Legality of eSignatures in Philippines

Background

The adoption of electronic signatures continues to gain momentum in the Philippines and across global markets, providing organizations with an efficient and environmentally responsible approach to document authentication. Moving from paper-based signatures to electronic processes streamlines workflows and accelerates the execution of business transactions. Nevertheless, organizations seeking to implement electronic signatures in the Philippines should assess the relevant legal, regulatory, security, and operational considerations to ensure their appropriate use.

For successful adoption in the Philippines, it is crucial to select an electronic signature tool that aligns with the nation's legal stipulations, specifically the Republic Act No. 8792, the Electronic Commerce Act of 2000.¹ This act affirms that electronic signatures may not be denied legal effect, validity, or enforceability solely because they are in electronic form.² Despite the progressive acceptance, it's essential to recognize that some documents may still need a physical signature, and seeking legal consultation is advisable to navigate variable regional laws.³

The importance of security surrounding electronic signature platforms cannot be overstated. Services must integrate robust protection features such as data encryption, signer identity verification, and audit trails to deter unauthorized access and ensure document authenticity. For instance, BoldSign offers these imperative security features and complies with legal and security protocols.

Enterprises in the Philippines must emphasize legal conformity, elevate security measures, and choose user-friendly platforms for integrating electronic signatures into their business frameworks. This approach boosts productivity and ensures the protection of their business exchanges.

Overview of the eSignature regulations

Generally, eSignatures are granted legal validity and effects equal to those given to the wet ink signature.⁴ The recognition stands, provided that a prescribed, unalterable procedure is followed. This procedure requires the use of a method to identify the party to be bound and demonstrate their access to the electronic document for consent or approval.⁵. It must be reliable and appropriate for the document's purpose, considering all relevant circumstances and agreements. Furthermore, the electronic signature must be necessary for the transaction to proceed, ensuring that the other party is authorized to verify and decide on the transaction's authentication.

The use of electronic signatures in the Philippines is regulated by:

1. Republic Act No. 8792, Electronic Commerce Act of 2000
2. Joint DTI-DOST Department Administrative Order No. 02 Providing Implementing Rules and Regulations on Electronic Authentication and Electronic Signatures⁶
3. Rules on Electronic Evidence (A.M. No. 01-7-01-SC)⁷
4. Rules on Electronic Notarization (A.M. No. 24-10-14-SC)⁸

The Philippines’ regulation grants all individuals the freedom to execute their contracts electronically upon agreement by the contracting parties. Such contracts shall, however, not be denied legal validity merely on the grounds that they were completed electronically.⁹

The regulations divide electronic signatures into:

1. Standard electronic signatures
2. Secure (Advanced) electronic signatures
3. Digital signatures

A standard electronic signature is any data, including a sound, symbol, or process, executed or adopted to identify a person and indicate that person's approval or intention regarding the information contained in a data message and which is attached to or logically associated with that data message.¹⁰

A secure electronic signature is designed so that, together with a security procedure, it can be verified that the signature is:¹¹

• Uniquely linked to the signatory
• Capable of identifying the signatories
• Developed through a mechanism the users can keep under their sole control
• Linked to the data it relates to so that any subsequent change to the data is detectable

Uniquely linked to a person

Asecure electronic signature must be uniquely connected to the person who is using it. The signature must be created using with methods that only the signer has access to, like a private key and confidential information, to verify their identity.

Use and incorporation under their sole control

The person using the secure electronic signature must have sole control over the means of creating it. Typically, this requires managing a key pair or two-factor authentication, with the signer exclusively holding the private key to prevent unauthorized signature forgery.

Identify the person using a technological process

The process used to create the signature must be capable of identifying the person signing. This may include a biometric signature, a personal identification number (PIN), an email address, or a company registration number.

Track down alterations made after signing

It is essential to preserve the authenticity of the signed document. Modifications made to the document post-signature should be identifiable. This is commonly accomplished through an audit trail. Audit trails record the signer's IP address, timestamps of key signing events, and location, providing proof of identity, timing, and place of signature.

A digital signature is a type of secure electronic signature consisting of a transformation of an electronic document or an electronic data message using an asymmetric or public cryptosystem such that a person having the initial untransformed electronic document and the signer's public key can accurately determine¹²:

1. Whether the transformation was created using the private key that corresponds to the signer's public key.
2. Whether the initial electronic document had been altered after the transformation was created.

A digital signature must meet the following requirements:¹³

• The digital signature is that of the person to whom it correlates
• The digital signature was affixed by that person with the intention of authenticating or approving the electronic document to which it is related or to indicate that person's consent to the transaction embodied therein.
• The methods or processes utilized to affix or verify the digital signature operated without error or fault.
• The certificate is valid and issued by the certification authority, with the correct information.
• The digital signature was created during the operational period of the certificate.
• The message associated with the digital signature has not been altered from the time it was signed.

Summary analysis

Authentication of eSignatures

Under the regulation, an electronic signature may be authenticated in any of the following ways:¹⁴

• By evidence that a method or process was utilized to establish and verify a digital signature
• By any other means provided by law
• By any other means satisfactory to the judge as establishing the genuineness of the electronic signature.

