IMPLEMENTING RULES AND REGULATIONS OF THE “ELECTRONIC COMMERCE ACT”

Pursuant to the provisions of Section 34 of Republic Act No. 8792,
otherwise known as the Electronic Commerce Act (the “Act”), the
following implementing rules and regulations (the “Rules”) are hereby
promulgated:

PART I
Declaration of Policy and Principles for Electronic Commerce Promotion

CHAPTER I — Declaration of Policy

SECTION 1.      Declaration of Policy . —
The State recognizes the vital role of information and communications
technology (ICT) in nation-building; the need to create an
information-friendly environment which supports and ensures the
availability, diversity and affordability of ICT products and services;
the primary responsibility of the private sector in contributing
investments and services in ICT; the need to develop, with appropriate
training programs and institutional policy changes, human resources for
the information age, a labor force skilled in the use of ICT and a
population capable of operating and utilizing electronic appliances and
computers; its obligation to facilitate the transfer and promotion of
technology; to ensure network security, connectivity and neutrality of
technology for the national benefit; and the need to marshal, organize
and deploy national information infrastructures, comprising in both
communications network and strategic information services, including
their interconnection to the global information networks, with the
necessary and appropriate legal, financial, diplomatic and technical
framework, systems and facilities.

SECTION 2.      Authority of the Department of Trade and Industry and Participating Entities.
— The Department of Trade and Industry (DTI) shall direct and supervise
the promotion and development of electronic commerce in the country
with relevant government agencies, without prejudice to the provisions
of Republic Act. 7653 (Charter of Bangko Sentral ng Pilipinas) and
Republic Act No. 8791 (General Banking Act).

CHAPTER II — Declaration of Principles for Electronic Commerce Promotion

SECTION 3.      Principles. — Pursuant
to the mandate under Section 29 of the Act to direct and supervise the
promotion and development of electronic commerce in the country, the
following principles are hereby adopted as Government policy on
electronic commerce:

a.      Role of the Government. Government
intervention, when required, shall promote a stable legal environment,
allow a fair allocation of scarce resources and protect public interest.
Such intervention shall be no more than is essential and should be
clear, transparent, objective, non-discriminatory, proportional,
flexible, and technologically neutral. Mechanisms for private sector
input and involvement in policy making shall be promoted and widely
used.

b.      Role of the Private Sector. The development of
electronic commerce shall be led primarily by the private sector in
response to market forces. Participation in electronic commerce shall be
pursued through an open and fair competitive market.

c.      International Coordination and Harmonization.
Electronic commerce is global by nature. Government policies that affect
electronic commerce will be internationally coordinated and compatible
and will facilitate interoperability within an international, voluntary
and consensus-based environment for standards setting.

d.      Neutral Tax Treatment. Transactions conducted
using electronic commerce should receive neutral tax treatment in
comparison to transactions using non-electronic means and taxation of
electronic commerce shall be administered in the least burdensome
manner.

e.      Protection of Users. The protection of users,
in particular with regard to privacy, confidentiality, anonymity and
content control shall be pursued through policies driven by choice,
individual empowerment, industry-led solutions. It shall be in
accordance with applicable laws. Subject to such laws, business should
make available to consumers and, where appropriate, business users the
means to exercise choice with respect to privacy, confidentiality,
content control and, under appropriate circumstances, anonymity.

f.       Electronic Commerce Awareness. Government and
the private sector will inform society, both individual consumers and
businesses, about the potentials of electronic commerce and its impact
on social and economic structures.

g.      Small and Medium-Sized Enterprises. Government
will provide small and medium-sized enterprises (SMEs) with information
and education relevant to opportunities provided by global electronic
commerce. Government will create an environment that is conducive to
private sector investment in information technologies and encourage
capital access for SMEs.

h.      Skills Development. Government shall enable
workers to share in the new and different employment generated by
electronic commerce. In this regard, the Government shall continue to
promote both formal and non-formal skills-development programs.

i.       Government as a Model User. Government shall
utilize new electronic means to deliver core public services in order to
demonstrate the benefits derived therefrom and to promote the use of
such means. In this regard, the Government will be a pioneer in using
new technologies. In particular, the Government Information System Plan
(GISP), which is expected to include, but not be limited to, on-line
public information and cultural resources, databases for health
services, web sites at local, regional and national levels and public
libraries and databases, where appropriate, will be implemented in
accordance with the provisions of the Act and RPWEB.

j.       Convergence. Convergence of technologies is
crucial to electronic commerce and will be supported by appropriate
government policies. Government will work closely with business in
preparing for and reacting to changes caused by convergence.

k.      Domain Name System. The Government supports
initiatives to ensure that Internet users will have a sufficient voice
in the governance of the domain name system.

l.       Access to Public Records. Government shall provide equal and transparent access to public domain information.

m.     Dispute Mechanisms. Government encourages the use of
self-regulatory extra-judicial dispute settlement mechanisms such as
arbitration and mediation as an effective way of resolving electronic
commerce disputes.

CHAPTER III — Objective and Sphere of Application

SECTION 4.      Objective of the Act. —
The Act aims to facilitate domestic and international dealings,
transactions, arrangements, agreements, contracts and exchanges and
storage of information through the utilization of electronic, optical
and similar medium, mode, instrumentality and technology to recognize
the authenticity and reliability of electronic documents related to such
activities and to promote the universal use of electronic transactions
in the government and by the general public.

SECTION 5.      Sphere of Application. —
The Act shall apply to any kind of electronic data message and
electronic document used in the context of commercial and non-commercial
activities to include domestic and international dealings,
transactions, arrangements, agreements, contracts and exchanges and
storage of information.

