MCC Industrial Sales Corp. v. Ssangyong Corp.

MCC Industrial Sales, a stainless steel importer, dealt with the Korean trader Ssangyong Corporation by phone and fax: Ssangyong faxed pro forma invoices, and MCC's manager Gregory Chan signed them and faxed them back. In April 2000 the parties agreed on 220 MT of hot rolled stainless steel at US$1,860 per MT, payable by irrevocable letters of credit. Because MCC could open only partial L/Cs, the order was split into two invoices of 110 MT. Despite repeated demands, extensions and price discounts, MCC opened an L/C only in August 2000, for 100 MT under a revised invoice at US$1,700 per MT. It asked for a further price cut on the remaining 100 MT and then failed to open the second L/C. Ssangyong cancelled the contract and sued MCC, Sanyo Seiki and Chan for damages in the RTC of Makati. The RTC denied a demurrer that attacked the lack of original invoices, admitting the evidence under R.A. 8792, and held MCC and Chan liable for US$93,493.87 in actual damages. The CA affirmed but absolved Chan, holding the photocopied fax invoices admissible as electronic documents under the Rules on Electronic Evidence.

1. 1Whether the CA decision had become final because the motion for reconsideration was late or pro forma.
2. 2Whether printouts or photocopies of facsimile transmissions are electronic evidence admissible as such.
3. 3Whether a perfected contract of sale was proved and breached, and whether actual damages were proved.

The appeal was partially granted. On the procedural point, the Court relaxed the rule that notice to one counsel is notice to all, in the interest of substantial justice, and held that a motion reiterating earlier arguments is not necessarily pro forma. On the evidence, although the IRR of R.A. 8792 copied the UNCITRAL Model Law definition of "data message," which includes telecopy, Congress deliberately deleted that phrase. The Senate deliberations adopted Senator Santiago's Canadian-based concept of an "electronic record," which "would not apply to telexes or faxes, except computer-generated faxes." An ordinary fax involves an original paper document and a paper copy at the receiving end, while the law's focus is paperless communication. The IRR went beyond the law. Hence, "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." With greater reason, a photocopy of a fax is not electronic evidence. Treated as secondary evidence under Rule 130, Section 5, Exhibits E and F were inadmissible because Ssangyong did not prove the originals' existence and their loss or unavailability. The contract was nonetheless proved by preponderance of other evidence, including the later invoices and the parties' conduct, and MCC breached it by failing to open the L/C. Actual damages were not proved: the statement of account was self-serving, and the resale contract covered different goods. The award was deleted and replaced with P200,000 in nominal damages; attorney's fees were sustained.