FACTS:

The case involves a motion for reconsideration filed by respondent Cameron Granville 3 Asset Management, Inc. seeking a reversal of the Court of Appeals' decision to order the production of the Loan Sale and Purchase Agreement (LSPA) that they possess. The motion for reconsideration raises several points, namely that the motion for production was filed out of time, the production of the LSPA would violate the parol evidence rule, and the LSPA is a privileged and confidential document. Respondent argues that petitioners filed their motion for production way beyond the protracted pre-trial period and should have exercised their right of extinguishment within 30 days from the substitution of the original creditor by respondent. Respondent maintains that the production of the LSPA is immaterial to the case and can be resolved through the application of relevant provisions of the Civil Code and jurisprudence. Additionally, respondent contends that the production of the LSPA would violate the parol evidence rule, that it is a privileged and confidential bank document, and that under the Special Purpose Vehicle Act, there is no requirement to disclose all financial documents in the assignment/sale/transfer. Petitioners, on the other hand, argue that their motion for production was not filed out of time and that there is no prohibition in the Rules of Court from filing motions for production beyond the pre-trial. They assert that if there was a valid transfer of the loan obligation, they must be informed of the actual transfer price, which can only be provided by the LSPA. Petitioners also argue that the parol evidence rule does not apply to them as they were not parties to the deed of assignment and that they have the right to seek evidence to determine their liability to respondent. The case also involves the issue of whether the LSPA is relevant and material to the disposition of the case.

The case involves a dispute over a deed of assignment between the petitioners and the respondent. The petitioners argue that they should be allowed to obtain evidence to determine the complete terms of the deed of assignment. They assert that the deed of assignment makes reference to the Legal Services and Privilege Act (LSPA), which they argue cannot be considered extrinsic to the deed. The respondent, on the other hand, claims that the LSPA is privileged and confidential. The petitioners counter that the parties do not fall under any of the relationships that would exempt the respondent from disclosing information. The respondent argues that the petitioners cannot accept and reject the same instrument at the same time, suggesting that the petitioners cannot impugn the validity of the deed of assignment. The petitioners clarify that their consistent position has always been to challenge the validity of the deed of assignment. Furthermore, they invoke the application of Article 1634 and Rule 8, Section 2 of the Rules of Court. The court denies the motion for reconsideration, stating that the discovery mode of production/inspection of documents may be availed of even beyond pre-trial upon a showing of good cause. It explains that Rule 27 of the 1997 Rules of Court does not provide a time frame for the utilization of the discovery mode and only requires leave of court "upon due application and a showing of due cause." The court cites previous cases, emphasizing that the purpose of discovery is to facilitate the disposition of the case and obtain the fullest possible knowledge of the issues and facts. It also notes that technicalities in pleading should be avoided to obtain substantial justice.

ISSUES:

1. • Whether deposition-taking can be done after pre-trial
2. • Whether the LSPA is relevant and material to the issue on the validity of the deed of assignment
3. • Whether Article 1634 of the Civil Code on assignment of credit in litigation is applicable
4. • Whether petitioners' right to extinguish their debt has lapsed

5. Whether the petitioners can inquire into the actual price paid by the assignee for the transfer of their debt.

6. Whether the parol evidence rule applies to the case.

7. Whether the LSPA is privileged and confidential in nature.

8. Whether or not the assignment of a credit requires a public instrument to be binding against third persons.

9. Whether or not the Law on Securitization of Receivables and Creation of the Asset Management Corporation applies to the assignment in this case.

10. Whether or not the invocation of Article 1634, which presupposes the validity of the deed of assignment, is allowed even if it contradicts the defense on the invalidity of the deed of assignment.

RULING:

1. • Deposition-taking can be done at any time after the institution of any action, whenever necessary or convenient. There is no rule that limits deposition-taking only to the period of pre-trial or before it.
2. • The LSPA is relevant and material to the issue on the validity of the deed of assignment, and its production and inspection by petitioners would be more in keeping with the objectives of the discovery rules.
3. • Article 1634 of the Civil Code on assignment of credit in litigation is applicable to the case.
4. • Petitioners' right to extinguish their debt under Article 1634 has not yet lapsed. They may exercise their right within 30 days from the date the assignee demands payment.

5. The 30-day period for petitioners to exercise their right to extinguish their debt should begin to run only from the time they are informed of the actual price paid by the assignee for the transfer of their debt. Respondent must disclose how much it paid to acquire the credit, so that petitioners can make the corresponding offer to pay the same amount in final settlement of their obligation.

6. The parol evidence rule does not apply to petitioners who are not parties to the deed of assignment and do not base a claim on it. Even if it does apply, an exception to the rule is when the party puts in issue the validity of the written agreement, which is the case in this instance. Petitioners are allowed to seek evidence to determine the complete terms of the deed of assignment.

7. The LSPA is not privileged and confidential in nature. The parties to the deed of assignment are not covered by any privileged communication as defined in the rules of evidence. The LSPA does not fall within any privileged classes of information. Moreover, the privilege is not absolute and the court may compel disclosure where it is indispensable for doing justice.

8. Yes. An assignment of a credit must appear in a public instrument in order to be binding against third persons.

9. No. The Law on Securitization of Receivables and Creation of the Asset Management Corporation does not apply to the assignment in this case.

10. Yes. The invocation of Article 1634 is allowed, even if it contradicts the defense on the invalidity of the deed of assignment.

PRINCIPLES:

• The modes of discovery are accorded a broad and liberal treatment to enable parties to obtain the fullest possible knowledge of the issues and facts before civil trials.

• Technicalities in pleading should be avoided in order to obtain substantial justice.

• The law requires payment to be made only to the person in whose favor the obligation has been constituted, his or her successor in interest, or any person authorized to receive it. Payment made to a person who is not the creditor, successor in interest, or authorized recipient is not effective payment.

• Article 1634 of the Civil Code - The debtor has the right to extinguish his or her debt by paying the assignee the same amount as what the assignee paid to acquire the credit.

• Parol Evidence Rule - When the terms of an agreement have been reduced to writing, there can be no evidence of such terms other than the contents of the written agreement. However, there are exceptions to the rule, including when the party puts in issue the validity of the written agreement.

• Privileged Communication - Certain types of communication, such as those between husband and wife, attorney and client, physician and patient, priest, and penitent, and public officers and public interest, are considered privileged against disclosure. However, the privilege is not absolute and the court may compel disclosure where it is indispensable for doing justice.

• An assignment of a credit must appear in a public instrument to be binding against third persons.

• The Law on Securitization of Receivables and Creation of the Asset Management Corporation does not apply to all assignments of credit.

• A party may set forth alternative causes of action or defenses in a pleading, even if they contradict each other.