Mcc v Ssanyong

8/9/2019 Mcc v Ssanyong

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408 SUPREME COURT REPORTS ANNOTATED MCC Industrial Sales Corporation vs. Ssangyong Corporation

G.R. No. 170633. October 17, 2007. *

MCC INDUSTRIAL SALES CORPORATION, petitioner, vs. SSANGYONG

CORPORATION, respondent. Actions; Pleadings and Practice; Attorneys; Judgments; While recdecision by one of se veral counsels on record is n otice to all, and the period to appealcommences on such date even if the ot her c ounsel has n ot yet received a copy of the d ecision,the rule may be re laxed where it appears that t here is an apparent agreement between thecounsels t hat it would be t he collaborati ng, not the pri ncipal, who would le t he ap peal briefand the subsequent pleadings i n the C ourt of Appeals. It cannot be ga insaid tha t in Albanov. Court of Appeals , 362 SCRA 667 (2001), we held that r eceipt of a copy of the decision byone of several counsels on record is n otice to all, and the period to appeal commences onsuch date even if the other cou nsel has not yet r eceived a copy of the d ecision. In this case,

when Atty. Samson received a copy of the CA decision on September 14, 2005, MCC hadonly fteen (15) days within which to le a motion for rec onsideration conformably withSection 1, Rule 52 of the Rules of C ourt, or to le a petition for revi ew on cert iorari inaccordance with Section 2, Rule 45. The period should not be reckoned from September 29,2005 (when Castillo Zamora & Poblador received_______________

* THIRD DIVISION.

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9 MCC Industrial Sales Corporation vs. Ssangyong Corporation

their copy of the decision) because notice to Atty. Samson is deemed notice tocollaborating counsel. We note, however, from the records of t he CA, that i t w as CastilloZamora & Poblador, not Atty. Samson, which led both MCCs and Chans Brief and ReplyBrief. Apparently, the arran gement between the two coun sels was for t he collaborating, notthe principal, counsel to le the appeal brief and subsequent pleadings in the CA. Thisexplains why it was Castillo Zamora & Poblador which led the motion for thereconsideration of the CA decision, and they d id so on October 5 , 2005, well within the 15-day period from September 29 , 2005, when they received their copy of the CA decision. Thiscould also be t he reason why the CA did not nd it necessary to r esolve the question of thetimeliness of petitioners m otion for rec onsideration, even as the CA denied the sa me.

Same; Same; Same; Procedural Rules an d Technicalities; It should be r emembered thatthe R ules w ere p romulgated to set guidelines i n the ord erly administration of justice, not to

shackle the hand that dispenses it. It should be remembered that the Rules werepromulgated to set gu idelines in the orderly administration of justice, not t o shackle thehand that di spenses i t. Otherwise, the court s would be consigned to being mere s laves t otechnical rules, deprived of their j udicial discretion. Technicalities m ust take a backseat t osubstantive rights. After all, it i s circumspect l eniency in this respect t hat w ill gi ve the

parties th e fullest opportunity to ve ntilate th e m erits of their resp ective causes, rath er t hanhave th em lose life, liberty, honor or p roperty on sheer tech nicalities.

Same; Same; Motions for R econsideration; Mere r estatement of arguments i n a motion for reconsideration does not per se

apply if the ar guments were not sufficiently pa ssed u pon and answered i n the dec ision soughtto be r econsidered. Suffice it to say that the mere restatement of arguments in a motion for
http://www.central.com.ph/sfsreader/session/0000014b35c96af8fda27568000a0082004500cc/p/AKS846/?username=Guest#p536scra8960408001http://www.central.com.ph/sfsreader/session/0000014b35c96af8fda27568000a0082004500cc/p/AKS846/?username=Guest#p536scra8960408001


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reconsideration does not per se result i n a pro forma motion. In Security Bank and TrustCompany, Inc. v. Cuenca , 341 SCRA 781 (2000), we held that a m otion for r econsiderationmay not be necessarily pro forma even if it r eiterates the arguments ea rlier p assed uponand rejected by the appellate court . A movant m ay rai se the sam e arguments pr ecisely toconvince t he court that i ts ru ling was erroneou s. Furthermore, the pro forma ru le will notapply if the arguments were not sufficiently passed upon and answered in the decisionsought to be reconsi dered.

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SUPREME COURT REPORTS ANNOTATED

MCC Industrial Sales Corporation vs. Ssangyong Corporation

Same; Same; The Su preme Court has am ple authority to go be yond the pleadings when,in the i nterest of justice or f or t he p romotion of public p olicy, there i s a need to m ake i ts ow n

ndings in order to support its conclus The second issue poses a novel question that

the Court welcomes. It provides the occasion for this Court t o pronounce a denitiveinterpretation of the eq ually innovative provisions of the E lectronic Commerce Act of 2000(R.A. No. 8792) vis-vis the Rules on Electronic Evidence. Although the parties di d not raisethe question whether t he ori ginal facsimile tr ansmissions a re electronic data messages orelectronic documents within the context of the Electronic Commerce Act (the petitionermerely a ssails as i nadmissible evi dence t he photocopies of the sa id facsimile tr ansmissions),we deem it app ropriate to det ermine rst whether t he said fax transmissions are i ndeedwithin the coverage of R.A. No. 8792 before ru ling on whether t he photocopies t hereof arecovered by the law. In any case, this Court has a mple authority to go b eyond the pleadingswhen, in the interest of justice or f or t he p romotion of public policy, there i s a need to makeits ow n ndings i n order t o su pport its con clusions.

Electronic Commerce Act of 2000 (R.A. No. 8792); Evidence;Rules on Electronic Evidence; Best Evidence Rule; Words and Phrases; To be admissible in electronic data message or to be considered as t

document un der the Best Evidence R ule, the writing must foremost be a n electronic datamessage or an electronic d ocument. The ru ling of the Appellate Court is incorrect. R.A.No. 8792, otherwise kn own as t he Electronic Commerce Act of 2000, considers an electronicdata message or an electronic docum ent as t he functional equivalent of a written documentfor evi dentiary purposes. The Rules on Electronic Evidence r egards an electronic document

as admissible in evidence if it complies w ith the rules on admissibility prescribed by theRules of Court and related laws, and is au thenticated in the manner pres cribed by the sai dRules. An electronic docum ent is al so t he equ ivalent of an original document under t he BestEvidence Rule, if it is a printout or ou tput r eadable by sight or ot her m eans, shown toreect the data a ccurately. Thus, to be a dmissible in evidence as a n electronic da ta messageor t o be considered as the functional equivalent of an original document u nder the BestEvidence Rule, the writing must foremost be a n electronic d ata message or an electronicdocument.

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Same; Same; Same; Statutory Construction; Words a nd Phrases; While data messagehas ref erence t o i nformation electronically sen t, stored or t ransmitted, it does n ot necessari lymean that i t w ill gi ve rise t o a right or extinguish an obligation, unlike an electronicdocument, nevertheless evident from the l aw is t he l egislative i ntent to g ive t he t wo t erms t he


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same construction. The clause on the interchangeability of the terms electronic datamessage and electronic document was the result of t he Senate of the Philippinesadoption, in Senate Bill 1902, of the phrase electronic data message an d the House ofRepresentat ives employment, in House Bill 9971, of the term electronic document. Inorder t o expedite the recon ciliation of the tw o versions, the tec hnical working group of theBicameral Conference Committee adopted both terms and intended them to be theequivalent of each on e. Be t hat as i t may, there i s a sl ight difference bet ween the two terms.While data m essage has ref erence to information electronically sent, stored or transmitted,it d oes n ot n ecessarily mean that i t w ill give ri se t o a right or ext inguish an obligation ,unlike an electronic document. Evident from the law, however, is t he legislative intent t ogive the two terms the sam e construction.

