Young Builders Corporation vs. Benson Industries, Inc.

A document attached to a pleading is not automatically an "actionable document" under Rule 8, Section 7 of the Rules of Court; it is only actionable if the specific right or obligation forming the basis of the action or defense emanates therefrom. Consequently, if a document is merely evidentiary, the adverse party need not specifically deny its genuineness and due execution under oath. Moreover, private documents must be authenticated in accordance with Section 20, Rule 132 before they can be admitted in evidence and given probative value.

In 1994, Benson Industries, Inc. (BII) contracted Young Builders Corporation (YBC) to construct an 8-storey commercial building in Cebu City. The original contract price was P36,900,000.00. Disputes arose regarding the completion of the project, the existence of extra works, and the basis of payment—whether on an "accomplishment billing" basis or pursuant to a fixed timetable. YBC claimed that as of May 18, 1998, it had accomplished works totaling P54,022,551.39 on the main contract and P11,839,110.99 on extra works, leaving a balance of P24,832,352.38 unpaid despite demands. BII countered that YBC failed to complete the construction within the agreed 360-day timeframe, abandoned the project, and performed defective work, and that the amounts paid already exceeded the original contract price.

• YBC and BII entered into a construction agreement in 1994 for an 8-storey commercial building in Cebu City with an original contract price of P36,900,000.00.
• YBC alleged that the agreement was on an "accomplishment billing basis" and that as of May 18, 1998, it had accomplished works worth P54,022,551.39 on the main contract and P11,839,110.99 on extra works (less P350,880.00 deduction), leaving a total collectible of P24,832,352.38.
• To support its claim, YBC presented: (1) a revised cost proposal dated October 17, 1995 (Exhibit "A"); (2) a cost breakdown for additional works (Exhibit "C"); and (3) an Accomplishment Billing dated May 18, 1998 (Exhibit "B") showing the alleged balance.
• BII denied the claim, asserting that the construction was subject to a timetable, that YBC failed to complete the building within 360 days, abandoned the project, and performed defective work. BII also claimed that payments exceeding P40 million already covered the original contract price.
• During trial, YBC presented only one witness, Nelson Go Yu, who identified but did not authenticate the Accomplishment Billing (Exhibit "B") or testify to the genuineness of Alfredo Young's signature thereon.
• YBC also presented a letter dated May 7, 1998 allegedly from BII's Ernesto Dacay, Sr. (Exhibit "F") and a Certification dated November 15, 1997 allegedly from BII's President Mary Dacay (Exhibit "E").
• Yu admitted during cross-examination that as of November 27, 2000, the building was "not yet completed."

• YBC argued that the Accomplishment Billing (Exhibit "B") was an actionable document that was deemed admitted because BII failed to specifically deny its genuineness and due execution under oath as required by Section 8, Rule 8 of the Rules of Court.
• YBC contended that BII effectively adopted the Accomplishment Billing as its own evidence when it offered the same as Exhibit "2," thus it should be accorded probative value.
• YBC claimed that the letter of Ernesto Dacay, Sr. (Exhibit "F") was admissible as an admission against BII's interest.
• YBC asserted that the Certification dated November 15, 1997 (Exhibit "E") proved the building's completion and should not have been disregarded despite Yu's admission that the project was incomplete.

• BII maintained that the Accomplishment Billing was not an actionable document because it was not the basis of YBC's cause of action but merely evidentiary; thus, a specific denial under oath was not required.
• BII argued that the Accomplishment Billing was self-serving and lacked probative value because YBC failed to substantiate it with receipts, payrolls, or other corroborating documents.
• BII contended that the Ernesto Dacay letter (Exhibit "F") and the Mary Dacay Certification (Exhibit "E") were inadmissible for lack of authentication and, in the case of the Certification, for being a mere photocopy in violation of the Best Evidence Rule.
• BII asserted that YBC failed to prove its claims by preponderance of evidence and that the admission of Yu that the building was incomplete contradicted YBC's claim of completion.

• Procedural Issues:
  • Whether the Court of Appeals erred in excluding the Accomplishment Billing (Exhibit "B") and the Ernesto Dacay letter (Exhibit "F") for failure to authenticate them as private documents under Section 20, Rule 132 of the Rules of Court.
  • Whether the Court of Appeals erred in excluding the Certification (Exhibit "E") as a mere photocopy in violation of the Best Evidence Rule.
• Substantive Issues:
  • Whether the Accomplishment Billing is an "actionable document" requiring a specific denial under oath pursuant to Section 8, Rule 8 of the Rules of Court.
  • Whether YBC discharged its burden of proving its monetary claims by preponderance of evidence despite the exclusion of its documentary exhibits.