PART II
Electronic Commerce in General

CHAPTER I — General Provisions

SECTION 6.      Definition of Terms. — For the purposes of the Act and these Rules, the following terms are defined, as follows:

a.      “Addressee” refers to a person who is intended
by the originator to receive the electronic data message or electronic
document, but does not include a person acting as an intermediary with
respect to that electronic data message or electronic document.

b.      “Commercial Activities” shall be given a wide
interpretation so as to cover matters arising from all relationships of a
commercial nature, whether contractual or not. The term shall likewise
refer to acts, events, transactions, or dealings occurring between or
among parties including, but not limited to, factoring, investments,
leasing, consulting, insurance, and all other services, as well as the
manufacture, processing, purchase, sale, supply, distribution or
transacting in any manner, of tangible and intangible property of all
kinds such as commodities, goods, merchandise, financial and banking
products, patents, participations, shares of stock, software, books,
works of art and other intellectual property.

c.      “Computer” refers to any device or apparatus
singly or interconnected which, by electronic, electro-mechanical,
optical and/or magnetic impulse, or other means with the same function,
can receive, record, transmit, store, process, correlate, analyze,
project, retrieve and/or produce information, data, text, graphics,
figures, voice, video, symbols or other modes of expression or perform
any one or more of these functions.

d.      “Convergence” refers to technologies moving together
towards a common point and elimination of differences between the
provisioning of video, voice and data, using digital and other emerging
technologies; the coming together of two or more disparate disciplines
or technologies; the ability of different network platforms to carry any
kind of service; and the coming together of consumer devices such as,
but not limited to, the telephone, television and personal computer.

e.      “Electronic data message” refers to information
generated, sent, received or stored by electronic, optical or similar
means, but not limited to, electronic data interchange (EDI), electronic
mail, telegram, telex or telecopy. Throughout these Rules, the term
“electronic data message” shall be equivalent to and be used
interchangeably with “electronic document.”

f.       “Information and Communications System” refers
to a system for generating, sending, receiving, storing or otherwise
processing electronic data messages or electronic documents and includes
the computer system or other similar device by or in which data is
recorded or stored and any procedures related to the recording or
storage of electronic data message or electronic document.

g.      “Electronic signature” refers to any
distinctive mark, characteristic and/or sound in electronic form,
representing the identity of a person and attached to or logically
associated with the electronic data message or electronic document or
any methodology or procedures employed or adopted by a person and
executed or adopted by such person with the intention of authenticating
or approving an electronic data message or electronic document.

h.      “Electronic document” refers to information or
the representation of information, data, figures, symbols or other modes
of written expression, described or however represented, by which a
right is established or an obligation extinguished, or by which a fact
may be proved and affirmed, which is received, recorded, transmitted,
stored, processed, retrieved or produced electronically. Throughout
these Rules, the term “electronic document” shall be equivalent to and
be used interchangeably with “electronic data message.”

i.       “Electronic key” refers to a secret code,
which secures and defends sensitive information that crosses over public
channels into a form decipherable only by itself or with a matching
electronic key. This term shall include, but not be limited to, keys
produced by single key cryptosystems, public key cryptosystems or any
other similar method or process, which may hereafter, be developed.

j.       “Intermediary” refers to a person who in
behalf of another person and with respect to a particular electronic
data message or electronic document sends, receives and/or stores or
provides other services in respect of that electronic data message or
electronic document.

k.      “Non-Commercial Activities” are those not falling under commercial activities.

l.       “Originator” refers to a person by whom, or on
whose behalf, the electronic data message or electronic document
purports to have been created, generated and/or sent. The term does not
include a person acting as an intermediary with respect to that
electronic data message or electronic document.

m.     “Person” means any natural or juridical person
including, but not limited to, an individual, corporation, partnership,
joint venture, unincorporated association, trust or other juridical
entity, or any governmental authority.

n.      “Service provider” refers to a provider of —

i.        On-line services or network access, or the operator
of facilities therefor, including entities offering the transmission,
routing, or providing of connections for on-line communications, digital
or otherwise, between or among points specified by a user, of
electronic data message or electronic documents of the user’s choosing;
or

ii.       The necessary technical means by which electronic
data message or electronic documents of an originator may be stored and
made accessible to a designated or undesignated third party.

Such service providers shall have no authority to modify or alter
the content of the electronic data message or electronic document
received or to make any entry therein on behalf of the originator,
addressee or any third party unless specifically authorized to do so,
and shall retain the electronic data message or electronic document in
accordance with the specific request or as necessary for the purpose of
performing the services it was engaged to perform.

CHAPTER II — Legal Recognition of Electronic Data Messages and Electronic Documents

SECTION 7.      Legal Recognition of Electronic Data Messages and Electronic Documents
. — Information shall not be denied validity or enforceability solely
on the ground that it is in the form of an electronic data message or
electronic document, purporting to give rise to such legal effect.
Electronic data messages or electronic documents shall have the legal
effect, validity or enforceability as any other document or legal
writing. In particular, subject to the provisions of the Act and these
Rules:

a.      A requirement under law that information is in writing
is satisfied if the information is in the form of an electronic data
message or electronic document.

b.      A requirement under law for a person to provide
information in writing to another person is satisfied by the provision
of the information in an electronic data message or electronic document.

c.      A requirement under law for a person to provide
information to another person in a specified non-electronic form is
satisfied by the provision of the information in an electronic data
message or electronic document if the information is provided in the
same or substantially the same form.

d.      Nothing limits the operation of any requirement under
law for information to be posted or displayed in specified manner, time
or location; or for any information or document to be communicated by a
specified method unless and until a functional equivalent shall have
been developed, installed, and implemented.

SECTION 8.      Incorporation by Reference
. — Information shall not be denied validity or enforceability solely
on the ground that it is not contained in an electronic data message or
electronic document but is merely incorporated by reference therein.

SECTION 9.      Use Not Mandatory . —
Without prejudice to the application of Section 27 of the Act and
Section 37 of these Rules, nothing in the Act or these Rules requires a
person to use or accept information contained in electronic data
messages, electronic documents, or electronic signatures, but a person’s
consent to do so may be inferred from the person’s conduct.

SECTION 10.    Writing. — Where the law
requires a document to be in writing, or obliges the parties to conform
to a writing, or provides consequences in the event information is not
presented or retained in its original form, an electronic document or
electronic data message will be sufficient if the latter:

a.         maintains its integrity and reliability; and,

b.         can be authenticated so as to be usable for subsequent reference, in that —

(i)      It has remained complete and unaltered, apart from
the addition of any endorsement and any authorized change, or any change
which arises in the normal course of communication, storage and
display; and

(ii)     It is reliable in the light of the purpose for which it was generated and in the light of all relevant circumstances.

SECTION 11.    Original. — Where the law
requires that a document be presented or retained in its original form,
that requirement is met by an electronic document or electronic data
message if —

a.         There exists a reliable assurance as to the integrity
of the electronic document or electronic data message from the time
when it was first generated in its final form and such integrity is
shown by evidence aliunde (that is, evidence other than the electronic
data message itself) or otherwise; and,

b.         The electronic document or electronic data message is
capable of being displayed to the person to whom it is to be presented.

c.         For the purposes of paragraph (a) above:

(i)      The criteria for assessing integrity shall be whether
the information has remained complete and unaltered, apart from the
addition of any endorsement and any change which arises in the normal
course of communication, storage and display; and

(ii)     The standard of reliability required shall be
assessed in the light of the purpose for which the information was
generated and in the light of all relevant circumstances.

