View full case

EAGLERIDGE DEVELOPMENT CORPORATION v. CAMERON GRANVILLE 3 ASSET MANAGEMENT

FACTS:

The case involves a collection suit initiated by Export and Industry Bank (EIB) against Eagleridge Development Corporation (EDC) and sureties Marcelo N. Naval and Crispin I. Oben. EIB transferred EDC's outstanding loan obligations to respondent Cameron Granville 3 Asset Management, Inc. (Cameron) through a Deed of Assignment. EDC and its sureties filed a motion for production/inspection of the Loan Sale and Purchase Agreement (LSPA) mentioned in the Deed of Assignment, claiming it is necessary to determine the consideration for the assignment of their loan obligation. However, the trial court denied their motion for failing to show "good cause" for the production of the LSPA. The court also denied their motion for reconsideration. The petitioners then filed a petition for certiorari with the Court of Appeals, which was dismissed due to technicalities. Their subsequent motion for reconsideration was also denied. As a result, the petitioners elevated the case to the Supreme Court.

ISSUES:

  1. Whether the verification and certification signed by Oben in his personal capacity instead of as a representative of EDC is a technical defect that warrants the dismissal of the petition.

  2. Whether the Court of Appeals erroneously denied the production of the Loan and Security Purchase Agreement (LSPA) and if such denial violated petitioners' right to due process.

  3. Whether the production of the Loan Sale and Purchase Agreement (LSPA) is necessary and should be granted by the court.

  4. Whether the denial of the motion for production of the LSPA constituted grave abuse of discretion.

RULING:

  1. The Court held that the verification and certification signed by Oben in his personal capacity instead of as a representative of EDC is a technical defect that does not warrant the dismissal of the petition. The earlier verification and certification signed by Naval, together with a Secretary Certificate containing his authority to sign on behalf of EDC, were already filed with the appellate court. Thus, the only lacking requirement was Oben's verification and certification.

  2. The Court found that the denial of the production of the LSPA violated petitioners' right to due process. The LSPA is relevant and necessary for the understanding of the Deed of Assignment, which was produced in court by the respondent. The respondent's claim against the petitioners relies entirely on the validity of the Deed of Assignment, therefore, it is incumbent upon the respondent to allow petitioners to inspect all documents relevant to the Deed, including the LSPA. The denial of the production of the LSPA impairs petitioners' fundamental right to due process.

  3. The court finds that the production of the LSPA is necessary for the petitioners to be informed of the actual consideration paid by the special purpose vehicle (SPV) in acquiring the loan. This information is crucial for the petitioners to negotiate for the extinguishment of their obligation. Therefore, the court orders the respondents to produce the LSPA for inspection and photocopying by the petitioners.

  4. The court rules that the denial of the motion for production of the LSPA, despite the existence of "good cause," relevancy, and materiality, amounted to unreasonable and arbitrary conduct on the part of the trial court. This constitutes grave abuse of discretion. Therefore, the remedy of certiorari is proper in this case.

PRINCIPLES:

  • The provision on production and inspection of documents is one of the modes of discovery that enables the parties and the court to discover all relevant and material facts in connection with the case pending before it.

  • The scope of discovery should be liberally construed to provide the litigants with information essential for a fair settlement or expeditious trial of the case.

  • The grant of a motion for production of document is discretionary on the part of the trial court judge but cannot be arbitrarily or unreasonably denied as it may bar access to relevant evidence and impair a party's right to due process.

  • The relevancy of documents and the sufficiency of their description should be determined based on reasonableness and practicability.

  • When part of a writing or record is given in evidence, the whole of the same subject may be inquired into by the other party, and when a detached writing or record is given in evidence, any other writing or record necessary to its understanding may also be given in evidence.

  • The provisions of the New Civil Code on subrogation and assignment of credits apply to transfers of Non-Performing Loans (NPLs) by a financial institution to a special purpose vehicle (SPV).

  • The equitable right of redemption allowed to a debtor under the Civil Code is applicable to transfers of NPLs by a financial institution to an SPV.

  • The exercise of discretion pertaining to discovery will be set aside if there is abuse or if the trial court's disposition of matters of discovery adversely affects the substantial rights of a party.

  • The rules on discovery are accorded broad and liberal interpretation to allow parties to obtain the fullest possible knowledge of the issues and facts, including those known only to their adversaries.

  • Litigants must act in good faith to reveal documents, papers, and other evidence material to the controversy. Courts must not countenance any technical ploy to the detriment of a fair and complete resolution of the case.