G.R. No. 201001 , November 10, 2014
MCMP CONSTRUCTION CORP., Petitioner, vs. MONARK EQUIPMENT CORP., Respondent.

FACTS

Petitioner MCMP Construction Corporation (MCMP) leased heavy equipment from respondent Monark Equipment Corporation (Monark) in 2000, covered by a Rental Equipment Contract. Monark delivered five pieces of equipment to MCMP’s project sites, evidenced by invoices and Documents Acknowledgment Receipts signed by MCMP representatives. The invoices stipulated payment within 30 days, with interest at 24% per annum, a 1% monthly compounded collection fee, a 2% per month penalty for late payment, and attorney’s fees equal to 25% of any amount due. MCMP failed to pay the rental fees within the period and only made two partial payments totaling PhP200,000. As of April 30, 2002, MCMP owed Monark PhP1,282,481.83, inclusive of principal, interest, penalty, and collection fees. Monark filed a suit for sum of money. During trial, Monark’s witness, Senior Account Manager Reynaldo Peregrino, testified that Monark’s original copy of the Contract was lost and presented a photocopy as secondary evidence. MCMP objected, arguing Monark did not diligently search for the original. The trial court directed MCMP to produce its copy, but MCMP failed to do so. The Regional Trial Court (RTC) ruled in favor of Monark, ordering MCMP to pay the amount due, 25% attorney’s fees, and costs. The Court of Appeals (CA) affirmed the RTC Decision and Order. MCMP filed the instant petition, challenging the CA’s allowance of secondary evidence under the Best Evidence Rule.

ISSUE

Whether the Court of Appeals erred in affirming the trial court’s decision allowing Monark to present secondary evidence to prove the contents of the lost Rental Equipment Contract.

RULING

No, the Court of Appeals did not err. The Supreme Court denied the petition but modified the monetary awards. The Best Evidence Rule (Rule 130, Section 3 of the Rules of Court) requires the original document when its contents are in inquiry, but allows exceptions, including when the original is lost or destroyed without bad faith on the offeror’s part. Under Rule 130, Sections 5 and 6, secondary evidence may be presented upon proof of the original’s execution, its loss, and the absence of bad faith. The Court, citing Country Bankers Insurance Corporation v. Lagman, outlined the requisites: proof of the original’s existence or due execution; its loss or destruction; and the offeror’s lack of bad faith. The CA and RTC correctly found these requisites present based on Peregrino’s uncontroverted testimony that the original was lost despite diligent efforts. The trial court’s assessment of witness credibility is respected. Furthermore, MCMP’s failure to present its copy of the Contract despite the court’s directive justified the presentation of secondary evidence under Rule 130, Section 6, and gave rise to the presumption under Rule 131, Section 3(e) that evidence willfully suppressed would be adverse if produced. The Court also found MCMP’s claim of non-delivery of equipment contradicted by its own witnesses. However, the Court modified the imposed charges, reducing the interest on the unpaid rental fees (PhP765,380.33) to 12% per annum from March 1, 2001, reducing the penalty and collection charge to 6% per annum, and reducing the attorney’s fees to 5% of the total amount recovered.