Citibank, N.A. Mastercard vs. Teodoro

Before secondary evidence may be admitted to prove the contents of original documents, the offeror must prove the due execution or existence of the original, its loss, destruction, or unavailability, and the absence of bad faith; where multiple original copies exist, all must be accounted for. A photocopy may not be used without accounting for the other originals.

Citibank, N.A. Mastercard operates a credit card system through which it extends credit accommodations to cardholders for purchases from member establishments, with cardholders later paying upon receipt of billings or statements of account. Efren S. Teodoro was one such cardholder, having applied for membership on December 14, 1990 and been issued Citibank, N.A. Mastercard No. 5423-3920-4457-7009. Under the terms and conditions, purchases were payable within the period indicated on the statement of account or within thirty days from the date or dates of use, and unpaid charges earned interest at 3.5 percent per month plus a penalty fee equivalent to 5 percent of the amount due for every month or fraction of a month's delay. The collection suit implicated the best evidence rule under Rule 130, specifically the requirements for admitting secondary evidence of original sales invoices.

Citibank, N.A. Mastercard operates a credit card system through which it extends credit accommodations to cardholders for the purchase of goods and services from member establishments, with purchases later paid by cardholders upon receipt of billings or statements of account. Efren S. Teodoro applied for membership on December 14, 1990; after approval, he was issued Citibank, N.A. Mastercard No. 5423-3920-4457-7009. Under the terms and conditions governing the card, the cardholder undertook to pay all purchases within the period indicated on the statement of account or within thirty days from the date or dates of use, and unpaid charges within the fixed period earned interest at 3.5 percent per month plus a penalty fee equivalent to 5 percent of the amount due for every month or fraction of a month's delay. Teodoro made various purchases through the card, was billed for them, and tendered various payments.

Citibank claimed that as of January 20, 1995, Teodoro's obligations stood at P191,693.25, inclusive of interest and service charges. It demanded payment several times, but Teodoro refused, claiming that the amount demanded did not correspond to his actual obligations. On January 25, 1996, Citibank filed a complaint for collection before the RTC of Makati City, docketed as Civil Case No. 96-092 and raffled to Branch 133. The RTC dismissed the complaint on April 23, 1996 for lack of jurisdiction over the amount involved, and the case was transferred to the MTC of Makati City, docketed as Civil Case No. 51586 and raffled to Branch 66.

During trial, Citibank presented several sales invoices or charge slips, which added up to only P24,388.36. Although mere photocopies of the originals, they were marked as Exhibits F to F-4. Because all the copies appeared to bear Teodoro's signatures, the trial court deemed them sufficient proof of his purchases with the credit card. Mark Hernando, assistant manager of Citibank, N.A. Mastercard, testified on the invoices. He explained that triplicate copies were produced although the cardholder signed the sales invoice only once: one original went to respondent, another to the merchant, and still another to petitioner. He also testified that he requested the originals from Equitable Credit Card Network, Inc., but failed to show that he had followed up the request as advised by another witness, Zen Hipolito.

The MTC found that the statement of account alone would not prove the claimed outstanding obligation and that the sales invoices were needed to substantiate the purchases. Summing the amounts in the sales invoices, it found Teodoro had incurred an obligation of P24,388.36; without the other sales invoices, doubt remained over Citibank's claim. The MTC ordered Teodoro to pay that amount with 3.5% interest and a 5% penalty per month or fraction of delay from February 21, 1995 until fully paid, plus 25% attorney's fees and costs.

• Due Execution and Identification: Petitioner argued that the testimony of its principal witness, Mark Hernando, assistant manager of Citibank, N.A. Mastercard, proved the existence or due execution of the original sales invoices, which sufficiently established respondent's liability of P24,388.36, and that Hernando competently identified respondent's signatures on the sales invoices because he recognized them as identical to the signature on respondent's credit card application form.
• Loss or Unavailability and Diligence: Petitioner maintained that it proved the loss or unavailability of the original sales invoices and its reasonable diligence and good faith in the search for or attempt to produce the originals.
• Court of Appeals Error: Petitioner contended that the Court of Appeals erred in reversing and setting aside the trial courts' decisions for insufficiency of evidence and in holding that petitioner failed to prove the due execution and the cause of the unavailability and non-production of the charge slips marked as Exhibits F to F-4.