An electronic data message or electronic document meeting and
complying with the requirements of Sections 6 or 7 of the Act shall be
the best evidence of the agreement and transaction contained therein.

SECTION 12.    Solemn Contracts . — No
provision of the Act shall apply to vary any and all requirements of
existing laws and relevant judicial pronouncements respecting
formalities required in the execution of documents for their validity.
Hence, when the law requires that a contract be in some form in order
that it may be valid or enforceable, or that a contract is proved in a
certain way, that requirement is absolute and indispensable.

Legal Recognition of Electronic Signatures

SECTION 13.    Legal Recognition of Electronic Signatures.
— An electronic signature relating to an electronic document or
electronic data message shall be equivalent to the signature of a person
on a written document if the signature:

a.         is an electronic signature as defined in Section 6(g) of these Rules; and,

b.         is proved by showing that a prescribed procedure, not
alterable by the parties interested in the electronic document or
electronic data message, existed under which:

(i)      A method is used to identify the party sought to be
bound and to indicate said party’s access to the electronic document or
electronic data message necessary for his consent or approval through
the electronic signature;

(ii)     Said method is reliable and appropriate for the
purpose for which the electronic document or electronic data message was
generated or communicated, in the light of all circumstances, including
any relevant agreement;

(iii)    It is necessary for the party sought to be bound, in
order to proceed further with the transaction, to have executed or
provided the electronic signature; and,

(iv)    The other party is authorized and enabled to verify
the electronic signature and to make the decision to proceed with the
transaction authenticated by the same.

The parties may agree to adopt supplementary or alternative
procedures provided that the requirements of paragraph (b) are complied
with.

For purposes of subparagraph (i) and (ii) of paragraph (b), the factors referred to in Annex “2” may be taken into account.

SECTION 14.    Presumption Relating to Electronic Signatures
. — In any proceeding involving an electronic signature, the proof of
the electronic signature shall give rise to the rebuttable presumption
that:

a.    The electronic signature is the signature of the person to whom it correlates; and,

b.    The electronic signature was affixed by that person with
the intention of signing or approving the electronic data message or
electronic document unless the person relying on the electronically
signed electronic data message or electronic document knows or has
notice of defects in or unreliability of the signature or reliance on
the electronic signature is not reasonable under the circumstances.

Modes of Authentication

SECTION 15.    Method of Authenticating Electronic Documents, Electronic Data Messages, and Electronic Signatures. —
Electronic documents, electronic data messages and electronic
signatures, shall be authenticated by demonstrating, substantiating and
validating a claimed identity of a user, device, or another entity in an
information or communication system.

Until the Supreme Court, by appropriate rules, shall have so
provided, electronic documents, electronic data messages and electronic
signatures, shall be authenticated, among other ways, in the following
manner:

a.    The electronic signature shall be authenticated by proof
that a letter, character, number or other symbol in electronic form
representing the persons named in and attached to or logically
associated with an electronic data message, electronic document, or that
the appropriate methodology or security procedures, when applicable,
were employed or adopted by a person and executed or adopted by such
person, with the intention of authenticating or approving an electronic
data message or electronic document;

b.    The electronic data message or electronic document shall
be authenticated by proof that an appropriate security procedure, when
applicable was adopted and employed for the purpose of verifying the
originator of an electronic data message or electronic document, or
detecting error or alteration in the communication, content or storage
of an electronic document or electronic data message from a specific
point, which, using algorithm or codes, identifying words or numbers,
encryptions, answers back or acknowledgment procedures, or similar
security devices.

SECTION 16.    Burden of Authenticating Electronic Documents or Electronic Data Messages.
— The person seeking to introduce an electronic document or electronic
data message in any legal proceeding has the burden of proving its
authenticity by evidence capable of supporting a finding that the
electronic data message or electronic document is what the person claims
it to be.

Modes for Establishing Integrity

SECTION 17.    Method of Establishing the Integrity of an Electronic Document or Electronic Data Message
. — In the absence of evidence to the contrary, the integrity of the
information and communication system in which an electronic data message
or electronic document is recorded or stored may be established in any
legal proceeding, among other methods —

a.    By evidence that at all material times the information and
communication system or other similar device was operating in a manner
that did not affect the integrity of the electronic document or
electronic data message, and there are no other reasonable grounds to
doubt the integrity of the information and communication system;

b.    By showing that the electronic document or electronic data
message was recorded or stored by a party to the proceedings who is
adverse in interest to the party using it; or,

c.    By showing that the electronic document or electronic data
message was recorded or stored in the usual and ordinary course of
business by a person who is not a party to the proceedings and who did
not act under the control of the party using the record.

Admissibility and Evidential Weight

SECTION 18.    Admissibility and Evidential Weight of Electronic Data Messages and Electronic Documents.
— For evidentiary purposes, an electronic document or electronic data
message shall be the functional equivalent of a written document under
existing laws. In any legal proceeding, nothing in the application of
the rules on evidence shall deny the admissibility of an electronic data
message or electronic document in evidence:

a.         On the sole ground that it is in electronic form; or,

b.         On the ground that it is not in the standard written form.

The Act does not modify any statutory rule relating to the
admissibility of electronic data messages or electronic documents,
except the rules relating to authentication and best evidence.

In assessing the evidential weight of an electronic data message
or electronic document, the reliability of the manner in which it was
generated, stored or communicated, the reliability of the manner in
which its originator was identified, and other relevant factors shall be
given due regard.

SECTION 19.    Proof by Affidavit and Cross-Examination
. — The matters referred to in Section 12 of the Act on admissibility
and evidentiary weight, and Section 9 of the Act on the presumption of
integrity of electronic signatures, may be presumed to have been
established by an affidavit given to the best of the deponent’s or
affiant’s personal knowledge subject to the rights of parties in
interest to cross-examine such deponent or affiant as a matter of right.
Such right of cross-examination may likewise be enjoyed by a party to
the proceedings who is adverse in interest to the party who has
introduced the affidavit or has caused the affidavit to be introduced.

