Young Builders Corp. v. Benson Industries, Inc.
REITERATIONFacts
The Antecedents: Young Builders Corporation (YBC) filed a complaint for collection of a sum of money against Benson Industries, Inc. (BII), alleging it was contracted in 1994 to construct a commercial building on an accomplishment billing basis. YBC claimed Php54,022,551.39 in accomplished works as of May 18, 1998, with a remaining balance of Php13,344,121.39 after payments, plus Php11,839,110.99 for extra works, totaling Php24,832,352.38 collectible. BII admitted the contract but denied the billing basis, citing YBC's non-compliance with a timetable and alleging breach through delay, abandonment, and defective work. BII also denied the extra works claim, deeming them remedial, and asserted set-offs for YBC's liabilities, seeking dismissal. Procedural History: The Regional Trial Court (RTC), Branch 21, Cebu City, initially denied BII's Demurrer to Evidence and subsequently ruled in favor of YBC on November 21, 2008, ordering BII to pay Php24,832,352.38 plus interest, attorney's fees, and litigation expenses. BII appealed to the Court of Appeals (CA), arguing YBC's failure to complete construction, lack of substantiation for claims, exceeding the timeframe, absence of written authority for changes, payment of the original contract price, and questioning the admissibility of evidence. The CA, in a Decision dated June 28, 2011, reversed the RTC's ruling, finding YBC failed to prove its entitlement to any balance and excluded YBC's Accomplishment Billing (Exhibit "B") due to lack of authentication, thus dismissing YBC's complaint. YBC's Motion for Reconsideration was denied by the CA on September 14, 2011. The Petition: Petitioner Young Builders Corporation (YBC) seeks review by certiorari of the CA's Decision and Resolution, raising three issues: (1) whether the CA erred in not giving probative value to its Accomplishment Billing (Exhibit "B") despite BII allegedly offering it as its own evidence (Exhibit "2"); (2) whether the CA erred in holding a letter from BII's Ernesto Dacay, Sr. (Exhibit "F") as not duly authenticated; and (3) whether the CA erred in reversing the RTC's judgment based on the exclusion of the Accomplishment Billing and the Ernesto Letter, and its findings regarding a certification (Exhibit "E"). YBC contends the Accomplishment Billing should have been admitted due to BII's failure to specifically deny its genuineness and due execution under oath, and that the CA improperly excluded key evidence without proper basis, leading to an erroneous dismissal of its collection claim.
Issue(s)
Whether the Court of Appeals erred in setting aside the formal requirements of law on specific denial by not giving probative value to YBC's Accomplishment Billing (Exhibit "B") even though it was offered by BII as its own evidence (Exhibit "2"). Whether the Court of Appeals erred when it held that the letter of BII's Ernesto Dacay, Sr. (Exhibit "F") was not duly authenticated. Whether the Court of Appeals erred when it reversed the judgment of the RTC on the basis of its ruling that: a. YBC's Accomplishment Billing has no probative value; b. The letter of BII's Ernesto Dacay, Sr. (Exhibit "F") was not duly authenticated; and c. The Certification of BII (Exhibit "E") that the subject building was completed was contradicted by YBC's own evidence.
Ruling
The Supreme Court denied the petition for review on certiorari for lack of merit. It affirmed the Court of Appeals' decision reversing the Regional Trial Court's ruling and dismissing YBC's complaint.
Ratio Decidendi
On the probative value of YBC's Accomplishment Billing (Exhibit "B"): The Court ruled that the Accomplishment Billing is not an actionable document under Section 7, Rule 8 of the Rules of Court. An actionable document is one upon which the action or defense is based, requiring its substance to be set forth in the pleading and the original or copy attached. The Accomplishment Billing, in this case, was merely evidentiary, showing the progress of work and expenses, not the primary basis of the collection suit which would have been the original construction contract. Therefore, BII's denial in its Answer, even if not under oath, was sufficient to contest its genuineness and due execution. Furthermore, even if it were actionable, BII, not appearing to be a party to its execution, would not be bound by the requirement of a verified specific denial. The Court agreed with the CA that the Accomplishment Billing, being a private document, was inadmissible due to YBC's failure to authenticate it as required by Section 20, Rule 132 of the Rules of Court. YBC's witness, Nelson Go Yu, merely identified the document but did not testify to its execution or the genuineness of the signature of the signatory, Alfredo Young. Without authentication, the document has no probative value. The Court also noted that even if admitted, the Accomplishment Billing was self-serving, and YBC failed to present other credible evidence like receipts or payrolls to substantiate its claims. The argument that BII adopted it as its own evidence (Exhibit "2") did not cure the lack of authentication, as it would lead to an absurd situation where a document excluded for one party is given probative value for the other. On the admissibility of BII's Letter dated May 7, 1998 (Exhibit "F"): The Court found that the CA correctly ruled the letter inadmissible. Similar to the Accomplishment Billing, the Ernesto Letter is a private document, and its due execution and authenticity must be proven as a prerequisite for admission under Section 20, Rule 132 of the Rules of Court. YBC's witness, Nelson Go Yu, never identified the letter in open court. Therefore, no probative value could be accorded to it. On the admissibility of the Certification dated November 15, 1997 (Exhibit "E") and the reversal of the RTC judgment: The Court noted that Exhibit "E" was a mere photocopy. Under the Best Evidence Rule (Section 3, Rule 130), the original document must be produced unless specific exceptions apply, none of which were invoked by YBC. Thus, Exhibit "E" should have been excluded. Moreover, the Court agreed with the CA that the veracity of this certification lost significance because YBC's own witness, Nelson Go Yu, admitted under oath that the building was not completed, even as of November 27, 2000. This admission contradicted the certification and demonstrated YBC's failure to discharge its burden of proof. The Court reiterated that a plaintiff must rely on the strength of its own evidence, not the weakness of the defendant's, and YBC failed to present preponderant evidence to substantiate its claims.
Main Doctrine
A private document, such as an accomplishment billing, must be authenticated in accordance with Section 20, Rule 132 of the Rules of Court before it can be admitted in evidence. Failure to do so warrants its exclusion and renders it without probative value, thereby undermining the cause of action based upon it. Furthermore, an accomplishment billing is merely evidentiary and not an actionable document, meaning its genuineness and due execution are not deemed admitted even if attached to the complaint, unless specifically denied under oath.