G.R. No. 203302 April 11, 2013 proceedings.

proceedings. He argued that the resort to the printouts of the ballot images,
which were secondary evidence, had been unwarranted because there was
MAYOR EMMANUEL L. MALIKSI, Petitioner, no proof that the integrity of the paper ballots had not been preserved.
vs.
COMMISSION ON ELECTIONS AND HOMER T. On September 14, 2012, the COMELEC En Banc resolved to deny Maliksi’s
SAQUILAVAN, Respondents. motion for reconsideration.2

RESOLUTION Maliksi then came to the Court via petition for certiorari, reiterating his
objections to the decryption, printing, and examination of the ballot images
BERSAMIN, J.: without prior notice to him, and to the use of the printouts of the ballot images
in the recount proceedings conducted by the First Division.1âwphi1
The Court hereby resolves the Extremely Urgent Motion for Reconsideration
tiled by petitioner Emmanuel L. Maliksi against the Court's decision In the decision promulgated on March 12, 2013, the Court, by a vote of 8-7,
promulgated on March 12, 2013, dismissing his petition for certiorari dismissed Maliksi’s petition for certiorari. The Court concluded that Maliksi
assailing the resolution dated September 14, 2012 of the Commission on had not been denied due process because: (a) he had received notices of
Elections (COMELEC) En Bane that sustained the declaration of respondent the decryption, printing, and examination of the ballot images by the First
Homer T. Saquilayan as the duly elected Mayor of Imus, Cavite. Division — referring to the orders of the First Division directing Saquilayan to
post and augment the cash deposits for the decryption and printing of the
ballot images; and (b) he had been able to raise his objections to the
For clarity, we briefly restate the factual antecedents.
decryption in his motion for reconsideration. The Court then pronounced that
the First Division did not abuse its discretion in deciding to use the ballot
During the 2010 Elections, the Municipal Board of Canvassers proclaimed images instead of the paper ballots, explaining that the printouts of the ballot
Saquilayan the winner for the position of Mayor of Imus, Cavite. Maliksi, the images were not secondary images, but considered original documents with
candidate who garnered the second highest number of votes, brought an the same evidentiary value as the official ballots under the Rule on Electronic
election protest in the Regional Trial Court (RTC) in Imus, Cavite alleging Evidence; and that the First Division’s finding that the ballots and the ballot
that there were irregularities in the counting of votes in 209 clustered boxes had been tampered had been fully established by the large number of
precincts. Subsequently, the RTC held a revision of the votes, and, based on cases of double-shading discovered during the revision.
the results of the revision, declared Maliksi as the duly elected Mayor of Imus
commanding Saquilayan to cease and desist from performing the functions
In his Extremely Urgent Motion for Reconsideration, Maliksi raises the
of said office. Saquilayan appealed to the COMELEC. In the meanwhile, the
following arguments, to wit:
RTC granted Maliksi’s motion for execution pending appeal, and Maliksi was
then installed as Mayor.
I.
In resolving the appeal, the COMELEC First Division, without giving notice to
the parties, decided to recount the ballots through the use of the printouts of WITH ALL DUE RESPECT, THIS HONORABLE SUPREME COURT EN
the ballot images from the CF cards. Thus, it issued an order dated March BANC GRAVELY ERRED IN DISMISSING THE INSTANT PETITION
28, 2012 requiring Saquilayan to deposit the amount necessary to defray the DESPITE A CLEAR VIOLATION OF PETITIONER’S CONSTITUTIONAL
expenses for the decryption and printing of the ballot images. Later, it issued RIGHT TO DUE PROCESS OF LAW CONSIDERING THAT DECRYPTION,
another order dated April 17, 2012 for Saquilayan to augment his cash PRINTING AND EXAMINATION OF THE DIGITAL IMAGES OF THE
deposit. BALLOTS, WHICH IS THE BASIS FOR THE ASSAILED 14 SEPTEMBER
2012 RESOLUTION OF THE PUBLIC RESPONDENT, WHICH IN TURN
AFFIRMED THE 15 AUGUST 2012 RESOLUTION OF THE COMELEC
On August 15, 2012, the First Division issued a resolution nullifying the
FIRST DIVISION, WERE DONE INCONSPICUOUSLY UPON A MOTU
RTC’s decision and declaring Saquilayan as the duly elected Mayor.1
PROPRIO DIRECTIVE OF THE COMELEC FIRST DIVISION SANS ANY
NOTICE TO THE PETITIONER, AND FOR THE FIRST TIME ON APPEAL.
Maliksi filed a motion for reconsideration, alleging that he had been denied
his right to due process because he had not been notified of the decryption
 II. proof in the RTC to show that the ballots or the ballot boxes had been
tampered, and had, in fact, actively participated in the revision proceedings;
WITH ALL DUE RESPECT, THIS HONORABLE SUPREME COURT EN (d) that the First Division should not have entertained the allegation of ballot
BANC GRAVELY ERRED IN UPHOLDING THE COMELEC FIRST tampering belatedly raised on appeal; (e) that the First Division should have
DIVISION’S RULING TO DISPENSE WITH THE PHYSICAL BALLOTS AND limited itself to reviewing the evidence on record; and (f) that the First
RESORT TO THEIR DIGITAL IMAGES NOTWITHSTANDING THE FACT Division did not even explain how it had arrived at the conclusion that the
THAT THE BALLOTS ARE THE BEST AND MOST CONCLUSIVE integrity of the ballots had not been preserved.
EVIDENCE OF THE VOTERS’ WILL, AND THAT BALLOT IMAGES CAN BE
RESORTED TO ONLY IF THE OFFICIAL BALLOTS ARE LOST OR THEIR Maliksi submits that the decision promulgated on March 12, 2013 is null and
INTEGRITY WAS COMPROMISED AS DETERMINED BY THE void for having been promulgated despite the absence from the deliberations
RECOUNT/REVISION COMMITTEE, CIRCUMSTANCES WHICH ARE and lack of signature of Justice Jose Portugal Perez.
WANTING IN THIS CASE, AND IN FACT THE INTEGRITY OF THE
BALLOT BOXES AND ITS CONTENTS WAS PRESERVED AND THE Ruling
ISSUE OF TAMPERING WAS ONLY BELATEDLY RAISED BY THE
PRIVATE RESPONDENT AFTER THE REVISION RESULTS SHOWED
The Court grants Maliksi’s Extremely Urgent Motion for Reconsideration, and
THAT HE LOST.
reverses the decision promulgated on March 12, 2013 on the ground that the
First Division of the COMELEC denied to him the right to due process by
III. failing to give due notice on the decryption and printing of the ballot images.
Consequently, the Court annuls the recount proceedings conducted by the
WITH ALL DUE RESPECT, IT IS THE HUMBLE SUBMISSION OF THE First Division with the use of the printouts of the ballot images.
PETITIONER-MOVANT THAT THE 12 MARCH 2013 RESOLUTION
ISSUED BY THE HONORABLE SUPREME COURT EN BANC IS NULL It bears stressing at the outset that the First Division should not have
AND VOID AB INITIO AND THEREFORE OF NO FORCE AND EFFECT, conducted the assailed recount proceedings because it was then exercising
FOR HAVING BEEN PROMULGATED DESPITE THE ABSENCE OF appellate jurisdiction as to which no existing rule of procedure allowed it to
HONORABLE SUPREME COURT JUSTICE JOSE PORTUGAL PEREZ AT conduct a recount in the first instance. The recount proceedings authorized
THE TIME OF THE DELIBERATION AND VOTING ON THE 12 MARCH under Section 6, Rule 15 of COMELEC Resolution No. 8804, as amended,
2013 RESOLUTION IN THE INSTANT CASE.3 are to be conducted by the COMELEC Divisions only in the exercise of their
exclusive original jurisdiction over all election protests involving elective
Maliksi insists: (a) that he had the right to be notified of every incident of the regional (the autonomous regions), provincial and city officials. 4
proceedings and to be present at every stage thereof; (b) that he was
deprived of such rights when he was not informed of the decryption, printing, As we see it, the First Division arbitrarily arrogated unto itself the conduct of
and examination of the ballot images by the First Division; (c) that the March the recount proceedings, contrary to the regular procedure of remanding the
28, 2012 and April 17, 2012 orders of the First Division did not sufficiently protest to the RTC and directing the reconstitution of the Revision Committee
give him notice inasmuch as the orders did not state the date, time, and for the decryption and printing of the picture images and the revision of the
venue of the decryption and printing of the ballot images; and (d) that he was ballots on the basis thereof. Quite unexpectedly, the COMELEC En Banc
thus completely deprived of the opportunity to participate in the decryption upheld the First Division’s unwarranted deviation from the standard
proceedings. procedures by invoking the COMELEC’s power to "take such measures as
the Presiding Commissioner may deem proper," and even citing the Court’s
Maliksi contends that the First Division’s motu proprio directive for the minute resolution in Alliance of Barangay Concerns (ABC) Party-List v.
decryption, printing, and examination of the ballot images was highly Commission on Elections5 to the effect that the "COMELEC has the power to
irregular. In this regard, he asserts: (a) that the decryption, printing, and adopt procedures that will ensure the speedy resolution of its cases. The
examination should have taken place during the revision before the trial court Court will not interfere with its exercise of this prerogative so long as the
and after the revision committee had determined that the integrity of the parties are amply heard on their opposing claims."
official ballots had not been preserved; (b) that the trial court did not make
such determination; (c) that, in fact, Saquilayan did not allege or present any
Based on the pronouncement in Alliance of Barangay Concerns (ABC) v. Election System in Connection with the May 10, 2010 Elections), as
Commission on Elections, the power of the COMELEC to adopt procedures amended by COMELEC Resolution No. 9164, itself requires that "the
that will ensure the speedy resolution of its cases should still be exercised Recount Committee determines that the integrity of the ballots has been
only after giving to all the parties the opportunity to be heard on their violated or has not been preserved, or are wet and otherwise in such a
opposing claims. The parties’ right to be heard upon adversarial issues and condition that (the ballots) cannot be recounted" before the printing of the
matters is never to be waived or sacrificed, or to be treated so lightly image of the ballots should be made, to wit:
because of the possibility of the substantial prejudice to be thereby caused to
the parties, or to any of them. Thus, the COMELEC En Banc should not have xxxx
upheld the First Division’s deviation from the regular procedure in the guise
of speedily resolving the election protest, in view of its failure to provide the
(g) Only when the Recount Committee, through its chairman, determines that
parties with notice of its proceedings and an opportunity to be heard, the
the integrity of the ballots has been preserved or that no signs of tampering
most basic requirements of due process.
of the ballots are present, will the recount proceed. In case there are signs
that the ballots contained therein are tampered, compromised, wet or are
I. otherwise in such a condition that it could not be recounted, the Recount
Committee shall follow paragraph (l) of this rule.
Due process requirements
xxxx
The picture images of the ballots are electronic documents that are regarded
as the equivalents of the original official ballots themselves.6 In Vinzons- (l) In the event the Recount Committee determines that the integrity of the
Chato v. House of Representatives Electoral Tribunal,7 the Court held that ballots has been violated or has not been preserved, or are wet and
"the picture images of the ballots, as scanned and recorded by the PCOS, otherwise in such a condition that it cannot be recounted, the Chairman of
are likewise ‘official ballots’ that faithfully capture in electronic form the votes the Committee shall request from the Election Records and Statistics
cast by the voter, as defined by Section 2(3) of R.A. No. 9369. As such, the Department (ERSD), the printing of the image of the ballots of the subject
printouts thereof are the functional equivalent of the paper ballots filled out by precinct stored in the CF card used in the May 10, 2010 elections in the
the voters and, thus, may be used for purposes of revision of votes in an presence of the parties. Printing of the ballot images shall proceed only upon
electoral protest." prior authentication and certification by a duly authorized personnel of the
Election Records and Statistics Department (ERSD) that the data or the
That the two documents—the official ballot and its picture image—are images to be printed are genuine and not substitutes. (Emphases supplied.)
considered "original documents" simply means that both of them are given
equal probative weight. In short, when either is presented as evidence, one is xxxx
not considered as weightier than the other.
Section 6, Rule 10 (Conduct of Revision) of the 2010 Rules of Procedure for
But this juridical reality does not authorize the courts, the COMELEC, Municipal Election Contests, which governs the proceedings in the Regional
and the Electoral Tribunals to quickly and unilaterally resort to the Trial Courts exercising original jurisdiction over election protests, provides:
printouts of the picture images of the ballots in the proceedings had
before them without notice to the parties. Despite the equal probative
xxxx
weight accorded to the official ballots and the printouts of their picture
images, the rules for the revision of ballots adopted for their respective
proceedings still consider the official ballots to be the primary or best (m) In the event that the revision committee determines that the integrity of
evidence of the voters’ will. In that regard, the picture images of the the ballots and the ballot box have not been preserved, as when proof of
ballots are to be used only when it is first shown that the official ballots tampering or substitution exists, it shall proceed to instruct the printing of the
are lost or their integrity has been compromised. picture image of the ballots stored in the data storage device for the precinct.
The court shall provide a non-partisan technical person who shall conduct
the necessary authentication process to ensure that the data or image stored
For instance, the aforesaid Section 6, Rule 15 of COMELEC Resolution No. is genuine and not a substitute. Only after this determination can the printed
8804 (In Re: Comelec Rules of Procedure on Disputes In An Automated
picture image be used for the recount. (Emphases supplied.)
 xxxx xxxx

A similar procedure is found in the 2010 Rules of the Presidential Electoral All the foregoing rules on revision of ballots stipulate that the printing of the
Tribunal, to wit: picture images of the ballots may be resorted to only after the proper
Revision/Recount Committee has first determined that the integrity of the
Rule 43. Conduct of the revision. – The revision of votes shall be done ballots and the ballot boxes was not preserved.
through the use of appropriate PCOS machines or manually and visually, as
the Tribunal may determine, and according to the following procedures: The foregoing rules further require that the decryption of the images stored in
the CF cards and the printing of the decrypted images take place during the
xxxx revision or recount proceedings. There is a good reason for thus fixing where
and by whom the decryption and the printing should be conducted. It is
(q) In the event that the RC determines that the integrity of the ballots and during the revision or recount conducted by the Revision/Recount Committee
the ballot box was not preserved, as when there is proof of tampering or when the parties are allowed to be represented, with their representatives
witnessing the proceedings and timely raising their objections in the course
substitution, it shall proceed to instruct the printing of the picture image of the
of the proceedings. Moreover, whenever the Revision/Recount Committee
ballots of the subject precinct stored in the data storage device for the same
makes any determination that the ballots have been tampered and have
precinct. The Tribunal may avail itself of the assistance of the COMELEC for
become unreliable, the parties are immediately made aware of such
the service of a non-partisan technical person who shall conduct the
necessary authentication process to ensure that the data or images stored determination.
are genuine and not merely substitutes. It is only upon such determination
that the printed picture image can be used for the revision of votes. When, as in the present case, it was not the Revision/Recount Committee or
(Emphases supplied.) the RTC exercising original jurisdiction over the protest that made the finding
that the ballots had been tampered, but the First Division in the exercise of its
xxxx appellate jurisdiction, the parties should have been given a formal notice
thereof.
Also, the House of Representative Electoral Tribunal’s Guidelines on the
Maliksi was not immediately made aware of that crucial finding because the
Revision of Ballots requires a preliminary hearing to be held for the purpose
First Division did not even issue any written resolution stating its reasons for
of determining whether the integrity of the ballots and ballot boxes used in
the May 10, 2010 elections was not preserved, as when there is proof of ordering the printing of the picture images. The parties were formally notified
that the First Division had found that the ballots had been tampered only
tampering or substitutions, to wit:
when they received the resolution of August 15, 2012, whereby the First
Division nullified the decision of the RTC and declared Saquilayan as the
Section 10. Revision of Ballots duly elected Mayor. Even so, the resolution of the First Division to that effect
was unusually mute about the factual bases for the finding of ballot box
xxxx tampering, and did not also particularize how and why the First Division was
concluding that the integrity of the ballots had been compromised. All that the
(d) When it has been shown, in a preliminary hearing set by the parties or by First Division declared as justification was a simple generalization of the
the Tribunal, that the integrity of the ballots and ballot boxes used in the May same being apparent from the allegations of ballot and ballot box tampering
10, 2010 elections was not preserved, as when there is proof of tampering or and upon inspection of the ballot boxes, viz:
substitutions, the Tribunal shall direct the printing of the picture images of the
ballots of the subject precinct stored in the data storage device for the same xxxx
precinct. The Tribunal shall provide a non-partisan technical person who
shall conduct the necessary authentication process to ensure that the data or The Commission (First Division) took into consideration the allegations of
image stored is genuine and not a substitute. It is only upon such ballot and ballot box tampering and upon inspecting the ballot boxes, it is
determination that the printed picture image can be used for the revision. (As apparent that the integrity of the ballots had been compromised so, to be
amended per Resolution of February 10, 2011; Emphases supplied.)
able to best determine the true will of the electorate, we decided to go over xxxx
the digital image of the appealed ballots.8(Emphasis supplied)
(e) Before the opening of the ballot box, the Recount Committee shall note its
xxxx condition as well as that of the locks or locking mechanism and record the
condition in the recount report. From its observation, the Recount Committee
It was the COMELEC En Banc’s assailed resolution of September 14, 2012 must also make a determination as to whether the integrity of the ballot box
that later on provided the explanation to justify the First Division’s resort to has been preserved.
the picture images of the ballots, by observing that the "unprecedented
number of double-votes" exclusively affecting the position of Mayor and the In the event that there are signs of tampering or if the ballot box appears to
votes for Saquilayan had led to the belief that the ballots had been tampered. have been compromised, the Recount Committee shall still proceed to open
However, that explanation by the COMELEC En Banc did not cure the First the ballot box and make a physical inventory of the contents thereof. The
Division’s lapse and did not erase the irregularity that had already invalidated committee shall, however, record its general observation of the ballots and
the First Division’s proceedings. other documents found in the ballot box.