Same; Same; Same; Same; Same; The international origin mentioned in Section 37 ofthe Electronic Commerce Act can only refer to the UNCITRAL Model Law, and theUNCITRALs denition of data message. As further guide for the Court in its task of

statutory construction, Section 37 of the Electronic Commerce Act of 2000 provides thatUnless ot herwise ex pressly provided for, the i nterpretation of this Act shall give due regardto its international ori gin and the need to promote uniformity in its a pplication and theobservance of good faith in international trade rel ations. The generally accepted principlesof international l aw and convention on electronic commerce sh all likewise b e considered.Obviously, the international ori gin mentioned in this section can only refer to theUNCITRAL Model Law, and the UNCITRALs denition of data m essage: Data m essagemeans information generated, sent, received or st ored by electronic, optical or si milarmeans including, bu t n ot l imited to, electronic d ata interchange (EDI), electronic mail,telegra m, telex or telecopy , is su bstantially the same as the IRRs characterization of anelectronic da ta m essage.

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Same; Same; Same; Same; Same; A construction should be rejected that gi ves to thelanguage u sed in a statute a meaning that does not accomplish the pu rpose for w hich the

statute was enacted, and that tends enactment. Congress deleted the phrase, but n ot l imited to, electronic data interchange

(EDI), electronic m ail, telegra m, telex o r t elecopy , and replaced the t erm data m essage (asfound in the UNCITRAL Model Law) with electronic data message. This legislativedivergence f rom what i s assu med as the terms international origin ha s b red uncertaintyand now impels the Court to make an inquiry into the true i ntent of the framers of the law.Indeed, in the con struction or i nterpretation of a legislative m easure, the p rimary ru le i s t osearch for an d determine the intent an d spirit of the law. A construction should be rejectedthat gi ves t o the language used i n a st atute a m eaning that does not accomplish t he pu rposefor which the st atute was en acted, and that t ends t o defeat the en ds which are sough t to beattained by the enactment.

Same; Same; Same; Same; Same; Facsimile Transmissions;There is no question thatwhen Congress formulated the term electronic d ata message, it intended t he same m eaningas t he t erm electronic r ecord in the C anada law, which construction of the t erm electronicdata message, excludes t elexes or faxes, except c omputergenerated faxes, in harmony withthe E lectronic Commerce Laws focus on paperless communications a nd the functional

equivalent approach that it espouses; are paper-based. When the Senate consequently voted to adopt the term electronic data


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message, it was consonant with the explanation of Senator Miriam Defensor-Santiago thatit would not apply to telexes or f axes, except com puter-generated faxes, unlike t he U nited

Nations model law on electronic commerce. In explaining the term electronic recordpatterned after the ECommerce Law of Canada, Senator Defensor-Santiago had in mindthe term electronic data message. This term then, while maintaining part of t heUNCITRAL Model Laws terminology of data message, has assumed a different context,this t ime, consonant w ith the ter m electronic record in the law of Canada. It accounts forthe addition of the word electronic and the deletion of the phrase but n ot l imited to,

electronic data interchange (EDI), e Noteworthy isthat t he Uniform Law Conference of Canada, explains t he t erm electronic record, as

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drafted in the Uniform Electronic Evidence Act, in a manner s trikingly similar to S en.Santiagos exp lanation during the Senate del iberations: x x x There i s n o question then thatwhen Congress formulated the term electronic data message, it intended the samemeaning as the ter m electronic record in the Canada law. This const ruction of the ter melectronic da ta message, which excludes telexes or faxes, except computer-generated faxes ,is in harmony with the Electronic Commerce Laws focus on paperless communicationsand the functional equivalent ap proach that i t espou ses. In fact, the deliberations of theLegislature a re rep lete with discussions on paperless a nd digital t ransactions. Facsimiletransmissions a re n ot, in this sen se, paperless, bu t veri ly are p aper-based.

Same; Same; Same; Same; Same; Same; A facsimile m achine, which was rst patentedin 1843 by Alexander B ain, is a device that can send or re ceive pictures an d text over atelephone line, and works by digitizing an image; A fax machine is es sentially an image

scanner, a modem and a computer printer combined into a highly Afacsimile machine, which was rst patented in 1843 by Alexander B ain, is a d evice that c ansend or rec eive pictures an d text over a tel ephone line. It works b y digitizing an imagedividing it i nto a grid of dots. Each dot i s ei ther on or off , depending on whether i t i s b lackor w hite. Electronically, each dot is rep resen ted by a bit that has a v alue of either 0 (off) or 1(on). In this w ay, the fax machine tr anslates a picture i nto a series of zeros a nd ones ( calleda bit map) that c an be transmitted like normal computer da ta. On the rec eiving side, a fax

machine read s t he incoming data, translates t he zer os an d ones ba ck into dots, and reprintsthe picture. A fax machine is essentially an image scanner, a modem and a computerprinter com bined into a highly specialized package. The scanner convert s t he content of aphysical document into a digital image, the modem sends t he image data over a ph one line,and the pri nter at the other end makes a d uplicate of the original document.

Same; Same; Same; Same; Same; Same; In a virtual or paperless environment,technically, there i s n o original copy to speak of, as a ll direct printouts o f the v irtual realityare t he sa me, in all respects, and are c onsidered as ori ginals; Ineluctably, the l aws d enitionof electronic data message, which, a s aforesaid, i s interchangeable with electronicdocument, could not have i ncluded facsimile t ransmissions, which have a n original pa per-based copy a s sent and a

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paper-based facsimile copy as received; While Congress antiin communications an d computer technology when it drafted the law, it excluded the early

forms of technology, like telegraph, tewhich is a newer d evelopment as c ompared to the ordinary fax machine to fax machinetransmission), when it dened the t erm electronic d ata message. In an ordinary f acsimiletransmission, there ex ists a n original paper-based information or da ta that i s scanned, sentthrough a phone line, and re-printed at t he rec eiving end. Be it noted that i n enacting theElectronic Commerce Act of 2000, Congress intended virtual or paperless writings to bethe functional equivalent and to have the same legal f unction as paper-based documents.Further, in a virtual or paperless environment, technically, there is no original copy tospeak of, as a ll direct printouts of t he virtual reality are th e same, in all respects, and areconsidered as ori ginals. Ineluctably, the laws d enition of electronic d ata message, which,as aforesaid, is interchangeable with electronic document, could not haveincluded facsimile transmissions , which have an original paper-based copy as sent and

a paper-based facsimile copy as recei ved . These t wo copies a re di stinct from each other, andhave different legal effects. While Congress anticipated future developments incommunications an d computer t echnology when it draf ted the law, it excluded the earlyforms of technology, like telegraph, telex and telecopy (except com puter-generated faxes,which is a newer development as c ompared to the ordinary fax machine to fax machinetransmission), when it dened the t erm electronic da ta message.

