THIRD DIVISION
|
MCC INDUSTRIAL SALES
CORPORATION, Petitioner, - versus - SSANGYONG CORPORATION, Respondent. |
G.R. No. 170633
Present: YNARES-SANTIAGO, J., Chairperson, AUSTRIA-MARTINEZ, CHICO-NAZARIO, NACHURA, and REYES, JJ. Promulgated: October 17, 2007 |
x------------------------------------------------------------------------------------x
DECISION
NACHURA, J.:
Before
the Court is a petition for review on certiorari
of the Decision[1] of the
Court of Appeals in CA-G.R. CV No. 82983 and its Resolution[2]
denying the motion for reconsideration thereof.
Petitioner
MCC Industrial Sales (MCC), a domestic corporation with office at Binondo,
On
April 13, 2000, Ssangyong Manila Office sent, by fax, a letter[9]
addressed to Gregory Chan, MCC Manager [also the President[10]
of Sanyo Seiki Stainless Steel Corporation], to confirm MCC’s and Sanyo Seiki’s
order of 220 metric tons (MT) of hot
rolled stainless steel under a preferential rate of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and
affixed his signature on the conforme
portion of the letter.[11]
On
In
the meantime, because of its confirmed transaction with MCC, Ssangyong placed
the order with its steel manufacturer, Pohang Iron and Steel Corporation
(POSCO), in
Because
MCC could open only a partial letter of credit, the order for 220MT of steel
was split into two,[16]
one for 110MT covered by Pro Forma
Invoice No. ST2-POSTS0401-1[17]
and another for 110MT covered by ST2-POSTS0401-2,[18]
both dated
On
Two
days later, 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 the
contracted price of US$1,860.00/MT for the 200MT stainless steel, and that the
goods were to be shipped in two tranches, the first 100MT on that day
and the second 100MT not later than June 27, 2000. Ssangyong reiterated its
request for the facilitation of the L/C’s opening.[21]
Ssangyong
later, through its Manila Office, sent a letter, on
The
following day,
However,
despite Ssangyong’s letters, MCC failed to open a letter of credit.[30] Consequently, on August 15, 2000, Ssangyong,
through counsel, wrote Sanyo Seiki that if the L/C’s were not opened, Ssangyong
would be compelled to cancel the contract and hold MCC liable for damages for
breach thereof amounting to US$96,132.18, inclusive of warehouse expenses,
related interests and charges.[31]
Later,
Pro Forma Invoice Nos. ST2-POSTS080-1[32]
and ST2-POSTS080-2[33]
dated
On
MCC
then faxed to Ssangyong a letter dated
Ssangyong
rejected the request, and, on August 23, 2000, sent a demand letter[37]
to Chan for the opening of the second and last L/C of US$170,000.00 with a
warning 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 for
US$64,066.99 (representing cost difference, warehousing expenses, interests and
charges as of August 15, 2000) and other damages for breach. Chan failed to reply.
Exasperated,
Ssangyong through counsel wrote a letter to MCC, on
Ssangyong
then filed, on
After Ssangyong rested its case,
defendants filed a Demurrer to Evidence[40]
alleging that Ssangyong failed to present the original copies of the 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 evidence presented had already been
admitted in the December 16, 2002 Order[41]
and their admissibility finds support in Republic Act (R.A.) No. 8792,
otherwise known as the Electronic Commerce Act of 2000. Considering that both
testimonial and documentary evidence tended to substantiate the material
allegations in the complaint, Ssangyong’s evidence sufficed for purposes of a
prima facie case.[42]
After
trial on the merits, the RTC rendered its Decision[43]
on
WHEREFORE, premises considered, Judgment is hereby rendered ordering
defendants MCC Industrial Sales Corporation and Gregory Chan, to pay plaintiff,
jointly and severally the following:
1)
Actual damages of US$93,493.87 representing the outstanding principal claim
plus interest at the rate of 6% per annum from
2)
Attorney’s fees in the sum of P50,000.00 plus P2,000.00 per
counsel’s appearance in court, the same being deemed just and equitable
considering that by reason of defendants’ breach of their obligation under the
subject contract, plaintiff was constrained to litigate to enforce its rights
and recover for the damages it sustained, and therefore had to engage the
services of a lawyer.
3)
Costs of suit.
No
award of exemplary damages for lack of sufficient basis.
SO
ORDERED.[44]
On
In
their Appeal Brief filed on
I. THE
HONORABLE COURT A QUO PLAINLY ERRED
IN FINDING THAT APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE
A.
THE
HONORABLE COURT A QUO PLAINLY ERRED
IN FINDING THAT APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OF STEEL PRODUCTS FROM APPELLEE, INSTEAD OF
ONLY 100 METRIC TONS.
1. THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN EVIDENCE THE PRO FORMA INVOICES WITH REFERENCE NOS.
ST2- POSTS0401-1 AND ST2-POSTS0401-2.
II. THE
HONORABLE COURT A QUO PLAINLY ERRED
IN AWARDING ACTUAL DAMAGES TO APPELLEE.
III. THE
HONORABLE COURT A QUO PLAINLY ERRED
IN AWARDING ATTORNEY’S FEES TO
APPELLEE.
IV. THE
HONORABLE COURT A QUO PLAINLY ERRED
IN FINDING APPELLANT GREGORY
CHAN JOINTLY AND SEVERALLY LIABLE WITH
APPELLANT MCC.[47]
On
WHEREFORE, premises considered, the Court holds:
(1)
The award of actual damages, with
interest, attorney’s fees and costs ordered by the lower court is hereby
AFFIRMED.
(2)
Appellant Gregory Chan is hereby
ABSOLVED from any liability.
SO
ORDERED.[50]
A
copy of the said Decision was received by MCC’s and Chan’s principal counsel,
Atty. Eladio B. Samson, on
On
Aggrieved,
MCC filed a petition for review on certiorari[56] before this Court, imputing the
following errors to the Court of Appeals:
THE COURT OF APPEALS DECIDED A LEGAL QUESTION
NOT IN ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A DEPARTURE FROM THE USUAL
AND ACCEPTED COURSE OF JUDICIAL PROCEEDINGS BY REVERSING THE COURT A QUO’S DISMISSAL OF THE COMPLAINT IN
CIVIL CASE NO. 02-124 CONSIDERING THAT:
I. THE COURT OF APPEALS
ERRED IN SUSTAINING THE ADMISSIBILITY IN EVIDENCE OF THE PRO-FORMA INVOICES
WITH REFERENCE NOS. ST2-POSTSO401-1 AND ST2-POSTSO401-2, DESPITE THE FACT THAT
THE SAME WERE MERE PHOTOCOPIES OF FACSIMILE PRINTOUTS.
II. THE COURT OF APPEALS FAILED TO
APPRECIATE THE OBVIOUS FACT THAT, EVEN ASSUMING PETITIONER BREACHED THE
SUPPOSED CONTRACT, THE FACT IS THAT PETITIONER FAILED TO PROVE THAT IT SUFFERED
ANY DAMAGES AND THE AMOUNT THEREOF.
III. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT
OF US$93,493.87 IS SIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN AT LEAST REDUCED,
IF NOT DELETED BY THE COURT OF APPEALS.[57]
In
its Comment, Ssangyong sought the dismissal of the petition, raising the
following arguments: that the CA decision dated 15 August 2005 is already final
and executory, because MCC’s motion for reconsideration was filed beyond the
reglementary period of 15 days from receipt of a copy thereof, and that, in any
case, it was a pro forma motion; that
MCC breached the contract for the purchase of the steel products when it failed
to open the required letter of credit; that the printout copies and/or
photocopies of facsimile or telecopy transmissions were properly admitted by
the trial court because they are considered original documents under R.A. No.
8792; and that MCC is liable for actual damages and attorney’s fees because of
its breach, thus, compelling Ssangyong to litigate.
The
principal issues that this Court is called upon to resolve are the following:
I – Whether
the CA decision dated
II – Whether
the print-out and/or photocopies of facsimile transmissions are electronic
evidence and admissible as such;
III – Whether
there was a perfected contract of sale between MCC and Ssangyong, and, if in
the affirmative, whether MCC breached the said contract; and
IV – Whether
the award of actual damages and attorney’s fees in favor of Ssangyong is proper
and justified.
- I
-
It
cannot be gainsaid that in Albano v.
