How Should E-Commerce Terms Comply With RA 11967?
Introduction
Digital platforms, e-retailers, and online merchants should review their user agreements in light of the Internet Transactions Act of 2023. Republic Act No. 11967 imposes disclosure, merchant-verification, privacy, invoicing, and consumer-redress duties that may not be satisfied by a generic terms-of-service document.
A properly drafted agreement should explain the platform’s role, identify the parties responsible for each transaction, disclose relevant commercial information, preserve consumer rights, and avoid contractual provisions that conflict with Philippine law. The agreement should also work together with the platform’s privacy notice, merchant agreement, refund policy, and complaint-handling procedure.
Governing Philippine Laws
The principal statute is the Internet Transactions Act of 2023, or Republic Act No. 11967. It applies to business-to-business and business-to-consumer internet transactions within the mandate of the Department of Trade and Industry when one party is situated in the Philippines or when the digital platform, e-retailer, or online merchant avails of the Philippine market and has minimum contacts in the country.
The Act does not cover online media content or consumer-to-consumer transactions. A foreign platform may still be subject to Philippine laws when it avails of the Philippine market to the extent of establishing minimum contacts, even if it has no legal presence in the Philippines.
Electronic contracting is also governed by Republic Act No. 8792, or the Electronic Commerce Act. Under Section 16, an offer, acceptance, and other elements required for contract formation may be expressed, demonstrated, and proved through electronic data messages or electronic documents. A contract cannot be denied validity or enforceability solely because it is electronic.
Data-processing clauses must comply with Republic Act No. 10173, or the Data Privacy Act of 2012. Platforms must also consider applicable issuances of the National Privacy Commission, including requirements concerning transparency, lawful processing, and valid consent.
First Identify the Platform’s Legal Role
The terms of service should not treat every online business as if it performs the same function. RA 11967 distinguishes among e-marketplaces, other digital platforms that do not retain oversight over the transaction, e-retailers, and online merchants.
| Platform role | Drafting consequence |
|---|---|
| E-marketplace | The agreement should explain merchant verification, transaction identification, promotional disclosures, privacy safeguards, and available redress mechanisms. |
| Digital platform without oversight over consumption | The agreement should accurately describe the platform’s limited role while addressing account information, prohibited conduct, complaint reporting, and ordinary diligence. |
| E-retailer or online merchant | The agreement should cover business identity, contact details, invoices or receipts, delivery, complaints, refunds, and consumer-facing obligations. |
A platform should not describe itself as a passive intermediary if its actual operations include payment processing, order confirmation, inventory control, delivery coordination, customer support, or authority to resolve disputes. The contract should reflect the platform’s actual conduct and technology.
Required Business and Merchant Information
For an e-marketplace, the terms should state that transactions will be clearly identified as e-commerce transactions and that the person or entity on whose behalf the transaction is made will be identified.
Promotional offers should also be described clearly. Discounts, premiums, gifts, eligibility requirements, expiration dates, limitations, and other conditions should be accessible, clear, and unambiguous.
Under RA 11967, e-marketplaces must require, as far as practicable, online merchants to submit the following before being listed:
- The merchant’s name, supported by a valid government identification card for an individual or business registration documents for a juridical entity;
- The geographic address of the merchant;
- A mobile or landline number and valid email address; and
- Professional registration details when the service is connected with the exercise of a regulated profession.
The platform’s agreement should authorize the collection and verification of these details, explain which information will be displayed publicly, and identify the circumstances in which information may be disclosed to competent authorities.
Except for government identification or registration documents and required contact details, the information should generally be published for transparency unless the platform provides a means for communication between merchants and consumers or provides a link to the Online Business Database.
Merchant Lists and Disclosure to Authorities
An e-marketplace must maintain a list of registered online merchants containing the information required by law. The list must be updated and verified regularly. The merchant terms should therefore include continuing duties to update business names, addresses, contact details, registration information, and professional credentials.
The terms should also explain that the platform may be required to provide specific information upon the issuance of a subpoena by a competent authority. Under RA 11967, this mechanism applies when an investigation is based on a sworn complaint alleging that the platform was used in the commission of a crime or as a means to commit a malicious, fraudulent, or unlawful act, and the complainant is unable to ascertain the perpetrator’s identity.
This clause should not be drafted as a general license for unrestricted disclosure. It should refer to lawful requests, applicable procedural requirements, data-protection duties, and the platform’s obligation to disclose only information covered by the competent authority’s process.
Consumer Privacy Provisions
RA 11967 requires digital platforms, e-marketplaces, e-retailers, and online merchants to take necessary precautions to protect consumer data in accordance with the Data Privacy Act. The terms of service should therefore be consistent with, but should not replace, a separate and accessible privacy notice.
The agreement should identify, in understandable language:
- The categories of personal data collected;
- The purposes of collection and processing;
- The parties or categories of recipients who may receive the data;
- Retention or deletion practices, where applicable;
- The rights and available remedies of data subjects; and
- The channels for privacy-related inquiries and complaints.
Consent should not be obtained through vague or blanket language when a more specific legal basis or purpose-specific authorization is required. NPC Circular No. 2023-04 emphasizes that valid consent should be freely given, specific, informed, evidenced, and capable of being withdrawn easily.
Terms should also avoid burying privacy disclosures in dense commercial provisions. The National Privacy Commission has stressed that information must be intelligible and understandable to the average data subject. A platform should use headings, plain explanations, and separate privacy notices rather than relying solely on a long-form contract.
