A Practical Use of E-Commerce in Shipping Transactions
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Unfortunately, the technology market and many of the so-called “dot.com” millionaires have crashed but have now been replaced by powerhouses like Amazon and Alibaba and China.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