Court of Appeals,[58]
we held that receipt of a copy of the decision by one of several counsels on
record is notice to all, and the period to appeal commences on such date even
if the other counsel has not yet received a copy of the decision. In this case, when Atty. Samson received a
copy of the CA decision on
We
note, however, from the records of the CA, that it was Castillo Zamora & Poblador,
not Atty. Samson, which filed both MCC’s and Chan’s Brief and Reply Brief. Apparently, the arrangement between the two counsels
was for the collaborating, not the principal, counsel to file the appeal brief
and subsequent pleadings in the CA. This
explains why it was Castillo Zamora & Poblador which filed the motion for the
reconsideration of the CA decision, and they did so on
Independent
of this consideration though, this Court assiduously reviewed the records and
found that strong concerns of substantial justice warrant the relaxation of
this rule.
In
Philippine Ports Authority v. Sargasso
Construction and Development Corporation,[59] we ruled that:
In Orata v. Intermediate
Appellate Court, we held that where strong considerations of substantive
justice are manifest in the petition, this Court may relax the strict
application of the rules of procedure in the exercise of its legal
jurisdiction. In addition to the basic merits of the main case, such a petition
usually embodies justifying circumstance which warrants our heeding to the
petitioner’s cry for justice in spite of the earlier negligence of counsel. As
we held in Obut v. Court of Appeals:
[W]e cannot look with favor on a course of
action which would place the administration of justice in a straight jacket for then the result would be a poor kind of
justice if there would be justice at all. Verily, judicial orders, such as the
one subject of this petition, are issued to be obeyed, nonetheless a
non-compliance is to be dealt with as the circumstances attending the case may
warrant. What should guide judicial action is the principle that a
party-litigant is to be given the fullest opportunity to establish the merits
of his complaint or defense rather than for him to lose life, liberty, honor or
property on technicalities.
The
rules of procedure are used only to secure and not override or frustrate
justice. A six-day delay in the perfection of the appeal, as in this case, does
not warrant the outright dismissal of the appeal. In Development Bank of the
[T]he rules of procedure are mere tools
intended to facilitate the attainment of justice, rather than frustrate it. A
strict and rigid application of the rules must always be eschewed when it would
subvert the rule’s primary objective of enhancing fair trials and expediting
justice. Technicalities should never be used to defeat the substantive rights
of the other party. Every party-litigant must be afforded the amplest opportunity
for the proper and just determination of his cause, free from the constraints
of technicalities.[60]
Moreover, it should be remembered
that the Rules were promulgated to set guidelines in the orderly administration
of justice, not to shackle the hand that dispenses it. Otherwise, the courts would be consigned to being
mere slaves to technical rules, deprived of their judicial discretion. Technicalities must take a backseat to
substantive rights. After all, it is
circumspect leniency in this respect that will give the parties the fullest
opportunity to ventilate the merits of their respective causes, rather than
have them lose life, liberty, honor or property on sheer technicalities.[61]
The
other technical issue posed by respondent is the alleged pro forma nature of MCC’s motion for reconsideration, ostensibly
because it merely restated the arguments previously raised and passed upon by
the CA.
In
this connection, suffice it to say that the mere restatement of arguments in a
motion for reconsideration does not per
se result in a pro forma
motion. In Security Bank and Trust Company, Inc. v. Cuenca,[62]
we held that a motion for reconsideration may not be necessarily pro forma even if it reiterates the
arguments earlier passed upon and rejected by the appellate court. A movant may raise the same arguments
precisely to convince the court that its ruling was erroneous. Furthermore, the pro forma rule will not apply if the arguments were not
sufficiently passed upon and answered in the decision sought to be reconsidered.
-
II -
The
second issue poses a novel question that the Court welcomes. It provides the occasion for this Court to
pronounce a definitive interpretation of the equally innovative provisions of
the Electronic Commerce Act of 2000 (R.A. No. 8792) vis-à-vis the Rules on Electronic Evidence.
Although
the parties did not raise the question whether the original facsimile
transmissions are “electronic data messages” or “electronic documents” within
the context of the Electronic Commerce Act (the petitioner merely assails as
inadmissible evidence the photocopies of the said facsimile transmissions), we
deem it appropriate to determine first whether the said fax transmissions are
indeed within the coverage of R.A. No. 8792 before ruling on whether the
photocopies thereof are covered by the law.
In any case, this Court has ample authority to go beyond the pleadings
when, in the interest of justice or for the promotion of public policy, there
is a need to make its own findings in order to support its conclusions.[63]
Petitioner contends that the photocopies of the pro forma invoices presented by respondent Ssangyong to prove the
perfection of their supposed contract of sale are inadmissible in evidence and
do not fall within the ambit of R.A. No. 8792, because the law merely admits as
the best evidence the original fax
transmittal. On the other hand, respondent posits that, from a reading of the
law and the Rules on Electronic Evidence, the original facsimile transmittal of
the pro forma invoice is admissible
in evidence since it is an electronic document and, therefore, the best
evidence under the law and the Rules. Respondent further claims that the
photocopies of these fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2)
are admissible under the Rules on Evidence because the respondent sufficiently
explained the non-production of the original fax transmittals.
In resolving this issue, the appellate court ruled as follows:
Admissibility
of Pro Forma
Invoices; Breach of Contract
by Appellants
Turning first to the appellants’ argument against the
admissibility of the Pro Forma Invoices with Reference Nos. ST2-POSTS0401-1 and
ST2-POSTS0401-2 (Exhibits “E”, “E-1” and “F”, pp. 215-218, Records), appellants
argue that the said documents are inadmissible (sic) being violative of the best evidence rule.
The argument is untenable.
The copies of the said pro-forma invoices submitted by
the appellee are admissible in evidence, although they are mere electronic
facsimile printouts of appellant’s orders. Such facsimile printouts are
considered Electronic Documents under the New Rules on Electronic Evidence,
which came into effect on
“(h)
‘Electronic document’ refers to information or the representation of
information, data, figures, symbols or other modes of written expression,
described or however represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved and affirmed, which
is received, recorded, transmitted, stored, processed, retrieved or produced
electronically. It includes digitally signed documents and any printout or
output, readable by sight or other means, which accurately reflects the
electronic data message or electronic document. For purposes of these Rules,
the term ‘electronic document’ may be used interchangeably with ‘electronic
data message’.
An electronic document shall be regarded as the
equivalent of an original document under the Best Evidence Rule, as long as it
is a printout or output readable by sight or other means, showing to reflect
the data accurately. (Rule 4, Section 1, A.M. No. 01-7-01-SC)
The ruling of the Appellate Court is incorrect.
R.A. No. 8792,[64]
otherwise known as the Electronic Commerce Act of 2000, considers an electronic
data message or an electronic document as the functional equivalent of a
written document for evidentiary purposes.[65]
The Rules on Electronic Evidence[66]
regards an electronic document as admissible in evidence if it complies with
the rules on admissibility prescribed by the Rules of Court and related laws,
and is authenticated in the manner prescribed by the said Rules.[67]
An electronic document is also the equivalent of an original document under the
Best Evidence Rule, if it is a printout or output readable by sight or other
means, shown to reflect the data accurately.[68]
Thus, to be admissible in evidence as an electronic data message or to be
considered as the functional equivalent of an original document under the Best
Evidence Rule, the writing must foremost
be an “electronic data message” or an “electronic document.”
The Electronic Commerce Act of 2000 defines electronic data message and
electronic document as follows:
Sec.
5. Definition
of Terms. For the purposes of this Act, the following terms are
defined, as follows:
xxx
c.
“Electronic
Data Message” refers to information generated, sent, received or stored by
electronic, optical or similar means.
xxx
f. “Electronic
Document” refers to information or the representation of information, data,
figures, symbols or other modes of written expression, described or however
represented, by which a right is established or an obligation extinguished, or
by which a fact may be proved and affirmed, which is received, recorded,
transmitted, stored, processed, retrieved or produced electronically.
The Implementing Rules and Regulations (IRR) of R.A.
No. 8792,[69]
which was signed on
Sec.
6. Definition
of Terms. For the purposes of this Act and these Rules, the following
terms are defined, as follows:
xxx
(e)
“Electronic Data Message” refers to information generated, sent, received or
stored by electronic, optical or similar means, but not limited to, electronic data interchange (EDI), electronic mail,
telegram, telex or telecopy. Throughout these Rules, the term “electronic data
message” shall be equivalent to and be used interchangeably with “electronic
document.”
x
x x x
(h) “Electronic Document” refers to
information or the representation of information, data, figures, symbols or
other modes of written expression, described or however represented, by which a
right is established or an obligation extinguished, or by which a fact may be
proved and affirmed, which is received, recorded, transmitted, stored,
processed, retrieved or produced electronically. Throughout these Rules, the term “electronic document” shall be
equivalent to and be used interchangeably with “electronic data message.”
