[Table of Contents]

PART II

ELECTRONIC COMMERCE IN GENERAL 

CHAPTER I

Sec. 3. Objective. This 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 transaction in the government and general public.

Sec. 4. Sphere of Application. This Act shall apply to any kind of 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.

Sec. 5. Definition of Terms. For the purposes of this Act, 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. The term does not include a person acting as an intermediary with respect to that electronic data message or electronic document.

b)  “Computer” refers to any device or apparatus which, by electronic, electro-mechanical or magnetic impulse, or by other means, is capable of receiving, recording, transmitting, storing, processing, retrieving, or producing information, data, figures, symbols or other modes of written expression according to mathematical and logical rules or of performing any one or more of those functions.

c)  “Electronic Data message” refers to information generated, sent, received or stored by electronic, optical or similar means.

d)  “Information and communication system” refers to a system intended for and capable of 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.

e)  “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.

f)  “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.

g)  “Electronic key” refers to a secret code which secures and defends sensitive information that crosses over public channels into a form decipherable only with a matching electronic key.

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

i)  “Originator” refers to a person by whom, or on whose behalf, the 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 document.

j)  “Service provider” refers to a provider of –

i)  On-line services or network access, or the operator of facilities thereof, including entitiesoffering the transmission, routing, or providing of connections for online communications, digital or otherwise, between or among points specified by a user, of electronic documents of the user’s choosing; or

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

iii)  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 who shall retain the 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 WRITING OR DOCUMENT AND DATA MESSAGES

Sec. 6. Legal Recognition of Data Messages – Information shall not be denied legal effect, validity or enforceability solely on the grounds that it is in the data message purporting to give rise to such legal effect, or that it is merely referred to in that electronic data message.

Sec. 7. Legal Recognition of Electronic Documents – Electronic documents shall have the legal effect, validity or enforceability as any other document or legal writing, and –

a)  Where the law requires a document to be in writing, that requirement is met by an electronic document if the said electronic document maintains its integrity and reliability and can be authenticated so as to be usable for subsequent reference, in that –

• i)  The electronic document has remained complete and unaltered, apart from the addition ofany endorsement and any authorized change, or any change which arises in the normalcourse of communication, storage and display; and

• ii)  The electronic document is reliable in the light of the purpose for which it was generated andin the light of all the relevant circumstances.

b)  Paragraph (a) applies whether the requirement therein is in the form of an obligation or whetherthe law simply provides consequences for the document not being presented or retained in itsoriginal form.

c)  Where the law requires that a document be presented or retained in its original form, thatrequirement is met by an electronic document if –

• i)  There exists a reliable assurance as to the integrity of the document from the time when itwas first generated in its final form; and

• ii)  That document is capable of being displayed to the person to whom it is to be presented:Provided, That no provision of this Act shall apply to vary any and all requirements of existinglaws on formalities required in the execution of documents for their validity.

For evidentiary purposes, an electronic document shall be the functional equivalent of a written document under existing laws.

This 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.

Sec. 8. Legal Recognition of Electronic Signatures – An electronic signature on the electronic document shall be equivalent to the signature of a person on a written document if that signature is proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document, existed under which –

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

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

c)  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

d)  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.

Sec. 9. Presumption Relating to Electronic Signatures – In any proceeding involving an electronic signature, it shall be presumed 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 theelectronic document unless the person relying on the electronically signed 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.

Sec. 10. Original Documents –

(1) Where the law requires information to be presented or retained in its original form, that requirement is met by an electronic data message or electronic document if:

• (a) the integrity of the information from the time when it was first generated in its final form, as an electronic data message or electronic document is shown by evidence aliunde or otherwise; and

• (b) where it is required that information be presented, that the information is capable of being displayed to the person to whom it is to be presented.

(2)  Paragraph (1) applies whether the requirement therein is in the form of an obligation or whether the law simply provides consequences for the information not being presented or retained in its original form.

(3)  For the purposes of subparagraph (a) of paragraph (1):

• (a) the criteria for assessing integrity shall be whether the information has remained complete andunaltered, apart from the addition of any endorsement and any change which arises in the normalcourse of communication, storage and display; and
  

• (b) the standard of reliability required shall be assessed in the light of the purpose for which theinformation was generated and in the light of all relevant circumstances.

Sec. 11. Authentication of Electronic Data Messages and Electronic Documents – Until the Supreme Court by appropriate rules shall have so provided, 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, among other ways, as follows:

(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 and 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 and/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 acknowledgement procedures, or similar security devices.

The Supreme Court may adopt such other authentication procedures, including the use of electronic notarization systems as necessary and advisable, as well as the certificate of authentication on printed or hard copies of the electronic document or electronic data messages by electronic notaries, service providers and other duly recognized or appointed certification authorities.