Consumer Complaints and Redress
An e-marketplace must maintain an effective and responsive redress mechanism for consumers and merchants. An e-retailer or online merchant must also have an accessible and efficient mechanism for handling client complaints.
The terms should state:
- How a complaint may be filed;
- The information and evidence that should accompany the complaint;
- The expected acknowledgment and response process;
- How the platform may request information from the parties;
- Available remedies, including cancellation, replacement, refund, or correction where legally applicable; and
- How unresolved complaints may be elevated to the appropriate government agency or other lawful forum.
A clause stating that all platform decisions are final should be reviewed carefully. Such wording should not improperly remove statutory consumer rights, prevent a lawful complaint, or restrict access to a competent government agency or court.
Invoices, Receipts, Delivery, and Transaction Records
E-retailers and online merchants must issue paper or electronic invoices or receipts for all sales. The terms should state when the invoice or receipt will be issued, how it will be delivered, and how the consumer may request a copy or correction.
Where the merchant is engaged in delivery services, RA 11967 permits it to require at least a valid email address or mobile phone number before entering into a transaction. The collection of this information should be connected to a legitimate operational purpose and handled consistently with the Data Privacy Act.
The contract should separately explain order placement, acceptance, payment authorization, shipment, delivery attempts, failed delivery, cancellation, returns, refunds, and circumstances beyond the merchant’s reasonable control.
Electronic Contract Formation and User Acceptance
Under the Electronic Commerce Act, the agreement may be accepted electronically. The platform should preserve reliable evidence of assent, such as the version of the terms presented, the date and time of acceptance, the user account, and the transaction or system record associated with the acceptance.
A checkbox or similar mechanism should identify the document being accepted. Important provisions should not be hidden behind an unrelated button or incorporated solely through inaccessible hyperlinks.
The Supreme Court held in MCC Industrial Sales Corporation v. Ssangyong Corporation, G.R. No. 170633, 2007, that electronic evidence must fall within the applicable statutory definition and evidentiary requirements. The decision also distinguished electronic documents from a fax transmission under the version of the Electronic Commerce Act considered in that case.
For drafting purposes, the platform should preserve the original electronic record, associated metadata where available, system logs, and the version history of amended terms. The agreement should also explain how users will be notified of material changes.
Prohibited and High-Risk Clauses
Corporate counsel should review the following provisions with particular care:
- A blanket waiver of consumer rights under Philippine law;
- A statement that the platform may process all user information for any purpose without further notice;
- A unilateral amendment clause that provides no reasonable notice of material changes;
- A complete exclusion of liability despite the platform’s own breach, fraud, unlawful conduct, or failure to observe duties imposed by law;
- A clause requiring consumers to waive complaints before the transaction is completed; and
- An exclusive foreign forum or governing-law clause that defeats mandatory Philippine protections applicable to the transaction.
Limitations of liability may be appropriate when clearly written and legally permissible, but they should distinguish between indirect commercial risks and liability that cannot lawfully be excluded. The wording should also correspond to the platform’s actual role and level of control.
Foreign Platforms and Philippine Market Contacts
A foreign platform cannot assume that the absence of a Philippine office removes it from Philippine regulation. Under the extraterritorial application provision of RA 11967, a person engaging in e-commerce who avails of the Philippine market to the extent of establishing minimum contacts is subject to applicable Philippine laws and regulations.
Terms for a foreign platform should therefore address Philippine transactions directly. They should identify the responsible merchant, provide a Philippine-facing complaint channel where appropriate, explain the treatment of Philippine consumer data, and avoid representations that Philippine law is categorically inapplicable.
Recommended Terms-of-Service Structure
A compliant agreement may be organized into the following sections:
- Definitions and identification of the platform’s role;
- Eligibility, account registration, and user verification;
- Merchant information and continuing update obligations;
- Product or service listings and promotional offers;
- Order formation, payment, invoices, and receipts;
- Delivery, cancellation, returns, refunds, and failed transactions;
- Prohibited conduct and account suspension;
- Privacy, data security, and communications;
- Complaints, redress, and escalation;
- Electronic records and notices;
- Changes to the agreement;
- Disclaimers and limitations of liability; and
- Governing law, dispute resolution, and contact information.
These sections should be supported by separate merchant terms, a privacy notice, a returns and refunds policy, a community or acceptable-use policy, and a consumer complaint procedure. A single document should not be used to obscure distinct legal disclosures.
Drafting and Compliance Checklist
Before publishing the agreement, counsel should confirm that the platform:
- Correctly identifies whether it is an e-marketplace, digital platform, e-retailer, or online merchant;
- Collects and verifies the information required from merchants;
- Maintains an updated merchant list;
- Clearly identifies the parties and the nature of each online transaction;
- Discloses promotional conditions in clear and accessible language;
- Provides invoices or receipts for sales;
- Maintains an accessible complaint and redress mechanism;
- Protects personal data under the Data Privacy Act; and
- Preserves reliable records of electronic acceptance and material amendments.
Conclusion
Terms of service under RA 11967 should be treated as part of an integrated compliance system rather than as a standalone liability waiver. The document must accurately describe the platform’s role, disclose the identity and information of merchants, protect consumer data, support electronic contracting, and provide a functioning complaint process.
Corporate counsel should conduct a provision-by-provision review of the agreement against the platform’s actual business model and technology. The review should include the merchant onboarding process, marketplace disclosures, privacy notice, invoice system, complaint workflow, data-retention practices, and procedures for responding to lawful subpoenas and regulatory orders.
About Nicolas and De Vega Law Offices
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