The phrase “but
not limited to, electronic data interchange (EDI), electronic mail, telegram,
telex or telecopy” in the IRR’s definition of “electronic data message” is copied
from the Model Law on Electronic Commerce adopted by the United Nations
Commission on International Trade Law (UNCITRAL),[70]
from which majority of the provisions of R.A. No. 8792 were taken.[71]
While Congress deleted this phrase in the Electronic Commerce Act of 2000, the
drafters of the IRR reinstated it. The
deletion by Congress of the said phrase is significant and pivotal, as
discussed hereunder.
The clause on the interchangeability of the terms
“electronic data message” and “electronic document” was the result of the
Senate of the
The Rules on Electronic Evidence promulgated by this Court defines the said terms in the following manner:
SECTION
1. Definition
of Terms. – For purposes of these Rules, the following terms are defined,
as follows:
x
x x x
(g)
“Electronic
data message” refers to information generated, sent, received or stored by
electronic, optical or similar means.
(h)
“Electronic
document” refers to information or the representation of information, data,
figures, symbols or other modes of written expression, described or however
represented, by which a right is established or an obligation extinguished, or
by which a fact may be proved and affirmed, which is received, recorded,
transmitted, stored, processed, retrieved or produced electronically. It
includes digitally signed documents and print-out or output, readable by sight
or other means, which accurately reflects the electronic data message or
electronic document. For purposes of
these Rules, the term “electronic document” may be used interchangeably with
“electronic data message.”
Given these definitions, we go back to the original question: Is an original printout of a facsimile transmission an electronic data message or electronic document?
The definitions under the Electronic Commerce Act of 2000, its IRR and the Rules on Electronic Evidence, at first glance, convey the impression that facsimile transmissions are electronic data messages or electronic documents because they are sent by electronic means. The expanded definition of an “electronic data message” under the IRR, consistent with the UNCITRAL Model Law, further supports this theory considering that the enumeration “xxx [is] not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.” And to telecopy is to send a document from one place to another via a fax machine.[75]
As further guide for the Court in its task of statutory construction, Section 37 of the Electronic Commerce Act of 2000 provides that
Unless otherwise expressly provided for, the
interpretation of this Act shall give due
regard to its international origin and the need to promote uniformity in
its application and the observance of good faith in international trade
relations. The generally accepted principles of international law and
convention on electronic commerce shall likewise be considered.
Obviously, the “international origin” mentioned in this section can only refer to the UNCITRAL Model Law, and the UNCITRAL’s definition of “data message”:
“Data message” means information generated, sent,
received or stored by electronic, optical or similar means including, but not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy.[76]
is substantially the same as the IRR’s characterization of an “electronic data message.”
However, Congress deleted the phrase, “but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy,” and replaced the term “data message” (as found in the UNCITRAL Model Law ) with “electronic data message.” This legislative divergence from what is assumed as the term’s “international origin” has bred uncertainty and now impels the Court to make an inquiry into the true intent of the framers of the law. Indeed, in the construction or interpretation of a legislative measure, the primary rule is to search for and determine the intent and spirit of the law.[77] A construction should be rejected that gives to the language used in a statute a meaning that does not accomplish the purpose for which the statute was enacted, and that tends to defeat the ends which are sought to be attained by the enactment.[78]
Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of Senate Bill 1902 (the predecessor of R.A. No. 8792), sponsored the bill on second reading, he proposed to adopt the term “data message” as formulated and defined in the UNCITRAL Model Law.[79] During the period of amendments, however, the term evolved into “electronic data message,” and the phrase “but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy” in the UNCITRAL Model Law was deleted. Furthermore, the term “electronic data message,” though maintaining its description under the UNCITRAL Model Law, except for the aforesaid deleted phrase, conveyed a different meaning, as revealed in the following proceedings:
x
x x x
Senator Santiago. Yes, Mr. President. I will furnish a copy
together with the explanation of this proposed amendment.
And then finally, before I leave the Floor,
may I please be allowed to go back to Section 5; the Definition of Terms. In
light of the acceptance by the good Senator of my proposed amendments, it will
then become necessary to add certain terms in our list of terms to be
defined. I would like to add a
definition on what is “data,” what is “electronic record” and what is an
“electronic record system.”
If the gentleman will give me permission, I
will proceed with the proposed amendment on Definition of Terms, Section 5.
Senator Magsaysay. Please go ahead, Senator Santiago.
Senator Santiago. We are in Part 1, short title on the
Declaration of Policy, Section 5, Definition of Terms.
At the appropriate places in the listing of
these terms that have to be defined since these are arranged alphabetically,
Mr. President, I would like to insert the term DATA and its definition. So, the
amendment will read: “DATA” MEANS REPRESENTATION, IN ANY FORM, OF INFORMATION
OR CONCEPTS.
The explanation is this: This definition of “data”
or “data” as it is now fashionably pronounced in
So again, the proposed amendment is this:
“DATA” MEANS REPRESENTATIONS, IN ANY FORM, OF INFORMATION OR CONCEPTS.
Senator Magsaysay. May I know how will this
affect the definition of “Data Message” which encompasses electronic records,
electronic writings and electronic documents?
Senator Santiago. These are completely
congruent with each other. These are compatible. When we define “data,” we are
simply reinforcing the definition of what is a data message.
Senator Magsaysay. It is accepted, Mr.
President.
Senator Santiago. Thank you. The next term is
“ELECTRONIC RECORD.” The proposed amendment is as follows:
“ELECTRONIC RECORD” MEANS DATA THAT IS
RECORDED OR STORED ON ANY MEDIUM IN OR BY A COMPUTER SYSTEM OR OTHER SIMILAR
DEVICE, THAT CAN BE READ OR PERCEIVED BY A PERSON OR A COMPUTER SYSTEM OR OTHER
SIMILAR DEVICE. IT INCLUDES A DISPLAY, PRINTOUT OR OTHER OUTPUT OF THAT DATA.
The explanation for this term and its
definition is as follows: The term “ELECTRONIC RECORD” fixes the scope of our
bill. The record is the data. The record
may be on any medium. It is electronic because it is recorded or stored
in or by a computer system or a similar device.
The amendment is intended to apply, for
example, to data on magnetic strips on cards or in Smart cards. As
drafted, it would not apply to telexes or faxes, except computer-generated
faxes, unlike the United Nations model law on electronic commerce. It would also not apply to regular digital
telephone conversations since the information is not recorded. It would apply
to voice mail since the information has been recorded in or by a device similar
to a computer. Likewise, video records are not covered. Though when the video
is transferred to a website, it would be covered because of the involvement of
the computer. Music recorded by a computer system on a compact disc would be
covered.
In
short, not all data recorded or stored in digital form is covered. A computer
or a similar device has to be involved in its creation or storage. The term
“similar device” does not extend to all devices that create or store data in
digital form. Although things that are not recorded or preserved by or in a
computer system are omitted from this bill, these may well be admissible under
other rules of law. This provision focuses on replacing the search for
originality proving the reliability of systems instead of that of individual
records and using standards to show systems reliability.
Paper
records that are produced directly by a computer system such as printouts are
themselves electronic records being just the means of intelligible display of
the contents of the record. Photocopies of the printout would be paper record
subject to the usual rules about copies, but the original printout would be
subject to the rules of admissibility of this bill.
However,
printouts that are used only as paper records and whose computer origin is
never again called on are treated as paper records. In that case, the
reliability of the computer system that produces the record is irrelevant to
its reliability.
Senator Magsaysay. Mr. President, if my
memory does not fail me, earlier, the lady Senator accepted that we use the
term “Data Message” rather than “ELECTRONIC RECORD” in being consistent with
the UNCITRAL term of “Data Message.” So
with the new amendment of defining “ELECTRONIC RECORD,” will this affect her
accepting of the use of “Data Message” instead of “ELECTRONIC RECORD”?
Senator Santiago. No, it will not. Thank you
for reminding me. The term I would like
to insert is ELECTRONIC DATA MESSAGE in lieu of “ELECTRONIC RECORD.”
Senator Magsaysay. Then we are, in effect, amending
the term of the definition of “Data Message” on page 2A, line 31, to which we
have no objection.
Senator Santiago. Thank you, Mr. President.
x
x x x
Senator Santiago. Mr. President, I have proposed all the
amendments that I desire to, including the amendment on the effect of error or
change. I will provide the language of the amendment together with the
explanation supporting that amendment to the distinguished sponsor and then he
can feel free to take it up in any session without any further intervention.
