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8/10/2019 MCC Industrial vs Ssangyong
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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.SSANGYONGCORPORATION, respondent.
Actions; Pleadings and Practice; Attorneys; Judgments; Whilereceipt 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,
the rule may be relaxed where it appears that there is an apparent
agreement between the counsels that it would be the collaborating,
not the principal, who would file the appeal brief and the
subsequent pleadings in the Court of Appeals.It cannot be
gainsaid that inAlbano v. Court of Appeals, 362 SCRA 667 (2001),
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 September 14, 2005, MCC had
only fifteen (15) days within which to file a motion for
reconsideration conformably with Section 1, Rule 52 of the Rules of
Court, or to file a petition for review on certiorariin accordance with
Section 2, Rule 45. The period should not be reckoned from
September 29, 2005 (when Castillo Zamora & Poblador received
_______________
*THIRD DIVISION.
409
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VOL. 536, OCTOBER 17, 2007 409
MCC Industrial Sales Corporation vs. Ssangyong Corporation
their copy of the decision) because notice to Atty. Samson is deemed
notice to collaborating counsel. We note, however, from the records
of the CA, that it was Castillo Zamora & Poblador, not Atty.
Samson, which filed both MCCs and Chans 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 October 5, 2005, well within the
15-day period from September 29, 2005, when they received their
copy of the CA decision. This could also be the reason why the CA
did not find it necessary to resolve the question of the timeliness of
petitioners motion for reconsideration, even as the CA denied the
same.
Same; Same; Same; Procedural Rules and Technicalities; 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.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. Technicalitiesmust 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.
Same; Same; Motions for Reconsideration; Mere restatement of
arguments in a motion for reconsideration does not per se result in a
pro forma motion; The pro forma rule will not apply if the
arguments were not sufficiently passed upon and answered in the
decision sought to be reconsidered.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, 341 SCRA 781 (2000), we held that a
motion for reconsideration may not be necessarilypro formaeven 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,
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the pro forma rule will not apply if the arguments were not
sufficiently passed upon and answered in the decision sought to be
reconsidered.
410
410 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong Corporation
Same; Same; The Supreme 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.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-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 Courthas 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.
Electronic Commerce Act of 2000 (R.A. No. 8792); Evidence;
Rules on Electronic Evidence; Best Evidence Rule; Words and
Phrases; 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
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
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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.
411
VOL. 536, OCTOBER 17, 2007 411
MCC Industrial Sales Corporation vs. Ssangyong Corporation
Same; Same; Same; Statutory Construction; Words and
Phrases; While data message has reference to information
electronically sent, stored or transmitted, it does not necessarily
mean that it will give rise to a right or extinguish an obligation,
unlike an electronic document, nevertheless evident from the law is
the legislative intent to give the two terms the same construction.
The clause on the interchangeability of the terms electronic data
message and electronic document was the result of the Senate of
the Philippines adoption, in Senate Bill 1902, of the phrase
electronic data message and the House of Representatives
employment, in House Bill 9971, of the term electronic document.
In order to expedite the reconciliation of the two versions, thetechnical working group of the Bicameral Conference Committee
adopted both terms and intended them to be the equivalent of each
one. Be that as it may, there is a slight difference between the two
terms. While data message has reference to information
electronically sent, stored or transmitted, it does not necessarily
mean that it will give rise to a right or extinguish an obligation,
unlike an electronic document. Evident from the law, however, is
the legislative intent to give the two terms the same construction.
Same; Same; Same; Same; Same; The international origin
mentioned in Section 37 of the Electronic Commerce Act can only
refer to the UNCITRAL Model Law, and the UNCITRALs
definition 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 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
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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 UNCITRALs
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, is substantiallythe same as the IRRs characterization of an electronic data
message.
412
412 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong Corporation
Same; Same; Same; Same; Same; 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.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 termsinternational 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. 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.
