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With the advent of remote and hybrid work setups and the digitization of most business processes, e-signatures are becoming increasingly popular.
But with their increasing popularity comes a common question: is an electronic signature legal in the Philippines?
In this post, we’ll discuss everything about e-signature so you can navigate the murky waters of its legality in the Philippines.
What Is an E-signature?
An electronic signature, more often known as an e-signature is a fast and secure way to sign digital documents. Because of their verifiability and security, anyone can use electronic signatures in place of handwritten ones.
In most cases, an e-signature is a digital file embedded into a document that indicates that you have agreed to its terms. The file can be in the form of a graphic image or even just your name, which may also include other information, such as your address or social security number. You also can use various document automation tools to help.
E-signatures are typically used for legal documents such as contracts, deeds, and wills; however, they can also be used on business forms like purchase orders and invoices if necessary.
Are Electronic Signatures Legal in the Philippines?
Yes. e-signatures are legal in the Philippines. However, it is not applicable to all document types.
To determine whether e-signatures are legal in the Philippines, you must look at two pieces of legislation: Republic Act No. 8792 and the Electronic Commerce Act of 2000 (“E-Commerce Act”) cover e-signature law in the Philippines.
“AN ACT PROVIDING FOR THE RECOGNITION AND USE OF ELECTRONIC COMMERCIAL AND NON-COMMERCIAL TRANSACTIONS AND DOCUMENTS, PENALTIES FOR UNLAWFUL USE THEREOF, AND FOR OTHER PURPOSES”
The E-Commerce Act regulates electronic records and signatures as well as data messages and electronic documents used for both business and personal purposes.
Contracts for the carriage of goods and electronic transactions within the government, including government-owned and controlled corporations, are subject to the regulations outlined in this law.
In line with the above. Republic Act 8792 or The Electronic Commerce Act of 2000 (the “Act”) aims to facilitate domestic and international transactions through the utilization of electronic mediums and technology to recognize the authenticity and reliability of electronic documents.
The E-Commerce Act was signed into law on March 15, 2000, by then-Philippine President Joseph Estrada. This law established that electronic signatures are valid when used in compliance with its rules and regulations.
What Are the Different Types of E-signatures?
There are three types of e-signatures: simple electronic signatures, advanced electronic signatures, and qualified electronic signatures. Electronic signatures are often used to sign documents electronically. A digital signature is an electronic code used to verify the identity of a person who signs a document electronically. The person signing documents with a digital signature is known as an e-signer.
E-signers can use many different types of e-signatures. Some are more secure than others, but all have one thing in common—they’re much easier to use than traditional pen-and-paper signatures.
1. Simple Electronic Signature
The lowest level of these is the simple electronic signature (SES). It’s the bare minimum for establishing someone’s identity with certainty.
When you sign a document, the process should be simple, secure, and fast.
Most people have seen this most often in the form of an attachment to an email. You receive the document with your name already in place where your signature is required. When you’re satisfied with the generated signature image, you can send it back by clicking a button. No matter who finished the process in the end, the document is now legally binding because someone signed it electronically.
Quicker document signing comes at the cost of making one or both parties vulnerable to fraud. If someone wanted to forge a signature, it would only require a click because it is impossible to tell who did it.
2. Advanced Electronic Signature
Advanced electronic signatures are digital signatures that use a high-level certificate to prove the identity of the signer. The signer has complete faith in the signature keys they use.
In order for an electronic signature to be considered valid, it must be linked to the electronic identifier of the signer. The easiest way to illustrate this is by requiring the signatory to use a mobile app to verify that their electronic signature was indeed created by them.
When compared with the basic e-signature, this type of advanced e-signature provides a higher level of security. In this case, the danger arises if someone gains access to one’s phone or steals access to the associated electronic identity, which is more common than we think.
3. Qualified Electronic Signature
A qualified electronic signature is a high-level electronic signature that has been verified by a Trust Service Provider (TSP). It’s like having your signature witnessed “as done on pen and paper,” but in electronic form.
When a signer uses the app on their phone to verify their electronic signature on an electronic document, the TSP checks all the “matching” criteria to make sure everything is in order.
TSPs are only used in one country, and they usually come from government-owned companies or institutions like the Post Office.
What Use Cases Are Appropriate for E-signatures?
E-signatures are not applicable to all document types. For example, they are not applicable to documents that need to be notarized, such as real estate sales contracts and deeds. However, they are helpful in HR document preparation, end-user agreements, contracts, and commercial and non-commercial dealings.