Senator Magsaysay. Before we end, Mr.
President, I understand from the proponent of these amendments that these are
based on the Canadian E-commerce Law of
1998. Is that not right?
Senator Santiago. That
is correct.[80]
Thus, when the Senate consequently voted to adopt
the term “electronic data message,” it was consonant with the explanation of
Senator Miriam Defensor-Santiago that it would not apply “to telexes or faxes, except computer-generated faxes, unlike the
United Nations model law on electronic commerce.” In explaining the term
“electronic record” patterned after the E-Commerce Law of Canada, Senator
Defensor-Santiago had in mind the term “electronic data message.” This term
then, while maintaining part of the UNCITRAL Model Law’s terminology of “data
message,” has assumed a different context, this time, consonant with the term “electronic
record” in the law of
“Electronic record” fixes the scope of the Act. The
record is the data. The record may be any medium. It is “electronic” because it
is recorded or stored in or by a computer system or similar device. The Act is
intended to apply, for example, to data on magnetic strips on cards, or in
smart cards. As drafted, it would not
apply to telexes or faxes (except computer-generated faxes), unlike the United
Nations Model Law on Electronic Commerce. It would also not apply to
regular digital telephone conversations, since the information is not recorded.
It would apply to voice mail, since the information has been recorded in or by
a device similar to a computer. Likewise video records are not covered, though
when the video is transferred to a Web site it would be, because of the
involvement of the computer. Music recorded by a computer system on a compact
disk would be covered.
In short, not all data recorded or stored in “digital”
form is covered. A computer or similar device has to be involved in its
creation or storage. The term “similar device” does not extend to all devices
that create or store data in digital form. Although things that are not
recorded or preserved by or in a computer system are omitted from this Act, they
may well be admissible under other rules of law. This Act focuses on replacing
the search for originality, proving the reliability of systems instead of that
of individual records, and using standards to show systems reliability.
Paper records that are produced directly by a computer
system, such as printouts, are themselves electronic records, being just the
means of intelligible display of the contents of the record. Photocopies of the
printout would be paper records subject to the usual rules about copies, but
the “original” printout would be subject to the rules of admissibility of this
Act.
However, printouts that are used only as paper
records, and whose computer origin is never again called on, are treated as
paper records. See subsection 4(2). In this case the reliability of the
computer system that produced the record is relevant to its reliability.[81]
There is no question then that when Congress
formulated the term “electronic data message,” it intended the same meaning as
the term “electronic record” in the
Facsimile transmissions are not, in this sense, “paperless,” but verily are paper-based.
A facsimile machine, which was first patented in 1843 by Alexander Bain,[83] is a device that can send or receive pictures and text over a telephone line. It works by digitizing an image—dividing it into a grid of dots. Each dot is either on or off, depending on whether it is black or white. Electronically, each dot is represented by a bit that has a value of either 0 (off) or 1 (on). In this way, the fax machine translates a picture into a series of zeros and ones (called a bit map) that can be transmitted like normal computer data. On the receiving side, a fax machine reads the incoming data, translates the zeros and ones back into dots, and reprints the picture.[84] A fax machine is essentially an image scanner, a modem and a computer printer combined into a highly specialized package. The scanner converts the content of a physical document into a digital image, the modem sends the image data over a phone line, and the printer at the other end makes a duplicate of the original document.[85] Thus, in Garvida v. Sales, Jr.,[86] where we explained the unacceptability of filing pleadings through fax machines, we ruled that:
A facsimile or fax transmission is a process involving
the transmission and reproduction of printed and graphic matter by scanning an
original copy, one elemental area at a time, and representing the shade or tone
of each area by a specified amount of electric current. The current is
transmitted as a signal over regular telephone lines or via microwave relay and
is used by the receiver to reproduce an image of the elemental area in the
proper position and the correct shade. The receiver is equipped with a stylus
or other device that produces a printed record on paper referred to as a
facsimile.
x x x A facsimile is not a genuine and authentic
pleading. It is, at best, an exact copy preserving all the marks of an
original. Without the original, there is no way of determining on its face
whether the facsimile pleading is genuine and authentic and was originally
signed by the party and his counsel. It may, in fact, be a sham pleading.[87]
Accordingly, in an ordinary facsimile transmission, there exists an original paper-based information or data that is scanned, sent through a phone line, and re-printed at the receiving end. Be it noted that in enacting the Electronic Commerce Act of 2000, Congress intended virtual or paperless writings to be the functional equivalent and to have the same legal function as paper-based documents.[88] Further, in a virtual or paperless environment, technically, there is no original copy to speak of, as all direct printouts of the virtual reality are the same, in all respects, and are considered as originals.[89] Ineluctably, the law’s definition of “electronic data message,” which, as aforesaid, is interchangeable with “electronic document,” could not have included facsimile transmissions, which have an original paper-based copy as sent and a paper-based facsimile copy as received. These two copies are distinct from each other, and have different legal effects. While Congress anticipated future developments in communications and computer technology[90] when it drafted the law, it excluded the early forms of technology, like telegraph, telex and telecopy (except computer-generated faxes, which is a newer development as compared to the ordinary fax machine to fax machine transmission), when it defined the term “electronic data message.”
Clearly then, the IRR went beyond the parameters of the law when it adopted verbatim the UNCITRAL Model Law’s definition of “data message,” without considering the intention of Congress when the latter deleted the phrase “but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy.” The inclusion of this phrase in the IRR offends a basic tenet in the exercise of the rule-making power of administrative agencies. After all, the power of administrative officials to promulgate rules in the implementation of a statute is necessarily limited to what is found in the legislative enactment itself. The implementing rules and regulations of a law cannot extend the law or expand its coverage, as the power to amend or repeal a statute is vested in the Legislature.[91] Thus, if a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails, because the law cannot be broadened by a mere administrative issuance—an administrative agency certainly cannot amend an act of Congress.[92] Had the Legislature really wanted ordinary fax transmissions to be covered by the mantle of the Electronic Commerce Act of 2000, it could have easily lifted without a bit of tatter the entire wordings of the UNCITRAL Model Law.
Incidentally,
the National Statistical Coordination Board Task Force on the Measurement of
E-Commerce,[93] on
We, therefore, conclude that the
terms “electronic data message” and “electronic document,” as defined under the
Electronic Commerce Act of 2000, do not include a facsimile transmission. Accordingly, a facsimile transmission cannot be considered as electronic evidence. It is
not the functional equivalent of an original under the Best Evidence Rule and
is not admissible as electronic evidence.
Since a facsimile transmission is not an “electronic data message” or an
“electronic document,” and cannot be considered as electronic evidence by the
Court, with greater reason is a photocopy of such a fax transmission not
electronic evidence. In the present case, therefore, Pro Forma Invoice Nos. ST2-POSTS0401-1
and ST2-POSTS0401-2 (Exhibits
“E” and “F”), which are mere photocopies
of the original fax transmittals, are not electronic evidence, contrary to the
position of both the trial and the appellate courts.
- III -
Nevertheless, despite the pro forma
invoices not being electronic evidence, this Court finds that respondent has
proven by preponderance of evidence the existence of a perfected contract of
sale.