In his dissenting opinion, Justice Antonio T. Carpio advances the view that The application of Section 3 to this case is inappropriate, considering that the
the COMELEC’s finding of ballot tampering was a mere surplusage because First Division did not in any way suggest in its decision dated August 15,
there was actually no need for such finding before the ballots’ digital 2010 that it was resolving Saquilayan’s motion to print the ballot images.
counterparts could be used. He cites Section 3, Rule 16 of COMELEC Instead, the First Division made therein a finding of tampering, thus:
Resolution No. 8804, as amended by Resolution No. 9164, which states:
The COMELEC (First Division) took into consideration the allegations of
Section 3. Printing of Ballot Images. - In case the parties deem it necessary, ballot and ballot box tampering and upon inspecting the ballot boxes, it is
they may file a motion to be approved by the Division of the Commission apparent that the integrity of the ballots had been compromised so, to be
requesting for the printing of ballot images in addition to those mentioned in able to best determine the true will of the electorate, we decided to go over
the second paragraph of item (e). Parties concerned shall provide the the digital images of the appealed ballots.
necessary materials in the printing of images such as but not limited to
copying papers, toners and printers. Parties may also secure, upon prior Even the COMELEC En Banc did not indicate in its decision dated
approval by the Division of the Commission, a soft copy of the ballot images September 14, 2012 that the First Division merely resolved Saquilayan’s
contained in a secured/hashed disc on the condition that the ballot images be motion for the printing of the ballot images; instead, it reinforced the First
first printed, at the expense of the requesting party, and that the printed Division’s finding that there was tampering of the ballots. The non-mention of
copies be signed by the parties’ respective revisors or representatives and by Saquilayan’s motion was a clear indication of the COMELEC’s intention to
an ERSD IT-capable representative and deposited with the Commission. act motu proprio; and also revealed its interpretation of its very own rules,
that there must be justifiable reason, i.e. tampering, before the ballot images
The Over-all chairman shall coordinate with the Director IV, Election Records could be resorted to.
and Statistics Department (ERSD), for the printing of images. Said director
shall in turn designate a personnel who will be responsible in the printing of The application of Section 3 would only highlight the First Division’s denial of
ballot images. Maliksi’s right to due process. For, if the First Division was really only acting
on a motion to allow the printing of the ballot images, there was a greater
Justice Carpio posits that when a party files a motion for the printing of the reason for the First Division to have given the parties notice of its ruling
ballots that he or she deems necessary, there is actually no need for a thereon. But, as herein noted, the First Division did not issue such ruling.
finding of tampering of the ballots or the ballot boxes before the COMELEC
Division may grant the motion. He states that a determination by the parties To interpret Section 3 as granting to any one of the parties the right to move
that the printing is necessary under Section 3 is a ground separate from for the printing of the ballot images should such party deem it necessary, and
Section 6(e), which in turn pertinently states that: the COMELEC may grant such motion, is contrary to its clear wording.
Section 3 explicitly states: "in case the parties deem it necessary, they may
Section 6. Conduct of the Recount – file a motion." The provision really envisions a situation in which both parties
have agreed that the ballot images should be printed. Should only one of the with the permission of the SET, had meanwhile conducted proceedings
parties move for the printing of the ballot images, it is not Section 3 that within the SET’s premises. Mendoza then claimed that his right to due
applies but Section 6(e), which then requires a finding that the integrity of the process was violated because he had not been given notice by the
ballots has been compromised. COMELEC that it would be conducting further proceedings within the SET
premises. The Court did not sustain his claim, however, and pointed out:
The disregard of Maliksi’s right to be informed of the decision to print the
picture images of the ballots and to conduct the recount proceedings during After consideration of the respondents’ Comments and the petitioner’s
the appellate stage cannot be brushed aside by the invocation of the fact that petition and Reply, we hold that the contested proceedings at the SET
Maliksi was able to file, after all, a motion for reconsideration. To be exact, ("contested proceedings") are no longer part of the adversarial aspects of the
the motion for reconsideration was actually directed against the entire election contest that would require notice of hearing and the participation of
resolution of the First Division, while Maliksi’s claim of due process violation the parties. As the COMELEC stated in its Comment and without any
is directed only against the First Division’s recount proceedings that resulted contrary or disputing claim in the petitioner’s Reply:
in the prejudicial result rendered against him. Notably, the First Division did
not issue any order directing the recount. Without the written order, Maliksi "However, contrary to the claim of petitioner, public respondent in the
was deprived of the chance to seek any reconsideration or even to assail the appreciation of the contested ballots in EPC No. 2007-44 simultaneously with
irregularly-held recount through a seasonable petition for certiorari in this the SET in SET Case No. 001-07 is not conducting "further proceedings"
Court. In that context, he had no real opportunity to assail the conduct of the requiring notice to the parties. There is no revision or correction of the ballots
recount proceedings. because EPC No. 2007-04 was already submitted for resolution. Public
respondent, in coordinating with the SET, is simply resolving the submitted
The service of the First Division orders requiring Saquilayan to post and protest case before it. The parties necessarily take no part in said
augment the cash deposits for the printing of the picture images did not deliberation, which require utmost secrecy. Needless to state, the actual
sufficiently give Maliksi notice of the First Division’s decision to print the decision-making process is supposed to be conducted only by the
picture images. The said orders did not meet the requirements of due designated members of the Second Division of the public respondent in strict
process because they did not specifically inform Maliksi that the ballots had confidentiality."
been found to be tampered. Nor did the orders offer the factual bases for the
finding of tampering. Hence, to leave for Maliksi to surmise on the factual In other words, what took place at the SET were the internal deliberations of
bases for finding the need to print the picture images still violated the the COMELEC, as a quasi-judicial body, in the course of appreciating the
principles of fair play, because the responsibility and the obligation to lay evidence presented and deciding the provincial election contest on the
down the factual bases and to inform Maliksi as the party to be potentially merits. These deliberations are no different from judicial deliberations which
prejudiced thereby firmly rested on the shoulders of the First Division. are considered confidential and privileged. We find it significant that the
private respondent’s Comment fully supported the COMELEC’s position and
Moreover, due process of law does not only require notice of the decryption, disavowed any participation in the contested proceeding the petitioner
printing, and recount proceedings to the parties, but also demands an complained about. The petitioner, on the other hand, has not shown that the
opportunity to be present at such proceedings or to be represented therein. private respondent was ever present in any proceeding at the SET relating to
Maliksi correctly contends that the orders of the First Division simply required the provincial election contest.1âwphi1
Saquilayan to post and augment his cash deposit. The orders did not state
the time, date, and venue of the decryption and recount proceedings. Clearly, To conclude, the rights to notice and to be heard are not material
the First Division had no intention of giving the parties the opportunity to considerations in the COMELEC’s handling of the Bulacan provincial election
witness its proceedings. contest after the transfer of the ballot boxes to the SET; no proceedings at
the instance of one party or of COMELEC has been conducted at the SET
Mendoza v. Commission on Elections9 instructs that notice to the parties and that would require notice and hearing because of the possibility of prejudice
their participation are required during the adversarial aspects of the to the other party. The COMELEC is under no legal obligation to notify either
proceedings. In that case, after the revision of the ballots and after the party of the steps it is taking in the course of deliberating on the merits of the
election protest case was submitted for decision, the ballots and ballot boxes provincial election contest. In the context of our standard of review for the
were transferred to the Senate Electoral Tribunal (SET) in connection with a petition, we see no grave abuse of discretion amounting to lack or excess of
protest case pending in the SET. Mendoza later learned that the COMELEC, jurisdiction committed by the COMELEC in its deliberation on the Bulacan
election contest and the appreciation of ballots this deliberation Remand to the COMELEC
entailed.10 (Emphasis supplied.) We are mindful of the urgent need to speedily resolve the election protest
because the term of the position involved is about to end. Thus, we overlook
Here, the First Division denominated the proceedings it had conducted as an pro hac vice the lack of factual basis for the COMELEC’s decision to use the
"appreciation of ballots" like in Mendoza. But unlike in Mendoza, the digital images of the ballots and sustain its decision thereon. Although a
proceedings conducted by the First Division were adversarial, in that the remand of the election protest to the RTC would have been the appropriate
proceedings included the decryption and printing of the picture images of the procedure, we direct the COMELEC En Banc instead to conduct the
ballots and the recount of the votes were to be based on the printouts of the decryption and printing of the digital images of the ballots and to hold recount
picture images. The First Division did not simply review the findings of the proceedings, with due notice to all the parties and opportunity for them to be
RTC and the Revision Committee, but actually conducted its own recount present and to participate during such proceedings. Nothing less serves the
proceedings using the printouts of the picture image of the ballots. As such, ideal objective safeguarded by the Constitution.
the First Division was bound to notify the parties to enable them to participate In the absence of particular rules to govern its proceedings in accordance
in the proceedings. with this disposition, the COMELEC is urged to follow and observe Rule 15 of
COMELEC Resolution No. 8804, as amended by COMELEC Resolution No.
Significantly, Section 6(l), Rule 15 of COMELEC Resolution No, 8804, as 9164.
The Court, by this resolution, does not intend to validate the victory of any of
amended by COMELEC Resolution No. 9164, requires the parties’ presence
the parties in the 2010 Elections. That is not the concern of the Court as yet.
during the printing of the images of the ballots, thus:x x x x
The Court simply does not want to countenance a denial of the fundamental
right to due process, a cornerstone of our legal system.11 After all, it is the
(l) In the event the Recount Committee determines that the integrity of the Court’s primary duty to protect the basic rights of the people vis-à-vis
ballots has been violated or has not been preserved, or are wet and government actions, thus:
otherwise in such a condition that it cannot be recounted, the Chairman of
the Committee shall request from the Election Records and Statistics
It cannot be denied that most government actions are inspired with noble
Department (ERSD), the printing of the image of the ballots of the subject
intentions, all geared towards the betterment of the nation and its people. But
precinct stored in the CF card used in the May 10, 2010 elections in the
presence of the parties. Printing of the ballot images shall proceed only upon then again, it is important to remember this ethical principle: "The end does
not justify the means." No matter how noble and worthy of admiration the
prior authentication and certification by a duly authorized personnel of the
purpose of an act, but if the means to be employed in accomplishing it is
Election Records and Statistics Department (ERSD) that the data or the
simply irreconcilable with constitutional parameters, then it cannot still be
images to be printed are genuine and not substitutes.x x x x
allowed. The Court cannot just turn a blind eye and simply let it pass. It will
continue to uphold the Constitution and its enshrined principles. 12
We should not ignore that the parties’ participation during the revision and
recount proceedings would not benefit only the parties, but was as vital and
WHEREFORE, the Court PARTIALLY GRANTS the Extremely Urgent
significant for the COMELEC as well, for only by their participation would the
Motion for Reconsideration of petitioner Emmanuel Maliksi; REVERSES the
COMELEC’s proceedings attain credibility as to the result. The parties’
Court's decision promulgated on March 12, 2013; and DIRECTS the
presence would have ensured that the requisite procedures have been
followed, including the required authentication and certification that the Commission on Elections En Bane to conduct proceedings for the decryption
images to be printed are genuine. In this regard, the COMELEC was less of the picture images of the ballots involved in the protest after due
authentication, and for the recount of ballots by using the printouts of the
than candid, and was even cavalier in its conduct of the decryption and
ballot images, with notice to and in the presence of the parties or their
printing of the picture images of the ballots and the recount proceedings. The
representatives in accordance with the procedure laid down by Rule 15 of
COMELEC was merely content with listing the guidelines that the First
COMELEC Resolution No. 8804, as amended by Resolution No. 9164.
Division had followed in the appreciation of the ballots and the results of the
recount. In short, there was vagueness as to what rule had been followed in
the decryption and printing proceeding. No pronouncement on costs of suit.

II. SO ORDERED.
G.R. No. 203302 : April 11, 2013 ISSUE: Whether the Supreme Court erred in dismissing the instant petition
MAYOR EMMANUEL L. MALIKSI, Petitioner,v. COMMISSION ON despite a clear violation of petitioner's constitutional right to due process of
ELECTIONS AND HOMER T. SAQUILAYAN, Respondents. law considering that decryption, printing and examination of the digital
BERSAMIN, J.: images of the ballots were done inconspicuously upon motu propio directive
of the COMELEC First Division sans any notice to the petitioner and for the
FACTS:During the 2010 Elections, Saquilayan was proclaimed as winner for first time on appeal.
the position of Mayor of Imus, Cavite. Maliksi, the candidate who garnered
the second highest number of votes, brought an election protest in the RTC HELD: The decision of the court a quo is granted.
in Imus, Cavite alleging that there were irregularities in the counting of votes POLITICAL LAW notice to parties
in 209 clustered precincts. Subsequently, the RTC held a revision of the Based on the pronouncement in Alliance of Barangay Concerns (ABC) v.
votes, and, based on the results of the revision, declared Maliksi as the duly Commission on Elections, the power of the COMELEC to adopt procedures
elected Mayor of Imus commanding Saquilayan to cease and desist from that will ensure the speedy resolution of its cases should still be exercised
performing the functions of said office. Saquilayan appealed to the only after giving to all the parties the opportunity to be heard on their
COMELEC. In the meanwhile, the RTC granted Maliksi's motion for opposing claims. The parties right to be heard upon adversarial issues and
execution pending appeal, and Maliksi was then installed as Mayor. matters is never to be waived or sacrificed, or to be treated so lightly
because of the possibility of the substantial prejudice to be thereby caused to
The COMELEC First Division, without giving notice to the parties, decided to the parties, or to any of them. Thus, the COMELEC En Banc should not have
recount the ballots through the use of the printouts of the ballot images from upheld the First Divisions deviation from the regular procedure in the guise of
the CF cards. Thus, it issued an order dated requiring Saquilayan to deposit speedily resolving the election protest, in view of its failure to provide the
the amount necessary to defray the expenses for the decryption and printing parties with notice of its proceedings and an opportunity to be heard, the
of the ballot images. Later, it issued another order for Saquilayan to augment most basic requirements of due process.
his cash deposit.
The picture images of the ballots are electronic documents that are regarded
The First Division nullified the decision of the RTC and declared Saquilayan as the equivalents of the original official ballots themselves.In Vinzons-Chato
as the duly elected Mayor. v. House of Representatives Electoral Tribunal, G.R. No. 199149, January
Maliksi filed a motion for reconsideration, alleging that he had been denied 22, 2013the Court held that "the picture images of the ballots, as scanned
his right to due process because he had not been notified of the decryption and recorded by the PCOS, are likewise official ballots that faithfully capture
proceedings. He argued that the resort to the printouts of the ballot images, in electronic form the votes cast by the voter, as defined by Section 2(3) of
which were secondary evidence, had been unwarranted because there was R.A. No. 9369. As such, the printouts thereof are the functional equivalent of
no proof that the integrity of the paper ballots had not been preserved. the paper ballots filled out by the voters and, thus, may be used for purposes
of revision of votes in an electoral protest."
That the two documents the official ballot and its picture image are
The COMELEC En Banc denied Maliksi's MR. considered "original documents" simply means that both of them are given
Maliksi then came to the Court via petition for certiorari, reiterating his equal probative weight. In short, when either is presented as evidence, one is
objections to the decryption, printing, and examination of the ballot images not considered as weightier than the other.
without prior notice to him, and to the use of the printouts of the ballot images
in the recount proceedings conducted by the First Division.
The Supreme Court via petition for certiorari dismissed the same. The Court But this juridical reality does not authorize the courts, the COMELEC, and the
then pronounced that the First Division did not abuse its discretion in Electoral Tribunals to quickly and unilaterally resort to the printouts of the
deciding to use the ballot images instead of the paper ballots, explaining that picture images of the ballots in the proceedings had before them without
the printouts of the ballot images were not secondary images, but considered notice to the parties. Despite the equal probative weight accorded to the
original documents with the same evidentiary value as the official ballots official ballots and the printouts of their picture images, the rules for the
under the Rule on Electronic Evidence; and that the First Divisions finding revision of ballots adopted for their respective proceedings still consider the
that the ballots and the ballot boxes had been tampered had been fully official ballots to be the primary or best evidence of the voters will. In that
established by the large number of cases of double-shading discovered regard, the picture images of the ballots are to be used only when it is first
during the revision. shown that the official ballots are lost or their integrity has been
compromised.
ARCHBISHOP FERNANDO R. Petitioners,
CAPALLA, OMAR SOLITARIO ALI and
MARY ANNE L. SUSANO, G.R. No. 201112
Petitioners,
- versus -
- versus - G.R. No. 201413
THE HONORABLE COMMISSION ON
ELECTIONS, Present:
Respondent.
x--------------------------------------------x CARPIO, J.,
VELASCO, JR.,
SOLIDARITY FOR SOVEREIGNTY (S4S), LEONARDO-DE CASTRO,
represented by Ma. Linda Olaguer; COMMISSION ON ELECTIONS and BRION,
RAMON PEDROSA, BENJAMIN SMARTMATIC-TIM Corporation, PERALTA,
PAULINO SR., EVELYN CORONEL, MA. G.R. No. 201121 Respndents. BERSAMIN,
LINDA OLAGUER MONTAYRE, and DEL CASTILLO,
NELSON T. MONTAYRE, ABAD,
Petitioners, VILLARAMA, JR.,
PEREZ,
- versus - MENDOZA,
SERENO,
COMMISSION ON ELECTIONS, REYES, and
represented by its Chairman, PERLAS-BERNABE, JJ.
Commissioner SIXTO S. BRILLANTES,
JR., Promulgated:
Respondent.
x--------------------------------------------x June 13, 2012

TEOFISTO T. GUINGONA, BISHOP

BRODERICK S. PABILLO, SOLITA
COLLAS MONSOD, MARIA CORAZON
MENDOZA ACOL, FR. JOSE DIZON, x----------------------------------------------------------------------------------------x
NELSON JAVA CELIS, PABLO R. G.R. No. 201127
MANALASTAS, GEORGINA R.
ENCANTO and ANNA LEAH E. COLINA,
Petitioners,
- versus -

COMMISSION ON ELECTIONS and DECISION

SMARTMATIC TIM CORPORATION,
Respondents.
x--------------------------------------------x
TANGGULANG DEMOKRASYA (TAN
DEM), INC., EVELYN L. KILAYKO,
TERESITA D. BALTAZAR, PILAR L.
CALDERON and ELITA T. MONTILLA,
PERALTA, J.: with the AES contract between the Comelec and Smartmatic-TIM in
connection with the May 10, 2010 elections subject to the following
Pursuant to its authority to use an Automated Election System (AES) under conditions: (1) the warranties agreed upon in the AES contract shall be in full
Republic Act (RA) No. 8436, as amended by RA No. 9369, or the Automation force and effect; (2) the original price for the hardware and software covered
Law and in accordance with RA No. 9184, otherwise known as by the OTP as specified in the AES contract shall be maintained, excluding
the Government Procurement Reform Act, the Commission on Elections the cost of the 920 units of PCOS and related peripherals previously
(Comelec) posted and published an invitation to apply for eligibility and to bid purchased for use in the 2010 special elections; and (3) all other services
for the 2010 Poll Automation Project[1] (the Project). On March 18, 2009, the related to the 2013 AES shall be subject to public bidding. On March 29,
Comelec approved and issued a Request for Proposal[2] (RFP) for the Project 2012, the Comelec issued Resolution No. 9377[10] resolving to accept
consisting of the following components: Smartmatic-TIMs offer to extend the period to exercise the OTP until March
31, 2012 and to authorize Chairman Brillantes to sign for and on behalf of the
Component 1: Paper-Based Automation Election System (AES) Comelec the Agreement on the Extension of the OTP Under the AES
Contract[11](Extension Agreement, for brevity). The aforesaid Extension
1-A. Election Management System (EMS) Agreement was signed on March 30, 2012.[12] On even date, the Comelec
1-B. Precinct Count Optical Scan (PCOS) System issued Resolution No. 9378[13]resolving to approve the Deed of Sale between
1-C. Consolidation/Canvassing System (CCS) the Comelec and Smartmatic-TIM to purchase the latters PCOS machines
(hardware and software) to be used in the upcoming May 2013 elections and
Component 2: Provision for Electronic Transmission of Election Results to authorize Chairman Brillantes to sign the Deed of Sale for and on behalf of
using Public Telecommunications Network the Comelec. The Deed of Sale[14] was forthwith executed.

