1
E-Commerce Act; objectives
1. Facilitate domestic and international
dealings, transactions, arrangements,
contracts and exchanges, and storage
of information, through the utilization
of electronic, optical and similar
medium, mode, instrumentality and
technology;
2. Recognize the authenticity and
reliability of electronic data messages or
electronic documents related to such
activities; and
3. Promote the universal use of electronic
transactions in the government and by
the general public.
Electronic Data Message - Refers to
information generated, sent, received or stored
by electronic, optical or similar means.
Electronic Documents (Requisites)
1. Information or representation of
information, data, figures, symbols, or
other modes of written expression;
2. By which a right is established or an
obligation extinguished, or by which a
fact may be proved; and
3. Which is received, recorded, retrieved,
produced, transmitted, stored, or
processed ELECTRONICALLY.
Electronic Signature – Distinctive mark,
characteristic and/or sound in electronic
form, representing a person’s identity and
attached or logically associated with electronic
data message or electronic document, or any
methodology or procedures employed or
adopted and executed or adopted with the
intention of authenticating or approving an
electronic data message or electronic
document.
Kinds
a. Electronic writings
b. Electronic Signature
c. Originals
Legal Effect and Recognition
Information shall not be denied legal
effect, validity or enforceability solely on the
grounds that it is in the form of or
incorporated in an e-doc purporting to give
rise to such legal effect, or that it is merely
DIMAINPOGINOTES
incorporated by reference in that electronic
data message.
 Where the law requires a document to
be in writing that requirement is met by
an electronic document, if the said
electronic document maintains its
integrity and reliability, and can be
authenticated so as to be usable for
subsequent reference;
 Applies whether the requirement is in
the form of an obligation, or whether
the law simply provides consequences
for the document not being presented
or retained in its original form;
 Where the law requires that a
document be presented or retained in
its original form, that requirement is
met by an electronic document;
 For evidentiary purposes, an electronic
document shall be the functional
equivalent of a written document.
Electronic Signatures; Legal recognition
An electric signature on an electronic
document shall be equivalent to the signature
of a person on a written document, if proved
by showing that a prescribed procedure is
followed, not alterable by the parties
interested in the electronic document.
The signature in the electronic
document presumes that the said signature is
the signature of the person to whom it
correlates and it was affixed by that person
with the intention of signing or approving the
electronic document.
Electronic document as Original
Where the law requires the information
to be presented or retained in its original form,
that requirement is met by an electronic data
message or electronic document if:
a. The integrity of the information from
the time when it was first generated in
its final form as an electronic data
message or electric document is shown
by evidence alliunde; and
b. Where it is required that the
information be presented, that the
information is capable of being
displayed.
Authentication of Electronic Document
1. Evidence that it had been digitally
signed by the person purported to have
signed the same;

2. Evidence that other appropriate
security procedures or devices as may
be authorized by the SC or by law for
authentication of electronic documents
were applied to the document; or
3. Other evidence showing its integrity
and reliability to judge’s satisfaction.
Note: Document electronically notarized is
considered as public document and proved as
a notarial document under ROC.
Authentication of Electronic Signature
Sec. 2. Authentication of electronic
signatures. - - An electronic signature may be
authenticated in any of the following manner:
1. By evidence that a method or process
was utilized to establish a digital
signature and verify the same;
2. By any other means provided by law; or
3. By any other means satisfactory to the
judge as establishing the genuineness
of the electronic signature.
E-Document as a contract
Except as otherwise agreed by the
parties:
a. An offer
b. Acceptance of an offer; and
c. Such other elements for the formation
of contracts must be expressly
demonstrated, and proved by means of
electronic data messages or electronic
documents.
No contract shall be denied validity or
enforceability on the sole ground that it is in
the form of an electronic data message or
electronic documents, or that any or all of the
elements required under existing laws for the
formation of the contracts is expressed,
demonstrated, and proved by means of
electronic data messages or electronic
documents.
When consummated?
Electric transactions made through
networking among banks, or linkages thereof
with other entities or networks shall be
deemed consummated upon the actual
dispensing of cash (e.g ATM Machines), or the
debit of one account, and the corresponding
credit to another, (such as in a Debit card)
DIMAINPOGINOTES
2
whether such transaction is initiated by the
depositor, or by an authorized collecting party.
E-Commerce Offenses
1. Hacking or Cracking
2. Piracy
a. Unauthorized copying,
reproduction, dissemination,
distribution, importation, use,
removal, alteration, substitution,
modification, storage, uploading,
downloading, communication;
b. Making available to the public,
or broadcasting of protected
material, electronic signature, or
copyrighted works including
legally protected sound
recordings or phonograms or
information material on
protected works, through the use
of telecommunication networks,
such as, but not limited to, the
internet, in a manner that
infringes intellectual property
right;
Note: Unlawful uploading and downloading of
review materials of a review center such as
JURIST Review Center LOL is a violation of E-
Commerce Act.
Liability of the Service Provider (GLOBE,
SMART, PLDT, FACEBOOK, YAHOO, etc.)
GR: Not liable for civil and criminal liability
from the obligations and liabilities of parties
under electronic data message or electronic
documents. They are also not liable for
making, publication, dissemination or
distribution of such material or any statement
made in such material, including possible
infringement of any right subsisting in or in
relation to such material.
Exns:
1. Have actual knowledge, or is not aware
of facts or circumstances from which it
is apparent, that making, publication,
dissemination or distribution of such
material is unlawful or infringes any
right subsisting in or in relation to such
material;
2. The service provider knowingly receive
a financial benefit directly attributable
to the unlawful or infringing activity;
and
 3