In an action for damages due to a breach of a contract, it is essential
that the claimant proves (1) the existence of a perfected contract, (2) the
breach thereof by the other contracting party and (3) the damages which he/she
sustained due to such breach. Actori
incumbit onus probandi. The burden of proof rests on the party who advances
a proposition affirmatively.[95]
In other words, a plaintiff in a civil action must establish his case by a preponderance
of evidence, that is, evidence that has greater weight, or is more convincing
than that which is offered in opposition to it.[96]
In
general, contracts are perfected by mere consent,[97]
which is manifested by the meeting of the offer and the acceptance upon the
thing and the cause which are to constitute the contract. The offer must be
certain and the acceptance absolute.[98]
They are, moreover, obligatory in whatever form they may have been entered
into, provided all the essential requisites for their validity are present.[99]
The
essential elements of a contract of sale are (1) consent or meeting of the
minds, that is, to transfer ownership in exchange for the price, (2) object
certain which is the subject matter of the contract, and (3) cause of the
obligation which is established.[101]
In
this case, to establish the existence of a perfected contract of sale between
the parties, respondent Ssangyong formally offered in evidence the testimonies
of its witnesses and the following exhibits:
|
Exhibit |
Description |
Purpose |
|
E |
Pro
forma Invoice dated |
To show that defendants contracted with
plaintiff for the delivery of 110 MT of stainless steel from |
|
E-1 |
Pro
forma Invoice dated |
To show that defendants sent their
confirmation of the (i) delivery to it of the specified stainless steel products,
(ii) defendants’ payment thereof by way of an irrevocable letter of credit in
favor of plaintiff, among other conditions. |
|
E-2 |
Conforme signature of Mr. Gregory Chan, contained in facsimile/thermal paper faxed
by defendants to plaintiff showing the printed transmission details on the
upper portion of said paper as coming from defendant MCC on |
To show that defendants sent their
confirmation of the (i) delivery to it of the total of 220MT specified
stainless steel products, (ii) defendants’ payment thereof by way of an
irrevocable letter of credit in favor of plaintiff, among other conditions. |
|
F |
Pro
forma Invoice dated |
To show that defendants contracted with
plaintiff for delivery of another 110 MT of stainless steel from |
|
G |
Letter to defendant SANYO SEIKE dated |
To prove that defendants were informed of
the date of L/C opening and defendant’s conforme/approval
thereof. |
|
G-1 |
Signature of defendant Gregory Chan, contained in facsimile/thermal paper. |
|
|
H |
Letter to defendants dated |
To prove that defendants were informed of
the successful price adjustments secured by plaintiff in favor of former and
were advised of the schedules of its L/C opening. |
|
I |
Letter to defendants dated |
To prove that plaintiff repeatedly
requested defendants for the agreed opening of the Letters of Credit,
defendants’ failure and refusal to comply with their obligations and the problems of plaintiff is incurring by
reason of defendants’ failure and refusal to open the L/Cs. |
|
J |
Letter to defendants dated |
|
|
K |
Letter to defendants dated |
|
|
L |
Facsimile message to defendants dated |
|
|
M |
Letter from defendants dated |
To prove that defendants admit of their
liabilities to plaintiff, that they requested for “more extension” of time
for the opening of the Letter of Credit, and begging for favorable
understanding and consideration. |
|
M-1 |
Signature of defendant Gregory Chan, contained in facsimile/thermal paper faxed
by defendants to plaintiff showing the printed transmission details on the
upper portion of said paper as coming from defendant MCC on June 00 |
|
|
N |
Letter to defendants dated |
|
|
O |
Letter to defendants dated |
To prove that plaintiff reiterated its request for defendants to
L/C opening after the latter's request for extension of time was granted,
defendants’ failure and refusal to comply therewith extension of time
notwithstanding. |
|
P |
Letter to defendants dated |
|
|
Q |
Demand letter to defendants dated |
To prove that plaintiff was constrained to
engaged services of a lawyer for collection efforts. |
|
R |
Demand letter to defendants dated |
To prove that defendants opened the first
L/C in favor of plaintiff, requested for further postponement of the final
L/C and for minimal amounts, were urged to open the final L/C on time, and
were informed that failure to comply
will cancel the contract. |
|
S |
Demand letter to defendants dated |
To show defendants’ refusal and failure to
open the final L/C on time, the cancellation of the contract as a consequence
thereof, and final demand upon defendants to remit its obligations. |
|
W |
Letter from plaintiff SSANGYONG to
defendant SANYO SEIKI dated |
To prove that there was a perfected sale
and purchase agreement between the parties for 220 metric tons of steel
products at the price of US$1,860/ton. |
|
W-1 |
Conforme signature of defendant Gregory Chan, contained in facsimile/thermal paper with
back-up photocopy |
To prove that defendants, acting through
Gregory Chan, agreed to the sale and purchase of 220 metric tons of steel
products at the price of US$1,860/ton. |
|
W-2 |
Name of sender MCC Industrial Sales
Corporation |
To prove that defendants sent their
conformity to the sale and purchase agreement by facsimile transmission. |
X |
Pro
forma Invoice dated |
To prove that defendant MCC agreed to
adjust and split the confirmed purchase order into 2 shipments at 100 metric
tons each at the discounted price of US$1,700/ton. |
|
X-1 |
Notation “1/2”, photocopy |
To prove that the present Pro forma Invoice was the first of 2 pro forma invoices. |
|
X-2 |
Ref. No. ST2-POSTS080-1, photocopy |
To prove that the present Pro forma Invoice was the first of 2 pro forma invoices. |
|
X-3 |
Conforme signature of defendant Gregory Chan, photocopy |
To prove that defendant MCC, acting through
Gregory Chan, agreed to the sale and purchase of the balance of 100 metric
tons at the discounted price of US$1,700/ton, apart from the other order and
shipment of 100 metric tons which was delivered by plaintiff SSANGYONG and
paid for by defendant MCC. |
|
DD |
Letter from defendant MCC to plaintiff
SSANGYONG dated |
To prove that there was a perfected sale
and purchase agreement between plaintiff SSANGYONG and defendant MCC for the
balance of 100 metric tons, apart from the other order and shipment of 100
metric tons which was delivered by plaintiff SSANGYONG and paid for by
defendant MCC. |
|
DD-1 |
Ref. No. ST2-POSTS080-1, contained in facsimile/thermal paper with
back-up photocopy |
To prove that there was a perfected sale
and purchase agreement between plaintiff SSANGYONG and defendant MCC for the
balance of 100 metric tons, apart from the other order and shipment of 100
metric tons which was delivered by plaintiff SSANGYONG and paid for by
defendant MCC. |
|
DD-2 |
Signature of defendant Gregory Chan, contained in facsimile/thermal paper with
back-up photocopy |
To prove that defendant MCC, acting through
Gregory Chan, agreed to the sale and purchase of the balance of 100 metric
tons, apart from the other order and shipment of 100 metric tons which was
delivered by plaintiff Ssangyong and paid for by defendant MCC.[102] |
Significantly,
among these documentary evidence presented by respondent, MCC, in its petition
before this Court, assails the admissibility only of Pro Forma Invoice Nos. ST2-POSTS0401-1
and ST2-POSTS0401-2 (Exhibits
“E” and “F”). After sifting through the records, the Court found that these invoices
are mere photocopies of their
original fax transmittals. Ssangyong avers that these documents were prepared
after MCC asked for the splitting of the original order into two, so that the
latter can apply for an L/C with greater facility. It, however, failed to
explain why the originals of these documents were not presented.
To
determine whether these documents are admissible in evidence, we apply the
ordinary Rules on Evidence, for as discussed above we cannot apply the
Electronic Commerce Act of 2000 and the Rules on Electronic Evidence.
Because
these documents are mere photocopies, they are simply secondary evidence,
admissible only upon compliance with Rule 130, Section 5, which states, “[w]hen
the original document has been lost or destroyed, or cannot be produced in
court, the offeror, upon proof of its execution or existence and the cause of
its unavailability without bad faith on his part, may prove its contents by a
copy, or by a recital of its contents in some authentic document, or by the
testimony of witnesses in the order stated.”
Furthermore, the offeror of secondary evidence must prove the predicates
thereof, namely: (a) the loss or destruction of the original without bad faith
on the part of the proponent/offeror which can be shown by circumstantial
evidence of routine practices of destruction of documents; (b) the proponent
must prove by a fair preponderance of evidence as to raise a reasonable
inference of the loss or destruction of the original copy; and (c) it must be
shown that a diligent and bona fide
but unsuccessful search has been made for the document in the proper place or
places. It has been held that where the missing document is the foundation of
the action, more strictness in proof is required than where the document is
only collaterally involved.[103]
Given
these norms, we find that respondent failed to prove the existence of the
original fax transmissions of Exhibits E and F, and likewise did not
sufficiently prove the loss or destruction of the originals. Thus, Exhibits E and F cannot be admitted in
evidence and accorded probative weight.
It
is observed, however, that respondent Ssangyong did not rely merely on Exhibits
E and F to prove the perfected contract.
It also introduced in evidence a variety of other documents, as
enumerated above, together with the testimonies of its witnesses. Notable among
them are Pro Forma Invoice Nos. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued
by Ssangyong and sent via fax to MCC. As already mentioned, these invoices
slightly varied the terms of the earlier invoices such that the quantity was
now officially 100MT per invoice and
the price reduced to US$1,700.00 per
MT. The copies of the said
Pro Forma Invoice
No. ST2-POSTS080-1 (Exhibit “X”),
however, is a mere photocopy of its original. But then again, petitioner MCC
does not assail the admissibility of this document in the instant petition.