Same; Same; Same; Same; Same; Facsimile Transmissions;
There is no question that when Congress formulated the term
electronic data message, it intended the same meaning as the term
electronic record in the Canada law, which construction of the
term electronic data message, excludes telexes or faxes, except
computergenerated faxes, in harmony with the Electronic Commerce
Laws focus on paperless communications and the functional
equivalent approach that it espouses; Facsimile transmissions are
not paperless but verily are paper-based.When the Senate
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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 ECommerce Law of Canada, Senator Defensor-
Santiago had in mind the term electronic data message. This term
then, while maintaining part of the UNCITRAL Model Lawsterminology of data message, has assumed a different context, this
time, consonant with the term electronic record in the law of
Canada. It accounts for the addition of the word electronic and the
deletion of the phrase but not limited to, electronic data
interchange (EDI), electronic mail, telegram, telex or telecopy.
Noteworthy is that the Uniform Law Conference of Canada,
explains the term electronic record, as
413
VOL. 536, OCTOBER 17, 2007 413
MCC Industrial Sales Corporation vs. Ssangyong Corporation
drafted in the Uniform Electronic Evidence Act, in a manner
strikingly similar to Sen. Santiagos explanation during the Senate
deliberations: x x x 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 Canada law. This
construction of the term electronic data message, which excludes
telexes or faxes, except computer-generated faxes, is in harmony with
the Electronic Commerce Laws focus on paperless communications
and the functional equivalent approach that it espouses. In fact,
the deliberations of the Legislature are replete with discussions on
paperless and digital transactions. Facsimile transmissions are not,
in this sense, paperless, but verily are paper-based.
Same; Same; Same; Same; Same; Same; A facsimile machine,
which was first patented in 1843 by Alexander Bain, is a device
that can send or receive pictures and text over a telephone line, and
works by digitizing an image; A fax machine is essentially an image
scanner, a modem and a computer printer combined into a highly
specialized package.A facsimile machine, which was first patented
in 1843 by Alexander Bain, is a device that can send or receive
pictures and text over a telephone line. It works by digitizing an
imagedividing it into a grid of dots. Each dot is either on or off,
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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. A fax machine is essentially an image scanner,
a modem and a computer printer combined into a highly specializedpackage. 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.
Same; Same; Same; Same; Same; Same; 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; Ineluctably, the laws
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
414
414 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong Corporation
paper-based facsimile copy as received; While Congress anticipated
future developments in communications and computer technology
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.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. 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. Ineluctably, the laws definition of
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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 facsimilecopy 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 when it drafted the law, it excluded the early
forms of technology, like telegraph, telex and telecopy (exceptcomputer-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.
Same; Same; Same; Same; Same; Same; Administrative Law;
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 IRR went beyond the
parameters of the law when it adopted verbatim the UNCITRAL
Model Laws 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.Clearly then, the IRR went beyond the
parameters of the law when it adopted verbatim the UNCITRAL
Model Laws 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 inclu-
415
VOL. 536, OCTOBER 17, 2007 415
MCC Industrial Sales Corporation vs. Ssangyong Corporation
sion of this phrase in the IRR offends a basic tenet in the exercise of
the rule-making power of administrative agencies. After all, thepower 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. 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
issuancean administrative agency certainly cannot amend an act
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of Congress. 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.
Same; Same; Same; Best Evidence Rule; Facsimile
Transmisions; A facsimile transmission cannot be considered as
electronic evidenceit is not the functional equivalent of anoriginal under the Best Evidence Rule and is not admissible as
electronic evidence.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.
Same; Same; Same; Same; Same; 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.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 photocopiesof the original fax transmittals, are not
electronic evidence, contrary to the position of both the trial and the
appellate courts.
416
416 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong Corporation
Actions; Contracts; Breach of Contract; Requisites.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
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sustained due to such breach. Actori incumbit onus probandi. The
burden of proof rests on the party who advances a proposition
affirmatively. 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.
Civil Law; Same; Sales; Elements; In general, contracts areperfected by mere consent, which is manifested by the meeting of the
offer and the acceptance upon the thing and the cause which are to
constitute the contract.In general, contracts are perfected by mere
consent, 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.
