Obligations and Remedies of Online Consumers under the Internet Transactions Act of 2023

Online consumer

Republic Act No. 11967, also known as the “Internet Transactions Act of 2023”

A new law was passed regulating internet transactions in the Philippines.  Republic Act No. 11967, also known as the “Internet Transactions Act of 2023”, aims “to promote and maintain a robust electronic commerce (e-commerce) environment in the country by building trust between online merchants and online consumers.”

The Internet Transactions Act of 2023 applies to all business-to-business and business-to-consumer internet transactions within the jurisdiction of the Department of Trade and Industry (DTI), where a) one (1) of the parties is situated in the Philippines or b) where the digital platform, e-retailer, or online merchant is availing of the Philippine market and has minimum contacts. This means that internet transactions, regardless of the location of the online retailer or merchant, is governed by the Internet Transactions Act of 2023 if part of its intended market is in the Philippines, and provided the online retailer or merchant has minimum contacts in the Philippines.

Online Businesses regardless of Location are covered by the Internet Transactions Act of 2023

As a matter of fact, Section 5 of the law expressly mentions that a person who, while engaging in e-commerce activity, does not have legal presence in the Philippines, will still be subject to applicable Philippine laws and regulations if the person avails of the Philippine market to the extent of establishing minimum contacts in the country.

The law, however, excluded online media content, and customer-to-customer transactions, referring to transactions between end-users done for personal, family, or household purposes and not done as a business endeavor. 

Through the Internet Transactions Act of 2023, a new E-Commerce Bureau was established under the Department of Trade and Industry, tasked specifically to handle covered businesses and transactions, to investigate, adjudicate and resolve complaints, and enforce applicable Philippines laws and regulations to protect online consumers and the general public.

Obligations of Online Consumers

Obligation of Ordinary Diligence

The Internet Transactions Act of 2023 now defined the obligations of online consumers in any internet transaction. It is incumbent on the consumer to exercise ordinary diligence in any internet transaction.

No Cancellation Policy

Where the online transaction includes the delivery of the purchased goods, the consumer is prohibited from cancelling confirmed orders when the said items have already been paid for by, or the goods are perishable in nature and are already in the possession of a third-party delivery service, or otherwise in transit to the online consumer. This means that the prior to the goods being paid for by, or handed over to, the delivery service or the courier, the consumer would have the right to cancel the transaction.

Exceptions to No Cancellation Policy

The rule prohibiting cancellation of confirmed orders is subject to four exceptions:

  1. The online consumer used electronic or digital payment and authorized the crediting of the amount despite cancellation
  2. The online consumer reimburses the third-party delivery service as a pre-condition for the cancellation of the order;
  3. The transaction allows cancellation for a fee; or
  4. The parties agree otherwise.

Remedies of Online Consumers

The Internet Transactions Act of 2023 enumerates certain remedies which online consumers may invoke in case the goods are defect or malfunction. It must be noted that these remedies are in addition to those which the online purchaser may invoke under the Civil Code, the Consumer act and existing regulations of the Department of Trade and Industry.

Defective or Lost Items

Thus, when the item is defective, malfunctions, loss of the item without fault from the online consumer, or failure to conform with warranty or any liability of the online merchant or e-retailer arising from the online transaction, he or she have the right to pursue the following remedies:

  1. Repair
  2. Replacement
  3. Refund, or
  4. Other remedies provided under Republic Act No. 7394 or any existing relevant laws

Refund or Replacement

If the online consumer avails or either replacement or refund as a remedy, the online merchant is entitled to the return of the original goods delivered, without any cost to the online consumer, within a reasonable period from the receipt thereof. Other arrangements or remedies may be agreed as, depending on what is indicated in the terms of the sale or the conditions of the transaction, which of course must be made known to the online consumer prior to the sale or transaction. 

On the other hand, where a refund was already given by the online merchant and the goods can no longer be returned due to the fault of the online consumer, the amount received by the consumer should be immediately returned to the online merchant or e-retailer. 

About Nicolas and De Vega Law Offices

If you need assistance in Philippine tax law, or have any questions about doing business in the Philippines, issues in e-commerce or online business concerns, or other legal concerns, we can help you. Nicolas and de Vega Law Offices is a full-service law firm in the Philippines.  You may visit us at the 16th Flr., Suite 1607 AIC Burgundy Empire Tower, ADB Ave., Ortigas Center, 1605 Pasig City, Metro Manila, Philippines.  You may also call us at +632 84706126, +632 84706130, +632 84016392 or e-mail us at [email protected]. Visit our website www.ndvlaw.com.