Same; Same; Same; Same; Same; Same; Administrative Law;The power ofadministrative offi cials t o p romulgate ru les i n the implementation of a statute i s n ecessarilylimited to what i s found in the legislative enactment i tself; T he IRR went beyond the

parameters of the law when it adopted verbatim the NCITRAL Model Laws denition data message, without c onsidering the intention of Congress w hen the latter d eleted the

phrase but not limited to, elecor telecopy. Clearly then, the IRR went beyond the parameters of the law when it adoptedverbatim the UNCITRAL Model Laws denition of data message, without considering theintention of Congress w hen the latter del eted the phrase but not limited to, electronic d atainterchange ( EDI), electronic m ail, telegra m, telex or t elecopy . The i nclu-

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MCC Industrial Sales Corporation vs. Ssangyong Corporationsion of this phrase i n the IR R offends a basic tenet in the exerc ise of the ru le-making

power of administrative agencies. After all, the power of administrative officials topromulgate ru les i n the implementation of a statute is n ecessarily limited to what i s foundin the legislative en actment itself. The implementing ru les an d regulations of a law cannotextend the l aw or expand its coverage, as t he power t o am end or r epeal a st atute is ves ted inthe Legislature. Thus, if a discrepancy occurs bet ween the basic law and an implementingrule or regu lation, it is t he former t hat p revails, because t he law cannot be broadened by amere administrative issuancean administrative agency certainly cannot amend an act ofCongress. Had the Legislature r eally wanted ordinary fax transmissions to be covered bythe mantle of the E lectronic Commerce Act of 2000, it could have ea sily lifted without a bitof tatter the entire wordings of the UNCITRAL Model Law.

Same; Same; Same; Best Evidence Rule; Facsimile Transmisions; A facsimiletransmission cannot be con sidered as el ectronic evidenceit is n ot the functional equivalentof an original under the Best Evidence R ule an d is n ot admissible as el ectronic evidence. We, therefore, conclude that t he terms electronic data message and electronic document,


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as dened under the Electronic Commerce Act of 2000, do not include a facsimiletransmission . Accordingly, a facsimile transmission cannot be considered as electronic

evidence . It i s n ot the functional equivalent of an original under t he B est Evidence R ule a ndis n ot admissible a s electronic evidence .

Same; Same; Same; Same; Same; Since a facsimile t ransmission is n ot an electronicdata message or an electronic d ocument, and cannot be con sidered as electronic evidenceby the C ourt, with greater r eason is a photocopy of such a fax transmission not electronic

evidence. Since a facsimile transmission is not an electronic data message or anelectronic document, and cannot be considered as el ectronic evidence by the Court, withgreater reason is a photocopy of such a fax transmission not electronic evidence. In thepresen t case, t herefore, Pro Forma Invoice N os. ST2-POSTS0401-1 and ST2-POSTS0401-2(Exhibits E an d F), which are mere photocopies of t he original fax transmittals, are n otelectronic evi dence, contrary to the p osition of both the t rial and the a ppellate cou rts.

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Actions; Contracts; Breach of Contract; Requisites. Despite the pro forma invoices notbeing electronic evidence, this Court nds t hat r espondent has p roven by preponderance ofevidence t he existence of a perfected contract of sale. In an action for d amages d ue to abreach of a contract, it i s essen tial that t he claimant proves (1) t he existence of a perfectedcontract, (2) the breach thereof by the other cont racting party and (3) t he damages w hichhe/she sustained due to such breach. Actori incumbit onus probandi . The burden of proofrests on the party who advances a proposition affirmatively. In other w ords, a plaintiff in acivil action must establish his case by a preponderance of e vidence, that i s, evidence t hathas g reater w eight, or i s m ore c onvincing than that w hich is offered i n opposition to it.

Civil Law; Same; Sales; Elements; In general, contracts a re perf ected by mere con sent,which is m anifested by the m eeting of the offer an d the acc eptance u pon the thing and thecause w hich are to constitute the contract. In general, contracts are perfected by mereconsent, which is manifested by the meeting of the offer and the a cceptance upon the thingand the cause which are t o constitute the contract. The offer must be certain and theacceptance a bsolute. They are, moreover, obligatory in whatever form they may have beenentered into, provided all the essen tial requisites f or th eir va lidity are p resen t. Sale, being a

consensual c ontract, follows t he general rule that i t i s p erfected at t he moment t here i s ameeting of the minds upon the thing which is the object of the contr act and upon the price.From that moment, the parties may reciprocally demand performance, subject to theprovisions of the law governing th e form of contracts. The essen tial elements of a con tract ofsale a re ( 1) consent or meeting of the m inds, that i s, to tr ansfer ow nership in exchange forthe price, (2) obj ect certain which is t he su bject m atter of t he con tract, and (3) cause of t heobligation which is est ablished.

Same; Same; Same; Evidence; Best Evidence Rule; Requisites Before Admission ofSecondary E vidence; It has b een held that w here the m issing d ocument is the foundation ofthe a ction, more st rictness i n proof is requ ired than where t he d ocument is on ly collaterallyinvolved. Because these documents are mere photocopies, they are simply secondaryevidence, admissible on ly upon compliance with Rule 130, Section 5, which states, [w]henthe ori ginal document has b een lost or dest royed, or cannot be p roduced i n court, the offeror,upon proof of its execu tion or exi stence an d the ca use of its u navail-

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ability without bad faith on his p art, may prove i ts con tents by a copy, or by a recital ofits contents in some authentic document, or by the testimony of witnesses in the orderstated. Furthermore, the offeror of secondary evidence m ust prove the predicates t hereof,namely: (a) t he loss or destruction of the original w ithout b ad faith on the part of theproponent/offeror which can be shown by circumstantial evidence of routine practices ofdestruction of documents; (b) the proponent must prove by a fair prepon derance of evidenceas to rai se a reason able inference of t he loss or destruction of t he original copy; and (c) itmust be shown that a diligent and bona de but unsuccessful search has been made for thedocument in the proper place or places. It has been held that w here the missing documentis the foundation of the action, more strictness in proof is required than where thedocument is on ly collaterally involved. Given these n orms, we nd that res pondent failed toprove the existence of t he original f ax transmissions of E xhibits E an d F, an d likewise

did not sufficiently prove t he l oss or de struction of the ori ginals. Thus, Exhibits E an d Fcannot be a dmitted in evidence and accorded probative weight.

Same; Same; Same; Same; Appeals; Evidence n ot objected to is d eemed admitted andmay be validly considered by the court in arriving at i ts j udgment; Issues n ot r aised onappeal ar e deemed abandoned. Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit X),however, is a m ere ph otocopy of its or iginal. But then again, petitioner M CC does n ot assailthe a dmissibility of this d ocument in the instant petition. Verily, evidence n ot obj ected to isdeemed admitted and may be validly considered by the court in arriving at its judgment.Issues not raised on appeal are deemed abandoned.

Same; Same; Same; Same; Appropriate conduct by the parties may be sufficient t o establish an agreement, and while there may be instances where the exchange of

correspondence do es n ot disclose t he exact point at which the d eal was c losed, the a ctions ofthe p arties m ay indicate t hat a binding obligation has been undertaken. The logical chainof events, as gleaned from the ev idence of both parties, started with the p etitioner a nd therespondent agre eing on the sal e and purchase of 220MT of stainless st eel at U S$1,860.00per M T. This initial contract was perfected . Later, as p etitioner a sked for seve ral extensionsto pay, adjustments in the delivery dates, and discounts in the price a s ori ginally agreed,the p arties sl ightly varied

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the terms of their contract, without n ecessarily novating it, t o the effect t hat theoriginal order w as reduced to 200MT, split i nto tw o deliveries, and the p rice d iscounted toUS$1,700 per M T. Petitioner, however, paid only half of its ob ligation and failed to open anL/C for t he other 10 0MT. Notably, the conduct of both parties su fficiently established theexistence of a con tract of sale, even if the w ritings of t he p arties, because o f their con testedadmissibility, were not as explicit i n establishing a contract. Appropriate conduct by theparties may be sufficient to establish an agreement, and while there may be instanceswhere the exchange of correspondence does not disclose the exact point at w hich the dealwas closed, the actions of t he parties may indicate that a binding obligation has beenundertaken.

