Rules on internet-based transactions
Published Nov 5, 2021 12:12 am
Crafting the rules governing internet-based transactions are not expected to be an easy one. The hurdles are high and the opposition from various e-commerce platforms is strong. Even the legislature is having a hard time that the measure is no longer in the running for passage in this Congress.
The Internet Transactions Act (ITA) did not sit well with e-commerce platforms, online shopping and e-marketplaces. They warned that the bill will stifle the growth of e-commerce in the country.
Amid the burgeoning e-commerce and the explosion of various forms of unimaginable scams online, the Department of Trade and Industry is trying to come up with a Joint Administrative Order (JAO). Four line agencies – Department of Trade and Industry, Department of Health, and Department of Environment and Natural Resources, and the Intellectual Property Office of the Philippines, and the National Privacy Commission – are signing the JAO.
But the proposed JAO is also expected to face the same opposition as it continued to incorporate the most contentious provision in the pending ITA bills. This relates to the provision of holding online shopping platforms “jointly and solidary liable” with online merchants for products sold that do not comply with intellectual property, consumer protection, and other laws.
The proposed JAO states that pursuant to Republic Act No. 7394, e-commerce platforms and e-marketplaces shall be considered, and shall be held liable in the same manner as, online sellers, merchants, and e- retailers, when they exercise direction or control over the selling practices of the actual online seller, merchant, and e-retailer, when the latter commits any of the specific violations.
Platforms are also liable for copyright infringement when, having been notified of an infringing activity and having the right and ability to control the same, benefits from the said infringing activity. In addition, under RA 8293, e-commerce platforms and e-marketplaces shall be liable for copyright infringement when, with knowledge of an infringing activity, the e-commerce platforms or e-marketplaces induces, causes, or materially contributes to the infringing conduct.
Online business may also be penalized in cases of violations of certain laws, rules and regulations governing their industries and their commercial activities or transactions. These include laws and issuances regarding data privacy, intellectual property, pricing, labelling, product standards, prohibited or controlled products, health products, licensing requirements, local government ordinances, and environmental compliance, among others.
In addition, online sellers, merchants, e-retailers and consumers may be held liable if their acts in relation to online selling and buying infringes upon protected data privacy rights of individuals under Sections 25 to 37 of the Data Privacy Act which include unauthorized processing of personal information and sensitive personal information, accessing personal and sensitive information due to negligence, and improper disposal of personal information and sensitive personal information, among others.
The DTI will accept any consumer complaint, whether or not the subject matter falls under its jurisdiction. The department shall assist the consumer by guiding them and forwarding their complaint to the appropriate agency having proper jurisdiction over the subject matter.
The JAO, however, considers that since e-commerce platforms and e-marketplaces may lack the time to prevent the actual online seller, merchant, and e-retailer from committing a violation of these rules, e-commerce platforms and e-marketplaces shall be given a period of 10 calendar days from written notice to take down the post of the online seller, merchant, and e-retailer. After which period and notice, and should the e-commerce platform and e-marketplace refuse or neglect to take down the post of the online seller, merchant, and e-retailer, the applicable department or agency under this JAO may now proceed against the e-commerce platform and e-marketplace as a principal violator of the rules and the laws referred.
Based on the draft, the JAO shall cover all online businesses, whether natural or juridical, registered or not, that are engaged in electronic transactions, particularly B2C transactions including, but not limited to the sale, procurement, or availment of consumer goods, digital content/product, digital financial services, online travel services, ride-hailing services and online courier, and education services.
The JAO aims to increase consumer confidence in business-to-consumer (B2C) e-commerce transactions. It seeks to ensure that e-commerce platforms, electronic retailers (e-retailers), and online merchants are properly guided about the rules, regulations, and responsibilities in the conduct of their online business, considering the need to protect consumers against deceptive, unfair, and unconscionable sales acts and practices. Moreover, the purpose of the JAO is to ensure that online consumers are informed of their rights and the mechanisms for redress.
The JAO is still up for consultation. Already, Laban Konsyumer Inc. (LKI), the country’s leading consumer advocacy group, has strong reservation about the proposed JAO.
LKI President Victorio Mario Dimagiba believes there is nothing better than passing a law. Dimagiba does not believe that the proposed provision for “jointly and solidary liable” will stifle e-commerce in the country, rather it will be a big boost to the e-commerce industry and align the Philippines to global standards.
But in the meantime, we need to put some sort of regulations to protect consumers. The e-commerce explosion is happening, exposing unwitting Filipinos to scammers. Certainly, the JAO is a stop gap measure, but it is better than nothing.