The Supreme Court ruled that a party acknowledging a debt through a promissory note and related actions must fulfill their obligation, even if the initial evidence of the debt (a dishonored check) was presented as a photocopy. This decision underscores the importance of honoring contractual commitments and clarifies the application of the Best Evidence Rule, particularly when original documents are unavailable through no fault of the offering party. The ruling serves as a reminder that consistent conduct acknowledging a debt can override technical challenges in presenting original documentation, reinforcing the principle of upholding freely entered agreements and promoting good faith in financial dealings.

Dishonored Check, Acknowledged Debt: Who Bears the Loss?

This case revolves around a foreign currency savings account opened by Amado M. Mendoza and his mother, Maria Marcos Vda. de Mendoza (respondents), at Bank of the Philippine Islands (BPI). A significant portion of their initial deposit was a US Treasury check that was later dishonored due to alteration. After the respondents withdrew the funds, BPI sought reimbursement, which the respondents contested, claiming insufficient proof of the check’s dishonor. This legal battle reached the Supreme Court, questioning whether BPI had sufficiently proven the dishonor of the check and, consequently, the respondents’ obligation to return the withdrawn funds.

The central issue hinges on the application of the **Best Evidence Rule**, which ordinarily requires the presentation of original documents when their contents are in question. However, this rule is not absolute; it has exceptions. As the Supreme Court emphasized, Section 3, Rule 130 of the Rules of Court states that the original document must be produced. The rule provides exceptions such as when the original has been lost or destroyed, or cannot be produced in court, without bad faith on the part of the offeror.

Building on this principle, BPI argued that the original check was confiscated by the U.S. government due to the alteration, a claim the Court found credible. The Supreme Court highlighted the burden of proof in civil cases, stating that the party with the burden of proof must produce a preponderance of evidence. This requires presenting evidence that is more convincing than the opposing evidence.

The Court found that BPI met this burden. The evidence presented, including the photocopy of the dishonored check, Amado’s letters acknowledging the debt, and his promissory note, demonstrated the existence of the obligation and his intent to fulfill it. The Court stated, “Records evince that BPI was able to satisfactorily prove by preponderance of evidence the existence of respondents’ obligation in its favor. Verily, Amado acknowledged its existence and expressed his conformity thereto when he voluntarily: (a) affixed his signature in the letters dated June 27, 1997 and July 18, 1997, where he acknowledged the dishonor of the subject check, and subsequently, allowed BPI to apply the proceeds of their US time deposit account to partially offset their obligation to the bank; and (b) executed a Promissory Note dated September 8, 1997 wherein he undertook to pay BPI in installments of P1,000.00 per month until the remaining balance of his obligation is fully paid.” This acknowledgment was crucial in the Court’s decision.

This approach contrasts with the Court of Appeals’ (CA) view, which had dismissed BPI’s complaint due to the lack of the original check and proper authentication of an email advising of the dishonor. The Supreme Court disagreed with the CA, emphasizing that Amado’s voluntary actions in acknowledging the debt and committing to a payment plan outweighed the technical deficiencies in the documentary evidence. While the e-mail advice from Bankers Trust may not have been properly authenticated in accordance with the Rules on Electronic Evidence, the same was merely corroborative evidence, and thus, its admissibility or inadmissibility should not diminish the probative value of the other evidence proving respondents’ obligation towards BPI, namely: (a) Amado’s voluntary acts of conforming to BPI’s letters dated June 27, 1997 and July 18, 1997 and executing the promissory note to answer for such obligation; and (b) the photocopy of the subject check, which presentation was justified as falling under the afore-discussed exception to the Best Evidence Rule. As such, their probative value remains.

Furthermore, the Supreme Court addressed the nature of the obligation. It clarified that BPI’s payment of the check proceeds based on a mistaken belief that it had cleared gave rise to a quasi-contractual obligation of *solutio indebiti*. **Solutio indebiti** arises when something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. Accordingly, Article 2154 of the Civil Code provides: If something is received when there is no right to demand it, and it was unduly delivered through mistake, the obligation to return it arises. This distinction affected the applicable interest rate on the amount owed.

FAQs

What was the central legal question in this case?	The key issue was whether BPI sufficiently proved the dishonor of a check and the subsequent obligation of the respondents to return the withdrawn funds, considering the Best Evidence Rule.
What is the Best Evidence Rule?	The Best Evidence Rule generally requires that the original document be presented as evidence when the content of the document is in question. However, exceptions exist, such as when the original is lost or unavailable through no fault of the offering party.
What is *solutio indebiti*?	*Solutio indebiti* is a quasi-contractual obligation that arises when someone receives something they are not entitled to, due to a mistake, creating an obligation to return it.
Why was a photocopy of the check allowed as evidence?	The original check was confiscated by the U.S. government, making it unavailable. The court accepted the photocopy as secondary evidence because the original’s unavailability was not due to BPI’s bad faith.
What role did Amado’s actions play in the court’s decision?	Amado’s voluntary acknowledgment of the debt and his commitment to repay it through a promissory note were crucial in establishing his obligation to BPI, despite challenges with the original check.
How did the court address the e-mail evidence?	The court considered the e-mail advice as corroborative evidence. Even if the e-mail was not properly authenticated, other evidence supported the ruling.
What was the impact of classifying the debt as *solutio indebiti*?	Classifying the debt as *solutio indebiti* affected the applicable interest rate. It was set at 6% per annum from the date of extrajudicial demand, rather than the higher rate for a loan or forbearance of money.
What is the practical implication of this ruling for borrowers?	Borrowers should be aware that actions acknowledging a debt, such as signing promissory notes or making partial payments, can be legally binding even if there are issues with the initial documentation of the debt.

In conclusion, this case illustrates the importance of upholding contractual obligations and the willingness of courts to look beyond technical evidentiary rules when there is clear evidence of a party acknowledging and assuming a debt. It also highlights the application of *solutio indebiti* and its impact on the calculation of interest. This ruling reinforces the need for individuals to carefully consider the implications of their actions when dealing with financial institutions and to seek legal advice when facing complex financial disputes.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: BANK OF THE PHILIPPINE ISLANDS vs. AMADO M. MENDOZA, G.R. No. 198799, March 20, 2017