THE E-COMMERCE ACT
Part I: Salient Points
Author: JJ Disini
Source: The
Philippine Star
Date: July 10, 2000
Republic Act No. 8792, otherwise known as the “Electronic
Commerce Act” recently went into effect without the fanfare that
occasioned its passage and approval. Any fanfare, to say the least, would
have been well-deserved -- unless we had lost sight of the fact that the
Philippines had beat even the United States in enacting an electronic
commerce law.
Inevitably, questions arise with respect to the law’s
impact not only upon our present body of laws but more importantly, upon
the business community as a whole. While the full impact of the law will
be felt way into the future, some of its significant provisions are expected
to have immediate effects. Without any doubt, the law was intended to
uphold the legal validity of electronic transactions and contracts and
create a secure legal environment which is expected to spur the growth
of electronic commerce in the country.
In a nutshell, the law:
- Raises electronic documents to the same legal status as paper documents;
- Elevates electronic signatures to the level of manually-signed signatures;
- Allows the use of electronic documents and electronic signatures in
commercial and non-commercial transactions;
- Mandates the Government to conduct its business electronically within
two (2) years; and,
- Criminalizes hacking and on-line piracy.
Electronic Documents. The law simply
states that information in electronic documents will not be denied legal
effect on the sole ground that it is in electronic form. Note that the
law does not intend to validate the contents of electronic documents but
only their form.
In practical terms, whenever the law requires a “writing”
or a “document”, an electronic document will suffice. However,
it should be noted that if a notarized document is required by law (such
as in a special power of attorney to sell land), such a document may not
be in electronic form until the Supreme Court promulgates rules on electronic
notarization.
Moreover, information in electronic documents may
be given effect even if it does not appear in the document but is merely
referred to therein. This facilitates the use of codes in electronic contracts
or the incorporation of standard terms and conditions by way of an active
hyperlink.
Finally, records required by the government to be
kept may now be retained in electronic form. This provision would allow
say, the retention of BIR records in a graphic format. But don’t
throw away your filing cabinets just yet. It would be more prudent to
wait for specific guidelines governing such retention. Nonetheless, it
is clear that this will boost the demand for data imaging and data encoding
services.
Electronic Signatures. It is commonly
believed that electronic signatures are confined to graphic representations
of manually-signed signatures. This, of course, is a fallacy. An electronic
signature may be any distinctive mark that represents the identity of
a person and is intended to authenticate or approve a document. The definition
is, of course, taken from the real world function of a signature. Under
the law if a person were to write the following words in an e-mail: “Okay.
Sgd. Gloria” – that would be a sufficient electronic signature.
However, be mindful of the fact that Section 8 of the Act seems to require
a particular non-alterable process before an electronic signature is given
legal effect and validity.
Scope of the Law. Despite its title,
the “Electronic Commerce Act” applies equally to non-commercial
transactions. The expansion of its scope was necessary in order to allow
electronic documents to perform non-commercial functions such as establishing
the paternity of a child; casting a vote in an election; and committing
torts and criminal offenses (e.g., libel and threats).
The Philippine “eGovernment”.
The law requires all government agencies to conduct their business and
perform public functions electronically within two (2) years from the
effectivity of the law. Whether this is a reasonable deadline remains
to be seen. However, it can expected that many government processes will
be re-engineered to avoid computerizing bureaucratic red tape.
Hacking and On-Line Piracy. Hacking
which refers to, among others, unauthorized access to data is including
the introduction of viruses is now punishable as a criminal offense. The
same is true for on-line piracy or the illegal copying, distribution,
broadcast, dissemination, upload, download, among others, of protected
works. Most striking is the penalty common to both offenses providing
for a minimum fine of P100,000 and a maximum “commensurate to the
damage incurred”. In practical terms, if the person who released
the ILOVEYOU virus were convicted under this law, the fine may total as
much as US$50 billion. Hence, it remains to be seen if the penalty may
be stricken down by the courts for being “cruel and unusual”
and therefore, unconstitutional.
Aside from the above-mentioned features, there are
other important issues surrounding the Electronic Commerce Act and these
involve electronic contracting, the problem of proof and evidence, and
the liability of service providers. Atty. JJ Disini is currently drafting
the Implementing Rules and Regulations for the Electronic Commerce Act
in behalf of a multi-agency task force co-chaired by the DTI, DBM and
the BSP. He is also a partner at Disini & Disini Law Office (www.disini.ph)
and can be reached at jj@disini.ph.
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