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PH Government Agencies Reiterate Laws and Regulations Applicable to Online Businesses and Consumers

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With the accelerated growth of e-Commerce, coupled with increase in consumer complaints and fraudulent online transactions, several government agencies promulgated guidelines reiterating the laws and regulations that also apply to online businesses.

 

Pursuant to their mandates conferred by law, the Department of Trade and Industry (DTI), Department of Agriculture (DA), Department of Environment and Natural Resources (DENR), Department of Health (DOH), Intellectual Property Office of the Philippines (IPOPHL), and the National Privacy Council (NPC) released Joint Administrative Order No. 22-01, which outlines the existing policies, procedures, and guidelines that should apply to online business, and integrates the procedures and remedies that online consumers are entitled to. The JAO covers all online businesses, whether natural or juridical,  formal or informal, that are engaged in electronic transactions, which include, but are not limited to e-Commerce platforms, online sellers, merchants, e-marketplaces, and e-retailers.

 

In general, the JAO provides that laws applicable to physical or offline businesses are, as far as practicable, equally applicable to online businesses. Violations of relevant laws governing commerce, when committed by online businesses, shall be penalized with the same penalties as provided in such applicable laws. Furthermore, the JAO provides that online businesses must bear in mind the following principles of the ASEAN Online Business Code of Conduct:

 

      1. Fair Treatment of Consumers;
      2. Upholding Responsibilities;
      3. Compliance with Laws and Regulations;
      4. Conformance to Local Standards;
      5. Ensured Quality and Safety;
      6. Honest and Truthful Communication;
      7. Price Transparency;
      8. Proper Recordkeeping;
      9. Review and Cancellation Options;
      10. Responsive Consumer Complaint and Redress System;
      11. Consumer Information Security;
      12. Online Payment Security;
      13. Desistance from Online Spamming;
      14. Non-proliferation of Fake Online Reviews;
      15. Consumer Education on Online Risks

 

RESPONSIBILITIES OF ONLINE BUSINESSES AND PROTECTION OF CONSUMERS

 

Following are the specific laws and regulations that are also applicable to online businesses, based on the JAO:

 

On Protection of Online Consumers Against Hazards to Health and Safety

      • R.A. No. 4109 or the “Standards Law, ” including all Department Administrative Orders issued by DTI, particularly the Technical Regulations, to ensure and certify product quality and safety.

      • R.A. No. 9211 or the “Tobacco Regulation Act of 2003” and E.O. No. 106, s. 2020, to ensure compliance with restrictions set forth on advertising, promotions, and access of minors, and to protect the consumers against hazards to health and safety of tobacco, vapor products, and heated tobacco products.
      • R.A. No. 10611 or the “Food and Safety Act of 2013,” P.D. No. 1619 s. 1979, and FDA Circular No. 2019-006, to ensure compliance with restrictions on advertising, promotions, and access of minors, and to protect the consumers against hazards to health and safety of alcoholic beverages.

      • DA regulations, including but not limited to proper handling and stewardship, shall apply to offer and sale of agricultural products online.

      • DTI Memorandum Circular No. 21-05, s. 2021, which enumerates the 87 products and systems covered under the Bureau of Philippine Standards (BPS) Mandatory Product Certification Schemes. Online platforms, sellers, merchants, or e-retailers selling products covered shall ensure that such products sold online bear a valid Philippine Standard (PS) Quality and/or Safety Certification Mark, Import Commodity Clearance (ICC) sticker, or any certification mark approved and issued by the DTI-BPS. Manufacturers and importers of the covered products shall secure the PS Mark or ICC stickers, and affix the Mark or stickers. 

 

On Protection of Online Consumers Against Deceptive, Unfair, and Unconscionable Sales Acts or Practices 

      • R.A. No. 7394 or the “Consumer Act of the Philippines” and R.A. No. 8293 or the “Intellectual Property Code of the Philippines” on the following: 


      • Prohibition Against Deceptive Online Sales Acts or Practices. The deceptive acts or practices by sellers or suppliers punishable by law include the following:

 