The person seeking to introduce an electronic data message and electronic document in any legal proceeding has the burden of proving its authenticity by evidence capable of supporting a finding that the electronic data message and electronic document is what the person claims it to be.

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 –

(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 data message and/or electronic document, and there are no other reasonable grounds to doubt the integrity of the information and communication system;

(b)  By showing that the electronic data message and/or electronic document 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 data message and/or electronic document 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.

Sec. 12. Admissibility and Evidential Weight of Electronic Data Message and Electronic Documents – In any legal proceedi ngs, 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 and electronic data message or electronic document meeting, and complying with the requirements under Sections 6 or 7 hereof shall be the best evidence of the agreement and transaction contained therein.

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.

Sec. 13. 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;

• iii. 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.

Sec. 14. Proof By Affidavit – The matters referred to in Section 12, on admissibility and Section 9, on the presumption of integrity, may be presumed to have been established by an affidavit given to the best of the deponent’s knowledge subject to the rights of parties in interest as defined in the following section.

Sec. 15. Cross-Examination – (1) A deponent of an affidavit referred to in Section 14 that has been introduced in evidence may be cross-examined as of right 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.

(2) Any party to the proceedings has the right to cross-examine a person referred to in Section 11, paragraph 4, sub-paragraph c.

CHAPTER III

COMMUNICATION OF ELECTRONIC DATA MESSAGES AND ELECTRONIC DOCUMENTS

Sec. 16. Formation and Validity of Electronic Contracts –

(1)  Except as otherwise agreed by the parties, an offer, the acceptance of an offer and such otherelements required under existing laws for the formation 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.

(2)  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.

Sec. 17. Recognition by Parties of Electronic Data Message or Electronic Document – 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.

Sec. 18. Attribution of Electronic Data Message –

(1)  An electronic data message or electronic document is that of the originator if it was sent by theoriginator himself.

(2)  As between the originator and the addressee, an electronic data message or electronic document isdeemed 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 electronicdata message or electronic document; or

• (b)  by an information system programmed by, or on behalf of the originator to operate automatically.

(3)  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 or electronic document was that of theoriginator, the addressee properly applied a procedure previously agreed to by the originator forthat purpose; or

• (b)  the electronic data message or electronic document as received by the addressee resulted fromthe actions of a person whose relationship with the originator or with any agent of the originator enabled that person to gain access to a met hod used by the originator to identify electronic data messages as his own.

(4)  Paragraph (3) does not apply:

• (a)  as of the time when the addressee has both received notice from the originator that the electronicdata message or electronic document is not that of the originator, and has reasonable time to actaccordingly; or

• (b)  in a case within paragraph (3) sub-paragraph (b), at any time when the addressee knew or shouldhave known, had it exercised reasonable care or used any agreed procedure, that the electronicdata message or electronic document was not that of the originator.

(5)  Where an electronic data message or electronic document is that of the originator or is deemed to bethat of the originator, or the addressee is entitled to act on that assumption, then, as between the originator and the addressee, the addressee is entitled to regard the electronic data message orelectronic document as received as being what the originator intended to send, and to act on that assumption. The addressee is not so entitled when it knew or should have known, had it exercised reasonable care or used any agreed procedure, that the transmission resulted in any error in the electronic data message or electronic document as received.

(6)  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.

Sec. 19. 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 or used the appropriate procedure –

(a)  That the transmission resulted in any error therein or in the electronic document when the electronic data message or electronic document enters the designated information system, or

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

Sec. 20. 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 orelectronic 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 in subparagraph (c), 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 other rights it may have.

Sec. 21. Time of Dispatch of Electronic Data Messages or Electronic Documents – 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 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.

Sec. 22. Time of Receipt of Electronic Data Messages or Electronic Documents – 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 system for the purpose of receiving electronic data message or electronic document, receipt occurs at the time when the electronic datamessage or electronic document enters the designated information system: Provided, however, that if the originator and the addressee are both participants in the designated information 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 system of the addressee that is not the designated information 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 system, receipt occurs when the electronic data message or electronic document enters an information system of the addressee.

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

Sec. 23. Place of Dispatch and Receipt of Electronic Data Messages or Electronic Documents – 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. Th is rule shall also apply to determine the tax situs of such transaction.

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, means the place where it is incorporated or otherwise legally constituted.

Sec. 24. Choice of Security Methods -Subject to applicable laws and/or rules and guidelines promulgated by the Department of Trade and Industry with other appropriate government agencies, parties to any electronic transaction shall be free to determine the type and level of electronic data message and electronic document security needed, and to select and use or implement appropriate technological methods that suit their needs.