About twenty-five years ago, the Philippine Congress empowered the Supreme Court (SC) to issue rules to allow for electronic notarization in the country. There is reason to be optimistic that the time for e-notarization has finally come.

Notarization: not an empty, routinary act

In a nutshell, the notarization process is designed to prevent fraud and forgery by having a trusted third-party -- the notary public -- ensure that the signature on a document is authentic, and that the signer knows what they are signing and does so voluntarily. The key components of this process include personal appearance of the signer before the notary, and verification of the signer’s identity by the notary.

In the Philippines, notarization has the effect of converting a private document into a public one, making it admissible in evidence without further proof of its authenticity. A notarial document is by law entitled to full faith and credit upon its face, and enjoys a legal presumption of regularity, authenticity, and due execution, which presumption may only be overturned by clear and convincing contrary proof.

Given the substantive public interest invested in the notarial practice, it is understandable that for more than a century, the legislature has limited notarial practice to members of the Bar, to be appointed by the courts. The current rules governing notarization are embodied in the Rules on Notarial Practice, promulgated by the SC in 2004.

When notarization is required

While under the Civil Code, a contract is valid and binding if all its elements -- consent, object, and cause -- are present, some statements or contracts are required by law to be in a public document, most notably those involving rights over real property. Other government agencies require certain statements to be notarized, i.e. select court pleadings and motions, documentation of certain corporate acts, taking out a loan or a mortgage, replacement of a lost ID, or availing of insurance and other benefits.

Still paper-based

The E-Commerce Act of 2000 aims to recognize electronic documents (covering commercial and non-commercial activities), provide standards to protect their integrity and reliability, and to promote the universal use of electronic transactions in the government and by the general public.

Specifically, it gave the SC the option to “adopt such other authentication procedures, including the use of electronic notarization systems as necessary and advisable.” But as previously noted, the SC has yet to operationalize this e-notarization.

As a result, notarial acts necessarily involve a paper document. In other words: the general rule is that electronic versions of paper-based documents are considered functionally equivalent to each other (assuming they comply with reliability and integrity standards set in the E-Commerce Act). The exception is carved for documents that need to be notarized, which must be signed on paper and be presented in person before a notary public.

This is unfortunate given the well-established benefits to digitalization: fraud prevention, time and money savings, reduced environmental impact, and better user experience, among others.

A 2022 United Nations study noted that “among the remaining legal impediments to implementing full paperless trade is the lack of rules involving electronic notarization systems.”

Personal appearance

At the height of the COVID-19 pandemic, the SC only went so far as to allow the notarization of paper documents with parties appearing before the notary through video conferencing instead of by being physically present. In effect, the SC made an exception to the rule that “personal appearance” means physical presence before the notary.

But even this limited exemption is now technically unavailable, as the state of national emergency due to COVID-19 has been lifted in 2023, and no area in the country is presently under any form of community quarantine -- a requirement under the SC’s interim rules.

We’re (supposed to have been) an early adopter

As early as year 2000, the authors of the E-Commerce Act recognized the possible emergence and benefits of having an e-notarization system. Interestingly, in the United States (US), e-notarization was first adopted by the State of Virginia only in 2011. Since then, this mode, where physical presence is deemed complied with when done via video conferencing, has been adopted in almost all jurisdictions in the US (47 states and the District of Columbia), notably in response to the pandemic.

In the European Union, Estonia is leading the pack by offering fully remote notarial services, dispensing with the video conference requirement altogether.

Going digital = more efficiency, transparency, less corruption

Apart from the earlier mandate of the E-Commerce Act, the Philippine government has been consistent in its larger goal to digitalize its processes. The Philippine Development Plan 2023-2028, the country’s overall blueprint for development planning, describes the very first strategy of the transformation agenda, as follows: “Digital transformation of government will result in more efficient and faster service delivery to the people, more transparency, and fewer opportunities for corruption at various levels.”

In President Ferdinand Marcos, Jr.’s words: “Digitalization is the call of today; not of the future -- but of the present. It is here. It is needed, and it is needed today.”