Component 3: Overall Project Management[3] Claiming that the foregoing issuances of the Comelec, as well as the
transactions entered pursuant thereto, are illegal and unconstitutional,
On June 9, 2009, the Comelec issued Resolution No. 8608 awarding the petitioners come before the Court in four separate Petitions for Certiorari,
contract for the Project to respondent Smartmatic-TIM.[4] On July 10, 2009, Prohibition, and Mandamus imputing grave abuse of discretion amounting to
the Comelec and Smartmatic-TIM entered into a Contract for the Provision of lack or excess of jurisdiction on the part of the Comelec in issuing the
an Automated Election System for the May 10, 2010 Synchronized National assailed Resolutions and in executing the assailed Extension Agreement and
and Local Elections,[5] (AES Contract, for brevity). The contract between the Deed.
Comelec and Smartmatic-TIM was one of lease of the AES with option to
purchase (OTP) the goods listed in the contract.In said contract, the Comelec G.R. No. 201112
was given until December 31, 2010 within which to exercise the option.
In G.R. No. 201112, petitioners Archbishop Fernando R. Capalla, Omar
On September 23, 2010, the Comelec partially exercised its OTP 920 units of Solitario Ali and Mary Anne L. Susano pray that a Temporary Restraining
PCOS machines with corresponding canvassing/consolidation system (CCS) Order (TRO) be issued enjoining the Comelec from purchasing the PCOS
for the special elections in certain areas in the provinces of Basilan, Lanao machines until after final judgment of the instant case; a writ of prohibition be
del Sur and Bulacan.[6] In a letter[7] dated December 18, 2010, Smartmatic- issued against the Comelec for the purchase of these defective PCOS
TIM, through its Chairman Cesar Flores (Flores), proposed a temporary machines; a writ of mandamus be issued compelling the Comelec to conduct
extension of the option period on the remaining 81,280 PCOS machines until the necessary bidding for the equipment and facilities which shall be used for
March 31, 2011, waiving the storage costs and covering the maintenance the 2013 National and Local Elections; and to declare Comelec Resolution
costs. The Comelec did not exercise the option within the extended period. Nos. 9376, 9377, and 9378, on the purchase of PCOS machines, null and
Several extensions were given for the Comelec to exercise the OTP until its void.
final extension on March 31, 2012.
Petitioners argue that if there is a necessity to purchase the PCOS
On March 6, 2012, the Comelec issued Resolution No. 9373[8] resolving to machines, the Comelec should follow RA 9184 requiring competitive public
seriously consider exercising the OTP subject to certain conditions. On bidding. They likewise argue that the OTP clause embodied in the contract
March 21, 2012, the Comelec issued Resolution No. 9376[9] resolving to with Smartmatic-TIM should be rendered invalid not only because the OTP
exercise the OTP the PCOS and CCS hardware and software in accordance has already lapsed but because of the fact that the OTP clause is a
circumvention of the explicit provisions of RA 9184. Petitioners add that the They went on by saying that the subject PCOS machines lack security
current PCOS machines do not meet the rigorous requirements of RA 9369 features which can guaranty the secrecy and sanctity of our votes in direct
that the system procured must have demonstrated capability and should contravention of RA 9369 which requires that the automated election system
have been successfully used in a prior electoral exercise here or abroad. must at least possess an adequate security feature against unauthorized
Petitioners submit that there are intrinsic technical infirmities as regards the access. In deciding to purchase the PCOS machines despite the above-
PCOS machines used during the 2010 elections which rendered it incapable enumerated defects, the Comelecs decision are claimed to be
for future use. Lastly, petitioners claim that the Comelec does not have the unconstitutional.[20]
capability to purchase and maintain the PCOS machines, because of lack of
trained manpower and technical expertise to properly maintain the PCOS G.R. No. 201127
machines; thus, the purchase is unfavorable to the general public.
In G.R. No. 201127, petitioners Teofisto Guingona, Bishop Broderick S.
G.R. No. 201121 Pabillo, Solita Collas Monsod, Maria Corazon Mendoza Acol, Fr. Jose Dizon,
Nelson Java Celis, Pablo R. Manalastas, Georgina R. Encanto and Anna
In G.R. No. 201121, petitioners Solidarity for Sovereignty (S4S), represented Leah E. Colina pray that the Court issue a TRO enjoining and restraining
by Ma. Linda Olaguer, Ramon Pedrosa, Benjamin Paulino, Sr., Evelyn respondents Comelec and Smartmatic-TIM from implementing Comelec
Coronel, Ma. Linda Olaguer Montayre and Nelson T. Montayre, pray that a Resolution No. 9376 and the Deed of Sale for the acquisition and purchase
TRO be issued directing the Comelec to desist from implementing the of the PCOS machines and related equipment; issue writ of preliminary
contract; that Resolution No. 9376 be declared unconstitutional and all acts injunction; declare Comelec Resolution No. 9376 void and unconstitutional
made pursuant thereto, including the purchase of the PCOS machines and annul the Deed of Sale; and direct the Comelec to conduct public
unlawful and void; that an Injunction be issued prohibiting the Comelec from bidding soonest for the automated election system to be used for the 2013
further pursuing any act pursuant to Resolution No. 9376.[15] elections.[21]

Petitioners argue that the Comelecs act of exercising its OTP the PCOS Petitioners fault the Comelec in totally disregarding the recommendation of
machines from Smartmatic-TIM after the period had already lapsed is illegal the Comelec Advisory Council (CAC) not to exercise the OTP. They point out
and unlawful.[16] They explain that the period within which the Comelec may that in its Resolution No. 2012-2003, the CAC resolved to recommend that
exercise the OTP could last only until December 31, 2010 without extension the Comelec should exert all efforts to procure the necessary AES only
as provided in the Comelecs bid bulletin.[17] They further assert that the through public bidding. The CAC likewise allegedly recommended that the
Comelecs acceptance of Smartmatic-TIMs unilateral extension of the option OTP should not be exercised if as a consequence, the rest of the system
period constitutes substantial amendment to the AES contract giving undue must come from the same vendor as the Comelec would lose the opportunity
benefit to the winning bidder not available to the other bidders. [18] Petitioners to look for better technology; would prevent the Comelec from taking
also contend that the Comelecs decision to purchase and use the PCOS advantage of the best possible technology available; would prevent other
machines is unconstitutional, as it allows the Comelec to abrogate its prospective vendors from competitively participating in the bidding process;
constitutional duty to safeguard the election process by subcontracting the and may erode the public trust and confidence in the electoral process. In its
same to an independent provider (Smartmatic-TIM), who controls the report to the Congressional Oversight Committee after the 2010 elections,
software that safeguards the entire election process. The purchase of the the CAC supposedly concluded that the Comelec does not need to use the
PCOS machines for use in the May 2013 elections would be tantamount to a same PCOS machines and that the Comelec would be better off not
complete surrender and abdication of the Comelecs constitutional mandate exercising the OTP the PCOS machines so it can look for an even better
in favor of Smartmatic-TIM. The control of the software and process solution for the May 2013 elections.[22] Like the other petitioners, it is their
verification systems places the Comelec at the end of the process as it position that Comelec Resolution No. 9376 is totally null and void having
merely receives the report of Smartmatic-TIM. This, according to petitioners, been issued in violation of the express provisions of RA 9184 and the AES
amounts to a direct transgression of the exclusive mandate of the Comelec contract. According to petitioners, the Comelec itself provided in its bid
completely to take charge of the enforcement and administration of the bulletins for a fixed and determinate period, and such period ended on
conduct of elections. [19] Lastly, petitioners aver that the Comelecs act of December 31, 2010. Thus, Smartmatic-TIM could not have unilaterally
deliberately ignoring the palpable infirmities and defects of the PCOS extended the option period and the Comelec could not have also given its
machines, as duly confirmed by forensic experts, is in violation of Section 2, consent to the extension. In extending the option period, it is tantamount to
Article V of the Constitution, as it fails to safeguard the integrity of the votes. giving the winning bidder a benefit that was not known and available to all
bidders during the bidding of the 2010 AES, which is a clear violation of the II. Whether or not the acceptance of the extension and the issuance
bidding rules and the equal protection clause of the of Comelec En Banc Resolution No. 9376 violate Republic Act No. 9184 or
Constitution.[23] Considering that the option period already expired, the the Government Procurement Reform Act and its Implementing Rules, and
purchase of the PCOS machines requires competitive public bidding. Lastly, Republic Act No. 9369 or the Automated Election Systems Act.
petitioners claim that the Comelec committed grave abuse of discretion in
opting to buy the PCOS machines and allied paraphernalia of Smartmatic-
TIM for the 2013 elections, despite incontrovertible findings of the glitches, The parties were, thereafter, required to submit their Memoranda.
malfunctions, bugs, and defects of the same.[24] The petitions are without merit.
Simply stated, petitioners assail the validity and constitutionality of the
G.R. No. 201418 Comelec Resolutions for the purchase of the subject PCOS machines as well
as the Extension Agreement and the Deed of Sale covering said goods
In G.R. No. 201418, petitioners Tanggulang Demokrasya (Tan Dem), Inc., mainly on three grounds: (1) the option period provided for in the AES
Evelyn L. Kilayko, Teresita D. Baltazar, Pilar L. Calderon and Elita T. Montilla contract between the Comelec and Smartmatic-TIM had already lapsed and,
pray that the Court annul Resolution No. 9376 and the March 30, 2012 Deed thus, could no longer be extended, such extension being prohibited by the
of Sale, and prohibit the Comelec and Smartmatic-TIM from implementing contract; (2) the extension of the option period and the exercise of the option
the same; and declare said Resolution and Deed of Sale invalid for having without competitive public bidding contravene the provisions of RA 9184;
been issued and executed by the Comelec with grave abuse of discretion and, (3) despite the palpable infirmities and defects of the PCOS machines,
and for violating the provisions of R.A. 9184.[25] the Comelec purchased the same in contravention of the standards laid
down in RA 9369.
Petitioners claim that the Comelec committed grave abuse of discretion
amounting to lack or excess of jurisdiction in contracting for the purchase of For its part, the Comelec defends the validity and constitutionality of its
AES goods and services from Smartmatic-TIM in spite of the below par decision to purchase the subject PCOS machines, pursuant to the OTP
performance of the latters PCOS machines, CCS and other software and under the AES contract with Smartmatic-TIM, on the following grounds: (1)
hardware in the May 2010 elections and non-compliance with the minimum Article 6.6 of the AES contract which states the option period was amended
functional capabilities required by law.[26] They echo the other petitioners by the extension agreement; (2) the exercise of the OTP is not covered by
contention that the Comelecs decision to buy the CCS, PCOS machines, RA 9184, because it is merely an implementation of a previously bidded
software and hardware of Smartmatic violates RA 9184s requirement of a contract; (3) taking into account the funds available for the purpose,
prior competitive public bidding. Since the Comelec is bent on pursuing the exercising the OTP was the prudent choice for the Comelec and is more
purchase of the subject goods, which is an entirely new procurement, advantageous to the government; and (4) the exercise of the OTP is
petitioners contend that there must be a public bidding. They argue that there consistent with the technical requirements of RA 9369.
is enough time to conduct public bidding for the 2013 elections, considering
that for the May 2010 elections, the Comelec only had 10 months and they Stated in another way, Smartmatic-TIM insists on the validity of the subject
were able to conduct the public bidding. Petitioners are of the view that there transaction based on the following grounds: (1) there is no prohibition either
is no more OTP to speak of, because the option period already lapsed and in the contract or provision of law for it to extend the option period; rather, the
could not be revived by the unilateral act of one of the contracting parties.[27] contract itself allows the parties to amend the same; (2) the OTP is not an
independent contract in itself, but is a provision contained in the valid and
On April 24, 2012, the Court issued a TRO enjoining the implementation of existing AES contract that had already satisfied the public bidding
the assailed contract of sale. The consolidated cases were later set for Oral requirements of RA 9184; (3) exercising the option was the most
Arguments on the following issues: advantageous option of the Comelec; and (4) Smartmatic-TIM has an
established track record in providing effective and accurate electoral
I. Whether or not the Commission on Elections may validly accept solutions and its satisfactory performance has been proven during the 2010
the extension of time unilaterally given by Smartmatic-TIM Corporation within elections. The alleged glitches in the May 2010 elections, if at all, are not
which to exercise the option to purchase under Article 4 of the Contract for attributable to the PCOS machines.
the Provision of an Automated Election System for the May 2010
Synchronized National and Local Elections; and We agree with respondents.
At the outset, we brush aside the procedural barriers (i.e., locus standi of
petitioners and the non-observance of the hierarchy of courts) that In case COMELEC should exercise its option to purchase, a warranty shall
supposedly prevent the Court from entertaining the consolidated petitions. As be required in order to assure that: (a) manufacturing defects shall be
we held in Guingona, Jr. v. Commission on Elections:[28] corrected; and/or (b) replacements shall be made by the PROVIDER, for a
minimum period of three (3) months, in the case of supplies, and one (1)
There can be no doubt that the coming 10 May 2010 [in this case, May 2013] year, in the case of equipment, after performance of this Contract. The
elections is a matter of great public concern. On election day, the country's obligation for the warranty shall be covered by retention money of ten
registered voters will come out to exercise the sacred right of suffrage. Not percent (10%) of every option to purchase payment made.
only is it an exercise that ensures the preservation of our democracy, the
coming elections also embodies our people's last ounce of hope for a better The retention money will be returned within five (5) working days after the
future. It is the final opportunity, patiently awaited by our people, for the expiration of the above warranty, provided, however, that the goods supplied
peaceful transition of power to the next chosen leaders of our country. If are in good operating condition free from patent and latent defects, all the
there is anything capable of directly affecting the lives of ordinary Filipinos so conditions imposed under the purchase contract have been fully met, and
as to come within the ambit of a public concern, it is the coming elections, any defective machines, except to those attributable to the COMELEC, have
more so with the alarming turn of events that continue to unfold. The wanton been either repaired at no additional charge or replaced or deducted from the
wastage of public funds brought about by one bungled contract after another, price under the Option to Purchase.[32]
in staggering amounts, is in itself a matter of grave public concern.[29]
Article 6.6 thereof, in turn provides for the period within which the Comelec
Thus, in view of the compelling significance and transcending public could exercise the option, thus:
importance of the issues raised by petitioners, the technicalities raised by
respondents should not be allowed to stand in the way, if the ends of justice Article 6
would not be subserved by a rigid adherence to the rules of procedure.[30] COMELECs Responsibilities

Now on the substantive issues. In order to achieve the modernization xxxx

program of the Philippine Electoral System, which includes the automation of
the counting, transmission and canvassing of votes for the May 2010 national 6.6. COMELEC shall notify the PROVIDER on or before 31 December 2010
and local elections with systems integration and over-all project management of its option to purchase the Goods as listed in Annex L.[33]
in a comprehensive and well-managed manner,[31] the Comelec entered into
an AES contract with Smartmatic-TIM for the lease of goods and purchase of The Comelec did not exercise the option within the period stated in the above
services under the contract, with option to purchase the goods. provision. Smartmatic, however, unilaterally extended the same until its final
extension on March 31, 2012. The Comelec, thereafter, accepted the option
The option contract between the Comelec and Smartmatic-TIM is embodied and eventually executed a Deed of Sale involving said goods. Now,
in Article 4.3 of the AES contract to wit: petitioners come before the Court assailing the validity of the extension, the
exercise of the option and the Deed of Sale. In light of the AES contract, can
Article 4 Smartmatic-TIM unilaterally extend the option period? Can the Comelec
Contract Fee and Payment accept the extension?

xxxx We answer in the affirmative.