Any party to the proceedings has the right to cross-examine a
person referred to in Section 11, paragraph 4, and sub-paragraph c of
the Act.

Retention of Electronic Data Message and Electronic Document

SECTION 20.    Retention of Electronic Data Message and Electronic Document. — Notwithstanding any provision of law, rule or regulation to the contrary:

a.   The requirement in any provision of law that certain
documents be retained in their original form is satisfied by retaining
them in the form of an electronic data message or electronic document
which:

(i)      Remains accessible so as to be usable for subsequent reference;

(ii)     Is retained in the format in which it was generated,
sent or received, or in a format which can be demonstrated to accurately
represent the electronic data message or electronic document generated,
sent or received; and,

(iii)    Where applicable, enables the identification of its
originator and addressee, as well as the determination of the date and
the time it was sent or received.

b.   The requirement referred to in paragraph (a) is satisfied
by using the services of a third party, provided that the conditions set
forth in subparagraphs (i), (ii) and (iii) of paragraph (a) are met.

c.   Relevant government agencies tasked with enforcing or
implementing applicable laws relating to the retention of certain
documents may, by appropriate issuances, impose regulations to ensure
the integrity, reliability of such documents and the proper
implementation of Section 13 of the Act.

CHAPTER III — Communication of Electronic Data Messages And Electronic Documents

SECTION 21.    Formation and Validity of Electronic Contracts
. — Except as otherwise agreed by the parties, an offer, the acceptance
of an offer and such other elements required under existing laws for
the formation and perfection of contracts may be expressed in,
demonstrated and proved by means of electronic data message or
electronic documents and no contract shall be denied validity or
enforceability on the sole ground that it is in the form of an
electronic data message or electronic document, or that any or all of
the elements required under existing laws for the formation of the
contracts is expressed, demonstrated and proved by means of electronic
documents.

SECTION 22.    Consummation of Electronic Transactions with Banks
. — Electronic transactions made through networking among banks, or
linkages thereof with other entities or networks, and vice versa, shall
be deemed consummated upon the actual dispensing of cash or the debit of
one account and the corresponding credit to another, whether such
transaction is initiated by the depositor or by an authorized collecting
party; Provided, that the obligation of one bank, entity, or person
similarly situated to another arising therefrom shall be considered
absolute and shall not be subjected to the process of preference of
credits; Provided, however, that the foregoing shall apply only to
transactions utilizing the Automated Teller Machine switching network.

Without prejudice to the foregoing, all electronic transactions
involving banks, quasi-banks, trust entities, and other institutions
which under special laws are subject to the supervision of the Bangko
Sentral ng Pilipinas shall be covered by the rules and regulations
issued by the same pursuant to its authority under Section 59 of
Republic Act No. 8791 (The General Banking Act), Republic Act No. 7653
(the Charter of the Bangko Sentral ng Pilipinas) and Section 20, Article
XII of the Constitution.

SECTION 23.    Recognition by Parties of Electronic Data Message. —
As between the originator and the addressee of an electronic data
message or electronic document, a declaration of will or other statement
shall not be denied legal effect, validity or enforceability solely on
the ground that it is in the form of an electronic data message or
electronic document.

Attribution of Electronic Data Message and Electronic Document

SECTION 24.    Origin of Electronic Data Message . — An electronic data message or electronic document is that of the originator if it was sent by the originator himself.

SECTION 25.    Origin of Electronic Data Message Not Personally Sent by an Originator
. — As between the originator and the addressee, an electronic data
message or electronic document is deemed to be that of the originator if
it was sent:

a.         by a person who had the authority to act on behalf of
the originator with respect to that electronic data message or
electronic document; or

b.         by an information and communications system programmed by, or on behalf of the originator to operate automatically.

SECTION 26.    When an Originator May Be Bound By an Electronic Data Message
. — As between the originator and the addressee, an addressee is
entitled to regard an electronic data message or electronic document as
being that of the originator, and to act on that assumption, if:

a.      in order to ascertain whether the electronic data
message was that of the originator, the addressee properly applied a
procedure previously agreed to by the originator for that purpose; or,

b.      the electronic data message or electronic document as
received by the addressee resulted from the actions of a person whose
relationship with the originator or with any agent of the originator
enabled that person to gain access to a method used by the originator to
identify electronic data messages or electronic documents as his own.

The provisions of this Section do not exclude other instances or
circumstances when an originator may be bound by the reliance and
consequent action of an addressee respecting an electronic data message,
which purports to have been that of the originator.

SECTION 27.    When an Originator May Not Be Bound By an Electronic Data Message
. — As between the originator and the addressee, an addressee is not
entitled to regard an electronic data message as being that of the
originator, and to act on that assumption:

a.    as of the time when the addressee has both received notice
from the originator that the electronic data message or electronic
document is not that of the originator, and has reasonable time to act
accordingly; or

b.    in a case within paragraph (b) Section 26 of these Rules,
at any time when the addressee knew or should have known, had it
exercised reasonable care or used any agreed procedure, that the
electronic data message or electronic document was not that of the
originator.

The provisions of this Section do not exclude other instances or
circumstances when an originator may not be liable for the reliance and
consequent action of an addressee respecting an electronic data message,
which purports to have been that of the originator.

Separate Receipt of and Error on Electronic Data Message and Electronic Document

SECTION 28.    Assumption Regarding Receipt of Separate Electronic Data Messages
. — The addressee is entitled to regard each electronic data message or
electronic document received as a separate electronic data message or
electronic document and to act on that assumption, except to the extent
that it duplicates another electronic data message or electronic
document and the addressee knew or should have known, had it exercised
reasonable care or used any agreed procedure, that the electronic data
message or electronic document was a duplicate.

SECTION 29.    Error on Electronic Data Message or Electronic Document
. — The addressee is entitled to regard the electronic data message or
electronic document received as that which the originator intended to
send, and to act on that assumption, unless the addressee knew or should
have known, had the addressee exercised reasonable care, used the
appropriate procedure or applied an agreed procedure:

a.      That the transmission resulted in any error therein or
in the electronic data message or electronic document when the latter
enters the designated information and communications system; or,

b.      That electronic data message or electronic document is
sent to an information and communications system which is not so
designated by the addressee for the purpose.

