Must Online Sellers Secure Permits Before Listing Regulated Goods?
Introduction
Online sellers cannot assume that listing a product on an e-marketplace is merely a private commercial activity. Philippine law imposes separate duties on online marketplaces, e-retailers, and merchants, especially when the goods are regulated because of public health, safety, consumer protection, or product-quality concerns.
Under the Internet Transactions Act of 2023, e-marketplaces must prohibit the sale of regulated goods unless the seller provides the necessary permit and license information. The required authorization depends on the product. Food, medicines, medical devices, and other health products may require authorization from the Food and Drug Administration (FDA), while certain consumer products, including regulated electrical or electronic goods, may be subject to Department of Trade and Industry (DTI) standards and certification requirements.
What Does the Internet Transactions Act Require?
Republic Act No. 11967, or the Internet Transactions Act of 2023, applies to business-to-business and business-to-consumer internet transactions within the mandate of the DTI when at least 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 Philippines.
The Act does not cover online media content or consumer-to-consumer transactions. Its principal provisions concern commercial online transactions, including transactions conducted through e-marketplaces and other digital platforms.
Under Section 21(e) of Republic Act No. 11967, an e-marketplace must prohibit the sale of regulated goods unless the seller provides the necessary permits and license information. The e-marketplace must also contractually require compliance with applicable sale procedures, limitations, and other conditions imposed by law or local government regulation.
This means that a marketplace may not treat regulatory compliance as solely the seller’s concern. The platform itself has a legal duty to prevent the sale of regulated goods where the necessary authorizations have not been shown.
What Must E-Marketplaces Check Before Listing Regulated Goods?
Before listing an online merchant, an e-marketplace must require, as far as practicable, identifying and business information. This includes the merchant’s name, a valid government identification card for an individual or business registration documents for a juridical entity, geographic address, and contact details consisting of a telephone or mobile number and valid email address.
For services connected with a regulated profession, the marketplace must also require information concerning the seller’s membership in the relevant professional body or institution.
The marketplace must maintain an updated and regularly verified list of registered online merchants. It must also maintain consumer redress mechanisms and take precautions to protect personal data under the Data Privacy Act of 2012.
These obligations do not replace product-specific licensing rules. A seller’s DTI or Securities and Exchange Commission registration is not, by itself, proof that the seller may offer medicines, health products, food, regulated electrical goods, or other controlled products for sale.
Are FDA Licenses Needed for Pharmaceuticals and Health Products?
Generally, yes. The FDA regulates health products, including drugs, medical devices, and other products falling within the scope of the Food and Drug Administration Act of 2009. The manufacture, importation, exportation, sale, offering for sale, distribution, transfer, or non-consumer use of a health product without the required FDA authorization is prohibited.
Health products must also comply with FDA labeling requirements. Advertisements, promotions, sponsorships, and other marketing activities directed to the general public must comply with FDA standards and regulations and must not create a misleading, deceptive, false, or erroneous impression concerning the product’s character, value, composition, merit, safety, efficacy, or quality.
Accordingly, an online seller offering pharmaceuticals or other health products should verify, before listing, at least the following:
- whether the product is a health product regulated by the FDA;
- whether the product has the required FDA registration or authorization;
- whether the seller or establishment has the required FDA license, when applicable;
- whether the product label complies with FDA requirements;
- whether the online advertisement makes only permitted and supportable claims; and
- whether the marketplace requires and records the relevant authorization documents.
In Department of Health, et al. v. Philippine Tobacco Institute, Inc., et al., G.R. No. 200431, 20 April 2021, the Supreme Court recognized that tobacco products may be treated as health products for purposes of FDA regulation concerning health. The Court explained that the FDA’s authority over the health aspects of tobacco products is not eliminated merely because another statute assigns an agency authority over specified tobacco-related activities.
What Rules Apply to Food Products?
Food sellers must consider the Food Safety Act of 2013 and the requirements issued by the appropriate regulatory agencies. Republic Act No. 10611 requires appropriate authorizations in the form of permits, licenses, and certificates of registration or compliance for establishments and facilities engaged in the production, post-harvest handling, processing, packing, holding, or production of food for consumption.
The applicable authorization depends on the nature of the food activity and the responsible regulatory agency. A seller should not assume that a business permit alone satisfies food-safety requirements. Depending on the product and activity, additional registration, licensing, sanitation, labeling, or product-compliance requirements may apply.
For online listings, the seller should ensure that product descriptions, labels, photographs, health claims, expiration information, and storage instructions are accurate and consistent with applicable regulations. The marketplace should also be able to identify the seller and, where required, verify the relevant authorization before the product is offered to consumers.
What Rules Apply to Electronics and Other Consumer Products?
Electronics and other consumer products may be subject to DTI product standards, inspection, testing, certification, labeling, or importation requirements. The precise obligation depends on the product classification and the applicable technical regulation.
Republic Act No. 7394, or the Consumer Act of the Philippines, requires consumer products to comply with applicable quality and safety standards before distribution in commerce. In Department of Trade and Industry v. SteelAsia Manufacturing Corporation, G.R. No. 238263, 15 November 2021, the Supreme Court recognized the DTI’s authority to issue regulations implementing consumer-protection and product-quality laws, including measures requiring inspection, testing, and certification.