It is a basic rule in the interpretation of contracts that an instrument must be
4.3. OPTION TO PURCHASE construed so as to give effect to all the provisions of the contract. [34] In
essence, the contract must be read and taken as a whole.[35] While the
In the event the COMELEC exercises its option to purchase the Goods as contract indeed specifically required the Comelec to notify Smartmatic-TIM of
listed in Annex L, COMELEC shall pay the PROVIDER an additional amount its OTP the subject goods until December 31, 2010, a reading of the other
of Two Billion One Hundred Thirty Million Six Hundred Thirty- Five Thousand provisions of the AES contract would show that the parties are given the right
Forty-Eight Pesos and Fifteen Centavos (Php2,130,635,048.15) as contained to amend the contract which may include the period within which to exercise
in the Financial Proposal of the joint venture partners Smartmatic and TIM.
the option. There is, likewise, no prohibition on the extension of the period, agreement of the parties provided said amendment is in writing and signed
provided that the contract is still effective. by the parties. In light of the provisions of the AES contract, there is,
therefore, nothing wrong with the execution of the Extension Agreement.
Article 2 of the AES contract lays down the effectivity of the contract, viz.:
Article 2 Considering, however, that the AES contract is not an ordinary contract as it
EFFECTIVITY involves procurement by a government agency, the rights and obligations of
the parties are governed not only by the Civil Code but also by RA 9184. In
2.1. This Contract shall take effect upon the fulfillment of all of the following this jurisdiction, public bidding is the established procedure in the grant of
conditions: government contracts. The award of public contracts, through public bidding,
is a matter of public policy.[40] The parties are, therefore, not at full liberty to
(a) Submission by the PROVIDER of the Performance Security; amend or modify the provisions of the contract bidded upon.
(b) Signing of this Contract in seven (7) copies by the parties; and
(c) Receipt by the PROVIDER of the Notice to Proceed. The three principles of public bidding are: (1) the offer to the public; (2) an
opportunity for competition; and (3) a basis for the exact comparison of
2.2. The Term of this Contract begins from the date of effectivity until bids.[41] By its very nature, public bidding aims to protect public interest by
the release of the Performance Security, without prejudice to the giving the public the best possible advantages through open
surviving provisions of this Contract, including the warranty provision competition.[42] Competition requires not only bidding upon a common
as prescribed in Article 8.3 and the period of the option to standard, a common basis, upon the same thing, the same subject matter,
purchase (Emphasis supplied).[36] and the same undertaking, but also that it be legitimate, fair and honest and
not designed to injure or defraud the government.[43] The essence of
Obviously, the contract took effect even prior to the 2010 elections. The only competition in public bidding is that the bidders are placed on equal footing
question now is whether its existence already ceased. Pursuant to the which means that all qualified bidders have an equal chance of winning the
above-quoted provision, it is important to determine whether or not the auction through their bids.[44] Another self-evident purpose of public bidding is
performance security had already been released to Smartmatic-TIM. In to avoid or preclude suspicion of favoritism and anomalies in the execution of
Article 8 of the AES contract, performance security was defined and the rules public contracts.[45]
in releasing said security were laid down, to wit:
Article 8 A winning bidder is not precluded from modifying or amending certain
Performance Security and Warranty provisions of the contract bidded upon. However, such changes must not
constitute substantial or material amendments that would alter the basic
8.1. Within three (3) days from receipt by the PROVIDER of the formal Notice parameters of the contract and would constitute a denial to the other bidders
of Award from COMELEC, the PROVIDER shall furnish COMELEC with a of the opportunity to bid on the same terms.[46]The determination of whether
Performance Security in an amount equivalent to five percent (5%) of the or not a modification or amendment of a contract bidded out constitutes a
Contract Amount; which Performance Security as of this date has been duly substantial amendment rests on whether the contract, when taken as a
received by COMELEC. whole, would contain substantially different terms and conditions that would
have the effect of altering the technical and/or financial proposals previously
Within seven (7) days from delivery by the PROVIDER to COMELEC of the submitted by the other bidders. The modifications in the contract executed
Over-all Project Management Report after successful conduct of the May 10, between the government and the winning bidder must be such as to render
2010 elections, COMELEC shall release to the PROVIDER the above- the executed contract to be an entirely different contract from the one bidded
mentioned Performance Security without need of demand.[37] upon.[47]

Smartmatic-TIM categorically stated in its Consolidated Comment to the Public bidding aims to secure for the government the lowest possible price
petitions that the Comelec still retains P50M of the amount due Smartmatic- under the most favorable terms and conditions, to curtail favoritism in the
TIM as performance security.[38] In short, the performance security had not award of government contracts and avoid suspicion of anomalies, and it
yet been released to Smartmatic-TIM which indicates that the AES contract places all bidders in equal footing. Any government action which permits any
is still effective and not yet terminated. Consequently, pursuant to Article substantial variance between the conditions under which the bids are invited
19[39] of the contract, the provisions thereof may still be amended by mutual and the contract executed after the award thereof is a grave abuse of
discretion amounting to lack or excess of jurisdiction which warrants proper proposals should include an OTP the subject goods. Although the AES
judicial action.[48] If this flawed process would be allowed, public bidding will contract was amended after the award of the contract to Smartmatic-TIM, the
cease to be competitive, and worse, government would not be favored with amendment only pertains to the period within which the Comelec could
the best bid. Bidders will no longer bid on the basis of the prescribed terms exercise the option because of its failure to exercise the same prior to the
and conditions in the bid documents but will formulate their bid in anticipation deadline originally agreed upon by the parties. Unlike in PSALM, wherein the
of the execution of a future contract containing new and better terms and winning bidder was given the right of first refusal which substantially
conditions that were not previously available at the time of the bidding. Such amended the terms of the contract bidded upon, thereby depriving the other
a public bidding will not inure to the public good.[49] bidders of the terms and opportunities granted to winning bidder after it won
the public auction; and in Agan, Jr., wherein the Concession Agreement
In Power Sector Assets and Liabilities Management Corporation (PSALM) v. entered into by the government with PIATCO contained provisions that
Pozzolanic Philippines Incorporated,[50] the Court nullified the right of first substantially departed from the draft Concession Agreement included in the
refusal granted to respondent therein in the Batangas Contract for being bid documents; the option contract in this case was already a part of the
contrary to public policy. The Court explained that the same violated the original contract and not given only after Smartmatic-TIM emerged as winner.
requirement of competitive public bidding in the government contract, The OTP was actually a requirement by the Comelec when the contract of
because the grant of the right of first refusal did not only substantially amend lease was bidded upon. To be sure, the Extension Agreement does not
the terms of the contract bidded upon so that resultantly the other bidders contain a provision favorable to Smartmatic-TIM not previously made
thereto were deprived of the terms and opportunities granted to respondent available to the other bidders.
therein after it won the public auction, but also altered the bid terms by Two. The amendment of the AES contract is not substantial. The approved
effectively barring any and all true bidding in the future.[51] budget for the contract was P11,223,618,400.00[56] charged against the
supplemental appropriations for election modernization. Bids were, therefore,
Also in Agan, Jr. v. Philippine International Air Terminals Co., Inc., accepted provided that they did not exceed said amount. After the
(PIATCO),[52] this Court declared as null and void, for being contrary to public competitive public bidding, Smartmatic-TIM emerged as winner and the AES
policy, the Concession Agreement entered into by the government with contract was thereafter executed. As repeatedly stated above, the AES
PIATCO, because it contained provisions that substantially departed from the contract is a contract of lease with OTP giving the Comelec the right to
Draft Concession Agreement included in the bid documents. The Court purchase the goods agreed upon if it decides to do so. The AES contract not
considered the subject contracts a mockery of the bidding process, because only indicated the contract price for the lease of goods and purchase of
they were substantially amended after their award to the successful bidder services which is P7,191,484,739.48, but also stated the additional amount
on terms more beneficial to PIATCO and prejudicial to public interest.[53] that the Comelec has to pay if it decides to exercise the option which
is P2,130,635,048.15. Except for the period within which the Comelec could
The same conclusions cannot be applied in the present case. exercise the OTP, the terms and conditions for such exercise are maintained
and respected. Admittedly, the additional amount the Comelec needed to pay
One. Smartmatic-TIM was not granted additional right that was not previously was maintained (less the amount already paid when it purchased 920 units of
available to the other bidders. Admittedly, the AES contract was awarded to PCOS machines with corresponding CCS for the special elections in certain
Smartmatic-TIM after compliance with all the requirements of a competitive areas in the provinces of Basilan, Lanao del Sur and Bulacan) subject to the
public bidding. The RFP, Bid Bulletins and the AES contract identified the warranties originally agreed upon in the AES contract. The contract amount
contract as one of lease with option to purchase. The AES contract is not only included that for the contract of lease but also for the OTP. Hence,
primarily a contract of lease of goods[54] listed in the contract and purchase of the competitive public bidding conducted for the AES contract was sufficient.
services[55] also stated in the contract. Section 4.3 thereof gives the Comelec A new public bidding would be a superfluity.
the OTP the goods agreed upon. The same provision states the conditions in
exercising the option, including the additional amount that the Comelec is The Solicitor General himself clarified during the oral arguments that the
required to pay should it exercise such right. It is, therefore, undisputed that purchase price of the remaining PCOS machines stated in the assailed Deed
this grant of option is recognized by both parties and is already a part of the of Sale was the price stated in Article 4.3 of the AES contract. Therefore, the
principal contract of lease. Having been included in the RFP and the bid said amount was already part of the original amount bidded upon in 2009 for
bulletins, this right given to the Comelec to exercise the option was known to the AES contract which negates the need for another competitive bidding. [57]
all the bidders and was considered in preparing their bids. The bidders were Third. More importantly, the amendment of the AES contract is more
apprised that aside from the lease of goods and purchase of services, their advantageous to the Comelec and the public.
 not it wants to purchase the subject goods. It is, therefore, uncertain whether
The nature of an option contract was thoroughly explained in Eulogio v. or not the principal contract would be entered into. The owner of the property
Apeles,[58] to wit: would then have to wait for the optionee to make a decision. A longer option
period would mean that more time would be given to the optionee to consider
An option is a contract by which the owner of the property agrees with circumstances affecting its decision whether to purchase the goods or
another person that the latter shall have the right to buy the former's property not. On the part of Smartmatic-TIM, it would have to wait for a longer period
at a fixed price within a certain time. It is a condition offered or contract by to determine whether the subject goods will be sold to the Comelec or not,
which the owner stipulates with another that the latter shall have the right to instead of freely selling or leasing them to other persons or governments
buy the property at a fixed price within a certain time, or under, or in possibly at a higher price. This is especially true in this case as the terms and
compliance with certain terms and conditions; or which gives to the owner of conditions for the exercise of the option including the purchase price, had
the property the right to sell or demand a sale. An option is not of itself a been included in the AES contract previously bidded upon. The parties are
purchase, but merely secures the privilege to buy. It is not a sale of property bound to observe the limitations embodied therein, otherwise, a new public
but a sale of the right to purchase. It is simply a contract by which the owner bidding would be needed.
of the property agrees with another person that he shall have the right to buy
his property at a fixed price within a certain time. He does not sell his land; We agree with respondents that the exercise of the option is more
he does not then agree to sell it; but he does sell something, i.e., the right or advantageous to the Comelec, because the P7,191,484,739.48 rentals paid
privilege to buy at the election or option of the other party. Its distinguishing for the lease of goods and purchase of services under the AES contract was
characteristic is that it imposes no binding obligation on the person holding considered part of the purchase price. For the Comelec to own the subject
the option, aside from the consideration for the offer.[59] goods, it was required to pay only P2,130,635,048.15. If the Comelec did not
exercise the option, the rentals already paid would just be one of the
Also in Carceller v. Court of Appeals,[60] the Court described an option in this government expenses for the past election and would be of no use to future
wise: elections. Assuming that the exercise of the option is nullified, the Comelec
would again conduct another public bidding for the AES for the 2013
An option is a preparatory contract in which one party grants to the other, for elections with its available budget of P7 billion. Considering that the said
a fixed period and under specified conditions, the power to decide, whether amount is the available fund for the whole election process, the amount for
or not to enter into a principal contract. It binds the party who has given the the purchase or lease of new AES will definitely be less than P7
option, not to enter into the principal contract with any other person during billion. Moreover, it is possible that Smartmatic-TIM would again participate
the period designated and, within that period, to enter into such contract with in the public bidding and could win at a possibly higher price. The Comelec
the one to whom the option was granted, if the latter should decide to use the might end up acquiring the same PCOS machines but now at a higher price.
option. It is a separate agreement distinct from the contract which the parties
may enter into upon the consummation of the option.[61] The advantage to the government of the exercise of the OTP was even
In Adelfa Properties, Inc. v. CA,[62] the Court described an option as: recognized by petitioners, shown during the oral arguments:

An option, as used in the law on sales, is a continuing offer or contract by ASSOCIATE JUSTICE PERALTA:
which the owner stipulates with another that the latter shall have the right to May I just ask you, do you know the total value of the subject matter of this
buy the property at a fixed price within a certain time, or under, or in contract?
compliance with, certain terms and conditions, or which gives to the owner of
the property the right to sell or demand a sale. It is sometimes called an
unaccepted offer. x x x[63] DEAN ESPEJO:
Php1.8 billion pesos, Your Honor.
From the foregoing jurisprudential pronouncements, an option is only a
preparatory contract and a continuing offer to enter into a principal contract.
Under the set-up, the owner of the property, which is Smartmatic-TIM, gives ASSOCIATE JUSTICE PERALTA:
the optionee, which is the Comelec, the right to accept the formers offer to Youre referring to the Deed of Sale.
purchase the goods listed in the contract for a specified amount, and within a
specified period. Thus, the Comelec is given the right to decide whether or DEAN ESPEJO:
Yes, Your Honor.
DEAN ESPEJO:
ASSOCIATE JUSTICE PERALTA: Around that much, Your Honor.
The whole, the whole equipment, subject matter of the contract.
ASSOCIATE JUSTICE PERALTA:
DEAN ESPEJO: You add this at two [billion] one hundred thirty million and so to seven billion
I think roughly, the original contract something like 10 billion I am not sure, one ninety-one the subject matter of your original contract; you come up with
Your Honor. something like over 9 billion pesos.
DEAN ESPEJO:
ASSOCIATE JUSTICE PERALTA: Close to Ten, Your Honor.
10 billion pesos.
ASSOCIATE JUSTICE PERALTA:
DEAN ESPEJO: Close to Ten.
Yes, Your Honor.
DEAN ESPEJO:
ASSOCIATE JUSTICE PERALTA: Yes, Your Honor.
Okay. Now, in the original contract of July 10, 2009, the contract was not
actually a purchase contract but merely a lease contract. ASSOCIATE JUSTICE PERALTA:
So thats practically less than the total value of the equipment, because
DEAN ESPEJO: according to you the total value would come up to 10 billion pesos, you add
Yes, Your Honor. up the Lease Contract of 7 billion and two billion, plus under this Deed of
Sale which is the subject matter of this petition, you will come up with a little
ASSOCIATE JUSTICE PERALTA: more than 9 billion pesos even less than the 10 billion pesos. Do you think
And the lease contract is 7.1 billion. that is disadvantageous to the government?

DEAN ESPEJO: DEAN ESPEJO:

It says 7.1 billion. May I be allowed to explain?

ASSOCIATE JUSTICE PERALTA: ASSOCIATE JUSTICE PERALTA:

Okay. But it is here [denominated] as a lease contract. Go ahead, you go ahead, you have all the time.
DEAN ESPEJO:
Yes, Your Honor. DEAN ESPEJO:
It may appear advantageous, Your Honor please, but on the other hand,
ASSOCIATE JUSTICE PERALTA: there are certain disadvantages there. For one thing, these are not brand
So the value was 10 billion pesos then you just pay the difference between new machines; these are refurbished existing machines which could be
ten (10) and seven (7) you get 3 billion pesos to purchase all of these suffering from hardware or software problem. For the COMELEC to accept
equipment. this, Your Honor please, each machine will have to be checked as to its
hardware and software. Eighty-two thousand (82,000) PCOS machines, Your
DEAN ESPEJO: Honor please, what if half of them, [turn out] to be white elephants or
Yes, Your Honor. malfunctioning, Your Honor please, then we will be acquiring eighty-two
thousand (82,000) with fifty percent (50%) malfunctioning machines. There is
ASSOCIATE JUSTICE PERALTA: a danger, Your Honor please, that does not appear to the naked eye. In any
Okay. Now, you look at your Deed of Sale, this is annexed to your petition, event, with respect to the financial figures there appears to be some
the value of the Deed of Sale is something like two billion one hundred thirty advantages, Your Honor, please.
million (Php2,130,000,000).
ASSOCIATE JUSTICE PERALTA:
x x x these are merely speculative. Yourre only speculating that there are
dangers, the dangers might not come, in fact, it might even be void or ASSOCIATE JUSTICE PERALTA:
favorable. Okay, now my other question is, do you think that if this was You will have first to go to Congress, then you go to Senate, and then you go
bidden out under R.A. 9184 for the purchase of all these equipment, do you to the President discounting the possibility of filing a petition to question the
think that a bidder will come up with a bid of less than 2 billion pesos for the allocation of additional amount for the 2013 elections, by the time that all of
whole equipment? When according to you, the equipment in 2009 is 10 these exercises are finished then election is there already.
billion, and elections are very near already 2013, the filing of certificates of
candidacy will be on the second to the last month of this year? DEAN ESPEJO:
DEAN ESPEJO: Well, Im hopeful, Your Honor please, that our Congressmen and our
May I be allowed to answer that by way of a speculation, Your Honor. Senators will rise to the occasion and move fast and appropriate the needed
amount of 3 billion pesos to help the COMELEC acquire the proper
ASSOCIATE JUSTICE PERALTA: Automated election System.
Go ahead, please.
x x x[64]
DEAN ESPEJO:
I think bidder will find it difficult to match that.
Another reason posed by petitioners for their objection to the exercise of the
xxxx option and the eventual execution of the March 30, 2012 Deed of Sale is the
existence of the alleged defects, glitches, and infirmities of the subject goods.
ASSOCIATE JUSTICE PERALTA: The technology provided by Smartmatic-TIM was not perfect, because of
Okay. My other question is this. Okay, now you admitted that the original some technical problems that were experienced during the 2010 elections.
value is 10 billion. Are you also aware that the budget of the COMELEC Petitioners herein doubt that the integrity and sanctity of the ballots are
when they come up with this contract is 7 billion? protected because of these defects.
DEAN ESPEJO:
Yes, Your Honor. We do not agree.

ASSOCIATE JUSTICE PERALTA: Prior to the execution of the Deed of Sale, the Comelec and Smartmatic-TIM
And the total value of the original contract is 10 billion. Do you think that the had agreed that the latter would undertake fixes and enhancements to the
COMELEC will have money to purchase equipment valued at 10 billion hardware and software to make sure that the subject goods are in working
pesos with only 7 billion pesos for the elections of 2013? Because the budget condition to ensure a free, honest, and credible elections. As former
of 7 billion is not for the purpose only of the purchase of the equipment, but Commissioner Augusto C. Lagman admitted[65] during the oral arguments,
also includes for the budget of the elections, pre, during and post elections there are possible software solutions to the alleged problems on the PCOS
expenses. machines and it is not inherently impossible to remedy the technical
problems that have been identified. While there is skepticism that
DEAN ESPEJO: Smartmatic-TIM would be able to correct the supposed defects prior to the
Well, Your Honor please, the shortfall of 3 billion pesos can be remedied if 2013 elections because of its inaction during the two years prior to the
Congress will appropriate additional amounts, if the President of this exercise of the option, we agree with the opinion of Chairman Sixto S.
Republic will convince the legislature to appropriate an additional amount, I Brillantes, Jr. that it is absurd to expect Smartmatic-TIM to invest time,
see no problem why the shortfall of 3 billion cannot be remedied, Your Honor money and resources in fixing the PCOS machines to the specifications and
please. requirements of the Comelec when prior to the exercise of the OTP, they do
not have the assurance from the Comelec that the latter will exercise the
ASSOCIATE JUSTICE PERALTA: option.[66]
Oh, thats again speculative.
Moreover, as to the digital signature which appears to be the major concern
DEAN ESPEJO: of petitioners, it has been clarified during the oral arguments that the PCOS
Again, thats unfortunate thats my speculation. machines are capable of producing digitally-signed transmissions:
 ATTY. LAZATIN:
JUSTICE CARPIO: Thats right.
I have some questions. Counsel, the law requires that the election returns
that are electronically transmitted must be digitally signed, correct? JUSTICE CARPIO:
Thats why Chairman Melo told Congress that it will cost one (1) billion to get
ATTY. LAZATIN: a third-party certifier, but the law does not require it even now, if you said in
Thats right, Your Honor. your presentation that the BEI Chairman could not input their private key,
thats generated because it takes five (5) months to do that and the list of BEI
JUSTICE CARPIO: Chairman is known only one (1) month before the election, then how could
Now, but in the 2010 elections, all election returns electronically transmitted there be a digital signature?
were NOT digitally signed, correct?
ATTY. LAZATIN:
ATTY. LAZATIN: Your Honor, as I mentioned it is anot a customized or personal digital
signature. It is a digital signature that is assigned by COMELEC.
They were, Your Honors, please
JUSTICE CARPIO:
JUSTICE CARPIO: Assigned by COMELEC? How canwho inputs that digital signature?
Why? How?
ATTY. LAZATIN:
ATTY. LAZATIN: It is cranked out, Your Honor, and
Your Honor, as we explained in our presentation, the iButtons, Your Honor,
contain the digital signatures JUSTICE CARPIO:
No, yourit is trusted that the list of the BEI Chairman is known only one (1)
JUSTICE CARPIO: month before, so how can the BEI Chairman input their digital signature five
Yes, I understand that (5) months before?