Dispatch and Receipt of Electronic Data Message and Electronic Document

SECTION 30.    Agreement on Acknowledgment of Receipt of Electronic Data Messages or Electronic Documents. —
The following rules shall apply where, on or before sending an
electronic data message or electronic document, the originator and the
addressee have agreed, or in that electronic document or electronic data
message, the originator has requested, that receipt of the electronic
document or electronic data message be acknowledged:

a.      Where the originator has not agreed with the addressee
that the acknowledgment be given in a particular form or by a particular
method, an acknowledgment may be given by or through any communication
by the addressee, automated or otherwise, or any conduct of the
addressee, sufficient to indicate to the originator that the electronic
data message or electronic document has been received.

b.      Where the originator has stated that the effect or
significance of the electronic data message or electronic document is
conditional on receipt of the acknowledgment thereof, the electronic
data message or electronic document is treated as though it has never
been sent, until the acknowledgment is received.

c.      Where the originator has not stated that the effect or
significance of the electronic data message or electronic document is
conditional on receipt of the acknowledgment, and the acknowledgment has
not been received by the originator within the time specified or agreed
or, if no time has been specified or agreed, within a reasonable time,
the originator may give notice to the addressee stating that no
acknowledgment has been received and specifying a reasonable time by
which the acknowledgment must be received; and if the acknowledgment is
not received within the time specified, the originator may, upon notice
to the addressee, treat the electronic document or electronic data
message as though it had never been sent, or exercise any other rights
it may have.

SECTION 31.    Time of Dispatch of Electronic Data Message or Electronic Document. —
Unless otherwise agreed between the originator and the addressee, the
dispatch of an electronic data message or electronic document occurs
when it enters an information and communications system outside the
control of the originator or of the person who sent the electronic data
message or electronic document on behalf of the originator.

SECTION 32.    Time of Receipt of Electronic Data Message or Electronic Document.
— Unless otherwise agreed between the originator and the addressee, the
time of receipt of an electronic data message or electronic document is
as follows:

a.   If the addressee has designated an information and
communications system for the purpose of receiving electronic data
message or electronic document, receipt occurs at the time when the
electronic data message or electronic document enters the designated
information and communications system; Provided, however, that if the
originator and the addressee are both participants in the designated
information and communications system, receipt occurs at the time when
the electronic data message or electronic document is retrieved by the
addressee.

b.   If the electronic data message or electronic document is
sent to an information and communications system of the addressee that
is not the designated information and communications system, receipt
occurs at the time when the electronic data message or electronic
document is retrieved by the addressee.

c.   If the addressee has not designated an information and
communications system, receipt occurs when the electronic data message
or electronic document enters an information and communications system
of the addressee.

These rules apply notwithstanding that the place where the
information and communications system is located may be different from
the place where the electronic data message or electronic document is
deemed to be received.

SECTION 33.    Place of Dispatch and Receipt of Electronic Data Message or Electronic Document.
— Unless otherwise agreed between the originator and the addressee, an
electronic data message or electronic document is deemed to be
dispatched at the place where the originator has its place of business
and received at the place where the addressee has its place of business.
This rule shall apply even if the originator or addressee had used a
laptop or other portable device to transmit or receive his electronic
data message or electronic document. This rule shall also apply to
determine the tax situs of such transaction to the extent not
inconsistent with Philippine situs rules and the regulations which may
be promulgated by the Bureau of Internal Revenue (BIR) relating to the
tax treatment of electronic commerce transactions.

For the purpose hereof —

a.    If the originator or the addressee has more than one place
of business, the place of business is that which has the closest
relationship to the underlying transaction or, where there is no
underlying transaction, the principal place of business.

b.    If the originator or the addressee does not have a place
of business, reference is to be made to its habitual residence; or

c.    The “usual place of residence” in relation to a body
corporate, which does not have a place of business, means the place
where it is incorporated or otherwise legally constituted.

Nothing in this Section shall be deemed to amend the rules of private international law.

Security Methods

SECTION 34.    Choice of Security Methods
. — Subject to applicable laws and/or rules and guidelines promulgated
by the Department of Trade and Industry and other appropriate government
agencies, parties to any electronic transaction shall be free to
determine the type and level of electronic data message or electronic
document security needed, and to select and use or implement appropriate
technological methods that suit their needs.

PART III
Electronic Commerce In Carriage Of Goods

SECTION 35.    Actions Related to Contracts of Carriage of Goods
. — Without derogating from the provisions of Part Two of the Act, this
Part of the Rules applies to any action in connection with, or in
pursuance of, a contract of carriage of goods, including but not limited
to:

(a)     (i)         furnishing the marks, number, quantity or weight of goods;
         (ii)        stating or declaring the nature or value of goods;
         (iii)       issuing a receipt for goods;
         (iv)       confirming that goods have been loaded;

(b)     (i)         notifying a person of terms and conditions of the contract;
         (ii)        giving instructions to a carrier;

(c)     (i)         claiming delivery of goods;
         (ii)        authorizing release of goods;
         (iii)       giving notices of loss of, or damage to goods;

(d)       giving any other notice or statement in connection with the performance of the contract;
(e)       undertaking to deliver goods to a named person or a person authorized to claim delivery;
(f)         granting, acquiring, renouncing, surrendering, transferring or negotiating rights in goods;
(g)       acquiring or transferring rights and obligations under the contract.

SECTION 36.    Transport Documents. —
(1) Subject to paragraph (3), where the law requires that any action
referred to in the immediately preceding Section be carried out in
writing or by using a paper document, that requirement is met if the
action is carried out by using one or more electronic data messages or
electronic documents. The transport documents referred to herein shall
include, but not be limited to, those enumerated in Annex “1” hereof.
Concerned agencies such as, but not limited to, the DTI, Department of
Finance, DOTC, Philippine Ports Authority and other port authorities,
shall, within their respective mandates, issue appropriate rules and
guidelines with respect to transport documents as provided herein.

(2)       Paragraph (1) applies whether the requirement therein
is in the form of an obligation or whether the law simply provides
consequences for failing either to carry out the action in writing or to
use a paper document.

(3)       If a right is to be granted to, or an obligation is to
be acquired by, one person and no other person, and if the law requires
that, in order to effect this, the right or obligation must be conveyed
to that person by the transfer, or use of, a paper document, that
requirement is met if the right or obligation is conveyed by using one
or more electronic data messages or electronic documents: Provided, That
a reliable method is used to render such electronic data messages or
electronic documents unique.

(4)       For the purposes of paragraph (3), the standard of
reliability required shall be assessed in the light of the purpose for
which the right or obligation was conveyed and in the light of all the
circumstances, including any relevant agreement.