They are, moreover, obligatory in whatever form they may have
been entered into, provided all the essential requisites for their
validity are present. Sale, being a consensual contract, follows the
general rule that it is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and
upon the price. From that moment, the parties may reciprocally
demand performance, subject to the provisions of the law governing
the form of contracts. 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.
Same; Same; Same; Evidence; Best Evidence Rule; RequisitesBefore Admission of Secondary Evidence; 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.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 unavail-
417
VOL. 536, OCTOBER 17, 2007 417
MCC Industrial Sales Corporation vs. Ssangyong Corporation
ability without bad faith on his part, may prove its contents by a
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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 destructionof the original copy; and (c) it must be shown that a diligent and
bona fidebut 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. 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.
Same; Same; Same; Same; Appeals; Evidence not objected to is
deemed admitted and may be validly considered by the court in
arriving at its judgment; Issues not raised on appeal are deemed
abandoned.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 atits judgment. Issues not raised on appeal are deemed abandoned.
Same; Same; Same; Same; 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.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
418
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418 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong Corporation
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/Cfor 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. 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.
Same; Same; Same; 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; 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.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 itscontractual 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.
Same; Same; Same; Evidence; Breach of Contract; Damages; It
is axiomatic that actual or compensatory damages cannot be
presumed, but must be proven with a reasonable degree of certainty.
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. In Villafuerte v. Court of
Appeals, 459 SCRA 58 (2005), we explained that: Actual or
compensatory damages are those awarded in order to compensate a
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party for an injury or loss he suffered. They arise out of a sense of
natural
419
VOL. 536, OCTOBER 17, 2007 419
MCC Industrial Sales Corporation vs. Ssangyong Corporation
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.
Same; Same; Same; Same; Same; Same; In the absence of
corroborative evidence, self-serving statements of account are not
sufficient basis to award actual damagesthe 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.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 competentproof that the claimant had suffered, and on evidence
of, the actual amount thereof.
Same; Same; Same; Same; Same; Same; Nominal damages are
recoverable where a legal right is technically violated and must bevindicated 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.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 respondents continuous accommodation, petitioner
completely reneged on its contractual duty. For such inattention
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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. Accordingly, the Court
awards nominal damages of P200,000.00 to respondent Ssangyong.
420
420 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong Corporation
Attorneys Fees; In the instant case, the Court finds the award
of attorneys fees proper considering that the defendants unjustified
refusal to pay has compelled the plaintiff to litigate and to incur
expenses to protect its rights.As to the award of attorneys 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 attorneys fees. The party must show that he falls under
one of the instances enumerated in Article 2208 of the Civil Code.
In the instant case, however, the Court finds the award of
attorneys fees proper, considering that petitioner MCCs unjustified
refusal to pay has compelled respondent Ssangyong to litigate and
to incur expenses to protect its rights.
PETITION for review on certiorari of the decision and
resolution of the Court of Appeals.
The facts are stated in the opinion of the Court.
Zamora, Poblador, Vasquez & Bretaafor petitioner.
Donato, Zarate & Rodriguezfor respondent.
NACHURA, J.:
Before the Court is a petition for review on certiorariof the
Decision1
of the Court of Appeals in CA-G.R. CV No. 82983
and its Resolution2
denying the motion for reconsideration
thereof.
Petitioner MCC Industrial Sales (MCC), a domestic
corporation with office at Binondo, Manila, is engaged in the
business of importing and wholesaling stainless steel
products.3 One of its suppliers is the Ssangyong
Corporation (Ssangyong),4
an international trading
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company5with head office in
_______________
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. 164-165.3Records, p. 2.
4TSN, June 18, 2003, pp. 7-8.
5TSN, August 21, 2002, p. 7.
