVERNMENT

Section 27. Government Use of Electronic Data Messages, Documents, and Signatures
This section mandates the government to adopt electronic transactions. Within 2 years of the law's effectivity, all government
agencies and corporations must:
➔​ Accept and issue electronic documents for filings, permits, licenses, and other official business.
➔​ Accept electronic payments and issue digital receipts.
➔​ Conduct government functions using electronic messages and documents.

📌 To do this, government agencies can make rules (after public hearings and publication) to specify:
1.​ How documents are filed, created, kept, or issued electronically.
2.​ When/how electronic signatures are required and what type.
3.​ Format of e-documents and how e-signatures are affixed.
4.​ Security, integrity, and confidentiality procedures.
5.​ Other necessary features of e-documents/payments.
6.​ Extent of use of e-documents for compliance.

Section 28. RPWEB (Philippine Government Online Network)

➔​ Within 2 years, the government must establish RPWEB, an online network connecting all government offices (national down
to local, even schools and GOCCs).
➔​ It will allow fast, open, and efficient electronic transmission of documents and data between agencies and to the public.
➔​ RPWEB is the starting platform of the Government Information Infrastructure (GII), which may evolve into better
technologies (fiber optics, satellite, wireless, broadband, etc.).

📌 To●​makeDOTC,GII NTC,
effective:
and the National Computer Center must reduce internet/telecom costs (lease lines, satellite, broadband,
wireless).
●​ Government must also build:
-​ a government website portal, and
-​ a domestic internet exchange system (so local internet traffic flows faster within the Philippines).
●​ Cable and wireless systems used for TV/broadcast infrastructure are considered part of telecommunications for
e-commerce, to maximize ICT convergence

📌
Section 29. Authority of the Department of Trade and Industry (DTI)
Rule:
●​ The DTI is the lead agency for promoting and supervising electronic commerce in the country, in coordination with other
agencies.
●​ This power does not override BSP’s and banking laws (R.A. 7653 and R.A. 337).
DTI’s powers include:
●​ Making rules and regulations on e-commerce.
●​ Setting quality standards and issuing certifications.
●​ Performing necessary functions for e-commerce growth.
●​ Installing an online public information system for quality and price monitoring of goods and services, to protect consumers.

PART 5- FINAL PROVISIONS

📌
Section 30. Extent of Liability of a Service Provider
Rule: A service provider (like internet providers, hosting platforms, or online access providers) is not liable for unlawful or
infringing content/data if they only provide access and meet these conditions:
1.​ They do not know or are not aware that the material is illegal or infringing.
2.​ They do not directly profit from the illegal activity.
3.​ They do not commit, encourage, or cause others to commit unlawful acts.

BUT, they may still be liable under:

●​ Contracts they entered into.​
Licensing or regulatory rules (like those imposed by NTC or DTI).
●​ Other written laws.
●​ Civil liability if a court orders them to act (e.g., blocking access to illegal content, removing it, or preserving evidence).

Section 31. Lawful Access

This section ensures that electronic files and signatures are protected from unauthorized access. Access is only allowed for the
person who has a legal right to the data and only for the authorized purpose.
➔​ It also states that an electronic key (like a password or security code) cannot be shared with anyone without the consent of
the person who lawfully possesses it.
➔​ This protection is so strong that a person cannot be forced to disclose their electronic key if it would violate their
constitutional right against self-incrimination

Section 32. Obligation of Confidentiality

This section imposes a duty of confidentiality on anyone who gains access to electronic information—including electronic keys,
documents, and other materials—as part of the powers granted by this Act.
➔​ They are strictly prohibited from sharing or conveying this information to others, except for the specific purposes authorized
by the law.

Section 33. Penalties

This section outlines the specific penalties for violations of the Act.
1.​ Hacking or Cracking: Unauthorized access to a computer system to corrupt, alter, steal, or destroy data is punishable by a
minimum fine of ₱100,000 and a prison term of 6 months to 3 years.
2.​ Piracy: Unauthorized copying, reproduction, or distribution of protected electronic material and copyrighted works that
infringe on intellectual property rights is penalized with a minimum fine of ₱100,000 and a prison term of 6 months to 3
years.
3.​ Consumer Act Violations: Violations of the Consumer Act using electronic transactions will be penalized with the same
penalties as those specified in the original law.
4.​ Other Violations: Any other violation of the Act not specifically mentioned is punishable by a fine of up to ₱1,000,000 or up
to 6 years imprisonment.

Section 34. Implementing Rules and Regulations

This section empowers the Department of Trade and Industry (DTI), the Department of Budget and Management (DBM), and the
Bangko Sentral ng Pilipinas (BSP) to create the necessary rules and regulations to implement the law.
➔​ They were given 60 days to do so, but the law states that the provisions of the Act are still valid and enforceable even if the
rules are not yet issued.

Section 35. Oversight Committee

A Congressional Oversight Committee was established to monitor the implementation of the Act. This committee, composed of
members from both the Senate and the House of Representatives, is required to meet regularly and receive performance reports
from the DTI, DBM, BSP, and other relevant government agencies.

Section 36. Appropriations

This section provides a budget for the initial implementation of the Act, specifically for Sections 27 and 28 (which deal with
government use of electronic transactions).
➔​ Funds were to be sourced from available funds in the General Appropriations Act of 2000, with future funding included in
subsequent annual budgets.

Section 37. Statutory Interpretation

Rule:
●​ Interpretation of this law must consider:
○​ Its international origin (it follows global models).
○​ Need for uniformity in application.
○​ Good faith in international trade relations.
○​ Principles of international law and e-commerce conventions.

Section 38. Variation by Agreement

Parties involved in electronic transactions can agree to vary provisions of this Act, unless expressly prohibited.

Section 39. Reciprocity

This section is about reciprocity, meaning that the benefits and privileges granted by this Act are only available to citizens of
countries that grant the same benefits and privileges to Filipino citizens.

Section 40. Separability Clause

This is a standard legal clause stating that if any part of the Act/provision is found to be unconstitutional, the remaining provisions
will remain in full force and effect

Section 41. Repealing Clause

Laws, rules, or regulations inconsistent with this Act are repealed, amended, or modified.

Section 42. Effectivity

The Act takes effect immediately after publication in the Official Gazette or in 2 newspapers of general circulation