Same; Same; Same; It is a well-entrenched rule t hat the failure of a buyer t o furnish anagreed letter of c redit i s a breach of the con tract between buyer a nd seller; Damages f or

failure to open a commercial credit may,


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the seller w ould reasonably have m ade had the transaction been carried out. With ournding that t here i s a valid contract, it i s cryst al-clear t hat w hen petitioner d id not ope nthe L/C for the rst half of the transaction (100MT), despite numerous demands fromrespondent Ssangyong, petitioner breached its contractual obligation. It is a well-entrenched rule t hat the failure of a buyer t o furnish an agreed letter of credit is a b reach ofthe contract bet ween buyer a nd seller. Indeed, where the buyer fails to open a letter ofcredit as stipulated, the seller or exporter i s entitled to claim damages for su ch breach.Damages for failure t o open a com mercial credit may, in appropriate c ases, include the lossof prot which the sel ler w ould reasonably have m ade had the t ransaction been carried ou t.

Same; Same; Same; Evidence; Breach of Contract; Damages;It i s a xiomatic t hat act ualor compensatory damages cannot be pre sumed, but must be pr oven with a re asonable degr eeof cert ainty. This Court, however, nds that t he award of actual damages is not in accordwith the evidence on rec ord. It is axi omatic that act ual or compensatory d amages cannot bepresumed, but must be proven with a reason able degree of certainty. In Villafuerte v. Court

of Appeals , 459 SCRA 58 (2005), we explained that: Actual or compensatory damages arethose awarded in order t o compensate a party for an injury or l oss h e suffered. They a riseout of a sen se of natural

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justice and are aimed at repairing the wrong done. Except as provided by law or bystipulation, a party i s en titled to an adequate com pensation only for su ch pecuniary loss ashe has d uly proven. It i s h ornbook doctrine t hat t o be a ble to rec over act ual damages, theclaimant bears t he on us of presenting before the court actual proof of the damages al legedto have been suffered.

Same; Same; Same; Same; Same; Same; In the absence of corroborative evidence, self- serving statements of account are not sufficient

cannot simply rely on speculation, conjecture or gu esswork as to the fact and amount ofdamages, but must depend on competent proof that the claimant had suffered, and on

evidence of, the actual amount thereof. The statement of account and the details of thelosses sustained by respondent d ue to the said breach are, at b est, self-serving. I t w asrespondent Ssan gyong itself which prepared the sai d documents. The items t herein are n ot

even substantiated by official r eceipts. In the absence of c orroborative evidence, the saidstatement of account is not sufficient basis to award actual damages. The court cannotsimply rely on speculation, conjecture or guesswork as t o the fact and amount of damages,but must depend on competent proof that t he claimant had suffered, and on evidence of, theactual amount thereof.

Same; Same; Same; Same; Same; Same; Nominal damages are recoverable where alegal r ight i s technically violated and must be vindicated against an invasion that h as

produced no actual present loss of any no sub stantial injury or actual damages whatsoever ha ve been or can be shown. The Courtnds tha t peti tioner k nowingly breached its con tractual obl igation and obstinately refusedto pay despite repeated demands from respondent. Petitioner even asked for severalextensions of time for i t to make good its ob ligation. But in spite of respondents con tinuousaccommodation, petitioner com pletely reneged on its con tractual du ty. For su ch inattentionand insensitivity, MCC must be held liable for nominal damages. Nominal damages arerecoverable where a legal right i s t echnically violated and must be vindicated against aninvasion that ha s produ ced no actual present loss of any kind or where there has been a


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fax. 8 On April 13, 2000, Ssangyong Manila Office sent , by fax, a letter 9 addressed toGregory Chan, MCC Manager [also the President 10of Sanyo Seiki Stainless S teelCorporation], to conrm MCCs an d Sanyo Seikis order of 220 metric tons (MT) ofhot rol led stainless steel u nder a preferential rate o f US$1,860.00 per MT . Chan,

on behalf of the corporations, assented and affixed his signature onthe conforme portion of the l etter. 11

On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice No. ST2-POSTSO401 12containing the terms and conditions of t he transaction. MCC sentback by fax to Ssangyong the invoice bearing the conformity signature 13 of Chan. Asstated in the pro forma invoice, payment for t he ordered steel products would bemade through an irrevocable letter of credit (L/C) at sight in favor ofSsangyong. 14 Follow-_______________

6 Records, p. 198; Exhibit A.7 CA Rollo , p. 97.8 TSN, August 21, 2002, p. 18.9 Records, pp. 336-337; Exhibit W. The document is an original copy of the fax transmittal in thermal

paper received by Ssangyong, however, the same is accompanied by a photocopy thereof containing aclearer p rint of its con tents.

10 Records, p. 49.11 Id. , at p p. 336-337; Exhibit W-1.12 Id. , at pp . 216-217; Exhibit E-1. The d ocument i s an original copy of t he fax transmittal in thermal


13 Id. ; Exhibit E-2.14 Id. ; Exhibit E-1.422


ing t heir u sual practice, delivery of the good s was t o be m ade a fter t he L/C had beenopened.

In the meantime, because of its conrmed transaction with MCC, Ssangyongplaced the order with its st eel manufacturer, Pohang Iron and Steel Corporation(POSCO), in South Korea 15 an d paid the sam e in full.

Because MCC could open only a partial letter of credit, the order f or 220MT ofsteel was split into two, 16one for 110MT covered by Pro Forma Invoice No. ST2-POSTS0401-1 17 and another for 110MT covered by ST2-POSTS0401-2 ,18 both dated

April 17, 2000.On June 20, 2000, Ssangyong, through its Manila Office, informed Sanyo Seiki

and Chan, by way of a fax transmittal, that it was ready to ship 193.597MT of

stainless st eel from Korea to the Philippines. It r equested that t he opening of theL/C be facilitated. 19 Chan affixed his signature on the fax transmittal and returnedthe sam e, by fax, to Ssangyong. 20

Two days l ater, on June 22, 2000, Ssangyong Manila Office informed Sanyo Seiki,thru Chan, that it was able to secure a US$30/MT price adjustment on thecontracted price of US$1,860.00/MT for t he 200MT stainless steel, and that t he
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goods were to be shipped in two tranches , the rst 100MT on that day and thesecond 100MT not later than June 27, 2000._______________

15 TSN, August 21, 2002, pp. 41-42, 67-68.16 TSN, October 15, 2003, pp. 89-92.17 Records, p. 215; Exhibit E. This is a m ere ph otocopy of the fax transmittal.18 Id. , at p. 218; Exhibit F. This i s a mere p hotocopy of the fax transmittal.19 Id. , at pp . 219-220; Exhibit G. The document is an original copy of t he fax transmittal in thermal


20 Id. ; Exhibit G-1.423

VOL. 536, OCTOBER 17, 2007 423 MCC Industrial Sales Corporation vs. Ssangyong Corporation

Ssangyong reiterated its req uest for t he facilitation of the L /Cs op ening. 21

Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to theTreasury Group of Sanyo Seiki that i t was looking forward to receiving the L/Cdetails a nd a cable copy thereof that day. 22 Ssangyong sent a separate letter of thesame date to Sanyo Seiki requesting for the open ing of the L/C covering payment ofthe rst 100MT not later than June 28, 2000. 23 Similar letters w ere t ransmitted bySsangyong Manila Office on June 27, 2000. 24On June 28, 2000, Ssangyong sentanother f acsimile letter t o M CC stating that i ts p rincipal in Korea w as already in adifficult s ituation 25 becau se of the failure of Sanyo Seiki and MCC to open the L/Cs.