• Procedural:
  • The Supreme Court held that the Court of Appeals correctly excluded the Accomplishment Billing (Exhibit "B") and the Ernesto Dacay letter (Exhibit "F") as evidence. Under Section 20, Rule 132, private documents must be authenticated by proof of due execution and genuineness before admission. YBC's witness, Nelson Go Yu, merely identified the documents but did not testify that he saw their execution, recognized the signatures, or that the makers confessed execution to him.
  • The Court also upheld the exclusion of the Certification (Exhibit "E") as it was a mere photocopy offered in violation of the Best Evidence Rule under Section 3, Rule 130, with no applicable exception invoked.
• Substantive:
  • The Court ruled that the Accomplishment Billing is not an actionable document under Rule 8, Section 7 because YBC's cause of action for collection of sum of money was based on the construction contract, not on the Billing itself. The Billing merely evidenced the extent of work done and was not the written instrument upon which the obligation to pay was founded. Consequently, BII was not required to specifically deny its genuineness and due execution under oath.
  • Furthermore, even if admitted, the Billing is self-serving and insufficient to establish YBC's claim without corroborating evidence like receipts or payrolls. The Court found that YBC failed to discharge its burden of proof by preponderance of evidence, as the plaintiff must rely on the strength of its own evidence and not on the weakness of the defense.

• Actionable Documents — Defined as written instruments or documents where the action or defense is based upon such instrument or document, meaning the specific right or obligation forming the basis of the claim emanates therefrom. Documents merely used as evidence, even if attached to pleadings, do not qualify as actionable documents and thus do not require a specific denial under oath under Section 8, Rule 8.
• Authentication of Private Documents — Under Section 20, Rule 132, before a private document is received in evidence, its due execution and authenticity must be proved by anyone who saw it executed, or by evidence of the genuineness of the signature or handwriting of the maker. Mere identification of the document by a witness who did not see its execution or recognize the signature is insufficient.
• Best Evidence Rule — Under Section 3, Rule 130, when the subject of inquiry is the contents of a document, the original must be produced, except in specific statutory exceptions; secondary evidence is inadmissible without laying the proper predicate.
• Burden of Proof and Preponderance of Evidence — The party having the burden of proof (the plaintiff in a collection case) must rely on the strength of its own evidence and not upon the weakness of the defendant's evidence. Preponderance of evidence means the weight, credit, and value of the aggregate evidence on either side, indicating the probability of the truth.

• "A written instrument or document is 'actionable' when an action or defense is based upon such instrument or document. While no contract or other instrument need not and cannot be set up as exhibit which is not the foundation of the cause of action or defense, those instruments which are merely to be used as evidence do not fall within the rule on actionable document."
• "The annexation of an exhibit to a pleading, such as the Accomplishment Billing in this case, does not amount to an allegation or averment that the statements and recitals contained therein are true and correct or that the truth of the recitals therein is tendered as an issue in the case; rather, the truth of such recitals must be expressly alleged in the pleading in order to raise the issue."
• "In addition, according to United Airlines, Inc. v. Court of Appeals, the plaintiff must rely on the strength of his own evidence and not upon the weakness of the defendant's."

• Chua v. Court of Appeals — Cited for the rule that before private documents can be received in evidence, proof of their due execution and authenticity must be presented, which may require the presentation of witnesses.
• General Enterprises, Inc. v. Lianga Bay Logging Co., Inc. — Cited in relation to the requirement of proving authenticity of private documents and the consequence of exclusion when authentication is lacking.
• Gregorio Araneta, Inc. v. Lyric Film Exchange, Inc. — Cited to distinguish actionable documents from mere evidence, holding that letters concerning a contract should not be set forth in the complaint as they are merely evidence.
• United Airlines, Inc. v. Court of Appeals — Cited for the principle that the plaintiff must rely on the strength of his own evidence and not upon the weakness of the defendant's.
• Pascual v. Burgos — Cited regarding the general rule that the Supreme Court is not a trier of facts and the exceptions thereto, including conflicting findings of fact between the RTC and the CA.
• BP Oil and Chemicals International Philippines, Inc. v. Total Distribution & Logistic Systems, Inc. — Cited to support the exception to the rule that only questions of law may be raised in Rule 45 when findings of fact by the lower courts are conflicting.

• Rule 45, Section 1 of the Rules of Court — Governs petitions for review on certiorari, limiting review to questions of law.
• Rule 8, Sections 7 and 8 of the Rules of Court — Define actionable documents and the requirement of specific denial under oath when an action or defense is founded upon a written instrument.
• Rule 132, Section 20 of the Rules of Court — Prescribes the manner of proving the due execution and authenticity of private documents before they can be admitted in evidence.
• Rule 130, Section 3 of the Rules of Court — States the Best Evidence Rule requiring the production of the original document when its contents are the subject of inquiry.
• Rule 131, Section 1 and Rule 133, Section 1 of the Rules of Court — Define burden of proof and preponderance of evidence, respectively, in civil cases.
• Article 1724 of the Civil Code — Mentioned in the background regarding claims for additional costs in construction contracts.