Case Summary (G.R. No. 170633)
Petitioner
- MCC Industrial Sales Corporation, challenging the Court of Appeals’ affirmation of damages for its alleged breach of contract.
Respondent
- Ssangyong Corporation, seeking recovery of damages for MCC’s failure to open the agreed letters of credit (L/Cs).
Key Dates
- April 13–17, 2000: Pro forma invoices for 220 MT of hot-rolled stainless steel at US$1,860/MT issued and confirmed via fax.
- June–August 2000: Multiple requests and extensions for opening irrevocable L/Cs; order split into two 100 MT tranches at US$1,700/MT; L/C opened only for the first tranche.
- November 16, 2001: Civil suit filed in RTC Makati for breach of contract and damages.
- March 24, 2004: RTC rendered decision awarding actual damages, attorney’s fees, and costs in favor of Ssangyong.
- August 31, 2005: Court of Appeals affirmed liability and award (absolving Chan).
- October 17, 2007: Supreme Court decision.
Applicable Law
- 1987 Philippine Constitution.
- Civil Code of the Philippines (consensual contracts, obligations).
- Republic Act No. 8792 (Electronic Commerce Act of 2000) and Supreme Court Rules on Electronic Evidence.
- Rules of Court.
Facts
Ssangyong offered, and MCC accepted, a sale of 220 MT of stainless steel by signing faxed pro forma invoices. Payment was by irrevocable L/C at sight. Ssangyong paid its manufacturer and awaited L/C opening for shipment. MCC’s limited bank credit forced the order’s division into two 110 MT shipments. Despite repeated extensions and a price discount to US$1,700/MT, MCC opened only one L/C, failed to open the second, and ultimately reneged on its obligation. Ssangyong canceled the contract and claimed damages.
Procedural History
Ssangyong sued MCC, Sanyo Seiki, and Chan for breach of contract. The RTC denied MCC’s demurrer to evidence under RA 8792, found a perfected contract, and awarded US$93,493.87 in actual damages, attorney’s fees (P50,000 + P2,000 per appearance), and costs. The CA affirmed, except absolved Chan, admitting fax printouts as “electronic documents.” MCC petitioned the Supreme Court.
Issues Before the Court
I. Whether the CA decision was final and executory.
II. Admissibility of ordinary fax transmissions under the Electronic Commerce Act and Rules on Electronic Evidence.
III. Existence and breach of a perfected contract of sale.
IV. Proper measure of damages and award of attorney’s fees.
I. Finality of the CA Decision
Notice to one counsel is notice to all; MCC’s collaborating counsel timely filed a motion for reconsideration. Even if technically late, the Supreme Court relaxed procedural rules to prevent injustice, holding the CA decision not yet final.
II. Admissibility of Fax Transmissions
The Court held that ordinary fax transmissions and their photocopies are paper-based and fall outside RA 8792’s definitions of “electronic data message” or “electronic document.” The IRR’s inclusion of telecopy exceeded statutory authority. Consequently, fax printouts are not admissible as electronic evidence.
III. Existence and Breach of Contract
Although certain fax invoices were inadmissible, the unchallenged documentary evidence and parties’ conduct established a meeting of minds and a perfect
...continue readingCase Syllabus (G.R. No. 170633)
Citation
- 562 Phil. 390 (Third Division, Supreme Court of the Philippines)
- G.R. No. 170633, October 17, 2007
- Ponente: Justice Nachura
Parties
- Petitioner: MCC Industrial Sales Corporation
- Domestic corporation based in Binondo, Manila
- Business: importing and wholesaling stainless steel products
- Respondent: Ssangyong Corporation
- International trading company headquartered in Seoul, South Korea
- Regional headquarters in Makati City, Philippines
Factual Background
- MCC and Ssangyong communicated by telephone and facsimile
- April 13, 2000: Ssangyong Manila faxed pro forma letter confirming order of 220 MT of hot-rolled stainless steel at US$1,860/MT
- April 17, 2000: Ssangyong issued Pro Forma Invoice No. ST2-POSTSO401; MCC’s Gregory Chan signed and faxed back
- Payment term: irrevocable letter of credit (L/C) at sight; delivery upon L/C opening
- Ssangyong paid POSCO (Korean steel mill) in full and awaited L/C
- MCC opened only partial L/C, splitting the 220 MT into two orders of 110 MT each
- June–July 2000: multiple Ssangyong faxes urging L/C opening; MCC requested time extensions for credit line
- June 30, 2000: Ssangyong offered further US$20/MT discount to accommodate MCC
- August 16, 2000: Ssangyong issued new pro forma invoices for two shipments of 100 MT at US$1,700/MT; both signed by Chan
- August 17, 2000: MCC opened L/C for first 100 MT and received goods; declined to open L/C for second 100 MT, sought additional discount
Procedural History
- August–September 2000: Ssangyong’s demand letters; cancellation of contract; demand for damages
- November 16, 2001: Ssangyong filed civil action for breach of contract before RTC Makati
- RTC (March 24, 2004)
- Denied MCC’s demurrer to evidence under E-Commerce Act
- Found contract perfected; MCC breached by failing to open second L/C
- Ordered MCC and Chan to pay US$93,493.87 actual damages, P50,000 attorney’s fees, P2,000 per appearance, plus costs
- CA (August 31, 2005)
- Affirmed RTC’s damages and costs award
- Absolved individual respondent Chan of liability
- Held pro forma invoices admissible as electronic documents under new Rules on Electronic Evidence
- SCC Petition (October 2005) by MCC, raising issues on procedural finality, evidentiary admissibility, breach and damages
Issues Presented
- I. Whether the CA decision of August 15, 2005 is final and executory
- II. Whether facsimile printouts (fax transmissions) are “electronic documents” admissible under the E-Commerce Act (R.A. 8792) and Rules on Electronic Evidence
- III. Whether a perfected contract of sale existed between MCC and Ssangyong and if MCC breached it by fa