The following day, June 29, 2000, Ssangyong received, by fax, a letter si gned byChan, requesting an extension of time to open the L/C because MCCs credit linewith the bank had been fully availed of in connection with another t ransaction, andMCC was waiting for an additional credit line. 26 On the same date, Ssangyongreplied, requesting that i t be i nformed of the date when the L/C would be opened,preferably at t he ea rliest possible ti me, since i ts S teel Team 2 in Korea was havingproblems an d Ssangyong was incurring warehousing costs. 27 To maintain their goodbusiness re lationship and to support MCC in its nancial predicament, Ssangyong

offered to negotiate with its s teel manufacturer, POSCO, another_______________

21 Id. , at p. 221; Exhibit H.22 Id. , at p. 223; Exhibit I.23 Id. , at p. 224; Exhibit J.24 Id. , at p. 225; Exhibit K.25 Id. , at p. 226; Exhibit L. The document is a m ere ph otocopy of the ori ginal fax message.26 Id. , at pp . 227-228; Exhibit M. The document is an original copy of the fax transmittal in thermal


27 Id. , at p. 229; Exhibit N.424

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US$20/MT discount on the price of the st ainless s teel ordered. This was intimatedin Ssangyongs Ju ne 30, 2000 letter to MCC. 28 On July 6, 2000, another follow-upletter 29 for the opening of the L/C was sent by Ssangyong to MCC.

However, despite Ssangyongs letters, MCC failed to open a letter of

cred it. 30 Consequently, on August 15, 2000, Ssangyong, through counsel, wrote SanyoSeiki that i f the L/Cs were n ot opened, Ssangyong would be compelled to can cel thecontract and hold MCC liable for damages for breach thereof amounting toUS$96,132.18, inclusive of warehouse exp enses, related interests a nd charges. 31

Later, Pro Forma Invoice Nos. ST2-POSTS080-1 32 and ST2-POSTS080-2 33 dated August 16, 2000 were issued by Ssangyong and sent via fax to MCC. The invoices

slightly varied the terms of t he earlier pro forma invoices (ST2POSTSO401, ST2-POSTS0401-1 and ST2-POSTS0401-2), in that the quantity was nowofficially 100MT per i nvoice and the price was reduced to US$1,700.00 per MT. Ascan be gleaned from the photocopies of the sai d August 16, 2000 invoices sub mittedto the court, they both bear t he conformity signature of MCC Manager Chan.

On August 17, 2000, MCC nally opened an L/C with PCIBank forUS$170,000.00 covering payment for 100MT of stainless steel coil under Pro

Forma Invo ice N o. ST2-_______________

28 Id. , at p. 230; Exhibit O. The d ocument is a m ere ph otocopy of the ori ginal letter.29 Id. , at p. 231; Exhibit P.30

Id. , at pp. 232-233; Exhibit Q.31 Id. , at p. 232.32 Id. , at p. 338; Exhibit X. The document is a m ere ph otocopy of the ori ginal fax transmittal.33 Id. , at p. 321; Exhibit 2-C. The document was cert ied as t he t rue copy of its or iginal by PCIBank.425


POSTS080-2 .34The goods covered by the said invoice were then shipped to andreceived by M CC. 35

MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Chan,requesting for a p rice ad justment of the ord er st ated in Pro Forma Invoice N o. ST2-POSTS080-1 , considering that the prevailing price of steel at t hat time wasUS$1,500.00/MT, and that MCC lost a lot of money due to a rec ent strike. 36

Ssangyong rejected the request, and, o n August 23, 2000, sent a demandletter 37 to Chan for the opening of the second and last L/C of US$170,000.00 with awarning that, if the said L/C was not opened by MCC on August 26, 2000,Ssangyong would be constrained to cancel the contract and hold MCC liable forUS$64,066.99 (representing cost d ifference, warehousing expenses, interests and

charges as of August 15, 2000) and other damages for breac h. Chan failed to r eply.Exasperated, Ssangyong through counsel wrote a letter to MCC, on September

11, 2000, canceling the sales con tract u nder ST2-POSTS0401-1 / ST2-POSTS0401-2, and demanding payment of US$97,317.37 representing losses, warehousingexpenses, interests an d charges. 38
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Ssangyong then led, on November 16, 2001, a civil action for damages due tobreach of contract against defendants MCC, Sanyo Seiki and Gregory Chan beforethe R egional Trial Court of Makati City. In its com plaint, 39 Ssangyong_______________

34 Id. , at pp . 318-320; Exhibits 2, 2-A and 2-B. These d ocuments were cer tied as tr ue copies oftheir originals by P CIBank.

35 Id. , at pp. 300-317; Exhibits 1-B to 1- R.36 Id. , at pp . 378-379; Exhibit DD. The document is an original copy of the fax transmittal in thermal


37 Id. , at p. 234; Exhibit R.38 Id. , at p. 235; Exhibit S.39 Id. , at pp . 1-10.426


alleged that def endants breached their contract when they ref used to open the L/Cin the amount of US$170,000.00 for the remaining 100MT of steel under Pro

Forma Invoice N os. ST2-POSTS0401-1 and ST2-POSTS0401-2 . After Ssangyong rested its case, defendants led a Demurrer to

Evidence 40 alleging that Ssangyong failed to present t he original copi es of t he pro forma invoices on which the civil action was based. In an Order dated April 24,

2003, the court denied the demurrer, ruling that the documentary evidencepresented had already been admitted in the December 16, 2002 Order 41 and theiradmissibility nds support in Republic Act (R.A.) No. 8792, otherwise k nown as t heElectronic Commerce Act of 2000. Considering that both testimonial anddocumentary evidence tended to substantiate the material allegations in thecomplaint, Ssangyongs evi dence su fficed for pu rposes of a prima facie case. 42

After trial on the merits, the RTC rendered its Decisi 43 on March 24, 2004, infavor of S sangyong. The trial court ruled that w hen plaintiff agreed to sell anddefendants ag reed to buy the 220MT of steel products for t he price of US$1,860 per

MT, the contract was perfected. The subject t ransaction was evidenced by Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 , which were later

amended only in terms of reduction of volume as well as the price per MT,following Pro Forma Invoice Nos. ST2-POSTS080-1 and ST2POSTS080-2 . TheRTC, however, excluded Sanyo Seiki from liability for l ack of competent evi dence.The fallo of the d ecision reads:WHEREFORE, premises considered, Judgment is hereby rendered ordering defendantsMCC Industrial Sales C orporation and Gregory C han, to pay plaintiff, jointly and severallythe following:

_______________

40 Id. , at p p. 262-267.41 Id. , at p. 254.42 Id. , at p. 275.43 Id. , at pp . 408-412.427
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1.1)Actual da mages of US$93,493.87 representing the outstanding principal claimplus i nterest at t he ra te of 6% per annum from March 30, 2001.

2.2)Attorneys fees i n the sum of P50,000.00 plus P 2,000.00 per coun sels a ppearancein court, the sam e being deemed just an d equitable considering that by reason ofdefendants breach of t heir obligation under the subject contract, pl aintiff wasconstrained to l itigate to en force i ts ri ghts a nd recover f or t he d amages it s ustained,and therefore h ad to en gage the servi ces of a l awyer.

3.3)Costs of suit.

No award of exemplary da mages for lack of sufficient basis.SO ORDERED. 44

On April 22, 2004, MCC and Chan, through their counsel of record, Atty. Eladio B.Samson, led their Notice of Appeal. 45On June 8, 2004, the law office of CastilloZamora & Poblador entered i ts ap pearance as t heir collaborating counsel.

In their Appeal Brief led on March 9, 2005, 46 MCC and Chan raised before theCA the following err ors of the RTC:

1.I.THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE

1.A.THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDINGTHAT APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OFSTEEL PRODUCTS FROM APPELLEE, INSTEAD OF ONLY 100 METRICTONS.

