Digest 10: MCC INDUSTRIAL SALES CORPORATION vs. SSANGYONG CORPORATION

MCC INDUSTRIAL SALES CORPORATION, petitioner, 

vs.

SSANGYONG CORPORATION, respondents.

Facts:  On April 13, 2000, the petitioner MCC Industrial Steel Corp., a  domestic corporation engaged in the importation and wholesale of stainless steel in the country, contracted with the herein private respondent, Ssangyon Corporation, a manufacturer of stainless steel with a head office in Seoul South Korea.  MCC ordered 220 metric ton of stainless steel for $1,860 metric ton.  It was arranged that the respondent will issue the sales invoices through fax, and once the petitioner conforme to such then MCC through its general manager and president George Chan, the latter has to fax the same with his signature.  On the time the petitioner had a hard time to open the latters of credit, Ssangyong decided to negotiate with its mother company in korea to grant MCC a discount and to extend for a while the opening of letters of credit.  Such request was accede by respondent.  The first $70,000 letter of credit was issued by MCC but the remaining $170,000 was not.  On this note, the respondent was compelled to filed a complaint for breach of contract and prayer for damages.  The lower court acceded with the prayer of the respondent, that indeed petitioner failed comply with their contract despite discounts given as well as extension for opening of letter of credit, under the strong protest of the petitioner that the fax copies presented as document cannot be relied upon as the best evidence.

Issue: Whether the print-out and/or photocopies of facsimile transmissions are electronic evidence and admissible as such?

Held:  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.

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 August 1, 2001. (Rule 2, Section 1 [h], A.M. No. 01-7-01-SC).

"(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, 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. The Rules on Electronic Evidence 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. 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. 

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 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 isto send a document from one place to another via a fax machine.

Indeed the court proved that it was within the intention of the framers of the law to consider that original printout or the electronic data store in computer or electronic gadget reduced in a readable form, will be considered as written instrument provided that proper authentication be made and proved, to which the respondent managed to do so.

The high court ruled in favor of the respondent.