421
VOL. 536, OCTOBER 17, 2007 421
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
Seoul, South Korea and regional headquarters in Makati
City, Philippines.6
The two corporations conducted business
through telephone calls and facsimile or telecopy
transmissions.7
Ssangyong would send the pro forma
invoices containing the details of the steel product order to
MCC; if the latter conforms thereto, its representative
affixes his signature on the faxed copy and sends it back to
Ssangyong, again by fax.8
On April 13, 2000, Ssangyong
Manila Office sent, by fax, a letter9 addressed to Gregory
Chan, MCC Manager [also the President10
of Sanyo Seiki
Stainless Steel Corporation], to confirm MCCs and Sanyo
Seikis 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 conformeportion of the letter.11
On April 17, 2000, Ssangyong forwarded to MCCPro
FormaInvoice No. ST2-POSTSO40112
containing the terms
and conditions of the transaction. MCCsent back by fax toSsangyongthe invoice bearing the conformity signature
13
of Chan. As stated in thepro formainvoice, payment for the
ordered steel products would be made through an
irrevocable letter of credit (L/C) at sight in favor of
Ssangyong.14
Follow-
_______________
6Records, p. 198; Exhibit A.
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7CA Rollo, p. 97.
8TSN, August 21, 2002, p. 18.
9Records, 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.
10Records, p. 49.
11Id., at pp. 336-337; Exhibit W-1.12Id., at pp. 216-217; Exhibit E-1. 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.
13Id.; Exhibit E-2.
14Id.; Exhibit E-1.
422
422 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
ing their usual practice, delivery of the goods was to be
made after the L/C had been opened.
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 South Korea15and paid the same in full.
Because MCCcould 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-
POSTS0401-117
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 steel from Korea to the Philippines. It requestedthat the opening of the L/C be facilitated.
19
Chan affixed his
signature on the fax transmittal and returned the same, by
fax, to Ssangyong.20
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
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June 27, 2000.
_______________
15TSN, August 21, 2002, pp. 41-42, 67-68.
16TSN, October 15, 2003, pp. 89-92.
17 Records, p. 215; Exhibit E. This is a mere photocopy of the fax
transmittal.18 Id., at p. 218; Exhibit F. This is a mere photocopy of the fax
transmittal.
19Id., at pp. 219-220; Exhibit G. 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.
20Id.; Exhibit G-1.
423
VOL. 536, OCTOBER 17, 2007 423
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
Ssangyongreiterated its request for the facilitation of the
L/Cs opening.21
Ssangyong later, through its Manila Office, sent a
letter, on June 26, 2000, to the Treasury Group of Sanyo
Seiki that it was looking forward to receiving the L/C details
and a cable copy thereof that day.22
Ssangyong sent a
separate letter of the same date to Sanyo Seiki requesting
for the opening of the L/C covering payment of the first
100MT not later than June 28, 2000.23
Similar letters were
transmitted by Ssangyong Manila Office on June 27,
2000.24
On June 28, 2000, Ssangyong sent another
facsimile letter to MCC stating that its principal in Korea
was already in a difficult situation25
because of the failure of
Sanyo Seiki and MCCto open the L/Cs.The following day, June 29, 2000, Ssangyongreceived,
by fax, a letter signed by Chan, requesting an extension of
time to open the L/C because MCCs credit line with the
bank had been fully availed of in connection with another
transaction, and MCCwas waiting for an additional credit
line.26
On the same date, Ssangyong replied, requesting
that it be informed of the date when the L/C would be
opened, preferably at the earliest possible time, since its
Steel Team 2 in Korea was having problems and
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Ssangyongwas incurring warehousing costs.27
To maintain
their good business relationship and to support MCCin its
financial predicament, Ssangyongoffered to negotiate with
its steel manufacturer, POSCO, another
_______________
21Id., at p. 221; Exhibit H.22Id., at p. 223; Exhibit I.
23Id., at p. 224; Exhibit J.
24Id., at p. 225; Exhibit K.
25Id., at p. 226; Exhibit L. The document is a mere photocopy of the
original fax message.
26Id., at pp. 227-228; Exhibit M. 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.
27Id., at p. 229; Exhibit N.
