Wet, Electronic, and Digital:
The Three Types of Signatures

Which ones are legally binding?

 

 

A signature is one of the most common and definitive ways of authentication. As it is unique to every individual, a signature allows transacting parties to verify each other’s identities and acknowledge each other’s consent. This is why signed documents are required for almost every kind of transaction.

 

With the advent of technology, signatures have evolved to be an essential part of digital transactions, with parties now able to sign these documents electronically. With the COVID-19 pandemic making it harder to transact in person and shifting the world towards a “new normal,” many businesses are looking at digital and contactless alternatives for their documentary needs, with their signatures following suit.

 

In this article, we will talk about the three main types of signatures, their pros and cons, and which signatures are considered legally binding in the Philippines.

Related: If you want to experience how e-signatures and electronic documents can make your business transactions easier, learn more about SignSecure.

 

Wet Signatures

The inked signatures we are most familiar with are called “wet signatures”. They come from an individual, by physical movement of the hand, using a writing implement with ink scrolling on a piece of paper. 

 

As wet signatures have been around far longer than their “dry” counterparts, they are considered the standard for any documents that need verification. Most Philippine laws that require signed documents contemplate the use of wet signatures, and it was not until recent years that laws and regulations made any distinction made between “wet” and other types of signatures.

 

While wet signatures do not have legal restrictions or limitations, they are increasingly becoming much harder to implement in the new normal. Strict quarantine and physical distancing requirements have made it difficult to set in-person meetings, and sending documents through couriers pose additional risks to all parties.

 

Electronic Signatures

Enter electronic signatures, or “e-signatures” as they are often called. As the name implies, e-signatures are any type of marks that an individual uses to signify their identity in an electronic document. While the most common example of this is an individual signing on a digital platform, e-signatures can also take the form of digitally scanned wet signatures or even an audio recording of the individual authenticating the transaction.

 

E-signatures were already growing in popularity even before COVID-19 hit, as businesses  began incorporating digital processes, but they are becoming indispensable tools in today’s business landscape. Instead of arranging physical meetings that may pose a health risk to the individuals involved, or mailing a document at the risk of loss, damage, or violations of confidentiality, many businesses are now creating electronic documents that can be verified through e-signatures. By using electronic documents, businesses are able to transact safely, quickly, and efficiently.

 

One common concern raised against the use of e-signatures is whether these are all recognized by law. However, e-signatures have already been accepted by Philippine law as legally binding, as long as they satisfy the requirements laid out in the Electronic Commerce Act of 2000, which revolve around presenting evidence that the party that provided the e-signature actually consented to the transaction. 

Related: Do you need to sign legal documents and ensure the validity of your e-signature? Click here.

 

Digital Signatures

Digital signatures are usually considered the strongest and most secure out of the different kinds of electronic signatures. These signatures use cryptographic technology to not only verify the identity of both parties, but also to authenticate the contents of the electronic document itself.

 

Digital signatures often rely on a set of private and public “keys,” which can be likened to digital fingerprints that represent the identities of the individual signing as well as the document used in the transaction. By encrypting a document with the sender’s public key, it ensures that only the recipient with their corresponding private key can decrypt the message and verify the authenticity of the document’s contents. Any outside tampering made to the document can be easily identified, thanks to this private key-public key dynamic, ensuring the security of the transaction.

 

 

As they are a subset of e-signatures, digital signatures are also recognized by Philippine law as legally binding, and they must also comply with the requirements of the Electronic Commerce Act of 2000. In addition, electronic documents signed by either e-signatures and digital signatures can also be admitted as evidence in any situation, by following the Supreme Court’s Rules on Electronic Evidence. This gives them the same legal effect and authenticity as physical documents.

 

Signing in the New Normal

With both electronic and digital signatures bearing the same weight as wet signatures, businesses can continue to transact digitally while worrying about fewer legal restrictions on their electronic documents. As the new normal brings new challenges, businesses can quickly adapt by digitizing their signatures and making their documents and transactions more efficient.

 

UNAWA can help you get started on setting up your electronic documents today. Find out more by clicking here.


We hope this article was helpful. To get more information, insight, and inspiration,check out the other articles in UNAWA Explainer for more tips on how your business can navigate the new normal.