              1. A consumer product or service has the sponsorship, approval, performance, characteristics, ingredients, accessories, uses, or benefits it does not have;
              2. A consumer product or service is of a particular standard, quality, grade, style, or model when in fact it is not;
              3. A consumer product is new, original or unused, when in fact, it is in a deteriorated, altered, reconditioned, reclaimed or second-hand state;
              4. A consumer product or service is available to the consumer for a reason that is different from the fact;
              5. A consumer product or service has been supplied in accordance with the previous representation when in fact it is not;
              6. A consumer product or service can be supplied in a quantity greater than the supplier intends; 
              7. A service, or repair of a consumer product is needed when in fact it is not;
              8. A specific price advantage of a consumer product exists when in fact it does not;
              9. The sales act or practice involves or does not involve a warranty, a disclaimer of warranties, particular warranty terms or other rights, remedies or obligations if the indication is false;
              10. The seller or supplier has a sponsorship, approval, or affiliation he does not have;
              11. The seller or supplier of a product or service has used a trademark, trade name, or other identifying mark, imprint, or device, or any likeness thereof, without the authorization of the owner.
              12. The seller or supplier of a product is not authorized by the trademark holder as a distributor/retail/seller of the product;
              13. The seller or supplier uses the traditional knowledge of indigenous people on wild food plants, medicinal plants, and animal parts, in sales promotions or trade, without their prior written consent or acknowledgement; and
              14. The seller or supplier misrepresents their products as proprietary, having regulatory approval, or legally compliant with existing laws and regulations when in fact they are not.

      • Unfair or Unconscionable Sales Act or Practice. Under the applicable laws, online businesses are also liable when the seller induces the consumer to enter into a sales or lease transaction grossly inimical to the interests of the consumer or grossly one-sided in favor of the online seller, merchant, or e-retailer by taking advantage of the consumer’s physical or mental infirmity, ignorance, illiteracy, lack of time or the general conditions of the environment or surroundings. In determining whether an act is unfair and unconscionable, the following may be considered:

 

              1. That the producer, manufacturer, distributor, supplier or seller took advantage of the inability of the consumer to reasonably protect his interest because of his inability to understand the language of an agreement, or similar factors;
              2. That when the electronic transaction was entered into, the price grossly exceeded the price at which similar products or services were readily obtainable in similar transaction by like consumers;
              3. That when the electronic transaction was entered into, the consumer was unable to receive a substantial benefit from the subject of the transaction;
              4. That the transaction that the seller or supplier induced the consumer to enter into was excessively one-sided in favor of the seller or supplier; 
              5. That the consumer was misled into purchasing a product or availing of a service by reason of the unauthorized use by the supplier or seller of a trademark, trade name, or other identifying mark, imprint, or device, or any likeness thereof, and which thereby falsely purports or is represented to be the product or service of another.

 

On Responsibilities of Online Businesses on Consumer Product and Service Warranties, Price Tag Placement, and Labeling 

 

      • R.A. No. 7394 or the “Consumer Act of the Philippines” and Civil Code provisions on Consumer Product and Service warranty.
      • Pertinent laws and regulations on labeling requirements including:
          1. R.A. No. 7394 or the “Consumer Act of the Philippines” on
                  1. Minimum Labeling requirements for consumer products whether manufactured locally or imported
                  2. Additional labeling and packaging requirements to prevent deception of the consumer or to facilitate value comparisons as to any consumer product; 
                  3. Additional labeling requirements for food under 
                  4. Labeling of drugs
                  5. Additional labeling requirements for cosmetics 
                  6. Warning labels for household urban hazardous substances on the hazards they present
          2. R.A. 6675, as amended by R.A. 9502 otherwise known as the “Universally Accessible Cheaper and Quality Medicines Act of 2008” on labeling of drugs
          3. The Milk Code (Section 10 of EO 51) on labeling of breastmilk substitutes and breastmilk supplements.
          4. RA 10620 otherwise known as the “Toy and Game Safety Labeling Act of 2013” on safety labeling and manufacturer’s markings for toys.
          5. P.D. No. 881 on warning labels for household urban hazardous substances on the hazards they present
          6. R.A. No. 11346 on the requirement of Graphic Health Warnings for vaping products and heated tobacco products.
      • The Consumer Act shall also apply as regards the placement of price tags of products or services offered online. Specifically:
              • Product listings by e-retailers or merchants on marketplace/platforms must contain the price(s) of the product/service in Philippine pesos and must display payment policies, delivery options, returns, refunds and exchange policy, and other charges if applicable;
              • Total price must be displayed. It must be clear, updated and accurate to avoid misleading online consumers;
              • The price must be indicated in high visibility areas preferably near the product title, or the add-to-cart button and ensure the text used for the price is readable and accessible; and
              • The practice of providing prices through private (or direct) messages to consumers/buyers is considered a violation of the Price Tag Law.

 

On Regulated, Restricted, and Prohibited Items

 

Online businesses shall exhibit the corresponding license or permit number as regards the regulated items for sale as prescribed by regulatory agencies. However, delivery platforms shall not be liable for transport of these items when the same cannot, on the face of the package, be determined to be in violation of this clause. 