Verily, evidence not objected to is deemed admitted and may be validly
considered by the court in arriving at its judgment.[104] Issues
not raised on appeal are deemed abandoned.
As to Pro Forma Invoice No. ST2-POSTS080-2
(Exhibits “1-A” and “2-C”), which was certified by PCIBank as a true copy of
its original,[105] it
was, in fact, petitioner MCC which introduced this document in evidence.
Petitioner MCC paid for the order stated in this invoice. Its admissibility,
therefore, is not open to question.
These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080-2), along with the other unchallenged documentary
evidence of respondent Ssangyong, preponderate in favor of the claim that a
contract of sale was perfected by the parties.
This Court also finds merit in the
following observations of the trial court:
Defendants
presented Letter of Credit (Exhibits “1”, “1-A” to “1-R”) referring to Pro
Forma Invoice for Contract No. ST2POSTS080-2, in the amount of US$170,000.00,
and which bears the signature of Gregory Chan, General Manager of MCC.
Plaintiff, on the other hand, presented Pro Forma Invoice referring to Contract
No. ST2-POSTS080-1, in the amount of US$170,000.00, which likewise bears the
signature of Gregory Chan, MCC. Plaintiff accounted for the notation “1/2” on
the right upper portion of the Invoice, that is, that it was the first of two
(2) pro forma invoices covering the subject contract between plaintiff and the
defendants. Defendants, on the other hand, failed to account for the notation
“2/2” in its Pro Forma Invoice (Exhibit “1-A”). Observably further, both Pro
Forma Invoices bear the same date and details, which logically mean that they
both apply to one and the same transaction.[106]
Indeed, why would petitioner open an
L/C for the second half of the transaction if there was no first half to speak
of?
The
logical chain of events, as gleaned from the evidence of both parties, started
with the petitioner and the respondent agreeing on the sale and purchase of
220MT of stainless steel at US$1,860.00 per MT. This initial contract was perfected. Later, as petitioner asked
for several extensions to pay, adjustments in the delivery dates, and discounts
in the price as originally agreed, the parties slightly varied the terms of
their contract, without necessarily novating it, to the effect that the
original order was reduced to 200MT, split into two deliveries, and the price
discounted to US$1,700 per MT. Petitioner, however, paid only half of its
obligation and failed to open an L/C for the other 100MT. Notably, the conduct of
both parties sufficiently established the existence of a contract of sale, even
if the writings of the parties, because of their contested admissibility, were
not as explicit in establishing a contract.[107]
Appropriate conduct by the parties may be sufficient to establish an agreement,
and while there may be instances where the exchange of correspondence does not
disclose the exact point at which the deal was closed, the actions of the
parties may indicate that a binding obligation has been undertaken.[108]
With
our finding that there is a valid contract, it is crystal-clear that when
petitioner did not open the L/C for the first half of the transaction (100MT),
despite numerous demands from respondent Ssangyong, petitioner breached its
contractual obligation. It is a well-entrenched rule that the failure of a
buyer to furnish an agreed letter of credit is a breach of the contract between
buyer and seller. Indeed, where the buyer fails to open a letter of credit as
stipulated, the seller or exporter is entitled to claim damages for such
breach. Damages for failure to open a commercial credit may, in appropriate
cases, include the loss of profit which the seller would reasonably have made
had the transaction been carried out.[109]
- IV -
This
Court, however, finds that the award of actual damages is not in accord with
the evidence on record. It is axiomatic that actual or compensatory damages
cannot be presumed, but must be proven with a reasonable degree of certainty.[110]
In Villafuerte v. Court of Appeals,[111]
we explained that:
Actual or compensatory damages are those
awarded in order to compensate a party for an injury or loss he suffered.
They arise out of a sense of natural justice and are aimed at repairing the
wrong done. Except as provided by law or by stipulation, a party is entitled to
an adequate compensation only for such pecuniary loss as he has duly proven. It
is hornbook doctrine that to be able to recover actual
damages, the claimant bears the onus of presenting before the court actual
proof of the damages alleged to have been suffered, thus:
A party is entitled to an adequate
compensation for such pecuniary loss actually suffered by him as he has duly
proved. Such damages, to be recoverable, must not only be capable of
proof, but must actually be proved with a reasonable degree of certainty.
We have emphasized that these damages cannot be presumed and courts, in making
an award must point out specific facts which could afford a basis for measuring
whatever compensatory or actual damages are borne.[112]
In
the instant case, the trial court awarded to respondent Ssangyong US$93,493.87
as actual damages. On appeal, the same was affirmed by the appellate court.
Noticeably, however, the trial and the appellate courts, in making the said
award, relied on the following documents submitted in evidence by the
respondent: (1) Exhibit “U,” the Statement of Account dated March 30, 2001; (2)
Exhibit “U-1,” the details of the said Statement of Account); (3) Exhibit “V,”
the contract of the alleged resale of
the goods to a Korean corporation; and (4) Exhibit “V-1,” the authentication of
the resale contract from the Korean Embassy and certification from the Philippine
Consular Office.
The
statement of account and the details of the losses sustained by respondent due
to the said breach are, at best, self-serving. It was respondent Ssangyong
itself which prepared the said documents. The items therein are not even
substantiated by official receipts. In the absence of corroborative evidence,
the said statement of account is not sufficient basis to award actual damages.
The court cannot simply rely on speculation, conjecture or guesswork as to the
fact and amount of damages, but must depend on competent proof that the claimant had suffered, and on evidence of,
the actual amount thereof.[113]
Furthermore,
the sales contract and its authentication certificates, Exhibits “V” and “V-1,”
allegedly evidencing the resale at a loss of the stainless steel subject of the
parties’ breached contract, fail to convince this Court of the veracity of its
contents. The steel items indicated in the sales contract[114]
with a Korean corporation are different in all respects from the items ordered
by petitioner MCC, even in size and quantity. We observed the following
discrepancies:
List of commodities as stated in Exhibit “V”:
COMMODITY: Stainless Steel HR Sheet in Coil, Slit Edge
SPEC: SUS304 NO. 1
SIZE/Q’TY:
2.8MM X 1,219MM X C 8.193MT
3.0MM X 1,219MM X C 7.736MT
3.0MM X 1,219MM X C 7.885MT
3.0MM X 1,219MM X C 8.629MT
4.0MM X 1,219MM X C 7.307MT
4.0MM X 1,219MM X C 7.247MT
4.5MM X 1,219MM X C 8.450MT
4.5MM X 1,219MM X C 8.870MT
5.0MM X 1,219MM X C 8.391MT
6.0MM X 1,219MM X C 6.589MT
6.0MM X 1,219MM X C 7.878MT
6.0MM X 1,219MM X C 8.397MT
_______________________________
TOTAL: 95.562MT[115]
List of commodities as stated in Exhibit “X” (the invoice that was not
paid):
DESCRIPTION: Hot
Rolled Stainless Steel Coil SUS 304
SIZE AND QUANTITY:
2.6 MM X
4’ X C 10.0MT
3.0 MM X
4’ X C 25.0MT
4.0 MM X
4’ X C 15.0MT
4.5 MM X
4’ X C 15.0MT
5.0 MM X
4’ X C 10.0MT
6.0 MM X
4’ X C 25.0MT
_______________________________
TOTAL: 100MT[116]
From
the foregoing, we find merit in the contention of MCC that Ssangyong did not
adequately prove that the items resold at a loss were the same items ordered by
the petitioner. Therefore, as the claim for actual damages was not proven, the
Court cannot sanction the award.
Nonetheless,
the Court finds that petitioner knowingly breached its contractual obligation
and obstinately refused to pay despite repeated demands from respondent.
Petitioner even asked for several extensions of time for it to make good its
obligation. But in spite of respondent’s continuous accommodation, petitioner
completely reneged on its contractual duty. For such inattention and
insensitivity, MCC must be held liable for nominal damages. “Nominal damages
are ‘recoverable where a legal right is technically violated and must be
vindicated against an invasion that has produced no actual present loss of any
kind or where there has been a breach of contract and no substantial injury or
actual damages whatsoever have been or can be shown.’”[117] Accordingly,
the Court awards nominal damages of P200,000.00 to respondent Ssangyong.
As
to the award of attorney’s fees, it is well settled that no premium should be
placed on the right to litigate and not every winning party is entitled to an automatic
grant of attorney’s fees. The party must show that he falls under one of the
instances enumerated in Article 2208 of the Civil Code.[118]
In the instant case, however, the Court finds the award of attorney’s fees proper,
considering that petitioner MCC’s unjustified refusal to pay has compelled
respondent Ssangyong to litigate and to incur expenses to protect its rights.