(5)       Where one or more electronic data messages or
electronic documents are used to effect any action in subparagraphs (f)
and (g) of Section 25 of the Act, no paper document used to effect any
such action is valid unless the use of electronic data message or
electronic document has been terminated and replaced by the use of paper
documents. A paper document issued in these circumstances shall contain
a statement of such termination. The replacement of electronic data
messages or electronic documents by paper documents shall not affect the
rights or obligations of the parties involved.

(6)       If a rule of law is compulsorily applicable to a
contract of carriage of goods which is in, or is evidenced by, a paper
document, that rule shall not be inapplicable to such a contract of
carriage of goods which is evidenced by one or more electronic data
messages or electronic documents by reason of the fact that the contract
is evidenced by such electronic data message or electronic document
instead of a paper document.

PART IV
Electronic Transactions in Government

CHAPTER — Government Use of Data Messages, Electronic Documents and Electronic Signatures

SECTION 37.    Government Use of Electronic Data Messages, Electronic Documents and Electronic Signatures.
— Notwithstanding any law to the contrary, within two (2) years from
the date of the effectivity of the Act, all departments, bureaus,
offices and agencies of the government, as well as all government-owned
and-controlled corporations, that pursuant to law require or accept the
filing of documents, require that documents be created, or retained
and/or submitted, issue permits, licenses or certificates of
registration or approval, or provide for the method and manner of
payment or settlement of fees and other obligations to the government,
shall:

a)      accept the creation, filing or retention of such
documents in the form of electronic data messages or electronic
documents;

b)      issue permits, licenses, or approval in the form of electronic data messages or electronic documents;

c)      require and/or accept payments, and issue receipts
acknowledging such payments, through systems using electronic data
messages or electronic documents; or

d)      transact the government business and/or perform
governmental functions using electronic data messages or electronic
documents,

and for the purpose, are authorized to adopt and promulgate, after
appropriate public hearing and with due publication in newspapers of
general circulation, the appropriate rules, regulations, or guidelines,
to, among others, specify —

(1)     the manner and format in which such electronic data
messages or electronic documents shall be filed, created, retained or
issued;

(2)     where and when such electronic data messages or
electronic documents have to be signed, the use of a electronic
signature, the type of electronic signature required;

(3)     the format of an electronic data message or electronic
document and the manner the electronic signature shall be affixed to the
electronic data message or electronic document;

(4)     the control processes and procedures as appropriate to
ensure adequate integrity, security and confidentiality of electronic
data messages or electronic documents or records or payments;

(5)     other attributes required of electronic data messages or electronic documents or payments; and

(6)     the full or limited use of the documents and papers for compliance with the government requirements;

Provided, That the Act shall by itself mandate any department of
the government, organ of state or statutory corporation to accept or
issue any document in the form of electronic data messages or electronic
documents upon the adoption, promulgation and publication of the
appropriate rules, regulations, or guidelines. Nothing in the Act or the
Rules authorizes any person to require any branch, department, agency,
bureau, or instrumentality of government to accept or process electronic
data messages; conduct its business; or perform its functions by
electronic means, until the adoption, promulgation and publication of
the afore-mentioned appropriate rules, regulations or guidelines. Such
rules, regulations or guidelines as well as the underlying technologies
utilized in the implementation of the Act and these Rules shall conform
the principles set forth in the immediately succeeding section.

SECTION 38.    Principles Governing Government Use of
Electronic Data Messages, Electronic Documents and Electronic
Signatures. — The following principles shall govern the
implementation of Section 27 of the Act and shall be mandatory upon all
departments, bureaus, offices and agencies of the government, as well as
all government-owned and -controlled corporations:

a)      Technology Neutrality. All solutions
implemented shall neither favor a particular technology over another nor
discriminate against or in favor of particular vendors of technology.

b)      Interoperability. All implementation of
technological solutions shall ensure the interoperability of systems
forming part of the government network.

c)      Elimination of Red Tape. Government processes
shall be re-examined and if appropriate, simplified or re-engineered to
maximize the functionality of technology and to eliminate unnecessary
delays in the delivery of governmental services.

d)      Security Measures. Government shall implement
appropriate security measures to guard against unauthorized access,
unlawful disclosure of information, and to ensure the integrity of
stored information.

e)      Auditability. All systems installed shall provide for an audit trail.

SECTION 39.    Government Information System Plan (GISP).
— It is hereby mandated that the GISP shall be adjusted, modified and
amended to conform to the provisions and requirements of the Act, RPWEB
and these Rules.

CHAPTER II — RPWEB

SECTION 40.    RPWEB to Promote the Use of Electronic
Documents and Electronic Data Messages in Government and to the General
Public. — Within two (2) years from the effectivity of the
Act, there shall be installed an electronic on-line network in
accordance with Administrative Order 332 and House of Representatives
Resolution 890, otherwise known as RPWEB, to implement Part IV of the
Act to facilitate the open, speedy and efficient electronic on-line
transmission, conveyance and use of electronic data messages or
electronic documents amongst all government departments, agencies,
bureaus, offices down to the division level and to the regional and
provincial offices as practicable as possible, government-owned and
-controlled corporations, local government units, other public
instrumentalities, universities, colleges and other schools, and
universal access to the general public.

The RPWEB network shall serve as initial platform of the
government information infrastructure to facilitate the electronic
on-line transmission and conveyance of government services to evolve and
improve by better technologies or kinds of electronic on-line wide area
networks utilizing, but not limited to, fiber optic, satellite,
wireless and other broadband telecommunication mediums or modes.

SECTION 41.    Implementing Agencies . —
To facilitate the rapid development of the government information
infrastructure, the Department of Transportation and Communications,
National Telecommunications Commission and the National Computer Center
shall in coordination with each other, promulgate the appropriate
issuances in accordance with their respective mandate to aggressively
formulate, promote and implement a policy environment and regulatory or
non-regulatory framework that shall lead to the substantial reduction of
costs of including, but not limited to, leased lines, land, satellite
and dial-up telephone access, cheap broadband and wireless accessibility
by government departments, agencies, bureaus, offices, government-owned
and -controlled corporations, local government units, other public
instrumentalities and the general public, to include the establishment
of a government website portal and a domestic internet exchange system
to facilitate strategic access to government and amongst agencies
thereof and the general public and for the speedier flow of locally
generated internet traffic within the Philippines.

