Philippines E-Commerce Law Raises New Issues

MANILA (08/09/2000) - The Philippines' new E-Commerce Act has resolved many issues that were preventing e-commerce from fully developing in the country.

Additional legislation, however, may still be needed to resolve other unsettled issues, said Jesus Disini, the lead lawyer who helped draft the implementing rules and regulations of the new law.

The Philippines became only the fifth country in Asia to enact a law on e-commerce, said Disini. With the new law, electronic documents and electronic signatures are now recognized in court. This means that electronic transactions over the Internet are now considered legal in the Philippines, he said.

The law covers both commercial and noncommercial transactions, so electronic transactions used for noncommercial purposes are also legally recognized, he said.

A provision in the new law also mandates the government to pursue and implement electronic governance within two years after the law has been signed. Although two years may be too short for government to fully implement e-governance, at least the law forces government to look into how technology can improve government services, added Disini.

The E-Commerce Act also reinforces the RPWeb initiative, which mandates all government agencies to become interlinked through the Internet, he said.

Another provision in the law also prepares the country for convergence. For example, cable companies are now classified under telecommunications, and are therefore allowed to take in up to 40 percent foreign equity. Broadcast companies, on the other hand, can split themselves into two companies, one to handle the infrastructure, and the other to handle content.

"So (broadcaster) ABS-CBN, for example, can split into two companies. One will handle the content and the other will handle infrastructure. The infrastructure company can be classified under telecommunications, meaning they can get foreign investments for up to 40 percent," said Disini.

Under the new law, computer crimes such as hacking, spreading viruses and unauthorized access to electronic devices will also be punishable.

"The law is good that it answered a lot of questions, but there are still some issues that are unresolved and some (new issues) were created because of the new law," said Disini.

Although the E-Commerce Act recognizes digital signatures, the provision on digital signature limited acceptance to only a subset of digital signatures instead of a broad acceptance. "You should still be careful when getting digital signatures to make sure that it complies with the law," said Disini.

The law also fails to explain electronic contracting or if click-through contracts or e-mail contracts are legal and valid, he added.

There also are not enough details on proof and evidence. In litigation, it is not clear how to go about proving electronic transaction.

Taxation is another issue that the law has failed to accurately define, said Disini. There are not enough rules on taxation and it is unclear who to tax because of the global nature of the Internet.

Another problematic issue is jurisdiction.

"One Philippine company wanting to avoid paying taxes here may choose to host his content in the British Virgin Islands, where there are no taxes. The law doesn't have an opinion on this," Disini said.

Another issue relates to privacy and database protection. The law has also failed to define the rights of people who own databases with information on other people. The transformative use of this database is also complicated because the user has rights, too, he said.

Disini said additional legislation may be needed to resolve some of these issues.

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