The Electronic Commerce Act needs an updating to ease the requirements for the recognition of electronic and digital signatures and facilitate cross-border paperless trade in the Philippines, according to a new report.

The “Readiness Assessment for Cross-Border Paperless Trade: Philippines” recommends the amendment of the e-Commerce Act to make it consistent with the United Nations Model Law on Electronic Commerce and the UN Convention on the Use of Electronic Communications in International Contracts to enhance cross-border paperless trade in the country.

The UN Model Law provides internationally acceptable rules for removing legal obstacles and increasing legal predictability for e-commerce, while the UN Convention aims to facilitate the use of electronic communications in international trade.

The readiness report, which was virtually introduced recently, offers a legal and technical assessment of the Philippines’ readiness for cross-border paperless trade, or the conduct of international trade based on electronic data and documents. The research, jointly published by the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP) and the Bureau of Customs (BOC), was based on a series of consultations and workshops conducted by experts and National Single Window-Technical Working Group (NSW-TWG) officials.

“One of the reasons why there has been no strong reliance on electronic documents is it is difficult under the e-Commerce Act to prove the validity of an electronic signature,” said Oliver Xavier Reyes, part of the ESCAP consultants team that prepared the report, during his presentation of the country’s legal readiness assessment in an online forum organized by BOC and UNESCAP.

Reyes cited a number of reasons for amending the e-Commerce Law, one of which is to facilitate electronic notarization, a practice already implemented in several jurisdictions around the world. Electronic notarization is not yet done in the Philippines, where a contracting party is still required to be physically present before a notary public.

To allow electronic notarization, the Supreme Court of the Philippines will need to take action, such as by developing the enabling rules, a move that can be facilitated by amending the e-Commerce Act, Reyes said.

Updating the Act can also serve to provide expressed recognition of smart and automated contracts, he added.

To expedite cross-border paperless trade, the readiness assessment report made a number of recommendations, including the accession of the Philippines to the UN Convention on the Use of Electronic Communications.

Reyes explained that under the e-Commerce Act, electronic contracts and transactions are legally recognized in the Philippines, but may not be legally binding in counterpart states. With the accession to the UN Convention, uniform rules will be established for the recognition of electronic contracts and communications in cross-border transactions.

The Philippines signed the UN Convention way back in 2007 but still needs to formally accede to the treaty, said Reyes.

Another recommendation is to enhance data sharing policies across government agencies to ensure data protection, ease of doing business, and harmonization of regulations.

The report also pressed for the enactment of an NSW Management Law, as Reyes said this can provide several advantages, including the setting out of clear lines of authority to operate and establish the system, the rights and obligations of NSW participants, and the liability and limitations of system operators.

An NSW Management Law can also integrate issues addressed by other laws, such as the Data Privacy Act in terms of data quality, data sharing and data protection, and the e-Commerce Act for electronic contracting, documents and signatures. It can also give guidance on tackling competition and dispute resolution concerns, Reyes said.

The readiness assessment report was drafted by a team of experts following readiness checklists developed by the ESCAP Interim Intergovernmental Steering Group on Cross-Border Paperless Trade Facilitation, of which the Philippines is a member. The first national consultation was co-organized by the BOC and ESCAP in March 2021, and was followed by a second one in June 2021. The draft report was then presented for further feedback and validation at the 3rd NSW-TWG meeting in August last year.