Trusting the internet

A bill seeking to protect buyers or sellers on the internet may finally see the light of day.

Last month, House Bill 4 was introduced by Speaker Martin Romualdez and a few other legislators, basically adopting the version filed by former House Deputy Speaker Wes Gatchalian and approved on third reading by the body during the previous Congress.

This was also among the priority bills identified by President Marcos in his first State-of-the-Nation Address.

The Internet Transactions Act bill seeks to promote an environment founded on trust among consumers and merchants as a means to increase the number of e-commerce participants and ultimately achieve sustainable growth. It aims to address the need to establish a singular office that will be responsible to carry out its provisions, ensure the implementation of the E-Commerce Act under Republic Act 8792, and serve as the focal point in the monitoring and implementation of the Philippine E-commerce Roadmap.

It noted from mobile shopping to online shopping, e-commerce has radically change the way people live their lives while the internet has dramatically transformed the way business is conducted.

Based on a 2019 study by Google and Temasek, the bill pointed out that in ASEAN alone, the internet economy is experiencing exponential growth as total gross merchandising value (GMV) in the region has reached $100 billion and is projected to hit $300 billion in 2025. It said that ASEAN economies have witnessed huge increases in the internet economy from 2015 to 2019, and growth rate is expected to continue at 10 to 30 percent from 2019 to 2025.

However, the Philippines notably has the lowest GMV in 2019 at $7.6 billion, the study revealed, lower than Malaysia’s $11 billion, Vietnam’s $12 billion, Singapore’s $12 billion, Thailand’s $16 billion and Indonesia’s $40 billion. This was despite the Philippines’ estimated 76 million active internet users, high penetration rate of 71 percent compared to the 54 percent global average, longer hours spent daily on the internet or 10 hours as against the global average of 6.42 hours, and very high social media penetration for its population aged 13 and above of 99 percent vis-à-vis a 59 percent global average.

But it emphasized that the expected growth of the Philippine internet economy at 27 percent compounded annual growth rate is deemed to be one of the fastest among ASEAN companies. The bill aims to ensure that this growth is achieved or even surpassed, it added.

It noted that e-commerce in the country is in its nascent stage, providing immense potential for businesses, adding that the Philippines has not yet generated unicorns or tech start-up companies that reach a valuation of $1 billion nor has the local economy reflected the dynamism that the Indonesian and Vietnamese e-commerce markets have reached at 2.8 percent and four percent of gross domestic product, respectively, with the Philippine e-commerce market remaining at 1.6 percent of GDP.

The bill likewise pointed out that Philippine micro, small and medium enterprises (MSMEs) lag behind in terms of adoption of e-commerce because either they find using digital technology platforms and tools too difficult, or they are unaware of the benefits they offer.

It added that the country lacks policies and regulations that will facilitate online transactions and cross-border processes which should address concerns such as lack of trust, low internet speeds, weak last-mile delivery options, payment mechanisms as majority still prefer to pay in local currency, lack of governing entity at the regional level that can fight cybercrime and settle cross-border disputes, difficulty in returning products, taxation, VAT registration of foreign e-commerce operators, the 12 percent VAT on total value of online transactions in the Philippines, and online consumer complaints.

The proposed Internet Transaction Act shall apply to any stage of all business-to-business and business-to-consumer e-commerce and internet transactions including those related to internet retail of consumer goods and services, online travel services, online media providers, ride-hailing services, and digital financial services but will not cover consumer-to-consumer transactions.

The bill if approved will have extra-territorial application so that a person engaging in e-commerce who purposefully avails of the Philippine market shall be deemed as doing business in the Philippines and shall be subject to the coverage of the law.

All individuals engaged in e-commerce will be required to register as a business either as a sole proprietor, one-person corporation, partnership, corporation, or cooperative.

It proposes the creation of an eCommerce Bureau under the Department of Trade and Industry which will, among others, have the power to investigate motu propio and file the appropriate cases for violation of the Act.

There will also be a Registry of Online Business (ROB) to provide consumers access to data of registered online business entities to verify their validity and existence, among others.

The DTI Secretary meanwhile shall have the power to issue a provisional order in effect for a maximum period of 30 days directing that a website, webpage, online application, social media account, or other similar platform, be taken down, made inaccessible in the Philippines, or that no entity shall process any payment to any of those entities, or otherwise be rendered commercially inoperative, to abate any further violations. The Secretary will also have the power to issue cease and desist orders.

To build trust in internet transactions, the proposed bill requires among others, that tracking of deliveries be provided as part of services of online merchants, that a cancellation option be provided, and that secure technology and protocols including those evidenced by visible trust certificates be used to ensure the safety and security of online payments and sensitive date,

Online merchants will be required to submit to e-commerce platform operators business registration documents, a geographic address where summons and other judicial processes may be served, contact details, among others.

To address complaints from ride hailing services, the bill makes it unlawful for consumers to cancel confirmed orders for the delivery of food or grocery items when the items have already been paid or are already in the possession of the ride hailing service partners or is already in transit to the consumer unless the consumer uses credit card services, or delivery is delayed for at least one hour due to the fault or negligence of the ride hailing service partner. Unreasonably shaming, demeaning, embarrassing or humiliating these ride hailing service partners is also illegal.

But if the goods delivered do not conform to the contract, the consumer is given the right to terminate by giving notice to the online merchant. The merchant may be liable for damages to the consumer due to lack of conformity with the contract of the goods.

E-commerce platform operators shall be solely liable with an online merchant to the consumer only to the extent of the civil damages suffered by the consumer as a direct result of the transaction, without prejudice to other liabilities.

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