1.1.THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING INEVIDENCE THE PRO FORMA INVOICES WITH REFERENCE NOS.ST2POSTS0401-1 AND ST2-POSTS0401-2.

1.II.THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ACTUAL DAMAGES TO APPELLEE.

_______________

44 Id. , at pp . 411-412.45 Id. , at p. 444.46 CA rollo , pp. 29-49.428


1.III.THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING ATTORNEYS FEES TO APPELLEE.
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2.IV.THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING APPELLANT GREGORY CHAN JOINTLY AND SEVERALLY LIABLE

WITH APPELLANT MCC. 47

On August 31, 2005, the CA rendered i ts Decision48

affirming the ru ling of the t rialcourt, but absolving Chan of any liability. The appellate cou rt ruled, among othe rs,that Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2POSTS0401-2 (ExhibitsE, E-1 an d F) were ad missible in evidence, although they were m ere f acsimileprintouts of MCCs steel orders. 49The dispositive portion of t he appellate courtsdecision reads:WHEREFORE, premises considered, the Court holds:

1.(1)The award of actual damages, with interest, attorneys fees an d costs ordered by

the lower court is hereby AFFIRMED.

2.(2)Appellant Gregory Chan is her eby ABSOLVED from any liability.

SO ORDERED. 50

A copy of the said Decision was received by MCCs and Chans principal Atty. Eladio B. Samson, on September 14, 2005. 51Their collaborating counsel,

Castillo Zamora & Poblador, 52 likewise, received a copy of the CA decision onSeptember 19, 2005. 53

On October 4, 2005 , Castillo Zamora & Poblador, on behalf of MCC, led amotion for recon sideration of the sa id_______________

47 Id. , at p. 36.48 Supra note 1.49 CA Rollo , pp. 127-128.50 Id. , at p. 131.51 Id. , at p. 160.52 The rms name was later changed to Zamora Poblador Vasquez & Bretaa.53 CA Rollo , p. 161.429


decision. 54 Ssangyong opposed t he motion contending that the decision of the CA hadbecome nal and executory on account of the failure of MCC to le the sai d motionwithin the reglementary period. The appellate court resolved, on November 22,2005, to deny the motion on its merits, 55 without, however, ruling on the proceduralissue ra ised. Aggrieved, MCC led a petition for review on cert iorari 56 before this Court,

imputing the following error s t o the Court of Appeals:THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN ACCORDANCEWITH JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL AND

ACCEPTED COURSE OF JUDICIAL PROCEEDINGS BY REVERSING THE COURT AQUO S DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. 02124 CONSIDERINGTHAT:
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1.I.THE COURT OF APPEALS ERRED IN SUSTAINING THE ADMISSIBILITY INEVIDENCE OF THE PROFORMA INVOICES WITH REFERENCE NOS.ST2POSTSO401-1 AND ST2-POSTSO401-2, DESPITE THE FACT THAT THESAME WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS.

2.II.THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS FACTTHAT, EVEN ASSUMING PETITIONER BREACHED THE SUPPOSEDCONTRACT, THE FACT IS THAT PETITIONER FAILED TO PROVE THAT ITSUFFERED ANY DAMAGES AND THE AMOUNT THEREOF.

3.III.THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF US$93,493.87 ISSIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEASTREDUCED, IF NOT DELETED BY THE COURT OF APPEALS. 57

_______________

54 Id. , at pp . 140-150.55 Supra note 2.56 Rollo , pp. 9-26.57 Id. , at p. 15.430


In its Comment, Ssangyong sought the dismissal of t he petition, raising thefollowing arguments: that the CA decision dated 15 August 2005 is al ready nal andexecutory, because MCCs motion for reconsideration was led beyond thereglementary p eriod of 15 days f rom receipt of a copy thereof , and that, in any case,it was a pro forma motion; that M CC breached the contract for t he purchase of thesteel products when it failed to open the req uired letter of credit; that the p rintoutcopies and/or photocopies of facsimile or telecopy transmissions were properlyadmitted by the trial court because t hey are considered original documents underR.A. No. 8792; and that MCC is liable for actual damages and attorneys feesbecause of its brea ch, thus, compelling Ssangyong to l itigate.

The p rincipal issues t hat this C ourt is cal led upon to resol ve a re t he following:

1.I Whether the CA decision dated 15 August 2005 is already nal andexecutory;

2.II Whether t he print-out an d/or p hotocopies of f acsimile transmissions a reelectronic evi dence an d admissible a s su ch;

3.III Whether there was a perfected contract of sale between MCC andSsangyong, and, if in the affirmative, whether MCC breached the saidcontract; and

4.IV Whether the award of actual damages and attorneys fees in favor ofSsangyong is proper an d justied.


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- I -It cannot be gainsaid that i n Albano v. Court of Appeals ,58 we held that rec eipt of acopy of the decision by one of several c ounsels on record is notice to a ll, and theperiod to appeal commences on su ch date even if the other counsel has n ot yet

_______________

58 415 Phil. 761; 362 SCRA 667 (2001).431


received a copy of the decision. In this case, when Atty. Samson received a copy ofthe CA decision on September 14, 2005, MCC had only fteen (15) days withinwhich to le a motion for r econsideration conformably with Section 1, Rule 52 of theRules of Court, or to le a petition for review on cert iorari in accordance withSection 2, Rule 45. The period should not be reckoned from September 29, 2005(when Castillo Zamora & Poblador received their copy of the decision) becausenotice t o Atty. Samson is dee med notice t o collaborating cou nsel.

We note, however, from the records of the CA, that i t was Castillo Zamora &Poblador, not Atty. Samson, which led both MCCs and Chans Brief and ReplyBrief. Apparently, the arrangement between the two counsels was for thecollaborating, not t he principal, counsel to le the appeal bri ef and subsequentpleadings in the CA. This explains why it was Castillo Zamora & Poblador whichled the motion for the reconsideration of the CA decision, and they did so onOctober 5, 2005, well within the 15-day period from September 29, 2005, when theyreceived their copy of the CA decision. This could also be t he reason why the CA didnot nd it n ecessary to resolve the question of the timeliness of peti tioners m otionfor r econsideration, even as t he CA denied the sam e.

Independent of this consideration though, this Court as siduously reviewed therecords a nd found that strong con cerns o f substantial justice warrant the rel axationof t his ru le.

In Philippine Ports Authority v. Sargasso Construction and Development

Corporation ,59 we rul ed t hat:In Orata v. Intermediate Appellate Court , we held that w here strong considerations ofsubstantive justice a re m anifest i n the petition, this C ourt m ay relax the strict applicationof t he rules of proced ure in the exercise of i ts legal jurisdiction. In addition to the basicmerits of t he main case, such a petition usually embodies justifying circumstance whichwarran ts ou r h eeding to the petitioners_______________

59 G.R. No. 146478, July 30, 2004, 435 SCRA 512.432


cry f or j ustice i n spite of t he earlier n egligence of cou nsel. As w e held in Obut v. Court of Appeals :

[W]e can not look with favor on a cou rse of action which would place t he ad ministration of justice in astraight j acket f or then the result would be a poor k ind of justice i f there w ould be justice a t al l.

Verily, judicial orders, such as the one
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The second issue poses a novel question that t he Court welcomes. It provides t heoccasion for this Court t o pronounce a denitive interpretation of the equallyinnovative provisions of the Electronic Commerce Act of 2000 (R.A. No. 8792) vis-vis the Rules on E lectronic Evidence.