Assessment of evidentiary weight of electronic information

In an assessment of an electronic record, the following set of standards are taken into consideration:¹⁵

• Reliability of the generation and storage of the information
• Reliability of the mode used to maintain the integrity of the record
• The familiarity of the witness or the person who made the entry with the communication and information system.
• The nature and quality of the information which went into the communication and information system on which the electronic data message or electronic document was based.
• The manner in which the signatory was identified
• Any other factor necessary

Recognition of foreign electronic signature

Generally, electronic signatures are deemed valid regardless of their place of origin. However, the reliability standards issued by the regulations are considered when determining the extent of validity. The regulation further grants parties to any cross-border transaction the freedom to agree. Such an agreement is equally regarded in assessing cross-border recognition.¹⁶

Scope and limitations of eSignature transactions

The use of electronic signatures is not legally recognized for all document types. Some transactions are appropriate for eSignatures, while others are not. Below is a brief analysis and a summary table of these transactions.

Documents that can be signed

Electronic signatures can be employed to affix signatures and provide countersignatures on a diverse array of documents, such as:

• Legal opinions
• Offer letters
• Memoranda and internal correspondences
• Non-disclosure agreements
• Purchase orders
• HR
• Procurement
• Employee onboarding, etc.

Exemptions

The regulations lack an expressed provision on the nature of transactions exempted. However, the following transactions cannot be completed in eSignature:

• Notaries¹⁷
• Wills
• Affirmations and Oaths

Aside from the above exemptions, if a notarized document is required by law or if the parties request one, that document may not be in electronic form.

The law requires that the following documents be notarized:

• Donation of an immovable property¹⁸
• Royalty agreements involving the assignment of patents or patent applications (Intellectual Property Code of the Philippines, Sec. 105)
• A contract of partnership where immovable property or real rights are contributed (Civil Code, Art. 1771)
• Secured demand notes, i.e., a secured demand note evidences the contribution of a secured demand note to a broker-dealer and the pledge of securities and/or cash with the broker-dealer as collateral to secure payment of such secured demand note (SRC Rules, Rule 49.1(2)(A)(ii)(e))
• An agent’s authority (special power of attorney) to sell the land or any interest in the land (Civil Code, Art. 1874, in relation to Art. 1878)
• Application for registration of securities (Form 12-1) with the Securities and Exchange Commission (“SEC”), i.e., every prospectus must also be subscribed under oath by the issuer (SRC, Sec. 12.7)
• Tax Returns
• The cession, repudiation, or renunciation of hereditary rights or of those of the conjugal partnership of gains (Civil Code, Art. 1358)
• An agent’s authority over an object which would require public document (Ibid.)
• A cession of actions or rights proceeding from an act appearing in a public document (Ibid.)
• Subordinated loan agreements, i.e., agreements evidencing or governing subordinated borrowing of cash by broker-dealers. The requirement applies to all subordinated loan agreements between a lender and a broker-dealer (Securities Regulation Code, Implementing Rules and Regulations (“SRC Rules”), Rule 49.1(2)(A)(ii)(b))
• Several corporate documents submitted to the SEC, such as articles of incorporation (Revised Corporation Code (“RCC”), Sec. 14), voting trust agreements (RCC, Sec. 58), applications filed by a foreign corporation for a license to transact business in the Philippines (RCC, Sec. 142), general information sheets, application for registration of securities (Form 12-1) (SRC, Sec. 12.7), and reports and forms submitted by banks to the Bangko Sentral ng Pilipinas
• Proxies issued by brokers and dealers (SRC Rules, Rule 20(11)(b)(xviii))
• An assignment of a credit, right or action shall produce no effect as against third persons (although it remains valid between the parties), unless it appears in a public document, or, where the assignment involves real property, the instrument is recorded in the Registry of Property (Civil Code, Art. 1625).

Summary list of exemptions

How does BoldSign help?

The following elements of compliance available within BoldSign can be used to comply with the Philippines eSignature laws:

• Secure and unique signing link: A secure and unique link to sign a document is sent directly to the signer's email address. This ensures that the document is only accessed by the intended signer and cannot be tampered with.
• Password protection: Senders can specify a password that needs to be entered before viewing and signing a document. This adds another layer of security to the signing process.
• Audit trail: The IP address of the signer and timestamps for all significant events in the signing process are recorded in an audit trail. This provides a record of who signed the document, when, and where.
• Digital signature: The final document is digitally signed with an AATL-compliant certificate. This ensures that the document cannot be tampered with without invalidating the signature.
• Consent: Signers are asked to confirm their intent to sign electronically and are informed that they could opt out. This ensures that the signer is aware of the implications of signing electronically and has given their consent.
• Custom terms: Get your signers to agree to a custom set of terms. This can be useful to ensure additional security and that the signer understands the terms of the document.
• QES compliance: BoldSign offers qualified electronic signatures (QES) that verify the signer's identity and help ensure documents are legally binding. These signatures provide the highest level of eSignature security, protecting important documents from unauthorized changes. For cross-border transactions involving the Philippines, BoldSign helps users manage and sign documents electronically while supporting compliance with applicable Phillipine legal requirements.

Disclaimer: The information on this page is intended to help businesses understand the legal framework of electronic signatures for this particular country.

However, Syncfusion’s officers, directors, stockholders, affiliates, attorneys, accountants, employees, or agents cannot provide legal advice. You should consult your personal attorney regarding your specific legal questions. Laws and regulations are subject to frequent changes, and the information may not be current or accurate. To the maximum extent permitted by law, Syncfusion provides this material on an “as-is” basis. Syncfusion disclaims and makes no representation or warranty of any kind with respect to this material, express, implied, or statutory, including representations, guarantees, warranties of merchantability, fitness for a particular purpose, or accuracy.

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