• Due Execution and Competence of Witness: Respondent maintained that petitioner failed to prove the due execution of the sales invoices; Hernando was not privy to their execution, was not the person before whom the application form was signed, executed, or acknowledged, and was not even present then, and he saw the sales invoices and respondent's alleged signatures only after the complaint had been filed or long after those invoices had been executed, so he was not competent to identify the signatures.
• Non-production and Diligence: Respondent contended that the alleged loss or unavailability of the original sales invoices was not sufficiently established because Hernando had requested the originals from Equitable Credit Card Network, Inc. but failed to show that he had followed up the request as advised by another witness, Zen Hipolito; therefore, the requirement of reasonable diligence and good faith in the search for or attempt to produce the originals was not satisfied.
• Section 5, Rule 130: Respondent concluded that because Hernando had not actually witnessed the execution of the sales invoices and the application form, petitioner failed to observe Section 5 of Rule 130 of the Rules of Court, which provides that the contents of the original may be proven by the testimony of witnesses.

• Admissibility of Photocopies: Whether the photocopies of the sales invoices or charge slips marked during trial as Exhibits F to F-4 are admissible in evidence.
• Due Execution and Cause of Unavailability: Whether petitioner proved the due execution of the original sales invoices and the cause of their unavailability and non-production.
• Court of Appeals Reversal for Insufficiency: Whether the Court of Appeals erred in reversing and setting aside the decisions of the trial courts for insufficiency of evidence to support their findings.

• Admissibility of Photocopies: No. The photocopies were secondary evidence and were inadmissible because petitioner failed to prove the exceptions under Section 3 and the conditions under Section 5 of Rule 130 of the Rules of Court.
• Due Execution and Cause of Unavailability: No. Although the existence of the original sales invoices was established, petitioner failed to prove their loss or unavailability after reasonable diligence and good faith, and failed to account for all original triplicate copies.
• Court of Appeals Reversal for Insufficiency: No. The Court of Appeals correctly reversed the trial courts because the inadmissible photocopies left respondent's alleged obligation unestablished by preponderance of evidence.

• Admissibility of Photocopies: Under Section 3, Rule 130, when the subject of inquiry is the contents of a document, no evidence is admissible other than the original itself, except in the enumerated cases. Section 5 permits secondary evidence when the original has been lost or destroyed or cannot be produced in court, but only upon proof of its execution or existence and the cause of its unavailability without bad faith on the offeror's part. The Court enumerated the requisites for admissibility of secondary evidence: (1) the existence or due execution of the original; (2) the loss and destruction of the original or the reason for its non-production in court; and (3) on the part of the offeror, the absence of bad faith to which the unavailability of the original can be attributed. The correct order of proof is existence, execution, loss, and contents, subject to the court's sound discretion. The original sales invoices were the best evidence of the alleged obligation, and the photocopies were mere secondary evidence. Although the existence of the originals was established by the photocopies and Hernando's testimony, petitioner failed to prove that the originals had been lost or could not be produced in court after reasonable diligence and good faith. The sales invoices might have been found by Equitable; Hernando requested the originals from Equitable but failed to show that he had subsequently followed up the request. Thus, no exception under Section 3 or condition under Section 5 was satisfied.
• Due Execution and Cause of Unavailability: When more than one original copy exists, it must appear that all of them have been lost, destroyed, or cannot be produced in court before secondary evidence can be given of any one; a photocopy may not be used without accounting for the other originals. In Santos vs. Santos, the Court upheld the pronouncement that before secondary evidence may be admitted to prove the contents of an original, the offeror must prove with the requisite quantum of evidence the loss, destruction, or unavailability of all original copies. Here, triplicates were produced although the cardholder signed the sales invoice only once; one original copy went to respondent, another to the merchant, and still another to petitioner. Each of these three copies is regarded as an original under Section 4(b), Rule 130. Petitioner failed to show that all three original copies were unavailable and that due diligence had been exercised in the search for them. The failure to prove loss or unavailability and diligence was fatal to the admissibility of the photocopies.
• Court of Appeals Reversal for Insufficiency: The burden of proof rested upon petitioner, as plaintiff, to establish its case based on a preponderance of evidence. Because the photocopies of the original sales invoices were inadmissible, petitioner failed to prove that respondent had an obligation in the principal amount of P24,388.36. Even if the photocopies had been admissible, they would still have had little probative value. The Court of Appeals therefore correctly reversed and set aside the trial courts' decisions for insufficiency of evidence.