_______________

61 Yuchengco v. Court of Appeals , G.R. No. 165793, October 27, 2006,505 SCRA 716, 723.62 396 Phil. 1081; 341 SCRA 781 (2000).434


Although the parties did not raise the question whether the otransmissions a re electronic data messages or electronic documents within thecontext of the Electronic Commerce Act (the petitioner merely assails as

inadmissible ev idence t he p hotocopies of the sa id facsimile tr ansmissions), we d eemit ap propriate to determine rst w hether t he said fax transmissions are indeedwithin the coverage of R.A. No. 8792 before ruling on whether the photocopiesthereof are cover ed by the law. In any case, this Court has ample authority to gobeyond the pleadings when, in the interest of justice or f or t he promotion of publicpolicy, there i s a n eed to make its own ndings i n order t o su pport its conclusions. 63

Petitioner con tends that t he photocopies of the pro forma invoices p resented byrespondent Ssangyong to prove the perfection of their su pposed contract of sale a reinadmissible in evidence an d do not fall within the ambit of R.A. No. 8792, becausethe law merely admits as the best evidence the original fax transmittal. On theother hand, respondent posits that, from a reading of the law and the Rules onElectronic Evidence, the original facsimile transmittal of t he pro forma invoice isadmissible in evidence si nce i t i s a n electronic document an d, therefore, the bestevidence under the law and the Rules. Respondent further claims that thephotocopies of these fax transmittals (specically ST2-POSTS0401-1 and ST2-POSTS0401-2 ) are ad missible under t he Rules on Evidence becau se t he re spondentsufficiently explained the n onproduction of the ori ginal fax tr ansmittals.

In resolving this i ssue, the appellate cou rt ruled as f ollows:_______________

63 Maharlika Publishing Corporation v. Tagle , 226 Phil. 456, 463-464;142 SCRA 553, 561 (1986).435


Admissibility of Pro Forma Invoices; Breach of Contract

by Appellants

Turning rst to the appellants argument against the admissibility of the Pro Forma Invoices with Reference Nos. ST2POSTS0401-1 and ST2-POSTS0401-2 (Exhibits

E, E-1 and F, pp. 215-218, Records), appellants argue that t he said documents areinadmissible ( sic ) being violative of the b est evi dence ru le.

The argument is untenable.


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The copies of t he said pro-forma invoices sub mitted by the appellee a re a dmissible inevidence, although they are m ere el ectronic facsimile printouts of appellants ord ers. Suchfacsimile printouts are c onsidered Electronic Documents u nder t he New Rules on ElectronicEvidence, which came into effect on August 1, 2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC).(h) Electronic document refers to i nformation or the represen tation of information, data, g ures,symbols or ot her m odes of written expression, described or h owever r epresented, by which a right isestablished or an obligation extinguished, or by w hich a fact may be proved and affirmed, which isreceived, recorded , transmitted, stored, processed , retrieved or produced electronically. It i ncludesdigitally signed documents and any printout or outpu t, readable by sight or ot her m eans, whichaccurately reects t he el ectronic data m essage or el ectronic document. For pu rposes of these R ules,the ter m electronic docu ment may be used i nterchangeably with electronic da ta message. An electronic document shall be regarded as the equivalent of an original document

under t he Best E vidence Rule, as long as it is a printout or out put r eadable by sight orother m eans, showing to re ect the data a ccurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)The ru ling of the Appellate C ourt is incorrect. R.A. No. 8792, 64 otherwise known asthe Electronic Commerce Act of_______________

64Entitled 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 Pu rposes.

Approved on June 14, 2000.436


2000, considers an electronic data message or an electronic document as thefunctional equivalent of a written document f or evi dentiary p urposes. 65 The Rules onElectronic E vi-_______________

65 Sections 6, 7 and 10 of R.A. No. 8792 read:Sec. 6. Legal Recognition of Data Messages. Information shall not be denied legal effect, validity or en forceab ility

solely on the g rounds that i t i s in the d ata m essage purporting to give ri se to su ch legal effect, or t hat i t i s m erely

referred to i n that el ectronic da ta m essage.

Sec. 7. Legal Recognition of Electronic Documents. Electronic docu ments sh all have the l egal effect, validityor en forceability as a ny other docu ment or l egal writing, and

(a) W here t he law requires a docu ment t o be in writing, that r equirement i s m et by a n electronic docum ent i f the

said electronic document m aintains its integrity and reliability and can be authenticated so as to be usable for

subsequent reference, in th at

1. (i)The electronic document has r emained complete an d unaltered, apart from the add ition of any endorsement

and any a uthorized chan ge, or any cha nge which arises in the norm al course of communication, storage an d

display; and

2. (ii)The el ectronic docu ment is r eliable in the l ight of the p urpose f or w hich i t was ge nerated a nd in the l ight of

all the rel evant circumstances.

1. (b)Paragrap h (a) app lies w hether t he requ irement t herein is i n the form of an obligation or w hether t he law

simply p rovides consequ ences f or t he do cument not being presented or ret ained i n its ori ginal form.


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2. (c)Where t he l aw requires t hat a document be presente d or r etained in its ori ginal form, that requi rement i s

met by a n electronic docum ent i f

1.(i)There exists a reliable assurance as to the integrity of the document f rom the time when it was rst

generated in its nal form; and

2. (ii)That docu ment is capable of being displayed to the person to whom it is t o be p resented: Provided , That no

provision of this Act shall apply to vary a ny and a ll

437


dence 66 regards a n electronic document as a dmissible in evidence i f it complies w iththe ru les on admissibility prescribed_______________

1. requirements of existing laws on f ormalities requ ired i n th e execu tion of documents for t heir val idity.

For evi dentiary purposes, an electronic document shall be the functional equi valent of a written document un der

existing laws.

This A ct does n ot m odify any statutory ru le rel ating to the admissibility of el ectronic d ata messages or el ectronic

documents, except t he ru les rel ating to au thentication and best evi dence.

Sec. 10. Original Documents. (1) W here t he l aw requires i nformation to be p resented or ret ained in its ori ginal

form, that r equirement is m et by a n electronic data m essage or el ectronic docu ment if:

1. (a)The integrity of the information from the t ime when it was rst generated i n its n al form, as an electronicdata m essage or el ectronic docum ent is shown by evidence aliunde or ot herwise; and

2. (b)Where i t i s requ ired tha t i nformation be presented, that t he information is cap able of bei ng displayed to

the person to w hom it is t o be p resented.

(2) Paragraph (1) applies w hether t he requ irement therein is in the form of an obligation or w hether t he law simply

provides consequences f or t he i nformation not bei ng presented or ret ained in its ori ginal f orm.

(3) For t he pu rposes of subparagrap h (a) of paragrap h (1):

1. (a)the cri teria for assess ing integrity sh all be w hether t he information has rem ained complete an d u naltered,

apart from the addition of any endorsement and any change which arises in the normal course of

communication, storage an d display; and

2. (b)the standard of reliability required shall be assessed in the light of the purpose for w hich the i nformation

was ge nerated and in the l ight of all relevant c ircumstances.

66 A.M. No. 01-7-01-SC, effective on August 1, 2001.438


by the Rules of C ourt and related laws, and is authenticated in the mannerprescribed by the said Rules. 67 An electronic document is also the equivalent of anoriginal document under the Best Evidence Rule, if it is a printout or ou tputreadable by si ght or other m eans, shown to reect the data a ccurately. 68_______________
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67 Rule 3 of the Rules on E lectronic Evidence reads:

RULE 3ELECTRONIC DOCUMENTS

SECTION 1. Electronic Documents as functional equivalent of paper-based documents. Whenever arule of evidence refers to the term writing, document, record, instrument, memorandum or any other f ormof writing, such term shall be deemed to i nclude a n electronic document as de ned in these R ules.

