A Practical Use of E-Commerce in Shipping Transactions

Valeriano Del RosarioManaging Partner, Vera Law (Del Rosario Raboca Gonzales Grasparil)

The E-Commerce law or Republic Act 8792 was signed by then President Estrada on the 14th of June 2000.

 

The purpose of the E-commerce law is two-fold.  First, it gives validity and legal recognition to electronic documents, electronic signatures and electronic transactions.  Secondly, the law facilitates the admission of electronic documents and electronic signatures as evidence in case of litigation.

Perhaps it was truer in the year 2000 than it is this year, but the perception of many people round the world was that a lot of wealth was being created through Electronic Commerce. It was only natural that the Philippines would want a share of that new found wealth.

 Unfortunately, the technology market and many of the so-called “dot.com” millionaires have crashed but have now been replaced by powerhouses like Amazon and Alibaba and China. However, the E-commerce law is still a very useful piece of legislation and this will be explained during the lecture together with the failed attempt to use it in shipping.

The Problem

The stumbling block to Electronic Commerce in the Philippines is embedded in the Civil Code of the Philippines. Art. 1403 of the Civil Code which is known as the stature of frauds, states that:-

 

“ART. 1403.       The     following   contracts   are unenforceable, unless they are ratified:

(2) Those that do not comply with the Statute of Frauds as set forth in this number.  In the following cases        an agreement  hereafter made  shall  be unenforceable by actions, unless the same,  or  some  note or  memorandum thereof,   be   in writing,  and  subscribed by    the    party             charged, or by his agent; evidence, therefore, of the agreement cannot be received without the writing, or a secondary evidence of its contents:

(a)   An  agreement that  by its terms is not to be performed within a year from the making thereof;

(b) A  special  promise to  answer  for the debt,   default,  or  miscarriage of another;

(c) An  agreement made  in  consideration of     marriage,     other     than    a mutual promise to marry;

(d) An agreement for the sale of goods, chattels or things in action, at a price not less than five hundred pesos, unless the buyer accept and receive part of such goods and  chattels, or the  evidences,  or some of them,  of  such things in action, or pay at  the  same time  some  part of  the purchase money;   but when a sale is made by   auction   and   entry is  made  by   the auctioneer in his sales book, at the time of the sale of the  amount and  kind  property sold, terms of sale, price, names of the purchasers and person on whose account the   sale    is    made,   it   is   sufficient memorandum;

(e) An agreement for the leasing for a longer period than one year, or for the sale of real property or of an interest therein;

(f) A representation as to the credit of a third person.” 

A case study will be presented at this juncture during the lecture.

 

The Solution: R.A. 8792

 

            Question 1. How does the E-commerce law apply to the shipping industry.

 

            The E-commerce law is expressly made to apply to maritime commerce under Part 3 of the law. I would draw your attention to Sec. 25 of the E-commerce law.

 

            “Sec. 25 –       Actions Related to Contracts of Carriage of Goods –

                                    b ii)      giving instructions to carriers.

                                    f)         granting, acquiring, renouncing surrendering, transferring a                                        negotiating rights to goods.

                                    g)         acquiring or transferring rights and obligations under the                                           contracts.”

 

            In addition, Sec. 26 of the E-commerce law specifically states that electronic messages and electronic documents are a valid substitute for a paper document.

 

Sec. 26 – Where the law requires that any action referred to in Sec. 25 be carried out in writing or by using a paper document that requirement is met if the action is carried out by using one or more electronic data messages or electronic documents.”

 

            Question 2. What happens if a party to an electronic transaction resorts to paper documentation?

 

            See Sec. 26(5) – no paper document used to effect any action is valid unless use of electronic data message or electronic document has been terminated and replaced.

 

            Question 3. What is the broader application of the E-commerce law?

 

                        “Sec. 4 – Sphere of Application

 

                                    This Act shall apply to any kind of electronic data message and                  electronic   document   used   in   the   context   of   commercial and non-               commercial activities  to  include domestic  and    international dealings,               transactions,   arrangements,   agreements,   contracts  and exchanges and                         storage of information.”

 

            Question 4. What is the meaning of the terms electronic data message, electronic signature, electronic documents?`

 

                        “Sec. 5 – Definition of  Terms –

                                    For the purposes of this Act, the following terms are defined, as                 follows:

                                    “Electronic Data Message” refers to information generated, sent,                received or stored by electronic, optical or similar means.

 

                                    “Electronic Signature”     refers     to    any    distinctive   mark,              characteristic and/or sound in electronic form, representing the identity of                a person and  attached  to or logically  associated with the electronic data              message or  electronic documents  or  any   methodology  or   procedures                      employed or adopted by a person and executed or adopted by such person                       with the  intention  of   authenticating or  approving   an electronic  data                   message or electronic document.

 

“Electronic Document” refers to information or the representation of information,    data,    figures,    symbols  or other modes   of written expression,   described or however represented, by which a right is established or an obligation extinguished, or by which a fact may be proved and affirmed, which is received, recorded, transmitted, stored, processed, retrieved or produced electronically.