424
424 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
US$20/MT discount on the price of the stainless steelordered. This was intimated in Ssangyongs June 30, 2000
letter to MCC.28
On July 6, 2000, another follow-up letter29
for the opening of the L/C was sent by Ssangyongto MCC.
However, despite Ssangyongs 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/Cs 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-POSTS080-132
and
ST2-POSTS080-233
dated August 16, 2000 were issued by
Ssangyongand sent viafax to MCC. The invoices slightly
varied the terms of the earlier pro forma invoices
(ST2POSTSO401, ST2-POSTS0401-1 and ST2-POSTS0401-
2), in that the quantity was now officially 100MTper invoice
and the price was reduced to US$1,700.00per MT. As can be
gleaned from the photocopies of the said August 16, 2000
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invoices submitted to the court, they both bear the
conformity signature of MCCManager Chan.
On August 17, 2000, MCC finally opened an L/C with
PCIBank for US$170,000.00 covering payment for 100MT
of stainless steel coil underPro FormaInvoice No. ST2-
_______________
28Id., at p. 230; Exhibit O. The document is a mere photocopy of the
original letter.
29Id., at p. 231; Exhibit P.
30Id., at pp. 232-233; Exhibit Q.
31Id., at p. 232.
32Id., at p. 338; Exhibit X. The document is a mere photocopy of the
original fax transmittal.
33Id., at p. 321; Exhibit 2-C. The document was certified as the true
copy of its original by PCIBank.
425
VOL. 536, OCTOBER 17, 2007 425
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
POSTS080-2.34
The goods covered by the said invoice were
then shipped to and received by MCC.35
MCCthen faxed to Ssangyonga letter dated August 22,
2000 signed by Chan, requesting for a price adjustment of
the order stated inPro FormaInvoice No. ST2-POSTS080-
1, considering that the prevailing price of steel at that time
was US$1,500.00/MT, and that MCClost a lot of money due
to a recent strike.36
Ssangyong rejected the request, and, on August 23,
2000, sent a demand letter37
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 MCCon August 26, 2000,Ssangyongwould 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, Ssangyongthrough counsel wrote a letter
to MCC, on September 11, 2000, canceling the sales
contract under ST2-POSTS0401-1/ST2-POSTS0401-2,
and demanding payment of US$97,317.37 representing
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losses, warehousing expenses, interests and charges.38
Ssangyong then filed, on November 16, 2001, a civil
action for damages due to breach of contract against
defendants MCC, Sanyo Seiki and Gregory Chan before the
Regional Trial Court of Makati City. In its complaint,39
Ssangyong
_______________
34Id., at pp. 318-320; Exhibits 2, 2-A and 2-B. These documents
were certified as true copies of their originals by PCIBank.
35Id., at pp. 300-317; Exhibits 1-B to 1-R.
36Id., at pp. 378-379; Exhibit DD. 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.
37Id., at p. 234; Exhibit R.
38Id., at p. 235; Exhibit S.
39Id., at pp. 1-10.
426
426 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
alleged that defendants breached their contract when they
refused to open the L/C in the amount of US$170,000.00 for
the remaining 100MT of steel underPro FormaInvoice Nos.
ST2-POSTS0401-1and ST2-POSTS0401-2.
After Ssangyong rested its case, defendants filed a
Demurrer to Evidence40
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 admittedin 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,
Ssangyongs evidence sufficed for purposes of aprima facie
case.42
After trial on the merits, the RTC rendered its Decision43
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1)
2)
3)
on March 24, 2004, in favor of Ssangyong. The trial court
ruled that when plaintiff agreed to sell and defendants
agreed to buy the 220MT of steel products for the price of
US$1,860 per MT, the contract was perfected. The subject
transaction was evidenced byPro FormaInvoice 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. The RTC, however,
excluded Sanyo Seiki from liability for lack of competent
evidence. Thefalloof the decision reads:
WHEREFORE, premises considered, Judgment is hereby rendered
ordering defendants MCC Industrial Sales Corporation and
Gregory Chan, to pay plaintiff, jointly and severally the following:
_______________
40Id., at pp. 262-267.