The SC, in its ambitious Strategic Plan for Judicial Innovations 2022-2027 identified manual processes that engender delay as a contributing factor to the inefficiencies faced by the Judiciary. It committed to promote innovation by utilizing the most appropriate, secure, and advanced technologies to provide seamless access to justice for all. Amid an “even larger wave of information” that looms, it promises to “adapt while maximizing the benefits of technological solutions”. Among the notable initiatives, the SC aimed to develop and deploy eCourt System 2.0 enabled by “digital signing based on biometric features,” a key ingredient of e-notarization.

And if anyone is still monitoring them, allowing e-notarization in partnership with local technology providers also directly contributes to achieving at least four (4) of the country’s Sustainable Development Goals (SDGs)targets.

Begin with the end in mind

Without a doubt, digitalization has been the strategic direction of the country and the judiciary, based on various legal mandates and our government’s stated priorities.

As early as year 2000, it has been the Philippine state’s objective to promote the universal use of electronic transactions in the “government and by the general public.” Since then, the Philippines has laid down sufficient legal and administrative rules that recognize electronic documents signatures as equivalent to wet signatures.[1]

In spite of all these, and the myriad digitalization initiatives being undertaken by government agencies and private enterprises, it is a surprise that both sectors still grapple with outdated paper-based workflows.

We can trace this to our deep-seated, long-held, and subconscious bias to see the ‘final’ or ‘end product’ of our transactions and processes reduced to paper. At best, this may be due to either a fear of the unknown or a lack of full understanding of the benefits of digital transformation (e.g. it is much easier to check if a digital signature is forged or an electronic document is tampered with, compared with their paper counterparts). At worse, bureaucratic inertia or the discomfort in changing “how things are done around here” (i.e. opaque, inefficient, and/or corruption-prone) may come into play.

Whatever the reason, given the indispensability of validly signed or notarized documents in our everyday transactions, any government digitalization program will only succeed when electronic signatures and e-notarization are legally allowed and widely used, especially by top government and corporate decision-makers.

A rare opportunity

As mentioned, there is no legal impediment for the SC to operationalize the e-notarization system, as it is explicitly empowered to do so by the E-Commerce Act.Moreover, there is sufficient experience from other jurisdictions from which we can derive standards and lessons on online notarization systems.

There is also a much more conducive environment for digital reform, given the accessibility of cloud computing and video conferencing, the availability of technologies that promote online trust and security, plus the Filipino public’s demonstrated familiarity -- and skill -- in doing things online (e.g. see our very high levels of digital payments, internet use, mobile phone penetration, etc.).

Taken together, these circumstances present the SC with a rare opportunity to roll-out e-notarization -- a game-changing initiative that will greatly improve legal access, ease of doing business, and the overall government transaction experience.

The SC has in fact taken clear steps to make this happen. Last year, it held a series of consultations with tech startups and other resource organizations to seek inputs in their work to draft rules to allow e-notarization in the country.(Disclosure: I was privileged to take part in the consultation session with Twala, a tech startup that I co-founded.)

Electronic notarization, when allowed, will complete the legal framework for digitalization of documents in the country. E-notarization represents a pivotal opportunity for the Philippines to modernize its legal processes, align with global digitalization trends, enhance legal access, and promote ease of doing business.

*About the author: Third Bagro is a lawyer, techpreneur, and former public servant. He co-founded Twala, a Department of Science and Technology-grant awarded, blockchain-powered digital signature and solutions provider, and is a partner at FLO Attorneys-at-Law. He served government for close to fifteen years, with stints at the Presidential Management Staff, the Senate, and the Department of Trade and Industry. He is the Philippines’ Country Representative of the US-ASEAN Business Council, a non-profit. He teaches Public Officers and Election Law at the UP College of Law.

**You may request a copy of the full white paper with citations and footnotes by sending an email to info@flo.com.ph.

[1] Bagro, Herminio III, Reyes, Jeffrey, and Samaniego, Emil. Blockchain-powered Digital Signature: The Key to a Fully Digital Economy (White Paper), pp. 8-17 and 20-23. Available at https://www.twalasign.io/legal-white-paper.

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Last year, the Supreme Court of the Philippines held a series of consultations with tech startups and resource persons to lay the groundwork for rules authorizing electronic notarization in the country. FLO Attorney Third Bagro, who participated in the consultations as Twala co-founder, says the rollout of e-notarization would be a game-changing initiative that will greatly improve legal access, ease of doing business, and the overall government transaction experience.

Article originally published by FLO Attorneys