ATTY. LAZATIN: ATTY. LAZATIN:

and the iButtons [interrupted] As I said, Your Honor, it is not a personal or customized signature. It is just
like
JUSTICE CARPIO:
because they are there, the machine is capable of producing digitally-signed JUSTICE CARPIO:
transmissions. But you just said that the BEI Chairman did not input their It is a machine ID, in other words?
private keys because there was no time. It requires five (5) months.
ATTY. LAZATIN:
ATTY. LAZATIN: No, let me explain it this way, Your Honor. The best example I can give, Your
Your Honor, as I said, there is a digital signature that was assigned to the Honor, is
BEIto the BEIs, your Honor, okay. I am saying that there is digital signature.
What I also said, Your Honor, is that there is also a possibility that another JUSTICE CARPIO:
digital certificate or signature can come from another certification authority Okay, let us define first what a digital signature means.
xxx
ATTY. LAZATIN:
JUSTICE CARPIO: The Rules of Court, Your Honor, defines digital signature as the first one it is
No, thats a third partythats a third-party certifier, but thats an option. The law electronic signature consisting of a transformation of an electronic document
does not require a third-party certification. It merely says that transmission or an electronic data message using an asymmetric or public Cryptosystem
must be digitally signed. such that a person having the initial untransformed electronic document and
the signers public key can accurately determine: (i) whether the
transformation was created using the private key that corresponds to the Your Honor, allow me to explain, Your Honor. The names, Your Honor, or the
signers public key; and (ii) whether the initial electronic document has been private keys arewere assigned to the BEIs Your Honor. In the same way,
altered after the transformation was made. Your Honor, in the office my code name, Your Honor, or assigned to me is 00
xxx
JUSTICE CARPIO:
Therefore, digital signature requires private key and public key JUSTICE CARPIO:
You mean to say the private key is embedded in the machine?
ATTY. LAZATIN: ATTY. LAZATIN:
Yes, Your Honor. No, Your Honor, it is embedded in the iButton and they are given a x x x

JUSTICE CARPIO: JUSTICE CARPIO:

and this private key and public key are generated by an algorithm, correct? Yes, in the machinethe iButton is in the machine.

ATTY. LAZATIN: ATTY. LAZATIN:

Yes, thats right, Your Honor. No, Your Honor.

JUSTICE CARPIO: JUSTICE CARPIO:

And there is another algorithm which, if you matchif you put together the Where is it?
private key and the message, will generate the signature.
ATTY. LAZATIN: ATTY. LAZATIN:
Thats right, Your Honor. It is a gadget, Your Honors, that is usedit is a separate gadget, your Honor
xxx This is a sample of an iButton, your Honor, and in fact we said that we
JUSTICE CARPIO: are prepared to demonstrate, Your Honor, and to show to this Court

And the third algorithm, that if you put together the public key and the xxxx
signature it will accept or reject the message, thats correct?
JUSTICE CARPIO:
ATTY. LAZATIN: On election Day, where was the iButton placed? In the machine?
Thats correct, Your Honor.
ATTY. LAZATIN:
JUSTICE CARPIO: To start the machine, Your Honor, you have to put it on top of that Button xxx
Now, was that used in the 2010 elections?
JUSTICE CARPIO:
ATTY. LAZATIN: In other words, whoever is in possession of that iButton can make a digitally-
Yes, your Honor. transmitted election return, correct?

JUSTICE CARPIO: ATTY. LAZATIN:

How was that private key generated? Thats correct, Your Honor. Your Honor, together with the other BEIs because
apart from this iButton, Your Honor, for authentication the BEIs, three of
ATTY. LAZATIN: them, Your Honor, have an 8-digit PIN, Your Honor.
Again, Your Honor, as I said
JUSTICE CARPIO:
JUSTICE CARPIO: How is that 8-digit PIN given to them?
Did the BEI Chairman know what that private key is?
ATTY. LAZATIN:
ATTY. LAZATIN: In a sealed envelope, Your Honor, these are x x x
JUSTICE CARPIO:
And then they also input that in the keyboard? JUSTICE CARPIO:
The moment you are in possession of the iButton and the four (4) sets of
ATTY. LAZATIN: PINs
Yes, Your Honor.
ATTY. LAZATIN:
JUSTICE CARPIO: Thats correct, Your Honor.
In the display? JUSTICE CARPIO:
If they can send an electronic transmission thats digitally signed and when
ATTY. LAZATIN: received by the COMELEC and matched with the public key will result with
Yes, Your Honor. an official election return, correct?
JUSTICE CARPIO: ATTY. LAZATIN:
So, that iButton contains the private key? Thats correct. In the same way, Your Honor, that even if someone keeps his
key or private key, Your Honor, if he is under threat he will also divulge it,
ATTY. LAZATIN: Your Honor. Its the same.
Yes, Your Honor, thats my understanding.
JUSTICE CARPIO:
JUSTICE CARPIO: Okay, so whoever wants to send it, he will have to get the private key from
And who controls the public key? Who control[led] the public key in the last the BEI Chairman and the PIN numbers from the other members
election?
ATTY. LAZATIN:
ATTY. LAZATIN: Yes, Your Honor.
My understanding, Your honor, is COMELEC, your Honor.
JUSTICE CARPIO:
JUSTICE CARPIO: before they can send the electronic transmission.
COMELEC had the public key?
ATTY. LAZATIN:
ATTY. LAZATIN: Yes, Your Honor.
Thats my understanding, Your Honor.
JUSTICE CARPIO:
JUSTICE CARPIO: Okay. That clarifies things. x x x[67]
And there was no certifying agency because it cost too much and the law did
not require that? As the Comelec is confronted with time and budget constraints, and in view
of the Comelecs mandate to ensure free, honest, and credible elections, the
ATTY. LAZATIN: acceptance of the extension of the option period, the exercise of the option,
Thats correct, Your Honor. But the machine, Your Honor, as I mentioned, is and the execution of the Deed of Sale, are the more prudent choices
capable of accepting any number of digital signatures whether self-generated available to the Comelec for a successful 2013 automated elections. The
or by a third-party certification authority, Your Honor. alleged defects in the subject goods have been determined and may be
corrected as in fact fixes and enhancements had been undertaken by
JUSTICE CARPIO: Smartmatic-TIM. Petitioners could not even give a plausible alternative to
Okay. So, whoever is in possession of that iButton and in possession of the ensure the conduct of a successful 2013 automated elections, in the event
four (4) PINS, the set of PINs, for the other BEI number, can send a that the Court nullifies the Deed of Sale.
transmission?
WHEREFORE, premises considered, the petitions are DISMISSED. The
ATTY. LAZATIN: Temporary Restraining Order issued by the Court on April 24, 2012
Yes, Your Honor. is LIFTED SO ORDERED.
Capalla vs. Comelec, GR No. 201112, June 13, 2012 Issue: Whether or not there was grave abuse of discretion amounting to lack
By LLBe:LawLifeBuzzEtcetera or excess of jurisdiction on the part of the Comelec in issuing the assailed
Resolutions and in executing the assailed Extension Agreement and Deed.
Facts: On July 10, 2009, the Comelec and Smartmatic-TIM entered into a
Contract for the Provision of an Automated Election System for the May 10, Held: No. A reading of the other provisions of the AES contract would show
2010 Synchronized National and Local Elections,(AES Contract). The that the parties are given the right to amend the contract which may include
contract between the Comelec and Smartmatic-TIM was one of “lease of the the period within which to exercise the option. There is, likewise, no
AES with option to purchase (OTP) the goods listed in the contract.” In said prohibition on the extension of the period, provided that the contract is still
contract, the Comelec was given until December 31, 2010 within which to effective. The Comelec still retains P50M of the amount due Smartmatic-TIM
exercise the option. In September 2010, the Comelec partially exercised its as performance security, which indicates that the AES contract is still
OTP 920 units of PCOS machines with corresponding effective and not yet terminated. Consequently, pursuant to Article 19 of the
canvassing/consolidation system (CCS) for the special elections in certain contract, the provisions thereof may still be amended by mutual agreement of
areas in the provinces of Basilan, Lanao del Sur and Bulacan. In a letter the parties provided said amendment is in writing and signed by the parties.
dated December 18, 2010, Smartmatic-TIM, through its Chairman Flores, Considering, however, that the AES contract is not an ordinary contract as it
proposed a temporary extension of the option period on the remaining PCOS involves procurement by a government agency, the rights and obligations of
machines until March 31, 2011, waiving the storage costs and covering the the parties are governed not only by the Civil Code but also by RA 9184. A
maintenance costs. The Comelec did not exercise the option within the winning bidder is not precluded from modifying or amending certain
extended period. Several extensions were given for the Comelec to exercise provisions of the contract bidded upon. However, such changes must not
the OTP until its final extension on March 31, 2012. constitute substantial or material amendments that would alter the basic
parameters of the contract and would constitute a denial to the other bidders
of the opportunity to bid on the same terms.
On March 29, 2012, the Comelec issued a Resolution resolving to accept
Smartmatic-TIM’s offer to extend the period to exercise the OTP until March
31, 2012 and to authorize Chairman Brillantes to sign for and on behalf of the The conclusions held by the Court in Power Sector Assets and Liabilities
Comelec the Agreement on the Extension of the OTP Under the AES Management Corporation (PSALM) v. Pozzolanic Philippines Incorporated
Contract (Extension Agreement). Comelec again issued a Resolution and Agan, Jr. v. Philippine International Air Terminals Co., Inc., (PIATCO)
resolving to approve the Deed of Sale between the Comelec and cannot be applied in the present case. First, Smartmatic-TIM was not granted
Smartmatic-TIM to purchase the latter’s PCOS machines to be used in the additional right that was not previously available to the other bidders. The
upcoming May 2013 elections and to authorize Chairman Brillantes to sign bidders were apprised that aside from the lease of goods and purchase of
the Deed of Sale for and on behalf of the Comelec. The Deed of Sale was services, their proposals should include an OTP the subject goods. Second,
forthwith executed. the amendment of the AES contract is not substantial. The approved budget
for the contract was P11,223,618,400.00 charged against the supplemental
appropriations for election modernization. Bids were, therefore, accepted
Petitioners assail the constitutionality of the Comelec Resolutions on the
provided that they did not exceed said amount. The competitive public
grounds that the option period provided for in the AES contract had already
bidding conducted for the AES contract was sufficient. A new public bidding
lapsed; that the extension of the option period and the exercise of the option
would be a superfluity. Lastly, the amendment of the AES contract is more
without competitive public bidding contravene the provisions of RA 9184; and
advantageous to the Comelec and the public because the
that the Comelec purchased the machines in contravention of the standards
P7,191,484,739.48 rentals paid for the lease of goods and purchase of
laid down in RA 9369. On the other hand, respondents argue on the validity
services under the AES contract was considered part of the purchase price.
of the subject transaction based on the grounds that there is no prohibition
For the Comelec to own the subject goods, it was required to pay only
either in the contract or provision of law for it to extend the option period; that
P2,130,635,048.15. If the Comelec did not exercise the option, the rentals
the OTP is not an independent contract in itself, but is a provision contained
already paid would just be one of the government expenses for the past
in the valid and existing AES contract that had already satisfied the public
election and would be of no use to future elections.
bidding requirements of RA 9184; and that exercising the option was the
most advantageous option of the Comelec.
G.R. No. 170633 October 17, 2007 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
MCC INDUSTRIAL SALES CORPORATION, petitioner, 193.597MT of stainless steel from Korea to the Philippines. It requested that
vs. the opening of the L/C be facilitated.19 Chan affixed his signature on the fax
SSANGYONG CORPORATION, respondents. transmittal and returned the same, by fax, to Ssangyong.20
DECISION 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
NACHURA, J.: 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
Before the Court is a petition for review on certiorari of the Decision1 of the day and the second 100MT not later than June 27, 2000. Ssangyong
Court of Appeals in CA-G.R. CV No. 82983 and its Resolution2 denying the reiterated its request for the facilitation of the L/C's opening.21
motion for reconsideration thereof.
Ssangyong later, through its Manila Office, sent a letter, on June 26, 2000, to
Petitioner MCC Industrial Sales (MCC), a domestic corporation with office at the Treasury Group of Sanyo Seiki that it was looking forward to receiving
Binondo, Manila, is engaged in the business of importing and wholesaling the L/C details and a cable copy thereof that day. 22 Ssangyong sent a
stainless steel products.3 One of its suppliers is the Ssangyong Corporation separate letter of the same date to Sanyo Seiki requesting for the opening of
(Ssangyong),4 an international trading company5 with head office in Seoul, the L/C covering payment of the first 100MT not later than June 28,
South Korea and regional headquarters in Makati City, Philippines.6 The two 2000.23 Similar letters were transmitted by Ssangyong Manila Office on June
corporations conducted business through telephone calls and facsimile or 27, 2000.24 On June 28, 2000, Ssangyong sent another facsimile letter to
telecopy transmissions.7 Ssangyong would send the pro forma invoices MCC stating that its principal in Korea was already in a difficult
containing the details of the steel product order to MCC; if the latter conforms situation25 because of the failure of Sanyo Seiki and MCC to open the L/C's.
thereto, its representative affixes his signature on the faxed copy and sends
it back to Ssangyong, again by fax.8 The following day, June 29, 2000, Ssangyong received, by fax, a letter
signed by Chan, requesting an extension of time to open the L/C because
On April 13, 2000, Ssangyong Manila Office sent, by fax, a letter 9 addressed MCC's credit line with the bank had been fully availed of in connection with
to Gregory Chan, MCC Manager [also the President10 of Sanyo Seiki another transaction, and MCC was waiting for an additional credit line.26 On
Stainless Steel Corporation], to confirm MCC's and Sanyo Seiki's order the same date, Ssangyong replied, requesting that it be informed of the date
of 220 metric tons (MT) of hot rolled stainless steel under a preferential rate when the L/C would be opened, preferably at the earliest possible time, since
of US$1,860.00 per MT. Chan, on behalf of the corporations, assented and its Steel Team 2 in Korea was having problems and Ssangyong was
affixed his signature on the conforme portion of the letter.11 incurring warehousing costs.27 To maintain their good business relationship
and to support MCC in its financial predicament, Ssangyong offered to
On April 17, 2000, Ssangyong forwarded to MCC Pro Forma Invoice
negotiate with its steel manufacturer, POSCO, another US$20/MT discount
No. ST2-POSTSO40112 containing the terms and conditions of the
on the price of the stainless steel ordered. This was intimated in Ssangyong's
transaction. MCC sent back by fax to Ssangyong the invoice bearing the
June 30, 2000 letter to MCC.28 On July 6, 2000, another follow-up letter29 for
conformity signature13 of Chan. As stated in the pro forma invoice, payment
the opening of the L/C was sent by Ssangyong to MCC.
for the ordered steel products would be made through an irrevocable letter of
credit (L/C) at sight in favor of Ssangyong.14 Following their usual practice, However, despite Ssangyong's letters, MCC failed to open a letter of
delivery of the goods was to be made after the L/C had been opened. credit.30 Consequently, on August 15, 2000, Ssangyong, through counsel,
wrote Sanyo Seiki that if the L/C's were not opened, Ssangyong would be
In the meantime, because of its confirmed transaction with MCC, Ssangyong
compelled to cancel the contract and hold MCC liable for damages for
placed the order with its steel manufacturer, Pohang Iron and Steel
breach thereof amounting to US$96,132.18, inclusive of warehouse
Corporation (POSCO), in South Korea15 and paid the same in full.
expenses, related interests and charges.31
Because MCC could open only a partial letter of credit, the order for 220MT
Later, Pro Forma Invoice Nos. ST2-POSTS080-132 and ST2-POSTS080-
of steel was split into two,16 one for 110MT covered by Pro Forma Invoice
233 dated August 16, 2000 were issued by Ssangyong and sent via fax to
No. ST2-POSTS0401-117 and another for 110MT covered by ST2-
MCC. The invoices slightly varied the terms of the earlier pro forma invoices
POSTS0401-2,18 both dated April 17, 2000.
(ST2-POSTSO401, ST2-POSTS0401-1 and ST2-POSTS0401-2), in that the material allegations in the complaint, Ssangyong's evidence sufficed for
quantity was now officially 100MT per invoice and the price was reduced purposes of a prima facie case.42
to US$1,700.00 per MT. As can be gleaned from the photocopies of the said
August 16, 2000 invoices submitted to the court, they both bear the After trial on the merits, the RTC rendered its Decision43 on March 24, 2004,
conformity signature of MCC Manager Chan. 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
On August 17, 2000, MCC finally opened an L/C with PCIBank for US$1,860 per MT, the contract was perfected. The subject transaction was
US$170,000.00 covering payment for 100MT of stainless steel coil under Pro evidenced by Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-
Forma Invoice No. ST2-POSTS080-2.34 The goods covered by the said POSTS0401-2, which were later amended only in terms of reduction of
invoice were then shipped to and received by MCC.35 volume as well as the price per MT, following Pro Forma Invoice Nos. ST2-
POSTS080-1 and ST2-POSTS080-2. The RTC, however, excluded Sanyo
MCC then faxed to Ssangyong a letter dated August 22, 2000 signed by Seiki from liability for lack of competent evidence. The fallo of the decision
Chan, requesting for a price adjustment of the order stated in Pro reads:
Forma Invoice No. ST2-POSTS080-1, considering that the prevailing price of
steel at that time was US$1,500.00/MT, and that MCC lost a lot of money WHEREFORE, premises considered, Judgment is hereby rendered ordering
due to a recent strike.36 defendants MCC Industrial Sales Corporation and Gregory Chan, to pay
plaintiff, jointly and severally the following:
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 1) Actual damages of US$93,493.87 representing the outstanding principal
with a warning that, if the said L/C was not opened by MCC on August 26, claim plus interest at the rate of 6% per annum from March 30, 2001.
2000, Ssangyong would be constrained to cancel the contract and hold MCC
liable for US$64,066.99 (representing cost difference, warehousing 2) Attorney's fees in the sum of P50,000.00 plus P2,000.00 per counsel's
expenses, interests and charges as of August 15, 2000) and other damages appearance in court, the same being deemed just and equitable considering
for breach. Chan failed to reply. that by reason of defendants' breach of their obligation under the subject
contract, plaintiff was constrained to litigate to enforce its rights and recover
Exasperated, Ssangyong through counsel wrote a letter to MCC, on for the damages it sustained, and therefore had to engage the services of a
September 11, 2000, canceling the sales contract under ST2-POSTS0401- lawyer.
1 /ST2-POSTS0401-2, and demanding payment of US$97,317.37
representing losses, warehousing expenses, interests and charges. 38 3) Costs of suit.