41Id., at p. 254.
42Id., at p. 275.
43Id., at pp. 408-412.
427
VOL. 536, OCTOBER 17, 2007 427
MCC Industrial Sales Corporation vs. SsangyongCorporation
Actual damages of US$93,493.87 representing the
outstanding principal claim plus interest at the rate of 6%
per annumfrom March 30, 2001.
Attorneys fees in the sum of P50,000.00 plus P2,000.00 per
counsels 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.
Costs of suit.
No award of exemplary damages for lack of sufficient basis.
SO ORDERED.44
On April 22, 2004, MCCand Chan, through their counsel of
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I.
A.
1.
II.
III.
IV.
record, Atty. Eladio B. Samson, filed their Notice of Appeal.45
On June 8, 2004, the law office of Castillo Zamora &
Poblador entered its appearance as their collaborating
counsel.
In their Appeal Brief filed on March 9, 2005,46
MCCand
Chan raised before the CA the following errors of the RTC:
THE HONORABLE COURT A QUO PLAINLYERRED IN FINDING THAT APPELLANTS
VIOLATED THEIR CONTRACT WITH
APPELLEE
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.
THE HONORABLE COURT A QUO PLAINLY
ERRED IN ADMITTING IN EVIDENCE THE
PRO FORMA INVOICES WITH REFERENCE
NOS. ST2POSTS0401-1 AND ST2-POSTS0401-2.
THE HONORABLE COURT A QUO PLAINLY
ERRED IN AWARDING ACTUAL DAMAGES TO
APPELLEE.
_______________
44Id., at pp. 411-412.
45Id., at p. 444.
46CA rollo, pp. 29-49.
428
428 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
THE HONORABLE COURT A QUO PLAINLY
ERRED IN AWARDING ATTORNEYS FEES TO
APPELLEE.
THE HONORABLE COURT A QUO PLAINLY
ERRED IN FINDING APPELLANT GREGORY
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(1)
(2)
CHAN JOINTLY AND SEVERALLY LIABLE
WITH APPELLANT MCC.47
On August 31, 2005, the CA rendered its Decision48
affirming the ruling of the trial court, but absolving Chan of
any liability. The appellate court ruled, among others, that
Pro Forma Invoice Nos. ST2-POSTS0401-1 and
ST2POSTS0401-2 (Exhibits E, E-1 and F) wereadmissible in evidence, although they were mere facsimile
printouts of MCCs steel orders.49
The dispositive portion of
the appellate courts decision reads:
WHEREFORE, premises considered, the Court holds:
The award of actual damages, with interest, attorneys fees
and costs ordered by the lower court is hereby AFFIRMED.
Appellant Gregory Chan is hereby ABSOLVED from any
liability.
SO ORDERED.50
A copy of the said Decision was received by MCCs and
Chans principal counsel, Atty. Eladio B. Samson, on
September 14, 2005.51
Their collaborating counsel, Castillo
Zamora & Poblador,52
likewise, received a copy of the CA
decision on September 19, 2005.53
On October 4, 2005, Castillo Zamora & Poblador, on
behalf of MCC, filed a motion for reconsideration of the said
_______________
47Id., at p. 36.
48Supranote 1.
49CA Rollo, pp. 127-128.
50Id., at p. 131.
51Id., at p. 160.
52The firms name was later changed to Zamora Poblador Vasquez &
Bretaa.
53CA Rollo, p. 161.
429
VOL. 536, OCTOBER 17, 2007 429
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
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I.
II.
III.
decision.54
Ssangyongopposed the motion contending that
the decision of the CA had become final and executory on
account of the failure of MCCto file the said motion within
the reglementary period. The appellate court resolved, on
November 22, 2005, to deny the motion on its merits,55
without, however, ruling on the procedural issue raised.
Aggrieved, MCCfiled a petition for review on certiorari56
before this Court, imputing the following errors to the Courtof 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
QUOS DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO.