The required authorization for an electronic product may therefore differ according to whether the product is covered by mandatory certification, an applicable Philippine standard, an importation requirement, or another product-specific regulation. Sellers should identify the exact product classification before listing it online.
Registration with the DTI or SEC is not necessarily equivalent to product certification. A seller may be properly registered as a business but still be unable to sell a particular regulated product without the required product authorization.
Does Product-Specific Regulation Override General Marketplace Rules?
Yes. Republic Act No. 11967 establishes general obligations for e-marketplaces and online merchants, but it does not remove the requirements imposed by product-specific laws.
For example, a marketplace listing for a pharmaceutical product must comply with the Internet Transactions Act and FDA requirements. A listing for food must comply with the Internet Transactions Act and applicable food-safety rules. A listing for a regulated electronic product must comply with the Internet Transactions Act and applicable DTI product standards.
The marketplace should therefore use a layered compliance process:
- identify whether the product is regulated;
- determine the government agency with jurisdiction;
- verify the seller’s business identity and contact information;
- require the applicable license, permit, registration, or certification;
- review the product’s labeling and online claims; and
- retain records showing the basis for approving the listing.
What Are the Duties of Online Merchants?
Section 23 of Republic Act No. 11967 requires e-retailers and online merchants to publish on their homepage their corporate or trade name, physical business address, and contact details, including a telephone or mobile number and valid email address. Where the service involves a regulated profession, the seller must also provide information concerning membership in the relevant professional body.
Online merchants must protect consumer data in accordance with Republic Act No. 10173, issue paper or electronic invoices or receipts for sales, and maintain an accessible and efficient complaint mechanism. Where the merchant is engaged in delivery services, it may require the consumer to provide at least a valid email address or mobile number before the transaction.
These obligations are separate from the duty to obtain product-specific authorization. A seller must satisfy both the general online-commerce requirements and the special requirements applicable to the product being sold.
Can a Marketplace Be Required to Disclose Seller Information?
Yes, but the disclosure process is subject to statutory conditions. Under Republic Act No. 11967, an e-marketplace must provide specified information upon subpoena by a competent authority when an investigation is based on a sworn complaint stating that the platform is being used in the commission of a crime or as a means to commit a malicious, fraudulent, or unlawful act, and the complainant cannot ascertain the perpetrator’s identity.
This mechanism reinforces the importance of accurate seller identification and recordkeeping. A seller who uses false identity information or submits questionable permits may expose both the seller and other participants in the transaction to regulatory or legal consequences.
What Should Sellers Do Before Listing Regulated Goods?
Online sellers should conduct a product-by-product compliance review rather than relying only on their business registration documents.
- Classify the product. Determine whether it is food, medicine, a medical device, a tobacco or vapor product, an electronic device, or another regulated consumer product.
- Identify the responsible agency. The FDA, DTI, local government, Bureau of Internal Revenue, or another agency may impose separate requirements.
- Secure the necessary authorization. Obtain the applicable license, permit, registration, certification, or approval before listing or selling.
- Submit accurate documents to the marketplace. Ensure that the documents identify the correct seller, product, establishment, and location and remain valid.
- Review product claims. Avoid unsupported claims about health benefits, safety, efficacy, performance, or quality.
- Maintain compliance records. Keep copies of permits, invoices, labels, supplier records, and marketplace communications.
Special Rule for Vaporized Nicotine Products
Republic Act No. 11900 allows the online sale or distribution of vaporized nicotine and non-nicotine products, their devices, and novel tobacco products, subject to specific conditions.
The online seller or distributor must adopt measures to prevent persons below eighteen years of age from accessing the sale. The website must bear the required signages, and a person’s legal age must be self-declared on the opening page when access is sought.
Online sellers or distributors must also be registered with the DTI or SEC. Products sold and advertised online must comply with statutory health-warning requirements and applicable Bureau of Internal Revenue requirements, including tax stamps, minimum or floor prices, or other fiscal marks. Delivery must likewise comply with the requirements of the law.
What Are the Risks of Listing Without the Required Authorization?
A marketplace may suspend or remove a listing, reject the seller’s application, require additional documents, or restrict the seller’s account. The DTI may also issue compliance or takedown measures under the Internet Transactions Act when an online activity violates applicable law or regulation.
Depending on the product and conduct involved, the seller may also face administrative sanctions, product seizure, cancellation or suspension of licenses, consumer claims, or criminal liability under the applicable special law. The precise consequence depends on the product, the violation, the seller’s knowledge and conduct, and the enforcement authority involved.
In Venus Commercial Co., Inc. v. Department of Health, et al., G.R. No. 240764, 8 June 2021, the Supreme Court upheld FDA administrative searches and seizures conducted under the FDA Act and its implementing rules. The decision confirms that regulatory authorities may use enforcement measures to protect public health when statutory requirements are violated.
Final Observations
Online sellers should secure the applicable specialized license, permit, registration, or certification before listing regulated goods. DTI or SEC business registration establishes the seller’s business identity; it does not automatically authorize the sale of every product.
Marketplaces should verify regulatory documents, maintain seller records, prohibit unauthorized listings, and provide complaint and redress mechanisms. Sellers should classify each product, identify the responsible regulator, confirm current requirements, and ensure that all product descriptions, labels, advertisements, and delivery practices comply with Philippine law.
About Nicolas and De Vega Law Offices
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