Ssangyong then filed, on November 16, 2001, a civil action for damages due No award of exemplary damages for lack of sufficient basis.
to breach of contract against defendants MCC, Sanyo Seiki and Gregory
Chan before the Regional Trial Court of Makati City. In its SO ORDERED.44
complaint,39Ssangyong alleged that defendants breached their contract when
they refused to open the L/C in the amount of US$170,000.00 for the On April 22, 2004, MCC and Chan, through their counsel of record, Atty.
remaining 100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401- Eladio B. Samson, filed their Notice of Appeal.45 On June 8, 2004, the law
1 and ST2-POSTS0401-2. office of Castillo Zamora & Poblador entered its appearance as their
collaborating counsel.
After Ssangyong rested its case, defendants filed a Demurrer to
Evidence40 alleging that Ssangyong failed to present the original copies of In their Appeal Brief filed on March 9, 2005,46 MCC and Chan raised before
the pro forma invoices on which the civil action was based. In an Order dated the CA the following errors of the RTC:
April 24, 2003, the court denied the demurrer, ruling that the documentary
I. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT
evidence presented had already been admitted in the December 16, 2002
APPELLANTS VIOLATED THEIR CONTRACT WITH APPELLEE
Order41 and their admissibility finds support in Republic Act (R.A.) No. 8792,
otherwise known as the Electronic Commerce Act of 2000. Considering that A. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING THAT
both testimonial and documentary evidence tended to substantiate the APPELLANTS AGREED TO PURCHASE 200 METRIC TONS OF STEEL
PRODUCTS FROM APPELLEE, INSTEAD OF ONLY 100 METRIC TONS.
1. THE HONORABLE COURT A QUO PLAINLY ERRED IN ADMITTING IN DEPARTURE FROM THE USUAL AND ACCEPTED COURSE OF
EVIDENCE THE PRO FORMA INVOICES WITH REFERENCE NOS. ST2- JUDICIAL PROCEEDINGS BY REVERSING THE COURT A
POSTS0401-1 AND ST2-POSTS0401-2. QUO'S DISMISSAL OF THE COMPLAINT IN CIVIL CASE NO. 02-124
CONSIDERING THAT:
II. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING
ACTUAL DAMAGES TO APPELLEE. I. THE COURT OF APPEALS ERRED IN SUSTAINING THE
ADMISSIBILITY IN EVIDENCE OF THE PRO-FORMA INVOICES WITH
III. THE HONORABLE COURT A QUO PLAINLY ERRED IN AWARDING REFERENCE NOS. ST2-POSTSO401-1 AND ST2-POSTSO401-2,
ATTORNEY'S FEES TO APPELLEE. DESPITE THE FACT THAT THE SAME WERE MERE PHOTOCOPIES OF
FACSIMILE PRINTOUTS.
IV. THE HONORABLE COURT A QUO PLAINLY ERRED IN FINDING
APPELLANT GREGORY CHAN JOINTLY AND SEVERALLY LIABLE WITH II. THE COURT OF APPEALS FAILED TO APPRECIATE THE OBVIOUS
APPELLANT MCC.47 FACT THAT, EVEN ASSUMING PETITIONER BREACHED THE
SUPPOSED CONTRACT, THE FACT IS THAT PETITIONER FAILED TO
On August 31, 2005, the CA rendered its Decision48 affirming the ruling of the PROVE THAT IT SUFFERED ANY DAMAGES AND THE AMOUNT
trial court, but absolving Chan of any liability. The appellate court ruled, THEREOF.
among others, that Pro Forma Invoice Nos. ST2-POSTS0401-1 and ST2-
POSTS0401-2 (Exhibits "E", "E-1" and "F") were admissible in evidence, III. THE AWARD OF ACTUAL DAMAGES IN THE AMOUNT OF
although they were mere facsimile printouts of MCC's steel orders.49 The US$93,493.87 IS SIMPLY UNCONSCIONABLE AND SHOULD HAVE BEEN
dispositive portion of the appellate court's decision reads: AT LEAST REDUCED, IF NOT DELETED BY THE COURT OF APPEALS.57

WHEREFORE, premises considered, the Court holds: In its Comment, Ssangyong sought the dismissal of the petition, raising the
following arguments: that the CA decision dated 15 August 2005 is already
(1) The award of actual damages, with interest, attorney's fees and costs final and executory, because MCC's motion for reconsideration was filed
ordered by the lower court is hereby AFFIRMED. beyond the reglementary period of 15 days from receipt of a copy thereof,
and that, in any case, it was a pro formamotion; that MCC breached the
(2) Appellant Gregory Chan is hereby ABSOLVED from any liability. 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
SO ORDERED.50
facsimile or telecopy transmissions were properly admitted by the trial court
A copy of the said Decision was received by MCC's and Chan's principal because they are considered original documents under R.A. No. 8792; and
counsel, Atty. Eladio B. Samson, on September 14, 2005.51 Their that MCC is liable for actual damages and attorney's fees because of its
collaborating counsel, Castillo Zamora & Poblador,52 likewise, received a breach, thus, compelling Ssangyong to litigate.
copy of the CA decision on September 19, 2005. 53
The principal issues that this Court is called upon to resolve are the following:
On October 4, 2005, Castillo Zamora & Poblador, on behalf of MCC, filed a
I – Whether the CA decision dated 15 August 2005 is already final and
motion for reconsideration of the said decision.54 Ssangyong opposed the
executory;
motion contending that the decision of the CA had become final and
executory on account of the failure of MCC to file the said motion within the II – Whether the print-out and/or photocopies of facsimile transmissions are
reglementary period. The appellate court resolved, on November 22, 2005, to electronic evidence and admissible as such;
deny the motion on its merits,55 without, however, ruling on the procedural
issue raised. III – Whether there was a perfected contract of sale between MCC and
Ssangyong, and, if in the affirmative, whether MCC breached the said
Aggrieved, MCC filed a petition for review on certiorari56 before this Court, contract; and
imputing the following errors to the Court of Appeals:
IV – Whether the award of actual damages and attorney's fees in favor of
THE COURT OF APPEALS DECIDED A LEGAL QUESTION NOT IN Ssangyong is proper and justified.
ACCORDANCE WITH JURISPRUDENCE AND SANCTIONED A
-I- 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
It cannot be gainsaid that in Albano v. Court of Appeals,58 we held that on technicalities.
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 The rules of procedure are used only to secure and not override or frustrate
other counsel has not yet received a copy of the decision. In this case, when justice. A six-day delay in the perfection of the appeal, as in this case, does
Atty. Samson received a copy of the CA decision on September 14, 2005, not warrant the outright dismissal of the appeal. In Development Bank of the
MCC had only fifteen (15) days within which to file a motion for Philippines vs. Court of Appeals, we gave due course to the petitioner's
reconsideration conformably with Section 1, Rule 52 of the Rules of Court, or appeal despite the late filing of its brief in the appellate court because such
to file a petition for review on certiorari in accordance with Section 2, Rule 45. appeal involved public interest. We stated in the said case that the Court may
The period should not be reckoned from September 29, 2005 (when Castillo exempt a particular case from a strict application of the rules of procedure
Zamora & Poblador received their copy of the decision) because notice to where the appellant failed to perfect its appeal within the reglementary
Atty. Samson is deemed notice to collaborating counsel. period, resulting in the appellate court's failure to obtain jurisdiction over the
case. In Republic vs. Imperial, Jr., we also held that there is more leeway to
We note, however, from the records of the CA, that it was Castillo Zamora & exempt a case from the strictness of procedural rules when the appellate
Poblador, not Atty. Samson, which filed both MCC's and Chan's Brief and court has already obtained jurisdiction over the appealed case. We
Reply Brief. Apparently, the arrangement between the two counsels was for emphasize that:
the collaborating, not the principal, counsel to file the appeal brief and
subsequent pleadings in the CA. This explains why it was Castillo Zamora & [T]he rules of procedure are mere tools intended to facilitate the attainment of
Poblador which filed the motion for the reconsideration of the CA decision, justice, rather than frustrate it. A strict and rigid application of the rules must
and they did so on October 5, 2005, well within the 15-day period from always be eschewed when it would subvert the rule's primary objective of
September 29, 2005, when they received their copy of the CA decision. This enhancing fair trials and expediting justice. Technicalities should never be
could also be the reason why the CA did not find it necessary to resolve the used to defeat the substantive rights of the other party. Every party-litigant
question of the timeliness of petitioner's motion for reconsideration, even as must be afforded the amplest opportunity for the proper and just
the CA denied the same. determination of his cause, free from the constraints of technicalities. 60

Independent of this consideration though, this Court assiduously reviewed Moreover, it should be remembered that the Rules were promulgated to set
the records and found that strong concerns of substantial justice warrant the guidelines in the orderly administration of justice, not to shackle the hand that
relaxation of this rule. dispenses it. Otherwise, the courts would be consigned to being mere slaves
to technical rules, deprived of their judicial discretion. Technicalities must
In Philippine Ports Authority v. Sargasso Construction and Development take a backseat to substantive rights. After all, it is circumspect leniency in
Corporation,59 we ruled that: 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,
In Orata v. Intermediate Appellate Court, we held that where strong honor or property on sheer technicalities.61
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 The other technical issue posed by respondent is the alleged pro
legal jurisdiction. In addition to the basic merits of the main case, such a forma nature of MCC's motion for reconsideration, ostensibly because it
petition usually embodies justifying circumstance which warrants our heeding merely restated the arguments previously raised and passed upon by the
to the petitioner's cry for justice in spite of the earlier negligence of counsel. CA.
As we held in Obut v. Court of Appeals:
In this connection, suffice it to say that the mere restatement of arguments in
[W]e cannot look with favor on a course of action which would place the a motion for reconsideration does not per se result in a pro forma motion.
administration of justice in a straight jacket for then the result would be a In Security Bank and Trust Company, Inc. v. Cuenca,62 we held that a motion
poor kind of justice if there would be justice at all. Verily, judicial orders, such for reconsideration may not be necessarily pro forma even if it reiterates the
as the one subject of this petition, are issued to be obeyed, nonetheless a arguments earlier passed upon and rejected by the appellate court. A movant
non-compliance is to be dealt with as the circumstances attending the case may raise the same arguments precisely to convince the court that its ruling
may warrant. What should guide judicial action is the principle that a party- was erroneous. Furthermore, the pro forma rule will not apply if the
arguments were not sufficiently passed upon and answered in the decision The copies of the said pro-forma invoices submitted by the appellee are
sought to be reconsidered. admissible in evidence, although they are mere electronic facsimile printouts
of appellant's orders. Such facsimile printouts are considered Electronic
- II - 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).
The second issue poses a novel question that the Court welcomes. It
provides the occasion for this Court to pronounce a definitive interpretation of "(h) 'Electronic document' refers to information or the representation of
the equally innovative provisions of the Electronic Commerce Act of 2000 information, data, figures, symbols or other modes of written expression,
(R.A. No. 8792) vis-à-vis the Rules on Electronic Evidence. described or however represented, by which a right is established or an
obligation extinguished, or by which a fact may be proved and affirmed,
Although the parties did not raise the question whether the original facsimile which is received, recorded, transmitted, stored, processed, retrieved or
transmissions are "electronic data messages" or "electronic documents" produced electronically. It includes digitally signed documents and any
within the context of the Electronic Commerce Act (the petitioner merely printout or output, readable by sight or other means, which accurately reflects
assails as inadmissible evidence the photocopies of the said facsimile the electronic data message or electronic document. For purposes of these
transmissions), we deem it appropriate to determine first whether the said fax Rules, the term 'electronic document' may be used interchangeably with
transmissions are indeed within the coverage of R.A. No. 8792 before ruling 'electronic data message'.
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 An electronic document shall be regarded as the equivalent of an original
justice or for the promotion of public policy, there is a need to make its own document under the Best Evidence Rule, as long as it is a printout or output
findings in order to support its conclusions.63 readable by sight or other means, showing to reflect the data accurately.
(Rule 4, Section 1, A.M. No. 01-7-01-SC)
Petitioner contends that the photocopies of the pro forma invoices presented
by respondent Ssangyong to prove the perfection of their supposed contract The ruling of the Appellate Court is incorrect. R.A. No. 8792,64 otherwise
of sale are inadmissible in evidence and do not fall within the ambit of R.A. known as the Electronic Commerce Act of 2000, considers an electronic data
No. 8792, because the law merely admits as the best evidence message or an electronic document as the functional equivalent of a written
the original fax transmittal. On the other hand, respondent posits that, from a document for evidentiary purposes.65 The Rules on Electronic
reading of the law and the Rules on Electronic Evidence, the original Evidence66 regards an electronic document as admissible in evidence if it
facsimile transmittal of the pro forma invoice is admissible in evidence since complies with the rules on admissibility prescribed by the Rules of Court and
it is an electronic document and, therefore, the best evidence under the law related laws, and is authenticated in the manner prescribed by the said
and the Rules. Respondent further claims that the photocopies of these fax Rules.67 An electronic document is also the equivalent of an original
transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are document under the Best Evidence Rule, if it is a printout or output readable
admissible under the Rules on Evidence because the respondent sufficiently by sight or other means, shown to reflect the data accurately.68
explained the non-production of the original fax transmittals.
Thus, to be admissible in evidence as an electronic data message or to be
In resolving this issue, the appellate court ruled as follows: considered as the functional equivalent of an original document under the
Best Evidence Rule, the writing must foremost be an "electronic data
Admissibility of Pro Forma message" or an "electronic document."
Invoices; Breach of Contract
by Appellants The Electronic Commerce Act of 2000 defines electronic data message and
electronic document as follows:
Turning first to the appellants' argument against the admissibility of the Pro
Forma Invoices with Reference Nos. ST2-POSTS0401-1 and ST2- Sec. 5. Definition of Terms. For the purposes of this Act, the following terms
POSTS0401-2 (Exhibits "E", "E-1" and "F", pp. 215-218, Records), are defined, as follows:
appellants argue that the said documents are inadmissible (sic) being
violative of the best evidence rule. xxx

The argument is untenable. c. "Electronic Data Message" refers to information generated, sent, received
or stored by electronic, optical or similar means.
xxx the House of Representative's employment, in House Bill 9971, of the term
"electronic document."72 In order to expedite the reconciliation of the two
f. "Electronic Document" refers to information or the representation of versions, the technical working group of the Bicameral Conference
information, data, figures, symbols or other modes of written expression, Committee adopted both terms and intended them to be the equivalent of
described or however represented, by which a right is established or an each one.73 Be that as it may, there is a slight difference between the two
obligation extinguished, or by which a fact may be proved and affirmed, terms. While "data message" has reference to information electronically sent,
which is received, recorded, transmitted, stored, processed, retrieved or stored or transmitted, it does not necessarily mean that it will give rise to a
produced electronically. right or extinguish an obligation,74 unlike an electronic document. Evident
from the law, however, is the legislative intent to give the two terms the same
The Implementing Rules and Regulations (IRR) of R.A. No. 8792,69 which construction.
was signed on July 13, 2000 by the then Secretaries of the Department of
Trade and Industry, the Department of Budget and Management, and then The Rules on Electronic Evidence promulgated by this Court defines the said
Governor of the Bangko Sentral ng Pilipinas, defines the terms as: terms in the following manner:

Sec. 6. Definition of Terms. For the purposes of this Act and these Rules, SECTION 1. Definition of Terms. – For purposes of these Rules, the
the following terms are defined, as follows: following terms are defined, as follows:

xxx xxxx
(e) "Electronic Data Message" refers to information generated, sent, received (g) "Electronic data message" refers to information generated, sent, received
or stored by electronic, optical or similar means, but not limited to, electronic or stored by electronic, optical or similar means.
data interchange (EDI), electronic mail, telegram, telex or telecopy.
Throughout these Rules, the term "electronic data message" shall be (h) "Electronic document" refers to information or the representation of
equivalent to and be used interchangeably with "electronic document." information, data, figures, symbols or other modes of written expression,
described or however represented, by which a right is established or an
xxxx obligation extinguished, or by which a fact may be proved and affirmed,
which is received, recorded, transmitted, stored, processed, retrieved or
(h) "Electronic Document" refers to information or the representation of produced electronically. It includes digitally signed documents and print-out
information, data, figures, symbols or other modes of written expression, or output, readable by sight or other means, which accurately reflects the
described or however represented, by which a right is established or an electronic data message or electronic document. For purposes of these
obligation extinguished, or by which a fact may be proved and affirmed, Rules, the term "electronic document" may be used interchangeably with
which is received, recorded, transmitted, stored, processed, retrieved or "electronic data message."
produced electronically. Throughout these Rules, the term "electronic
document" shall be equivalent to and be used interchangeably with Given these definitions, we go back to the original question: Is an original
"electronic data message." printout of a facsimile transmission an electronic data message or electronic
document?
The phrase "but not limited to, electronic data interchange (EDI), electronic
mail, telegram, telex or telecopy" in the IRR's definition of "electronic data The definitions under the Electronic Commerce Act of 2000, its IRR and the
message" is copied from the Model Law on Electronic Commerce adopted by Rules on Electronic Evidence, at first glance, convey the impression
the United Nations Commission on International Trade Law that facsimile transmissions are electronic data messages or electronic
(UNCITRAL),70 from which majority of the provisions of R.A. No. 8792 were documents because they are sent by electronic means. The expanded
taken.71 While Congress deleted this phrase in the Electronic Commerce Act definition of an "electronic data message" under the IRR, consistent with the
of 2000, the drafters of the IRR reinstated it. The deletion by Congress of the UNCITRAL Model Law, further supports this theory considering that the
said phrase is significant and pivotal, as discussed hereunder. enumeration "xxx [is] not limited to, electronic data interchange (EDI),
electronic mail, telegram, telex or telecopy." And to telecopy is to send a
The clause on the interchangeability of the terms "electronic data message" document from one place to another via a fax machine.75
and "electronic document" was the result of the Senate of the Philippines'
adoption, in Senate Bill 1902, of the phrase "electronic data message" and
As further guide for the Court in its task of statutory construction, Section 37 Senator Santiago. Yes, Mr. President. I will furnish a copy together with the
of the Electronic Commerce Act of 2000 provides that explanation of this proposed amendment.