02124 CONSIDERING THAT:
THE COURT OF APPEALS ERRED IN SUSTAINING THEADMISSIBILITY IN EVIDENCE OF THE PROFORMA
INVOICES WITH REFERENCE NOS. ST2POSTSO401-1
AND ST2-POSTSO401-2, DESPITE THE FACT THAT THE
SAME WERE MERE PHOTOCOPIES OF FACSIMILE
PRINTOUTS.
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 PROVETHAT IT SUFFERED ANY DAMAGES AND THE
AMOUNT THEREOF.
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
_______________
54Id., at pp. 140-150.
55Supranote 2.
56Rollo, pp. 9-26.
57Id., at p. 15.
430
430 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
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I
II
III
IV
Corporation
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 MCCs 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 formamotion; that MCCbreached 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 MCCis liable for
actual damages and attorneys fees because of its breach,
thus, compelling Ssangyongto litigate.
The principal issues that this Court is called upon to
resolve are the following:
Whether the CA decision dated 15 August 2005 is
already final and executory;
Whether the print-out and/or photocopies of
facsimile transmissions are electronic evidence and
admissible as such;
Whether there was a perfected contract of sale
between MCC and Ssangyong, and, if in the
affirmative, whether MCC breached the saidcontract; and
Whether the award of actual damages and
attorneys fees in favor of Ssangyongis proper and
justified.
- I -
It cannot be gainsaid that inAlbano v. Court of Appeals,58
weheld 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
_______________
58415 Phil. 761; 362 SCRA 667 (2001).
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431
VOL. 536, OCTOBER 17, 2007 431
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
received a copy of the decision. In this case, when Atty.Samson received a copy of the CA decision on September 14,
2005, MCChad only fifteen (15) days within which to file a
motion for reconsideration conformably with Section 1, Rule
52 of the Rules of Court, or to file a petition for review on
certiorariin accordance with Section 2, Rule 45. The period
should not be reckoned from September 29, 2005 (when
Castillo Zamora & Poblador received their copy of the
decision) because notice to Atty. Samson is deemed notice to
collaborating counsel.
We note, however, from the records of the CA, that it was
Castillo Zamora & Poblador, not Atty. Samson, which filed
both MCCs and Chans 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 October 5, 2005, well within the 15-day period from
September 29, 2005, when they received their copy of theCA decision. This could also be the reason why the CA did
not find it necessary to resolve the question of the timeliness
of petitioners motion for reconsideration, even as the CA
denied the same.
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
petitioners
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_______________
59G.R. No. 146478, July 30, 2004, 435 SCRA 512.
432
432 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. SsangyongCorporation
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 Philippines vs. Court of
Appeals, we gave due course to the petitioners appeal despite the
late filing of its brief in the appellate court because such appeal
involved public interest. We stated in the said case that the Court
may exempt a particular case from a strict application of the rules of
procedure where the appellant failed to perfect its appeal within the
reglementary period, resulting in the appellate courts failure to
obtain jurisdiction over the case. In Republic vs. Imperial, Jr., we
also held that there is more leeway to exempt a case from the
strictness of procedural rules when the appellate court has already
obtained jurisdiction over the appealed case. We emphasize that:
[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 rules 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
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_______________
60 Philippine Ports Authority v. Sargasso Construction &
Development Corporation, supra, at pp. 527-528.
433
VOL. 536, OCTOBER 17, 2007 433
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
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 MCCs 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 mererestatement 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 necessarilypro 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, thepro formarule 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-vis the Rules on Electronic
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Evidence.
_______________
61Yuchengco v. Court of Appeals, G.R. No. 165793, October 27, 2006,
505 SCRA 716, 723.
62396 Phil. 1081; 341 SCRA 781 (2000).
434
434 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
Although the parties did not raise the question whether the
original facsimile transmissions are electronic data
messages or electronic documents within the context ofthe 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 thepro forma
invoices presented by respondent Ssangyongto 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 originalfax 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
thepro formainvoice is admissible in evidence since it is anelectronic 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 nonproduction of the original fax
transmittals.