WHEREFORE, PREMISES CONSIDERED, the
appeal is PARTIALLY GRANTED. The
Decision of the Court of Appeals in CA-G.R. CV No. 82983 is MODIFIED in that the award of actual
damages is DELETED. However, petitioner
is ORDERED to pay respondent NOMINAL DAMAGES in the amount of P200,000.00,
and the ATTORNEY’S FEES as awarded
by the trial court.
SO ORDERED.
ANTONIO
EDUARDO B. NACHURA
Associate Justice
WE CONCUR:
CONSUELO YNARES-SANTIAGO
Associate
Justice
Chairperson
|
MA. ALICIA AUSTRIA-MARTINEZ Associate
Justice |
MINITA V. CHICO-NAZARIO Associate Justice |
RUBEN T. REYES
Associate
Justice
A T T E S T A T I O N
I attest that the conclusions in the above Decision were
reached in consultation before the case was assigned to the writer of the
opinion of the Court’s Division.
CONSUELO
YNARES-SANTIAGO
Associate
Justice
Chairperson,
Third Division
C E R T I F I C A T I O N
Pursuant to Section 13, Article VIII of the Constitution
and the Division Chairperson's Attestation, I certify that the conclusions in
the above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court’s Division.
REYNATO
S. PUNO
Chief
Justice
[1] Penned by Associate Justice
Rodrigo V. Cosico, with Associate Justices Danilo B. Pine and Arcangelita
Romilla Lontok, concurring; CA rollo,
pp. 120-131.
[2] CA rollo, pp. 164-165.
[3] Records, p. 2.
[4] TSN,
[5] TSN,
[6] Records, p. 198; Exhibit “A.”
[7] CA rollo, p. 97.
[8] TSN,
[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 a clearer print of its contents.
[10] Records, p. 49.
[11]
[12]
[13] Id.;
Exhibit “E-2.”
[14] Id.;
Exhibit “E-1.”
[15] TSN,
[16] TSN,
[17] Records, p. 215; Exhibit “E.” This
is a mere photocopy of the fax transmittal.
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
[26]
[27]
[28]
[29]
[30]
[31]
[32]
[33]
[34]
[35]
[36]
[37]
[38]
[39]
[40]
[41]
[42]
[43]
[44]
[45]
[46] CA rollo, pp. 29-49.
[47]
[48] Supra note 1.
[49] CA rollo, pp. 127-128.
[50]
[51]
[52] The firm’s name was later changed to
Zamora Poblador Vasquez & Bretaña.
[53] CA rollo, p. 161.
[54]
[55] Supra note 2.
[56] Rollo,
pp. 9-26.
[57]
[58] 415 Phil. 761 (2001).
[59] G.R. No. 146478,
[60] Philippine
Ports Authority v. Sargasso Construction & Development Corporation, supra,
at 527-528.
[61] Yuchengco
v. Court of Appeals, G.R. No. 165793,
[62] 396 Phil. 1081 (2000).
[63] Maharlika Publishing Corporation v. Tagle, 226 Phil. 456, 463-464 (1986).
[64] Entitled “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 Purposes.”
Approved on
[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 enforceability
solely on the grounds that it is in the data message purporting to give rise to
such legal effect, or that it is merely referred to in that electronic data
message.
Sec. 7. Legal
Recognition of Electronic Documents. – Electronic documents shall have
the legal effect, validity or enforceability as any other document or legal
writing, and –
(a) Where the law requires a
document to be in writing, that requirement is met by an electronic document if
the said electronic document maintains its integrity and reliability and can be
authenticated so as to be usable for subsequent reference, in that –
(i) The electronic document has remained complete and
unaltered, apart from the addition of any endorsement and any authorized
change, or any change which arises in the normal course of communication,
storage and display; and
(ii) The electronic document is reliable in the light
of the purpose for which it was generated and in the light of all the relevant
circumstances.
(b) Paragraph (a) applies whether the requirement therein is in the
form of an obligation or whether the law simply provides consequences for the
document not being presented or retained in its original form.
(c) Where the law requires that a document be presented or retained in
its original form, that requirement is met by an electronic document if –
(i) There exists a reliable assurance as to the
integrity of the document from the time when it was first generated in its
final form; and
(ii) That document is capable of being displayed to
the person to whom it is to be presented: Provided,
That no provision of this Act shall apply to vary any and all requirements of existing laws on formalities required in
the execution of documents for their validity.
For evidentiary purposes, an electronic document shall be the
functional equivalent of a written document under existing laws.
This Act does not modify any statutory rule relating
to the admissibility of electronic data messages or electronic documents, except
the rules relating to authentication and best evidence.
Sec. 10. Original Documents. – (1)
Where the law requires information to be presented or retained in its original
form, that requirement is met by an electronic data message or electronic
document if:
(a) The integrity of the information from the time when it
was first generated in its final form, as an electronic data message or
electronic document is shown by evidence aliunde
or otherwise; and
(b) Where it is required that information be presented,
that the information is capable of being displayed to the person to whom it is
to be presented.
(2) Paragraph (1) applies whether the requirement therein
is in the form of an obligation or whether the law simply provides consequences
for the information not being presented or retained in its original form.
(3) For the purposes of subparagraph (a) of paragraph (1):
(a) the criteria for assessing integrity shall be whether
the information has remained complete and unaltered, apart from the addition of
any endorsement and any change which arises in the normal course of
communication, storage and display; and
(b) the standard of reliability required shall be assessed
in the light of the purpose for which the information was generated and in the
light of all relevant circumstances.
[66] A.M. No. 01-7-01-SC, effective on
[67] Rule 3 of the Rules on Electronic
Evidence reads:
ELECTRONIC DOCUMENTS
SECTION 1. Electronic Documents as functional
equivalent of paper-based documents. – Whenever a rule of evidence refers
to the term writing, document, record, instrument, memorandum or any other form
of writing, such term shall be deemed to include an electronic document as
defined in these Rules.
SEC. 2. Admissibility. – An electronic document
is admissible in evidence if it complies with the rules on admissibility
prescribed by the Rules of Court and related laws and is authenticated in the
manner prescribed by these Rules.
[68] Rule 4 of the Rules on Electronic
Evidence reads:
BEST EVIDENCE RULE
SECTION 1. Original
of an Electronic Document. – An electronic document shall be regarded as
the equivalent of an original document under the Best Evidence Rule if it is a
printout or output readable by sight or other means, shown to reflect the data
accurately.
SEC. 2. Copies
as equivalent of the originals. - When a document is in two or more copies
executed at or about the same time with identical contents, or is a counterpart
produced by the same impression as the original, or from the same matrix, or by
mechanical or electronic re-recording, or by chemical reproduction, or by other
equivalent techniques which accurately reproduces the original, such copies or
duplicates shall be regarded as the equivalent of the original.
Notwithstanding the foregoing,
copies or duplicates shall not be admissible to the same extent as the original
if:
(a) a genuine question is raised as to the
authenticity of the original; or
(b) in the circumstances it would be unjust or
inequitable to admit the copy in lieu of the original.
[69] The Electronic Commerce Act of 2000
provides, in its Section 34, that the DTI [Department of Trade and Industry],
Department of Budget and Management and the Bangko Sentral ng Pilipinas are
empowered to enforce the provisions of the Act and issue implementing rules and
regulations necessary, in coordination with the Department of Transportation
and Communications, National Telecommunications Commission, National Computer
Center, National Information Technology Council, Commission on Audit, other
concerned agencies and the private sector, to implement the Act within sixty
(60) days after its approval.
[70] On June 12, 1996, the Commission,
after consideration of the text of the draft Model Law as revised by the
drafting group, decided to adopt the said law and to recommend that all States
give favorable consideration to the said Model Law on Electronic Commerce when
they enact or revise their laws, in view of the need for uniformity of the law
applicable to alternatives of paper-based forms of communication and storage of
information (UNCITRAL Model Law on Electronic Commerce with Guide to Enactment
1996 with additional article 5 bis as
adopted in 1998, United Nations Publication, New York, 1999).
[71] Record of the Senate, Vol. III, No.
61, February 16, 2000, p. 405.
[72] R.A. No. 8792 is a consolidation of
Senate Bill 1902 and House Bill 9971 (Senate Proceedings, 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 2000.
