Internet Transactions Act of 2023 (RA11967): what it means for buyers, merchants, and marketplaces

On 5 December 2023, President Ferdinand Marcos Jr. signed into law Republic Act No. 11967 or The Internet Transactions Act of 2023.  This new law applies to all business-to-business and business-to-consumer internet transactions where one of the parties 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 within the said market. 

Excluded from the coverage of the new law are online media content, and consumer-to-consumer (C2C) transactions.

Highlights of the law are as follows:

I. OBLIGATIONS AND REMEDIES OF ONLINE CONSUMERS

Online consumers are those who purchase, lease, receive or subscribe to goods or services over the internet for a fee.  They are expected to exercise ordinary diligence when entering internet transactions.

Confirmed orders cannot be cancelled if: (1) the items have already been paid for, or (2) the goods are perishable in nature, and (3) they are already in possession of a third party for its delivery.

However, cancellation can be made under the following circumstances: (1) the online consumer uses electronic or digital payment and authorized the crediting of the amount despite cancellation, (2) the online consumer reimburses the third-party delivery service as a pre-condition for the cancellation of the order; (3) the transaction allows cancellation for a fee; or (4) the parties agree on the cancellation.

II. OBLIGATIONS OF E-MARKETPLACES

E-marketplaces are the digital platforms whose business is to connect online consumers with online merchants, facilitate and conclude the sales, process the payment of the products, goods or services through the platform, or facilitate the shipment of goods or provide logistics services and post-purchase support within such platforms, and otherwise retains oversight over consummation of the transaction.  They are required to ensure that the relevant information about the internet transactions on their platform are properly identifiable.  Specifically, this requires identifiable transactions, person/s on whose behalf they are made, promotional offers, submission of merchant information such as identification, address, contact details, among others.  E-marketplaces are also required to maintain a list of all online merchants registered under their platform and unsure that data covered by the Data Privacy Act is complied with.  The goods or services must indicate the price, description and condition.

Sale of regulated goods are prohibited unless the e-marketplace has the relevant license or permit for the sale

III. E-RETAILERS AND ONLINE MERCHANTS

E-retailers refer to those who sell goods or services directly to online consumers through its own website, webpage or application.

On the other hand,  an online merchant are those who sell non-financial goods or services to online consumers through an e-marketplace or third-party digital platform. 

An e-retailer shall also be considered an online merchant if it offers the same goods or services outside its own website through a third-party digital platform and the online consumer purchases, leases, subscribes to, or obtains the service of the e-retailer through the said third-party platform.

1. OBLIGATIONSBoth e-retailers and online merchants are required to indicate price of goods and services offered and ensure that the goods are received by the online consumer according to the terms and conditions of the transaction. The goods are required to be delivered in full including its accessories and in a quality fit for its use.Where the e-retailer or online merchant is a digital goods or service provider, the digital goods or services shall be of quality and functional, or the services shall be of the same type as advertised or described.  Where the transaction involves a digital platform that offers a performance of a service, said service shall be performed and completed according to the terms of the contract. The e-retailer is required to publish on its homepage all its relevant corporate details such as corporate, trade or business name, physical shop address or place of business, contact details and the like.  It has to ensure that data privacy laws are complied with.
2.  LIABILITYE-retailers or online merchants are primarily liable to indemnify the online consumer should there be any civil action or administrative complaints arising from internet transactions contrary to any of the Law’s requirements.  They are also subsidiarily liable to the extent of damages suffered by the online consumer as a direct result of the transaction. The e-marketplaces or digital platforms shall be solidarily liable if it fails to remove or disable access to goods or services that are illegal, injurious, unsafe or dangerous.