• Best Evidence Rule — When the subject of inquiry is the contents of a document, no evidence is admissible other than the original document itself, except in the cases enumerated under Section 3, Rule 130 of the Rules of Court. The original copies of the sales invoices were the best evidence to prove the alleged credit card obligation; the photocopies were mere secondary evidence and were inadmissible absent proof of any exception.
• Requisites for Admission of Secondary Evidence — Before secondary evidence may be admitted to prove the contents of original documents, the offeror must prove: (1) the existence or due execution of the original; (2) the loss and destruction of the original or the reason for its non-production in court; and (3) the absence of bad faith to which the unavailability of the original can be attributed. The correct order of proof is existence, execution, loss, and contents, subject to the court's sound discretion. Petitioner proved existence but failed to prove loss or unavailability after reasonable diligence and good faith.
• All Originals Must Be Accounted For — When more than one original copy of a document exists, it must appear that all of them have been lost, destroyed, or cannot be produced in court before secondary evidence can be given of any one; a photocopy may not be used without accounting for the other originals. The sales invoices were triplicates, and each copy was regarded as an original under Section 4(b), Rule 130; petitioner failed to show that all three original copies were unavailable and that due diligence had been exercised in searching for them.
• Burden of Proof in Civil Cases — In civil cases, the party that alleges a fact has the burden of proving it, and the plaintiff must establish its case by a preponderance of evidence. Because the photocopies were inadmissible, petitioner failed to establish respondent's alleged obligation.

• "Before secondary evidence may be admitted to prove the contents of original documents, the offeror must prove the due execution and the subsequent loss or unavailability of the original." — This opening statement states the threshold rule applied by the Court and frames the entire admissibility analysis.
• "Applying the above Rule to the present case, before a party is allowed to adduce secondary evidence to prove the contents of the original sales invoices, the offeror must prove the following: (1) the existence or due execution of the original; (2) the loss and destruction of the original or the reason for its nonproduction in court; and (3) on the part of the offeror, the absence of bad faith to which the unavailability of the original can be attributed." — This passage enumerates the requisites for admitting secondary evidence under Section 5, Rule 130, which the Court found petitioner failed to satisfy.
• "Finally, when more than one original copy exists, it must appear that all of them have been lost, destroyed, or cannot be produced in court before secondary evidence can be given of any one. A photocopy may not be used without accounting for the other originals." — This states the all-originals rule, which was decisive because the sales invoices existed in triplicate and each copy was an original.
• "In the present case, the existence of the original sales invoices was established by the photocopies and the testimony of Hernandez. Petitioner, however, failed to prove that the originals had been lost or could not be produced in court after reasonable diligence and good faith in searching for them." — This passage applies the requisites to the facts and explains why the photocopies remained inadmissible despite proof of the originals' existence.

• Santos vs. Santos, 342 SCRA 753 (October 12, 2000) — Cited for the rule that before secondary evidence may be admitted to prove the contents of an original, the offeror must prove the loss, destruction, or unavailability of all original copies of the document.
• Santos vs. Court of Appeals, 368 SCRA 91 (October 23, 2001) — Cited in support of the requisites for admissibility of secondary evidence under Section 5, Rule 130 of the Rules of Court.
• De Vera vs. Aguilar, 218 SCRA 602 (February 9, 1993) — Cited for the correct order of proof for secondary evidence: existence, execution, loss, and contents, subject to the court's sound discretion.
• Intestate Estate of the Late Don Mariano San Pedro y Esteban vs. Court of Appeals, 333 Phil. 597 (December 18, 1996) and Trans-Pacific Industrial Supplies, Inc. vs. Court of Appeals, 235 SCRA 494 (August 19, 1994) — Cited for the rule that in civil cases, the party that alleges a fact has the burden of proving it.
• Security Bank & Trust Company vs. Triumph Lumber and Construction Corporation, 361 Phil. 463 (January 21, 1999) — Cited for the proposition that even if the photocopies had been admissible, they would still have had little probative value.

• Section 3, Rule 130, Rules of Court — When the subject of inquiry is the contents of a document, no evidence shall be admissible other than the original document itself, except in the enumerated cases, including when the original has been lost or destroyed or cannot be produced in court without bad faith on the part of the offeror. The photocopies did not fall under any exception because petitioner failed to prove loss or unavailability without bad faith.
• Section 4(b), Rule 130, Rules of Court — When a document is in two or more copies executed at or about the same time with identical contents, all such copies are equally regarded as originals. The sales invoices were triplicates, so each copy was an original that had to be accounted for before secondary evidence could be admitted.
• Section 5, Rule 130, Rules of Court — When 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 contents by a copy, by a recital of its contents in some authentic document, or by the testimony of witnesses in the order stated. Petitioner failed to prove the cause of the originals' unavailability and reasonable diligence in searching for them, rendering the photocopies inadmissible.

Justices Puno (Chairman), Sandoval-Gutierrez, Corona, and Carpio-Morales concurred.