Unless otherwise expressly provided for, the interpretation of this Act shall And then finally, before I leave the Floor, may I please be allowed to go back
give due regard to its international origin and the need to promote uniformity to Section 5; the Definition of Terms. In light of the acceptance by the good
in its application and the observance of good faith in international trade Senator of my proposed amendments, it will then become necessary to add
relations. The generally accepted principles of international law and certain terms in our list of terms to be defined. I would like to add a definition
convention on electronic commerce shall likewise be considered. on what is "data," what is "electronic record" and what is an "electronic
record system."
Obviously, the "international origin" mentioned in this section can only refer
to the UNCITRAL Model Law, and the UNCITRAL's definition of "data If the gentleman will give me permission, I will proceed with the proposed
message": amendment on Definition of Terms, Section 5.

"Data message" means information generated, sent, received or stored by Senator Magsaysay. Please go ahead, Senator Santiago.
electronic, optical or similar means including, but not limited to, electronic
data interchange (EDI), electronic mail, telegram, telex or telecopy.76 Senator Santiago. We are in Part 1, short title on the Declaration of Policy,
Section 5, Definition of Terms.
is substantially the same as the IRR's characterization of an "electronic data
message." At the appropriate places in the listing of these terms that have to be defined
since these are arranged alphabetically, Mr. President, I would like to insert
However, Congress deleted the phrase, "but not limited to, electronic data the term DATA and its definition. So, the amendment will read: "DATA"
interchange (EDI), electronic mail, telegram, telex or telecopy," and replaced MEANS REPRESENTATION, IN ANY FORM, OF INFORMATION OR
the term "data message" (as found in the UNCITRAL Model Law ) with CONCEPTS.
"electronic data message." This legislative divergence from what is assumed
as the term's "international origin" has bred uncertainty and now impels the The explanation is this: This definition of "data" or "data" as it is now
Court to make an inquiry into the true intent of the framers of the law. Indeed, fashionably pronounced in America - - the definition of "data" ensures that
in the construction or interpretation of a legislative measure, the primary rule our bill applies to any form of information in an electronic record, whether
is to search for and determine the intent and spirit of the law.77 A construction these are figures, facts or ideas.
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 So again, the proposed amendment is this: "DATA" MEANS
that tends to defeat the ends which are sought to be attained by the REPRESENTATIONS, IN ANY FORM, OF INFORMATION OR CONCEPTS.
enactment.78
Senator Magsaysay. May I know how will this affect the definition of "Data
Interestingly, when Senator Ramon B. Magsaysay, Jr., the principal author of Message" which encompasses electronic records, electronic writings and
Senate Bill 1902 (the predecessor of R.A. No. 8792), sponsored the bill on electronic documents?
second reading, he proposed to adopt the term "data message" as
formulated and defined in the UNCITRAL Model Law.79 During the period of Senator Santiago. These are completely congruent with each other. These
amendments, however, the term evolved into "electronic data message," and are compatible. When we define "data," we are simply reinforcing the
the phrase "but not limited to, electronic data interchange (EDI), electronic definition of what is a data message.
mail, telegram, telex or telecopy" in the UNCITRAL Model Law was deleted.
Senator Magsaysay. It is accepted, Mr. President.
Furthermore, the term "electronic data message," though maintaining its
description under the UNCITRAL Model Law, except for the aforesaid Senator Santiago. Thank you. The next term is "ELECTRONIC RECORD."
deleted phrase, conveyed a different meaning, as revealed in the following The proposed amendment is as follows:
proceedings:
"ELECTRONIC RECORD" MEANS DATA THAT IS RECORDED OR
xxxx STORED ON ANY MEDIUM IN OR BY A COMPUTER SYSTEM OR OTHER
SIMILAR DEVICE, THAT CAN BE READ OR PERCEIVED BY A PERSON
OR A COMPUTER SYSTEM OR OTHER SIMILAR DEVICE. IT INCLUDES Senator Santiago. No, it will not. Thank you for reminding me. The term I
A DISPLAY, PRINTOUT OR OTHER OUTPUT OF THAT DATA. would like to insert is ELECTRONIC DATA MESSAGE in lieu of
"ELECTRONIC RECORD."
The explanation for this term and its definition is as follows: The term
"ELECTRONIC RECORD" fixes the scope of our bill. The record is the data. Senator Magsaysay. Then we are, in effect, amending the term of the
The record may be on any medium. It is electronic because it is recorded or definition of "Data Message" on page 2A, line 31, to which we have no
stored in or by a computer system or a similar device. objection.

The amendment is intended to apply, for example, to data on magnetic strips Senator Santiago. Thank you, Mr. President.
on cards or in Smart cards. As drafted, it would not apply to telexes or
faxes, except computer-generated faxes, unlike the United Nations xxxx
model law on electronic commerce. It would also not apply to regular
digital telephone conversations since the information is not recorded. It would Senator Santiago. Mr. President, I have proposed all the amendments that I
apply to voice mail since the information has been recorded in or by a device desire to, including the amendment on the effect of error or change. I will
similar to a computer. Likewise, video records are not covered. Though when provide the language of the amendment together with the explanation
the video is transferred to a website, it would be covered because of the supporting that amendment to the distinguished sponsor and then he can
involvement of the computer. Music recorded by a computer system on a feel free to take it up in any session without any further intervention.
compact disc would be covered.
Senator Magsaysay. Before we end, Mr. President, I understand from the
In short, not all data recorded or stored in digital form is covered. A computer proponent of these amendments that these are based on the Canadian E-
or a similar device has to be involved in its creation or storage. The term commerce Law of 1998. Is that not right?
"similar device" does not extend to all devices that create or store data in
digital form. Although things that are not recorded or preserved by or in a Senator Santiago. That is correct.80
computer system are omitted from this bill, these may well be admissible
Thus, when the Senate consequently voted to adopt the term "electronic data
under other rules of law. This provision focuses on replacing the search for
message," it was consonant with the explanation of Senator Miriam
originality proving the reliability of systems instead of that of individual
Defensor-Santiago that it would not apply "to telexes or faxes, except
records and using standards to show systems reliability.
computer-generated faxes, unlike the United Nations model law on electronic
Paper records that are produced directly by a computer system such as commerce." In explaining the term "electronic record" patterned after the E-
printouts are themselves electronic records being just the means of Commerce Law of Canada, Senator Defensor-Santiago had in mind the term
intelligible display of the contents of the record. Photocopies of the printout "electronic data message." This term then, while maintaining part of the
would be paper record subject to the usual rules about copies, but the UNCITRAL Model Law's terminology of "data message," has assumed a
original printout would be subject to the rules of admissibility of this bill. 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
However, printouts that are used only as paper records and whose computer deletion of the phrase "but not limited to, electronic data interchange (EDI),
origin is never again called on are treated as paper records. In that case, the electronic mail, telegram, telex or telecopy." Noteworthy is that the Uniform
reliability of the computer system that produces the record is irrelevant to its Law Conference of Canada, explains the term "electronic record," as drafted
reliability. in the Uniform Electronic Evidence Act, in a manner strikingly similar to Sen.
Santiago's explanation during the Senate deliberations:
Senator Magsaysay. Mr. President, if my memory does not fail me, earlier,
the lady Senator accepted that we use the term "Data Message" rather than "Electronic record" fixes the scope of the Act. The record is the data. The
"ELECTRONIC RECORD" in being consistent with the UNCITRAL term of record may be any medium. It is "electronic" because it is recorded or stored
"Data Message." So with the new amendment of defining "ELECTRONIC in or by a computer system or similar device. The Act is intended to apply, for
RECORD," will this affect her accepting of the use of "Data Message" instead example, to data on magnetic strips on cards, or in smart cards. As drafted, it
of "ELECTRONIC RECORD"? would not apply to telexes or faxes (except computer-generated faxes),
unlike the United Nations Model Law on Electronic Commerce. It would also
not apply to regular digital telephone conversations, since the information is
not recorded. It would apply to voice mail, since the information has been
recorded in or by a device similar to a computer. Likewise video records are specialized package. The scanner converts the content of a physical
not covered, though when the video is transferred to a Web site it would be, document into a digital image, the modem sends the image data over a
because of the involvement of the computer. Music recorded by a computer phone line, and the printer at the other end makes a duplicate of the original
system on a compact disk would be covered. document.85 Thus, in Garvida v. Sales, Jr.,86where we explained the
unacceptability of filing pleadings through fax machines, we ruled that:
In short, not all data recorded or stored in "digital" form is covered. A
computer or similar device has to be involved in its creation or storage. The A facsimile or fax transmission is a process involving the transmission and
term "similar device" does not extend to all devices that create or store data reproduction of printed and graphic matter by scanning an original copy, one
in digital form. Although things that are not recorded or preserved by or in a elemental area at a time, and representing the shade or tone of each area by
computer system are omitted from this Act, they may well be admissible a specified amount of electric current. The current is transmitted as a signal
under other rules of law. This Act focuses on replacing the search for over regular telephone lines or via microwave relay and is used by the
originality, proving the reliability of systems instead of that of individual receiver to reproduce an image of the elemental area in the proper position
records, and using standards to show systems reliability. and the correct shade. The receiver is equipped with a stylus or other device
that produces a printed record on paper referred to as a facsimile.
Paper records that are produced directly by a computer system, such as
printouts, are themselves electronic records, being just the means of x x x A facsimile is not a genuine and authentic pleading. It is, at best, an
intelligible display of the contents of the record. Photocopies of the printout exact copy preserving all the marks of an original. Without the original, there
would be paper records subject to the usual rules about copies, but the is no way of determining on its face whether the facsimile pleading is genuine
"original" printout would be subject to the rules of admissibility of this Act. and authentic and was originally signed by the party and his counsel. It may,
in fact, be a sham pleading.87
However, printouts that are used only as paper records, and whose computer
origin is never again called on, are treated as paper records. See subsection Accordingly, in an ordinary facsimile transmission, there exists an
4(2). In this case the reliability of the computer system that produced the original paper-based information or data that is scanned, sent through a
record is relevant to its reliability.81 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
There is no question then that when Congress formulated the term paperless writings to be the functional equivalent and to have the same legal
"electronic data message," it intended the same meaning as the term function as paper-based documents.88 Further, in a virtual or paperless
"electronic record" in the Canada law. This construction of the term environment, technically, there is no original copy to speak of, as all direct
"electronic data message," which excludes telexes or faxes, except printouts of the virtual reality are the same, in all respects, and are
computer-generated faxes, is in harmony with the Electronic Commerce considered as originals.89 Ineluctably, the law's definition of "electronic data
Law's focus on "paperless" communications and the "functional equivalent message," which, as aforesaid, is interchangeable with "electronic
approach"82 that it espouses. In fact, the deliberations of the Legislature are document," could not have included facsimile transmissions, which have
replete with discussions on paperless and digital transactions. 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
Facsimile transmissions are not, in this sense, "paperless," but verily are legal effects. While Congress anticipated future developments in
paper-based. communications and computer technology90 when it drafted the law, it
excluded the early forms of technology, like telegraph, telex and telecopy
A facsimile machine, which was first patented in 1843 by Alexander Bain,83 is (except computer-generated faxes, which is a newer development as
a device that can send or receive pictures and text over a telephone line. It compared to the ordinary fax machine to fax machine transmission), when it
works by digitizing an image—dividing it into a grid of dots. Each dot is either defined the term "electronic data message."
on or off, 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, Clearly then, the IRR went beyond the parameters of the law when it adopted
the fax machine translates a picture into a series of zeros and ones (called a verbatim the UNCITRAL Model Law's definition of "data message," without
bit map) that can be transmitted like normal computer data. On the receiving considering the intention of Congress when the latter deleted the phrase "but
side, a fax machine reads the incoming data, translates the zeros and ones not limited to, electronic data interchange (EDI), electronic mail, telegram,
back into dots, and reprints the picture.84 A fax machine is essentially an telex or telecopy." The inclusion of this phrase in the IRR offends a basic
image scanner, a modem and a computer printer combined into a highly tenet in the exercise of the rule-making power of administrative agencies.
After all, the power of administrative officials to promulgate rules in the electronic evidence, contrary to the position of both the trial and the appellate
implementation of a statute is necessarily limited to what is found in the courts.
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 - III -
repeal a statute is vested in the Legislature.91 Thus, if a discrepancy occurs
between the basic law and an implementing rule or regulation, it is the former Nevertheless, despite the pro forma invoices not being electronic evidence,
that prevails, because the law cannot be broadened by a mere administrative this Court finds that respondent has proven by preponderance of evidence
issuance—an administrative agency certainly cannot amend an act of the existence of a perfected contract of sale.
Congress.92 Had the Legislature really wanted ordinary fax transmissions to
be covered by the mantle of the Electronic Commerce Act of 2000, it could In an action for damages due to a breach of a contract, it is essential that the
have easily lifted without a bit of tatter the entire wordings of the UNCITRAL claimant proves (1) the existence of a perfected contract, (2) the breach
Model Law. thereof by the other contracting party and (3) the damages which he/she
sustained due to such breach. Actori incumbit onus probandi. The burden of
Incidentally, the National Statistical Coordination Board Task Force on the proof rests on the party who advances a proposition affirmatively.95 In other
Measurement of E-Commerce,93 on November 22, 2006, recommended a words, a plaintiff in a civil action must establish his case by a preponderance
working definition of "electronic commerce," as "[a]ny commercial transaction of evidence, that is, evidence that has greater weight, or is more convincing
conducted through electronic, optical and similar medium, mode, than that which is offered in opposition to it.96
instrumentality and technology. The transaction includes the sale or
purchase of goods and services, between individuals, households, In general, contracts are perfected by mere consent,97 which is manifested
businesses and governments conducted over computer-mediated networks by the meeting of the offer and the acceptance upon the thing and the cause
through the Internet, mobile phones, electronic data interchange (EDI) and which are to constitute the contract. The offer must be certain and the
other channels through open and closed networks." The Task Force's acceptance absolute.98 They are, moreover, obligatory in whatever form they
proposed definition is similar to the Organization of Economic Cooperation may have been entered into, provided all the essential requisites for their
and Development's (OECD's) broad definition as it covers transactions made validity are present.99 Sale, being a consensual contract, follows the general
over any network, and, in addition, it adopted the following provisions of the rule that it is perfected at the moment there is a meeting of the minds upon
OECD definition: (1) for transactions, it covers sale or purchase of goods and the thing which is the object of the contract and upon the price. From that
services; (2) for channel/network, it considers any computer-mediated moment, the parties may reciprocally demand performance, subject to the
network and NOT limited to Internet alone; (3) it excludes transactions provisions of the law governing the form of contracts.100
received/placed using fax, telephone or non-interactive mail; (4) it considers
The essential elements of a contract of sale are (1) consent or meeting of the
payments done online or offline; and (5) it considers delivery made online
minds, that is, to transfer ownership in exchange for the price, (2) object
(like downloading of purchased books, music or software programs) or offline
certain which is the subject matter of the contract, and (3) cause of the
(deliveries of goods).94
obligation which is established.101
We, therefore, conclude that the terms "electronic data message" and
In this case, to establish the existence of a perfected contract of sale
"electronic document," as defined under the Electronic Commerce Act of
between the parties, respondent Ssangyong formally offered in evidence the
2000, do not include a facsimile transmission. Accordingly, a facsimile
testimonies of its witnesses and the following exhibits:
transmissioncannot 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.

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 photocopies of the original fax transmittals, are not
 2000, original defendants for the agreed opening of the
Letters of Credit, defendants' failure and
hibit Description Purpose J Letter to defendants dated 26 June refusal to comply with their obligations and the
2000, original problems of plaintiff is incurring by reason of
E Pro forma Invoice dated 17 April To show that defendants contracted with defendants' failure and refusal to open the
2000 with Contract No. ST2- plaintiff for the delivery of 110 MT of stainless L/Cs.
K Letter to defendants dated 27 June
POSTS0401-1, photocopy steel from Korea payable by way of an 2000, original
irrevocable letter of credit in favor of plaintiff,
among other conditions.
L Facsimile message to defendants
dated 28 June 2000, photocopy
E-1 Pro forma Invoice dated 17 April To show that defendants sent their
2000 with Contract No. ST2- confirmation of the (i) delivery to it of the
M Letter from defendants dated 29 June To prove that defendants admit of their
POSTS0401, contained in specified stainless steel products, (ii) 2000, contained in facsimile/thermal liabilities to plaintiff, that they requested for
facsimile/thermal paper faxed by defendants' payment thereof by way of an paper faxed by defendants to plaintiff "more extension" of time for the opening of the
defendants to plaintiff showing the irrevocable letter of credit in favor of plaintiff, showing the printed transmission Letter of Credit, and begging for favorable
printed transmission details on the among other conditions. details on the upper portion of said understanding and consideration.
upper portion of said paper as
paper as coming from defendant
coming from defendant MCC on 26
MCC on 29 June 00 11:12 AM
Apr 00 08:41AM
M- Signature of defendant Gregory
E-2 Conforme signature of Mr. Gregory To show that defendants sent their
1 Chan, contained in facsimile/thermal
Chan, contained in facsimile/thermal confirmation of the (i) delivery to it of the total paper faxed by defendants to plaintiff
paper faxed by defendants to plaintiff of 220MT specified stainless steel products, (ii) showing the printed transmission
showing the printed transmission defendants' payment thereof by way of an details on the upper portion of said
details on the upper portion of said irrevocable letter of credit in favor of plaintiff, paper as coming from defendant
paper as coming from defendant among other conditions. MCC on June 00 11:12 AM
MCC on 26 Apr 00 08:41AM
N Letter to defendants dated 29 June
F Pro forma Invoice dated 17 April To show that defendants contracted with 2000, original
2000 with Contract No. ST2- plaintiff for delivery of another 110 MT of
POSTSO401-2, photocopy stainless steel from Korea payable by way of
an irrevocable letter of credit in favor of O Letter to defendants dated 30 June To prove that plaintiff reiterated its request for
plaintiff, among other conditions. 2000, photocopy defendants to L/C opening after the latter's
request for extension of time was granted,
defendants' failure and refusal to comply
G Letter to defendant SANYO SEIKE To prove that defendants were informed of the therewith extension of time notwithstanding.
dated 20 June 2000, contained in date of L/C opening and
facsimile/thermal paper defendant's conforme/approval thereof.
P Letter to defendants dated 06 July
2000, original
G- Signature of defendant Gregory
1 Chan, contained in facsimile/thermal
paper. Q Demand letter to defendants dated To prove that plaintiff was constrained to
15 Aug 2000, original engaged services of a lawyer for collection
efforts.
H Letter to defendants dated 22 June To prove that defendants were informed of the
2000, original successful price adjustments secured by
plaintiff in favor of former and were advised of R Demand letter to defendants dated To prove that defendants opened the first L/C
the schedules of its L/C opening. 23 Aug 2000, original in favor of plaintiff, requested for further
postponement of the final L/C and for minimal
amounts, were urged to open the final L/C on
I Letter to defendants dated 26 June To prove that plaintiff repeatedly requested
time, and were informed that failure to comply
 will cancel the contract. and paid for by defendant MCC.