In HR document preparation, e-signatures can be used to inform employees about new benefits or changes to their health insurance coverage.
They can also be used for training purposes—for example, an employee handbook could be signed electronically by managers when it is first distributed and again once it has been reviewed by employees.
E-signatures can also help with the creation of end-user agreements. These are agreements between individuals and corporations that specify how they will use technology together.
For example, an individual might sign an agreement with a company that provides software services so that they can access their account online using a username and password provided by the company’s service provider.
In this case, both parties would have an interest in ensuring that each party has read and understood what they’re agreeing on before signing on the dotted line.
Contracts can also be signed electronically if both parties agree to do so beforehand (and if there are no legal issues that prevent this).
What Use Cases Are Not Appropriate for e-signatures?
Certain documents may not be electronically signed, such as formal notarizations.
Formal notarization is a process that involves a notary public and an acknowledgment of the parties involved in making a document. It is used to ensure that the signatories were present and aware of what they were signing.
The different types of documents that may need notarization are:
- Contract of partnership that involves movable and immovable property and real rights
- Immovable property donation
- Special power of attorney
- Royalty agreements that involve the signing of patent and patent applications
- Subordinated loan agreements
- Secured demand notes
- SEC Form 12-1
- Corporate documents submitted to the SEC
- Broker and dealer-issued proxies
- Tax returns
- The renunciation of or refusal to exercise an inherited right, or the relinquishment of a share in property obtained by marriage
- An agent’s authority over an object, evidenced by a public document, is deemed to be exercised within the boundaries of his or her territory
- A transfer of rights that is stated in a public document.
- Assignments that do not appear in a public document or are not recorded at the Registry of Property may be ignored by third parties.
How Are E-signatures Authenticated?
There are many factors that can be used to authenticate a person’s identity when signing documents online. The most common methods use passwords, one-time SMS codes, and biometric matching. Other methods include government-issued IDs, digital certificates issued by Trust Service Providers (TSP) or Certificate Authorities (CA), and smart cards or mobile-derived credentials.
The sender’s system authenticates the signer before the transaction takes place. User ID and password are required, along with other authentication factors like two-factor authentication or biometrics if they’re available on the sender’s system.
Another way to authenticate your signer is by sending them a one-time SMS code to verify their identity. This method is useful for documents that require multiple-signatures across multiple systems, such as contracts with multiple parties involved who may not be in the same location at once but need to sign all parts of it simultaneously.
Other ways include verifying unknown people using government-issued IDs (driver’s license, passport, etc.), which applications capture, extract, and analyze before authenticating for signing purposes; or asking questions about personal information related specifically to your business.
Frequently Asked Questions
Now that we’ve walked you through everything there is to know about e-signature legality, we’ve rounded up some common questions about e-signatures you may have:
How to create an e-signature?
Creating an e-signature is a simple process. First, you’ll need to set up an account on your chosen e-signature provider’s website. Once you’ve done that, you’ll be able to create your signature. The steps may vary slightly depending on which company you choose, but here’s what we recommend:
- Choose the type of signature you want to use. Options might include a handwritten signature, a printed signature, or even just a line or box where you can draw your own personalized mark.
- Decide what information will go into your e-signature. This could include your name, contact information, and even some additional text if desired—all of which will be displayed next to the signed document itself when it’s printed out for others to see!
- Create a unique password for this particular account so no one else can access it later on down the road if needed (but don’t forget it either).
How to make an e-signature in Word?
- Create a line by clicking on the desired location.
- Input > Signature Line will appear, follow the link to the Office-signature Line.
- Enter a name into the Suggested Signer box in the-signature Setup dialog.
- The Suggested Signer’s title field allows you to specify a role for the signatory.
- Then, choose OK. Your signed document now features the-signature block
So, yeah. They’re legal.
E-signatures are perfectly legal in the Philippines. However, there are some cases where they may not be applicable.
For example, if you are using an e-signature to sign a document that will be used as evidence in court, it is best to use a physical signature instead as the law states that a document must be signed by hand and then notarized to be valid as evidence in court.
Another case is when the document involves real estate transactions. In this case, the law requires both parties to sign on paper and have their signatures notarized or witnessed by a public officer.
In conclusion, e-signatures are legally acceptable in the Philippines. Just make sure that it’s not one of the aforementioned cases where they may not be considered valid.