SECTION 42.    Cable Television and Broadcast as Telecommunications
. — The physical infrastructure of cable and wireless systems for cable
TV and broadcast excluding programming and content and the management
thereof shall be considered as within the activity of telecommunications
for the purpose of electronic commerce and to maximize the convergence
of ICT in the installation of the government information infrastructure.

CHAPTER III — Delineation of Functions

SECTION 43.    Delineation of Functions and Coordination by the DTI . — In the implementation of the Act, the following government agencies shall have the functions stated hereunder:

a)         The Department of Trade and Industry shall:

(i)      Supervise and coordinate the full implementation of
Section 27 of the Act. For this purpose, all government agencies
intending to comply with the said provision of law shall coordinate with
the DTI in order to ensure adherence with the principles provided for
in Section 38 of these Rules. Observance of all laws and regulations on
public bidding, disbursements and other restrictions, including COA
policies, shall be mandatory.

(ii)     Install an on-line public information and quality and
price monitoring system for goods and services aimed in protecting the
interests of the consuming public availing of the advantages of the Act.

(iii)    Establish a voluntary listing system for all
businesses or entities involved in electronic commerce including, but
not limited to, value-added service (VAS) providers as this term is
understood in Republic Act No. 7925, banks, financial institutions,
manufacturing companies, retailers, wholesalers, and on-line exchanges.
The list of electronic commerce entities shall be maintained by the DTI
and made available electronically to all interested parties.

(iv)    Review, study and assess all legal, technical and
commercial issues arising in the field of electronic commerce which may
be directed to the DTI and if necessary, convene the appropriate
government agencies in order to discuss, deliberate on and resolve the
same and in the proper cases, promulgate additional rules and
regulations to implement the Act.

b)   The Bangko Sentral ng Pilipinas shall exercise and perform
such functions as mandated under the Act including the promulgation of
the rules and regulations to implement the provisions of the Act with
respect to banks, quasi-banks, trust entities, and other institutions
which under special laws are subject to the Bangko Sentral ng Pilipinas
supervision.

c)   The Department of Budget and Management shall identify the
fund source for the implementation of Sections 37, 39 and 40 of the
Rules, consistent with the provisions of the annual General
Appropriations Act, and in its capacity in managing the budget execution
and accountability processes of government, shall be responsible for
putting such core processes on-line.

PART V
Final Provisions

SECTION 44.    Extent of Liability of a Service Provider
. — Except as otherwise provided in this Section, no person or party
shall be subject to any civil or criminal liability in respect of the
electronic data message or electronic document for which the person or
party acting as a service provider as defined in Section 6(n) of these
Rules merely provides access if such liability is founded on:

a)      The obligations and liabilities of the parties under the electronic data message or electronic document;

b)      The making, publication, dissemination or distribution
of such material or any statement made in such material, including
possible infringement of any right subsisting in or in relation to such
material: Provided, That

(i)      The service provider: (1) does not have actual
knowledge, or (2) is not aware of the facts or circumstances from which
it is apparent, that the making, publication, dissemination or
distribution of such material is unlawful or infringes any rights
subsisting in or in relation to such material, or (3) having become
aware, advises the affected parties within a reasonable time, to refer
the matter to the appropriate authority or, at the option of the
parties, to avail of alternative modes of dispute resolution;

(ii)     The service provider does not knowingly receive a
financial benefit directly attributable to the unlawful or infringing
activity; and,

(iii)    The service provider does not directly commit any
infringement or other unlawful act and does not induce or cause another
person or party to commit any infringement or other unlawful act and/or
does not benefit financially from the infringing activity or unlawful
act of another person or party;

Provided, further, That nothing in this Section shall affect —

a)      Any obligation founded on contract;

b)      The obligation of a service provider as such under a
licensing or other regulatory regime established under written law;

c)      Any obligation imposed under any written law; or,

d)      The civil liability of any party to the extent that such
liability forms the basis for injunctive relief issued by a court under
any law requiring that the service provider take or refrain from
actions necessary to remove, block or deny access to any material, or to
preserve evidence of a violation of law.

Lawful Access

SECTION 45.    Lawful Access to Electronic Documents, Electronic Data Messages, and Electronic Signatures
. — Access to an electronic file, or an electronic signature of an
electronic data message or electronic document shall only be authorized
and enforced in favor of the individual or entity having a legal right
to the possession or the use of the plaintext, electronic signature or
file and solely for the authorized purposes.

SECTION 46.    Lawful Access to Electronic Keys
. — The electronic key for identity or integrity shall not be made
available to any person or party without the consent of the individual
or entity in lawful possession of that electronic key. The testimonial
disclosure of an electronic key in any proceeding shall be limited by
the Constitutional right against self-incrimination.

SECTION 47.    Obligation of Confidentiality
. — Except for the purposes authorized under the Act, any person who
obtained access to any electronic key, electronic data message, or
electronic document, book, register, correspondence, information, or
other material pursuant to any powers conferred under the Act, shall not
convey to or share the same with any other person.

Penal Provisions

SECTION 48.    Hacking. — Hacking or
cracking which refers to unauthorized access into or interference in a
computer system/server or information and communication system; or any
access in order to corrupt, alter, steal, or destroy using a computer or
other similar information and communication devices, without the
knowledge and consent of the owner of the computer or information and
communications system, including the introduction of computer viruses
and the like, resulting in the corruption, destruction, alteration,
theft or loss of electronic data messages or electronic document shall
be punished by a minimum fine of one hundred thousand pesos
(P100,000.00) and a maximum commensurate to the damage incurred and a
mandatory imprisonment of six (6) months to three (3) years.

SECTION 49.    Piracy. — Piracy or the
unauthorized copying, reproduction, dissemination, distribution,
importation, use, removal, alteration, substitution, modification,
storage, uploading, downloading, communication, making available to the
public, or broadcasting of protected material, electronic signature or
copyrighted works including legally protected sound recordings or
phonograms or information material on protected works, through the use
of telecommunication networks, such as, but not limited to, the
internet, in a manner that infringes intellectual property rights shall
be punished by a minimum fine of one hundred thousand pesos
(P100,000.00) and a maximum commensurate to the damage incurred and a
mandatory imprisonment of six (6) months to three (3) years. The
foregoing shall be without prejudice to the rights, liabilities and
remedies under Republic Act No. 8293 or Intellectual Property Code of
the Philippines and other applicable laws.

