IT Law Journal

administrator April 28th, 2008

Facsimile Transmission and the e-Commerce Law
Mary Ann L. Reyes

A facsimile transmission is not an “electronic data message” or an “electronic document,” and cannot be considered as electronic evidence within the purview of the Electronic Commerce Act of 2000 and the Rules on Electronic Evidence, even of a fax transmission is sent by electronic means, according to the Supreme Court.

“It is not the functional equivalent of an original under the Best Evidence Rule and is not admissible as electronic evidence,” the SC said in the case of MCC Industrial Sales Corporations vs. Ssanyong Corporation (GR No. 170633 dated October 17, 2007).

If a fax transmission is not electronic evidence, with greater reason is a photocopy of such transmission not electronic evidence, the Court noted.

In a decision penned by Associate Justice Antonio Eduardo B. Nachura, the SC concluded that the terms “electronic data message” and “electronic document,” as defined under Republic Act No. 8792 or 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,” it said.

The Court explained that 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.

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 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,” it said.

It added: “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.’”

The Supreme Court stressed that the implementing rules and regulations of the Electronic Commerce Act of 2000 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. 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 issuance—an administrative agency certainly cannot amend an act of Congress,” it explained.

The Court added that 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.

RA 8792 considers an electronic data message or an electronic document as the functional equivalent of a written document for evidentiary purposes.

Meanwhile, the Rules on Electronic Evidence regard 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.

The SC noted that 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.”

In the MCC case, the Court pointed out that certain invoices presented by Ssangyong as evidence to prove the existence of a sales contract and the breach thereof, were mere photocopies of the original fax transmittals and are not electronic evidence, contrary to the position of both the trial and the appellate courts.

Despite the pro forma invoices not being electronic evidence, the SC found that respondent Ssangyong has proven by preponderance of evidence the existence of a perfected contract of sale.

Being mere photocopies of their original fax transmittals, the Court applied the ordinary Rules on Evidence since it 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 of the Rules of Court 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,” the Court said.

The SC noted that given these norms, respondent failed to prove the existence of the original fax transmissions and likewise did not sufficiently prove the loss or destruction of the originals.

It however observed, however, that Ssangyong did not rely merely on these exhibits to prove the perfected contract. It also introduced in evidence a variety of other documents together with the testimonies of its witnesses.

There was one pro forma invoice which was a mere photocopy of the 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,” the High Court pointed out. “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,” it added.

The SC said: “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.”

It noted that when petitioner did not open the letter for credit for the first half of the transaction despite numerous demands from Ssangyong, petitioner MCC 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,” according to the High Tribunal.

MCC in this case was held liable for nominal damages “which 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.”

• ITLJ 4-2
• Comments(1)