MANILA, Philippines - A mobile internet user browses through a menu of online merchants available at a virtual marketplace app for fresh produce amid the general community quarantine, 9 June 2020. Through the Internet Transactions Act, Senator Win Gatchalian is seeking to strengthen the countr’s digital economy which is still at its developing stage despite having an estimated 76 million active internet users and high internet penetration rate of71 percent. Photo by Mark Cayabyab/OS WIN GATCHALIAN

E-commerce is a relatively young sector in the Philippines. This sector, however, saw an exponential growth this 2020 due to the implications of the COVID-19 pandemic.

This growth can be seen based on the number of complaints linked to Internet transactions received by the Department of Trade and Industry (DTI).

In 2019, the DTI reported 2,467 Internet commerce complaints. This number rose by more than 600% or equivalent to 14,869 complaints from January to October this year.

E-commerce transactions grew amid the pandemic, wherein many Filipinos are compelled to purchase goods online as authorities impose quarantine protocols.

The top three complaints received by the agency include violations of the Price Act, delivery of defective products, and deceptive practices.

Addressing these e-commerce concerns, the House of Representatives recently passed House Bill No. 7805 or the Internet Transactions Act (ITA) on the third and final reading.

One of the priority bills under the leadership of House Speaker Lord Alan Velasco, the ITA received affirmative support from 232 congressmen.

The law is principally authored by Valenzuela City Rep. Wesley Gatchalian and Ako Bicol Party-List Rep. Alfredo Garbin.

The ITA seeks to regulate commercial transactions on the Internet to protect both consumers and sellers from fraud and abuses.

Apart from tangible goods, these transactions include those that involve online travel services, digital media, ride hailing, and digital financial services, which could be business-to-business (B2B) or business-to-consumer (B2C) in nature.

The new law also seeks to create the e-Commerce Bureau which will operate under the DTI. The bureau is mandated to implement, monitor, and ensure compliance to the ITA, and will have the power to investigate, summon, and file charges against those who have violated the law.

Under the ITA, businesses and individuals who engage in e-commerce must register through the e-Commerce Bureau. Those that are legally authorized to do e-commerce in the Philippines include:

  • an individual duly licensed to do business as a single-proprietor with the Department of Trade and Industry (DTI);
  • a juridical entity duly registered with the Securities and Exchange Commission, whether as a corporation, a one-person corporation, or as a partnership;
  • a cooperative duly licensed by the Cooperative Development Authority;
  • a foreign corporation duly licensed by the SEC to transact business in the Philippines; and
  • a non-resident foreign individual or juridical entity who can set up a domestic corporation or branch office in the Philippines, can appoint a resident agent, or can notify and submits its contact details to the E-Commerce Bureau.

Those registered will get an industry-led eCommerce Trustmark which represents safety and security in Internet transactions. Trustmark will be granted to the website of the registrant.

Failure to register will be made to pay a fine equivalent to 100% of the amount of the digital goods they sell.

The ITA states that e-commerce platforms like Lazada, Shopee, and Zalora will also be held liable if they fail to exercise extraordinary diligence to prevent any loss or damage to the consumer, fail to publish the details of their merchants, fail to examine goods like food, drugs, and cosmetics.

Aside from protecting consumers, the law also seeks to protect sellers by allowing them to redress if a violation has been committed. Riders and delivery service personnel are also covered as the law makes it unlawful for customers to unreasonably “shame, demean, embarrass, or humiliate” them.

The ITA also makes it illegal to cancel orders for food or grocery items made by ride hailing services that were already paid. A consumer, however, may cancel an order if it was delayed for at least an hour from the expected time of arrival due to the fault or negligence of the delivery service.

Consumers who violate the law may be fined with up to P50,000, while online merchants may be fined with P500,000 to P5 million.

The law, meanwhile, does not cover consumer-to-consumer transactions and those considered petty, one-off, or occasional low-value transactions. Thus, the ITA compels consumers to transact only with registered merchants to secure full coverage and protection of the law.

With the ITA, the government seeks to institutionalize and organize the e-commerce sector in the Philippines. This matters as e-commerce will play a vital role as a valuable contributor to revive the economy heavily crippled by the pandemic.

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