S Demand letter to defendants dated To show defendants' refusal and failure to DD Letter from defendant MCC to To prove that there was a perfected sale
11 Sept 2000, original open the final L/C on time, the cancellation of plaintiff SSANGYONG dated 22 and purchase agreement between plaintiff
the contract as a consequence thereof, and August 2000, contained in SSANGYONG and defendant MCC for
final demand upon defendants to remit its
facsimile/thermal paper with the balance of 100 metric tons, apart from
obligations.
back-up photocopy the other order and shipment of 100
metric tons which was delivered by
W Letter from plaintiff SSANGYONG to To prove that there was a perfected sale and
defendant SANYO SEIKI dated 13 purchase agreement between the parties for plaintiff SSANGYONG and paid for by
April 2000, with fax back from 220 metric tons of steel products at the price of defendant MCC.
defendants SANYO SEIKI/MCC to US$1,860/ton.
plaintiff SSANGYONG, contained in DD- Ref. No. ST2-POSTS080- To prove that there was a perfected sale
facsimile/thermal paper with back-up 1 1, contained in facsimile/thermal and purchase agreement between plaintiff
photocopy paper with back-up photocopy SSANGYONG and defendant MCC for
the balance of 100 metric tons, apart from
W- Conforme signature of defendant To prove that defendants, acting through the other order and shipment of 100
1 Gregory Chan, contained in Gregory Chan, agreed to the sale and metric tons which was delivered by
facsimile/thermal paper with back-up purchase of 220 metric tons of steel products
plaintiff SSANGYONG and paid for by
photocopy at the price of US$1,860/ton.
defendant MCC.
W- Name of sender MCC Industrial To prove that defendants sent their conformity
2 Sales Corporation to the sale and purchase agreement by DD-2 Signature of defendant Gregory To prove that defendant MCC, acting
facsimile transmission. Chan, contained in through Gregory Chan, agreed to the sale
facsimile/thermal paper with and purchase of the balance of 100 metric
X Pro forma Invoice dated 16 To prove that defendant MCC agreed to back-up photocopy tons, apart from the other order and
August 2000, photocopy adjust and split the confirmed purchase shipment of 100 metric tons which was
order into 2 shipments at 100 metric tons delivered by plaintiff Ssangyong and paid
each at the discounted price of for by defendant MCC.102
US$1,700/ton.
Significantly, among these documentary evidence presented by respondent,
X-1 Notation "1/2", photocopy To prove that the present Pro forma MCC, in its petition before this Court, assails the admissibility only of Pro
Invoice was the first of 2 pro forma Forma Invoice Nos. ST2-POSTS0401-1 and ST2-POSTS0401-2 (Exhibits
invoices. "E" and "F"). After sifting through the records, the Court found that these
invoices are mere photocopies of their original fax transmittals. Ssangyong
avers that these documents were prepared after MCC asked for the splitting
X-2 Ref. No. ST2-POSTS080- To prove that the present Pro
of the original order into two, so that the latter can apply for an L/C with
1, photocopy formaInvoice was the first of 2 pro
greater facility. It, however, failed to explain why the originals of these
formainvoices.
documents were not presented.
X-3 Conforme signature of defendant To prove that defendant MCC, acting To determine whether these documents are admissible in evidence, we apply
Gregory Chan, photocopy through Gregory Chan, agreed to the sale the ordinary Rules on Evidence, for as discussed above we cannot apply the
and purchase of the balance of 100 metric Electronic Commerce Act of 2000 and the Rules on Electronic Evidence.
tons at the discounted price of
US$1,700/ton, apart from the other order Because these documents are mere photocopies, they are simply secondary
and shipment of 100 metric tons which evidence, admissible only upon compliance with Rule 130, Section 5, which
was delivered by plaintiff SSANGYONG 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 This Court also finds merit in the following observations of the trial court:
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." Defendants presented Letter of Credit (Exhibits "1", "1-A" to "1-R") referring
Furthermore, the offeror of secondary evidence must prove the predicates to Pro Forma Invoice for Contract No. ST2POSTS080-2, in the amount of
thereof, namely: (a) the loss or destruction of the original without bad faith on US$170,000.00, and which bears the signature of Gregory Chan, General
the part of the proponent/offeror which can be shown by circumstantial Manager of MCC. Plaintiff, on the other hand, presented Pro Forma Invoice
evidence of routine practices of destruction of documents; (b) the proponent referring to Contract No. ST2-POSTS080-1, in the amount of
must prove by a fair preponderance of evidence as to raise a reasonable US$170,000.00, which likewise bears the signature of Gregory Chan, MCC.
inference of the loss or destruction of the original copy; and (c) it must be Plaintiff accounted for the notation "1/2" on the right upper portion of the
shown that a diligent and bona fide but unsuccessful search has been made Invoice, that is, that it was the first of two (2) pro forma invoices covering the
for the document in the proper place or places. It has been held that where subject contract between plaintiff and the defendants. Defendants, on the
the missing document is the foundation of the action, more strictness in proof other hand, failed to account for the notation "2/2" in its Pro Forma Invoice
is required than where the document is only collaterally involved. 103 (Exhibit "1-A"). Observably further, both Pro Forma Invoices bear the same
date and details, which logically mean that they both apply to one and the
Given these norms, we find that respondent failed to prove the existence of same transaction.106
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 Indeed, why would petitioner open an L/C for the second half of the
F cannot be admitted in evidence and accorded probative weight. transaction if there was no first half to speak of?

It is observed, however, that respondent Ssangyong did not rely merely on The logical chain of events, as gleaned from the evidence of both parties,
Exhibits E and F to prove the perfected contract. It also introduced in started with the petitioner and the respondent agreeing on the sale and
evidence a variety of other documents, as enumerated above, together with purchase of 220MT of stainless steel at US$1,860.00 per MT. This initial
the testimonies of its witnesses. Notable among them are Pro Forma Invoice contract was perfected. Later, as petitioner asked for several extensions to
Nos. ST2-POSTS080-1 and ST2-POSTS080-2 which were issued by pay, adjustments in the delivery dates, and discounts in the price as originally
Ssangyong and sent via fax to MCC. As already mentioned, these invoices agreed, the parties slightly varied the terms of their contract, without
slightly varied the terms of the earlier invoices such that the quantity was now necessarily novating it, to the effect that the original order was reduced to
officially 100MT per invoice and the price reduced to US$1,700.00 per MT. 200MT, split into two deliveries, and the price discounted to US$1,700 per
The copies of the said August 16, 2000 invoices submitted to the court bear MT. Petitioner, however, paid only half of its obligation and failed to open an
the conformity signature of MCC Manager Chan. L/C for the other 100MT. Notably, the conduct of both parties sufficiently
established the existence of a contract of sale, even if the writings of the
Pro Forma Invoice No. ST2-POSTS080-1 (Exhibit "X"), however, is a mere parties, because of their contested admissibility, were not as explicit in
photocopy of its original. But then again, petitioner MCC does not assail the establishing a contract.107 Appropriate conduct by the parties may be
admissibility of this document in the instant petition. Verily, evidence not sufficient to establish an agreement, and while there may be instances where
objected to is deemed admitted and may be validly considered by the court in the exchange of correspondence does not disclose the exact point at which
arriving at its judgment.104 Issues not raised on appeal are deemed the deal was closed, the actions of the parties may indicate that a binding
abandoned. obligation has been undertaken.108

As to Pro Forma Invoice No. ST2-POSTS080-2 (Exhibits "1-A" and "2-C"), With our finding that there is a valid contract, it is crystal-clear that when
which was certified by PCIBank as a true copy of its original,105 it was, in fact, petitioner did not open the L/C for the first half of the transaction (100MT),
petitioner MCC which introduced this document in evidence. Petitioner MCC despite numerous demands from respondent Ssangyong, petitioner
paid for the order stated in this invoice. Its admissibility, therefore, is not open breached its contractual obligation. It is a well-entrenched rule that the failure
to question. 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
These invoices (ST2-POSTS0401, ST2-POSTS080-1 and ST2-POSTS080- credit as stipulated, the seller or exporter is entitled to claim damages for
2), along with the other unchallenged documentary evidence of respondent such breach. Damages for failure to open a commercial credit may, in
Ssangyong, preponderate in favor of the claim that a contract of sale was appropriate cases, include the loss of profit which the seller would
perfected by the parties. reasonably have made had the transaction been carried out.109
- IV - subject of the parties' breached contract, fail to convince this Court of the
veracity of its contents. The steel items indicated in the sales contract114 with
This Court, however, finds that the award of actual damages is not in accord a Korean corporation are different in all respects from the items ordered by
with the evidence on record. It is axiomatic that actual or compensatory petitioner MCC, even in size and quantity. We observed the following
damages cannot be presumed, but must be proven with a reasonable degree discrepancies:
of certainty.110 In Villafuerte v. Court of Appeals,111 we explained that:
List of commodities as stated in Exhibit "V":
Actual or compensatory damages are those awarded in order to compensate
a party for an injury or loss he suffered. They arise out of a sense of natural COMMODITY: Stainless Steel HR Sheet in Coil, Slit Edge
justice and are aimed at repairing the wrong done. Except as provided by law SPEC: SUS304 NO. 1
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 SIZE/Q'TY:
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, 2.8MM X 1,219MM X C 8.193MT
thus:

A party is entitled to an adequate compensation for such pecuniary loss 3.0MM X 1,219MM X C 7.736MT
actually suffered by him as he has duly proved. Such damages, to be
recoverable, must not only be capable of proof, but must actually be proved 3.0MM X 1,219MM X C 7.885MT
with a reasonable degree of certainty. We have emphasized that these
damages cannot be presumed and courts, in making an award must point 3.0MM X 1,219MM X C 8.629MT
out specific facts which could afford a basis for measuring whatever
compensatory or actual damages are borne.112 4.0MM X 1,219MM X C 7.307MT

In the instant case, the trial court awarded to respondent Ssangyong 4.0MM X 1,219MM X C 7.247MT
US$93,493.87 as actual damages. On appeal, the same was affirmed by the
appellate court. Noticeably, however, the trial and the appellate courts, in
4.5MM X 1,219MM X C 8.450MT
making the said award, relied on the following documents submitted in
evidence by the respondent: (1) Exhibit "U," the Statement of Account dated
March 30, 2001; (2) Exhibit "U-1," the details of the said Statement of 4.5MM X 1,219MM X C 8.870MT
Account); (3) Exhibit "V," the contract of the alleged resale of the goods to a
Korean corporation; and (4) Exhibit "V-1," the authentication of the resale 5.0MM X 1,219MM X C 8.391MT
contract from the Korean Embassy and certification from the Philippine
Consular Office. 6.0MM X 1,219MM X C 6.589MT

The statement of account and the details of the losses sustained by 6.0MM X 1,219MM X C 7.878MT
respondent due to the said breach are, at best, self-serving. It was
respondent Ssangyong itself which prepared the said documents. The items 6.0MM X 1,219MM X C 8.397MT
therein are not even substantiated by official receipts. In the absence of
corroborative evidence, the said statement of account is not sufficient basis TOTAL: 95.562MT115
to award actual damages. The court cannot simply rely on speculation,
conjecture or guesswork as to the fact and amount of damages, but must List of commodities as stated in Exhibit "X" (the invoice that was not paid):
depend on competent proof that the claimant had suffered, and on evidence
of, the actual amount thereof.113 DESCRIPTION: Hot Rolled Stainless Steel Coil SUS 304
Furthermore, the sales contract and its authentication certificates, Exhibits
"V" and "V-1," allegedly evidencing the resale at a loss of the stainless steel SIZE AND QUANTITY:
 2.6 MM X 4' X C 10.0MT SO ORDERED

3.0 MM X 4' X C 25.0MT

4.0 MM X 4' X C 15.0MT

4.5 MM X 4' X C 15.0MT

5.0 MM X 4' X C 10.0MT

6.0 MM X 4' X C 25.0MT

TOTAL: 100MT116

From the foregoing, we find merit in the contention of MCC that Ssangyong
did not adequately prove that the items resold at a loss were the same items
ordered by the petitioner. Therefore, as the claim for actual damages was not
proven, the Court cannot sanction the award.

Nonetheless, 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 respondent's continuous
accommodation, petitioner completely reneged on its contractual duty. For
such inattention 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.'"117 Accordingly, the Court awards nominal
damages of P200,000.00 to respondent Ssangyong.

As to the award of attorney's 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 attorney's fees. The party must show that he falls under
one of the instances enumerated in Article 2208 of the Civil Code.118 In the
instant case, however, the Court finds the award of attorney's fees proper,
considering that petitioner MCC's unjustified refusal to pay has compelled
respondent Ssangyong to litigate and to incur expenses to protect its rights.

WHEREFORE, PREMISES CONSIDERED, the appeal is PARTIALLY

GRANTED. The Decision of the Court of Appeals in CA-G.R. CV No. 82983
is MODIFIED in that the award of actual damages is DELETED. However,
petitioner is ORDERED to pay respondent NOMINAL DAMAGES in the
amount of P200,000.00, and the ATTORNEY'S FEES as awarded by the
trial court.
MCC INDUSTRIAL SALES CORPORATION, petitioner, vs. The Implementing Rules and Regulations (IRR) of R.A. No. 8792 defines the
SSANGYONG CORPORATION, respondents. “Electronic Data Message” refers to information generated, sent, received or
G.R. No. 170633; October 17, 2007 stored by electronic, optical or similar means, but not limited to, electronic
Facts: data interchange (EDI), electronic mail, telegram, telex or telecopy.
Petitioner is engaged in the business of importing and wholesaling stainless
steel products. One of its suppliers is the responded, an international trading The phrase “but not limited to, electronic data interchange (EDI), electronic
company with head office in Seoul, South Korea and regional headquarters mail, telegram, telex or telecopy” in the IRR’s definition of “electronic data
in Makati City, Philippines. The two corporations conducted business through message” is copied from the Model Law on Electronic Commerce adopted by
telephone calls and facsimile or telecopy transmissions. Respondent would the United Nations Commission on International Trade Law (UNCITRAL),
send the pro forma invoices containing the details of the steel product order from which majority of the provisions of R.A. No. 8792 were taken. While
to petitioner; if the latter conforms thereto, its representative affixes his Congress deleted this phrase in the Electronic Commerce Act of 2000, the
signature on the faxed copy and sends it back to the respondent, again by drafters of the IRR reinstated it. The deletion by Congress of the said phrase
fax. is significant and pivotal.

Respondent filed a civil action for damages due to breach of contract against Moreover, when Congress formulated the term “electronic data message,” it
petitioner before the Regional Trial Court of Makati City. In its complaint, intended the same meaning as the term “electronic record” in the Canada
respondent alleged that defendants breached their contract when they law. This construction of the term “electronic data message,” which excludes
refused to open the letter of credit in the amount of US$170,000.00 for the telexes or faxes, except computer-generated faxes, is in harmony with the
remaining 100MT of steel under Pro Forma Invoice Nos. ST2-POSTS0401- Electronic Commerce Law’s focus on “paperless” communications and the
1 and ST2-POSTS0401-2. “functional equivalent approach” that it espouses. Facsimile transmissions
are not, in this sense, “paperless,” but verily are paper-based.
After respondent rested its case, petitioner filed a Demurrer to Evidence
alleging that respondent failed to present the original copies of the pro forma [I]n an ordinary facsimile transmission, there exists an original paper-based
invoices on which the civil action was based. Petitioner contends that the information or data that is scanned, sent through a phone line, and re-printed
photocopies of the pro forma invoices presented by respondent at the receiving end. … [I]n a virtual or paperless environment, technically,
Ssangyong to prove the perfection of their supposed contract of sale are there is no original copy to speak of, as all direct printouts of the virtual reality
inadmissible in evidence and do not fall within the ambit of R.A. No. 8792, are the same, in all respects, and are considered as originals. Ineluctably,
because the law merely admits as the best evidence the original the law’s definition of “electronic data message,” which, as aforesaid, is
fax transmittal. On the other hand, respondent posits that, from a reading of interchangeable with “electronic document,” could not have included
the law and the Rules on Electronic Evidence, the original facsimile facsimile transmissions, which have an original paper-based copy as sent
transmittal of the pro forma invoice is admissible in evidence since it is an and a paper-based facsimile copy as received. These two copies are distinct
electronic document and, therefore, the best evidence under the law and the from each other, and have different legal effects. While Congress anticipated
Rules. Respondent further claims that the photocopies of these future developments in communications and computer technology when it
fax transmittals (specifically ST2-POSTS0401-1 and ST2-POSTS0401-2) are drafted the law, it excluded the early forms of technology, like telegraph, telex
admissible under the Rules on Evidence because the respondent sufficiently and telecopy (except computer-generated faxes, which is a newer
explained the non-production of the original fax transmittals. development as compared to the ordinary fax machine to fax machine
transmission), when it defined the term “electronic data message.”
Issue:Whether the print-out and/or photocopies of facsimile transmissions
are electronic evidence and admissible as such? [T]he terms “electronic data message” and “electronic document,” as defined
under the Electronic Commerce Act of 2000, do not include a facsimile
Held:Electronic document shall be regarded as the equivalent of an original transmission. Accordingly, a facsimile transmission cannot be considered as
document under the Best Evidence Rule, as long as it is a printout or output electronic evidence. It is not the functional equivalent of an original under the
readable by sight or other means, showing to reflect the data accurately. Best Evidence Rule and is not admissible as electronic evidence
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.