 

  • The Supreme Court has already decided that a facsimile transmission is not an “electronic data message” or an “electronic document. The fax is sent electronically but it cannot be considered as electronic evidence by the Court. (MCC Industrial Sales Corporation vs. Ssangyong Corporation, G.R. No. 170633, October 17, 2007; Torres vs. Pagcor, G.R. No. 193531, December 14, 2011 citing MCC Industrial Sales vs. Ssangyong)

 

            Question 5. How does the E-commerce Law solve the problem of enforceability under  Art. 1403 of the Civil Code.

 

            The answer is set out in sections 6, 7, 8 and 12 of the E-commerce law.

                        “Sec. 6 -Legal  Recognition  of Electronic  Data  Message –                                   Information shall  not be  denied  validity or  enforceability solely on the                ground that  it  is in  the form of an electronic data message purporting to                         give  rise  to such  legal  effect, or  that  it   is   merely   incorporated   by                  reference in that electronic data message.”

 

                        “Sec. 7 – Legal Recognition of Electronic Documents – Electronic              documents shall have the legal effect, validity or enforceability as any                  other document or legal writing,”  and –

                       

                                    (a) Where the law requires a document to be in writing, that                        requirement   is   met   by     an     electronic     document     if     the    said                         electronic document maintains its integrity and reliability and can be                       authenticated so as to be usable for subsequent references, in that:-

                       

(i)             The  electronic document  has  remained complete  and unaltered, apart from the  addition of any endorsement and any authorized change, or any change  which   arises    in the normal course of communication, storage and display; and

                       

                        (ii)       The electronic document is reliable is reliable in the light of the                                purpose for which it was generated and in the light of all relevant                              circumstances.

 

                                    (b)       Paragraph (a) applies whether the requirement therein is in              the   form   of   an     obligation     or     whether     the     law      simply                         provides consequences for the document not being presented or retained                on its original form.

 

                                    (c)        Where  the  law requires  that  a document be presented or                         retained in  its  original form  that  requirement is  met by  an electronic                     document if:-

           

                        (i)        There   exists   a   reliable   assurance   as   to   the   integrity of                               the document from the time when it was first generated in its final                            form; and

                       (ii)      The document is capable of being displayed to the person to whom                                    it is to be presented:  Provided.   That   no   provision of  this  Act                            shall apply to vary any and all requirement of existing laws on                                formalities   required   in  the   execution   of   documents   for                           their validity.

                                   

                                    For evidentiary  purposes,  an electronic  document  shall be   the                         functional equivalent or a written document under existing laws.

 

                                    This   Act   does   not   modify  any   statutory   rule    relating   to                       the admissibility  of  electronic data  messages  or electronic documents,                    except the rules relating to authentication and best evidence.”

 

Sec. 8 –   Legal   Recognition   of    Electronic   Signatures –   An electronic signature  on   the   electronic   documents  shall be  equivalent  to the       signature of  a  person on  a  written document  if  the signature is an electronic signature  and proved by showing that a prescribed procedure, not alterable by the       parties interested in the electronic document, existed under which –

 

a.)   A method  is  used to identify the party sought to be bound and to indicate  said party’s  access  to the electronic document necessary for his consent or approval through the electronic signature;

b.)   Said method  is  reliable and appropriate for the purpose for which the  electronic document  was  generated or  communicated,  in the  light  of all circumstances, including any relevant agreement;

c.)   It is necessary for the party sought to be bound, in order to proceed further with the transaction, to have executed or provided the electronic signature; and

d.)   The other  party  is authorized  and enabled to verify the electronic signature and  to make the decision to proceed with the transaction authenticated by the same.”

 

            Question 6. How does the E-commerce Law solve the problem of admissibility of evidence under standard court requirements calling for proof by means of a paper document.

Sec. 12 –  Admissibility and Evidential Weight of Electronic Data Messages or Electronic Documents –  In any legal proceedings, nothing in the  application of the rules on evidence shall deny the admissibility of an electronic data message or electronic document in evidence –

 

                                    a. On the sole ground that it is in electronic form; or

                                    b. On the ground that it is not in the standard written form, and the                        electronic data message or electronic documents meeting, and complying                      with the requirements under Sections 6 or 7 hereof shall be the best                         evidence of the agreement and transaction contained therein.

 

                                    In assessing the evidential weight of an electronic data message or                electronic document,   the  reliability of  the  manner in  which  it   was                        generated, stored or communicated, the reliability of the manner in which               its originator  was identified,   and other relevant factors shall be given                         due regards.”

                       

                        The Internet and the Promulgation of Laws

It is interesting to note that while the Civil Code provides that “laws take effect fifteen days following the completion of their publication either in the Official Gazette, or in a newspaper of general circulation in the Philippines”, the E-Commerce Law does not make the internet a medium for publishing laws, rules and regulations. (Garcillano vs. The House of Representatives Committees on Public Information, G.R. No. 170338, December 23, 2008)

 

Presented by:

 

VALERIANO R. DEL ROSARIO