SECTION 50.    Other Penal Offenses . —
Violations of the Consumer Act or Republic Act No. 7394 and other
relevant or pertinent laws through transactions covered by or using
electronic data messages or electronic documents, shall be penalized
with the same penalties as provided in those laws.

SECTION 51.    Other Violations of the Act.
— Other violations of the provisions of the Act, shall be penalized
with a maximum penalty of one million pesos (P1,000,000.00) or six-(6)
years imprisonment.

Miscellaneous Provisions

SECTION 52.    Statutory Interpretation .
— Unless otherwise expressly provided for, the interpretation of these
Rules and the Act shall give due regard to the Act’s international
origin — the UNCITRAL Model Law on Electronic Commerce — and the need to
promote uniformity in its application and the observance of good faith
in international trade relations. The generally accepted principles of
international law and convention on electronic commerce shall likewise
be considered.

SECTION 53.    Variation by Agreement. —
Any provision of the Act may be varied by agreement between and among
parties; Provided that such agreement involves only the generation,
sending, receiving, storing or otherwise processing of an electronic
data message or electronic document. Nothing shall authorize contracting
parties to agree upon stipulations or covenants, which defeat the legal
recognition, validity and admissibility of electronic data messages,
electronic documents, or electronic signatures.

SECTION 54.    Reciprocity. — All
benefits, privileges, advantages or statutory rules established under
this Act, including those involving practice of profession, shall be
enjoyed only by parties whose country of origin grants the same benefits
and privileges or advantages to Filipino citizens. Inasmuch as the Act
merely contemplates the legal recognition of electronic forms of
documents and signatures and does not amend any law governing the
underlying substantive validity of acts or transactions, this provision
shall be subject to existing Constitutional and statutory restrictions
relative to activities which are reserved to Philippine citizens or
juridical entities partially or wholly-owned by Philippine citizens.

SECTION 55.    Oversight Committee. —
There shall be a Congressional Oversight Committee composed of the
Committees on Trade and Industry/Commerce, Science and Technology,
Finance and Appropriations of both the Senate and House of
Representatives, which shall meet at least every quarter of the first
two years and every semester for the third year after the approval of
this Act to oversee its implementation. The DTI, DBM, Bangko Sentral ng
Pilipinas, and other government agencies as may be determined by the
Congressional Committee shall provide a quarterly performance report of
their actions taken in the implementation of this Act for the first
three (3) years.

SECTION 56.    DTI’s Continuing Authority to Implement the Act and Issue Implementing Rules
. — Among others, the DTI is empowered to promulgate rules and
regulations, as well as provide quality standards or issue
certifications, as the case may be, and perform such other functions as
may be necessary for the implementation of this Act in the area of
electronic commerce.

SECTION 57.    Separability . — If any
provision in these Rules or application of such provision to any
circumstance is held invalid, the remainder of these Rules shall not be
affected thereby.

SECTION 58.    Effectivity . — These
Rules shall take effect fifteen (15) days from the complete publication
thereof in a newspaper of general circulation.

Adopted: 13 July 2000

(SGD.) MANUEL A. ROXAS II
Secretary, Department of Trade and Industry

(SGD.) BENJAMIN E. DIOKNO
Secretary, Department of Budget and Management

(SGD.) RAFAEL B. BUENAVENTURA
Governor, Bangko Sentral ng Pilipinas

ANNEX I

UNIFORM CUSTOMS AND PRACTICE. 500 (UCP)

Art. 23. Marine/Ocean Bill of Loading	Art. 27. Airport Transport Documents
23.1 Late delivery, Misrouting, Mishandling, Loss and Damage	27.1    Claim – ibid
23.2 Customs Duties and Taxes	27.2    Customs duties & taxes
23.3 Port Charges i.e. Arrastre Wharfage	27.3    Airport charges
23.4 Inbound Shipment-Cargo Handler/Operator	27.4    Inbound shipment-cargo handler/operator
23.4.1            Warehouse Operator	27.4.1            Warehouse operator
Art. 24. Non-Negotiable Seaway Bill	Art. 28. Road, Rail, or Inland Transport Documents
24.1         Claim – ibid	28.1 Claim – ibid
24.2         Customs Duties and Taxes	28.2 Customs Duties & Taxes
24.3         Port Charges i.e. Arrastre Wharfage	28.3 Terminal charges
24.4         Inbound Shipment-Cargo Handler/Operator	28.4 Inbound shipment-cargo handler/operator
24.4.1            Warehouse Operator	28.4.1            Warehouse operator
Art. 25. Charter Party/Bill of Lading	Art. 29. Courier and Post Receipts
25.1         Claim – ibid	29.1         Late delivery, misrouting, mishandling, loss & damage
25.2         Customs Duties & Taxes	29.2 Customs duties & taxes
25.3         Port Charges i.e. Arrastre Wharfage	29.3 Postal authority charges
25.4         Inbound Shipment-Cargo Handler/Operator	29.4 Inbound shipment-cargo handler/operator
25.4.1            Warehouse Operator	29.4.1            Warehouse operator
Art. 26. Multi-Modal Transport Docs.	Art. 30. Transport Documents issued by freight forwarders
26.1         Late delivery, misrouting, mishandling, loss and damage	30.1         Claim – ibid
26.2         Customs, duties, and taxes	30.2         Customs duties & taxes
26.3         Port charges i.e. arrastre wharfage	30.3         Port charges i.e. arrastre wharfage
26.4         Inbound shipment-cargo handler/operator	30.4         Inbound shipment-cargo handler/operator
26.4.1            Warehouse operator	30.4.1            Warehouse operator

ANNEX II

a) the sophistication of the equipment used by each of the parties;
b) the nature of their trade activity;
c) the frequency at which commercial transactions take place between the parties;
d) the kind and size of the transaction;
e) the function of signature requirements in a given statutory and regulatory environment;
f) the capability of communication systems;
g) compliance with authentication procedures set forth by intermediaries;
h) the range of authentication procedures made available by any intermediary;
i) compliance with trade customs and practice;
j) the existence of insurance coverage mechanisms against unauthorized messages;
k) the importance and the value of the information contained in the data message;
l) the availability of alternative methods of identification and the cost of implementation;
m) the degree of acceptance or non-acceptance of the method of
identification in the relevant industry or field both at the time the
method was agreed upon and the time when the data message was
communicated; and
n) any other relevant factor.