 

Online businesses shall not produce, import,  distribute, market, sell, or transport prohibited goods or services, such as, but not limited to counterfeit goods and products, precious metals and conflict minerals, weapons, artifacts, sexual services, seditious or treasonous materials, and other such goods and services. The JAO provides for a non-exhaustive list of prohibited or restricted items, which include:

 

      1. Wildlife and wildlife products and derivatives;
      2. Human parts or remains;
      3. Fertilizers, pesticides (chemical and biorational), other agricultural chemicals, seeds with plant incorporated protectants, and seeds, conventional or biotech-traited, unless duly licensed or permitted;
      4. Toxic substances and hazardous wastes;
      5. Imported Recyclable materials containing hazardous substances;
      6. Health products, including food, drugs, cosmetics, devices, biologicals, vaccines, in-vitro diagnostic reagents, household/urban hazardous substances, household/urban pesticides, toys and childcare articles, unless duly licensed or permitted;
      7. Prohibited food, including listings containing medicinal claims, noxious food items, non-pasteurized dairy products, wild mushrooms, and any other food items hazardous to human health;
      8. Drugs, prescription-only medicines, pharmacy-only medicines, drug-like substances, and associated paraphernalia;
      9. Alcoholic beverages, unless duly licensed or permitted;
      10. Tobacco or tobacco-related products, electronic cigarettes, e-juices, and heated tobacco products, unless duly licensed and permitted;
      11. Ionizing radiation sources and services/activities involving thereof;
      12. Lottery tickets;
      13. Slot machines;
      14. Goods or items that are embargoed, mislabeled, recalled, stolen, expired, repacked, unlabeled, smuggled, and parallel imports, except drugs and medicines when authorized by law;
      15. Used cosmetics;
      16. Counterfeit items;
      17. Currency, credits, and securities;
      18. Precious metals;
      19. Artifacts and antiquities;
      20. Weapons;
      21. Chainsaw;
      22. Equipment and devices critical to surveillance and information gathering; 
      23. Government or Police related items;
      24. Prohibited services, i.e., those that are sexual or illegal in nature;
      25. Obscene, seditious, or treasonous materials;
      26. Publications, books, films, videos and/or video games that do not comply with applicable laws in the country of sale and/or delivery;
      27. Blasphemous materials;
      28. Products that relate to campaigns, elections, political issues, or issues of public debate; that advocate for or against, or attack a politician or political party; or that promote or encourage any form of hate, crime, prejudice, rebellion, or violence.
      29.  Other items that are, or contain components that are illegal or that poses potential health or safety risk;
      30. Wildlife species (flora and fauna) whether live, stuffed, preserved, by-products and derivatives, which are regulated by the Wildlife Act (R.A. 9147);
      31. Fishery and aquatic products;
      32. All plants, planting materials, and plant wood products;
      33. Coffee;
      34. All sugarcane-based sugar;
      35. Leaf Tobacco;
      36. Tobacco products;
      37. Tobacco-related materials;
      38. Crushed and/or sized sand gravel and/or other unsolicited materials;
      39. Iron, manganese, and/or chromium ore(s);
      40. Mine wastes and/or mill tailings
      41. Unprocessed, raw, or run-of-mine minerals;
      42. Controlled chemicals;
      43. Legal tender Philippine notes and coins, checks, money order and other bills of exchange drawn in pesos against banks operating in the Philippines in an amount exceeding Php 50,000.00
      44. Cultural properties;
      45. Optical and magnetic media, its manufacturing equipment, parts and accessories and manufacturing materials;
      46. Firearms and ammunition, parts and components thereof, accessories of firearms, tools, machinery, or instruments used or intended to be used in the manufacture of firearms and ammunition, or parts thereof;
      47. Chainsaw, including parts and accessories;
      48. Nuclear and radioactive materials;
      49. Nuclear-related dual use items;
      50. Explosive/Explosive ingredients 
      51. Firecrackers and Pyrotechnic devices.

 

The list is non-exhaustive and may be revised or updated by relevant regulatory agencies concerned.

 

On Data Privacy

 

  • R.A. 10173 or the “Data Privacy Act,” on responsibilities of online sellers, merchants, or e-retailers to ensure privacy protection and transparency, legitimate purpose, and proportionality in data collection and processing. Thus, online sellers, merchants, or e-retailers must comply with the following:

 

      1. They must handle all personal data of their consumers with the utmost care and respect.
      2. Personal information shall be retained only for as long as necessary: for the fulfillment of the declared, specified, and legitimate purpose, or when the processing relevant to the purpose has been terminated; for the establishment, exercise or defense of legal claims; for legitimate business purposes, which must be consistent with standards followed by the applicable industry or approved by appropriate government agency; or as provided by law; 
      3. Personal data shall be disposed of or discarded in a secure manner that would prevent further processing, unauthorized access, or disclosure to any other party or the public, or prejudice the interests of the data subjects.
      4. A Privacy Notice shall be posted in the websites or online platforms, in order to provide consumers with information regarding the purpose and extent of the processing of their personal data in relation to their transactions.
      5. Online merchants operating their own platforms are prohibited from asking unnecessary permissions from consumers to collect or use their personal data. 
      6. Prior to the collection of personal data, the lawful criteria for such processing must be determined, which in the case of sale-related processing, need not necessarily be consent.
      7. Personal data provided by customers shall not be used for purposes not authorized by consumers. 
      8. Upon collection and processing of personal data, the online sellers shall inform the consumers of their data privacy rights under the Data Privacy Act
      9. Personal information may be disclosed to public authorities pursuant to their mandates and in accordance with the provisions of the Data Privacy Act.