[74] House of Representatives’ Transcript
of Proceedings,
[75] <http://www.webopedia.com/TERM/T/telecopy.html>
(visited
[76] UNCITRAL
Model Law on Electronic Commerce with Guide to Enactment 1996 with additional
article 5 bis as adopted in 1998,
United Nations publication,
[77] People
v. Purisima, 176 Phil. 186, 204 (1978).
[78] De
Guia v. Commission on Elections, G.R. No. 104712,
[79] III RECORD, SENATE 11th
CONGRESS 2nd SESSION 399 (
[80] Senate Transcript of Proceedings, Vol. II, No. 88, April 3, 2000, pp. 32-37.
[81] BLG, Consolidated E-Commerce
Statutes, Part II-Electronic Evidence Laws, UEEA, Copyright © Carswell, a
Division of Thomson Canada Ltd. or its Licensors; <www.westlaw.com> (visited
[82] In its Guide to Enactment, the
UNCITRAL explains the functional-equivalent approach of the Model Law in this
way:
“E. The ‘functional-equivalent’ approach
“15. The Model Law is based on the recognition that
legal requirements prescribing the use of traditional paper-based documentation
constitute the main obstacle to the development of modern means of
communication. In the preparation of the Model Law, consideration was given to
the possibility of dealing with impediments to the use of electronic commerce
posed by such requirements in national laws by way of extension of the scope of
such notions as ‘writing’, ‘signature’ and ‘original’, with a view to
encompassing computer-based techniques. Such an approach is used in a number of
existing legal instruments, e.g., article 7 of the UNCITRAL Model Law on
International Commercial Arbitration and article 13 of the United Nations
Convention on Contracts for the International Sale of Goods. It was observed
that the Model Law should permit States to adapt their domestic legislation to
developments in communications technology applicable to trade law without
necessitating the wholesale removal of the paper-based requirements themselves
or disturbing the legal concepts and approaches underlying those requirements.
At the same time, it was said that electronic fulfillment of writing
requirements might in some cases necessitates the development of new rules.
This was due to one of many distinctions between EDI messages and paper-based
documents, namely, that the latter were readable by the human eye, while the
former were not so readable unless reduced to paper or displayed on a screen.
“16. The Model Law thus relies on a new approach,
sometimes referred to as the ‘functional equivalent approach’, which is based
on an analysis of the purposes and functions of the traditional paper-based
requirement with a view to determining how those purposes or functions could be
fulfilled through electronic-commerce techniques. For example, among the
functions served by a paper document are the following: to provide that a
document would be legible by all; to provide that a document would remain
unaltered over time; to allow for the reproduction of a document so that each
party would hold a copy of the same data; to allow for the authentication of
data by means of a signature; and to provide that a document would be in a form
acceptable to public authorities and courts. It should be noted that in respect
of all of the above-mentioned functions of paper, electronic records can
provide the same level of security as paper and, in most cases, a much higher
degree of reliability and speed, especially with respect to the identification
of the source and content of the data, provided that a number of technical and
legal requirements are met. However, the adoption of the functional-equivalent
approach should not result in imposing on users of electronic commerce more
stringent standards of security (and the related costs) than in a paper-based
environment.
“17. A data message, in and of itself, cannot be
regarded as an equivalent of a paper document in that it is of a different
nature and does not necessarily perform all conceivable functions of a paper
document. That is why the Model Law adopted a flexible standard, taking into
account the various layers of existing requirements in a paper-based
environment: when adopting the “functional-equivalent” approach, attention was
given to the existing hierarchy of form requirements, which provides distinct
levels of reliability, traceability and inalterability with respect to paper-based
documents. For example, the requirement that date be presented in written form
(which constitutes a ‘threshold requirement’) is not to be confused with more
stringent requirements such as ‘signed writing,’ ‘signed original’ or
‘authenticated legal act’.
“18. The Model Law does not attempt to define a
computer-based equivalent to any kind of paper document. Instead, it singles
out basic functions of paper-based form requirements, with a view to providing
criteria which, once they are met by data messages, enable such data messages
to enjoy the same level of legal recognition as corresponding paper documents
performing the same function. It should be noted that the functional-equivalent
approach has been taken in articles 6 to 8 of the Model Law with respect to the
concepts of ‘writing’, ‘signature’ and ‘original’ but not with respect to other
legal concepts dealt with in the Model Law. For example, article 10 does not
attempt to create a functional equivalent of existing storage requirements.” (UNCITRAL
Model Law on Electronic Commerce with Guide to Enactment 1996 with additional
article 5 bis as adopted in 1998,
United Nations publication, New York, 1999.)
[83] <http://inventors.about.com/od/bstartinventors/a/fax_machine.htm>
(visited
[84] <http://inventors.about.com/gi/dynamic/offsite.htm?zi=1/XJ&sdn=inventors&zu=http%3A%2F%
2F
web-opedia.internet.com%2FTERM%2Ff%2Ffax -machine.html> (visited
[85] <http://en.wikipedia.org/wiki/Fax_machine>
(visited
[86] 338 Phil. 484, 496-497 (1997).
[87] Go
v. Commission on Elections, G.R. No. 147741, May 10, 2001, 357 SCRA 739,
involving the filing of a withdrawal of certificate of candidacy thru fax, but
the original copy thereof was filed on the following day; see also Justice Cuevas v. Muñoz, 401 Phil. 752
(2000), in which the facsimile transmission of the request for provisional
arrest and other supporting documents was allowed in extradition proceedings; Heirs of Lourdes Sabanpan v. Comorposa,
456 Phil. 161 (2003), concerning a facsimile signature; and Cathay Pacific Airways v. Fuentebella,
G.R. No. 142541, December 15, 2005, 478 SCRA 97, which involves a facsimile
transmission of a notice of hearing.
[88] III RECORD, SENATE 11th
CONGRESS 2nd SESSION 781-783 (
[89] House of Representatives’ Transcript
of Proceedings,
[90] III RECORD, SENATE 11th
CONGRESS 2nd SESSION 437 (
[91] Public
Schools District Supervisors Association. v. De Jesus, G.R. 157286,
[92] Nasipit
Lumber Co. v. National Wages and Productivity Commission, 352 Phil. 503,
518 (1998).
[93] The Philippine Statistical System (PSS), through the NSCB, created the Task Force to address the statistical information requirements of the Electronic Commerce Act of 2000. The composition of the Task Force is as follows: the Department of Trade and Industry as Chair; the NSCB as Vice Chair; and the Bangko Sentral ng Pilipinas, the Commission on Audit, the Department of Budget and Management, the Department of Labor and Employment, the Department of Science and Technology, the Department of Transportation and Communications/National Telecommunications Commission, the National Computer Center, the National Economic and Development Authority, the National Statistics Office, the Statistical Research and Training Center, and the Philippine Internet Services Organization, as members.
[94] Recommendations of the NSCB Task
Force on the Measurement of e-Commerce,
[95] Black’s Law Dictionary, 5th ed.
(1979).
[96] Heirs
of Cipriano Reyes v. Calumpang, G.R. No. 138463,
[97] Civil Code, Art. 1315.
[98] Johannes
Schuback & Sons Philippine Trading Corporation v. Court of Appeals,
G.R. No. 105387,
[99] San
Lazaro Development Corporation v. Court of Appeals, G.R. No. 124242,
January 21, 2005, 449 SCRA 99, 111.
[100] Civil Code, Art. 1475.
[101] San Lazaro Development Corporation v. Court of Appeals, supra note 99, at 113.
[102] Records, pp. 193-195 and 332-334.
[103] Lee
v. People, G.R. No. 159288,
[104] Interpacific
Transit, Inc. v.
[105] Under Rule 130, Section 7, a
certified true copy is an admissible evidence only when the original document
is a public record.
[106] Records, p. 411.
[107] Standard
Bent Glass Corp. v. Glassrobots Oy, 333 F. 3d 440.
[108] Maharlika
Publishing Corporation v. Tagle, 226 Phil. 456, 468 (1986), quoting American Jurisprudence 2d., Section 73
(pp. 186-187).
[109] Reliance
Commodities, Inc. v. Daewoo Industrial Company, Ltd., G.R. No. 100831,
December 17, 1993, 228 SCRA 545, 555.
[110] Development
Bank of the
[111] G.R. No. 134239,
[112] Villafuerte
v. Court of Appeals, supra, at 69.
[113]
[114] Records, p. 245.
[115]
[116]
[117] Francisco
v. Ferrer, Jr., 405 Phil. 741, 751 (2001).
[118] Tanay
Recreation Center and Development Corp. v. Fausto, G.R. No. 140182, April
12, 2005, 455 SCRA 436, 457.