3. The service provider directly commit registered with the Central Bank which
any infringement or other unlawful act shall assess and appraise the value of such
and does not induce or cause another assets other than foreign exchange
person or party to commit any
infringement or other unlawful act
and/or does not benefit financially from
the infringing activity or unlawful act or
b. “Doing Business” in the Philippines
another person or party.
Under Section 3 (d) of FIA’91 “Doing
business in the Philippines” is deemed to
FOREIGN INVESTMENT ACT (RA 7042) include the following acts:

1. Policy of the Law 1. Soliciting orders, service contracts,

opening offices, whether liaison offices
Section 2. Declaration of Policy. - It is the or branches;
policy of the State to:
2. Appoiting representatives or distributor
a. attract, promote and welcome
operating under full control of foreign
productive investments from foreign
corporation, who are domiciled in the
individuals, partnerships, corporations,
Philippines or in any calendar year stay
and governments, including their
in the country for a period or periods
political subdivisions, in activities
not exceeding 180 days or more;
which significantly contribute to
national industrialization and
3. Participating in management,
socioeconomic development to the
supervision or control of any domestic
extent that foreign investment is
business, firm, entity, or corporation in
allowed in such activity by the
Philippines;
Constitution and relevant laws;

4. Any other acts that imply a continuity

b. Foreign investments shall be
of commercial dealings or
encouraged in enterprises that
arrangements, and contemplate to that
significantly expand livelihood and
extent the performance of acts or
employment opportunities for Filipinos;
works, or the exercise of some of the
function normally incident to and in
c. enhance economic value of farm
progressive prosecution of commercial
products;
gain or of the purpose or object of the
business organization.
d. promote the welfare of Filipino
consumers; Note: If a foreign corporation is doing
business in the Philippines, prior SEC
e. expand the scope, quality and volume registration is required. Otherwise, the
of exports and their access to foreign corporation may be sanctioned by fine or
markets; and/or imprisonment (officers), it cannot be sue
(except estoppel on the other party) but can be
f. transfer relevant technologies in sued in the Philippine courts.
agriculture, industry and support
services. Foreign investments shall be
welcome as a supplement to Filipino c. Export Enterprise
capital and technology in those
An export enterprise is a manufacturing,
enterprises serving mainly the domestic
processing, or service (including tourism)
market.
enterprise, which exports 60% or more of its
output, or a trader which purchases products
manufactured domestically and exports 60%
2. Definition of Terms
or more of such purchases.
a. Foreign Investments As a rule, there are no restrictions on the
extent of foreign ownership in export
The term "foreign investment" shall
enterprises, unless the products and services
mean as equity investment made by a non-
fall within Negative List A and B or utilize raw
Philippine national in the form of foreign
materials from depleting natural resources.
exchange and/or other assets actually
transferred to the Philippines and duly
DIMAINPOGINOTES
 4

List A – Enumerates the areas of economic

activities reserves for Philippine Nationals by
Constitutional mandate and specific laws,
including exploitation of natural resources,
operation of public utilities, educational
institutions, mass media, labor recruitment
and the retail trade.

List B – List down activities where foreign

ownership is listed for reasons of security,
defense, risk to health and morals and
protection of small and medium scale
enterprise, including defense-related activities,
such as the manufacture and distribution of
firearms and explosives including the
manufacture and distribution of dangerous
drugs, gambling, nightclubs, bathhouse,
massage parlors, and other similar activities.

Note: If the activity is in the Negative List,

foreign ownership in the enterprise is
generally limited to a maximum of 40% unless
the Constitution or other laws provide a lower
limit.

d. Domestic Market Enterprise

A domestic market enterprise is one that

produces goods for sale or renders services to
the domestic market entirely, or if exporting a
portion of its output fails to consistently
export at least 60% thereof. In a domestic
market enterprise, foreigners can invest as
much as 100% equity, except in areas
included in Negative List (List A and B).

Requirement Remittances

The foreign investor should have

US$200,000 remittances or capital
requirement for the investment.

However, if the said foreign investor

was able to introduce before the Philippines
advance technology to be determined by the
DOST or employ atleast 50 direct Filipino
employees, the capital requirement is only
US$100,000.

DIMAINPOGINOTES