 

LIABILITIES OF ONLINE BUSINESSES

 

Liability for sale of defective product and service

 

Online businesses may be liable for sale of defective products and services under the Consumer Protection Act. Specifically, in such case, online merchants or sellers will be liable: when it is not possible to identify the manufacturer, builder, producer or importer of a defective product; when the product is supplied, without clear identification of the manufacturer, producer, builder or importer; and when the perishable goods were not adequately preserved. 

 

Liability for sale of defective product and service

 

The online sale of fake and/or pirated goods is a violation of R.A. No. 8293 and R.A. No. 8203, or the “Special Law on Counterfeit Drugs.” 

 

A person who finds that their IP protected products are being infringed by unauthorized sellers or merchants online may request the online e-commerce platforms being used by the infringer to take down the infringing products. The e-commerce platforms have the authority to enforce the rights of the IP holder, in accordance with their internal guidelines. However, the complaints shall also be transmitted by the DTI to the brand owners so that they may check and report the same to the IPOPHL for action. The complaints may also be brought before other regulatory agencies having jurisdiction over the same such as, but not limited to, the Optical Media Board and the Food and Drug Administration. 

 

Liability of e-commerce platforms and e-marketplaces

 

E-commerce platforms, e-marketplaces, and the like, shall be treated, and shall be held liable in the same manner as online sellers, merchants, and e-retailers, when the latter commits any violation of the laws implemented by the JAO. They shall likewise verify if the goods sold in their platforms are regulated, prohibited, original, genuine, licensed, or unexpired.

 

In case of prima facie violation of any pertinent laws or regulations, the concerned authorized agency shall issue a notice giving the violator a maximum of 3 calendar days within which to take down such post. Failure to comply shall be construed as intentional and overt act which shall aggravate the offense charged. The take down notice may be appealed, but no reposting is allowed pending appeal.

 

Delivery platforms are liable in the same manner as online sellers, merchants, and e-retailers, but only upon notice that they are carrying or delivering restricted, prohibited, or infringing items.

 

 E-commerce platforms, e-marketplaces, and the like are prohibited from:

 

      • Disseminating or causing the dissemination of any false, deceptive or misleading advertisement for the purpose of inducing or which is likely to induce directly or indirectly the purchase of products or services; 
      • Advertising any food, drug, cosmetic, device, or hazardous substance in a manner that is false, misleading or deceptive, or is likely to create an erroneous impression regarding its character, value, quantity, composition, merit, or safety; 
      • Advertising any food, drug, cosmetic, device, or hazardous substance, unless such product is duly registered and approved by the concerned department for use in any advertisement; 
      • Using registered marks as well as copies or reproductions thereof in marketing emails and advertisements, without the authority of the trademark owner.

 

Upon the effectivity of the JAO, e-commerce platforms and e-marketplaces are directed to enact and strictly enforce measures to prohibit online sellers or merchants, previously found administratively liable, from further selling, posting, or offering items for sale in their platforms. Failure to enact or enforce such internal mechanisms shall be considered as intentional and overt act.

 

REMEDIES OF CONSUMERS

 

The handling of consumer complaints shall be done in accordance with the rules of the government agency having jurisdiction over the product or service complained of. However, the consumer may opt to seek primary resolution through the internal complaint mechanism of the online businesses before resorting to intervention by the DTI or other regulatory agency. 

 

Online consumers may file their complaints with the DTI through walk-in at the national or provincial offices, or through the consumer care hotline at 1-384, SMS at 09178343330, and through written complaints delivered through postal or messengerial service. Complaints can also be filed electronically through the DTI website, DTI Consumer Care Facebook page, or email at consumercare@dti.gov.ph, ask@dti.gov.ph, or fteb@dti.gov.ph.

 

Online sellers and consumers are advised that their communications, whether done via social media, built-in communication services on e-Commerce platforms, or any other form of electronic communication using an electronic device, may constitute an electronic data message. Screenshots of such electronic communications may be used as evidence to prove a fact or establish a right in administrative or judicial proceedings, subject to rules promulgated by the Supreme Court.

 

PENALTIES

 

All online businesses may be held liable for violations against laws, rules, and regulations covered under this JAO and other applicable laws and issuances. 

 

For the schedule of penalties and other important information, refer to JAO 2022-01 here 

 

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