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Abstract
This paper reviews Philippine regulations governing digital platforms with cross-border operations and the impacts of these laws on the ability of platforms to innovate and participate in the global economy. There is no shortage of constitutional, statutory, and policy support for innovation, e-commerce, digitization, and entrepreneurship. However, there is a disconnect between these policies and the environment created by how implementing statutes and regulations evolved.
Existing banking and financial services laws, consumer protection, cybersecurity, and data privacy support digital platform operations. Despite this, digital platforms could benefit further if the country's data privacy regulations are assessed in light of incongruences with the data protection and privacy regulations of neighboring countries in Southeast Asia.
A survey of the regulations revealed obstacles in facilitating seamless electronic transactions. For instance, the implementing rules and regulations of the E-commerce Law (Republic Act 8792) provides onerous technical requisites before an electronic signature can be considered legal and valid. Further, existing notarial rules are unable to facilitate a completely remote and electronic notarization procedure.
Meanwhile, the Securities and Exchange Commission (SEC) had expanded investment regulations, such that the scope of the constitutional restriction (foreign participation is absolutely prohibited) on mass media had been applied to most websites and digital platforms. Additionally, SEC gave a broad definition to "mass media" as platforms that "communicate to the public", which essentially renders all websites and online platforms posting content related to third parties as mass media. Public utilities, telecommunications, and education platforms had suffered the same fate. As a result, constitutional restrictions, expanded by statutory and administrative issuances, evolved to impede some digital platforms from receiving foreign funding. The harms sought to be avoided by such limitations may not be relevant to the existing business models of the platform being regulated.
These regulatory gaps could negatively impact digital platforms in two ways. First, they inhibit innovation because uncertainties could limit funding opportunities and discourage firms from developing or launching novel products. Second, gaps and overlaps could lead to cross-border and domestic regulatory arbitrage, forcing firms to relocate to areas or jurisdictions where risks are more manageable.
Therefore, this paper recommends a recalibration of regulations, taking into consideration the policy objectives on innovation vis-a-vis the protection of Filipino consumers and entrepreneurs. Policymakers could...