Regulating your Online Carts

During President Ferdinand Marcos, Jr.’s first State of the Nation Address on July 25, he requested Congress to enact a legislative measure to regulate internet commercial activities to ensure that the rights of consumers who engage in online transactions are protected.

Meanwhile, the Departments of Trade and Industry, Health, Agriculture, and Environment and Natural Resources, the Intellectual Property Office of the Philippines, and the National Privacy Commission, issued Joint Administrative Order No. 22-01 (JAO 22-01) on March 4 as a stand-in while legislation is pending.

JAO 22-01 consolidated pertinent provisions relating to e-commerce from various existing laws, such as the ASEAN Online Business Code of Conduct, R.A. 4109 or the Standards Law, R.A. 9211 or the Tobacco Regulation Act of 2003, R.A. 10611 or the Food and Safety Act of 2013, R.A. 8293 or the Intellectual Property Code of the Philippines, R.A. 7394 or the Consumer Act of the Philippines, R.A. 10173 or the Data Privacy Act, and R.A. 8203 or the Special Law on Counterfeit Drugs, to name a few. The joint administrative order likewise provided for a schedule of the corresponding penalties for violation of its provisions, a procedural step-by-step guide in addressing consumer complaints, as well as a non-exhaustive listing of regulated, restricted, and prohibited goods.

Section 13 of the JAO imposes additional obligations, as well as corresponding liabilities, to e-commerce platforms and e-marketplaces. Said provision provides that e-commerce platforms such as Shopee, Lazada, and eBay, shall be treated and shall be held liable in the same manner as online sellers, merchants, and e-retailers when the latter commit any violation of the laws being implemented by the joint administrative order.

Similarly, delivery partners are made liable in the same manner as online sellers only upon notice that they are carrying or delivering restricted, prohibited, or infringing items.

In addition, these platforms are required to verify if the goods sold in their respective platforms are regulated, prohibited, original, genuine, licensed, or expired. In case of a prima facie violation of any pertinent laws or regulations committed in an online post, the concerned authorized agency is to issue a notice giving the violator a maximum period of three days to take down such a post. Failure to do so will be construed as an intentional and overt act that will aggravate the offense.
In a nutshell, this is a big leap from the current practice that consumers’ right of action for defective products or breach of contract is only against the seller and/or manufacturer. This key feature of JAO 22-01 shifts the burden on the e-commerce platform. At the pain of fines and even imprisonment, online platforms now must take on a more active seat in ensuring fair and transparent trade.

Aside from this, the proposed Internet Transaction Act (S.B. 2489) introduces features to address the growth of e-commerce. S.B. 2489 provides for the creation of an E-commerce Bureau, as well as the Online Dispute Resolution platform, an interactive website which serves as a single point of entry for consumers, online merchants and traders seeking an out-of-court resolution of disputes. S.B. 2489 likewise outlines a simplified procedure in effecting the remedies for consumers.

Under this Senate Bill, the remedy of consumers for non-conforming products is to either seek replacement/repair or proportionate price reduction. In certain instances, such as when replacement/repair is no longer possible, the aggrieved buyer may also seek termination of the contract. Consumers are also entitled to damages provided such becomes apparent within six months from receipt. For this purpose, among others, merchants are obliged to issue paper or electronic invoices or receipts for all sales. This is also in consonance with Revenue Regulations No. 8-2022 on the issuance of such e-receipts.

Consumers, however, are not entitled to repair/replacement or a price reduction when they have contributed to any ambiguity or lack of conformity with the contract or its effects. Furthermore, S.B. 2489 mandates that it shall be unlawful for consumers to cancel confirmed delivery orders of food or groceries when already paid for or in the possession of the delivery partner, to place fictitious orders, and to unreasonably shame, demean, embarrass, or humiliate online delivery partners, among others.

In any event, legislation of rules that regulate e-commerce is crucial, especially in the midst of this pandemic where most of our transactions occur online. The challenge, however, is in striking a balance between the interests of all stakeholders: consumers, sellers, online platforms, and delivery partners.

This article is for informational and educational purposes only. It is not offered and does not constitute legal advice or legal opinion.

Maribel Nicole Lopez is an associate of the Litigation and Dispute Resolution Department (LDRD) of the Angara Abello Concepcion Regala & Cruz Law Offices or ACCRALAW.

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