G.R. No. 198998 - Young Builders Corp. vs. Benson Industries, Inc.

Case Summary (G.R. No. 198998)

Factual Background

YBC alleged that it contracted with BII in 1994 to construct BII’s commercial building on an accomplishment billing basis and that as of May 18, 1998 it had accomplished work amounting to PHP 54,022,551.39. YBC claimed payments of PHP 40,678,430.00 by BII, leaving a balance of PHP 13,344,121.39, and further asserted extra works of PHP 11,839,110.99 less a PHP 350,880 deduction, resulting in a total collectible of PHP 24,832,352.38 per the Accomplishment Billing dated May 18, 1998, which it attached to the complaint.

Trial Court Proceedings

The RTC conducted trial after pretrial. YBC presented one witness, architect Nelson Go Yu, and offered documents including a revised cost proposal (Exhibit A), the Accomplishment Billing (Exhibit B), and a cost breakdown for additional works (Exhibit C). BII filed a Demurrer to Evidence, which the RTC denied, and thereafter presented five witnesses in its defense. On November 21, 2008, the RTC rendered judgment in favor of YBC ordering BII to pay PHP 24,832,352.38 plus legal interest, PHP 500,000 as attorney’s fees, and PHP 100,000 as litigation expenses.

Court of Appeals Decision

On appeal, the Court of Appeals (CA) reversed and set aside the RTC judgment and dismissed the complaint. The CA found that YBC failed to prove the extent and value of work actually accomplished because the pivotal Accomplishment Billing (Exhibit B) was self-serving and its due execution and authenticity were not properly proven, rendering it inadmissible and devoid of probative value. With Exhibit B excluded, the CA concluded that YBC’s collection claim lacked evidentiary support.

Issues Presented to the Supreme Court

In its Rule 45 petition, YBC raised principally whether the CA erred in excluding the Accomplishment Billing for failure to give it probative value despite its attachment to the complaint and alleged adoption by BII, whether the CA erred in ruling that the Ernesto Dacay, Sr. letter (Exhibit F) was not duly authenticated, and whether the CA improperly disregarded the Certification dated November 15, 1997 (Exhibit E) certifying completion.

Petitioner's Contentions

YBC contended that the Accomplishment Billing was an actionable document attached to the complaint and thus its genuineness and due execution were deemed admitted because BII did not specifically deny those matters under oath. YBC further maintained that BII adopted the Accomplishment Billing as BII’s Exhibit 2 and therefore the document should be accorded probative weight. YBC argued that the Ernesto Letter was an admission against interest and that the Mary Certification demonstrated completion.

Respondent's Position

BII maintained that the construction was not on an accomplishment-billing basis but pursuant to a timetable which YBC breached, and that alleged extra works were remedial works occasioned by defective workmanship. BII asserted that the Accomplishment Billing was not actionable but merely evidentiary and self-serving, and denied under oath the existence of any collectible balance. BII also challenged the admissibility and authentication of the private documents presented by YBC.

Supreme Court’s Consideration on Actionable Document Rule

The Court examined Rule 8, Sections 7 and 8 and reiterated that a document is “actionable” when the action or defense is founded upon it so that the substance must be set forth and the original or copy attached. The Court concluded that the Accomplishment Billing was not the actionable instrument forming the basis of YBC’s cause of action because the primary grounds for the collection suit were the alleged unpaid obligations under the main construction contract, and no written construction contract was attached to the complaint. The Accomplishment Billing served only evidentiary purposes to show progress and expenses incurred. Consequently, Section 8’s rule deeming genuineness and due execution admitted did not apply, and BII was not required to make a verified specific denial under oath.

Supreme Court’s Ruling on Authentication of Private Documents

The Court applied Rule 132, Section 20 and held that private documents must be authenticated before they are received in evidence, either by a witness who saw the execution, evidence of genuineness of signature, or other prescribed means. The signer of the Accomplishment Billing, Alfredo Young, did not testify. YBC’s witness, Yu, only identified the document but did not attest to its execution or the genuineness of the signature. The Court therefore affirmed the CA’s exclusion of Exhibit B for lack of authentication. The same principle led to exclusion of the Ernesto Letter (Exhibit F), which was not identified or authenticated in open court by YBC’s witness.