In resolving this issue, the appellate court ruled as
follows:
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63Maharlika Publishing Corporation v. Tagle, 226 Phil. 456, 463-464;
142 SCRA 553, 561 (1986).
435
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MCC Industrial Sales Corporation vs. Ssangyong
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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. ST2POSTS0401-1
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 appellants 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 usedinterchangeably 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
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(i)
(ii)
(b)
(c)
_______________
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 Purposes. Approved
on June 14, 2000.
436
436 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
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 Evi-
_______________
65Sections 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
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
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.
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.
Where the law requires that a document be presented or retained in its
original form, that requirement is met by an electronic document if
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(i)
(ii)
(a)
(b)
(a)
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
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
437
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MCC Industrial Sales Corporation vs. Ssangyong
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dence66
regards an electronic document as admissible in
evidence if it complies with the rules on admissibility
prescribed
_______________
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:
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 aliundeor otherwise; and
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):
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
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(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.
66A.M. No. 01-7-01-SC, effective on August 1, 2001.
438
438 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
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 dataaccurately.68
_______________
67Rule 3 of the Rules on Electronic Evidence reads:
RULE 3
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.
68Rule 4 of the Rules on Electronic Evidence reads:
RULE 4
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
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(a)
(b)
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:
439
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MCC Industrial Sales Corporation vs. Ssangyong
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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:
x x x
c. Electronic Data Message refers to information generated,
sent, received or stored by electronic, optical or similar means.
x x x
f. Electronic Document refers to information or therepresentation 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 July 13, 2000 by the then Secre-
_______________
a genuine question is raised as to the authenticity of the original; or
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
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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.
440
440 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
taries of the Department of Trade and Industry, the
Department of Budget and Management, and then
Governor of the Bangko Sentral ng Pilipinas, defines theterms as:
Sec. 6.Definition of Terms.For the purposes of this Act and these
Rules, the following terms are defined, as follows:
x x x
(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 usedinterchangeably 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
IRRs 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.
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No.
_______________
70On 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 revisetheir 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 addi
441
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MCC Industrial Sales Corporation vs. SsangyongCorporation
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 Philippines adoption, in Senate
Bill 1902, of the phrase electronic data message and the
House of Representatives employment, in House Bill 9971,
of the term electronic document.72
In order to expedite the
reconciliation of the two versions, the technical working
group of the Bicameral Conference Committee adopted both
terms and intended them to be the equivalent of each one.73
Be that as it may, there is a slight difference between the
two terms. While data message has reference to
information electronically sent, stored or transmitted, it does
not necessarily mean that it will give rise to a right orextinguish an obligation,
74
unlike an electronic document.
Evident from the law, however, is the legislative intent to
give the two terms the same construction.
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
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(g)
(h)
_______________
tional article 5 bis as adopted in 1998, United Nations Publication,
New York, 1999).
71Record of the Senate, Vol. III, No. 61, February 16, 2000, p. 405.
72R.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.
74House of Representatives Transcript of Proceedings, June 5, 2000.
442
442 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
Electronic data message refers to information generated,
sent, received or stored by electronic, optical or similar
means.
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
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supports this theory considering that the enumeration x x
x [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 originand the need to
promote uniformity in its application and the observance of good
_______________
75 (visited August
27, 2007).
443
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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 UNCITRALs 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 IRRs 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 terms international origin has
bred uncertainty and now impels the Court to make an
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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
_______________
76 UNCITRAL Model Law on Electronic Commerce with Guide to
Enactment 1996 with additional article 5 bisas adopted in 1998, United
Nations publication, New York, 1999.
77People v. Purisima, 176 Phil. 186, 204; 86 SCRA 542, 559 (1978).
78De Guia v. Commission on Elections, G.R. No. 104712, May 6,
1992, 208 SCRA 420, 425.
444
444 SUPREME COURT REPORTS ANNOTATED
MCC Industrial Sales Corporation vs. Ssangyong
Corporation
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 o