SEC. 2. Admissibility. An electronic document is admissible in evidence if it complies with the ruleson admissibility prescribed by the Rules of Court and related laws an d is au thenticated in the mannerprescribed by these R ules.

68 Rule 4 of the Rules on E lectronic Evidence reads:RULE 4

BEST EVIDENCE RULE

SECTION 1. Original o f an Electronic Document. An electronic docum ent shal l be regarded as the equ ivalent of an

original document under t he Best Evidence Rule if it is a pri ntout or outpu t readable by si ght or ot her m eans, shown to

reect the d ata a ccurately.

SEC. 2. Copies as equivalent of the ori ginals. When a document i s in two or m ore copies executed a t or about t he

same ti me with identical contents, or i s a counterpart produ ced by the sam e impression as the original, or f rom the

same matrix, or by mechanical or el ectronic re-recording, or by chemical r eproduction, or by other equ ivalent

techniques w hich accuratel y reprodu ces t he ori ginal, such copies or d uplicates sh all be regarded as the equivalent of

the o riginal.

Notwithstanding the f oregoing , copies or du plicates s hall not be a dmissible to t he sam e exten t as the o riginal if:

439


Thus, to be a dmissible in evidence as an electronic da ta message or t o be con sideredas the functional equivalent of an original document under the Best E videnceRule, the writing must foremost be a n electronic d ata message or a n electronicdocument.

The Electronic Commerce Act of 2000 denes electronic data message andelectronic document as follows:Sec. 5. Denition of Terms. For t he purposes of this Act, the following terms are de ned,as follows:

x x xc. Electronic Data Message refers t o information generated , sent, received or st ored by

electronic, optical or si milar m eans.x x xf. Electronic Document refers t o information or t he rep resentation of information, data,

gures, symbols or other m odes of written expression, described or how ever r epresented, bywhich a right is est ablished or an obligation extinguished, or by w hich a fact may be provedand affirmed, which is received, r ecorded, transmitted, stored, proc essed, r etrieved orproduced electron ically.

The Implementing Rules and Regulations (IRR) of R.A. No. 8792,69

which was signedon July 13, 2000 by the t hen Secre-_______________

1. (a)a ge nuine qu estion is rai sed as to t he a uthenticity of t he ori ginal; or

2. (b)in the ci rcumstances i t w ould be unjust or i nequitable to ad mit t he copy in lieu of the ori ginal.
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69 The Electronic Commerce Act of 2000 provides, in its Section 34, that t he DTI [Department of Tradeand Industry], Department of Budget and Management and the Bangko Sentral ng Pilipinas areempowered to en force t he provisions of the Act and issue i mplementing ru les an d regulations n ecessary, incoordination with the Department of Transportation and Communications, National TelecommunicationsCommission, National Computer C enter, National Information Technology Council, Commission on Audit,

other concerne d agencies a nd the private sect or, to implement t he Act within sixty (60) days after i tsapproval.

440


taries of the Department of Trade and Industry, the Department of Budget andManagement, and then Governor of the Bangko Sentral ng Pilipinas , denes theterms as:Sec. 6. Denition of Terms. For t he purposes of this Act and these R ules, the following

terms are d ened, as f ollows: x x x(e) Electronic Data Message r efers t o information generated , sent, received or st ored by

electronic, optical or si milar m eans, but n ot limited to, electronic d ata interchange ( EDI), electronic mail, telegram, telex

message shall be equ ivalent t o a nd be u sed interchangeably w ith electronic d ocument.x x x x(h) Electronic Document refers t o information or the representat ion of information,

data, gures, symbols or other modes of written expression, described or howeverrepresented, by which a right i s est ablished or a n obligation extinguished, or by which a

fact may be proved and affirmed, which is received, recorded, transmitted, stored,processed , retrieved or p roduced electronically. Throughout these Rules, the term electronicdocument shall be equivalent to and be used interchangeably with electronic datamessage.

The phrase but not l imited to, electronic d ata interchange ( EDI), electronic m ail,telegra m, telex or telecopy in the IRRs denition of electronic data message iscopied from the Model Law on Electronic Commerce adopted by t he United NationsCommission on International Trade Law (UNCITRAL), 70 from which majority of theprovisions of R.A. No._______________

70 On June 12, 1996, the Commission, after consideration of the text of the draft Model Law as revi sedby the drafting group, decided to adopt the said law and to recommend that al l States give favorableconsideration to the sai d Model Law on Electronic Commerce when they enact or revise their laws, in viewof the n eed for u niformity of the l aw applicable to al ternatives of paper-based forms of communication andstorage of information (UNCITRAL Model Law on Electronic Commerce with Guide to Enactment 1996with addi

441

VOL. 536, OCTOBER 17, 2007 441

MCC Industrial Sales Corporation vs. Ssangyong Corporation8792 were taken. 71 While Congress deleted this phrase in the Electronic Commerce

Act of 2000, the drafters of the IRR reisaid phrase i s s ignicant and pivotal, as di scussed h ereunder.

The clause on the interchangeability of the terms electronic da ta message an delectronic document was t he resu lt of the Senate of t he P hilippines adoption, in


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Senate Bill 1902, o f the phrase electronic data message and the House ofRepresentatives employment, in House Bill 9971, of the term electronicdocument. 72 In order t o ex pedite th e recon ciliation of the tw o versions, the tec hnicalworking group of the Bicameral Conference Committee adopted both terms and

intended them to be t he equivalent of each one. 73 Be t hat as i t may, there i s a slightdifference between the two terms. While data message has referenceto information electronically sen t, stored or t ransmitted, it does n ot necessarily m eanthat i t w ill gi ve rise to a right or extinguish an obligation ,74unlike an electronicdocument. Evident from the law, however, is t he legislative intent t o give the twoterms the same construction.

The Rules on Electronic Evidence promulgated by this Court den es the saidterms in the following manner:SECTION 1. Denition of Terms. For purposes of these Rules, the following terms are

dened, as follows:x x x x

_______________

tional article 5 bis a s adop ted in 1998, United Nations P ublication, New York, 1999).71 Record of the Senate, Vol. III, No. 61, February 16, 2000, p. 405.72 R.A. No. 8792 is a consol idation of Senate B ill 1902 and House Bill 9971 (Senate P roceedings, June 8,

2000, p. 90).73 The Electronic Commerce Act and its Implementing Rules and Regulations, Annotations by Atty.

Jesus M. Disini, Jr., Legislative History by Janette C. Toral, published by the Philippine Exporters

Confederation, Inc. in September 200 0.74 House of Representatives Transcript of Proceedings, June 5 , 2000.442


1.(g)Electronic d ata message r efers t o information generated , sent, received or st oredby electronic, optical or si milar m eans.

2.(h)Electronic d ocument ref ers t o information or t he represen tation of information,

data, gures, symbols or ot her m odes of written expression, described or h oweverrepresen ted, by which a right is est ablished or a n obligation extinguished, or bywhich a fact may be proved and affirmed, which is received, recorded, transmitted,stored, processed , retrieved or produced electronically. It includes digitally signeddocuments and print-out or output, readable by sight or ot her means, whichaccurately reect s t he el ectronic d ata message or e lectronic d ocument. For p urposesof these R ules, the t erm electronic d ocument m ay be used interchangeably withelectronic d ata message.

Given these d enitions, we go back to the original qu estion: Is a n original pri ntoutof a facsimile transmission an electronic data m essage or electronic document?

The denitions under the Electronic Commerce Act of 2000, its IRR and theRules on Electronic Evidence, at rst gl ance , convey the impression that facsimiletransmissions are electronic data messages or electronic documents because theyare sent by electronic means. The expanded denition of an electronic data
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