Supreme Court’s Application of the Best Evidence Rule

The Court addressed the Mary Certification (Exhibit E), noting that it was offered as a photocopy and that Rule 130, Section 3 requires production of originals where the contents of a document are in issue unless a recognized exception applies. YBC invoked none of the exceptions. The photocopy thus failed the Best Evidence Rule and could not be accorded probative value.

Burden of Proof and Preponderance

The Court reiterated that YBC, as plaintiff, bore the burden to prove its claim by the preponderance of evidence pursuant to Rule 131 and Rule 133. Given the exclusion of the Accomplishment Billing and the failure to authenticate other key documents, and in light of YBC’s witness testimony admitting noncompletion of the project, the Court found that YBC did not meet its burden to establish entitlement to the claimed sum.

Ruling and Disposition

The Supreme Court denied the petition for lack of merit a

Case Syllabus (G.R. No. 198998)

Parties and Procedural Posture

Young Builders Corporation filed a petition for review on certiorari under Rule 45, Rules of Court challenging the Court of Appeals' Decision dated June 28, 2011 and Resolution dated September 14, 2011.
Benson Industries, Inc. was the respondent below and successfully obtained reversal of the Regional Trial Court judgment.
The RTC, Branch 21, Cebu City rendered a decision dated November 21, 2008 in Civil Case No. CEB-22526 in favor of Young Builders Corporation.
The Court of Appeals reversed and set aside the RTC judgment and dismissed the complaint, prompting the present Rule 45 petition.
The petition was opposed by Benson Industries, Inc. and followed by a reply from Young Builders Corporation.

Key Factual Allegations

Young Builders Corporation alleged that it was contracted by Benson Industries, Inc. in 1994 to construct a commercial building on an accomplishment billing basis.
Young Builders Corporation claimed that as of May 18, 1998 it had accomplished works in the amount of PHP 54,022,551.39 and that Benson Industries, Inc. paid PHP 40,678,430.00 leaving a balance of PHP 13,344,121.39.
Young Builders Corporation further alleged extra works amounting to PHP 11,839,110.99 less PHP 350,880.00 for a water cistern and asserted a total collectible of PHP 24,832,352.38.
Benson Industries, Inc. denied the accomplishment billing basis and pleaded that the construction was governed by a timetable, asserting delay, abandonment, and defective workmanship by Young Builders Corporation.
Benson Industries, Inc. contended that alleged extra works were remedial in nature and that payments already made exceeded any claimed balance.

Evidence Presented

Young Builders Corporation offered a revised cost proposal dated October 17, 1995 as Exhibit "A", a cost breakdown for additional works as Exhibit "C", and an Accomplishment Billing dated May 18, 1998 as Exhibit "B".
Young Builders Corporation also offered a letter dated May 7, 1998 attributed to Ernesto Dacay, Sr. as Exhibit "F" and a certification dated November 15, 1997 attributed to Mary Dacay as Exhibit "E", the latter being a photocopy.
Young Builders Corporation presented one witness, Architect Nelson Go Yu, who identified several exhibits but did not testify to the execution of Exhibit "B" or the authorship of Exhibit "F".
Benson Industries, Inc. presented five witnesses including Engr. Diego Bariquet and company representatives who testified on delay, quality issues, and payments.

Procedural History

The RTC conducted trial, denied Benson Industries, Inc.'s demurrer to evidence, and rendered judgment in favor of Young Builders Corporation ordering payment of PHP 24,832,352.38 plus legal interest, PHP 500,000.00 attorney's fees, and PHP 100,000.00 litigation expenses.
Benson Industries, Inc. appealed to the Court of Appeals which reversed the RTC and dismissed the complaint in its Decision dated June 28, 2011.
The Court of Appeals denied Young Builders Corporation's motion for reconsideration in its Resolution dated September 14, 2011.
Young Builders Corporation filed the present petition for review under Rule 45, Rules of Court which the Supreme Court resolved on the merits within the recognized factual-exception to the Rule 45 prohibition.

Issues Presented

Whether the Court of Appeals erred in refusing to accord probative value to the Accomplishment Billing (Exhibit "B") on the ground of lack of specific denial under oath and failure of authentication.
Whether the Court of Appeals erred in holding that the letter of Ernesto Dacay, Sr. (Exhibit "F") was not duly authenticated and therefore inadmissible.
Whether the Court of Appeals erred in disregarding the Certification dated November 15, 1997 (Exhibit "E") and in relying on contradictions in the evidence to reverse the RTC judgment.

Ruling and Disposition

The petition was denied for lack of merit and the Court affirmed t