Everything you need to know about e-signatures!
Yes, we know. E-signatures are everywhere, and everyone is talking about them. Those of you who are still wandering the unknown streets of all things e-signatures, let us help!
Living in a digitally connected world entitles us to certain benefits. Today, we can get things done swiftly – businesses move at a breakneck pace, deals are made in seconds, bank transfers occur in the blink of an eye, etc. So, when it comes to signing documents, how can we afford to lag behind?
From deals, partnerships, and collaborations between businesses to employee signatures on various documents, the one thing common is the need for a signature. However, in this day and age, we can hardly afford to wait for a person to be physically present everywhere just to sign on a document or even scan, print, email, or courier it. Let’s not forget the COVID-19 pandemic that ensured that physically signing a document was next to impossible for the past 2 to 3 years. Neither is the process efficient nor is it effective. It also leads to innumerable delays resulting in increased costs and sometimes can even lead to the cancellation of a deal.
This is where electronic signatures step in. Electronic Signatures solutions enable organizations and individuals to sign documents remotely from a mobile device or computer, creating an authentic signature in seconds.
Gone are the days when it took more than a few days to sign and send ink-to-paper signatures. Today, procuring a legally binding signature takes a few seconds and can be done remotely from a computer or mobile device. From understanding how e-signatures work and their legal standing in the Philippines, here is everything you need to know.
What is an electronic signature?
The exact definition of electronic signatures may differ from country to country. In the Philippines, “Electronic Signature” refers to any distinctive mark, characteristic and/or sound in electronic form, representing the identity of a person and attached to or logically associated with the electronic data message or electronic document or any methodology or procedures employed or adopted by a person and executed or adopted by such person with the intention of authenticating or approving an electronic data message or electronic document.
Although the term electronic signatures are often used interchangeably with digital signatures, the two are very different. In short, electronic signatures are a legal concept that needs to prove who signed, what was signed, and the intent and consent of the signatory. On the other hand, a digital signature is the encryption technology that works WITH an electronic signature and not as an electronic signature in itself. Digital signatures play the role of securing sensitive data, detecting tampering efforts, and strengthening the signatories’ trust.
How do electronic signatures work?
The broad category of e-signatures encompasses many types of electronic signatures. The category includes digital signatures, which are a specific technology implementation of electronic signatures. Both digital signatures and other e-signature solutions allow you to sign documents and authenticate the signer. Digital signatures, like handwritten signatures, are unique to each signer.
Digital signature solution providers follow a protocol called PKI or Public Key Infrastructure. PKI requires the provider to use a mathematical algorithm to generate two long numbers, called keys. One key is public, and one key is private.
When a signer electronically signs a document, the signature is created using the signer’s private key, which is always securely kept by the signer. The mathematical algorithm acts as a cipher, creating data matching the signed document, called a hash, and encrypting that data. The resulting encrypted data is the digital signature. The signature can also track what time the document was signed. If the document changes or is tampered with after signing, the digital signature automatically stands invalidated.
Are e-signatures legally binding in the Philippines?
Electronic signatures have been recognized for more than two decades in the Philippines. The Electronic Commerce Act of 2000 (Republic Act No. 8792) in the Philippines provides recognition for electronic documents and electronic signatures in accordance with its provisions and expressly states that an "electronic signature on the electronic document shall be equivalent to the signature of a person on a written document."
Documents can be executed via the government-sponsored Philippine National Public Key Infrastructure (PNPKI). The PNPKI is a digital signature authenticated by the Department of Information and Communications Technology, through which the government ensures secure, safe, and efficient delivery of services to individuals and businesses.
Sec 8 of the Republic Act No. 8792 states that: An electronic signature on the electronic document shall be equivalent to the signature of a person on a written document if that signature is proved by showing that a prescribed procedure, not alterable by the parties interested in the electronic document, existed under which -
- A method is used to identify the party sought to be bound and to indicate said party’s access to the electronic document necessary for his consent or approval through the electronic signature;
- Said method is reliable and appropriate for the purpose for which the electronic document was generated or communicated, in the light of all the circumstances, including any relevant agreement;
- It is necessary for the party sought to be bound, to proceed further with the transaction, to have executed or provided the electronic signature; and
- The other party is authorized and enabled to verify the electronic signature and decide to proceed with the transaction authenticated by the same.
What are the benefits of using e-signatures?
- Faster Turn-Around-Time- Electronic signatures accelerate approvals and agreements by eliminating idle periods from the process. With electronic signatures, you don’t have to wait for the mail or get in your car to drop off documents. The moment you apply your electronic signature to a document is the moment you can move to the next step. According to a report in 2020, e-signatures can reduce your TAT for documentation from 1-2 weeks to mere minutes.
- Reduced operational costs- Electronic signatures can help organizations save considerable operational costs. They help speed up workflows to save time and increase productivity and reduce the cost of printing, postage, and filing storage. In addition, moving your paper trail online helps you save money on physical supplies and stop wasting business resources and time on tedious administrative tasks.
- Reduced Errors and Risks- Among financial institutions, e-signatures reduce scanning errors by 92% and prevent file loss and displacement by 66%. In addition, businesses are said to achieve 70% to 80% efficiency improvements after removing manual processes to adopt digital technologies like e-signature solutions.
- Reduced Carbon Footprint- A simple e-signature software solution can save as much as 2.5 billion trees in less than 20 years. Additionally, when you don't need to physically store, send, and receive documents for signatures, you also put an end to several logistics that indirectly increase your carbon footprint.
- Improved User Experience- Imagine sending a courier physically to your client for their signatures. Now replace that image with a digital software solution through which you can send important contracts to your clients in the safest way, without fear of tampering, mishandling, loss, damage, etc. What a great impression you can make. You can create a seamless, effortless, and clean experience for customers and employees alike.
The long, arduous process of signing and sending ink-to-paper signatures used to be a major road bump in the contract management process. However, not anymore! Today, procuring a legally admissible signature takes a few seconds—and can be done remotely, from a computer or mobile device. In addition to streamlining administrative procedures, electronic signatures—or e-signatures—offer businesses an elegant way to reduce risks, save resources, and build a better customer experience.
Exela presents DrySign, a powerful e-signature solution that is legally binding in the Philippines and other major economies worldwide. With attractive plans for large enterprises, small and growing businesses as well as individuals, DrySign can truly transform the way you work.
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DISCLAIMER: The information on this site is for general information purposes only and is not intended to serve as legal advice. Laws governing the subject matter may change quickly, and Exela cannot guarantee that all the information on this site is current or correct. Should you have specific legal questions about any of the information on this site, you should consult with a licensed attorney in your area.