The Philippines is dubbed as the fastest growing digital economy among major ASEAN member-states in 2021. Effectively leveraging digital transformation can propel the country’s economic recovery from the losses brought about by the Covid-19 pandemic. However, the uneven and digitally-underdeveloped landscape persists stemming from infrastructure insufficiency, low level of internet literacy, and high cost of connectivity. This paper expounds on the value of the digital economy, and describes the country’s prevalent ICT context. It also discusses the emerging trends and challenges, focusing on the two main sectors: e-Commerce and digital payments. Finally, it summarizes the national government plans and strategic directions to accelerate digitalization, and the proposed key legislations that could address the enumerated issues and challenges of the internet economy.