Facsimile Transaction Outputs are “not” Electronic Documents, says SC

Just last October 17, 2007, Justice Nachura [or maybe his law clerk] interpreted “Electronic Documents” of Section 5 (f) of RA 8792 (Electronic Commerce Act of 2000) to exclude original data print-out of telefax machines. He held that since the phrase “but not limited to, electronic data interchange (EDI), electronic mail, telegram, telex or telecopy” was deleted from Section 6 (e) from the IRR of RA 8792, there is a need to resort to the mode of interpretation required by the E-Commerce Act enunciated in Section 37 and deliberation records to determine legislative intent.

(Though Section 6 (e) of the IRR refers to “Electronic Data Message” and Section 5 (f) of the Act refers to “Electronic Documents,” the technical working group of the Bicameral Conference Committee adopted both terms and intended them to be the equivalent of each one.)

Section 37 of the Act states that “Unless otherwise expressly provided for, the interpretation of this Act shall give due regard to its international origin and the need to promote uniformity in its application and the observance of good faith in international trade relations…”

The question is whether the legislative deliberation records are included as “provided for” in the Act or not. The section seems to give precedence to the interpretation of the Act’s international origin (which is the UNCITRAL Model Law) than to the deliberation records of the legislature. For the sake of uniformity of application.

If not, how outrageous. The sovereign authority’s own interpretation is disregarded in interpreting the Act it created by virtue of its sovereignty in applying the Act in its territory.

But then again, the result is equally outrageous. Justice Nachura [or his clerk] interpreted telefax transmissions as out of the scope of electronic documents in the case of MCC Industrial Sales Corporation v Ssangyong Corporation. It held that during the deliberations of the Senate, Senator Miriam Defensor-Santiago on April 3, 2000 proposed to insert an amendment of the term “Electronic Data Message” which [as drafted] would not apply to telexes or faxes, except computer-generated faxes, unlike the United Nations model law. Sen Defensor-Santiago acquired the definition of the term from the 1998 Canadian E-Commerce Law. Her amendment was approved. It held that this interpretation is in harmony with the Canadian Law’s focus on “paperless” communications and the functional equivalent approach. It further held that the deliberations of the Legislature are replete with discussions on paperless and digital transactions, and that facsimile transactions are paper-based.

The decision disregarded many things.

It disregarded the ordinary meaning of electronic documents as the representation of data which is received, transmitted, processed, retrieved or produced electronically. Fax machines, as the court admits, compose an image into grids or dots, which dots are electronically represented by a bit with a value of either 1 or 0. The image is transmitted like a normal computer data, and the receiving machine translates the 0s and 1s back into dots and reprints the picture. Facsimile transactions then, commonsensically, fall within the definition of electronic documents. They are digital images that are produced, processed, transmitted, retrieved and received electronically, even though the medium is paper. It is a document, it is electronically digitally processed, though it is read on paper. VoIP and facsimile transactions should be placed on equal footing. They both use packets, though VOIP uses Digital Packet Switch Network and facsimile transactions use Public Switched Telephone Network.

It disregarded the goal of Section 37 – to achieve uniformity of interpretation. The UNCITRAL Model Law holds that electronic documents are “not limited to EDI, electronic mail, telegram, telex or telecopy. This means products of facsimile transactions may be considered electronic documents, assuming they are similar to telex or telecopy.” The Act does not include this phrase, but the IRR does. But since the international origin of the Act is the UNCITRAL Model Law itself, it should have been considered as part of the act.

One might say then that Senator Defensor-Santiago’s amendment should be disregarded. Well, my take is that if the goal is to widen the sanction over the different modes of doing business brought about by information and communications technology, then by all means facsimile transactions should be included. It is one of the vital modes of doing business today, because it is very convenient. It had been in place even before the emergence of VOIP, which as a mode might replace facsimile transactions. Facsimile transaction outputs do not clearly come within the scope of Rule 130 Section 4 [Original of a Document] because they are electronically-processed, and the 1997 revision of the Revised Rules on Evidence of the Rules of Court is silent on electronically-processed documents. This is one of situations the E-Commerce Act, in conjunction with the Rules on Electronic Evidence promulgated by the Supreme Court, seeks to remedy. To take them outside the scope of the Act would be turning a blind eye over the fact that it is a convenient and prevalent mode of transacting business.

It disregarded the guide to the enactment of the UNCITRAL Model Law. The guide states that Model law’s functional equivalent approach is “based on the recognition that [present] legal requirements prescribing the use of traditional paper-based documentation constitute the main obstacle to the development of the modern means of communication…[and that a way to deal with such obstacle is to] extend the scope of such notions of ‘writing,’ ‘signature’ and ‘original’ with a view to encompassing computer techniques.”

The extension of the protection from paper to electronic documents does not mean ignoring in-between, neither-here-nor-there situations such as facsimile transactions that are also electronically-processed but later ends on paper. The fact that the final output ends on paper does not obliterate its mode of processing – still electronic. Obliterating this prevalent way of doing business outside the scope of electronic documents keeps it outside the protection, and thus regulation, of the law. And because it is not at all sanctioned by the law, it becomes a useless mode. Its convenience is diluted not because it is easy to use but because it is illegally feasible from lawful acknowledgement, thus protection. Those who are currently using this as a mode are greatly inconvenienced and I’m sure, frustrated. Anyway, the case still affirmed the existence of obligation by looking at the totality of the documents adduced which mainly consisted of exchange of letters. Still, it could have been easier for the claiming creditor, and faster.

It disregarded the policy of the Act to “help realize the need to create an information-friendly environment which supports and ensures the availability, diversity and affordability of ICT products and services.” The court’s interpretation will achieve the opposite: it will drive the technology of facsimile transactions into obsolescence, because the products of such transactions do not hold any probative value in the eyes of the law in proving rights and obligations. Instead, from facsimile transactions, resort should be had to letter-writing. How romantic.

It disregarded the policy of the Act of “its obligation to…ensure network…connectivity and neutrality of technology for the national benefit.” The court discouraged network connectivity by disallowing products of facsimile transactions within the scope of protection of electronic documents. It disregarded the benefits of its convenience to the nation.